UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-K





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





For
the fiscal year ended December 31, 2008





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
      DriveNorth 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 YorkStock
    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£NoT





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£NoT





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. YesTNo£





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 PartIIIof this Form 10-K or any amendment to
this Form 10-K.T





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£Accelerated
filerTNon-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£NoT





As ofJune 30, 2008, 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$654,483,038 based upon the
last reported sale price of $20.55 per share on the New York Stock Exchange on
such date.





As ofFebruary 14, 2009, the number of outstanding shares of
Common Stock, par value $.01 per share,of the Registrant was
77,558,656.





DOCUMENTS INCORPORATED BY
REFERENCE





Certain sections of the Registrant’s
definitive Proxy Statement for the 2009 AnnualMeeting 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.




TABLE OF
CONTENTS





PagePart IItem
      1.
                                                  Business
                                                  1Item
      1A.
                                                  Risk Factors
                                                  5Item
      1B.
                                                  Unresolved Staff Comments
                                                  13Item
      2.
                                                  Properties
                                                  14Item
      3.
                                                  Legal Proceedings
                                                  22Item
      4.
                                                  Submission of Matters to a Vote of Security
      Holders
                                                  22Part IIItem
      5.
                                                  Market For Registrant’s Common Equity, Related Stockholder
      Matters and Issuer Purchases of Equity Securities
                                                  23Item
      6.
                                                  Selected Financial Data
                                                  25Item
      7.
                                                  Management’s Discussion and Analysis of Financial Condition
      and Results of Operations
                                                  27Item
      7A.
                                                  Quantitative and Qualitative Disclosures about Market
      Risk
                                                  48Item
      8.
                                                  Financial Statements and Supplementary
    Data
                                                  49Item
      9.
                                                  Changes in and Disagreements with Accountants on Accounting
      and Financial Disclosure
                                                  49Item
      9A.
                                                  Controls and Procedures
                                                  49Item
      9B.
                                                  Other information
                                                  49Part IIIItem
      10.
                                                  Directors and Executive Officers of the
      Registrant
                                                  50Item
      11.
                                                  Executive Compensation
                                                  50Item
      12.
                                                  Security Ownership of Certain Beneficial Owners and
      Management
                                                  50Item
      13.
                                                  Certain Relationships and Related
      Transactions
                                                  50Item
      14.
                                                  Principal Accountant Fees and Services
                                                  50Part IVItem
      15.
                                                  Exhibits and Financial Statement
    Schedules
                                                  51Signatures
                                                  55





Table of Contents





PART I





ITEM 1.
            BUSINESS





The Company





We are a
real estate investment trust, or REIT, that principally owns, manages, acquires
and develops neighborhood and community shopping centers. 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, 2008, our property portfolio comprises 160 properties, including
146 shopping centers consisting of approximately 16.0 million square feet of
gross leasable area (“GLA”), four development/redevelopment properties, six
non-retail properties and four parcels of land.  As of December 31,
2008, our core portfolio was 92.1% leased and included national, regional and
local tenants.





In
addition, we currently own a 10% interest in GRI-EQY I, LLC (“GRI Venture”),
which owns ten neighborhood shopping centers totaling approximately 1.4 million
square feet of GLA as of December 31, 2008.  The GRI Venture’s
properties were 97.3% leased at December 31, 2008.  Additionally, we
own a 20% interest in G&I VI Investment South Florida Portfolio, LLC (“DRA
Venture”) which owns one office building and two neighborhood shopping centers
totaling approximately 503,000 square feet of GLA as of December 31,
2008.  The DRA Venture’s properties were 67.6% leased at December 31,
2008.





In this
annual report, unless stated otherwise or unless the context requires otherwise,
references to “we,” “us” or “our” mean Equity One, Inc. and our consolidated
subsidiaries.





Strategy
and Philosophy





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 at higher rental rates and redeveloping those properties to make
      them more attractive to tenants or to permit additional or better
      uses;





·
            Investment
      Strategy:  Using capital wisely to renovate or redevelop
      our properties and to acquire and develop additional shopping centers
      where expected returns meet or exceed our standards as well as by
      investing in strategic partnerships that minimize risk;
  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 access to institutional capital and 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. 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, and Boston,
Massachusetts.  Strong trade-area demographics help our tenants
generate high sales, which has enabled us to maintain high occupancy rates and
increase rental rates.





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;





·
            increase
      rental rates upon the renewal of expiring leases or as we lease space to
      new tenants while minimizing vacancy and down-time;
  and





·
            evaluate
      renovation or redevelopment opportunities that will make our properties
      more attractive for leasing or re-leasing to tenants, take advantage of
      under-utilized land or existing square footage, or re-configure properties
      for better uses.





- 1
-
 Table of Contents





Investment Strategy. Our
investment strategy is to deploy capital in projects that are expected to
generate 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;





·
            selectively
      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.





In the
past, we have also made investments in the securities of other companies, whose
assets or markets are consistent with our investment strategy.  These
investment decisions are made in the same manner as other investments by us and
are subject to the gross income and asset tests necessary to maintain our REIT
qualification.





In
evaluating potential redevelopment, acquisition and development opportunities,
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 flows from operations, by borrowing under our existing
credit facilities, reinvesting proceeds from selling properties that do not meet
our investment criteria or, if appropriate market conditions exist, by accessing
capital from institutional partners or the capital markets to issue equity, debt
or a combination thereof.  Our capital strategy is to 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; and





·
            using
      joint venture arrangements to access less expensive capital, mitigate
      capital risk, or to capitalize on the expertise of local real estate
      partners.





While we
generally hold our properties for investment and for the production of rental
income, we also recycle our capital.  Over time, when our assets no
longer meet our investment criteria, asset type or geographic focus, we may sell
or otherwise dispose of those assets.  By identifying these
opportunities, we are able to recycle our capital and reinvest the proceeds in
more attractive properties or markets.





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.





- 2
-
 Table of Contents





REIT
Status





We
elected to be taxed as a real estate investment trust for federal income tax
purposes beginning with our taxable year ended December 31, 1995. As a REIT, we
are generally not subject to federal income tax on REIT taxable income that we
distribute to our stockholders. Under the Internal Revenue Code of 1986, as
amended, which we refer to as the Code, REITs are subject to numerous
organizational and operational requirements, including the requirement to
distribute at least 90% of REIT taxable income (excluding net capital gains)
each year. We will be subject to federal income tax on our taxable income
(including any applicable alternative minimum tax) at regular corporate rates if
we fail to qualify as a REIT for tax purposes in any taxable year, or to the
extent we distribute less than 100% of REIT taxable income. We will also not be
permitted to qualify for treatment as a REIT for federal income tax purposes for
four years following the year during which qualification is lost. Even if we
qualify as a REIT for federal income tax purposes, we may be subject to certain
state and local income and franchise taxes and to federal income and excise
taxes on our undistributed REIT 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. The sales of
certain land parcels, our investment in DIM Vastgoed N.V. 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.





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, including:





·
            the
      Comprehensive Environmental Response, Compensation, and Liability Act of
      1980, as amended, which we refer to as
CERCLA;





·
            the
      Resource Conservation & Recovery
Act;





·
            the
      Federal Clean Water Act;





·
            the
      Federal Clean Air Act;





·
            the
      Toxic Substances Control Act;





·
            the
      Occupational Safety & Health Act;
and





·
            the
      Americans with Disabilities Act of 1990
(“ADA”).





Environmental Regulations.The application of these laws to a specific property that we own 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, principally
CERCLA, 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.





Americans with
Disabilities Act.Our properties are
subject to the 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.





- 3
-
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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 are 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, outlet stores and
discount shopping clubs.  This competition could contribute to lease
defaults and insolvency of our tenants.





Employees





Our
headquarters are located at 1600 N.E. Miami Gardens Drive, North Miami Beach,
Florida 33179.  At December 31, 2008, we had 159 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.





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 DriveNorth
      Miami Beach, Florida 33179Attn:
      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.





- 4
-
 Table of Contents





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.





Credit
market constraints may affect our ability to refinance maturing debt at a
reasonable cost.





As a
result of losses incurred by lenders over the last year, the cost of credit has
risen throughout the U.S. economy.  Institutions that historically
financed investment in commercial real estate directly (through bonds, mortgage
loans, or bank financing) or indirectly (through purchases of securitized loans)
have curtailed the capital they provide REITs and other real estate
investors.  For example, the issuance of commercial mortgage-backed
securities, or CMBS, virtually ceased in 2008.  In addition, since May
2008, no REIT has been successful in issuing new unsecured corporate
bonds.  Credit spreads on secondary trading in previously issued bonds
widened out during the year to the highest levels we have
observed.  Toward the end of 2008, banks withdrew their willingness to
extend credit for real estate companies.  To the extent bank
credit is being extended, loan tenors are shorter, credit spreads are wider, and
covenants are more restrictive than in the past.  Although traditional
mortgage lenders such as life insurance companies remain active in making loans,
the loan-to-value ratios they underwrite are more conservative and their loan
pricing is higher than in recent years.





How long
the credit markets will remain constrained is unclear.  As of December
31, 2008, we had approximately $268.6 million of bonds and mortgage debt
scheduled to mature in the next two years.  If credit constraints
persist, 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.  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.  Alternately, we may need to repay
maturing debt with proceeds from the issuance of equity or the sale of
assets.





In order
to repay $176.1 million of bonds that mature on April 15, 2009, we accumulated
as of December 31, 2008 a diversified portfolio of $128.4 million of short-term
corporate bonds that mature over the next year.  Subsequent to year
end, we were repaid $47.8 million, leaving $80.6 million of such investments
outstanding.  Any drop in the marketability of the remaining bonds we
own or any defaults by the issuers may have adverse effects on our
liquidity.





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





Our goal
is to improve the performance of our properties by re-leasing vacated space.
However, in 2008, rapid decreases in consumer confidence and consumer spending
led to a deterioration in the businesses of many of our retail tenants and made
it difficult to maintain our overall occupancy.  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 are impacted by these consumer trends adversely affecting our occupancy
and bad debt experience. 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 found in
certain leases restricting the use of other space at our properties. If the
economic conditions persist or worsen in 2009, our properties and results of
operations could continue to 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, demand for retail space
has declined, generally reducing the market rental rates for our properties when
renewing leases or leasing or re-leasing vacant space.





- 5
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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 commission fees
paid by us in connection with new leases or lease renewals, and the cost of
making leasehold improvements.





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 2.3 million square
feet, or approximately 14.4% of our gross leasable area, at December 31, 2008,
and approximately $18.1 million, or 10.5%, of our annual minimum rent in
2008.





Given the
difficult retail environment predicted for 2009, some of our anchor or other
tenants may 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 2008, 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 or may
decline to extend a lease upon its expiration or may reject the lease in
bankruptcy.  Any 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.





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.





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





As of
December 31, 2008, we had debt and other liabilities outstanding in the
aggregate amount of approximately $1.1 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, 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;





·
            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 without 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.





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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 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.





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





Of our
approximately $1.1 billion of debt outstanding as of December 31, 2008,
approximately $136.4 million bears interest at variable interest rates,
including $100.0 million of fixed rate borrowings that we have converted to
floating rate borrowings through the use of hedging agreements.  We
also may borrow additional funds at variable interest rates in the future.
Increases in interest rates would increase our interest expense on our variable
rate debt and 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. Although
we may in the future enter into hedging arrangements or other transactions as to
a portion of our variable rate debt to limit our exposure to rising interest
rates, the amounts we are required to pay under the variable rate debt to which
the hedging or similar arrangements relate may increase in the event of
non-performance by the counterparties to any of our hedging
arrangements.





In
addition, the market price of our common stock is affected by the annual
distribution rate on the shares of our common stock. Increasing market interest
rates 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.





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





Approximately
56.5% of our retail property gross leasable area is located in
Florida.  As a result, economic, real estate and other, general
conditions in Florida 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.  Any
resulting oversupply or reduced demand for retail properties in Florida would
adversely affect our operating performance and limit our ability to make
distributions to stockholders.





In
addition, a significant portion of our retail property gross leasable area is
located in coastal areas that are susceptible to the harmful effects of tropical
storms, hurricanes and other similar natural disasters.  As of
December 31, 2008, over 60.9% of the total insured value of our portfolio is
located in the State of Florida. In 2005, our properties experienced damage from
a total of seven named hurricanes or tropical storms with not all of the storm
damages fully insured.  While some of these uninsured expenses are
recoverable from our tenants, not all of the leases have provisions permitting
reimbursement, and, therefore, we must pay the remaining
amounts.  Moreover, with the increased hurricane activity, the cost of
property insurance has risen dramatically. 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 affect the willingness of residents to remain
in or move to the affected area.  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. We also
currently carry environmental insurance on most 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.





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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 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 adequate amounts
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 or due to terrorist acts and toxic mold, or, if offered, the expense
of obtaining these types of insurance may not be justified. We, therefore, may
cease to have insurance coverage against certain types of losses and/or there
may be decreases in the 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 when appropriate because real estate
investments are illiquid.





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.





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. We do not intend to engage in
prohibited transactions. We cannot assure you, however, 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 prohibitedtransactions.





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.  At
December 31, 2008, we had invested an aggregate of approximately $55.0 million
in these development or redevelopment projects at various stages of completion
and anticipate that these projects will require an additional $11.7 million to
complete, based on our current plans and estimates.  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 fluctuation 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).





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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 condition 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.





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;





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





·
            properties
      we acquire may fail to achieve within the time frames we project 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, 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.





Competition
for the acquisition of assets and the leasing of properties may impede our
ability to make, or may increase the cost of, these acquisitions and may impair
our future income.





Numerous
commercial developers and real estate companies compete with us in seeking
tenants for our existing properties and properties for acquisition. This
competition may:





·
            reduce
      properties available for
acquisition;





·
            increase
      the cost of properties available for
  acquisition;





·
            reduce
      the rate of return on these
properties;





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·
            reduce
      rents payable to us;





·
            interfere
      with our ability to attract and retain
tenants;





·
            lead
      to increased vacancy rates at our properties;
  and





·
            adversely
      affect 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 Internal Revenue 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 Internal Revenue Code for which not infrequently there are 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 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. In addition, we must make distributions to
stockholders aggregating annually at least 90% of our REIT taxable income,
excluding net capital gains. Under new procedures adopted in 2008 and 2009,
REITs are permitted to pay the distributions required to qualify as a REIT under
the Code in their own stock, rather than cash, subject to certain limitations.
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 Internal Revenue Code.  Although we anticipate that our cash flows
from operating activities will be sufficient to enable us to pay our operating
expenses and meet distribution requirements, no assurance can be given in this
regard.  We may be required to borrow money or sell assets to
distribute enough of our taxable income to satisfy the distribution requirement
and to avoid corporate income tax.





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;





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·
            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
Chairman of the Board and his affiliates are beneficial owners of approximately
57.1% 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.





Chaim
Katzman, the chairman of our board of directors and our largest stockholder, and
his affiliates beneficially own approximately 57.1% 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 almost 63.8% of our outstanding shares with
respect to the election of directors.  Accordingly, Mr. Katzman is
able to exercise significant control 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 control 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.





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





Several
of our affiliated stockholders that beneficially own a significant interest in
our company, 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.





If a
stockholder 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 shall be
      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 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.





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





The
Internal Revenue 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
prohibits any one stockholder from owning (actually or constructively) more than
9.9% in value of the outstanding shares of common stock or of any class or
series of outstanding preferred 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 9.9% 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 9.9% 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 9.9% ownership
limit.  Our board of directors may waive these restrictions on a
case-by-case basis, and it has in the past done so, including for the affiliates
of Chaim Katzman, our chairman of the board.  The 9.9% 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.





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





Our
ability to continue to pay dividends on our common stock at historical 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
      performance of lease terms by
tenants;





·
            the
      terms of our loan covenants; and





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





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 and debt securities.
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
newly adopted procedures of the Internal Revenue Service, REITs are permitted to
pay the distributions required to qualify as a REIT under the Code in common
stock for two years ended December 31, 2009 . If we were to pay all or a portion
of our dividends in stock, there could be an adverse effect on the market price
of our common 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 ownership limit 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, 2011 is 15%, as opposed to the marginal tax rates 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.  That result
could continue to be the case if legislation were to extend the 15% tax rate to
taxable years starting after December 31, 2010.  No legislation,
however, is currently pending in Congress to extend the 15% tax rate on
dividends.





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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.”  A REIT is
domestically controlled if at all times during a specified testing period less
than 50% in value of its stock was held directly or indirectly by non-U.S.
persons.  We cannot assure our stockholders that we will qualify as a
domestically controlled REIT.  If we were to fail to so qualify, 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.





ITEM 1B.
            UNRESOLVED
      STAFF COMMENTS





None.





- 13
-
 Table of Contents





ITEM 2.
            PROPERTIES





Our
portfolio consists primarily of grocery-anchored shopping centers and, at
December 31, 2008, contained an aggregate of approximately 16.4 million square
feet of gross leasable area, or GLA.  Other than our leasehold
interests in 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, all of our properties are owned in fee
simple.  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 – Mortgage Indebtedness.”





The
following table provides a brief description of our properties as of December
31, 2008:




Year
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            Total GLA
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            Average
    annualBuilt /
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            Sq. Ft.
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            Percent
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            base rent
                                                                                                                                                                                                            
                                                                                                                                                                                                            Grocer
    Anchor
                                                                                                                                                                                                            Other
    AnchorsProperty
                                                                                                                                                                                                            
                                                                                                                                                                                                            Renovated
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            at12/31/08
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            Leased
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            per leased
    SF
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            > 10,000 sq.
      ft.ALABAMA
      (2)Madison
      Centre
                                                                                                                                                                                                            
                                                                                                                                                                                                            1997
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            64,837
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            97.5
                                                                                                                                                                                                            %
                                                                                                                                                                                                            
                                                                                                                                                                                                            $
                                                                                                                                                                                                            9.83
                                                                                                                                                                                                            
                                                                                                                                                                                                            Publix
                                                                                                                                                                                                            Rite
      AidWinchester
      Plaza
                                                                                                                                                                                                            
                                                                                                                                                                                                            2006
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            78,544
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            93.6
                                                                                                                                                                                                            %
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            12.22
                                                                                                                                                                                                            
                                                                                                                                                                                                            PublixTOTAL SHOPPING CENTERS ALABAMA
      (2)
                                                                                                                                                                                                            143,381
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            95.4
                                                                                                                                                                                                            %
                                                                                                                                                                                                            
                                                                                                                                                                                                            $
                                                                                                                                                                                                            11.11CONNECTICUT
      (1)Brookside
      Plaza
                                                                                                                                                                                                            
                                                                                                                                                                                                            1985
      / 2006
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            210,588
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            85.4
                                                                                                                                                                                                            %
                                                                                                                                                                                                            
                                                                                                                                                                                                            $
                                                                                                                                                                                                            11.63
                                                                                                                                                                                                            
                                                                                                                                                                                                            Shaw's
                                                                                                                                                                                                            Bed Bath & Beyond / Walgreens /
      StaplesTOTAL SHOPPING CENTERS CONNECTICUT
      (1)
                                                                                                                                                                                                            210,588
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            85.4
                                                                                                                                                                                                            %
                                                                                                                                                                                                            
                                                                                                                                                                                                            $
                                                                                                                                                                                                            11.63FLORIDA
      (80)Orlando
      / Central Florida (10)Alafaya
      Commons
                                                                                                                                                                                                            
                                                                                                                                                                                                            1987
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            126,333
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            95.5
                                                                                                                                                                                                            %
                                                                                                                                                                                                            
                                                                                                                                                                                                            $
                                                                                                                                                                                                            14.11
                                                                                                                                                                                                            
                                                                                                                                                                                                            PublixAlafaya
      Village
                                                                                                                                                                                                            
                                                                                                                                                                                                            1986
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            38,118
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            85.2
                                                                                                                                                                                                            %
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            20.30
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            Metro
      Fitness (shadow)Conway
      Crossing
                                                                                                                                                                                                            
                                                                                                                                                                                                            2002
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            76,321
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            83.4
                                                                                                                                                                                                            %
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            11.52
                                                                                                                                                                                                            
                                                                                                                                                                                                            PublixEastwood,
      Shoppes of
                                                                                                                                                                                                            
                                                                                                                                                                                                            1997
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            69,037
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            100.0
                                                                                                                                                                                                            %
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            12.28
                                                                                                                                                                                                            
                                                                                                                                                                                                            PublixHunter's
      Creek
                                                                                                                                                                                                            
                                                                                                                                                                                                            1998
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            73,204
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            100.0
                                                                                                                                                                                                            %
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            13.85
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            Office
      Depot / Lifestyle Family FitnessKirkman
      Shoppes
                                                                                                                                                                                                            
                                                                                                                                                                                                            1973
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            88,820
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            98.6
                                                                                                                                                                                                            %
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            18.05
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            Party
      AmericaLake
      Mary Centre
                                                                                                                                                                                                            
                                                                                                                                                                                                            1988
      / 2001
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            339,084
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            95.5
                                                                                                                                                                                                            %
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            13.23
                                                                                                                                                                                                            
                                                                                                                                                                                                            Albertsons
                                                                                                                                                                                                            Kmart
      / Lifestyle Fitness Center /    Office
      DepotPark
      Promenade
                                                                                                                                                                                                            
                                                                                                                                                                                                            1987
      / 2000
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            128,848
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            82.0
                                                                                                                                                                                                            %
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            7.76
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            Beauty
      Depot / Orange County LibraryTown
      & Country
                                                                                                                                                                                                            
                                                                                                                                                                                                            1993
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            72,043
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            95.6
                                                                                                                                                                                                            %
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            8.36
                                                                                                                                                                                                            
                                                                                                                                                                                                            Albertsons*(Ross
      Dress For Less)Unigold
      Shopping Center
                                                                                                                                                                                                            
                                                                                                                                                                                                            1987
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            117,527
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            96.3
                                                                                                                                                                                                            %
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            11.72
                                                                                                                                                                                                            
                                                                                                                                                                                                            Winn-Dixie
                                                                                                                                                                                                            Lifestyle
      Family FitnessJacksonville
      / North Florida (8)Atlantic
      Village
                                                                                                                                                                                                            
                                                                                                                                                                                                            1984
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            100,559
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            89.9
                                                                                                                                                                                                            %
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            11.07
                                                                                                                                                                                                            
                                                                                                                                                                                                            Publix
                                                                                                                                                                                                            Jo-Ann
      Fabric & CraftsBeauclerc
      Village
                                                                                                                                                                                                            
                                                                                                                                                                                                            1962
      / 1988
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            70,429
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            92.1
                                                                                                                                                                                                            %
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            9.24
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            Big
      Lots / Goodwill / Bealls OutletForest
      Village
                                                                                                                                                                                                            
                                                                                                                                                                                                            2000
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            71,526
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            86.7
                                                                                                                                                                                                            %
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            10.76
                                                                                                                                                                                                            
                                                                                                                                                                                                            PublixFt.
      Caroline
                                                                                                                                                                                                            
                                                                                                                                                                                                            1985
      / 1995
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            74,546
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            87.0
                                                                                                                                                                                                            %
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            7.27
                                                                                                                                                                                                            
                                                                                                                                                                                                            Winn-Dixie
                                                                                                                                                                                                            Citi
      TrendsMedical
      & Merchants
                                                                                                                                                                                                            
                                                                                                                                                                                                            1993
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            156,153
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            91.6
                                                                                                                                                                                                            %
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            13.20
                                                                                                                                                                                                            
                                                                                                                                                                                                            Publix
                                                                                                                                                                                                            Memorial
      HospitalMiddle
      Beach
                                                                                                                                                                                                            
                                                                                                                                                                                                            1994
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            69,277
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            98.7
                                                                                                                                                                                                            %
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            9.75
                                                                                                                                                                                                            
                                                                                                                                                                                                            PublixOak
      Hill
                                                                                                                                                                                                            
                                                                                                                                                                                                            1985
      / 1997
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            78,492
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            94.3
                                                                                                                                                                                                            %
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            7.44
                                                                                                                                                                                                            
                                                                                                                                                                                                            Publix
                                                                                                                                                                                                            Beall'sSouth
      Beach**
                                                                                                                                                                                                            
                                                                                                                                                                                                            1990
      / 1991
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            303,048
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            96.7
                                                                                                                                                                                                            %
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            12.64
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            Beall's
      / Bed Bath & Beyond / Home Depot / Stein Mart/
  Staples





- 14
-
 Table of Contents





Year
                                                
                                                
                                                Total GLA
                                                
                                                
                                                
                                                
                                                
                                                Average
    annualBuilt /
                                                
                                                
                                                Sq. Ft.
                                                
                                                
                                                Percent
                                                
                                                
                                                base rent
                                                
                                                Grocer
    Anchor
                                                Other
    AnchorsProperty
                                                
                                                Renovated
                                                
                                                
                                                at12/31/08
                                                
                                                
                                                Leased
                                                
                                                
                                                per leased
    SF
                                                
                                                
                                                > 10,000 sq.
      ft.Miami-Dade
      / Broward / Palm Beach (34)Bird
      Ludlum
                                                
                                                1988
      / 1998
                                                
                                                
                                                
                                                192,282
                                                
                                                
                                                
                                                96.3
                                                %
                                                
                                                $
                                                16.88
                                                
                                                Winn-Dixie
                                                CVS
      Pharmacy / Bird Executive / GoodwillBoca
      Village
                                                
                                                1978
                                                
                                                
                                                
                                                93,428
                                                
                                                
                                                
                                                92.2
                                                %
                                                
                                                
                                                16.13
                                                
                                                Publix
      Greenwise
                                                CVS
      PharmacyBoynton
      Plaza
                                                
                                                1978
      / 1999
                                                
                                                
                                                
                                                99,324
                                                
                                                
                                                
                                                93.8
                                                %
                                                
                                                
                                                13.35
                                                
                                                Publix
                                                CVS
      PharmacyBluffs
      Square
                                                
                                                1986
                                                
                                                
                                                
                                                132,395
                                                
                                                
                                                
                                                90.2
                                                %
                                                
                                                
                                                13.77
                                                
                                                Publix
                                                WalgreensChapel
      Trail
                                                
                                                2007
                                                
                                                
                                                
                                                56,378
                                                
                                                
                                                
                                                97.2
                                                %
                                                
                                                
                                                22.02
                                                
                                                
                                                LA
      FitnessCoral
      Reef Shopping Center
                                                
                                                1968
      / 1990
                                                
                                                
                                                
                                                74,680
                                                
                                                
                                                
                                                100.0
                                                %
                                                
                                                
                                                19.40
                                                
                                                
                                                Office
      Depot / Walgreen'sCountryside
      Shops
                                                
                                                1986
      / 1988 / 1991
                                                
                                                
                                                
                                                179,561
                                                
                                                
                                                
                                                99.3
                                                %
                                                
                                                
                                                13.84
                                                
                                                Publix
                                                CVS
      Pharmacy / Stein MartCrossroads
      Square
                                                
                                                1973
                                                
                                                
                                                
                                                84,387
                                                
                                                
                                                
                                                73.6
                                                %
                                                
                                                
                                                17.90
                                                
                                                
                                                CVS
      PharmacyCVS
      Plaza
                                                
                                                2004
                                                
                                                
                                                
                                                29,204
                                                
                                                
                                                
                                                91.1
                                                %
                                                
                                                
                                                17.35
                                                
                                                
                                                CVS
      PharmacyEl
      Novillo
                                                
                                                1970
      / 2000
                                                
                                                
                                                
                                                10,000
                                                
                                                
                                                
                                                100.0
                                                %
                                                
                                                
                                                22.05
                                                
                                                
                                                Jumbo
      BuffetGreenwood
                                                
                                                1982
      / 1994
                                                
                                                
                                                
                                                132,325
                                                
                                                
                                                
                                                89.0
                                                %
                                                
                                                
                                                12.73
                                                
                                                Publix
                                                Bealls
      OutletJonathan's
      Landing
                                                
                                                1997
                                                
                                                
                                                
                                                26,820
                                                
                                                
                                                
                                                68.3
                                                %
                                                
                                                
                                                23.00
                                                
                                                Publix(shadow)Lago
      Mar
                                                
                                                1995
                                                
                                                
                                                
                                                82,613
                                                
                                                
                                                
                                                92.4
                                                %
                                                
                                                
                                                14.14
                                                
                                                PublixLantana
      Village
                                                
                                                1976
      / 1999
                                                
                                                
                                                
                                                181,780
                                                
                                                
                                                
                                                95.5
                                                %
                                                
                                                
                                                7.21
                                                
                                                Winn-Dixie
                                                Kmart
      / Rite Aid* (Family Dollar)Meadows
                                                
                                                1997
                                                
                                                
                                                
                                                75,524
                                                
                                                
                                                
                                                98.7
                                                %
                                                
                                                
                                                13.92
                                                
                                                PublixOakbrook
      Square
                                                
                                                1974
      / 2000 / 2003
                                                
                                                
                                                
                                                199,633
                                                
                                                
                                                
                                                94.4
                                                %
                                                
                                                
                                                14.56
                                                
                                                Publix
                                                Stein
      Mart / TJ Maxx / Home Goods / CVS / Basset Furniture /
    Duffy'sOaktree
      Plaza
                                                
                                                1985
                                                
                                                
                                                
                                                23,745
                                                
                                                
                                                
                                                82.0
                                                %
                                                
                                                
                                                16.20Pine
      Island
                                                
                                                1983
      / 1999
                                                
                                                
                                                
                                                254,907
                                                
                                                
                                                
                                                93.4
                                                %
                                                
                                                
                                                11.63
                                                
                                                Publix
                                                Home
      Depot Expo / StaplesPine
      Ridge Square
                                                
                                                1986
      / 1998 / 1999
                                                
                                                
                                                
                                                117,399
                                                
                                                
                                                
                                                92.3
                                                %
                                                
                                                
                                                14.73
                                                
                                                Fresh
      Market
                                                Bed
      Bath & Beyond / Nordic InteriorsPlaza
      Alegre
                                                
                                                2003
                                                
                                                
                                                
                                                91,611
                                                
                                                
                                                
                                                96.1
                                                %
                                                
                                                
                                                15.98
                                                
                                                Publix
                                                GoodwillPoint
      Royale
                                                
                                                1970
      / 2000
                                                
                                                
                                                
                                                216,760
                                                
                                                
                                                
                                                96.9
                                                %
                                                
                                                
                                                7.42
                                                
                                                Winn-Dixie
                                                Best
      BuyProsperity
      Centre
                                                
                                                1993
                                                
                                                
                                                
                                                122,014
                                                
                                                
                                                
                                                96.6
                                                %
                                                
                                                
                                                18.06
                                                
                                                
                                                Office
      Depot / CVS / Bed Bath & Beyond /  TJ
MaxxRidge
      Plaza
                                                
                                                1984
      / 1999
                                                
                                                
                                                
                                                155,204
                                                
                                                
                                                
                                                99.6
                                                %
                                                
                                                
                                                11.49
                                                
                                                
                                                AMC
      Theater / Kabooms / Wachovia* (United Collection) / Round Up/
      GoodwillRiverside
      Square
                                                
                                                1987
                                                
                                                
                                                
                                                104,241
                                                
                                                
                                                
                                                84.3
                                                %
                                                
                                                
                                                13.53
                                                
                                                PublixSawgrass
      Promenade
                                                
                                                1982
      / 1998
                                                
                                                
                                                
                                                107,092
                                                
                                                
                                                
                                                87.6
                                                %
                                                
                                                
                                                11.58
                                                
                                                Publix
                                                WalgreensSheridan
      Plaza
                                                
                                                1973
      / 1991
                                                
                                                
                                                
                                                504,495
                                                
                                                
                                                
                                                95.8
                                                %
                                                
                                                
                                                14.17
                                                
                                                Publix
                                                Kohl's
      / Ross / Bed Bath & Beyond / Office Depot / LA Fitness / USA Baby
      & Child Space / Assoc. in NeurologyShoppes
      of Andros Isles
                                                
                                                2000
                                                
                                                
                                                
                                                79,420
                                                
                                                
                                                
                                                91.2
                                                %
                                                
                                                
                                                12.82
                                                
                                                PublixShoppes
      of Silverlakes
                                                
                                                1995
      / 1997
                                                
                                                
                                                
                                                126,788
                                                
                                                
                                                
                                                95.9
                                                %
                                                
                                                
                                                17.69
                                                
                                                PublixShops
      at Skylake
                                                
                                                1999
      / 2005 / 2006
                                                
                                                
                                                
                                                283,943
                                                
                                                
                                                
                                                99.7
                                                %
                                                
                                                
                                                16.13
                                                
                                                Publix
                                                TJMaxx
      / LA Fitness / GoodwillTamarac
      Town Square
                                                
                                                1987
                                                
                                                
                                                
                                                127,635
                                                
                                                
                                                
                                                84.2
                                                %
                                                
                                                
                                                11.26
                                                
                                                Publix
                                                Dollar
      TreeWaterstone
                                                
                                                2005
                                                
                                                
                                                
                                                82,531
                                                
                                                
                                                
                                                97.9
                                                %
                                                
                                                
                                                15.06
                                                
                                                Publix
                                                WalgreensWest
      Lakes Plaza
                                                
                                                1984
      / 2000
                                                
                                                
                                                
                                                100,747
                                                
                                                
                                                
                                                100.0
                                                %
                                                
                                                
                                                12.58
                                                
                                                Winn-Dixie
                                                Navarro
      PharmacyWestport
      Plaza
                                                
                                                2002
                                                
                                                
                                                
                                                49,533
                                                
                                                
                                                
                                                100.0
                                                %
                                                
                                                
                                                18.07
                                                
                                                PublixYoung
      Circle
                                                
                                                1962
      / 1997
                                                
                                                
                                                
                                                65,834
                                                
                                                
                                                
                                                93.6
                                                %
                                                
                                                
                                                15.41
                                                
                                                Publix
                                                Walgreens




- 15
-
 Table of Contents





Year
                                                                            
                                                                            
                                                                            Total GLA
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            Average
    annualBuilt /
                                                                            
                                                                            
                                                                            Sq. Ft.
                                                                            
                                                                            
                                                                            Percent
                                                                            
                                                                            
                                                                            base rent
                                                                            
                                                                            Grocer
    Anchor
                                                                            Other
    AnchorsProperty
                                                                            
                                                                            Renovated
                                                                            
                                                                            
                                                                            at12/31/08
                                                                            
                                                                            
                                                                            Leased
                                                                            
                                                                            
                                                                            per leased
    SF
                                                                            
                                                                            
                                                                            > 10,000 sq.
      ft.Florida
      Treasure / Northeast Coast (8)Cashmere
      Corners
                                                                            
                                                                            2001
                                                                            
                                                                            
                                                                            
                                                                            92,734
                                                                            
                                                                            
                                                                            
                                                                            96.0
                                                                            %
                                                                            
                                                                            $
                                                                            9.50
                                                                            
                                                                            AlbertsonsNew
      Smyrna Beach
                                                                            
                                                                            1987
                                                                            
                                                                            
                                                                            
                                                                            118,451
                                                                            
                                                                            
                                                                            
                                                                            100.0
                                                                            %
                                                                            
                                                                            
                                                                            11.57
                                                                            
                                                                            Publix
                                                                            Bealls
      OutletOld
      King Commons
                                                                            
                                                                            1988
                                                                            
                                                                            
                                                                            
                                                                            84,759
                                                                            
                                                                            
                                                                            
                                                                            94.7
                                                                            %
                                                                            
                                                                            
                                                                            8.61
                                                                            
                                                                            
                                                                            Wal-Mart
      / Staples / Bealls OutletRyanwood
                                                                            
                                                                            1987
                                                                            
                                                                            
                                                                            
                                                                            114,925
                                                                            
                                                                            
                                                                            
                                                                            96.3
                                                                            %
                                                                            
                                                                            
                                                                            11.33
                                                                            
                                                                            Publix
                                                                            Bealls
      Outlet / Books-A-MillionSalerno
      Village
                                                                            
                                                                            1987
                                                                            
                                                                            
                                                                            
                                                                            82,477
                                                                            
                                                                            
                                                                            
                                                                            92.8
                                                                            %
                                                                            
                                                                            
                                                                            10.72
                                                                            
                                                                            Winn-Dixie
                                                                            CVS
      PharmacyShops
      at St. Lucie
                                                                            
                                                                            2006
                                                                            
                                                                            
                                                                            
                                                                            19,361
                                                                            
                                                                            
                                                                            
                                                                            100.0
                                                                            %
                                                                            
                                                                            
                                                                            22.87South
      Point Center
                                                                            
                                                                            2003
                                                                            
                                                                            
                                                                            
                                                                            64,790
                                                                            
                                                                            
                                                                            
                                                                            90.3
                                                                            %
                                                                            
                                                                            
                                                                            15.61
                                                                            
                                                                            PublixTreasure
      Coast
                                                                            
                                                                            1983
                                                                            
                                                                            
                                                                            
                                                                            133,781
                                                                            
                                                                            
                                                                            
                                                                            97.2
                                                                            %
                                                                            
                                                                            
                                                                            11.63
                                                                            
                                                                            Publix
                                                                            TJ
      MaxxTampa
      / St. Petersburg / Venice / Cape Coral / Naples (20)Bay
      Pointe Plaza
                                                                            
                                                                            1984
      / 2002
                                                                            
                                                                            
                                                                            
                                                                            103,986
                                                                            
                                                                            
                                                                            
                                                                            95.6
                                                                            %
                                                                            
                                                                            
                                                                            10.12
                                                                            
                                                                            Publix
                                                                            Bealls
      OutletCarrollwood
                                                                            
                                                                            1970
      / 2002
                                                                            
                                                                            
                                                                            
                                                                            94,203
                                                                            
                                                                            
                                                                            
                                                                            92.9
                                                                            %
                                                                            
                                                                            
                                                                            13.32
                                                                            
                                                                            Publix
                                                                            Golf
      LockerCharlotte
      Square
                                                                            
                                                                            1980
                                                                            
                                                                            
                                                                            
                                                                            96,188
                                                                            
                                                                            
                                                                            
                                                                            82.3
                                                                            %
                                                                            
                                                                            
                                                                            8.43
                                                                            
                                                                            Publix*
                                                                            Seafood
      Buffet(American
      Signature Furniture)Chelsea
      Place
                                                                            
                                                                            1992
                                                                            
                                                                            
                                                                            
                                                                            81,144
                                                                            
                                                                            
                                                                            
                                                                            96.5
                                                                            %
                                                                            
                                                                            
                                                                            11.73
                                                                            
                                                                            PublixDolphin
      Village
                                                                            
                                                                            1967/1990
                                                                            
                                                                            
                                                                            
                                                                            138,129
                                                                            
                                                                            
                                                                            
                                                                            75.5
                                                                            %
                                                                            
                                                                            
                                                                            11.34
                                                                            
                                                                            Publix
                                                                            Dollar
      Tree / CVSLake
      St. Charles
                                                                            
                                                                            1999
                                                                            
                                                                            
                                                                            
                                                                            57,015
                                                                            
                                                                            
                                                                            
                                                                            100.0
                                                                            %
                                                                            
                                                                            
                                                                            9.78
                                                                            
                                                                            Sweet
      BayLutz
      Lake
                                                                            
                                                                            2002
                                                                            
                                                                            
                                                                            
                                                                            64,985
                                                                            
                                                                            
                                                                            
                                                                            95.8
                                                                            %
                                                                            
                                                                            
                                                                            13.91
                                                                            
                                                                            PublixMarco
      Town Center
                                                                            
                                                                            2001
                                                                            
                                                                            
                                                                            
                                                                            109,830
                                                                            
                                                                            
                                                                            
                                                                            86.8
                                                                            %
                                                                            
                                                                            
                                                                            17.71
                                                                            
                                                                            PublixMariners
      Crossing
                                                                            
                                                                            1989
      / 1999
                                                                            
                                                                            
                                                                            
                                                                            97,812
                                                                            
                                                                            
                                                                            
                                                                            91.9
                                                                            %
                                                                            
                                                                            
                                                                            10.53
                                                                            
                                                                            Sweet
      BayMidpoint
      Center
                                                                            
                                                                            2002
                                                                            
                                                                            
                                                                            
                                                                            75,386
                                                                            
                                                                            
                                                                            
                                                                            100.0
                                                                            %
                                                                            
                                                                            
                                                                            12.24
                                                                            
                                                                            PublixPavilion
                                                                            
                                                                            1982
                                                                            
                                                                            
                                                                            
                                                                            167,745
                                                                            
                                                                            
                                                                            
                                                                            90.3
                                                                            %
                                                                            
                                                                            
                                                                            13.49
                                                                            
                                                                            Publix
                                                                            Pavilion
      6 TheatreRegency
      Crossing
                                                                            
                                                                            1986
      / 2001
                                                                            
                                                                            
                                                                            
                                                                            85,864
                                                                            
                                                                            
                                                                            
                                                                            81.6
                                                                            %
                                                                            
                                                                            
                                                                            10.13
                                                                            
                                                                            PublixRoss
      Plaza
                                                                            
                                                                            1984
      / 1996
                                                                            
                                                                            
                                                                            
                                                                            90,826
                                                                            
                                                                            
                                                                            
                                                                            95.3
                                                                            %
                                                                            
                                                                            
                                                                            12.15
                                                                            
                                                                            
                                                                            Ross
      Dress for Less / DealsSeven
      Hills
                                                                            
                                                                            1991
                                                                            
                                                                            
                                                                            
                                                                            72,590
                                                                            
                                                                            
                                                                            
                                                                            89.5
                                                                            %
                                                                            
                                                                            
                                                                            10.64
                                                                            
                                                                            PublixShoppes
      of North Port
                                                                            
                                                                            1991
                                                                            
                                                                            
                                                                            
                                                                            84,705
                                                                            
                                                                            
                                                                            
                                                                            96.1
                                                                            %
                                                                            
                                                                            
                                                                            10.35
                                                                            
                                                                            Publix
                                                                            Bealls
      OutletSummerlin
      Square
                                                                            
                                                                            1986
      / 1998
                                                                            
                                                                            
                                                                            
                                                                            109,156
                                                                            
                                                                            
                                                                            
                                                                            77.0
                                                                            %
                                                                            
                                                                            
                                                                            10.94
                                                                            
                                                                            Winn-Dixie
                                                                            Lee
      County Sheriff's OfficeSunpoint
      Shopping Center
                                                                            
                                                                            1984
                                                                            
                                                                            
                                                                            
                                                                            132,374
                                                                            
                                                                            
                                                                            
                                                                            60.0
                                                                            %
                                                                            
                                                                            
                                                                            9.11
                                                                            
                                                                            
                                                                            Goodwill
      / Ozzie's Buffet / Big LotsVenice
      Plaza
                                                                            
                                                                            1971
      / 1979 / 1999
                                                                            
                                                                            
                                                                            
                                                                            132,345
                                                                            
                                                                            
                                                                            
                                                                            98.7
                                                                            %
                                                                            
                                                                            
                                                                            6.04
                                                                            
                                                                            Sweet
      Bay
                                                                            TJ
      Maxx / BlockbusterVenice
      Shopping Center
                                                                            
                                                                            1968
      / 2000
                                                                            
                                                                            
                                                                            
                                                                            109,801
                                                                            
                                                                            
                                                                            
                                                                            92.7
                                                                            %
                                                                            
                                                                            
                                                                            5.53
                                                                            
                                                                            Publix
                                                                            Beall's
      OutletWalden
      Woods
                                                                            
                                                                            1985
      / 1998 / 2003
                                                                            
                                                                            
                                                                            
                                                                            75,874
                                                                            
                                                                            
                                                                            
                                                                            93.1
                                                                            %
                                                                            
                                                                            
                                                                            8.11
                                                                            
                                                                            
                                                                            Dollar
      Tree / Aaron Rents / Dollar GeneralTOTAL SHOPPING CENTERS FLORIDA
      (80)
                                                                            9,008,834
                                                                            
                                                                            
                                                                            
                                                                            92.9
                                                                            %
                                                                            
                                                                            $
                                                                            12.66




- 16
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 Table of Contents





Year
                                                                                    
                                                                                    
                                                                                    Total GLA
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    Average
    annualBuilt /
                                                                                    
                                                                                    
                                                                                    Sq. Ft.
                                                                                    
                                                                                    
                                                                                    Percent
                                                                                    
                                                                                    
                                                                                    base rent
                                                                                    
                                                                                    Grocer
    Anchor
                                                                                    Other
    AnchorsProperty
                                                                                    
                                                                                    Renovated
                                                                                    
                                                                                    
                                                                                    at12/31/08
                                                                                    
                                                                                    
                                                                                    Leased
                                                                                    
                                                                                    
                                                                                    per leased
    SF
                                                                                    
                                                                                    
                                                                                    > 10,000 sq.
      ft.GEORGIA
      (24)Atlanta
      (20)BridgeMill
                                                                                    
                                                                                    2000
                                                                                    
                                                                                    
                                                                                    
                                                                                    89,102
                                                                                    
                                                                                    
                                                                                    
                                                                                    94.3
                                                                                    %
                                                                                    
                                                                                    $
                                                                                    15.45
                                                                                    
                                                                                    PublixBuckhead
      Station
                                                                                    
                                                                                    1996
                                                                                    
                                                                                    
                                                                                    
                                                                                    233,930
                                                                                    
                                                                                    
                                                                                    
                                                                                    89.7
                                                                                    %
                                                                                    
                                                                                    
                                                                                    19.74
                                                                                    
                                                                                    
                                                                                    Bed
      Bath & Beyond / TJ Maxx / Old Navy / Toys R Us / DSW / Golfsmith /
      Ulta 3Butler
      Creek
                                                                                    
                                                                                    1990
                                                                                    
                                                                                    
                                                                                    
                                                                                    95,597
                                                                                    
                                                                                    
                                                                                    
                                                                                    93.5
                                                                                    %
                                                                                    
                                                                                    
                                                                                    10.87
                                                                                    
                                                                                    KrogerChastain
      Square
                                                                                    
                                                                                    1981
      / 2001
                                                                                    
                                                                                    
                                                                                    
                                                                                    91,637
                                                                                    
                                                                                    
                                                                                    
                                                                                    98.7
                                                                                    %
                                                                                    
                                                                                    
                                                                                    17.85
                                                                                    
                                                                                    PublixCommerce
      Crossing
                                                                                    
                                                                                    1988
                                                                                    
                                                                                    
                                                                                    
                                                                                    100,668
                                                                                    
                                                                                    
                                                                                    
                                                                                    62.4
                                                                                    %
                                                                                    
                                                                                    
                                                                                    4.78
                                                                                    
                                                                                    Ingles
                                                                                    Fred's
      StoreDouglas
      Commons
                                                                                    
                                                                                    1988
                                                                                    
                                                                                    
                                                                                    
                                                                                    97,027
                                                                                    
                                                                                    
                                                                                    
                                                                                    96.0
                                                                                    %
                                                                                    
                                                                                    
                                                                                    10.36
                                                                                    
                                                                                    KrogerFairview
      Oaks
                                                                                    
                                                                                    1997
                                                                                    
                                                                                    
                                                                                    
                                                                                    77,052
                                                                                    
                                                                                    
                                                                                    
                                                                                    93.9
                                                                                    %
                                                                                    
                                                                                    
                                                                                    11.24
                                                                                    
                                                                                    KrogerGrassland
      Crossing
                                                                                    
                                                                                    1996
                                                                                    
                                                                                    
                                                                                    
                                                                                    90,906
                                                                                    
                                                                                    
                                                                                    
                                                                                    97.3
                                                                                    %
                                                                                    
                                                                                    
                                                                                    11.70
                                                                                    
                                                                                    KrogerHairston
      Center
                                                                                    
                                                                                    2000
                                                                                    
                                                                                    
                                                                                    
                                                                                    13,000
                                                                                    
                                                                                    
                                                                                    
                                                                                    46.2
                                                                                    %
                                                                                    
                                                                                    
                                                                                    14.66Hamilton
      Ridge
                                                                                    
                                                                                    2002
                                                                                    
                                                                                    
                                                                                    
                                                                                    90,996
                                                                                    
                                                                                    
                                                                                    
                                                                                    83.6
                                                                                    %
                                                                                    
                                                                                    
                                                                                    11.87
                                                                                    
                                                                                    KrogerMableton
      Crossing
                                                                                    
                                                                                    1997
                                                                                    
                                                                                    
                                                                                    
                                                                                    86,819
                                                                                    
                                                                                    
                                                                                    
                                                                                    98.1
                                                                                    %
                                                                                    
                                                                                    
                                                                                    10.70
                                                                                    
                                                                                    KrogerMacland
      Pointe
                                                                                    
                                                                                    1992-93
                                                                                    
                                                                                    
                                                                                    
                                                                                    79,699
                                                                                    
                                                                                    
                                                                                    
                                                                                    98.5
                                                                                    %
                                                                                    
                                                                                    
                                                                                    10.14
                                                                                    
                                                                                    PublixMarket
      Place
                                                                                    
                                                                                    1976
                                                                                    
                                                                                    
                                                                                    
                                                                                    77,706
                                                                                    
                                                                                    
                                                                                    
                                                                                    89.4
                                                                                    %
                                                                                    
                                                                                    
                                                                                    12.40
                                                                                    
                                                                                    
                                                                                    Galaxy
      CinemaPaulding
      Commons
                                                                                    
                                                                                    1991
                                                                                    
                                                                                    
                                                                                    
                                                                                    192,391
                                                                                    
                                                                                    
                                                                                    
                                                                                    94.9
                                                                                    %
                                                                                    
                                                                                    
                                                                                    8.02
                                                                                    
                                                                                    Kroger
                                                                                    KmartPiedmont
      Peachtree Crossing
                                                                                    
                                                                                    1978
      / 1998
                                                                                    
                                                                                    
                                                                                    
                                                                                    152,239
                                                                                    
                                                                                    
                                                                                    
                                                                                    100.0
                                                                                    %
                                                                                    
                                                                                    
                                                                                    17.02
                                                                                    
                                                                                    Kroger
                                                                                    Cost
      Plus Store / Binders Art SuppliesPowers
      Ferry Plaza
                                                                                    
                                                                                    1979
      / 1987 / 1998
                                                                                    
                                                                                    
                                                                                    
                                                                                    86,473
                                                                                    
                                                                                    
                                                                                    
                                                                                    90.4
                                                                                    %
                                                                                    
                                                                                    
                                                                                    9.89
                                                                                    
                                                                                    
                                                                                    Micro
      CenterShops
      of Huntcrest
                                                                                    
                                                                                    2003
                                                                                    
                                                                                    
                                                                                    
                                                                                    97,040
                                                                                    
                                                                                    
                                                                                    
                                                                                    92.8
                                                                                    %
                                                                                    
                                                                                    
                                                                                    13.76
                                                                                    
                                                                                    PublixShops
      of Westridge
                                                                                    
                                                                                    2006
                                                                                    
                                                                                    
                                                                                    
                                                                                    66,297
                                                                                    
                                                                                    
                                                                                    
                                                                                    85.2
                                                                                    %
                                                                                    
                                                                                    
                                                                                    13.88
                                                                                    
                                                                                    PublixWesley
      Chapel
                                                                                    
                                                                                    1989
                                                                                    
                                                                                    
                                                                                    
                                                                                    170,792
                                                                                    
                                                                                    
                                                                                    
                                                                                    63.7
                                                                                    %
                                                                                    
                                                                                    
                                                                                    6.02
                                                                                    
                                                                                    Ingles*
                                                                                    CVS
      Pharmacy / Corinthian CollegeWilliamsburg
      @ Dunwoody
                                                                                    
                                                                                    1983
                                                                                    
                                                                                    
                                                                                    
                                                                                    44,928
                                                                                    
                                                                                    
                                                                                    
                                                                                    100.0
                                                                                    %
                                                                                    
                                                                                    
                                                                                    20.12Central
      / South Georgia (4)Daniel
      Village
                                                                                    
                                                                                    1956
      / 1997
                                                                                    
                                                                                    
                                                                                    
                                                                                    171,932
                                                                                    
                                                                                    
                                                                                    
                                                                                    94.2
                                                                                    %
                                                                                    
                                                                                    
                                                                                    8.65
                                                                                    
                                                                                    Bi-Lo
                                                                                    St.
      Joseph Home Health CareMcAlpin
      Square
                                                                                    
                                                                                    1979
                                                                                    
                                                                                    
                                                                                    
                                                                                    176,807
                                                                                    
                                                                                    
                                                                                    
                                                                                    87.1
                                                                                    %
                                                                                    
                                                                                    
                                                                                    8.00
                                                                                    
                                                                                    Kroger
                                                                                    Big
      Lots /  U.S Post OfficeSpalding
      Village
                                                                                    
                                                                                    1989
                                                                                    
                                                                                    
                                                                                    
                                                                                    235,318
                                                                                    
                                                                                    
                                                                                    
                                                                                    67.8
                                                                                    %
                                                                                    
                                                                                    
                                                                                    7.99
                                                                                    
                                                                                    Kroger
                                                                                    JC
      Penney* / Blockbuster / Fred's StoreWalton
      Plaza
                                                                                    
                                                                                    1990
                                                                                    
                                                                                    
                                                                                    
                                                                                    43,460
                                                                                    
                                                                                    
                                                                                    
                                                                                    97.2
                                                                                    %
                                                                                    
                                                                                    
                                                                                    10.24
                                                                                    
                                                                                    Harris Teeter* (Omni
    Fitness)TOTAL SHOPPING CENTERS GEORGIA
      (24)
                                                                                    2,661,816
                                                                                    
                                                                                    
                                                                                    
                                                                                    87.8
                                                                                    %
                                                                                    
                                                                                    $
                                                                                    11.75LOUISIANA
      (14)Ambassador
      Row
                                                                                    
                                                                                    1980
      / 1991
                                                                                    
                                                                                    
                                                                                    
                                                                                    193,978
                                                                                    
                                                                                    
                                                                                    
                                                                                    69.7
                                                                                    %
                                                                                    
                                                                                    $
                                                                                    10.25
                                                                                    
                                                                                    
                                                                                    Conn's
      Appliances / Big Lots / Chuck E CheeseAmbassador
      Row Courtyard
                                                                                    
                                                                                    1986
      / 1991 / 2005
                                                                                    
                                                                                    
                                                                                    
                                                                                    146,697
                                                                                    
                                                                                    
                                                                                    
                                                                                    100.0
                                                                                    %
                                                                                    
                                                                                    
                                                                                    10.19
                                                                                    
                                                                                    
                                                                                    Bed
      Bath & Beyond / Marshall's / Hancock Fabrics / United Training Academy
      / Tuesday MorningBluebonnet
      Village
                                                                                    
                                                                                    1983
                                                                                    
                                                                                    
                                                                                    
                                                                                    101,623
                                                                                    
                                                                                    
                                                                                    
                                                                                    98.0
                                                                                    %
                                                                                    
                                                                                    
                                                                                    11.87
                                                                                    
                                                                                    Matherne's
                                                                                    Office
      DepotBoulevard
                                                                                    
                                                                                    1976
      / 1994
                                                                                    
                                                                                    
                                                                                    
                                                                                    68,012
                                                                                    
                                                                                    
                                                                                    
                                                                                    98.4
                                                                                    %
                                                                                    
                                                                                    
                                                                                    8.71
                                                                                    
                                                                                    
                                                                                    Piccadilly
      / Harbor Freight Tools / Golfballs.comCountry
      Club Plaza
                                                                                    
                                                                                    1982
      / 1994
                                                                                    
                                                                                    
                                                                                    
                                                                                    64,686
                                                                                    
                                                                                    
                                                                                    
                                                                                    95.2
                                                                                    %
                                                                                    
                                                                                    
                                                                                    6.51
                                                                                    
                                                                                    Winn-DixieCrossing
                                                                                    
                                                                                    1988
      / 1993
                                                                                    
                                                                                    
                                                                                    
                                                                                    114,806
                                                                                    
                                                                                    
                                                                                    
                                                                                    99.0
                                                                                    %
                                                                                    
                                                                                    
                                                                                    5.87
                                                                                    
                                                                                    Save
      A Center
                                                                                    A-1
      Home Appliance /
Piccadilly




- 17
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 Table of Contents





Year
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              Total GLA
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              Average
    annualBuilt /
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              Sq. Ft.
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              Percent
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              base rent
                                                                                                                                                              
                                                                                                                                                              Grocer
    Anchor
                                                                                                                                                              Other
    AnchorsProperty
                                                                                                                                                              
                                                                                                                                                              Renovated
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              at12/31/08
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              Leased
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              per leased
    SF
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              > 10,000 sq.
      ft.Elmwood
      Oaks
                                                                                                                                                              
                                                                                                                                                              1989
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              133,995
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              100.0
                                                                                                                                                              %
                                                                                                                                                              
                                                                                                                                                              $
                                                                                                                                                              9.91
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              Academy
      Sports / Dollar Tree / Home DécorGrand
      Marche (ground lease)
                                                                                                                                                              
                                                                                                                                                              1969
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              200,585
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              100.0
                                                                                                                                                              %
                                                                                                                                                              
                                                                                                                                                              NA
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              Grand
      MarchePlaza
      Acadienne
                                                                                                                                                              
                                                                                                                                                              1980
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              105,419
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              54.2
                                                                                                                                                              %
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              4.24
                                                                                                                                                              
                                                                                                                                                              Super
      1 Store
                                                                                                                                                              Fred's
      StoreSherwood
      South
                                                                                                                                                              
                                                                                                                                                              1972
      / 1988 / 1992
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              77,107
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              86.0
                                                                                                                                                              %
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              6.24
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              Burke's
      Outlet / Harbor Freight Tools / Fred's StoreSiegen
      Village
                                                                                                                                                              
                                                                                                                                                              1988
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              170,416
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              98.7
                                                                                                                                                              %
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              8.88
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              Office
      Depot / Big Lots / Dollar Tree / Stage / Party CityTarpon
      Heights
                                                                                                                                                              
                                                                                                                                                              1982
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              56,605
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              72.9
                                                                                                                                                              %
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              4.72
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              Stage
      / Dollar GeneralVillage
      at Northshore
                                                                                                                                                              
                                                                                                                                                              1988
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              144,638
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              98.9
                                                                                                                                                              %
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              8.69
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              Marshalls
      / Dollar Tree / Kirschman's* / Bed Bath & Beyond / Office
      DepotWal-Mart
      Mathews
                                                                                                                                                              
                                                                                                                                                              1985
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              54,223
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              100.0
                                                                                                                                                              %
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              2.90
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              Wal-Mart*TOTAL SHOPPING CENTERS LOUISIANA
      (14)
                                                                                                                                                              1,632,790
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              91.2
                                                                                                                                                              %
                                                                                                                                                              
                                                                                                                                                              $
                                                                                                                                                              8.38MASSACHUSETTS
      (7)Cambridge
      Star Market
                                                                                                                                                              
                                                                                                                                                              1953
      / 1997
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              66,108
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              100.0
                                                                                                                                                              %
                                                                                                                                                              
                                                                                                                                                              $
                                                                                                                                                              26.89
                                                                                                                                                              
                                                                                                                                                              Star
      MarketMedford
      Shaw's Supermarket
                                                                                                                                                              
                                                                                                                                                              1995
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              62,656
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              100.0
                                                                                                                                                              %
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              23.94
                                                                                                                                                              
                                                                                                                                                              Shaw'sPlymouth
      Shaw's Supermarket
                                                                                                                                                              
                                                                                                                                                              1993
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              59,726
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              100.0
                                                                                                                                                              %
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              17.77
                                                                                                                                                              
                                                                                                                                                              Shaw'sQuincy
      Star Market
                                                                                                                                                              
                                                                                                                                                              1965
      / 1995
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              100,741
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              100.0
                                                                                                                                                              %
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              17.36
                                                                                                                                                              
                                                                                                                                                              Star
      MarketSwampscott
      Whole Foods
                                                                                                                                                              
                                                                                                                                                              1967
      / 2005
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              35,907
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              100.0
                                                                                                                                                              %
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              22.89
                                                                                                                                                              
                                                                                                                                                              Whole
      FoodsWebster
      Plaza
                                                                                                                                                              
                                                                                                                                                              1963
      / 1998
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              199,425
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              100.0
                                                                                                                                                              %
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              7.99
                                                                                                                                                              
                                                                                                                                                              Shaw's
                                                                                                                                                              K
      Mart / Family Dollar / Dollar TreeWest
      Roxbury Shaw's Plaza
                                                                                                                                                              
                                                                                                                                                              1973
      / 1995 / 2006
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              76,316
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              90.6
                                                                                                                                                              %
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              23.16
                                                                                                                                                              
                                                                                                                                                              Shaw'sTOTAL SHOPPING CENTERS MASSACHUSETTS
      (7)
                                                                                                                                                              600,879
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              98.8
                                                                                                                                                              %
                                                                                                                                                              
                                                                                                                                                              $
                                                                                                                                                              17.02MISSISSIPPI
      (1)Shipyard
      Plaza
                                                                                                                                                              
                                                                                                                                                              1987
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              66,857
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              100.0
                                                                                                                                                              %
                                                                                                                                                              
                                                                                                                                                              $
                                                                                                                                                              7.18
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              Big
      Lots / Buffalo Wild WingsTOTAL SHOPPING CENTERS MISSISSIPPI
      (1)
                                                                                                                                                              66,857
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              100.0
                                                                                                                                                              %
                                                                                                                                                              
                                                                                                                                                              $
                                                                                                                                                              7.18NORTH
      CAROLINA (9)Centre
      Pointe Plaza
                                                                                                                                                              
                                                                                                                                                              1989
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              163,642
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              95.6
                                                                                                                                                              %
                                                                                                                                                              
                                                                                                                                                              $
                                                                                                                                                              6.59
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              Belk's
      / Goody's / Dollar Tree / Aaron RentsChestnut
      Square
                                                                                                                                                              
                                                                                                                                                              1985
      / 2008
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              34,260
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              100.0
                                                                                                                                                              %
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              15.55
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              WalgreensGalleria
                                                                                                                                                              
                                                                                                                                                              1986
      / 1990
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              92,114
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              90.6
                                                                                                                                                              %
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              10.46
                                                                                                                                                              
                                                                                                                                                              Harris
      Teeter*Parkwest
      Crossing
                                                                                                                                                              
                                                                                                                                                              1990
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              85,602
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              93.0
                                                                                                                                                              %
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              10.37
                                                                                                                                                              
                                                                                                                                                              Food
      LionRiverview
      Shopping Center
                                                                                                                                                              
                                                                                                                                                              1973
      / 1995
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              128,498
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              95.7
                                                                                                                                                              %
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              7.99
                                                                                                                                                              
                                                                                                                                                              Kroger
                                                                                                                                                              Upchurch
      Drugs / Riverview GalleriesSalisbury
      Marketplace
                                                                                                                                                              
                                                                                                                                                              1987
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              79,732
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              75.4
                                                                                                                                                              %
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              10.94
                                                                                                                                                              
                                                                                                                                                              Food
      LionStanley
      Market Place
                                                                                                                                                              
                                                                                                                                                              2007
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              53,228
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              93.4
                                                                                                                                                              %
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              9.83
                                                                                                                                                              
                                                                                                                                                              Food
      Lion
                                                                                                                                                              Family
      DollarThomasville
      Commons
                                                                                                                                                              
                                                                                                                                                              1991
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              148,754
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              96.2
                                                                                                                                                              %
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              5.80
                                                                                                                                                              
                                                                                                                                                              Ingles
                                                                                                                                                              KmartWillowdaile
      Shopping Center
                                                                                                                                                              
                                                                                                                                                              1986
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              143,601
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              94.3
                                                                                                                                                              %
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              8.52
                                                                                                                                                              
                                                                                                                                                              Harris
      Teeter
                                                                                                                                                              Hall
      of FitnessTOTAL SHOPPING CENTERS NORTH CAROLINA
      (9)
                                                                                                                                                              929,431
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                                                              93.1
                                                                                                                                                              %
                                                                                                                                                              
                                                                                                                                                              $
                                                                                                                                                              8.52




- 18
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 Table of Contents





Year
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      Total GLA
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      Average
    annualBuilt /
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      Sq. Ft.
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      Percent
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      base rent
                                                                                                                                                                                                      
                                                                                                                                                                                                      Grocer
    Anchor
                                                                                                                                                                                                      Other
    AnchorsProperty
                                                                                                                                                                                                      
                                                                                                                                                                                                      Renovated
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      at12/31/08
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      Leased
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      per leased
    SF
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      > 10,000 sq.
      ft.SOUTH
      CAROLINA (7)Belfair
      Towne Village
                                                                                                                                                                                                      
                                                                                                                                                                                                      2000
      / 2003 / 2006
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      166,639
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      98.2
                                                                                                                                                                                                      %
                                                                                                                                                                                                      
                                                                                                                                                                                                      $
                                                                                                                                                                                                      13.79
                                                                                                                                                                                                      
                                                                                                                                                                                                      Kroger
                                                                                                                                                                                                      Stein
      MartLancaster
      Plaza
                                                                                                                                                                                                      
                                                                                                                                                                                                      1971
      / 1990
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      77,400
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      64.9
                                                                                                                                                                                                      %
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      3.13
                                                                                                                                                                                                      
                                                                                                                                                                                                      Bi-Lo
                                                                                                                                                                                                      Tractor
      SupplyLancaster
      Shopping Center
                                                                                                                                                                                                      
                                                                                                                                                                                                      1963
      / 1987
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      29,047
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      100.0
                                                                                                                                                                                                      %
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      2.11
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      Sweet
      Union FurnitureMilestone
      Plaza
                                                                                                                                                                                                      
                                                                                                                                                                                                      1995
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      96,121
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      91.3
                                                                                                                                                                                                      %
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      15.62
                                                                                                                                                                                                      
                                                                                                                                                                                                      Bi-LoNorth
      Village Center
                                                                                                                                                                                                      
                                                                                                                                                                                                      1984
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      60,356
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      89.2
                                                                                                                                                                                                      %
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      8.73
                                                                                                                                                                                                      
                                                                                                                                                                                                      Bi-Lo
                                                                                                                                                                                                      Dollar
      General / Gold's GymWindy
      Hill
                                                                                                                                                                                                      
                                                                                                                                                                                                      1968
      / 1988 / 2006
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      68,465
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      98.2
                                                                                                                                                                                                      %
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      6.38
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      Rose's
      Store / Family Dollar StoreWoodruff
                                                                                                                                                                                                      
                                                                                                                                                                                                      1995
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      68,055
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      100.0
                                                                                                                                                                                                      %
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      10.63
                                                                                                                                                                                                      
                                                                                                                                                                                                      PublixTOTAL SHOPPING CENTERS SOUTH CAROLINA
      (7)
                                                                                                                                                                                                      566,083
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      91.8
                                                                                                                                                                                                      %
                                                                                                                                                                                                      
                                                                                                                                                                                                      $
                                                                                                                                                                                                      10.52VIRGINIA
      (1)Smyth
      Valley Crossing
                                                                                                                                                                                                      
                                                                                                                                                                                                      1989
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      126,841
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      100.0
                                                                                                                                                                                                      %
                                                                                                                                                                                                      
                                                                                                                                                                                                      $
                                                                                                                                                                                                      6.05
                                                                                                                                                                                                      
                                                                                                                                                                                                      Ingles
                                                                                                                                                                                                      Wal-MartTOTAL SHOPPING CENTERS VIRGINIA
      (1)
                                                                                                                                                                                                      126,841
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      100.0
                                                                                                                                                                                                      %
                                                                                                                                                                                                      
                                                                                                                                                                                                      $
                                                                                                                                                                                                      6.05TOTAL CORE SHOPPING CENTER PORTFOLIO
      (146)
                                                                                                                                                                                                      15,947,500
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      92.1
                                                                                                                                                                                                      %
                                                                                                                                                                                                      
                                                                                                                                                                                                      $
                                                                                                                                                                                                      11.88OTHER
      PROPERTIES (6)4101
      South I-85 Industrial
                                                                                                                                                                                                      
                                                                                                                                                                                                      1956
      / 1963
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      188,513
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      38.0
                                                                                                                                                                                                      %Banco
      Popular Office Building
                                                                                                                                                                                                      
                                                                                                                                                                                                      1971
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      32,737
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      90.8
                                                                                                                                                                                                      %Laurel
      Walk Apartments
                                                                                                                                                                                                      
                                                                                                                                                                                                      1985
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      106,480
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      96.0
                                                                                                                                                                                                      %Mandarin
      Mini-Storage
                                                                                                                                                                                                      
                                                                                                                                                                                                      1982
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      52,300
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      83.6
                                                                                                                                                                                                      %Prosperity
      Office Building
                                                                                                                                                                                                      
                                                                                                                                                                                                      1972
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      3,200
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      0.0
                                                                                                                                                                                                      %Providence
      Square
                                                                                                                                                                                                      
                                                                                                                                                                                                      1973
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      85,930
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      28.5
                                                                                                                                                                                                      %TOTAL OTHER PROPERTIES (6)
                                                                                                                                                                                                      469,160
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      55.9
                                                                                                                                                                                                      %TOTAL EXCLUDING DEVELOPMENTS, REDEVELOPMENTS &
      LAND (152)
                                                                                                                                                                                                      16,416,660
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      
                                                                                                                                                                                                      91.0
                                                                                                                                                                                                      %DEVELOPMENTS,
      REDEVELOPMENTS & LAND (8)Developments
      (3)Redevelopments
      (1)Land
      Held for Development (4)TOTAL CONSOLIDATED - 160
      Properties




Most of
our leases provide for the monthly payment in advance of fixed minimum rentals,
the tenants’ pro rata share of ad valorem taxes, insurance (including fire and
extended coverage, rent insurance and liability insurance) and common area
maintenance for the property.  They may also provide for the payment
of additional rentals 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 this case, we
make the payments for the utilities and are reimbursed by the tenants on a
monthly basis.  Generally, our leases prohibit the tenant from
assigning or subletting its space.  They also require the tenant to
use its space for the purpose designated in its lease agreement and to operate
its business 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 lessee will remain liable
for the payment of the lease obligations under that lease
agreement.





- 19
-
 Table of Contents





Major
Tenants





The
following table sets forth as of December 31, 2008 the gross leasable area, or
GLA, of our existing properties leased to tenants in our core shopping center
portfolio:





Supermarket Anchor Tenants(1)
                            
                            
                            Other Anchor Tenants(1)
                            
                            
                            Non-anchor Tenants
                            
                            
                            TotalLeased
      GLA (sq. ft.)
                            
                            
                            4,799,203
                            
                            
                            
                            4,830,947
                            
                            
                            
                            5,053,171
                            
                            
                            
                            14,683,321Percentage
      of Total Leased GLA
                            
                            
                            32.7
                            %
                            
                            
                            32.9
                            %
                            
                            
                            34.4
                            %
                            
                            
                            100.0
                            %





(1) We
define anchor tenants as tenants occupying a space consisting of 10,000 square
feet or more of GLA.





The
following table sets forth as of December 31, 2008 the annual minimum rent at
expiration attributable to tenants in our core shopping center
portfolio:





Supermarket Anchor Tenants
                            
                            
                            Other Anchor Tenants
                            
                            
                            Non-anchor Tenants
                            
                            
                            TotalAnnual
      Minimum Rent (“AMR”)
                            
                            $
                            42,795,146
                            
                            
                            $
                            43,971,581
                            
                            
                            $
                            94,996,057
                            
                            
                            $
                            181,762,784Percentage
      of Total AMR
                            
                            
                            23.5
                            %
                            
                            
                            24.2
                            %
                            
                            
                            52.3
                            %
                            
                            
                            100.0
                            %





The
following table sets forth as of December 31, 2008 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
      12/31/08
                                          
                                          
                                          Percent of Aggregate Annualized Minimum
      Rent
                                          
                                          
                                          Average Annual Minimum Rent per Square
      FootPublix
                                          
                                          
                                          52
                                          
                                          
                                          
                                          2,303,366
                                          
                                          
                                          
                                          14.4
                                          %
                                          
                                          $
                                          18,073,072
                                          
                                          
                                          
                                          10.5
                                          %
                                          
                                          $
                                          7.85Supervalu
                                          
                                          
                                          7
                                          
                                          
                                          
                                          458,273
                                          
                                          
                                          
                                          2.9
                                          %
                                          
                                          
                                          8,302,236
                                          
                                          
                                          
                                          4.8
                                          %
                                          
                                          
                                          18.12Kroger
                                          
                                          
                                          12
                                          
                                          
                                          
                                          679,082
                                          
                                          
                                          
                                          4.3
                                          %
                                          
                                          
                                          5,379,703
                                          
                                          
                                          
                                          3.1
                                          %
                                          
                                          
                                          7.92Bed
      Bath & Beyond
                                          
                                          
                                          8
                                          
                                          
                                          
                                          261,332
                                          
                                          
                                          
                                          1.6
                                          %
                                          
                                          
                                          3,049,214
                                          
                                          
                                          
                                          1.8
                                          %
                                          
                                          
                                          11.67Winn
      Dixie
                                          
                                          
                                          9
                                          
                                          
                                          
                                          398,128
                                          
                                          
                                          
                                          2.5
                                          %
                                          
                                          
                                          2,892,815
                                          
                                          
                                          
                                          1.7
                                          %
                                          
                                          
                                          7.27LA
      Fitness
                                          
                                          
                                          3
                                          
                                          
                                          
                                          144,307
                                          
                                          
                                          
                                          0.9
                                          %
                                          
                                          
                                          2,517,941
                                          
                                          
                                          
                                          1.5
                                          %
                                          
                                          
                                          17.45CVS
      Pharmacy
                                          
                                          
                                          13
                                          
                                          
                                          
                                          143,460
                                          
                                          
                                          
                                          0.9
                                          %
                                          
                                          
                                          2,237,735
                                          
                                          
                                          
                                          1.3
                                          %
                                          
                                          
                                          15.60TJ
      Maxx Companies
                                          
                                          
                                          8
                                          
                                          
                                          
                                          248,658
                                          
                                          
                                          
                                          1.6
                                          %
                                          
                                          
                                          2,227,042
                                          
                                          
                                          
                                          1.3
                                          %
                                          
                                          
                                          8.96Blockbuster
                                          
                                          
                                          21
                                          
                                          
                                          
                                          110,669
                                          
                                          
                                          
                                          0.7
                                          %
                                          
                                          
                                          2,206,459
                                          
                                          
                                          
                                          1.3
                                          %
                                          
                                          
                                          19.94Office
      Depot
                                          
                                          
                                          7
                                          
                                          
                                          
                                          179,837
                                          
                                          
                                          
                                          1.1
                                          %
                                          
                                          
                                          2,062,123
                                          
                                          
                                          
                                          1.2
                                          %
                                          
                                          
                                          11.47Total
      top ten tenants
                                          
                                          
                                          140
                                          
                                          
                                          
                                          4,927,112
                                          
                                          
                                          
                                          30.9
                                          %
                                          
                                          $
                                          48,948,340
                                          
                                          
                                          
                                          28.5
                                          %
                                          
                                          $
                                          9.93





- 20
-
 Table of Contents





Lease
Expirations





The
following tables sets forth as of December 31, 2008 the anticipated expirations
of tenant leases in our core shopping center portfolio for each year from 2009
through 2017 and thereafter:





ALL TENANTSYear
                                      
                                      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
      ExpirationM-T-M
                                      
                                      
                                      78
                                      
                                      
                                      
                                      171,589
                                      
                                      
                                      
                                      1.1
                                      %
                                      
                                      $
                                      2,441,571
                                      
                                      
                                      
                                      1.3
                                      %
                                      
                                      $
                                      14.232009
                                      
                                      
                                      554
                                      
                                      
                                      
                                      1,699,119
                                      
                                      
                                      
                                      10.6
                                      %
                                      
                                      
                                      21,889,429
                                      
                                      
                                      
                                      12.0
                                      %
                                      
                                      
                                      12.882010
                                      
                                      
                                      518
                                      
                                      
                                      
                                      1,996,561
                                      
                                      
                                      
                                      12.5
                                      %
                                      
                                      
                                      23,559,388
                                      
                                      
                                      
                                      13.0
                                      %
                                      
                                      
                                      11.802011
                                      
                                      
                                      489
                                      
                                      
                                      
                                      2,130,491
                                      
                                      
                                      
                                      13.4
                                      %
                                      
                                      
                                      26,923,186
                                      
                                      
                                      
                                      14.8
                                      %
                                      
                                      
                                      12.642012
                                      
                                      
                                      317
                                      
                                      
                                      
                                      1,702,848
                                      
                                      
                                      
                                      10.7
                                      %
                                      
                                      
                                      19,946,815
                                      
                                      
                                      
                                      11.0
                                      %
                                      
                                      
                                      11.712013
                                      
                                      
                                      297
                                      
                                      
                                      
                                      1,525,349
                                      
                                      
                                      
                                      9.6
                                      %
                                      
                                      
                                      20,398,622
                                      
                                      
                                      
                                      11.2
                                      %
                                      
                                      
                                      13.372014
                                      
                                      
                                      90
                                      
                                      
                                      
                                      982,811
                                      
                                      
                                      
                                      6.2
                                      %
                                      
                                      
                                      8,996,094
                                      
                                      
                                      
                                      5.0
                                      %
                                      
                                      
                                      9.152015
                                      
                                      
                                      33
                                      
                                      
                                      
                                      353,140
                                      
                                      
                                      
                                      2.2
                                      %
                                      
                                      
                                      4,115,870
                                      
                                      
                                      
                                      2.3
                                      %
                                      
                                      
                                      11.662016
                                      
                                      
                                      36
                                      
                                      
                                      
                                      921,311
                                      
                                      
                                      
                                      5.8
                                      %
                                      
                                      
                                      14,019,445
                                      
                                      
                                      
                                      7.7
                                      %
                                      
                                      
                                      15.222017
                                      
                                      
                                      27
                                      
                                      
                                      
                                      495,943
                                      
                                      
                                      
                                      3.1
                                      %
                                      
                                      
                                      6,332,535
                                      
                                      
                                      
                                      3.5
                                      %
                                      
                                      
                                      12.77Thereafter
                                      
                                      
                                      122
                                      
                                      
                                      
                                      2,704,159
                                      
                                      
                                      
                                      16.9
                                      %
                                      
                                      
                                      33,139,829
                                      
                                      
                                      
                                      18.2
                                      %
                                      
                                      
                                      12.26Sub-total/Average
                                      
                                      
                                      2,561
                                      
                                      
                                      
                                      14,683,321
                                      
                                      
                                      
                                      92.1
                                      %
                                      
                                      $
                                      181,762,784
                                      
                                      
                                      
                                      100.0
                                      %
                                      
                                      $
                                      12.38Vacant
                                      
                                      
                                      473
                                      
                                      
                                      
                                      1,264,179
                                      
                                      
                                      
                                      7.9
                                      %
                                      
                                      NA
                                      
                                      
                                      NA
                                      
                                      
                                      NATotal/Average
                                      
                                      
                                      3,034
                                      
                                      
                                      
                                      15,947,500
                                      
                                      
                                      
                                      100.0
                                      %
                                      
                                      $
                                      181,762,784
                                      
                                      
                                      
                                      100.0
                                      %
                                      
                                      NA





ANCHOR TENANTS > 10,000
    SFYear
                                      
                                      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
      ExpirationM-T-M
                                      
                                      
                                      2
                                      
                                      
                                      
                                      23,928
                                      
                                      
                                      
                                      0.2
                                      %
                                      
                                      $
                                      138,312
                                      
                                      
                                      
                                      0.2
                                      %
                                      
                                      $
                                      5.782009
                                      
                                      
                                      32
                                      
                                      
                                      
                                      800,824
                                      
                                      
                                      
                                      8.0
                                      %
                                      
                                      
                                      6,228,780
                                      
                                      
                                      
                                      7.2
                                      %
                                      
                                      
                                      7.782010
                                      
                                      
                                      35
                                      
                                      
                                      
                                      992,554
                                      
                                      
                                      
                                      9.9
                                      %
                                      
                                      
                                      5,916,501
                                      
                                      
                                      
                                      6.8
                                      %
                                      
                                      
                                      5.962011
                                      
                                      
                                      41
                                      
                                      
                                      
                                      1,162,463
                                      
                                      
                                      
                                      11.6
                                      %
                                      
                                      
                                      8,804,526
                                      
                                      
                                      
                                      10.1
                                      %
                                      
                                      
                                      7.572012
                                      
                                      
                                      30
                                      
                                      
                                      
                                      1,037,287
                                      
                                      
                                      
                                      10.4
                                      %
                                      
                                      
                                      6,800,184
                                      
                                      
                                      
                                      7.8
                                      %
                                      
                                      
                                      6.562013
                                      
                                      
                                      27
                                      
                                      
                                      
                                      868,553
                                      
                                      
                                      
                                      8.7
                                      %
                                      
                                      
                                      6,523,778
                                      
                                      
                                      
                                      7.5
                                      %
                                      
                                      
                                      7.512014
                                      
                                      
                                      18
                                      
                                      
                                      
                                      689,361
                                      
                                      
                                      
                                      6.9
                                      %
                                      
                                      
                                      4,478,259
                                      
                                      
                                      
                                      5.2
                                      %
                                      
                                      
                                      6.502015
                                      
                                      
                                      9
                                      
                                      
                                      
                                      277,831
                                      
                                      
                                      
                                      2.8
                                      %
                                      
                                      
                                      2,328,013
                                      
                                      
                                      
                                      2.7
                                      %
                                      
                                      
                                      8.382016
                                      
                                      
                                      16
                                      
                                      
                                      
                                      833,255
                                      
                                      
                                      
                                      8.3
                                      %
                                      
                                      
                                      12,215,738
                                      
                                      
                                      
                                      14.1
                                      %
                                      
                                      
                                      14.662017
                                      
                                      
                                      11
                                      
                                      
                                      
                                      413,474
                                      
                                      
                                      
                                      4.1
                                      %
                                      
                                      
                                      4,591,709
                                      
                                      
                                      
                                      5.3
                                      %
                                      
                                      
                                      11.11Thereafter
                                      
                                      
                                      65
                                      
                                      
                                      
                                      2,530,620
                                      
                                      
                                      
                                      25.4
                                      %
                                      
                                      
                                      28,740,927
                                      
                                      
                                      
                                      33.1
                                      %
                                      
                                      
                                      11.36Sub-total/Average
                                      
                                      
                                      286
                                      
                                      
                                      
                                      9,630,150
                                      
                                      
                                      
                                      96.3
                                      %
                                      
                                      $
                                      86,766,727
                                      
                                      
                                      
                                      100.0
                                      %
                                      
                                      $
                                      9.01Vacant
                                      
                                      
                                      14
                                      
                                      
                                      
                                      369,555
                                      
                                      
                                      
                                      3.7
                                      %
                                      
                                      NA
                                      
                                      
                                      NA
                                      
                                      
                                      NATotal/Average
                                      
                                      
                                      300
                                      
                                      
                                      
                                      9,999,705
                                      
                                      
                                      
                                      100.0
                                      %
                                      
                                      $
                                      86,766,727
                                      
                                      
                                      
                                      100.0
                                      %
                                      
                                      NA





- 21
-
 Table of Contents




SHOP TENANTS < 10,000
      SFYear
                                      
                                      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
      ExpirationM-T-M
                                      
                                      
                                      76
                                      
                                      
                                      
                                      147,661
                                      
                                      
                                      
                                      2.5
                                      %
                                      
                                      $
                                      2,303,259
                                      
                                      
                                      
                                      2.4
                                      %
                                      
                                      $
                                      15.602009
                                      
                                      
                                      522
                                      
                                      
                                      
                                      898,295
                                      
                                      
                                      
                                      15.1
                                      %
                                      
                                      
                                      15,660,649
                                      
                                      
                                      
                                      16.5
                                      %
                                      
                                      
                                      17.432010
                                      
                                      
                                      483
                                      
                                      
                                      
                                      1,004,007
                                      
                                      
                                      
                                      16.9
                                      %
                                      
                                      
                                      17,642,887
                                      
                                      
                                      
                                      18.6
                                      %
                                      
                                      
                                      17.572011
                                      
                                      
                                      448
                                      
                                      
                                      
                                      968,028
                                      
                                      
                                      
                                      16.3
                                      %
                                      
                                      
                                      18,118,660
                                      
                                      
                                      
                                      19.1
                                      %
                                      
                                      
                                      18.722012
                                      
                                      
                                      287
                                      
                                      
                                      
                                      665,561
                                      
                                      
                                      
                                      11.2
                                      %
                                      
                                      
                                      13,146,631
                                      
                                      
                                      
                                      13.8
                                      %
                                      
                                      
                                      19.752013
                                      
                                      
                                      270
                                      
                                      
                                      
                                      656,796
                                      
                                      
                                      
                                      11.0
                                      %
                                      
                                      
                                      13,874,845
                                      
                                      
                                      
                                      14.6
                                      %
                                      
                                      
                                      21.132014
                                      
                                      
                                      72
                                      
                                      
                                      
                                      293,450
                                      
                                      
                                      
                                      4.9
                                      %
                                      
                                      
                                      4,517,835
                                      
                                      
                                      
                                      4.8
                                      %
                                      
                                      
                                      15.402015
                                      
                                      
                                      24
                                      
                                      
                                      
                                      75,309
                                      
                                      
                                      
                                      1.3
                                      %
                                      
                                      
                                      1,787,857
                                      
                                      
                                      
                                      1.9
                                      %
                                      
                                      
                                      23.742016
                                      
                                      
                                      20
                                      
                                      
                                      
                                      88,056
                                      
                                      
                                      
                                      1.5
                                      %
                                      
                                      
                                      1,803,706
                                      
                                      
                                      
                                      1.9
                                      %
                                      
                                      
                                      20.482017
                                      
                                      
                                      16
                                      
                                      
                                      
                                      82,469
                                      
                                      
                                      
                                      1.4
                                      %
                                      
                                      
                                      1,740,826
                                      
                                      
                                      
                                      1.8
                                      %
                                      
                                      
                                      21.11Thereafter
                                      
                                      
                                      57
                                      
                                      
                                      
                                      173,539
                                      
                                      
                                      
                                      2.9
                                      %
                                      
                                      
                                      4,398,902
                                      
                                      
                                      
                                      4.6
                                      %
                                      
                                      
                                      25.35Sub-total/Average
                                      
                                      
                                      2,275
                                      
                                      
                                      
                                      5,053,171
                                      
                                      
                                      
                                      85.0
                                      %
                                      
                                      $
                                      94,996,057
                                      
                                      
                                      
                                      100.0
                                      %
                                      
                                      $
                                      18.80Vacant
                                      
                                      
                                      459
                                      
                                      
                                      
                                      894,624
                                      
                                      
                                      
                                      15.0
                                      %
                                      
                                      NA
                                      
                                      
                                      NA
                                      
                                      
                                      NATotal/Average
                                      
                                      
                                      2,734
                                      
                                      
                                      
                                      5,947,795
                                      
                                      
                                      
                                      100.0
                                      %
                                      
                                      $
                                      94,996,057
                                      
                                      
                                      
                                      100.0
                                      %
                                      
                                      NA





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
coverage 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 all of our policies contain
limits beyond which we have no coverage.





ITEM3.
            LEGAL
      PROCEEDINGS





Neither
we nor our properties are subject to any litigation which we believe will have a
material adverse affect on our business, financial condition, results of
operations or cash flows. Furthermore, to the best of our knowledge, there is no
litigation threatened against us or any of our properties, other than 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 cash
flows.





ITEM 4.
            SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY
HOLDERS





No
matters were submitted for stockholder vote during the fourth quarter of
2008.





- 22
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 Table of Contents





PART
II





ITEM5.
            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 16, 2009, we had 1,526 stockholders of
record representing 13,757 beneficial owners. The following table sets forth for
the periods indicated the high and low sale prices as reported by the NYSE and
the distributions declared by us:





High
                          
                          
                          Low
                          
                          
                          Distributions DeclaredFirst
      Quarter, 2008
                          
                          $
                          24.55
                          
                          
                          $
                          20.66
                          
                          
                          $
                          0.30Second
      Quarter, 2008
                          
                          $
                          26.44
                          
                          
                          $
                          20.46
                          
                          
                          $
                          0.30Third
      Quarter, 2008
                          
                          $
                          23.43
                          
                          
                          $
                          19.01
                          
                          
                          $
                          0.30Fourth
      Quarter, 2008
                          
                          $
                          20.42
                          
                          
                          $
                          10.43
                          
                          
                          $
                          0.30First
      Quarter, 2007
                          
                          $
                          28.76
                          
                          
                          $
                          25.52
                          
                          
                          $
                          0.30Second
      Quarter, 2007
                          
                          $
                          29.30
                          
                          
                          $
                          25.55
                          
                          
                          $
                          0.30Third
      Quarter, 2007
                          
                          $
                          28.09
                          
                          
                          $
                          22.77
                          
                          
                          $
                          0.30Fourth
      Quarter, 2007
                          
                          $
                          28.68
                          
                          
                          $
                          21.49
                          
                          
                          $
                          0.30





Dividends
paid during 2008 and 2007 totaled $89.6 million and $88.6 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
Internal Revenue Code of 1986, or 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
Code.





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, 2003 until December 31, 2008.  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, 2003 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 tracking day.  If the
semi-annual interval is not a trading day, the preceding trading day is
used.





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 or the Securities Exchange Act of 1934 except to the
extent we specifically incorporate this information by reference, and shall not
otherwise be deemed filed under such acts.





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Period EndingIndex
                        
                        12/31/03
                        
                        
                        12/31/04
                        
                        
                        12/31/05
                        
                        
                        12/31/06
                        
                        
                        12/31/07
                        
                        
                        12/31/08Equity One,
      Inc.
                        
                        
                        100.00
                        
                        
                        
                        148.97
                        
                        
                        
                        152.81
                        
                        
                        
                        194.04
                        
                        
                        
                        175.74
                        
                        
                        
                        143.26Russell
      2000
                        
                        
                        100.00
                        
                        
                        
                        118.33
                        
                        
                        
                        123.72
                        
                        
                        
                        146.44
                        
                        
                        
                        144.15
                        
                        
                        
                        95.44NAREIT
      All Equity REIT Index
                        
                        
                        100.00
                        
                        
                        
                        131.58
                        
                        
                        
                        147.58
                        
                        
                        
                        199.32
                        
                        
                        
                        168.05
                        
                        
                        
                        104.65SNL
      REIT Retail Shopping Ctr
                        
                        
                        100.00
                        
                        
                        
                        135.86
                        
                        
                        
                        148.26
                        
                        
                        
                        199.56
                        
                        
                        
                        164.30
                        
                        
                        
                        98.92





Issuer
Purchases Of Equity Securities





No equity
securities were purchased by us during 2008.





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, 2008. The
balance sheet data at December 31, 2008 and 2007, and the statement of
operations data for the years ended December 31, 2008, 2007 and 2006, 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.





Years Ended
    December 31,2008
                                        
                                        
                                        2007
                                        
                                        
                                        2006
                                        
                                        
                                        2005
                                        
                                        
                                        2004(in
      thousands other than per share, percentage and ratio data)Statement of Operations
      Data: (1)Total
      revenue
                                        
                                        $
                                        239,029
                                        
                                        
                                        $
                                        246,109
                                        
                                        
                                        $
                                        224,937
                                        
                                        
                                        $
                                        202,322
                                        
                                        
                                        $
                                        179,342Property
      operating expenses
                                        
                                        
                                        64,384
                                        
                                        
                                        
                                        62,755
                                        
                                        
                                        
                                        59,391
                                        
                                        
                                        
                                        48,036
                                        
                                        
                                        
                                        42,048Rental
      property depreciation and amortization
                                        
                                        
                                        45,527
                                        
                                        
                                        
                                        45,989
                                        
                                        
                                        
                                        40,206
                                        
                                        
                                        
                                        33,372
                                        
                                        
                                        
                                        28,561General
      and administrative expenses
                                        
                                        
                                        31,957
                                        
                                        
                                        
                                        28,200
                                        
                                        
                                        
                                        31,905
                                        
                                        
                                        
                                        20,290
                                        
                                        
                                        
                                        19,097Total
      operating expenses
                                        
                                        
                                        141,868
                                        
                                        
                                        
                                        136,944
                                        
                                        
                                        
                                        131,502
                                        
                                        
                                        
                                        101,698
                                        
                                        
                                        
                                        89,706Interest
      expense
                                        
                                        
                                        (60,851
                                        )
                                        
                                        
                                        (66,520
                                        )
                                        
                                        
                                        (53,732
                                        )
                                        
                                        
                                        (47,050
                                        )
                                        
                                        
                                        (40,722
                                        )Amortization
      of deferred financing fees
                                        
                                        
                                        (1,629
                                        )
                                        
                                        
                                        (1,678
                                        )
                                        
                                        
                                        (1,484
                                        )
                                        
                                        
                                        (1,448
                                        )
                                        
                                        
                                        (1,329
                                        )Other
      income (expense), net
                                        
                                        
                                        32,949
                                        
                                        
                                        
                                        9,366
                                        
                                        
                                        
                                        12,180
                                        
                                        
                                        
                                        (3,641
                                        )
                                        
                                        
                                        (19,745
                                        )Minority
      interest
                                        
                                        
                                        (112
                                        )
                                        
                                        
                                        (112
                                        )
                                        
                                        
                                        (206
                                        )
                                        
                                        
                                        (188
                                        )
                                        
                                        
                                        (689
                                        )Gain
      on extinguishment of debt
                                        
                                        
                                        6,473
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        251
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -Impairment
      loss
                                        
                                        
                                        (37,543
                                        )
                                        
                                        
                                        (430
                                        )
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -(Provision)
      benefit for income taxes
                                        
                                        
                                        (1,015
                                        )
                                        
                                        
                                        272
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -Income
      from continuing operations
                                        
                                        $
                                        35,433
                                        
                                        
                                        $
                                        50,063
                                        
                                        
                                        $
                                        50,444
                                        
                                        
                                        $
                                        48,297
                                        
                                        
                                        $
                                        27,151Net
      income
                                        
                                        $
                                        35,008
                                        
                                        
                                        $
                                        69,385
                                        
                                        
                                        $
                                        176,955
                                        
                                        
                                        $
                                        92,741
                                        
                                        
                                        $
                                        97,804Basic
      earnings per share:Income
      from continuing operations
                                        
                                        $
                                        0.48
                                        
                                        
                                        $
                                        0.68
                                        
                                        
                                        $
                                        0.68
                                        
                                        
                                        $
                                        0.65
                                        
                                        
                                        $
                                        0.39Net
      income
                                        
                                        $
                                        0.47
                                        
                                        
                                        $
                                        0.95
                                        
                                        
                                        $
                                        2.40
                                        
                                        
                                        $
                                        1.26
                                        
                                        
                                        $
                                        1.39Diluted
      earnings per share:Income
      from continuing operations
                                        
                                        $
                                        0.48
                                        
                                        
                                        $
                                        0.68
                                        
                                        
                                        $
                                        0.68
                                        
                                        
                                        $
                                        0.65
                                        
                                        
                                        $
                                        0.38Net
      income
                                        
                                        $
                                        0.47
                                        
                                        
                                        $
                                        0.95
                                        
                                        
                                        $
                                        2.38
                                        
                                        
                                        $
                                        1.24
                                        
                                        
                                        $
                                        1.37Balance
      Sheet Data:Total
      rental properties, net of accumulated depreciation
                                        
                                        $
                                        1,704,362
                                        
                                        
                                        $
                                        1,875,342
                                        
                                        
                                        $
                                        1,752,018
                                        
                                        
                                        $
                                        1,896,505
                                        
                                        
                                        $
                                        1,873,687Total
      assets
                                        
                                        
                                        2,036,263
                                        
                                        
                                        
                                        2,174,384
                                        
                                        
                                        
                                        2,069,775
                                        
                                        
                                        
                                        2,059,881
                                        
                                        
                                        
                                        1,992,292Mortgage
      notes payable
                                        
                                        
                                        371,077
                                        
                                        
                                        
                                        397,112
                                        
                                        
                                        
                                        391,647
                                        
                                        
                                        
                                        446,925
                                        
                                        
                                        
                                        495,056Total
      liabilities(2)
                                        
                                        
                                        1,125,776
                                        
                                        
                                        
                                        1,257,463
                                        
                                        
                                        
                                        1,143,108
                                        
                                        
                                        
                                        1,085,727
                                        
                                        
                                        
                                        1,059,507Minority
      interest
                                        
                                        
                                        989
                                        
                                        
                                        
                                        989
                                        
                                        
                                        
                                        989
                                        
                                        
                                        
                                        1,425
                                        
                                        
                                        
                                        1,397Shareholders’
      equity
                                        
                                        
                                        909,498
                                        
                                        
                                        
                                        915,932
                                        
                                        
                                        
                                        925,678
                                        
                                        
                                        
                                        972,729
                                        
                                        
                                        
                                        931,388Other
      Data:Funds
      from operations(3)
                                        
                                        $
                                        60,489
                                        
                                        
                                        $
                                        98,409
                                        
                                        
                                        $
                                        110,311
                                        
                                        
                                        $
                                        124,836
                                        
                                        
                                        $
                                        113,663Cash
      flows from:Operating
      activities
                                        
                                        
                                        86,631
                                        
                                        
                                        
                                        107,016
                                        
                                        
                                        
                                        94,643
                                        
                                        
                                        
                                        117,192
                                        
                                        
                                        
                                        113,110Investing
      activities
                                        
                                        
                                        51,306
                                        
                                        
                                        
                                        (104,602
                                        )
                                        
                                        
                                        114,813
                                        
                                        
                                        
                                        (82,371
                                        )
                                        
                                        
                                        (244,851
                                        )Financing
      activities
                                        
                                        
                                        (133,895
                                        )
                                        
                                        
                                        (1,101
                                        )
                                        
                                        
                                        (209,558
                                        )
                                        
                                        
                                        (39,841
                                        )
                                        
                                        
                                        135,897GLA
      (square feet) at end of period
                                        
                                        
                                        16,417
                                        
                                        
                                        
                                        17,548
                                        
                                        
                                        
                                        18,353
                                        
                                        
                                        
                                        19,699
                                        
                                        
                                        
                                        19,914Occupancy
      of core shopping center portfolio at end of period
                                        
                                        
                                        92.1
                                        %
                                        
                                        
                                        93.2
                                        %
                                        
                                        
                                        95.0
                                        %
                                        
                                        
                                        93.0
                                        %
                                        
                                        
                                        95.0
                                        %





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





(2)
            Amounts
      have been reclassified to conform to the 2008
  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.”





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FFO, as
defined by NAREIT, is “net income (computed in accordance with GAAP), excluding
gains (or losses) from sales of depreciable real property, plus depreciation and
amortization, and after adjustments for unconsolidated partnerships and joint
ventures”.  It states further that “adjustments for unconsolidated
partnerships and joint ventures will be calculated to reflect funds from
operations on the same basis.”  We believe that financial analysts,
investors and stockholders are better served by the 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.





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, 2008:





Year Ended
December 31,2008
                                                
                                                
                                                2007
                                                
                                                
                                                2006
                                                
                                                
                                                2005
                                                
                                                
                                                2004(In
      thousands)Net
      income
                                                
                                                $
                                                35,008
                                                
                                                
                                                $
                                                69,385
                                                
                                                
                                                $
                                                176,955
                                                
                                                
                                                $
                                                92,741
                                                
                                                
                                                $
                                                97,804Adjustments:Rental
      property depreciation and amortization, including discontinued
      operations
                                                
                                                
                                                45,586
                                                
                                                
                                                
                                                47,514
                                                
                                                
                                                
                                                44,791
                                                
                                                
                                                
                                                43,445
                                                
                                                
                                                
                                                37,215Gain
      on disposal of depreciable real estate
                                                
                                                
                                                (21,027
                                                )
                                                
                                                
                                                (18,885
                                                )
                                                
                                                
                                                (112,995
                                                )
                                                
                                                
                                                (11,460
                                                )
                                                
                                                
                                                (22,176
                                                )Minority
      interest
                                                
                                                
                                                112
                                                
                                                
                                                
                                                112
                                                
                                                
                                                
                                                206
                                                
                                                
                                                
                                                110
                                                
                                                
                                                
                                                623Loss
      on sale of fixed assets
                                                
                                                
                                                -
                                                
                                                
                                                
                                                283
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -Other
      Items:Pro
      rata share of real estate depreciation from unconsolidated joint
      ventures
                                                
                                                
                                                810
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                1,354
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                197Funds from
      operations
                                                
                                                $
                                                60,489
                                                
                                                
                                                $
                                                98,409
                                                
                                                
                                                $
                                                110,311
                                                
                                                
                                                $
                                                124,836
                                                
                                                
                                                $
                                                113,663





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 31,2008
                                                      
                                                      
                                                      2007
                                                      
                                                      
                                                      2006
                                                      
                                                      
                                                      2005
                                                      
                                                      
                                                      2004(In
      thousands)Earnings
      per diluted share*
                                                      
                                                      $
                                                      0.47
                                                      
                                                      
                                                      $
                                                      0.95
                                                      
                                                      
                                                      $
                                                      2.38
                                                      
                                                      
                                                      $
                                                      1.24
                                                      
                                                      
                                                      $
                                                      1.37Adjustments:Rental
      property depreciation and amortization, including discontinued
      operations
                                                      
                                                      
                                                      0.61
                                                      
                                                      
                                                      
                                                      0.65
                                                      
                                                      
                                                      
                                                      0.60
                                                      
                                                      
                                                      
                                                      0.58
                                                      
                                                      
                                                      
                                                      0.52Gain
      on disposal of depreciable real estate
                                                      
                                                      
                                                      (0.28
                                                      )
                                                      
                                                      
                                                      (0.26
                                                      )
                                                      
                                                      
                                                      (1.52
                                                      )
                                                      
                                                      
                                                      (0.15
                                                      )
                                                      
                                                      
                                                      (0.31
                                                      )Other
      items:Pro
      rata share of real estate depreciation from unconsolidated joint
      ventures
                                                      
                                                      
                                                      0.01
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      0.02
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -Funds
      from operations per diluted share
                                                      
                                                      $
                                                      0.81
                                                      
                                                      
                                                      $
                                                      1.34
                                                      
                                                      
                                                      $
                                                      1.48
                                                      
                                                      
                                                      $
                                                      1.67
                                                      
                                                      
                                                      $
                                                      1.58





*
            Earnings
      per diluted share reflect the add-back of interest on convertible
      partnership units and the minority interests in earnings of consolidated
      subsidiaries which are convertible to shares of our common
      stock.





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ITEM7.
            MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS





The
following should be read in conjunction with our consolidated financial
statements, including the 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 principally owns, manages, acquires
and develops neighborhood and community shopping centers. 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. Our primary objective is to
maximize stockholder value by generating sustainable cash flow growth and
increasing the value of our real estate assets.  To achieve our
objective, we lease and manage our shopping centers primarily with experienced,
in-house personnel.  We acquire neighborhood or community shopping
centers that either have leading anchor tenants or contain a mix of tenants
which 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, 2008, our property portfolio comprises 160 properties, including
146 shopping centers consisting of approximately 16.0 million square feet of
gross leasable area (“GLA”), four development/redevelopment properties, six
non-retail properties and four parcels of land.  As of December 31,
2008, our core portfolio was 92.1% leased and included national, regional and
local tenants.  We currently own a 10% interest in GRI-EQY I, LLC, a
joint venture which owns ten neighborhood shopping centers totaling
approximately 1.4 million square feet of GLA as of December 31,
2008.  In total, the GRI joint venture’s properties were 97.3% leased
at December 31, 2008.  Additionally, we own a 20% interest in G&I
VI Investment South Florida Portfolio, LLC, a joint venture which owns one
office building and two neighborhood shopping centers totaling approximately
503,000 square feet of GLA as of December 31, 2008.  In total, this
venture’s properties were 67.6% leased at December 31, 2008.





During
2008, our business felt the effects of the softening economic environment and
extended turmoil in the U.S credit markets.  Buyers and sellers of
real estate assets have faced a constrained financial market that has made
completing transactions more difficult. A consumer-led economic slowdown has had
a meaningful impact on most retailers, causing some companies, both national and
local, to cease operations or declare bankruptcy.  While the economic
conditions have had an effect in most of our markets, certain markets, such as
South Florida, have experienced a disproportionate economic slowdown due to
housing price declines and other regional factors. Due to these difficult
conditions, our development program has slowed and is focusing on higher return
projects with the least amount of capital requirements. Management responded to
the prevailing market conditions and lower levels of development and acquisition
activity by reducing our workforce by 10%  during the three months
ended December 31, 2008.





These
macro-trends have made it more difficult for us to achieve our objectives of
growing our business through internal rent increases, re-cycling capital from
lower-tier assets into higher quality properties, and growing our asset
management business.  As an example, lower occupancy resulting from
tenants ceasing operations has had an impact on our rental revenue and expense
recoveries, thereby negatively affecting our year over year operating
results.





Operating
Strategies.  We derive substantially all of our revenue from
tenants under existing leases at our properties. Due to the difficult leasing
environment in 2008, our operating strategy centered on maximizing occupancy
while continuing to increase rents.  In 2008, this strategy resulted
in:





·
            an
      increase in the average rental rate of 8.9% to $17.28 per square foot on
      349 lease renewals aggregating approximately 757,522 square
      feet;





·
            193
      additional new leases totaling 496,552 square feet at an average rental
      rate of $17.27 per square foot on same site basis;
  and





·
            a
      decrease in economic occupancy for our core shopping center portfolio of
      1.10% as compared to 2007.





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 on high-density neighborhoods in
major metropolitan areas, leasing to strong tenants in the markets in which we
own properties and maintaining a diverse tenant mix.





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Investment
Strategies.  Our investment strategy is to deploy capital in
projects that generate attractive, risk-adjusted returns and, at the same time,
to sell assets that no longer meet our investment criteria.  In 2008,
this strategy resulted in:





·
            the
      sale of nine community shopping center properties and one out parcel to
      the GRI joint venture for an aggregate gross sales price of $201.2 million
      which generated an aggregate gain of approximately $21.6
      million;


·
            the
      sale of  one community shopping center located in Carrollton,
      Texas for a consideration of $2.8 million resulting in a loss of
      $557,000;


·
            the
      purchase of short-term debt securities for an aggregate purchase price of
      approximately $132.7 million;


·
            the
      completion of one redevelopment project for approximately $4.2 million
      located in North Carolina; and


·
            the
      investment in two new joint ventures, including GRI, owning commercial and
      retail properties totaling $14.2
million.





Capital Strategy. Our
business during 2008 was financed using our revolving lines of credit, proceeds
from the sale of properties to joint ventures and third parties, the issuance of
equity and new mortgages.  Specifically, in 2008, our capital strategy
resulted in:





·
            the
      acquisition of approximately $88.0 million principal amount of our senior
      notes, at a discount, resulting in a net gain on early extinguishment of
      debt of approximately $6.4 million;


·
            the
      issuance of $54.7 million in
equity;


·
            the
      prepayment of $36.9 million of certain mortgage
  notes;


·
            the
      completion of a $65.0 million loan transaction secured by a mortgage on
      one of our larger properties; and


·
            the
      amendment and restatement of our credit agreement with a syndicate of
      banks to provide for a $227.0 million unsecured revolving credit facility,
      maturing October 2011, that replaced a facility that would have expired in
      January 2009.





At
December 31, 2008, the outstanding balances on our lines of credit aggregated
$35.5 million, with $193.7 million of availability under those facilities
subject to covenants that may restrict our use of additional
borrowings.  Although we have enjoyed a low interest rate environment
and open access to capital markets in recent years, a tightening of the credit
markets has had an adverse effect on the availability of capital and the cost of
our borrowings. At this time, it is very difficult to project the extent to
which credit will be available at a reasonable cost for our
business.





2009 Outlook.We expect the current
recession to continue to affect our business in 2009.  Decreases in
retail sales are straining many of our tenants, particularly those tenants that
sell goods or provide services that tend to be more discretionary than
necessity-oriented in nature.  As a result, some tenants may no longer
be able to afford their current rent or may not be able to continue in business
at all.  We anticipate addressing these challenges by undertaking
intensive leasing efforts, negotiating reductions in certain recoverable
expenses from our vendors, and making case-by-case assessments regarding the
financial and operating strength of our tenants.  We believe that the
fact that 72.6% of our centers are grocery-anchored serves as 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.





We also
expect current credit market constraints to limit our debt financing options
compared to the options available to us in recent years.  While
availability under our existing unsecured revolving line of credit provides
sufficient capital to address our near-term debt maturities, our ability to
raise new capital at an attractive cost 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 shareholders.





As a
result of credit constraints and less retailer demand for new stores, our
acquisition and development activities have slowed.  In the fourth
quarter of 2008, we implemented a reduction in workforce to streamline our
organization given the current economic environment.  In addition,
certain of our executives voluntarily agreed to reduce their base compensation
in 2009.  Our focus remains on reducing overhead costs throughout our
organization, although contractual agreements that are in force in many
instances limit our ability to do so.





We expect
to continue to market non-core properties for sale in 2009.  We also
expect to market certain properties where we would like to retain a continuing
interest to potential institutional joint venture partners.  However,
the volume of commercial real estate transactions has slowed over the last year,
and it may be difficult to sell properties at prices that we deem
appropriate.





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Following
the end of the year, we entered into a Stock Exchange Agreement pursuant to
which we acquired approximately 1.2 million ordinary shares of DIM Vastgoed
N.V., or DIM.  Under this agreement, we issued 866,373 shares of our
common stock as payment for these initial shares and obtained voting rights with
respect to an additional 766,573 ordinary shares of DIM, which we have agreed to
buy, subject to the satisfaction of certain conditions, on or before January 1,
2011 for additional shares of our stock or cash. As a result of the initial
exchange and the voting rights agreement, we have voting control over
approximately 74.6% of DIM’s outstanding ordinary shares, including the
approximately 4.0 million DIM shares we owned prior to year-end and excluding
treasury shares.  Given our increased stake in DIM, we are working
with its existing management to reduce costs, improve operations and address
certain financing and other needs. Based on
our current assumption that we will demonstrate control over DIM as of the first
quarter of 2009, we anticipate consolidating the financial results and balance
sheet of DIM into our financial statements at such time.





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” of 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.





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.
Generally, our leases contain fixed escalations which occur at specified times
during the term of the lease. Base rents are recognized on a straight-line basis
from when the tenant controls the space through the term of the related lease,
net of valuation adjustments, based on our assessment of credit, collection and
other business risk. 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 non-recognition 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 SFAS Statement No. 66, Accounting for Sales of Real
Estate.  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.Upon acquisition of operating real estate properties, we estimate the
fair value of acquired tangible assets (consisting of land, building and
improvements), identified intangible assets and liabilities (consisting of
above- and below-market leases, in-place leases and lease origination costs),
and assumed debt in accordance with SFAS No. 141, Business Combinations. Based
on these estimates, we allocate the purchase price to the applicable assets and
liabilities based on their estimated fair value. We evaluate the useful life of
each amortizable intangible asset in each reporting period and account for any
changes in such estimated useful life over the revised remaining useful life. In
2009, the accounting guidance for real estate acquisitions will change pursuant
to SFAS No.141(R) Business combinations. Refer to Accounting Pronouncements for
further details.





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.





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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 40 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 are capitalized into properties
in construction in progress and land held for development on our consolidated
balance sheets.  Costs incurred include predevelopment expenditures
directly related to a specific project including development and construction
costs, interest, insurance and real estate tax expense.  Indirect
development costs include employee salaries and benefits, travel and other
related costs that are directly associated with the development of the
property.  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.





Our
method of calculating capitalized interest is based upon applying our weighted
average borrowing rate to that portion of actual costs incurred.  We
cease interest cost capitalization when the property is held available for
occupancy upon substantial completion of tenant improvements, but no later than
one year from the completion of major construction.





Long Lived Assets.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. An impairment charge may also be
recorded for any asset if it is probable, in our estimation, that aggregate
future cash flows (undiscounted and without interest charges) to be generated by
the property are less than the carrying value of the property.





Our
properties are reviewed for impairment if events or changes in circumstances
indicate that the carrying amount of the property may not be
recoverable.  If there is an event or change in circumstance
indicating the potential for impairment in the value of a property, we evaluate
our ability to recover our net investment in the long-lived assets by comparing
the carrying value (net book value) of such asset to the estimated future
undiscounted cash flows over their expected useful life. The impairment
assessment has a direct impact on our net income because recording an impairment
charge results in an immediate charge to expense.





Investments in Unconsolidated Joint
Ventures.We strategically invest in unconsolidated entities that own,
manage, acquire, develop and redevelop operating
properties.   Our partners generally are financial or other
strategic partners. Most of the unconsolidated entities through which we acquire
and develop land are accounted for by the equity method of accounting because we
are not the primary beneficiary, as defined under FIN 46R, and we have a
significant, but less than controlling, interest in the entities. We record our
investments in and advances to these entities in our consolidated balance sheets
as “Investment and advances in real estate joint ventures” and our pro-rata
share of the entities’ earnings or losses are included in our consolidated
statements of operations as “Equity in income in unconsolidated joint ventures,”
as described in Note 11 of the notes to our consolidated financial
statements.





Management
uses its judgment when determining if we are the primary beneficiary of, or have
a controlling interest in, an unconsolidated entity. Factors considered in
determining whether we have significant influence or we have control 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 continuing involvement.





We
evaluate our investments in unconsolidated entities for impairment during each
reporting period in accordance with APB 18. A series of operating losses of an
investee or other factors may indicate that a decrease in the value of our
investment in the unconsolidated entity has occurred which is
other-than-temporary. The amount of impairment recognized is the excess of the
investment’s carrying amount over its estimated fair value.





Additionally,
we consider various qualitative factors to determine if a decrease in the value
of our investment is other-than-temporary. These factors include age of the
venture, intent and ability for us to retain our investment in the entity,
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, then no impairment charge is recorded.





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Securities.We have
investments that consist primarily of equity securities.  These equity
investments are classified as available-for-sale and recorded at fair value
based on current market prices.  Changes in the fair value of these
equity investments are included in accumulated other comprehensive income (loss)
unless a decrease in fair value is deemed to be other than temporary. Refer to
Note 8 of the consolidated financial statements for additional disclosure on
impairments of securities held by the company.





Goodwill.Goodwill has been
recorded to reflect the excess of cost over the fair value of net assets
acquired in various business acquisitions.  We are required to 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 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.  For the year ended December 31, 2008, $531,700 of goodwill
impairment was incurred.





We cannot
predict the occurrence of certain future events that might adversely affect the
reported value of goodwill that totaled approximately $11.8 million at December
31, 2008.  Such events include, but are not limited to, strategic
decisions made in response to economic and competitive conditions, the impact of
the economic environment on our tenant base, or a materially negative change in
our relationships with significant tenants.





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 valuing the fair value at
the grant date and the assumptions that marketplace participants would use in
making estimates of fair value include:  expected volatility, expected
dividend yield, risk-free interest rate, involuntary conversion due to change in
control and expected exercise history of similar grants.





In
addition, we have employment agreements for three of our executive officers
under which the employees have the right to an additional cash bonus at the end
of the initial term of those agreements, or earlier as provided in the
agreements, based on the performance of our stock versus a group of our
peers.  In assessing the annual compensation costs related to these
future payments, we are required to make critical assumptions and estimates in
determining the future payment.





Our
estimates of the compensation costs under SFAS No. 123(R), Share-Based Payment and these
agreements are based upon assumptions believed to be reasonable, but which are
inherently uncertain and unpredictable.  Assumptions may not always
reflect unanticipated events and changes in circumstances may
occur.





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
(each a “TRS”) are subject to federal, state and local income
taxes.  TRS income taxes are accounted for under the asset and
liability method as required by SFAS No. 109, Accounting for Income Taxes.
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 TRS assets and liabilities and for operating loss and tax credit
carry-forwards.  The TRS estimates its 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. For the
year ended December 31, 2008, we recorded a valuation allowance of $1.2
million.





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Discontinued Operations.The
application of current accounting principles that govern the classification of
any of our properties as held-for-sale on the balance sheet, 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 SFAS No. 144,
Accounting for the Impairment
and Disposal of Long-Lived Assets (“SFAS 144”), 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. Due to these
uncertainties, it is not likely that we can meet the criteria of SFAS 144 prior
to the sale formally closing. 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 SFAS 144. 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 SFAS 144, 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 SFAS 144, 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.





Recent
Accounting Pronouncements





In
September 2006, the FASB issued SFAS No. 157, Fair Value Measurements
(“SFAS 157”), which defines fair value, establishes a framework for measuring
fair value in GAAP and expands disclosures about fair value
measurements.  SFAS 157 is effective for fiscal years beginning after
November 15, 2007 and interim periods within those fiscal years.  We
adopted the requirements of SFAS 157 as of January 1, 2008 without a material
impact on our consolidated financial statements, as more fully disclosed in Note
9 thereto, Fair Value
Measurements.  In February 2008, the FASB issued FASB Staff
Position Paper (“FSP”) FAS 157-2, Effective Date of FASB Statement No.
157(“FSP 157-2”), which delays the effective date of SFAS 157 for
nonfinancial assets and nonfinancial liabilities that are recognized or
disclosed in the financial statements on a nonrecurring basis to fiscal years
beginning after November 15, 2008.  In October 2008, the FASB issued
FSP FAS 157-3, Determining the
Fair Value of a Financial Asset When the Market for that Asset is Not Active(“FSP 157-3”). FSP 157-3 clarifies the application of SFAS 157 in a
market that is not active.  We have not applied the provisions of SFAS
157 to our nonfinancial assets and nonfinancial liabilities in accordance with
FSP 157-2 and FSP 157-3.





In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities (“SFAS 159”),which allows entities
to voluntarily choose, at specified election dates, to measure many financial
assets and financial liabilities at fair value.  The election is made
on an instrument-by-instrument basis and is irrevocable.  Subsequent
to the adoption of SFAS 159, changes in fair value for the particular
instruments must be reported in earnings.  Upon initial adoption, SFAS
159 provided entities with a one-time chance to elect the fair value option for
existing eligible items.  The effect of the first measurement to fair
value should be reported as a cumulative-effect adjustment to the opening
balance of retained earnings in the year the statement is
adopted.  SFAS 159 is effective for fiscal years beginning after
November 15, 2007.  We did not elect the fair value option for
financial assets or liabilities existing on the January 1, 2008 adoption
date.  We will consider the applicability of the fair value option for
assets acquired or liabilities incurred in future transactions.





In
December 2007, the FASB issued SFAS No. 141 (R), Business Combinations (“SFAS
141(R)”).  In summary, SFAS 141(R) requires the acquirer of a business
to measure at fair value the assets acquired, the liabilities assumed, and any
noncontrolling interest in the acquiree at the acquisition date, with limited
exceptions.  In addition, this standard requires acquisition costs to
be expensed as incurred.  The standard is effective for fiscal years
beginning after December 15, 2008 and is to be applied prospectively, with no
earlier adoption permitted.  The adoption of this standard may have an
impact on the accounting for certain costs related to our future acquisitions.
As noted in footnote 20 Subsequent Events to our
consolidated financial statements, we increased our ownership to greater than
50% in DIM subsequent to December 31, 2008. As a result of our increased
influence over DIM, we currently anticipate consolidating the results of DIM
with ours beginning with the first quarter of 2009.  Finally, we are
still evaluating the accounting treatment of this increased investment both
relating to its prior treatment under the cost method and the allocation of the
purchase price.  Given recent accounting guidance, our acquisition may
be treated as a multistep acquisition and, therefore, have an effect on earnings
in the three months ending March 31, 2009.





In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements(“SFAS 160”), which requires
consolidated net income to be reported at amounts that include the amounts
attributable to both the parent and non-controlling interest.  SFAS
160 is effective for fiscal years beginning on or after December 15,
2008.  The adoption of this standard is not expected to have a
material effect on our consolidated results of operations, yet will require
additional disclosures relating to our joint venture at Sunlake and down-REIT at
Walden Woods Village and will effect our disclosure for the three months ending
March 31, 2009.





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In March
2008, the FASB issued SFAS No. 161, Disclosures About Derivative
Instruments and Hedging Activities – an amendment of FASB Statement No.
133, (“SFAS 161”). SFAS 161 expands the disclosure requirements in SFAS
No. 133, Accounting for
Derivative Instruments and Hedging Activities, regarding an entity’s
derivative instruments and hedging activities. SFAS 161 is effective for fiscal
years beginning after December 1, 2008. We are evaluating the impact that
adoption of SFAS 161 will have on our consolidated financial
statements.





In April
2008, the FASB issued FSP SFAS No. 142-3, Determination of the Useful Life of
Intangible Assets (“FSP SFAS 142-3”). FSP SFAS 142-3 amends paragraph
11(d) of FASB SFAS No. 142, Goodwill and Other Intangible
Assets (“SFAS 142”), which amends the factors that should be considered
in developing renewal or extension assumptions used to determine the useful life
of a recognized intangible asset under SFAS 142. FSP SFAS 142-3 is intended to
improve the consistency between the useful life of a recognized intangible asset
under SFAS 142 and the period of expected cash flows used to measure the fair
value of the asset under FSP SFAS 142-3. FSP SFAS 142-3 is effective for
financial statements issued for fiscal years beginning after December 15, 2008
and must be applied prospectively to intangible assets acquired after the
effective date. We are evaluating the impact that adoption of FSP SFAS 142-3
will have on our consolidated financial statements.





In May
2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted
Accounting Principles (“SFAS 162”). SFAS 162 is intended to improve
financial reporting by identifying a consistent framework, or hierarchy, for
selecting accounting principles to be used in preparing financial statements for
nongovernmental entities that are presented in conformity with generally
accepted accounting principles in the United States of America. SFAS 162 will be
effective 60 days following the U.S. Securities and Exchange Commission’s
approval of the Public Company Accounting Oversight Board amendments to AU
Section 411, The Meaning of
Fairly Presented in Conformity with Generally Accepted Accounting
Principles. We do not expect the adoption of SFAS 162 to result in a
change in current practice, and as such, will have no impact on our consolidated
financial statements.





In June2008, the FASB issued FASB Staff
Position Emerging Issues Task Force 03-6-1,Determining Whether
Instruments Granted in Share-Based Payment Transactions Are Participating
Securities(“FSP-EITF
03-6-1”). Under FSP-EITF 03-6-1, unvested share-based payment awards that
contain non-forfeitable rights to dividends or dividend equivalents (whether
paid or unpaid) are participating securities and shall be included in the
computation of earnings per share pursuant to the two-class method. FSP-EITF
03-6-1 is effective for financial statements issued for fiscal years beginning
afterDecember15, 2008, and interim periods within those years
and requires retrospective application. We are currently evaluating the impact
of adopting FSP-EITF 03-6-1 on our earnings per share.





In
December 2008, the FASB issued FSP FAS 140-4 and FIN 46(R)-8, Disclosure by Public Entities
(Enterprises) About Transfers of Financial Assets and Interests in Variable
Interest Entities. The purpose of the FSP is to promptly improve
disclosures by public companies until the pending amendments to FASB SFAS No.
140, Accounting for Transfers
and Servicing of Financial Assets and Extinguishment of Liabilities
(“SFAS 140”), and FIN 46R are finalized and approved by the FASB. The FSP amends
SFAS 140 to require public companies to provide additional disclosures about a
transferor’s continuing involvement with transferred financial assets. It also
amends FIN 46R by requiring public companies to provide additional disclosures
regarding their involvement with variable interest entities. This FSP is
effective for fiscal years beginning after December 1, 2008. The FSP will not
have a material effect on our consolidated financial statements.





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Results
of Operations





Year
Ended December 31, 2008 Compared to Year Ended December 31, 2007





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 and other expenses; general and administrative expenses, which include
payroll, office expenses, professional fees 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 and
impairment charges.  We also capitalize certain expenses, such as
taxes and interest 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 change in our statement of operations line
items is related to these changes in our property portfolio.  In
addition, non-cash impairment charges may also affect
comparability.





The following summarizes certain line
items from our audited consolidated statements of operations which we think are
important in understanding our operations and/or those items which have
significantly changed in 2008 compared to 2007:





For the year ended
      December 31,2008
                                
                                
                                2007
                                
                                
                                % Change(in
      thousands)Total
      rental revenue
                                
                                $
                                239,029
                                
                                
                                $
                                246,109
                                
                                
                                
                                -2.9
                                %Property
      operating expenses
                                
                                
                                64,384
                                
                                
                                
                                62,755
                                
                                
                                
                                2.6
                                %Rental
      property depreciation and amortization
                                
                                
                                45,527
                                
                                
                                
                                45,989
                                
                                
                                
                                -1.0
                                %General
      and administrative expenses
                                
                                
                                31,957
                                
                                
                                
                                28,200
                                
                                
                                
                                13.3
                                %Investment
      income
                                
                                
                                10,332
                                
                                
                                
                                7,321
                                
                                
                                
                                41.1
                                %Equity
      in income in unconsolidated joint ventures
                                
                                
                                108
                                
                                
                                
                                -
                                
                                
                                
                                N/AOther
      income
                                
                                
                                967
                                
                                
                                
                                310
                                
                                
                                
                                N/AInterest
      expense
                                
                                
                                60,851
                                
                                
                                
                                66,520
                                
                                
                                
                                -8.5
                                %Gain
      on sale of real estate
                                
                                
                                21,542
                                
                                
                                
                                2,018
                                
                                
                                
                                967.5
                                %Gain
      on extinguishment of debt
                                
                                
                                6,473
                                
                                
                                
                                -
                                
                                
                                
                                N/AImpairment
      loss
                                
                                
                                37,543
                                
                                
                                
                                430
                                
                                
                                
                                8630.9
                                %(Provision)
      benefit for income taxes
                                
                                
                                (1,015
                                )
                                
                                
                                272
                                
                                
                                
                                -473.2
                                %(Loss)
      income from discontinued operations
                                
                                
                                (425
                                )
                                
                                
                                19,322
                                
                                
                                
                                -102.2
                                %Net
      income
                                
                                
                                35,008
                                
                                
                                
                                69,385
                                
                                
                                
                                -49.5
                                %





Total
revenue decreased by $7.1 million, or 2.9%, to $239.0 million in
2008.  The decrease is primarily attributable to the
following:





·
            a
      decrease of approximately $10.8 million attributable to the sale of nine
      income producing properties to the GRI Venture, revenue from which was
      included fully in 2007 results and partially included in 2008 results
      through the date of sale;





·
            a
      decrease of approximately $300,000 in non-retail property
      income;





·
            an
      increase of approximately $1.5 million related to properties acquired in
      2007;





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·
            an
      increase of approximately $1.3 million related to a settlement fee
      received in connection with a previous tenant’s
  bankruptcy;





·
            an
      increase of approximately $800,000 related to the completion of various
      development/redevelopment projects, partly offset by a decrease of
      $300,000 for development/redevelopment projects currently under
      construction; and





·
            an
      increase of approximately $600,000 associated with management, leasing and
      asset management services provided to our joint
  ventures.





Property operating expenses increased by
$1.6 million, or 2.6%, to $64.4 million in 2008.  The increase
primarily consists of the following:





·
            an
      increase of approximately $4.1 million in property operating costs partly
      due to higher common area maintenance expense, bad debt expense, general
      repairs and maintenance costs associated with vacant rental units, and
      higher real estate tax expense, partially offset by lower insurance
      expense;





·
            an
      increase of approximately $300,000 related to properties acquired in
      2007;





·
            an
      increase of $200,000 related to the completion of various
      development/redevelopment properties;
and





·
            a
      decrease of approximately $2.9 million associated with the sale of nine
      income producing properties to the GRI
Venture.





Rental
property depreciation and amortization decreased by $500,000, or 1.0%, to $45.5
million for 2008 from $46.0 million in 2007.  The decrease in 2008 was
primarily related to the following activity:





·
            a
      decrease of approximately $2.1 million related to the sale of nine income
      producing properties to the GRI
venture;





·
            a
      decrease of approximately $100,000 in non-retail
    properties;





·
            an
      increase of approximately $1.3 million related to amortization of tenant
      improvements and leasing
commissions;





·
            an
      increase of approximately $300,000 related to properties acquired in 2007;
      and





·
            the
      completion of various development/redevelopment projects increased
      depreciation and amortization by
$200,000.





General
and administrative expenses increased by $3.8 million, or 13.3%, to $32.0
million for 2008 from $28.2 million in 2007.  The increase is mainly
attributable to:





·
            an
      increase of $1.8 million related to employee training, professional
      conferences and information technology
expenses;





·
            an
      increase of approximately $900,000 in compensation and employment-related
      expenses related to new executives and employees partly offset by lower
      severance-related expense paid to former
  employees;





·
            an
      increase of approximately $700,000 related to acquisition costs associated
      with additional shares of DIM;




·
            an
      increase of approximately $500,000 related to satellite offices
      expense;


·
              an
      increase of $300,000 for personal property tax expense;
      and


·
            a
      decrease of approximately $400,000 of pre-development costs related to
      non-viable projects.





Investment
income increased by $3.0 million, or 41.1%, compared to 2007.  The
increase relates primarily to interest income associated with our short-term
bond investments.





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Equity in income in unconsolidated
joint ventures was $108,000 for 2008 based on our pro rata share of our joint
ventures operating gains/losses.





Other
income increased by $650,000 in 2008 compared to 2007.  The increase
primarily relates to the receipt of income of approximately $600,000 following
the execution of an easement agreement in settlement of a condemnation
proceeding at one of our properties and the receipt of a $200,000 earnest money
deposit following the termination of a land sale contract offset by $100,000 of
lower related-party revenue.





Interest
expense decreased by $5.7 million, or 8.5%, to $60.8 million in 2008 as compared
to $66.5 million for 2007.  The decrease is primarily attributable to
the following:





·
            a
      decrease of approximately $2.1 million attributable to reduced usage of
      our lines of credit;





·
            a
      decrease of approximately $1.2 million in interest expense related to a
      reduction in mortgage indebtedness resulting from the sale of properties
      to the GRI joint venture;





·
            a
      decrease of $2.1 million related to the payoff of certain mortgages and
      principal amortization offset by an increase of approximately $900,000 in
      mortgage interest related to additional mortgage
    indebtedness;





·
            an
      increase of approximately $1.9 million of interest incurred related to
      higher average unsecured senior notes outstanding in 2008, offset by a
      decrease of $1.7 million related to our interest rate swap contract
      associated with our senior notes and a decrease of approximately $1.6
      million related to the write off of interest rate contracts due to the
      early extinguishment of our debt;
and





·
            an
      increase of $200,000 of interest expense related to lower capitalized
      interest for development/redevelopment
projects.





Gain on
sale of real estate was approximately $21.5 million in 2008 as compared to $2.0
million in 2007.  The gain was primarily attributable to the sale of
nine properties to the GRI joint venture, which is not included in discontinued
operations due to the continuing involvement we have with that
venture.





During
2008, we repurchased and canceled approximately $88.0 million principal amount
of our senior unsecured notes and recognized a net gain on early extinguishment
of debt of approximately $6.4 million, coupled with $200,000 gain from early
extinguishment of mortgages, totaling $6.5 million net gain for 2008. There were
no comparable gains in continuing operations in the same 2007
period.





Impairment
loss for 2008 was $37.5 million as compared to $430,000 for 2007.  The
increase is primarily attributable to the following:





·
            approximately
      $32.8 million of impairment loss related to our DIM
      investment;





·
            approximately
      $3.7 million of impairment loss associated with two redevelopment projects
      that were terminated;





·
            approximately
      $531,700 of impairment loss related to goodwill associated with several of
      our income producing properties;
and





·
            approximately
      $380,000 of impairment loss related to our preferred stock investment in
      another REIT.





For
further information regarding our impairment loss, see Note 7, Securities, and Note 8,
Impairment Loss, to our
consolidated financial statements.





In the
twelve months ended December 31, 2008, our discontinued operations resulted in a
net loss of $425,000 compared to a net gain of $19.3 million in
2007.  In 2008, we sold one income producing property for a loss of
$557,000 partly offset by $132,000 generated in net operating income related to
discontinued operations.  During 2007, we had a net gain of $19.3
million in net operating income related to discontinued operations.





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Our
provision for income taxes is $1.0 million for 2008, compared to a benefit of
$0.3 million in 2007.





As a
result of the foregoing, net income decreased by $34.4 million, or 49.5%, to
$35.0 million for 2008 from $69.4 million in 2007.





Year
Ended December 31, 2007 Compared to Year Ended December 31, 2006





The
following summarizes items from our audited consolidated statements of
operations that we think are important in understanding our operations and/or
those items which significantly changed in 2007 as compared to
2006:





For the year ended
      December 31,2007
                                
                                
                                2006
                                
                                
                                % Change(in
      thousands)Total
      rental revenue
                                
                                $
                                246,109
                                
                                
                                $
                                224,937
                                
                                
                                
                                9.4
                                %Property
      operating expenses
                                
                                
                                62,755
                                
                                
                                
                                59,391
                                
                                
                                
                                5.7
                                %Rental
      property depreciation and amortization
                                
                                
                                45,989
                                
                                
                                
                                40,206
                                
                                
                                
                                14.4
                                %General
      and administrative expenses
                                
                                
                                28,200
                                
                                
                                
                                31,905
                                
                                
                                
                                -11.6
                                %Investment
      income
                                
                                
                                7,321
                                
                                
                                
                                7,479
                                
                                
                                
                                -2.1
                                %Equity
      in income in unconsolidated joint ventures
                                
                                
                                -
                                
                                
                                
                                1,853
                                
                                
                                
                                -100.0
                                %Interest
      expense
                                
                                
                                66,520
                                
                                
                                
                                53,732
                                
                                
                                
                                23.8
                                %Gain
      on sale of real estate
                                
                                
                                2,018
                                
                                
                                
                                2,545
                                
                                
                                
                                -20.7
                                %Gain
      on extinguishment of debt
                                
                                
                                -
                                
                                
                                
                                251
                                
                                
                                
                                -100.0
                                %Impairment
      loss
                                
                                
                                430
                                
                                
                                
                                -
                                
                                
                                
                                N/ABenefit
      (provision) for income taxes
                                
                                
                                272
                                
                                
                                
                                -
                                
                                
                                
                                N/AIncome
      from discontinued operations
                                
                                
                                19,322
                                
                                
                                
                                126,511
                                
                                
                                
                                -84.7
                                %Net
      income
                                
                                
                                69,385
                                
                                
                                
                                176,955
                                
                                
                                
                                -60.8
                                %





Total
revenue increased by $21.2 million, or 9.4%, to $246.1 million in 2007 from
$224.9 million in 2006. The increase was mostly composed of the
following:





·
            an
      increase of $19.9 million associated with properties acquired in 2007 and
      2006;





·
            an
      increase of approximately $2.2 million related to the completion of
      various development/redevelopment projects, partly offset by a decrease of
      $900,000 for development/redevelopment projects under
      construction;





·
            an
      increase of $1.6 million in same-property revenue due to higher rental
      rates, tenant expense recovery income and percentage rent
      income;





·
            a
      decrease of approximately $1.0 million associated with property
      management, leasing and accounting services revenue for a portfolio of
      Texas properties, which services were terminated in the second quarter of
      2007; and





·
            a
      decrease of approximately $600,000 in non-retail property
      income.





Property
operating expenses increased by $3.4 million, or 5.7%, to $62.8 million for 2007
from $59.4 million in 2006.  The increase in 2007 is largely a result
of the following activity:





·
            an
      increase of approximately $5.5 million related to properties acquired in
      2007 and 2006;





·
            an
      increase of approximately $700,000 related to the completion of various
      development/redevelopment projects, partly offset by a decrease of
      $300,000 for development/redevelopment projects under
      construction;





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·
            a
      decrease of approximately $1.8 million in property operating costs partly
      due to lower common area maintenance expense, property
      management/maintenance salary, lease termination expense, hurricane
      expense and real estate tax expense partially offset by higher insurance
      and bad debt provision expense;





·
            a
      decrease of approximately $700,000 in office-related expense primarily
      related to closing the operation of various property management satellite
      offices; and





·
            a
      decrease of $300,000 in general operating expenses for our non-retail
      properties.





Rental
property depreciation and amortization increased by $5.8 million, or 14.4%, to
$46.0 million for 2007 from $40.2 million in 2006.  The increase is
primarily attributable to the following:





·
            an
      increase of $4.9 million related to properties acquired during 2007 and
      2006;





·
            the
      completion of various development/redevelopment projects increased
      depreciation and amortization by $600,000, partially offset by a decrease
      of approximately $300,000 of depreciation expense related to projects in
      various stages of construction; and





·
            same-property
      depreciation and amortization expense increased by $600,000 related to
      increased leasing and tenant improvement
  activity.





General
and administrative expenses decreased by $3.7 million, or 11.6%, to $28.2
million for 2007 from $31.9 million in 2006.  The decrease resulted
primarily from:





·
            $1.5
      million decrease in compensation and employment-related expenses paid in
      2006 related to executive management changes partly offset by higher
      severance-related expense paid to former employees in 2007 as well as
      higher payroll and payroll-related
expenses;





·
            $1.0
      million decrease attributable to lower pre-acquisition
    costs;





·
            a
      decrease of approximately $700,000 related to lower travel and
      entertainment expense;





·
            a
      decrease of approximately $400,000 related to lower income
      taxes;





·
            a
      decrease of approximately $400,000 in fees reflecting fewer directors and
      fewer meetings; and





·
            an
      increase of approximately $300,000 of professional fees mainly related to
      higher audit fees.





Investment
income decreased by $158,000 in 2007, mostly due to a $1.6 million decrease in
interest income related to lower cash balances, partially offset by an increase
of $1.4 million of dividend income primarily related to our ownership of 3.8
million ordinary shares of DIM Vastgoed N.V.





Equity in
income in unconsolidated joint ventures was $1.9 million for
2006.  The income primarily was related to the sale of a land parcel
held in a joint venture in which we had a 50% interest.





Interest
expense increased by $12.8 million, or 23.8%, to $66.5 million for 2007 from
$53.7 million in 2006.  The increase is mainly attributable to the
following:





·
            an
      increase of approximately $8.2 million related to higher total unsecured
      senior debt outstanding,
      partially offset by a $400,000 decrease in interest expense associated
      with our interest rate swap;





·
            an
      increase of approximately $2.6 million of interest expense related to
      lower capitalized interest for  development/redevelopment
      projects;





·
            an
      increase of approximately $1.6 million related to the decrease in the
      amortization of the fair value debt premium related to two unsecured
      senior notes that were paid off in April and August
  2006;





·
            an
      increase of $1.7 million in mortgage interest which is primarily related
      to properties acquired in 2007 and 2006 partly offset by repayment of
      certain mortgages; and





·
            a
      decrease of approximately $900,000 related to lower interest expense
      associated with our unsecured line of credit
  facility.





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Gain on
sale of real estate in 2007 includes the sale of six land parcels for proceeds
of nearly $5.5 million, generating $2.0 million in net realized gains, compared
to gains in the same period of 2006 of approximately $2.5 million for
2006,





In 2007,
our discontinued operations resulted in a net gain of $19.3 million compared to
a net gain of $126.5 million for 2006.  In 2007, we sold 14 income
producing properties that produced a net gain of $19.4 million partly offset by
$82,000 operating income loss related to discontinued operations.  The
$7.0 million of operations of income-producing property sold for 2006 reflects a
reclassification of operations of properties sold or held for
sale.  The income from discontinued operations of $126.5 million in
2006 is primarily related to the sale of our Texas properties.





As a
result of the foregoing, net income decreased by $107.6 million, or 60.8%, to
$69.4 million for 2007 from $177.0 million in 2006.





Liquidity
and Capital Resources





Due to
the nature of our business, we typically generate significant amounts of cash
from operations; however, the cash generated from operations is primarily paid
to our stockholders in the form of dividends.  Our status as a REIT
requires that we distribute 90% of our REIT taxable income (including net
capital gain) each year, as defined in the Code.  Our short-term
liquidity requirements consist primarily of normal recurring operating expenses,
regular debt service requirements (including debt service relating to additional
or replacement debt, as well as scheduled debt maturities), recurring company
expenditures, such as general and administrative expenses, non-recurring company
expenditures, such as tenant improvements and redevelopments, and dividends to
common stockholders.  Historically, we have satisfied these
requirements principally through cash generated from operations and our credit
facilities.





Our
long-term capital requirements consist primarily of maturities under our
long-term debt, development and redevelopment costs and the costs related to
growing our business, including acquisitions.  Historically, we have
funded these requirements through a combination of sources which were available
to us, including additional and replacement secured and unsecured borrowings,
proceeds from the issuance of additional debt or equity securities, capital from
institutional partners that desire to form joint venture relationships with us
and proceeds from property dispositions.  During 2008, however, as a
result of deteriorating conditions in the credit and capital markets, many of
these sources of capital became increasingly more expensive or more difficult to
obtain or may be temporarily unavailable.





In
response to the changing economic conditions that occurred during the second
half of 2008, we have undertaken a number of initiatives to improve our
liquidity position and address our capital needs. The following is a summary of
those initiatives:





·
            Equity
      Offering.On September 29, 2008, we
      completed a public offering and concurrent private placement of equity
      securities. The offerings resulted in net cash proceeds of approximately
      $54.7 million to us.





·
            New
      Mortgage Loan.On September 25, 2008, we
      completed a $65.0 million loan transaction secured by a mortgage on our
      Sheridan Plaza shopping center located in Hollywood, Florida. The loan
      matures on October 10, 2018 and principal and interest are payable in
      arrears based on a 30 year amortization and a 6.25% annual interest
      rate.





·
            Senior
      Note Repurchases.During
      2008, we purchased $88.0 million of our unsecured senior notes with
      varying maturities, including $23.8 million of notes maturing in 2009, and
      generated a gain on the early extinguishment of debt of $6.4 million for
      2008.





·
            GRI
      Joint Venture. During 2008, we contributed nine operating
      properties to a joint venture with Global Retail Investors LLC in which we
      have a 10% interest. The sale of these properties generated a gain on sale
      of $21.6 million and cash proceeds of approximately $142.5
      million.





·
            Credit
      Lines.On October
      17, 2008, we amended and restated our credit agreement with a syndicate of
      banks to provide for a $227.0 million unsecured revolving credit facility
      that replaced a facility that would have expired in January
      2009.  The new facility includes a competitive bid option which
      allows us to conduct auctions among the participating banks for borrowings
      at any one time outstanding up to 50% of the then commitments, a $35.0
      million swing line facility for short term borrowings and a $20.0 million
      letter of credit commitment.  Subject to the terms and
      conditions in the amended credit agreement, the total commitments under
      the facility may be increased up to a total of $400.0
      million.  The facility expires on October 17, 2011, with a one
      year extension option.





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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.





As of
December 31, 2008, we had approximately $128.5 million of short-term corporate
debt securities that we expect to use for the repayment of certain near-term
debt, including $176.2 million of senior notes due in April 2009.  In
addition, we had $5.4 million of cash and cash equivalents available as of
December 31, 2008.  We have two revolving credit facilities with
aggregate potential borrowing limits up to $242.0 million, which we can utilize
initially to finance the acquisition of properties and meet other short-term
working capital requirements. As of December 31, 2008, we had $193.7 million
available to be drawn under those credit facilities.  Subsequent to
year-end, we repaid $35.5 million of outstanding balances under our lines of
credit with proceeds from repayment receipts and sales of certain short-term
corporate debt securities.





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 31,2008
                                        
                                        
                                        2007
                                        
                                        
                                        Increase (Decrease)(in
      thousands)Cash
      provided by operating activities
                                        
                                        $
                                        86,631
                                        
                                        
                                        $
                                        107,016
                                        
                                        
                                        $
                                        (20,385
                                        )Cash
      provided by (used in) investing activities
                                        
                                        
                                        51,306
                                        
                                        
                                        
                                        (104,602
                                        )
                                        
                                        
                                        155,908Cash
      used in financing activities
                                        
                                        
                                        (133,895
                                        )
                                        
                                        
                                        (1,101
                                        )
                                        
                                        
                                        (132,794
                                        )Cash
      and cash equivalents, end of year
                                        
                                        
                                        5,355
                                        
                                        
                                        
                                        1,313
                                        
                                        
                                        
                                        4,042





Net cash
from operating activities consists primarily of net operating income from our
rental properties (rental and other revenue less property operating expenses),
plus fee income and investment income, less general and administrative expenses
and interest expense.  In addition, net cash from operating activities
includes changes in working capital.  In 2008, our net cash from
operating activities was $86.6 million, compared to $107.0 million in
2007.  The decrease of $20.4 million is primarily due to an increase
in working capital of $9.5 million in 2008, when we reduced payables and accrued
expenses by $7.1 million, compared to a decrease in working capital of $5.6
million in 2007, when we received repayment of a note receivable in the amount
of $4.7 million.  The decrease also resulted from lower net operating
income and higher general administrative expenses, partly offset by higher
investment income and lower interest expense.
 
 Net cash
from investing activities consists primarily of property acquisitions or
dispositions, costs incurred in developments, investments in or distributions
from joint ventures, investments in securities, and cash held in
escrow.  In 2008, our net cash provided by investing activities was
$51.3 million.  In 2007, our net cash used in investing activities was
$104.6 million.  The difference of $155.9 million is primarily due to
our property dispositions exceeding our acquisitions in 2008, whereas in 2007,
our acquisitions exceeded our dispositions.  In 2008, we invested
$134.7 million of our disposition proceeds and cash released from escrow in
short-term debt securities to prepare for the repayment of our $176.2 million in
bonds that mature in April 2009.
 
 Net cash
from financing activities consists primarily of proceeds from financing and the
issuance of common stock, less repayment of debt and dividends paid to
stockholders.  In 2008, our net cash used in financing activities was
$133.9 million, compared to $1.1 million in 2007.  The difference of
$132.8 million primarily reflects a net reduction in debt of $96.3 million in
2008, compared to a net increase in debt of $87.1 million in 2007.  In
2008, we funded a portion of our debt reduction with proceeds from the issuance
of common stock of $57.1 million.


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Contractual
Commitments.  The following tables set forth certain
information regarding future contractual obligations, excluding interest, as of
December 31, 2008:




Payments due by periodContractual Obligations
                                            
                                            Total
                                            
                                            
                                            Less than 1 year
                                            
                                            
                                            1-3 years
                                            
                                            
                                            3-5 years
                                            
                                            
                                            More than 5 years(In
      thousands)Mortgage
      notes payable:Scheduled
      amortization
                                            
                                            $
                                            89,031
                                            
                                            
                                            $
                                            10,361
                                            
                                            
                                            $
                                            26,657
                                            
                                            
                                            $
                                            19,016
                                            
                                            
                                            $
                                            32,997Balloon
      payments
                                            
                                            
                                            282,046
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            168,316
                                            
                                            
                                            
                                            46,197
                                            
                                            
                                            
                                            67,533Total
      mortgage obligations
                                            
                                            
                                            371,077
                                            
                                            
                                            
                                            10,361
                                            
                                            
                                            
                                            194,973
                                            
                                            
                                            
                                            65,213
                                            
                                            
                                            
                                            100,530Unsecured
      revolving credit facilities
                                            
                                            
                                            35,500
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            35,500
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -Unsecured
      senior notes(1)
                                            
                                            
                                            656,964
                                            
                                            
                                            
                                            176,185
                                            
                                            
                                            
                                            10,000
                                            
                                            
                                            
                                            117,000
                                            
                                            
                                            
                                            353,779Capital
      leases
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -Operating
      leases
                                            
                                            
                                            1,034
                                            
                                            
                                            
                                            540
                                            
                                            
                                            
                                            348
                                            
                                            
                                            
                                            72
                                            
                                            
                                            
                                            74Construction
      commitments
                                            
                                            
                                            2,157
                                            
                                            
                                            
                                            2,157
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -Total
      contractual obligations
                                            
                                            $
                                            1,066,732
                                            
                                            
                                            $
                                            189,243
                                            
                                            
                                            $
                                            240,821
                                            
                                            
                                            $
                                            182,285
                                            
                                            
                                            $
                                            454,383






(1)
            $100
      million of the outstanding balance has been swapped to a floating interest
      rate based on the six-month LIBOR in arrears, plus 0.4375%.  The
      contractual obligations for the unsecured senior notes do not reflect this
      interest rate swap.





The
following table sets forth certain information regarding future interest
obligations on outstanding debt as of December 31, 2008:







Payments due by periodTotal
                                                  
                                                  
                                                  Less than 1 year
                                                  
                                                  
                                                  1-3 years
                                                  
                                                  
                                                  3-5 years
                                                  
                                                  
                                                  More than 5 years(In
      thousands)Mortgage
      notes
                                                  
                                                  $
                                                  126,176
                                                  
                                                  
                                                  $
                                                  26,236
                                                  
                                                  
                                                  $
                                                  52,138
                                                  
                                                  
                                                  $
                                                  24,110
                                                  
                                                  
                                                  $
                                                  23,692Unsecured
      senior notes(2)
                                                  
                                                  
                                                  223,576
                                                  
                                                  
                                                  
                                                  30,863
                                                  
                                                  
                                                  
                                                  85,042
                                                  
                                                  
                                                  
                                                  82,099
                                                  
                                                  
                                                  
                                                  25,572Unsecured
      revolving credit facilities(3)
                                                  
                                                  
                                                  2,078
                                                  
                                                  
                                                  
                                                  744
                                                  
                                                  
                                                  
                                                  1,334
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -Total
      interest obligations
                                                  
                                                  $
                                                  351,830
                                                  
                                                  
                                                  $
                                                  57,843
                                                  
                                                  
                                                  $
                                                  138,514
                                                  
                                                  
                                                  $
                                                  106,209
                                                  
                                                  
                                                  $
                                                  49,264





(2)
            $100
      million of the outstanding principal balance has been swapped to a
      floating interest rate based on the six-month LIBOR in arrears, plus
      0.4375%.  The interest obligations for the unsecured senior
      notes presented above assume that the rate that was in effect at December
      31, 2008 remains the same for this interest rate
  swap.





(3)
            Interest
      on the unsecured revolving credit facility is variable; these amounts
      assume that the weighted average interest rate remains the same as the
      rate at December 31, 2008.





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Indebtedness.The following table
sets forth certain information regarding our indebtedness as of December 31,
2008:





Property
                  
                  Balance
      at December 31,
    2008
                  
                  
                  Rate(1)
                  
                  Maturity
      date
                  
                  Balance
      Due at Maturity(in
      thousands)
                  
                  
                  
                  
                  
                  
                  (in
      thousands)Mortgage
      debtPark
      Promenade
                  
                  
                  5,935
                  
                  
                  
                  8.100
                  %
                  02/01/10
                  
                  
                  5,833Jonathan's
      Landing
                  
                  
                  2,706
                  
                  
                  
                  8.050
                  %
                  05/01/10
                  
                  
                  2,639Bluff's
      Square
                  
                  
                  9,590
                  
                  
                  
                  8.740
                  %
                  06/01/10
                  
                  
                  9,401Kirkman
      Shoppes
                  
                  
                  9,056
                  
                  
                  
                  8.740
                  %
                  06/01/10
                  
                  
                  8,878Ross
      Plaza
                  
                  
                  6,316
                  
                  
                  
                  8.740
                  %
                  06/01/10
                  
                  
                  6,192Shoppes
      of Andros Isle
                  
                  
                  6,086
                  
                  
                  
                  7.900
                  %
                  06/10/10
                  
                  
                  5,800Boynton
      Plaza
                  
                  
                  7,069
                  
                  
                  
                  8.030
                  %
                  07/01/10
                  
                  
                  6,902Pointe
      Royale
                  
                  
                  3,068
                  
                  
                  
                  7.950
                  %
                  07/15/10
                  
                  
                  2,502Shops
      at Skylake
                  
                  
                  12,504
                  
                  
                  
                  7.650
                  %
                  08/01/10
                  
                  
                  11,644Parkwest
      Crossing
                  
                  
                  4,467
                  
                  
                  
                  8.100
                  %
                  09/01/10
                  
                  
                  4,352Spalding
      Village
                  
                  
                  8,722
                  
                  
                  
                  8.190
                  %
                  09/01/10
                  
                  
                  7,932Charlotte
      Square
                  
                  
                  3,224
                  
                  
                  
                  9.190
                  %
                  02/01/11
                  
                  
                  2,992Forest
      Village
                  
                  
                  4,209
                  
                  
                  
                  7.270
                  %
                  04/01/11
                  
                  
                  4,044Boca
      Village
                  
                  
                  7,782
                  
                  
                  
                  7.200
                  %
                  05/01/11
                  
                  
                  7,466MacLand
      Pointe
                  
                  
                  5,498
                  
                  
                  
                  7.250
                  %
                  05/01/11
                  
                  
                  5,268Pine
      Ridge Square
                  
                  
                  6,880
                  
                  
                  
                  7.020
                  %
                  05/01/11
                  
                  
                  6,580Sawgrass
      Promenade
                  
                  
                  7,782
                  
                  
                  
                  7.200
                  %
                  05/01/11
                  
                  
                  7,465Lake
      Mary Centre
                  
                  
                  23,074
                  
                  
                  
                  7.250
                  %
                  11/01/11
                  
                  
                  21,973Lake
      St. Charles
                  
                  
                  3,638
                  
                  
                  
                  7.130
                  %
                  11/01/11
                  
                  
                  3,461Belfair
      Towne Village
                  
                  
                  10,243
                  
                  
                  
                  7.320
                  %
                  12/01/11
                  
                  
                  9,321Marco
      Town Center
                  
                  
                  7,846
                  
                  
                  
                  6.700
                  %
                  01/01/12
                  
                  
                  7,150Riverside
      Square
                  
                  
                  7,058
                  
                  
                  
                  9.190
                  %
                  03/01/12
                  
                  
                  6,458Cashmere
      Corners
                  
                  
                  4,662
                  
                  
                  
                  5.880
                  %
                  11/01/12
                  
                  
                  4,084Eastwood
                  
                  
                  5,555
                  
                  
                  
                  5.880
                  %
                  11/01/12
                  
                  
                  4,866Meadows
      Shopping Center
                  
                  
                  5,837
                  
                  
                  
                  5.870
                  %
                  11/01/12
                  
                  
                  5,113Lutz
      Lake Crossing
                  
                  
                  7,420
                  
                  
                  
                  6.280
                  %
                  01/01/13
                  
                  
                  7,012Midpoint
      Center
                  
                  
                  6,381
                  
                  
                  
                  5.770
                  %
                  07/10/13
                  
                  
                  5,458Buckhead
      Station
                  
                  
                  26,806
                  
                  
                  
                  6.880
                  %
                  09/01/13
                  
                  
                  23,584Alafaya
      Village
                  
                  
                  3,970
                  
                  
                  
                  5.990
                  %
                  11/11/13
                  
                  
                  3,603Summerlin
      Square
                  
                  
                  2,311
                  
                  
                  
                  6.750
                  %
                  02/01/14
                  
                  
                  -South
      Point
                  
                  
                  7,821
                  
                  
                  
                  5.720
                  %
                  07/10/14
                  
                  
                  6,509Bird
      Ludlum
                  
                  
                  6,742
                  
                  
                  
                  7.680
                  %
                  02/15/15
                  
                  
                  -Treasure
      Coast Plaza
                  
                  
                  3,202
                  
                  
                  
                  8.000
                  %
                  04/01/15
                  
                  
                  -Shoppes
      of Silverlakes I
                  
                  
                  1,875
                  
                  
                  
                  7.750
                  %
                  07/01/15
                  
                  
                  30Grassland
      Crossing
                  
                  
                  5,058
                  
                  
                  
                  7.870
                  %
                  12/01/16
                  
                  
                  2,601Mableton
      Crossing
                  
                  
                  3,611
                  
                  
                  
                  6.850
                  %
                  08/15/18
                  
                  
                  1,869Sheridan
      Plaza
                  
                  
                  64,876
                  
                  
                  
                  6.250
                  %
                  10/10/18
                  
                  
                  54,754BridgeMill
                  
                  
                  8,608
                  
                  
                  
                  7.940
                  %
                  05/05/21
                  
                  
                  3,761Westport
      Plaza
                  
                  
                  4,456
                  
                  
                  
                  7.490
                  %
                  08/24/23
                  
                  
                  1,221Chastain
      Square
                  
                  
                  3,365
                  
                  
                  
                  6.500
                  %
                  02/28/24
                  
                  
                  58





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Daniel
      Village
                  
                  
                  3,679
                  
                  
                  
                  6.500
                  %
                  02/28/24
                  
                  
                  63Douglas
      Commons
                  
                  
                  4,383
                  
                  
                  
                  6.500
                  %
                  02/28/24
                  
                  
                  75Fairview
      Oaks
                  
                  
                  4,148
                  
                  
                  
                  6.500
                  %
                  02/28/24
                  
                  
                  71Madison
      Centre
                  
                  
                  3,365
                  
                  
                  
                  6.500
                  %
                  02/28/24
                  
                  
                  58Paulding
      Commons
                  
                  
                  5,714
                  
                  
                  
                  6.500
                  %
                  02/28/24
                  
                  
                  97Siegen
      Village
                  
                  
                  3,718
                  
                  
                  
                  6.500
                  %
                  02/28/24
                  
                  
                  63Wesley
      Chapel Crossing
                  
                  
                  2,935
                  
                  
                  
                  6.500
                  %
                  02/28/24
                  
                  
                  50Webster
      Plaza
                  
                  
                  7,826
                  
                  
                  
                  8.070
                  %
                  08/15/24
                  
                  
                  2,793Total
      mortgage debt (48 loans outstanding)
                  
                  $
                  371,077
                  
                  
                  
                  7.220
                  %
                  4.96
                  
                  $
                  282,046





(1)
            The
      rate in effect on December 31,
2008.





The
weighted average interest rate of the mortgage notes payable at December 31,
2008 and 2007 was 7.22% and 7.42%, respectively, excluding the effects of the
premium adjustment.





Each of
the existing mortgage loans is secured by a mortgage on one or more of our
properties. Certain of the mortgage loans involving an aggregate principal
balance of approximately $63.9 million contain prohibitions on transfers of
ownership which may have been violated by our previous issuances of common stock
or in connection with past acquisitions and may be violated by transactions
involving our capital stock in the future. If a violation were established, it
could serve as a basis for a lender to accelerate amounts due under the affected
mortgage. To date, no lender has notified us that it intends to accelerate its
mortgage. In the event that the mortgage holders declare defaults under the
mortgage documents, we will, if required, prepay the remaining mortgage from
existing resources, refinancing of such mortgages, borrowings under our other
lines of credit or other sources of financing.  Based on discussions
with various lenders, current credit market conditions and other factors, we
believe that the mortgages will not be accelerated.  Accordingly, we
believe that the violations of these prohibitions will not have a material
adverse impact on our results of operations or financial condition.





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Our
outstanding unsecured senior notes at December 31, 2008 consist of the
following:





Unsecured
      senior notes payable
                    
                    Balance
      at December 31,
    2008
                    
                    
                    Rate(1)
                    
                    Maturity
      date
                    
                    Balance
      Due at Maturity(in
      thousands)
                    
                    
                    
                    
                    
                    
                    (in
      thousands)3.875%
      senior notes(2)
                    
                    $
                    176,185
                    
                    
                    
                    3.875
                    %
                    04/15/09
                    
                    $
                    176,185Fair
      value of $100MM fixed-to-floating interest rate swap
                    
                    
                    949
                    
                    
                    6-month
      Libor + 0.4375%
                    
                    04/15/09
                    
                    
                    9497.84%
      senior notes
                    
                    
                    10,000
                    
                    
                    
                    7.840
                    %
                    01/23/12
                    
                    
                    10,0005.375%
      senior notes
                    
                    
                    117,000
                    
                    
                    
                    5.375
                    %
                    10/15/15
                    
                    
                    117,0006.00%
      senior notes
                    
                    
                    106,500
                    
                    
                    
                    6.000
                    %
                    09/15/16
                    
                    
                    106,5006.25%
      senior notes
                    
                    
                    115,000
                    
                    
                    
                    6.250
                    %
                    01/15/17
                    
                    
                    115,0006.00%
      senior notes
                    
                    
                    132,279
                    
                    
                    
                    6.000
                    %
                    09/15/17
                    
                    
                    132,279Total
      unsecured senior notes payable
                    
                    $
                    657,913
                    
                    
                    
                    5.660
                    %
                    6.53
                    
                    $
                    657,913(wtd-avg interest
      rate)
                    
                    (wtd-avg
      maturity)





(1)
            The
      rate in effect on December 31,
2008.





(2)
            $100.0
      million of the outstanding balance has been swapped to a floating interest
      rate based on the six-month LIBOR in arrears, plus 0.4375%.  The
      indicated rate and weighted average rate for the unsecured senior notes do
      not reflect this interest rate
swap.





The
weighted average interest rate of the unsecured senior notes at December 31,
2008 and December 31, 2007 was 5.66% and 5.67%, respectively, excluding the
effects of the interest rate swap and net premium adjustment.  In
April 2007, we completed a private placement of $150.0 million senior unsecured
notes that mature on September 15, 2017.  Interest is due
semi-annually on March 15 and September 15 of each year, with the first payment
paid on September 15, 2007.  The notes were issued at a discount of
$151,500 that is being amortized as interest expense over the life of the
notes.  On December 5, 2007, we completed an exchange offer of
registered notes for the private placement notes.





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





On March
24, 2004, concurrently with the issuance of the $200.0 million 3.875% senior
unsecured notes, we entered into a $100.0 million notional principal variable
rate interest swap with an estimated fair value of $949,000 as of December 31,
2008.  This swap converted fixed rate debt to variable rate based on
the six-month LIBOR in arrears plus 0.4375%, and matures April 15,
2009.





The
following table provides a summary of our unsecured revolving lines of credit
balances at December 31, 2008:





Revolving
      credit facilities
                                    
                                    Balance
      at December 31,
    2008
                                    
                                    
                                    Rate(1)
                                    
                                    Maturity
      date
                                    
                                    Balance
      Due at Maturity(in
      thousands)
                                    
                                    
                                    
                                    
                                    
                                    
                                    (in
      thousands)$227MM
      Wells Fargo Unsecured
                                    
                                    $
                                    35,500
                                    
                                    
                                    
                                    2.068
                                    %
                                    10/17/11
                                    
                                    $
                                    35,500$15MM
      City National Bank Unsecured
                                    
                                    
                                    -
                                    
                                    
                                    
                                    N/A
                                    
                                    10/11/09
                                    
                                    
                                    -Total
      revolving credit facilities
                                    
                                    $
                                    35,500
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    $
                                    35,500





(1)The
rate in effect on December 31, 2008, which is t he
weighted average interest rate on the outstanding Wells Fargo
balance.





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On
October 17, 2008, we amended and restated our credit agreements with a syndicate
of banks to provide for a $227.0 million unsecured revolving credit facility
that replaced our existing facility that would have expired in January
2009.  The amended facility bears interest at our option at (i)
applicable LIBOR plus 1.00% to 1.70%, depending on the credit ratings of our
senior unsecured notes, or (ii) daily LIBOR plus 3.00%.  The amended
facility also includes a competitive bid option which allows us to conduct
auctions among the participating banks for borrowings at any one time
outstanding up to 50% of the lender commitments, a $35.0 million swing line
facility for short term borrowings and a $20.0 million letter of credit
commitment.   Subject to the terms and conditions in the amended
credit agreement the total commitments under the facility may be increased up to
a total of $400.0 million.  The amended facility expires on October
17, 2011, with a one year extension option.  In addition, the amended
facility contains customary covenants, including financial covenants regarding
debt levels, total liabilities, interest coverage, fixed charge coverage ratios,
unencumbered properties, permitted investments and others. If a default under
the facility exists, our ability to pay dividends is limited to the amount
necessary to maintain our status as a REIT unless the default is a payment
default or bankruptcy event in which case we are prohibited from paying any
dividends.





We also
have a $15.0 million unsecured credit facility with City National Bank of
Florida, on which there was no outstanding balance as of December 31, 2008 and
December 31, 2007.  This facility also provides collateral for
$527,000  in outstanding letters of credit.  In addition, we
also have a $55,000 outstanding secured letter of credit with Bank of
America.





As of
December 31, 2008, the aggregate availability under the both credit facilities
was approximately $193.7 million, net of outstanding balances and letters of
credit and subject to covenants provided therein.





We may
not have sufficient funds on hand to repay balloon amounts on our indebtedness
at maturity. Therefore, we plan to refinance such indebtedness either
through additional mortgage financings secured by individual properties or
groups of properties, by unsecured private or public debt offerings or by
additional equity offerings, if available, or through the availability of our
credit lines.  Our results of operations could be affected if the cost
of new debt is greater or lesser than the cost of the maturing
debt.  If new financing is not available, we could be required to sell
assets and our business could be adversely affected. Refer to our risk factors
with the caption “ Credit markets may affect our ability to refinance maturing
debt at a reasonable cost” for additional risks related to
liquidity.





Equity.  For the
year ended December 31, 2008, we issued 711,250 shares of our common stock
pursuant to the exercise of stock options at prices ranging from $16.61 to
$24.45 per share.  No shares were purchased from the Dividend
Reinvestment and Stock Purchase Plan which was suspended in March 2006, with
approximately 5.4 million shares still available for sale.





On
September 24, 2008, we entered into an underwriting agreement with several
underwriters with respect to the issue and sale of 2,200,000 shares of our
common stock in an underwritten public offering.  The shares were
offered to the public at $21.47 per share. The issuance of the shares was
registered under the Securities Act of 1933 pursuant to our shelf registration
statement.





Contemporaneous
with the execution of the underwriting agreement, we entered into a common stock
purchase agreement with an affiliate of our largest stockholder, Gazit-Globe,
Ltd., which may be deemed to be controlled by Chaim Katzman, the chairman of our
board of directors. Under the purchase agreement, Gazit’s affiliate agreed to
purchase 440,000 shares of our common stock at the public offering price in a
private placement. In connection with the purchase agreement, we also executed a
registration rights agreement granting the investor customary demand and
“piggy-back” registration rights.





Future Capital
Requirements.  We believe, based on currently proposed plans
and assumptions relating to our operations, that our existing financial
arrangements, together with cash generated from our operations, will be
sufficient to satisfy our cash requirements for a period of at least twelve
months. In the event that our plans change, our assumptions change or prove to
be inaccurate or cash flows from operations or amounts available under existing
financing arrangements prove to be insufficient to fund our expansion and
development efforts or to the extent we discover suitable acquisition targets
the purchase price of which exceeds our existing liquidity, we would be required
to seek additional sources of financing. There can be no assurance that any
additional financing will be available on acceptable terms or at all, and any
future equity financing could be dilutive to existing stockholders. If adequate
funds are not available, our business operations could be materially adversely
affected.





Distributions.  We
believe that we currently qualify, and intend to continue to qualify in the
future, as a REIT under the Internal Revenue Code. As a REIT, we are allowed to
reduce taxable income by all or a portion of our distributions to
stockholders.  As distributions have exceeded taxable income, no
provision for federal income taxes has been made. While we intend to continue to
pay dividends to our stockholders, we also will reserve such amounts of cash
flow as we consider necessary for the proper maintenance and improvement of our
real estate and other corporate purposes while still maintaining our
qualification as a REIT. Our cash distributions for the year ended December 31,
2008 were $89.6 million.





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Off-Balance-Sheet
Arrangements





From time
to time, we may have off-balance-sheet joint ventures and other unconsolidated
arrangements with varying structures. As of December 31, 2008 we had two
unconsolidated joint ventures.





On
February 22, 2008, we formed a joint venture with Global Retail Investors, LLC.,
an entity formed by an affiliate of First Washington Realty, Inc. and the State
of California Public Employees’ Retirement System.  We have a 10%
ownership interest in this joint venture.  On April 1, 2008, the joint
venture agreement was amended and restated in connection with the our sale of
seven income producing properties and one outparcel to the joint venture. The
aggregate gross sales price of the seven assets was $176.8 million and the
assets were sold in two tranches during the quarter ended June 30,
2008.  The properties had a net book value of $152.6 million and we
recognized a total gain on sale of approximately $18.5 million, which is net of
approximately $2.4 million of costs incurred in connection with the defeasance
of existing mortgage debt paid for by the purchaser.  At the closings,
$9.3 million of the sale proceeds were contributed by us to the joint venture as
our investment in the joint venture.  On November 13, 2008, we sold an
additional two properties to the joint venture which had a net book value of
$21.9 million, and we recognized a total gain on sale of approximately $3.2
million.  At the closings, $1.2 million of the sale proceeds were
contributed by us to the joint venture as our investment in the joint
venture.





On April
29, 2008, we entered into a joint venture with an affiliate of DRA Advisors,
LLC, or DRA, to invest in value-added acquisition opportunities.  The
joint venture is 80% owned by the affiliate of DRA and 20% owned by
us.  During 2008, the DRA joint venture completed the acquisition
of a portfolio of three properties comprising one office building and two
neighborhood shopping centers totaling approximately 503,000 square feet of
GLA.  As part of this acquisition, we contributed $3.2 million to the
venture.  Our capital contribution represents our pro-rata portion of
the net purchase price, after the assumption by the DRA joint venture of
existing mortgage indebtedness. We have agreed to manage all three of the
properties and will act as leasing agent for the two retail properties acquired
by the joint venture.





In
addition, following the end of the year, we entered into a Stock Exchange
Agreement pursuant to which we acquired approximately 1.2 million ordinary
shares of DIM Vastgoed N.V., or DIM.  Under this agreement, we issued
866,373 shares of our common stock as payment for these initial shares and
obtained voting rights with respect to an additional 766,573 ordinary shares of
DIM, which we have agreed to buy, subject to the satisfaction of certain
conditions, on or before January 1, 2011 for additional shares of our stock or
cash. As a result of the initial exchange and the voting rights agreement, we
have voting control over approximately 74.6% of DIM’s outstanding ordinary
shares, including the approximately 4.0 million DIM shares we owned prior to
year-end and excluding treasury shares. Based on
our current assumption that we will demostrate control over DIM as of the first
quarter of 2009, we anticipate consolidating the financial results and balance
sheet of DIM into our financial statements at such time.





We
consolidate entities in which we own less than a 100% equity interest if we have
a controlling interest or are the primary beneficiary in a variable-interest
entity, as defined in Financial Interpretation No. 46, Consolidation of Variable Interest
Entities.





Letters of
Credit:  As of December 31, 2008, we have pledged letters of
credit for $12.9 million as additional security for certain property
matters.  Substantially all of our letters of credit are issued under
our revolving credit facilities.





Construction
Commitments:  As of December 31, 2008, we have entered into
construction commitments and have outstanding obligations to fund $2.2 million,
based on current plans and estimates, in order to complete current development
and redevelopment projects.  These obligations, comprising principally
construction contracts, are generally due as the work is performed and are
expected to be financed by funds available under our credit
facilities.





Operating Lease
Obligations:  Certain of our properties are subject to ground
leases, which are accounted for as operating leases and have annual obligations
of approximately $40,000.  Additionally, we have operating lease
agreements for office space for which we have an annual obligation of
approximately $425,000.





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





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Environmental
Matters





We are
subject to numerous environmental laws and regulations.  The operation
of dry cleaning facilities or gas stations at our shopping centers is the
principal environmental concern. We require that the tenants who operate these
facilities do so in material compliance with current laws and regulations and we
have established procedures to monitor their operations. Where available, we
have applied and been accepted into state sponsored environmental
programs.  Several properties in our portfolio will require or are
currently undergoing varying levels of environmental remediation.  We
have environmental insurance policies covering most of our
properties.





We
believe that the ultimate disposition of currently known environmental matters
will not have a material effect on our financial position, liquidity or
operations.





Inflation
and Recession Considerations





Most of
our leases contain provisions designed to partially mitigate any adverse impact
of inflation.  Most of our leases require the tenant to pay its share
of operating expenses, including common area maintenance, real estate taxes and
insurance, thereby reducing our exposure to increases in costs and operating
expenses resulting from inflation.  A small number of our leases also
include clauses enabling us to receive percentage rents based on a tenant’s
gross sales above predetermined levels, which sales generally increase as prices
rise, or escalation clauses which are typically related to increases in the
Consumer Price Index or similar inflation indices.





Our financial results are affected by
general economic conditions in the markets in which our properties are located.
An economic recession, or other adverse changes in general or local economic
conditions, could result in the inability of some of our existing tenants to
meet their lease obligations and could otherwise adversely affect our ability to
attract or retain tenants.





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ITEM
      7A.
            QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK





Interest
Rate Risk





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





As ofDecember 31, 2008, we had approximately $135.5 million of
outstanding floating rate debt (excluding our interest rate swap), including
$100.0 million of fixed rate borrowings that we have converted to floating rate
borrowings through the use of hedging agreements.  We do not believe
that the interest rate risk represented by our floating rate debt is material as
ofDecember 31,
2008, in relation to our
$1.1 billion of outstanding debt, $2.0billion of total assets and
$2.4billion total market
capitalization as of that date.





If interest rates on our variable rate
debt increase by 1%, the increase in annual interest expense on our variable
rate debt would decrease future earnings and cash flows by approximately $1.4
million.  If interest rates on our variable rate debt decrease by 1%,
the decrease in interest expense on our variable rate debt would increase future
earnings and cash flows by approximately $1.4 million. This assumes that the
amount outstanding under our variable rate debt remains at approximately $135.5
million (including the $100.0 million of fixed rate debt converted to floating
rate debt through the use of hedging agreements), the balance as ofDecember 31, 2008.





The fair value of our fixed-rate debt is
$781.4 million, which includes the mortgage notes and fixed-rate portion of the
senior unsecured notes payable (excluding the unamortized premium and the $100.0
million of fixed-rate debt converted to floating-rate debt through
maturity).  If interest rates increase by 1%, the fair value of our
total fixed-rate debt would decrease by approximately $32.8
million.  Conversely, if interest rates decrease by 1%, the fair value
of our total outstanding debt would increase by approximately $35.0
million.  This assumes that our total outstanding fixed-rate debt
remains at $781.4 million, the balance as ofDecember 31, 2008.





Hedging.To manage, or hedge, our exposure to
interest rate risk, we follow established risk management policies and
procedures, including the use of a variety of derivative financial instruments.
We do not enter into derivative instruments for speculative purposes. We require
that the hedges or derivative financial instruments be effective in managing the
interest rate risk exposure that they are designated to hedge. This
effectiveness is essential to qualify for hedge accounting. Hedges that meet
these hedging criteria are formally designated as such at the inception of the
contract. When the terms of an underlying transaction are modified, or when the
underlying hedged item ceases to exist, resulting in some ineffectiveness, the
change in the fair value of the derivative instrument will be included in
earnings. Additionally, any derivative instrument used for risk management that
becomes ineffective is marked-to-market each period and would be charged to
operations.





We are exposed to credit risk in the
event of non-performance by the counter-parties to the hedge
agreements.  We believe that we mitigate our credit risk by entering
into these agreements with major financial institutions.  Net interest
differentials to be paid or received under a swap contract and/or collar
agreement are included in interest expense as incurred or
earned.





During 2004, concurrent with the
issuance of $200.0 million unsecured senior notes, we entered into a $100.0
million notional principal variable rate interest swap with an estimated fair
value of $949,000 as ofDecember 31, 2008. This swap converted fixed rate debt to
variable rate based on the six-month LIBOR in arrears plus 0.4375%, and maturesApril 15, 2009.





The estimated fair value of our
derivative financial instruments has been determined using available market
information and appropriate valuation methodologies. However, considerable
judgment is necessarily required in interpreting market data to develop the
estimates of fair value. Accordingly, the estimates presented herein are not
necessarily indicative of the amounts that we could realize in a current market
exchange. The use of different market assumptions or estimation methodologies
may have a material effect on the estimated fair value.





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Other
Market Risks





As of
December 31, 2008, we had no material exposure to any other market risks
(including foreign currency exchange risk, commodity price risk or equity price
risk).





In making
this determination and for purposes of the Securities and Exchange Commission's
market risk disclosure requirements, we have estimated the fair value of our
financial instruments at December 31, 2008 based on pertinent information
available to management as of that date. Although management is not aware of any
factors that would significantly affect the estimated fair value amounts as of
December 31, 2008, future estimates of fair value and the amounts which may be
paid or realized in the future may differ significantly from amounts
presented.





ITEM
      8.
            FINANCIAL
      STATEMENTS AND SUPPLEMENTARY DATA





The
financial statements and supplementary data required by Regulation S-X are
included in this Form 10-K commencing on page F-1.





ITEM
9.               
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE





None.





ITEM
      9A.
            CONTROLS
      AND PROCEDURES





Evaluation of Disclosure Controls and
Procedures





Under the supervision and with the
participation of our management, including the principal executive officer and
principal financial officer, we conducted an evaluation of the effectiveness of
the design and operation of our disclosure controls and procedures, as defined
in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
amended, as ofDecember 31,
2008, the end of the period
covered by this report.  Based on this evaluation, our principal
executive officer and principal financial officer concluded as ofDecember 31, 2008that our disclosure controls and
procedures were effective at the reasonable assurance level such that the
information relating to us and our consolidated subsidiaries, required to be
disclosed in our Securities and Exchange Commission (“SEC”) reports (i) is
recorded, processed, summarized and reported within the time periods specified
in SEC rules and forms, and (ii) is accumulated and communicated to our
management, including our principal executive officer and principal financial
officer, as appropriate to allow timely decisions regarding required
disclosure.





Management Report on Internal Control
over Financial Reporting





The report of our management regarding
internal control over financial reporting is set forth on page F-1 of this
Annual Report on Form 10-K under the caption “Management Report on Internal
Control over Financial Reporting” and incorporated herein by
reference.





Attestation Report of Independent
Registered Public Accounting Firm





The report of our independent registered
public accounting firm regarding our internal control over financial reporting
is set forth in page F-2 of this Annual Report on Form 10-K under the caption
“Report of Independent Registered Public Accounting Firm” and incorporated
herein by reference.





Changes in Internal Control over
Financial Reporting





There were no changes in our internal
control over financial reporting during the quarter endedDecember 31, 2008, that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.





ITEM
      9B.
            OTHER
      INFORMATION





None.





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PART III





ITEM10.
            DIRECTORS
      AND EXECUTIVE OFFICERS OF THE
REGISTRANT





Incorporated
by reference from our definitive proxy statement to be filed within 120 days
after the end of our fiscal year covered by this Form 10-K.





ITEM
      11.
            EXECUTIVE
      COMPENSATION





Incorporated
by reference from our definitive proxy statement to be filed within 120 days
after the end of our fiscal year covered by this Form 10-K.





ITEM
      12.
            SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS





Equity Compensation Plan
Information





The following table sets forth
information regarding securities authorized for issuance under equity
compensation plans as ofDecember 31, 2008





Plan
    category
                        
                        Number of securities to be issued
      upon exercise of outstanding options, warrants and
      rights
                        
                        
                        Weighted-average exercise price of
      outstanding options, warrants and rights
                        
                        
                        Number of securities remaining
      available for future issuance under equity compensation plans (excluding
      securities reflected in column (a))(a)
                        
                        
                        (b)
                        
                        
                        (c)Equity compensation plans approved
      by security holders(1)
                        
                        
                        2,110,568
                        
                        
                        $
                        23.09
                        
                        
                        
                        3,375,383Equity compensation plans not
      approved by security holders
                        
                        
                        364,660
                        
                        
                        $
                        24.70
                        
                        
                        
                        -Total
                        
                        
                        2,475,228
                        
                        
                        $
                        23.32
                        
                        
                        
                        3,375,383








The other
information required by this item is incorporated by reference from our
definitive proxy statement to be filed within 120 days after the end of our
fiscal year covered by this Form 10-K.





ITEM
      13.
            CERTAIN
      RELATIONSHIPS AND RELATED
TRANSACTIONS





Incorporated
by reference from our definitive proxy statement to be filed within 120 days
after the end our fiscal year covered by this Form 10-K.





ITEM
      14.
            PRINCIPAL
      ACCOUNTANT FEES AND SERVICES





Incorporated
by reference from our definitive proxy statement to be filed within 120 days
after the end our fiscal year covered by this Form 10-K.





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PART IV





ITEM15.
            EXHIBITS
      AND FINANCIAL STATEMENT SCHEDULES





(a)
            The following consolidated
      financial information is included as a separate section of this
      Form10-K:





1.
                                                          Financial
      Statements:PageManagement Report on Internal
      Control Over Financial Reporting
                                                          F-1Report of Independent Registered
      Public Accounting Firm
                                                          F-2Report of Independent Registered
      Public Accounting Firm
                                                          F-3Consolidated Balance Sheets as ofDecember 31,
      2008and
      2007
                                                          F-4Consolidated Statements of
      Operations for the years endedDecember 31, 2008, 2007 and
    2006
                                                          F-5Consolidated Statements of
      Comprehensive Incomefor the years endedDecember 31, 2008, 2007 and
    2006
                                                          F-6Consolidated Statements of
      Stockholders’ Equityfor the years endedDecember 31, 2008, 2007 and
    2006
                                                          F-7Consolidated Statements of Cash
      Flows for the years endedDecember 31, 2008, 2007 and
    2006
                                                          F-8 -
F-9Notes to the Consolidated
      Financial Statements
                                                          F-102.
                                                          Financial statement schedules
      required to be filedSchedule III - Real Estate
      Investments and Accumulated Depreciation
                                                          S-1 –
S-4Schedule IV – Mortgage Loans on
      Real Estate
                                                          S-5Schedules I and V are not required
      to be filed.





(b)
            Exhibits: The following exhibits
      are filed as part of, or incorporated by reference into, this annual
      report.





EXHIBIT NO.
                  DESCRIPTION3.1
                  Composite
      Charter of the Company (Exhibit 3.1) (1)3.2
                  Amended
      and Restated Bylaws of the Company (Exhibit 3.2) (2)4.1
                  Indenture
      dated November 9, 1995 between the Company, as successor-by-merger to IRT
      Property Company, and SunTrust Bank, as Trustee (Exhibit 4(c))
      (3)4.2
                  Intentionally
      Omitted4.3
                  Intentionally
      Omitted4.4
                  Supplemental
      Indenture No. 3, dated September 9, 1998, between the Company, as
      successor-by-merger to IRT Property Company, and SunTrust Bank, as Trustee
      (Exhibit 4.1) (6)4.5
                  Supplemental
      Indenture No. 4, dated November 1, 1999, between the Company, as
      successor-by-merger to IRT Property Company, and SunTrust Bank, as Trustee
      (Exhibit 4.1) (7)4.6
                  Supplemental
      Indenture No. 5, dated February 12, 2003, between the Company and SunTrust
      Bank, as Trustee (Exhibit 4.1) (8)4.7
                  Supplemental
      Indenture No. 6, dated April 23, 2004, between the Company and SunTrust
      Bank, as Trustee (Exhibit 4.2) (9)4.8
                  Supplemental
      Indenture No. 7, dated May 20, 2005, between the Company and SunTrust
      Bank, as Trustee (Exhibit 4.1) (10)4.9
                  Indenture,
      dated September 9, 1998, between the Company, as successor-by-merger to
      IRT Property Company, and SunTrust Bank, as Trustee (Exhibit 4.2)
      (6)4.10
                  Supplemental
      Indenture No. 1, dated September 9, 1998, between the Company, as
      successor-by-merger to IRT Property Company, and SunTrust Bank, as Trustee
      (Exhibit 4.3) (6)





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EXHIBIT NO.
                  DESCRIPTION4.11
                  Supplemental
      Indenture No. 2, dated November 1, 1999, between the Company, as
      successor-by-merger to IRT Property Company, and SunTrust Bank, as Trustee
      (Exhibit 4.5) (7)4.12
                  Supplemental
      Indenture No. 3, dated February 12, 2003, between the Company and SunTrust
      Bank, as Trustee (Exhibit 4.2) (8)4.13
                  Supplemental
      Indenture No. 4, dated March 26, 2004, between the Company and SunTrust
      Bank, as Trustee (Exhibit 4.1) (11)4.14
                  Supplemental
      Indenture No. 5, dated April 23, 2004, between the Company and SunTrust
      Bank, as Trustee (Exhibit 4.1) (9)4.15
                  Supplemental
      Indenture No. 6 dated May 20, 2005, between the Company and SunTrust Bank,
      as Trustee (Exhibit 4.2)(10)4.16
                  Supplemental
      Indenture No. 7 dated September 20, 2005, between the Company and SunTrust
      Bank, as Trustee (Exhibit 4.1)(12)4.17
                  Supplemental
      Indenture No. 8 dated December 30, 2005, between the Company and SunTrust
      Bank, as Trustee (Exhibit 4.17) (13)4.18
                  Supplemental
      Indenture No. 9 dated March 10, 2006 between the Company and SunTrust
      Bank, as Trustee (Exhibit 4.1) (14)4.19
                  Supplemental
      Indenture No. 10 dated August 18, 2006 between the Company and SunTrust
      Bank, as Trustee (Exhibit 4.1) (15)4.20
                  Supplemental
      Indenture No. 11 dated April 18, 2007, between the Company and U.S. Bank
      National Association, as Trustee (Exhibit 4.1) (27)10.1
                  Form
      of Indemnification Agreement (Exhibit 10.1)(16)10.2
                  1995
      Stock Option Plan, as amended (17)*10.3
                  Amended
      and Restated 2000 Executive Incentive Plan (Annex A)
  (32)*10.4
                  Form
      of Stock Option Agreement for stock options awarded under the Amended and
      Restated 2000 Executive Incentive Plan (Exhibit 10.3)
  (19)*10.5
                  Form
      of Restricted Stock Agreement for restricted stock awarded under the
      Amended and Restated 2000 Executive Incentive Plan (Exhibit 10.4)
      (19)*10.6
                  IRT
      1989 Stock Option Plan, assumed by the Company (20)*10.7
                  IRT
      1998 Long-Term Incentive Plan, assumed by the Company
  (21)*10.8
                  2004
      Employee Stock Purchase Plan (Annex B) (18)*10.9
                  Registration
      Rights Agreement, dated as of January 1, 1996 by and among the Company,
      Chaim Katzman, Gazit Holdings, Inc., Dan Overseas Ltd., Globe Reit
      Investments, Ltd., Eli Makavy, Doron Valero and David Wulkan, as amended.
      (Exhibit 10.6, Amendment No. 3) (22)10.10
                  Stock Exchange Agreement datedMay 18,
      2001among the
      Company, First Capital Realty Inc. and First Capital America Holding Corp
      (23)10.11
                  Use
      Agreement, regarding use of facilities, by and between Gazit (1995), Inc.
      and the Company, dated January 1, 1996. (Exhibit 10.15, Amendment No. 1)
      (22)10.12
                  Subscription
      Agreement, dated October 4, 2000, made by Alony Hetz Properties &
      Investments, Ltd. (Exhibit 10.13) (24)10.13
                  Stockholders
      Agreement, dated October 4, 2000, among the Company, Alony Hetz Properties
      & Investments, Ltd., Gazit-Globe (1982), Ltd., M.G.N. (USA), Inc. and
      Gazit (1995), Inc. (Exhibit 10.14) (24)10.14
                  First
      Amendment to Stockholders Agreement, dated December 19, 2001, among the
      Company Alony Hetz Properties & Investments, Ltd., Gazit-Globe (1982),
      Ltd., M.G.N. (USA), Inc. and Gazit (1995), Inc. (Exhibit 10.15)
      (24)10.15
                  Second
      Amendment to Stockholders Agreement, dated October 28, 2002, among the
      Company Alony Hetz Properties & Investments, Ltd., Gazit-Globe (1982),
      Ltd., M.G.N. (USA), Inc. and Gazit (1995), Inc. (25)10.16
                  Third
      Amendment to Stockholders Agreement, dated May 23, 2003, among the Company
      Alony Hetz Properties & Investments, Ltd., Gazit-Globe (1982), Ltd.,
      M.G.N. (USA), Inc. and Gazit (1995), Inc. (9)10.17
                  Chairman
      Compensation Agreement effective as of January 1, 2007 between the Company
      and Chaim Katzman (Exhibit 10.1) (26)*10.18
                  First
      Amended and Restated Employment Agreement effective as of September 15,
      2006 between the Company and Jeffrey S. Olson (Exhibit 10.2)
      (26)*10.19
                  Employment
      Agreement effective as of November 15, 2006 between the Company and
      Gregory R. Andrews (Exhibit 10.3)
(26)*





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EXHIBIT NO.
                  DESCRIPTION10.20
                  Employment
      Agreement, effective as of March 14, 2008 between the Company and Thomas
      Caputo (Exhibit 10.1) (33)*10.21
                  Fourth
      Amendment to Stockholders Agreement, dated June 23, 2004, among the
      Company, Alony-Hetz Properties & Investments, Ltd., Gazit-Globe, Ltd.,
      MGN (USA), Inc. and Gazit (1995), Inc.10.22
                  Registration
      Rights Agreement, dated October 28, 2002, between the Company and certain
      Purchasers (Exhibit 99.3) (28)10.23
                  Second
      Amended and Restated Credit Agreement, dated as of October 17, 2008, among
      the Company, each of the financial institutions initially a signatory
      thereto, SunTrust Bank, as Syndication Agent, Bank of America, N.A. and
      PNC Bank National Association, as Co-Documentation Agents, and Wells Fargo
      Bank, National Association as contractual representative of the Lenders to
      the extent and manner provided in Article XII and as Sole Lead Arranger.
      (Exhibit 10.1) (29)10.24
                  Clarification
      Agreement and Protocol, dated as of  January 1, 2004, among the
      Company and Gazit-Globe (1982), Ltd. (Exhibit 10.2)
(30)10.25
                  Equity
      One, Inc. Non-Qualified Deferred Compensation Plan. (Exhibit 10.1)
      (31)*10.26
                  Employment
      Agreement effective as of July 30, 2007 between the Company and Thomas
      McDonough  (Exhibit 10.2) (34)10.27
                  Employment
      Agreement effective as of January 2, 2007 between the Company and Arthur
      L. Gallagher (Exhibit 10.1) (34)10.28
                  Registration
      Rights Agreement made as of September 23, 2008 by and among the Company
      and MGN America LLC (Exhibit 10.2) (35)10.29
                  Common
      Stock Purchase Agreement made as of September 23, 2008 by and between the
      Company and MGN America, LLC (Exhibit 10.14) (35)10.30
                  Senior
      Officers Voluntary Salary Reduction Letter effective as of February 6,
      2009 (Exhibit 10.1) (36)*12.1
                  Ratios
      of Earnings to Fixed Charges21.1
                  List
      of Subsidiaries of the Registrant23.1
                  Consent
      of Ernst & Young LLP31.1
                  Certification
      of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 200231.2
                  Certification
      of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 200232.1
                  Certification
      of Chief Executive Officer and Chief Financial Officer pursuant to 18
      U.S.C. 1350, as created by Section 906 of the Sarbanes-Oxley Act of
      2002


*Identifies
employee agreements, management contracts, compensatory plans or other
arrangements.








(1)
            Previously
      filed as an exhibit to our Quarterly Report on Form 10-Q for the period
      ended June 30, 2002, and incorporated by reference
  herein.


(2)
            Previously
      filed as an exhibit to our Annual Report on Form 10-K for the period ended
      December 31, 2003, and incorporated by reference
  herein.


(3)
            Previously
      filed by IRT Property Company as an exhibit to IRT’s Annual Report on Form
      10-K for the period ending December 31, 1995, and incorporated by
      reference herein.


(4)
            Intentionally
      Omitted.


(5)
            Intentionally
      Omitted.


(6)
            Previously
      filed by IRT Property Company as an exhibit to IRT’s Current Report on
      Form 8-K filed on September 15, 1998, and incorporated by reference
      herein.


(7)
            Previously
      filed by IRT Property Company as an exhibit to IRT’s Current Report on
      Form 8-K filed on November 12, 1999, and incorporated by reference
      herein.


(8)
            Previously
      filed as an exhibit to our Current Report on Form 8-K filed on February
      20, 2003, and incorporated by reference
herein.


(9)
            Previously
      filed as an exhibit to our Quarterly Report on Form 10-Q for the period
      ended March 31, 2004, and incorporated by reference
  herein.


(10)
            Previously
      filed as an exhibit to our Quarterly Report on Form 10-Q for the period
      ended June 30, 2005, and incorporated by reference
  herein.


(11)
            Previously
      filed as an exhibit to our Current Report on Form 8-K filed on March 31,
      2004, and incorporated by reference
herein.


(12)
            Previously
      filed as an exhibit to our Current Report on Form 8-K filed on September
      20, 2005, and incorporated by reference
herein.


(13)
            Previously
      filed as an exhibit to our Annual Report on Form 10-K on March 3, 2006,
      and incorporated by reference
herein.





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(14)
            Previously
      filed as an exhibit to our Current Report on Form 8-K on March 13, 2006,
      and incorporated by reference
herein.


(15)
            Previously
      filed as an exhibit to our Current Report on Form 8-K filed on August 22,
      2006, and incorporated by reference
herein.


(16)
            Previously
      filed as an exhibit to our Annual Report on Form 10-K on March 16, 2005,
      and incorporated by reference
herein.


(17)
            Previously
      filed with our definitive Proxy Statement for the Annual Meeting of
      Stockholders held on June 30, 1999, and incorporated herein by
      reference.


(18)
            Previously
      filed with our definitive Proxy Statement for the Annual Meeting of
      Stockholders held on May 21, 2004, and incorporated herein by
      reference.


(19)
            Previously
      filed with our Current Report on Form 8-K filed on February 18, 2005, and
      incorporated by reference herein.


(20)
            Previously
      filed by IRT Property Company as an exhibit to IRT’s Current Report on
      Form 8-K filed on March 22, 1989, and incorporated herein by
      reference.


(21)
            Previously
      filed by IRT Property Company with IRT’s definitive Proxy Statement for
      the Annual Meeting of Stockholders held on May 22, 1998, and incorporated
      herein by reference.


(22)
            Previously
      filed with our Registration Statement on Form S-11, as amended
      (Registration No. 333-3397), and incorporated herein by
      reference.


(23)
            Previously
      filed as Appendix A to our definitive Proxy Statement for the Special
      Meeting of Stockholders held on September 6, 2001 and incorporated herein
      by reference.


(24)
            Previously
      filed with our Annual Report Form 10-K/A filed on March 18, 2002, and
      incorporated herein by reference.


(25)
            Previously
      filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q for the period
      ended September 30, 2002, and incorporated by reference
      herein.


(26)
            Previously
      filed as an exhibit to our Quarterly Report on Form 10-Q on November 9,
      2006, and incorporated by reference
herein.


(27)
            Previously
      filed as an exhibit to our Current Report on Form 8-K filed on April 20,
      2007, and incorporated by reference
herein.


(28)
            Previously
      filed as Exhibit 2.1 to our Current Report on Form 8-K filed on October
      30, 2002, and incorporated by reference
herein.


(29)
            Previously
      filed as an exhibit to our Current Report on Form 8-K filed on October 23,
      2008, and incorporated by reference
herein.


(30)
            Previously
      filed as an exhibit to our Current Report on Form 8-K filed on March 16,
      2004, and incorporated by reference
herein.


(31)
            Previously
      filed as an exhibit to our Current Report on Form 8-K filed on July 7,
      2005, and incorporated by reference
herein.


(32)
            Previously
      filed as Annex A to our definitive Proxy Statement for the Annual Meeting
      of Stockholders held on June 4, 2007 and incorporated herein by
      reference


(33)
            Previously
      filed as an exhibit to our Current Report on Form 8-K filed on March 18,
      2008, and incorporated by reference
herein.


(34)
            Previously
      filed as an exhibit to our Quarterly Report on Form 10-Q filed on May 5,
      2008, and incorporated by reference
herein.


(35)
            Previously
      filed as an exhibit to our Current Report on Form 8-K filed on September
      29, 2008, and incorporated by reference
herein.


(36)
            Previously
      filed as an exhibit to our Current Report on Form 8-K filed on February 6,
      2009, and incorporated by reference
herein.





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SIGNATURES





Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.





Date:February 28,
      2009
                EQUITYONE, INC.By:/s/JeffreyS.OlsonJeffreyS.OlsonChief Executive
      Officer





Pursuant to the requirements of the
Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the Registrant in the capacities, and on the
dates indicated.





SIGNATURE
                                          TITLE
                                          DATE/s/JeffreyS.Olson
                                          Chief Executive
      Officer and Director
                                          February
      28, 2009JeffreyS.Olson
                                          (Principal
      Executive Officer)/s/GregoryR.Andrews
                                          Executive Vice
      President and
                                          February
      28, 2009GregoryR.Andrews
                                          Chief Financial
      Officer
                                            (Principal
      Accounting and
                                            Financial
      Officer)/s/ChaimKatzman
                                          Chairman of the
      Board
                                          February
      28, 2009ChaimKatzman/s/NoamBen-Ozer
                                          Director
                                          February
      28, 2009NoamBen-OzerDirector
                                          February
      28, 2009JamesS.Cassel/s/CynthiaCohen
                                          Director
                                          February
      28, 2009CynthiaCohen/s/NeilFlanzraich
                                          Director
                                          February
      28, 2009NeilFlanzraich/s/NathanHetz
                                          Director
                                          February
      28, 2009NathanHetz/s/PeterLinneman
                                          Director
                                          February
      28, 2009PeterLinneman/s/DoriJ.Segal
                                          Director
                                          February
      28, 2009DoriJ.Segal





- 55
-
 Table of Contents





EQUITY ONE, INC. AND
SUBSIDIARIES








TABLE OF
CONTENTS











PageManagement Report on Internal
      Control Over Financial Reporting
                F-1Report
      of Independent Registered Public Accounting Firm
                F-2Report
      of Independent Registered Public Accounting Firm
                F-3Consolidated
      Balance Sheets as of December 31, 2008 and 2007
                F-4Consolidated
      Statements of Operations for the years ended December 31, 2008, 2007 and
      2006
                F-5Consolidated
      Statements of Comprehensive Income for the years ended December 31, 2008,
      2007 and 2006
                F-6Consolidated
      Statements of Stockholders’ Equity for the years ended December 31, 2008,
      2007 and 2006
                F-7Consolidated
      Statements of Cash Flows for the years ended December 31, 2008, 2007 and
      2006
                F-8Notes
      to the Consolidated Financial Statements
                F-10





Table of Contents





Management
Report on Internal Control over Financial Reporting





The
management of Equity One, Inc. and subsidiaries (the “Company”) is responsible
for establishing and maintaining adequate internal control over financial
reporting, defined in Rule 13a-15(f) promulgated under the Securities Exchange
Act of 1934, as a process designed by, or under the supervision of, the
Company’s principal executive and principal financial officers and effected by
the Company’s board of directors, management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting, which
requires the use of certain estimates and judgments, and the preparation of
financial statements for external purposes in accordance with generally accepted
accounting principles and includes those policies and procedures
that:





·
            Pertain
      to the maintenance of records that in reasonable detail accurately and
      fairly reflect the transactions and dispositions of the assets of the
      Company;





·
            Provide
      reasonable assurance that transactions are recorded as necessary to permit
      preparation of financial statements in accordance with generally accepted
      accounting principles, and that receipts and expenditures of the Company
      are being made only in accordance with authorizations of management and
      directors of the Company; and





·
            Provide
      reasonable assurance regarding prevention or timely detection of
      unauthorized acquisition, use or disposition of the Company’s assets that
      could have a material effect on the financial
  statements.





Reasonable
assurance is based on the premise that the cost of internal controls should not
exceed the benefits derived.  Reasonable assurance includes the
understanding that there is a remote likelihood that material misstatements will
not be prevented or detected in a timely manner. Because of its inherent
limitations, internal control over financial reporting may not prevent or detect
misstatements.





The
Company’s management assessed the effectiveness of the Company’s internal
control over financial reporting as of December 31, 2008.  In making
this assessment, the Company’s management used the criteria set forth by the
Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Based on this assessment,
management has concluded that, as of December 31, 2008, the Company’s internal
control over financial reporting is effective.





Projections
of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may
deteriorate.





The
Company’s independent registered public accounting firm has issued a report on
the Company’s internal control over financial reporting.  This report
appears on the following page of this Form 10-K.





F-1
 Table of Contents





REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM








The Board
of Directors and Stockholders


Equity
One, Inc.








We have
audited Equity One, Inc. and subsidiaries’ internal control over financial
reporting as of December 31, 2008, based on criteria established in Internal
Control—Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission (the COSO criteria). Equity One, Inc. and
subsidiaries’ management is responsible for maintaining effective internal
control over financial reporting, and for its assessment of the effectiveness of
internal control over financial reporting included in the accompanying
Management Report on Internal Control over Financial Reporting. Our
responsibility is to express an opinion on the company’s internal control over
financial reporting based on our audit.





We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, testing
and evaluating the design and operating effectiveness of internal control based
on the assessed risk, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable
basis for our opinion.





A
company’s internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company’s internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial
statements.





Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements.  Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.





In our
opinion, Equity One, Inc. and subsidiaries maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2008,
based onthe COSO
criteria.





We also
have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the consolidated balance sheets of Equity One,
Inc. and subsidiaries as of December 31, 2008 and 2007, and the related
consolidated statements of operations, comprehensive income, stockholders'
equity, and cash flows for each of the three years in the period ended December
31, 2008 of Equity One, Inc. and subsidiaries and our report dated February 27,
2009 expressed an unqualified opinion thereon.





/s/ Ernst
& Young LLP


Certified
Public Accountants


February
27, 2009


Miami,
Florida





F-2
 Table of Contents





REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM








The Board
of Directors and Stockholders


Equity
One, Inc.





We have
audited the accompanying consolidated balance sheets of Equity One, Inc. and
subsidiaries as of December 31, 2008 and 2007, and the related consolidated
statements of operations, comprehensive income, stockholders' equity, and cash
flows for each of the three years in the period ended December 31,
2008.  Our audits also included the financial statement schedules
listed in the Index at Item 15(a). These financial statements and schedules are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and schedules based on our
audits.





We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.





In our
opinion, the financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Equity One, Inc. and
subsidiaries at December 31, 2008 and 2007, and the consolidated results of
their operations and their cash flows for each of the three years in the period
ended December 31, 2008, in conformity with U.S. generally accepted accounting
principles. Also, in our opinion, the related financial statement schedules,
when considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth
therein.





As
discussed in Note 2 to the consolidated financial statements, the Company
adopted SFAS No. 123(R), “Share-Based Payment,” applying the modified
prospective method at the beginning of fiscal year 2006.





We also
have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), Equity One, Inc. and subsidiaries’ internal
control over financial reporting as of December 31, 2008, based on criteria
established in Internal Control-Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission and our report dated
February 27, 2009 expressed an unqualified opinion thereon.





/s/ Ernst
& Young LLP


Certified
Public Accountants


February
27, 2009


Miami,
Florida





F-3
 Table of Contents





EQUITY
ONE, INC. AND SUBSIDIARIES


Consolidated
Balance Sheets


December
31, 2008 and 2007


(In
thousands)





December 31, 2008
                
                
                December 31, 2007ASSETSProperties:Income
      producing
                
                $
                1,900,513
                
                
                $
                2,047,993Less:
      accumulated depreciation
                
                
                (196,151
                )
                
                
                (172,651
                )Income-producing
      properties, net
                
                
                1,704,362
                
                
                
                1,875,342Construction
      in progress and land held for development
                
                
                74,371
                
                
                
                81,574Properties
      held for sale
                
                
                -
                
                
                
                323Properties,
      net
                
                
                1,778,733
                
                
                
                1,957,239Cash
      and cash equivalents
                
                
                5,355
                
                
                
                1,313Cash
      held in escrow
                
                
                -
                
                
                
                54,460Accounts
      and other receivables, net
                
                
                12,209
                
                
                
                14,148Investment
      and advances in unconsolidated joint ventures
                
                
                11,745
                
                
                
                -Securities
                
                
                160,585
                
                
                
                72,299Goodwill
                
                
                11,845
                
                
                
                12,496Other
      assets
                
                
                55,791
                
                
                
                62,429TOTAL
      ASSETS
                
                $
                2,036,263
                
                
                $
                2,174,384LIABILITIES
      AND STOCKHOLDERS’ EQUITYLiabilities:Notes
      PayableMortgage
      notes payable
                
                $
                371,077
                
                
                $
                397,112Unsecured
      revolving credit facilities
                
                
                35,500
                
                
                
                37,000Unsecured
      senior notes payable
                
                
                657,913
                
                
                
                744,6851,064,490
                
                
                
                1,178,797Unamortized/unaccreted
      discount/premium on notes payable
                
                
                5,225
                
                
                
                10,042Total
      notes payable
                
                
                1,069,715
                
                
                
                1,188,839Other
      liabilitiesAccounts
      payable and accrued expenses
                
                
                27,778
                
                
                
                30,499Tenant
      security deposits
                
                
                8,908
                
                
                
                9,685Other
      liabilities
                
                
                19,375
                
                
                
                28,440Total
      liabilities
                
                
                1,125,776
                
                
                
                1,257,463Minority
      interest
                
                
                989
                
                
                
                989Commitments
      and contingencies
                
                
                -
                
                
                
                -Stockholders'  equity:Preferred
      stock, $0.01 par value – 10,000 shares authorized but
    unissued
                
                
                -
                
                
                
                -Common
      stock, $0.01 par value – 100,000 shares authorized, 76,198 and 73,300
      shares issued and outstanding for 2008 and 2007,
    respectively
                
                
                762
                
                
                
                733Additional
      paid-in capital
                
                
                967,514
                
                
                
                906,174(Distributions
      in excess of earnings) / retained earnings
                
                
                (36,617
                )
                
                
                17,987Accumulated
      other comprehensive loss
                
                
                (22,161
                )
                
                
                (8,962
                )Total
      stockholders’ equity
                
                
                909,498
                
                
                
                915,932TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY
                
                $
                2,036,263
                
                
                $
                2,174,384





See
accompanying notes to consolidated financial statements.





F-4
 Table of Contents





EQUITY
ONE, INC. AND SUBSIDIARIES


Consolidated
Statements of Operations


Years
Ended December 31, 2008, 2007 and 2006


(In
thousands, except per share amounts)





2008
                    
                    
                    2007
                    
                    
                    2006REVENUE:Minimum
      rent
                    
                    $
                    183,412
                    
                    
                    $
                    189,422
                    
                    
                    $
                    171,834Expense
      recoveries
                    
                    
                    51,927
                    
                    
                    
                    53,324
                    
                    
                    
                    49,004Percentage
      rent
                    
                    
                    1,901
                    
                    
                    
                    2,200
                    
                    
                    
                    2,032Management
      and leasing services
                    
                    
                    1,789
                    
                    
                    
                    1,163
                    
                    
                    
                    2,067Total
      revenue
                    
                    
                    239,029
                    
                    
                    
                    246,109
                    
                    
                    
                    224,937COSTS
      AND EXPENSES:Property
      operating
                    
                    
                    64,384
                    
                    
                    
                    62,755
                    
                    
                    
                    59,391Rental
      property depreciation and amortization
                    
                    
                    45,527
                    
                    
                    
                    45,989
                    
                    
                    
                    40,206General
      and administrative
                    
                    
                    31,957
                    
                    
                    
                    28,200
                    
                    
                    
                    31,905Total
      costs and expenses
                    
                    
                    141,868
                    
                    
                    
                    136,944
                    
                    
                    
                    131,502INCOME
      BEFORE OTHER INCOME AND EXPENSE, MINORITY INTEREST AND DISCONTINUED
      OPERATIONS
                    
                    
                    97,161
                    
                    
                    
                    109,165
                    
                    
                    
                    93,435OTHER
      INCOME AND EXPENSE:Investment
      income
                    
                    
                    10,332
                    
                    
                    
                    7,321
                    
                    
                    
                    7,479Equity
      in income in unconsolidated joint ventures
                    
                    
                    108
                    
                    
                    
                    -
                    
                    
                    
                    1,853Other
      income
                    
                    
                    967
                    
                    
                    
                    310
                    
                    
                    
                    303Interest
      expense
                    
                    
                    (60,851
                    )
                    
                    
                    (66,520
                    )
                    
                    
                    (53,732
                    )Amortization
      of deferred financing fees
                    
                    
                    (1,629
                    )
                    
                    
                    (1,678
                    )
                    
                    
                    (1,484
                    )Loss
      on sale of fixed assets
                    
                    
                    -
                    
                    
                    
                    (283
                    )
                    
                    
                    -Gain
      on sale of real estate
                    
                    
                    21,542
                    
                    
                    
                    2,018
                    
                    
                    
                    2,545Gain
      on extinguishment of debt
                    
                    
                    6,473
                    
                    
                    
                    -
                    
                    
                    
                    251Impairment
      loss
                    
                    
                    (37,543
                    )
                    
                    
                    (430
                    )
                    
                    
                    -INCOME
      BEFORE MINORITY INTEREST, INCOME TAXES AND DISCONTINUED
      OPERATIONS
                    
                    
                    36,560
                    
                    
                    
                    49,903
                    
                    
                    
                    50,650(Provision)
      benefit for income taxes
                    
                    
                    (1,015
                    )
                    
                    
                    272
                    
                    
                    
                    -Minority
      Interest
                    
                    
                    (112
                    )
                    
                    
                    (112
                    )
                    
                    
                    (206
                    )INCOME
      FROM CONTINUING OPERATIONS
                    
                    
                    35,433
                    
                    
                    
                    50,063
                    
                    
                    
                    50,444DISCONTINUED
      OPERATIONS:Operations
      of income-producing properties sold
                    
                    
                    132
                    
                    
                    
                    (82
                    )
                    
                    
                    6,951(Loss)
      gain on disposal of income-producing properties
                    
                    
                    (557
                    )
                    
                    
                    19,404
                    
                    
                    
                    119,560(Loss)
      income from discontinued operations
                    
                    
                    (425
                    )
                    
                    
                    19,322
                    
                    
                    
                    126,511NET
      INCOME
                    
                    $
                    35,008
                    
                    
                    $
                    69,385
                    
                    
                    $
                    176,955EARNINGS
      (LOSS) PER COMMON SHARE - BASIC:Continuing
      operations
                    
                    $
                    0.48
                    
                    
                    $
                    0.68
                    
                    
                    $
                    0.68Discontinued
      operations
                    
                    
                    (0.01
                    )
                    
                    
                    0.27
                    
                    
                    
                    1.72$
                    0.47
                    
                    
                    $
                    0.95
                    
                    
                    $
                    2.40Number
      of Shares Used in Computing Basic Earnings per Share
                    
                    
                    74,075
                    
                    
                    
                    73,091
                    
                    
                    
                    73,598EARNINGS
      (LOSS) PER COMMON SHARE - DILUTED:Continuing
      operations
                    
                    $
                    0.48
                    
                    
                    $
                    0.68
                    
                    
                    $
                    0.68Discontinued
      operations
                    
                    
                    (0.01
                    )
                    
                    
                    0.27
                    
                    
                    
                    1.70$
                    0.47
                    
                    
                    $
                    0.95
                    
                    
                    $
                    2.3874,222
                    
                    
                    
                    73,362
                    
                    
                    
                    74,324Number
      of Shares Used in Computing Diluted Earnings per
  Share




See
accompanying notes to consolidated financial statements.


F-5
 Table of Contents





EQUITY
ONE, INC. AND SUBSIDIARIES


Consolidated
Statements of Comprehensive Income


Years
ended December 31, 2008, 2007 and 2006


(In
thousands)





2008
                
                
                2007
                
                
                2006NET
      INCOME
                
                $
                35,008
                
                
                $
                69,385
                
                
                $
                176,955OTHER
      COMPREHENSIVE INCOME:Net
      unrealized holding (loss) gain on securities available for
      sale
                
                
                (36,562
                )
                
                
                (1,386
                )
                
                
                (9,780
                )Reclassification
      adjustment for other than temporary impairment loss on securities
      available for sale
                
                
                23,174
                
                
                
                -
                
                
                
                -Changes
      in fair value of cash flow hedges
                
                
                -
                
                
                
                75
                
                
                
                (2,574
                )Reclassification
      adjustment for gain on the sale of securities and cash flow hedges
      included in net income
                
                
                15
                
                
                
                2,322
                
                
                
                29Net
      realized gain (loss) of interest rate contracts included in net
      income
                
                
                102
                
                
                
                (2,498
                )
                
                
                1,543Net
      amortization of interest rate contracts
                
                
                72
                
                
                
                23
                
                
                
                (120
                )Other
      comprehensive income adjustment
                
                
                (13,199
                )
                
                
                (1,464
                )
                
                
                (10,902
                )COMPREHENSIVE
      INCOME
                
                $
                21,809
                
                
                $
                67,921
                
                
                $
                166,053





See
accompanying notes to consolidated financial statements.





F-6
 Table of Contents





EQUITY
ONE, INC. AND SUBSIDIARIES


Consolidated
Statement of Stockholders' Equity


For
the years ended December 31, 2008, 2007 and 2006


(In
thousands)





Common
      Stock
                                                
                                                
                                                Additional
      Paid-In Capital
                                                
                                                
                                                Retained
      Earnings
                                                
                                                
                                                Accumulated
      Other Comprehensive Loss
                                                
                                                
                                                Unamortized
      Restricted Stock Compensation
                                                
                                                
                                                Notes
      Receivable from the Issuance of Common Stock
                                                
                                                
                                                Total
      Stockholders' EquityBALANCE,
      JANUARY 1, 2006
                                                
                                                $
                                                754
                                                
                                                
                                                $
                                                955,378
                                                
                                                
                                                $
                                                22,950
                                                
                                                
                                                $
                                                3,404
                                                
                                                
                                                $
                                                (9,692
                                                )
                                                
                                                $
                                                (65
                                                )
                                                
                                                $
                                                972,729Cumulative
      effect of change in accounting principle
                                                
                                                
                                                (5
                                                )
                                                
                                                
                                                (5,188
                                                )
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                9,692
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                4,499Issuance
      of common stock
                                                
                                                
                                                9
                                                
                                                
                                                
                                                8,074
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                8,083Stock
      issuance cost
                                                
                                                
                                                -
                                                
                                                
                                                
                                                (69
                                                )
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                (69
                                                )Repurchase
      of common stock
                                                
                                                
                                                (30
                                                )
                                                
                                                
                                                (69,073
                                                )
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                (69,103
                                                )Share-based
      compensation expense
                                                
                                                
                                                -
                                                
                                                
                                                
                                                6,125
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                6,125Repayments
      of notes receivable from issuance of common stock
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                65
                                                
                                                
                                                
                                                65Net
      income
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                176,955
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                176,955Dividends
      declared
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                (162,704
                                                )
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                (162,704
                                                )Other
      comprehensive income adjustment
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                (10,902
                                                )
                                                
                                                
                                                -
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                (10,902
                                                )BALANCE,
      DECEMBER 31, 2006
                                                
                                                
                                                728
                                                
                                                
                                                
                                                895,247
                                                
                                                
                                                
                                                37,201
                                                
                                                
                                                
                                                (7,498
                                                )
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                925,678Issuance
      of common stock
                                                
                                                
                                                5
                                                
                                                
                                                
                                                3,877
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                3,882Share-based
      compensation expense
                                                
                                                
                                                -
                                                
                                                
                                                
                                                7,050
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                7,050Net
      income
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                69,385
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                69,385Dividends
      declared
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                (88,599
                                                )
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                (88,599
                                                )Other
      comprehensive income adjustment
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                (1,464
                                                )
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                (1,464
                                                )BALANCE,
      DECEMBER 31, 2007
                                                
                                                
                                                733
                                                
                                                
                                                
                                                906,174
                                                
                                                
                                                
                                                17,987
                                                
                                                
                                                
                                                (8,962
                                                )
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                915,932Issuance
      of common stock
                                                
                                                
                                                29
                                                
                                                
                                                
                                                57,073
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                57,102Stock
      issuance cost
                                                
                                                
                                                -
                                                
                                                
                                                
                                                (2,161
                                                )
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                (2,161
                                                )Share-based
      compensation expense
                                                
                                                
                                                -
                                                
                                                
                                                
                                                6,428
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                6,428Net
      income
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                35,008
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                35,008Dividends
      declared
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                (89,612
                                                )
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                (89,612
                                                )Other
      comprehensive income adjustment
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                (13,199
                                                )
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                (13,199
                                                )BALANCE,
      DECEMBER 31, 2008
                                                
                                                $
                                                762
                                                
                                                
                                                $
                                                967,514
                                                
                                                
                                                $
                                                (36,617
                                                )
                                                
                                                $
                                                (22,161
                                                )
                                                
                                                $
                                                -
                                                
                                                
                                                $
                                                -
                                                
                                                
                                                $
                                                909,498





See
accompanying notes to consolidated financial statements.





F-7
 Table of Contents





EQUITY
ONE, INC. AND SUBSIDIARIES


Consolidated
Statements of Cash Flows


For
the years ended December 31, 2008, 2007 and 2006


(In
thousands)





2008
                
                
                2007
                
                
                2006OPERATING
      ACTIVITIES:Net
      income
                
                $
                35,008
                
                
                $
                69,385
                
                
                $
                176,955Adjustments
      to reconcile net income to net cash provided by operating
      activities:Straight
      line rent adjustment
                
                
                (829
                )
                
                
                (1,582
                )
                
                
                (4,066
                )Amortization/accretion
      of above (below) market lease intangibles
                
                
                (3,708
                )
                
                
                (4,586
                )
                
                
                (2,612
                )Change
      in deferred income taxes
                
                
                1,045Provision
      for losses on accounts receivable
                
                
                2,214
                
                
                
                1,559
                
                
                
                742Accretion
      of discount on available-for-sale securities
                
                
                (413
                )Amortization of
      premium on notes payable
                
                
                (1,900
                )
                
                
                (2,102
                )
                
                
                (5,864
                )Amortization
      of deferred financing fees
                
                
                1,629
                
                
                
                1,684
                
                
                
                1,503Rental
      property depreciation and amortization
                
                
                46,406
                
                
                
                47,514
                
                
                
                44,791Share-based
      payments
                
                
                6,428
                
                
                
                7,050
                
                
                
                6,125Amortization
      of derivatives
                
                
                (29
                )
                
                
                23
                
                
                
                (120
                )Gain
      on disposal of real estate and income-producing properties
                
                
                (20,985
                )
                
                
                (21,423
                )
                
                
                (122,105
                )Impairment
      loss
                
                
                37,543
                
                
                
                3,360
                
                
                
                -Gain
      on extinguishment of debt
                
                
                (6,473
                )
                
                
                491
                
                
                
                -Loss
      on sale of fixed assets
                
                
                -
                
                
                
                283
                
                
                
                -Gain
      on sale of securities
                
                
                -
                
                
                
                (325
                )
                
                
                (282
                )Equity
      in income of unconsolidated joint ventures
                
                
                (108
                )
                
                
                -
                
                
                
                (1,853
                )Operating
      distributions from unconsolidated joint ventures
                
                
                169
                
                
                
                -
                
                
                
                1,373Minority
      interest
                
                
                112
                
                
                
                112
                
                
                
                206Changes
      in assets and liabilities:Accounts
      and other receivables
                
                
                (264
                )
                
                
                3,262
                
                
                
                (1,988
                )Other
      assets
                
                
                1,395
                
                
                
                8,465
                
                
                
                1,807Accounts
      payable and accrued expenses
                
                
                (7,128
                )
                
                
                (2,191
                )
                
                
                2,946Tenant
      security deposits
                
                
                (777
                )
                
                
                63
                
                
                
                60Other
      liabilities
                
                
                (2,704
                )
                
                
                (4,026
                )
                
                
                (2,975
                )Net
      cash provided by operating activities
                
                
                86,631
                
                
                
                107,016
                
                
                
                94,643-INVESTING
      ACTIVITIES:Additions
      to and purchases of rental property
                
                $
                (9,714
                )
                
                $
                (107,587
                )
                
                $
                (186,006
                )Land
      held for development
                
                
                (87
                )
                
                
                (2,651
                )
                
                
                (45,784
                )Additions
      to construction in progress
                
                
                (30,447
                )
                
                
                (15,212
                )
                
                
                (47,429
                )Proceeds
      from disposal of rental properties
                
                
                191,905
                
                
                
                71,273
                
                
                
                411,090Increase
      in cash held in escrow
                
                
                54,460
                
                
                
                (52,913
                )
                
                
                (1,547
                )Investments
      in joint ventures
                
                
                (17,178
                )Advances
      to joint ventures
                
                
                (265
                )Distributions
      of capital from joint ventures
                
                
                2,966Increase
      in deferred leasing costs
                
                
                (5,936
                )
                
                
                (3,884
                )
                
                
                (6,163
                )Additions
      to notes receivable
                
                
                (3
                )
                
                
                (14
                )
                
                
                (33
                )Proceeds
      from repayment of notes receivable
                
                
                22
                
                
                
                4,745
                
                
                
                5,735Proceeds
      from sale of securities
                
                
                250
                
                
                
                2,822
                
                
                
                12,852Purchase
      of securities
                
                
                (134,667
                )
                
                
                (1,181
                )
                
                
                (29,837
                )Distributions
      from (to) unconsolidated joint ventures from sale of
    property
                
                
                -
                
                
                
                -
                
                
                
                1,935Net
      cash provided by (used in) investing activities
                
                
                51,306
                
                
                
                (104,602
                )
                
                
                114,813FINANCING
      ACTIVITIES:Repayments
      of mortgage notes payable
                
                $
                (78,316
                )
                
                $
                (22,270
                )
                
                $
                (88,880
                )Borrowings
      under mortgage notes
                
                
                65,000
                
                
                
                -
                
                
                
                -Net
      repayments under revolving credit facilities
                
                
                (1,500
                )
                
                
                (39,500
                )
                
                
                (16,665
                )Proceeds
      from senior debt offerings
                
                
                -
                
                
                
                148,874
                
                
                
                246,868Repayment
      of senior debt
                
                
                (81,518
                )
                
                
                -
                
                
                
                (125,000
                )Cash
      paid for settlement of interest rate contracts
                
                
                -
                
                
                
                (2,498
                )
                
                
                -Change
      in deferred financing costs
                
                
                (2,779
                )
                
                
                (878
                )
                
                
                (1,947
                )Proceeds
      from issuance of common stock
                
                
                57,102
                
                
                
                3,882
                
                
                
                8,083Repayment
      of notes receivable from issuance of common stock
                
                
                -
                
                
                
                -
                
                
                
                65Stock
      issuance costs
                
                
                (2,161
                )
                
                
                -
                
                
                
                (69
                )Repurchase
      of common stock
                
                
                -
                
                
                
                -
                
                
                
                (69,103
                )Cash
      dividends paid to stockholders
                
                
                (89,611
                )
                
                
                (88,599
                )
                
                
                (162,704
                )Distributions
      to minority interest
                
                
                (112
                )
                
                
                (112
                )
                
                
                (206
                )Net
      cash used in financing activities
                
                
                (133,895
                )
                
                
                (1,101
                )
                
                
                (209,558
                )Net
      increase in cash and cash equivalents
                
                
                4,042
                
                
                
                1,313
                
                
                
                (102
                )Cash
      and cash equivalents at beginning of the year
                
                
                1,313
                
                
                
                -
                
                
                
                102Cash
      and cash equivalents at end of the year
                
                $
                5,355
                
                
                $
                1,313
                
                
                $
                -





F-8
 Table of Contents





EQUITY
ONE, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOWS


YEARS
ENDED DECEMBER 31, 2008, 2007 and 2006


(In
thousands)





SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATION:Cash
      paid for interest (net of capitalized interest of $2.9 million, $3.2
      million and $5.8 million in 2008, 2007 and 2006,
    respectively)
                  
                  $
                  65,413
                  
                  
                  $
                  66,386
                  
                  
                  $
                  57,684SUPPLEMENTAL
      SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:Change
      in unrealized holding loss on securities
                  
                  $
                  (36,562
                  )
                  
                  $
                  (1,386
                  )
                  
                  $
                  (9,753
                  )Change
      in cash flow hedges
                  
                  $
                  -
                  
                  
                  $
                  75
                  
                  
                  $
                  (2,574
                  )The
      Company acquired and assumed mortgages on the acquisition of certain
      rental properties:Fair
      value of rental property
                  
                  $
                  -
                  
                  
                  $
                  69,069
                  
                  
                  $
                  58,551Assumption
      of mortgage notes payable
                  
                  
                  -
                  
                  
                  
                  (27,740
                  )
                  
                  
                  (33,602
                  )Fair
      value adjustment of mortgage notes payable
                  
                  
                  -
                  
                  
                  
                  (1,974
                  )
                  
                  
                  (1,863
                  )Cash
      paid for rental property
                  
                  $
                  -
                  
                  
                  $
                  39,355
                  
                  
                  $
                  23,086The
      Company issued senior unsecured notes:Face
      value of notes
                  
                  
                  
                  
                  
                  $
                  150,000
                  
                  
                  $
                  250,000Underwriting
      Costs
                  
                  
                  -
                  
                  
                  
                  (975
                  )
                  
                  
                  (1,624
                  )Discount
                  
                  
                  -
                  
                  
                  
                  (151
                  )
                  
                  
                  (1,508
                  )Cash
      received
                  
                  $
                  -
                  
                  
                  $
                  148,874
                  
                  
                  $
                  246,868





(Concluded)





See
accompanying notes to the consolidated financial statements.





F-9
 Table of Contents





EQUITY
ONE, INC. AND SUBSIDIARIES


NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006





1.
            Organization
      and Basis of Presentation





Organization





Equity
One, Inc. operates as a self-managed real estate investment trust (“REIT”) that
principally acquires, renovates, develops and manages neighborhood and community
shopping centers anchored by leading supermarkets, drug stores or discount
retail store chains. As of December 31, 2008, our property portfolio comprises
160 properties, including 146 shopping centers consisting of approximately 16.0
million square feet of gross leasable area (“GLA”), four
development/redevelopment properties, six non-retail properties and four parcels
of land. As of December 31, 2008, our core portfolio was 92.1% leased and
included national, regional and local tenants.





We
currently own a 10% interest in GRI-EQY I, LLC (“GRI Venture”), which owns ten
neighborhood shopping centers totaling approximately 1.4 million square feet of
GLA as of December 31, 2008.  The GRI Venture’s properties were 97.3%
leased at December 31, 2008.  Additionally, we own a 20% interest in
G&I VI Investment South Florida Portfolio, LLC (“DRA Venture”) which owns
one office building and two neighborhood shopping centers totaling approximately
503,000 square feet of GLA as of December 31, 2008.  The DRA Venture’s
properties were 67.6% leased at December 31, 2008.





Basis
of Presentation





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





2.
            Summary
      of Significant Accounting Policies





Use
of Estimates





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





Properties





Income-producing
properties are stated at cost, less accumulated depreciation and
amortization.  Costs include those related to acquisition, development
and construction, including tenant improvements, interest incurred during
development, costs of predevelopment and certain direct and indirect costs of
development. Costs related to unsuccessful acquisition opportunities are
expensed when it is probable that we will not be successful in the
acquisition.





Depreciation
and amortization is computed using the straight-line method over the estimated
useful lives of the assets, as follows:





Buildings
              30-40
      yearsBuildings
      and Land Improvements
              5-40
      yearsTenant
      improvements
              Lesser
      of minimum lease term or economic useful lifeFurniture
      and Equipment
              5-7
      years





F-10
 Table of Contents





Expenditures
for ordinary maintenance and repairs are expensed to operations as they are
incurred.  Significant renovations and improvements that improve or
extend the useful lives 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.





Cash
and Cash Equivalents





We
consider liquid investments with a purchase date life to maturity of three
months or less to be cash equivalents.





Cash
Held in Escrow





Cash held
in escrow represents the cash proceeds of property sales that were held by
qualified intermediaries in anticipation of the acquisition of replacement
properties in tax-free exchanges under Section 1031 of the Internal Revenue
Code.





Accounts
Receivable





Accounts
receivable includes amounts billed to tenants and accrued expense recoveries due
from tenants.  We make
estimates of the un-collectability of our accounts receivable
related to base rents, straight-line rent balances, expense reimbursements and
other revenues.We analyze accounts receivable and
historical bad debt levels, customer credit worthiness and current economic
trends when evaluating the adequacy of the allowance for doubtful accounts using
the specific identification method.In addition, tenants in bankruptcy are
analyzed and estimates are made in connection with the expected recovery of
pre-petition and post-petition claims.Our reported net income is directly
affected by management’s estimate of the collectability of accounts
receivable.





The
allowance for doubtful accounts was approximately $3.1 million and $2.2 million
at December 31, 2008 and December 31, 2007, respectively.





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. Such events and circumstances include,
but are not limited to, significant decreases in the market value of the asset,
adverse changes in the extent or manner in which the asset is being used,
significant changes in business conditions, or cash flows associated with the
use of the assets. 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,
fair value of fixed (tangible) assets and definite-lived intangible assets is
determined primarily using either the projected cash flows discounted at a rate
commensurate with the risk involved or an appraisal. For long-lived assets to be
disposed of by sale or other than by sale, fair value is determined in a similar
manner, except that fair values are reduced for disposal costs. At December 31,
2008, we reviewed the operating properties and construction in progress for
impairment on a property-by-property and project-by-project basis in accordance
with SFAS 144, Accounting for the Impairment or Disposal of
Long-LivedAssets (“SFAS 144”), as we determined the current economic
conditions to be a general indicator 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 and are inherently uncertain. The
factors that may influence the assumptions include:





F-11
 Table of Contents





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





·
            competitors’
      presence and their actions;





·
            properly
      specific attributes such as location desirability, anchor tenants and
      demographics;





·
            current
      local market economic and demographic conditions;
  and





·
            future
      expected capital expenditures and the timing before net operating income
      is stabilized.





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





Properties
Held for Sale





Under
SFAS 144, the definition of a component of an entity, assuming no significant
continuing involvement, requires that income producing properties that are sold
or classified as held for sale be accounted for as discontinued
operations.  Accordingly, the results of operations of income
producing properties disposed of or classified as held for sale for which we
have no significant continuing involvement are reflected as discontinued
operations. Given the nature of real estate sales contracts, it is customary for
such contracts to allow potential buyers a period of time to evaluate the
property prior to becoming committed to its acquisition.  In addition,
certain conditions to the closing of a sale, such as financing
contingencies,  often remain following the completion of the buyer’s
due diligence review.  As a result, properties under contract may not
close within the expected time period, or may not close at
all.  However, notwithstanding these conditions, if we determine that
the property meets the criteria of SFAS 144 and is likely to close within the
time requirements, we typically classify a property as “discontinued operations”
following completion of the buyer’s due diligence review.  Otherwise,
if we are unable to make such a determination, we do not classify a property as
“discontinued operations” until all buyer contingencies are removed or it is
sold.





Construction
in Progress and Land Held for Development





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 are capitalized into
construction in progress and land held for development on our consolidated
balance sheets.  Costs incurred include predevelopment expenditures
directly related to a specific project including development and construction
costs, interest, insurance and real estate tax expense.  Indirect
development costs include employee salaries and benefits, travel and other
related costs that are directly associated with the development of the
property.  The capitalization of such expenses ceases when the
property is ready for its intended use and has reached stabilization but no
later than one-year from substantial completion of construction
activity.  If we determine that a project is no longer viable, all
predevelopment project costs are immediately expensed.  Similar costs
related to properties not under development are expensed as
incurred.





Our
method of calculating capitalized interest is based upon applying our weighted
average borrowing rate to the actual costs incurred.  Total interest
capitalized to construction in progress and land held for development was $2.9
million, $3.2 million, and $5.8 million for the years ended December 31, 2008,
2007 and 2006, respectively.





F-12
 Table of Contents





Investments
In Unconsolidated Joint Ventures





We
analyze our joint ventures under Financial Accounting Standards Board (“FASB”)
Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest
Entities ("FIN 46R"), an interpretation of Accounting Research Bulletin
No. 51 (“ARB No. 51”), as well as Emerging Issues Task Force No. 04-5, Determining Whether a General
Partner, or General Partners as a Group, Controls a Limited Partnership or
Similar Entity When the Limited Partners Have Certain Rights ("EITF
04-5") and the American Institute of Certified Public Accountants (AICPA)
Statement of Position 78-9, Accounting for Investments in Real
Estate Ventures ("SOP 78-9") in order to determine whether the entity
should be consolidated. If it is determined that these investments do not
require consolidation because the entities are not variable interest entities
(“VIEs”) in accordance with FIN 46R, 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.





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





Securities





Our
investments in securities are classified as available-for-sale and recorded at
fair value based on current market prices.  Changes in the fair value
of the securities investments are included in accumulated other comprehensive
income, except other-than-temporary decreases in fair value, which are
recognized immediately as a change to earnings.  We evaluate our
investments in available-for-sale securities, such as our investment in DIM and
our other debt and equity securities, for other-than-temporary declines each
reporting period in accordance with Financial Accounting
Standard  115, Accounting for Certain Investments
in Debt and Equity Securities (“FAS 115”),FASB Staff Position
115-1, The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain
Investments (“FSP 115-1”), and Securities and Exchange Commission Staff
Accounting Bulletin 103, Update of Codification of Staff
Accounting Bulletins, (“SAB 103”).  We performed
this impairment review with respect to our investments for the year ended
December 31, 2008, and recorded impairment during that period in the aggregate
amount of $33.2 million.  We considered the following quantitative and
qualitative factors to determine if an impairment adjustment was
needed:





·
            our
      intent and ability to hold the securities for a period of time sufficient
      to allow for any anticipated recovery in fair
  value;





·
            the
      financial and operational condition of the company underlying the
      security;





·
              market
      and economic conditions that might affect the investments’
      prospects;





·
              the
      extent to which fair value is below our cost basis and the period of time
      over which the decline has existed;
and





·
              various
      other factors that could be indicators of the recoverability of the
      investment.





For
expanded detail on the qualitative factors considered in the 2008 impairment
review, refer to Note 8, Impairment Loss.





F-13
 Table of Contents





Goodwill





Goodwill
reflects the excess of cost over the fair value of net assets acquired in
various business acquisitions.  We adopted SFAS No. 142, Goodwill and Other Intangible
Assets (“SFAS 142”), on January 1, 2002.





We are
required to 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 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.  For the year ended December 31, 2008,
we recorded $531,700 of goodwill impairment.





We cannot
predict the occurrence of certain future events that might adversely affect the
reported value of goodwill, which totaled approximately $11.8 million at
December 31, 2008.  Such events include, but are not limited to,
strategic decisions made in response to economic and competitive conditions, the
impact of the economic environment on our tenants, or a materially negative
change in our relationships with significant tenants.





Goodwill
was included in the determination of the gain on disposal of real estate due to
the disposition of certain properties. For the years ended December 31, 2008,
2007 and 2006, $112,000, $595,000 and $604,000, respectively, was included in
the gains on sale for these periods.





For
expanded detail on the qualitative factors considered in the 2008 impairment
review, refer to Note 8, Impairment Loss.





Deferred
Costs and Intangibles





Deferred
costs, intangible assets included in other assets, and intangible liabilities
included in other liabilities consist of loan origination fees, leasing costs
and the value of intangible assets when a property was acquired.  Loan
and other fees directly related to rental property financing with third parties
are amortized over the term of the loan using the effective interest
method.  Direct salaries, third-party fees and other costs incurred by
us to originate a lease are capitalized and are being amortized against the
respective leases using the straight-line method over the term of the related
leases. Intangible assets consist of in-place lease values, tenant origination
costs and above-market rents that were recorded in connection with the
acquisition of the properties.  Intangible liabilities consist of
below-market rents that are also recorded in connection with the acquisition of
properties.  Both intangible assets and liabilities are amortized
accreted using the straight-line method over the term of the related leases.
When a lease is terminated early, any remaining unamortized balances under lease
intangible assets or liabilities are expensed.





Deposits





Deposits
included in other assets comprise funds held by various institutions for future
payments of property taxes, insurance and improvements, utility and other
service deposits.





Minority
Interest





On
January 1, 1999, Equity One (Walden Woods) Inc., a wholly-owned subsidiary of
ours, entered into a limited partnership as a general partner.  An
income-producing shopping center (“Walden Woods Village”) was contributed by its
owners (the “Minority Partners”), and we contributed 93,656 shares of our common
stock (the “Walden Woods Shares”) to the limited partnership at an agreed-upon
price of $10.30 per share.  Based on this per share price and the net
value of property contributed by the Minority Partners, the limited partners
received 93,656 partnership units.  We have entered into a Redemption
Agreement with the Minority Partners whereby the Minority Partners can request
that we purchase either their limited partnership units or any shares of common
stock that they may receive in exchange for their partnership units at a price
of $10.30 per unit or per share at any time before January 1, 2014. Because of
the Redemption Agreement, we consolidate the accounts of the partnership with
our financial data.  We have also entered into a Conversion Agreement
with the Minority Partners under which, following notice, the Minority Partners
can convert their partnership units into Walden Woods Shares. In addition, under
the terms of the limited partnership agreement, the Minority Partners do not
have an interest in the Walden Woods Shares except to the extent of
dividends.  Accordingly, a preference in earnings has been allocated
to the Minority Partners to the extent of the dividends declared. The Walden
Woods Shares are not considered outstanding in our consolidated financial
statements and are excluded from the share count in the calculation of primary
earnings per share.





F-14
 Table of Contents





We have
controlling interests in two joint ventures that, together, own our Sunlake
development project.  We have funded all of the acquisition costs, are
required to fund any necessary development and operating costs, receive an 8%
preferred return on our advances and are entitled to 60% of the profits
thereafter.  The minority partners are not required to make
contributions and, to date, have not contributed any capital.  One
joint venture has commenced construction of its retail project and the other
joint venture is evaluating the future development of the remaining land
parcels.  No minority interest has been recorded as the venture has
incurred operating losses after taking into account our preferred
return.





Use
of Derivative Financial Instruments





We
account for derivative and hedging activities in accordance with SFAS No. 133,
Accounting for Derivative
Instruments and Hedging Activities,asamended and
interpreted.  These accounting standards require us to measure
derivatives, including certain derivatives embedded in other contracts, at fair
value and to recognize them in our consolidated balance sheets as assets or
liabilities, depending on our rights or obligations under the applicable
derivative contract.  For derivatives designated as fair value hedges,
the changes in the fair value of both the derivative instrument and the hedged
item are recorded in earnings.  For derivatives designated as cash
flow hedges, the effective portions of changes in fair value of the derivative
are reported in other comprehensive income and are subsequently reclassified
into earnings when the hedged item affects earnings.  Changes in fair
value of derivative instruments not designated as hedging instruments, and
ineffective portions of hedges, are recognized in earnings in the current
period.





We do not
enter into derivative instruments for speculative purposes.  We
require that the hedges or derivative financial instruments be effective in
managing the interest rate risk exposure that they are designated to
hedge.  This effectiveness is essential to qualify for hedge
accounting.  Hedges that meet these hedging criteria are formally
designated as such at the inception of the contract.  When the terms
of an underlying transaction are modified, or when the underlying hedged item
ceases to exist, resulting in some ineffectiveness, the change in the fair value
of the derivative instrument will be included in
earnings.  Additionally, any derivative instrument used for risk
management that becomes ineffective is marked-to-market each period. We believe
that our credit risk has been mitigated by entering into these agreements with
major financial institutions.  Net interest differentials to be paid
or received under a swap contract and/or collar agreement are included in
interest expense as incurred or earned.





The
estimated fair value of our derivative financial instruments has been determined
using available market information and appropriate valuation
methodologies.  However, considerable judgment is required in
interpreting market data to develop the estimates of fair
value.  Accordingly, the estimates presented herein are not
necessarily indicative of the amounts that we could realize in a current market
exchange.  The use of different market assumptions or estimation
methodologies may have a material effect on the estimated fair
value.





In 2006,
we entered into an aggregate notional amount of $85.0 million of treasury
locks.  The treasury locks were executed to hedge the benchmark
interest rate associated with forecasted interest payments relating to an
anticipated issuance of fixed-rate borrowings.  The treasury locks
were terminated in connection with the issuance of $150.0 million of unsecured
senior notes in April 2007.  The realized loss on these hedging
relationships has been deferred in other comprehensive income and is being
amortized against earnings over the term of the debt as an adjustment to
interest expense.





On March
24, 2004, concurrently with the issuance of $200.0 million 3.875% senior
unsecured notes, we entered into a $100.0 million notional principal variable
interest rate swap with an estimated fair value of $949,000 as of December 31,
2008.  This swap converts fixed rate debt to variable rate based on
the six-month LIBOR in arrears plus 0.4375%, and matures April 15,
2009.





F-15
 Table of Contents





Business
Combinations





When we
purchase real estate properties, 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 pursuant to the provisions of SFAS No. 141, Business Combinations(“SFAS
141”).  Our initial fair value purchase price allocations may be
refined as final information regarding the fair value of the assets acquired and
liabilities assumed becomes available, and would be limited to one year from the
acquisition date. We allocate the purchase price of the acquired property to
land, building, improvements and intangible assets.  The aggregate
value of other acquired intangible assets, consisting of in-place leases, is
measured by the excess of (i) the purchase price paid for a property after
adjusting existing in-place leases to market rental rates over (ii) the
estimated fair value of the property as-if-vacant, determined as set forth
above.  The value of in-place leases exclusive of the value of
above-market and below-market in-place leases is amortized to expense over the
remaining non-cancelable periods of the respective leases.  If a lease
were to be terminated prior to its stated expiration, all unamortized amounts
relating to that lease would be written off.  There are three
categories of intangible assets to be considered:  (1) in-place
leases; (2) above and below-market value of in-place leases; and (3) customer
relationships.





The value
of in-place leases is estimated based on the fair value of at-market in-place
leases considering the cost of acquiring similar leases, the foregone rents
associated with the lease-up period and carrying costs associated with the
lease-up period.  Intangible assets associated with at-market,
in-place leases are amortized as additional lease expense over the remaining
contractual lease term.





Above-market
and below-market in-place lease values for acquired properties are computed
based on the present value of the difference between the contractual amounts to
be paid pursuant to the leases negotiated and in-place at the time of
acquisition and our estimate of fair market lease rates for the property or
comparable property, measured over a period equal to the remaining contractual
lease period.  The value of above-market lease assets is amortized as
a reduction of rental income over the remaining terms of the respective
leases.  The value of below-market lease liabilities is amortized as
an increase to rental income over the remaining terms of the respective
leases.





We
evaluate business combinations to determine the value, if any, of customer
relationships separate from customer contracts (leases). Other than as discussed
above, we have determined that our real estate properties do not have any other
significant identifiable intangibles.





The
results of operations of acquired properties are included in our financial
statements as of the dates they are acquired.  The intangible assets
and liabilites associated with property acquisitions are included in other
assets and other liabilities in our consolidated balance sheets.  In
the event that a tenant terminates its lease, all unamortized costs are
written-off as a charge to depreciation expense.





Revenue
Recognition





Rental
income includes minimum rents, expense reimbursements, termination fees and
percentage rental payments.  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 rental
revenue.  Factors considered during this evaluation include, among
others, the type of improvements made, who holds legal title to the
improvements, and other controlling rights provided by the lease
agreement.  Lease revenue recognition commences when the lessee is
given possession of the leased space and there are no contingencies offsetting
the lessee’s obligation to pay rent.





Many of
the lease agreements contain provisions that require the payment of additional
rents based on the respective tenant’s sales volume (contingent or percentage
rent) and substantially all contain provisions that require reimbursement of the
tenant’s share of real estate taxes, insurance and common area maintenance
costs, or CAM.  Revenue based on 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.





F-16
 Table of Contents





We
recognize gains or losses on sales of real estate in accordance with SFAS No. 66
Accounting for Sales of Real
Estate (“SFAS 66”).  Profits are not recognized until (a) a
sale has been consummated; (b) the buyer’s initial and continuing investments
are adequate to demonstrate a commitment to pay for the property; (c) our
receivable, if any, is not subject to future subordination; and (d) we have
transferred to the buyer the usual risks and rewards of ownership, and we do not
have a substantial continuing involvement with the property.  The
sales of income producing properties where we do not have a continuing
involvement are presented in the discontinued operations section of our
consolidated statements of operations.





We are
engaged by two joint ventures to provide asset management, property management,
leasing and investing services for such venture’s respective
assets.  We receive fees for our services, including a property
management fee calculated as a percentage of gross revenues received, and
recognize these fees as the services are rendered.





Earnings
Per Share





Earnings
per share is accounted for in accordance with SFAS No. 128, Earnings per Share, which
requires a dual presentation of basic and diluted earnings per share on the face
of the consolidated statement of operations.  Basic earnings per share
is computed by dividing net income attributable to common stockholders by the
weighted average number of common shares outstanding for the period. Diluted
earnings per share reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock or resulted in the issuance of common stock that then shared
in the earnings of the Company.  We calculate the dilutive effect of
share-based payment compensation arrangements using the treasury stock
method.   This method assumes that the proceeds we receive from
the exercise of stock options and non-vested stock are used to repurchase common
shares in the market.  The adoption of SFAS No. 123(R), Share-Based Payment (“SFAS
123(R)”), requires that we include, as assumed proceeds, the amount of
compensation cost attributed to future services and not yet recognized, and the
amount of tax benefits (both deferred and current), if any, that would be
credited to additional paid-in capital assuming exercise of the options and
vesting of the restricted shares.





Income
Taxes





We elect
to be taxed as a REIT and believe that we qualify as a REIT under Sections 856
through 860 of the Internal Revenue Code of 1986, as amended (the “Code”). To
maintain REIT status for federal income tax purposes, we are required to
distribute at least 90% of our REIT taxable income to our stockholders as well
as comply with certain other requirements as defined by the Code. Accordingly,
we are not subject to federal corporate income tax to the extent that we
distribute 100% of our REIT taxable income each year.





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 (“TRS”) are subject to federal,
state and local income taxes.





TRS
income taxes are accounted for under the asset and liability method as required
by SFAS No. 109, Accounting
for Income Taxes. 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 TRS assets and liabilities and for
operating loss and tax credit carry-forwards. Deferred tax assets and
liabilities are measured using enacted tax rates in effect for the year in which
those temporary differences are expected to be recovered or
settled.  We provide a valuation allowance for deferred tax assets
that we do not anticipate will be realized.  Prior to 2008, our TRSs
did not have significant tax provisions or net deferred income tax
items.





In June
2006, the FASB issued SFAS Interpretation No. 48, Accounting for Uncertainty in Income
Taxes(“FIN 48”).  FIN 48 requires that all tax positions
subject to SFAS No. 109, Accounting for Income
Taxes,  be analyzed using a two-step approach.  The
first step requires an entity to determine if a tax position would more likely
than not be sustained upon examination.  In the second step, the tax
benefit is measured as the largest amount of benefit, determined on a cumulative
probability basis that is more likely than not to be realized upon ultimate
settlement.  FIN 48 was effective for fiscal years beginning after
December 15, 2006, with any adjustment in a company’s tax provision being
accounted for as a cumulative effect of accounting change in beginning
equity.  The adoption of the standard did not have a material impact
on our consolidated financial statements.





F-17
 Table of Contents





Share-Based
Payment





Cumulative
Effect of Change in Accounting Principle





Prior to
January 1, 2006, we accounted for share-based payments under the recognition and
measurement provisions of Accounting Principle Board Opinion No. 25, Accounting for Stock Issued to
Employees (“APB No. 25”) , and related interpretations, as permitted by
SFAS No. 123, Accounting for
Stock-Based Compensation(“SFAS 123”).  Under APB No. 25, no
stock-based compensation costs were recognized in the statement of operations as
our options granted had an exercise price equal to the market value of our
common shares on the date of grant.  Effective January 1, 2006, we
adopted the fair value recognition provisions of SFAS 123(R), using the
modified-prospective-transition method.  Under this transition method,
compensation costs recognized beginning January 1, 2006 include: (a)
compensation costs for all share-based payments granted prior to, but not vested
as of, January 1, 2006, based on the grant date fair value estimated in
accordance with the original provisions of SFAS 123, and (b) compensation costs
for all share-based payments granted subsequent to January 1, 2006 based on the
grant date fair value estimated in accordance with the provisions of SFAS
123(R).  We use the Black-Scholes-Merton valuation model to value
stock options.





On
January 1, 2006, we recorded the cumulative effect of adopting SFAS
123(R).  This cumulative effect resulted in decreasing accrued
liabilities by $4.5 million and increasing shareholder equity by $4.5
million.  These balance sheet changes related to deferred compensation
on unvested shares.  There was no effect on the consolidated statement
of operations or cash flows.  Under SFAS 123(R), deferred compensation
is no longer recorded at the time unvested shares are
issued.  Share-based compensation is now recorded over the requisite
service period with an offsetting credit to equity (generally additional paid-in
capital).





Share-Based
Payment Subsequent to the Adoption of SFAS 123(R)





Share-based
compensation expense charged against earnings for the years ended December 31,
2008, 2007 and 2006 is summarized as follows:





2008
                                            
                                            
                                            2007
                                            
                                            
                                            2006(In
      thousands)Unvested
      restricted stock
                                            
                                            $
                                            4,424
                                            
                                            
                                            $
                                            5,239
                                            
                                            
                                            $
                                            5,366Unvested
      stock options
                                            
                                            
                                            1,989
                                            
                                            
                                            
                                            1,799
                                            
                                            
                                            
                                            747Employee
      stock purchase plan discount
                                            
                                            
                                            15
                                            
                                            
                                            
                                            12
                                            
                                            
                                            
                                            12Total
      cost
                                            
                                            
                                            6,428
                                            
                                            
                                            
                                            7,050
                                            
                                            
                                            
                                            6,125Less
      amount capitalized
                                            
                                            
                                            (323
                                            )
                                            
                                            
                                            (494
                                            )
                                            
                                            
                                            (178
                                            )Net
      share-based compensation expense
                                            
                                            $
                                            6,105
                                            
                                            
                                            $
                                            6,556
                                            
                                            
                                            $
                                            5,947





Segment
Reporting





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





F-18
 Table of Contents





Our
portfolio is primarily located throughout the southeastern United States;
however, we do not distinguish or group our operations on a geographical basis
for purposes of allocating resources or measuring performance. We review
operating and financial data for each property on an individual basis;
therefore, each of our individual properties is a separate operating segment. No
individual property constitutes more than 4% of our combined revenue, net income
or assets, and thus the individual properties have been aggregated into one
reportable segment based upon their similarities with regard to both the nature
and economics of the centers, tenants and operational processes, as well as
long-term average financial performance. In addition, none of the shopping
centers are located outside the United States.





Concentration
of Credit Risk





A
concentration of credit risk arises in our business when a national or
regionally based tenant occupies a substantial amount of space in multiple
properties owned by us.  In that event, if the tenant suffers a
significant downturn in its business, it may become unable to make its
contractual rent payments to us, exposing us to potential losses in rental
revenue, expense recoveries, and percentage rent. Further, the impact may be
magnified if the tenant is renting space in multiple
locations.  Generally, we do not obtain security from our
nationally-based or regionally-based tenants in support of their lease
obligations to us.  We regularly monitor our tenant base to assess
potential concentrations of credit risk.  As of December 31, 2008,
Publix Super Markets accounted for over 10%, or approximately $18.1 million, of
our aggregated annualized minimum rent.  No other tenant accounted for
over 5% of our annualized minimum rent.





Recent
Accounting Pronouncements





In
September 2006, the FASB issued SFAS No. 157, Fair Value Measurements
(“SFAS 157”), which defines fair value, establishes a framework for measuring
fair value in GAAP and expands disclosures about fair value
measurements.  SFAS 157 is effective for fiscal years beginning after
November 15, 2007 and interim periods within those fiscal years.  We
adopted the requirements of SFAS 157 as of January 1, 2008 without a material
impact on our consolidated financial statements, as more fully disclosed in Note
9 thereto, Fair Value
Measurements.  In February 2008, the FASB issued FASB Staff
Position Paper (“FSP”) FAS 157-2, Effective Date of FASB Statement No.
157(“FSP 157-2”), which delays the effective date of SFAS 157 for
nonfinancial assets and nonfinancial liabilities that are recognized or
disclosed in the financial statements on a nonrecurring basis to fiscal years
beginning after November 15, 2008.  In October 2008, the FASB issued
FSP FAS 157-3, Determining the
Fair Value of a Financial Asset When the Market for that Asset is Not Active(“FSP 157-3”). FSP 157-3 clarifies the application of SFAS 157 in a
market that is not active.  We have not applied the provisions of SFAS
157 to our nonfinancial assets and nonfinancial liabilities in accordance with
FSP 157-2 and FSP 157-3.





In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities (“SFAS 159”),which allows entities
to voluntarily choose, at specified election dates, to measure many financial
assets and financial liabilities at fair value.  The election is made
on an instrument-by-instrument basis and is irrevocable.  Subsequent
to the adoption of SFAS 159, changes in fair value for the particular
instruments must be reported in earnings.  Upon initial adoption, SFAS
159 provided entities with a one-time election of the fair value option for
existing eligible items.  The effect of the first measurement to fair
value should be reported as a cumulative-effect adjustment to the opening
balance of retained earnings in the year the statement is
adopted.  SFAS 159 is effective for fiscal years beginning after
November 15, 2007.  We did not elect the fair value option for
financial assets or liabilities existing on the January 1, 2008 adoption
date.  We will consider the applicability of the fair value option for
assets acquired or liabilities incurred in future transactions.





In
December 2007, the FASB issued SFAS No. 141 (R), Business Combinations (“SFAS
141(R)”).  SFAS 141(R) of a business to measure at fair value the
assets acquired, the liabilities assumed, and any non-controlling interest in
the acquiree at the acquisition date, with limited exceptions.  In
addition, this standard requires acquisition costs to be expensed as incurred
and changes the accounting related to acquisitions and business combinations to
more of a fair value based approach.  The standard is effective for
fiscal years beginning after December 15, 2008 and is to be applied
prospectively, with no earlier adoption permitted.  The adoption of
this standard may have an impact on the accounting for certain costs related to
our future acquisitions. Pursuant to the SFAS No. 141 (R), in the fourth quarter
of 2008 a charge in the amount of $500,000 was recognized in general
administrative expense associated with previously capitalized acquisition costs
that are no longer capitalizable under SFAS 141(R).  As noted in
footnote 20 Subsequent
Events, we increased our ownership to greater than 50% in DIM subsequent
to December 31, 2008.  In addition, as a result of our increased
influence over DIM, we currently anticipate consolidating the results of DIM
with ours beginning with the first quarter of 2009.  Finally, we are
still evaluating the accounting treatment of this increased investment both
relating to its prior treatment under the cost method and the allocation of the
purchase price.  Given recent accounting guidance, our acquisition may
be treated as a multistep acquisition and, therefore, have an effect on earnings
in the three months ending March 31, 2009.





F-19
 Table of Contents





In
December 2007, the FASB issued SFAS 160, Noncontrolling Interests in
Consolidated Financial Statements (“SFAS 160), which requires
consolidated net income to be reported at amounts that include the amounts
attributable to both the parent and non-controlling interest.  SFAS
160 is effective for fiscal years beginning on or after December 15,
2008.  The adoption of this standard is not expected to have a
material effect on our consolidated results of operations, yet will require
additional disclosures relating to our joint venture at Sunlake and our
down-REIT at Walden Woods Village and will effect our disclosure for the three
months ending March 31, 2009.





In March
2008, the FASB issued SFAS No. 161, Disclosures About Derivative
Instruments and Hedging Activities – an amendment of FASB Statement No.
133, (“SFAS 161”). SFAS 161 expands the disclosure requirements in SFAS
No. 133, Accounting for
Derivative Instruments and Hedging Activities, regarding an entity’s
derivative instruments and hedging activities. SFAS 161 is effective for fiscal
years beginning after December 1, 2008. We are currently evaluating the impact
that adoption of SFAS 161 will have on our consolidated financial
statements.





In April
2008, the FASB issued FSP SFAS No. 142-3, Determination of the Useful Life of
Intangible Assets (“FSP SFAS 142-3”). FSP SFAS 142-3 amends paragraph
11(d) of FASB SFAS No. 142, Goodwill and Other Intangible
Assets (“SFAS 142”), which amends the factors that should be considered
in developing renewal or extension assumptions used to determine the useful life
of a recognized intangible asset under SFAS 142. FSP SFAS 142-3 is intended to
improve the consistency between the useful life of a recognized intangible asset
under SFAS 142 and the period of expected cash flows used to measure the fair
value of the asset under FSP SFAS 142-3. FSP SFAS 142-3 is effective for
financial statements issued for fiscal years beginning after December 15, 2008
and must be applied prospectively to intangible assets acquired after the
effective date. We are currently evaluating the impact that adoption of FSP SFAS
142-3 will have on our consolidated financial statements.





In May
2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted
Accounting Principles (“SFAS 162”). SFAS 162 is intended to improve
financial reporting by identifying a consistent framework, or hierarchy, for
selecting accounting principles to be used in preparing financial statements for
nongovernmental entities that are presented in conformity with generally
accepted accounting principles in the United States of America. SFAS 162 will be
effective 60 days following the U.S. Securities and Exchange Commission’s
approval of the Public Company Accounting Oversight Board amendments to AU
Section 411, The Meaning of
Fairly Presented in Conformity with Generally Accepted Accounting
Principles. We are currently evaluating the impact that the adoption of
SFAS 162 will have on our consolidated financial statements.





In June2008, the FASB issued FASB Staff
Position Emerging Issues Task Force 03-6-1,Determining Whether
Instruments Granted in Share-Based Payment Transactions Are Participating
Securities(“FSP-EITF
03-6-1”). Under FSP-EITF 03-6-1, unvested share-based payment awards that
contain non-forfeitable rights to dividends or dividend equivalents (whether
paid or unpaid) are participating securities and shall be included in the
computation of earnings per share pursuant to the two-class method. FSP-EITF
03-6-1 is effective for financial statements issued for fiscal years beginning
afterDecember15, 2008, and interim periods within those years
and requires retrospective application. We are currently evaluating the impact
of adopting FSP-EITF 03-6-1 on our earnings per share.





In December 2008, the FASB issued FSP
FAS 140-4 and FIN 46(R)-8,Disclosure by Public
Entities (Enterprises) About Transfers of Financial Assets and Interests in
Variable Interest Entities. The purpose of the FSP is to promptly
improve disclosures by public companies until the pending amendments to FASB
SFAS No.140,Accounting for
Transfers and Servicing of Financial Assets and Extinguishment of
Liabilities(“SFAS 140”),
and FIN 46R are finalized and approved by the FASB. The FSP amends SFAS 140 to
require public companies to provide additional disclosures about a transferor’s
continuing involvement with transferred financial assets. It also amends FIN 46R
by requiring public companies to provide additional disclosures regarding their
involvement with variable interest entities. This FSP is effective for fiscal
years beginning afterDecember 1,
2008. We do not expect theFSP will have a material
effect on our consolidated financial statements.





F-20
 Table of Contents





Fair
value of financial instruments





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





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





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





Available for Sale
Securities.  The fair value estimated at December 31, 2008 and
2007 was $160.6 million and $72.3 million, respectively, based on the closing
market prices of the securities. The unrealized holding loss was $21.3 million
at December 31, 2008, and $7.9 million at December 31, 2007.





Mortgage Notes Payable. The
fair value estimated at December 31, 2008 and 2007 was $383.5 million and $426.4
million, respectively, calculated based on the net present value of payments
over the term of the loans using estimated market rates for similar mortgage
loans and remaining terms.





Unsecured Revolving Credit
Facilities.The fair value estimated
at December 31, 2008 was $31.4 million, calculated by using the current rates at
which similar loans would be made and remaining terms.  The carrying
amounts reported in the balance sheets approximate fair value.





Unsecured Senior Notes
Payable.  The fair value estimated at December 31, 2008 and
2007 was $498.0 million and $704.7 million, calculated based on the net present
value of payments over the terms of the notes using estimated market rates for
similar notes and remaining terms.





F-21
 Table of Contents





3.
            Properties





The
following table is a summary of the composition of properties in the
consolidated balance sheets:





December 31,2008
                      
                      
                      2007(thousands)Land
      and land improvements
                      
                      $
                      816,886
                      
                      
                      $
                      891,431Building
      and building improvements
                      
                      
                      1,037,976
                      
                      
                      
                      1,116,936Tenant
      improvements
                      
                      
                      45,651
                      
                      
                      
                      39,6261,900,513
                      
                      
                      
                      2,047,993Less:
      accumulated depreciation
                      
                      
                      (196,151
                      )
                      
                      
                      (172,651
                      )Income-producing
      property, net
                      
                      $
                      1,704,362
                      
                      
                      $
                      1,875,342





4.
            Accounts
      and Other Receivables





The
following table is a summary of the composition of accounts and other
receivables in the consolidated balance sheets:





December 31,2008
                      
                      
                      2007(in
      thousands)Tenants
                      
                      $
                      13,829
                      
                      
                      $
                      15,654Other
                      
                      
                      1,456
                      
                      
                      
                      737Allowance
      for doubtful accounts
                      
                      
                      (3,076
                      )
                      
                      
                      (2,243
                      )Total
      accounts and other receivables, net
                      
                      $
                      12,209
                      
                      
                      $
                      14,148





5.
            Other
      Assets





The
following is a summary of the composition of other assets in the consolidated
balance sheets:





December 31,2008
                      
                      
                      2007(In
      thousands)Notes
      receivable
                      
                      $
                      50
                      
                      
                      $
                      69Deposits
      and escrow impounds
                      
                      
                      7,056
                      
                      
                      
                      9,175Deferred
      financing fees, net
                      
                      
                      6,788
                      
                      
                      
                      6,474Leasing
      commissions, net
                      
                      
                      12,046
                      
                      
                      
                      10,743Intangible
      assets, net
                      
                      
                      11,769
                      
                      
                      
                      18,649Furniture
      and equipment, net
                      
                      
                      2,423
                      
                      
                      
                      2,370Prepaid
      and other assets
                      
                      
                      15,659
                      
                      
                      
                      14,949Total
      other assets
                      
                      $
                      55,791
                      
                      
                      $
                      62,429





F-22
 Table of Contents





The
following is a summary of the composition of our intangible assets and
accumulated amortization as of December 31, 2008 and 2007:





December 31,2008
                      
                      
                      2007(In
      thousands)Intangible
      AssetsAbove
      market
                      
                      $
                      3,765
                      
                      
                      $
                      4,745In
      place
                      
                      
                      15,744
                      
                      
                      
                      18,826Origination
                      
                      
                      3,816
                      
                      
                      
                      5,714Lease
      incentive
                      
                      
                      135
                      
                      
                      
                      8Total
      intangibles
                      
                      
                      23,460
                      
                      
                      
                      29,293Accumulated
      AmortizationAbove
      market
                      
                      
                      1,751
                      
                      
                      
                      1,725In
      place
                      
                      
                      7,796
                      
                      
                      
                      6,674Origination
                      
                      
                      2,141
                      
                      
                      
                      2,244Lease
      incentive
                      
                      
                      3
                      
                      
                      
                      1Total
      accumulated amortization
                      
                      
                      11,691
                      
                      
                      
                      10,644Intangible
      Assets, net
                      
                      $
                      11,769
                      
                      
                      $
                      18,649





The
amortization for the next five years for the recorded intangible assets is
approximately $2.7 million, $2.0 million, $1.6 million, $1.3 million and $1.0
million, respectively.  At December 31, 2008 and 2007, the gross
carrying amount of our intangible liabilities is $25.8 million and $30.7
million, respectively, and the accumulated amortization was $11.9 million and
$9.5 million, respectively. Our intangible liabilities are solely composed of
below-market rent adjustments. The amortization for the next five years for the
recorded intangible liabilities is approximately $3.7 million, $2.7 million,
$1.8 million, $1.4 million and $1.2 million, respectively.





6.
            Borrowings





The
following table is a summary of our  mortgage notes payable balances
for the years ended December 31, 2008 and December 31, 2007:





December 31,2008
                                
                                
                                2007Mortgage
      Notes Payable
                                
                                (In
      thousands)Fixed
      rate mortgage loans
                                
                                $
                                371,077
                                
                                
                                $
                                397,112





The
weighted average interest rate of the mortgage notes payable at December 31,
2008 and December 31, 2007 was 7.22% and 7.42%, respectively, excluding the
effects of the net premium adjustment.





Each of
the existing mortgage loans is secured by a mortgage on one or more of our
properties. Certain of the mortgage loans involving an aggregate principal
balance of approximately $63.9 million contain prohibitions on transfers of
ownership which may have been violated by our previous issuances of common stock
or in connection with past acquisitions and may be violated by transactions
involving our capital stock in the future. If a violation were established, it
could serve as a basis for a lender to accelerate amounts due under the affected
mortgage. To date, no lender has notified us that it intends to accelerate its
mortgage. In the event that the mortgage holders declare defaults under the
mortgage documents we will, if required, repay the remaining mortgage from
existing resources, refinancing of such mortgages, borrowings under its
revolving lines of credit or other sources of financing.  Based on
discussions with various lenders, current credit market conditions and other
factors, we believe that the mortgages will not be
accelerated.  Accordingly, we believe that the violations of these
prohibitions will not have a material adverse impact on our results of
operations or financial condition.





F-23
 Table of Contents





On
September 25, 2008, we obtained a $65.0 million loan secured by a mortgage on
our Sheridan Plaza shopping center located in Hollywood, Florida. The loan
matures on October 10, 2018, and principal and interest are payable in arrears
monthly based on a 30-year amortization and a 6.25% annual interest
rate.





During
the year ended December 31, 2008, we prepaid, without penalty, $36.9 million in
mortgage loans.





Our
outstanding unsecured senior notes at December 31, 2008 and December 31, 2007
consist of the following:





December 31,2008
                      
                      
                      2007(In
      thousands)Unsecured
      Senior Notes Payable3.875%
      Senior Notes, due 4/15/09
                      
                      $
                      176,185
                      
                      
                      $
                      200,000Fair
      value of interest rate swap
                      
                      
                      949
                      
                      
                      
                      (315
                      )7.84%
      Senior Notes, due 1/23/12
                      
                      
                      10,000
                      
                      
                      
                      25,0005.375%
      Senior Notes, due 10/15/15
                      
                      
                      117,000
                      
                      
                      
                      120,0006.0%
      Senior Notes, due 9/15/16
                      
                      
                      106,500
                      
                      
                      
                      125,0006.25%
      Senior Notes, due 1/15/17
                      
                      
                      115,000
                      
                      
                      
                      125,0006.0%
      Senior Notes, due 9/15/17
                      
                      
                      132,279
                      
                      
                      
                      150,000Total
                      
                      $
                      657,913
                      
                      
                      $
                      744,685





Our
unamortized/unaccreted premium / (discount) on our mortgage notes payable and
notes payable at December 31, 2008 and December 31, 2007 consists of the
following:





Unamortized/unaccreted
      premium / (discount)
                                
                                December 31,
                                
                                
                                December 31,2008
                                
                                
                                2007(In thousands)Mortgage
      notes payable
                                
                                $
                                6,360
                                
                                
                                $
                                10,455Unsecured
      senior notes payable
                                
                                
                                (1,135
                                )
                                
                                
                                (413
                                )$
                                5,225
                                
                                
                                $
                                10,042





The
weighted average interest rate of the unsecured senior notes at December 31,
2008 and 2007 was 5.66% and 5.67%, respectively, excluding the effects of the
interest rate swap and net premium adjustment.





F-24
 Table of Contents





During
the year ended December 31, 2008, we purchased $88.0 million of our outstanding
unsecured senior notes, with varying maturities, which generated a gain on the
early extinguishment of debt of $6.4 million for the year ended December 31,
2008.





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





On March
24, 2004, we swapped $100.0 million notional principal of the $200.0 million,
3.875% senior notes to a floating interest rate based on the six-month LIBOR in
arrears plus 0.4375%.  The swap matures April 15, 2009, concurrently
with the maturity of the 3.875% senior notes.





The
following table provides a summary of our unsecured revolving lines of credit
balances at December 31, 2008 and December 31, 2007:





December 31,2008
                      
                      
                      2007Unsecured
      Revolving Credit Facilities
                      
                      (In
      thousands)Wells
      Fargo
                      
                      $
                      35,500
                      
                      
                      $
                      37,000City
      National Bank
                      
                      
                      -
                      
                      
                      
                      -Total
                      
                      $
                      35,500
                      
                      
                      $
                      37,000





On
October 17, 2008, we amended and restated our credit agreements with a syndicate
of banks to provide for a $227.0 million unsecured revolving credit facility
that replaced our existing facility that would have expired in January
2009.  The amended facility bears interest at our option at (i)
applicable LIBOR plus 1.00% to 1.70%, depending on the credit ratings of our
senior unsecured notes, or (ii) daily LIBOR plus 3.0%.  The amended
facility also includes a competitive bid option which allows us to conduct
auctions among the participating banks for borrowings at any one time
outstanding up to 50% of the lender commitments, a $35.0 million swing line
facility for short term borrowings and a $20.0 million letter of credit
commitment.   Subject to the terms and conditions in the amended
credit agreement the total commitments under the facility may be increased up to
a total of $400.0 million.  The amended facility expires on October
17, 2011, with a one year extension option.  In addition, the amended
facility contains customary covenants, including financial covenants regarding
debt levels, total liabilities, interest coverage, fixed charge coverage ratios,
unencumbered properties, and permitted investments. If a default under the
facility were to arise, our ability to pay dividends is limited to the amount
necessary to maintain our status as a REIT unless the default is a payment
default or bankruptcy event in which case we are prohibited from paying any
dividends.





The
interest rate in effect at December 31, 2008 and December 31, 2007, was 2.14%
and 5.00%, respectively.  The facility also provides for the issuance
of letters of credit, of which there were $12.3 million issued at December 31,
2008.





We also
have a $15.0 million unsecured credit facility with City National Bank of
Florida, on which there was no outstanding balance as of December 31, 2008 and
December 31, 2007. This facility also provides for the issuance of $527,000 in
outstanding letters of credit. In addition, we also have a $55,000 outstanding
secured letter of credit with Bank of America.





As of
December 31, 2008, the availability under the various credit facilities was
approximately $193.7 million net of outstanding balances and letters of credit
and subject to the covenants in the loan agreements.





F-25
 Table of Contents





Principal
maturities (including scheduled amortization payments) of the notes payable as
of December 31, 2008 are as follows:





Principal Maturities for the Year Ending December
      31,
                        
                        Amount(In
      thousands)2009
                        
                        $
                        186,5462010
                        
                        
                        82,0672011
                        
                        
                        112,8752012
                        
                        
                        45,5322013
                        
                        
                        47,106Thereafter
                        
                        
                        589,415Total
                        
                        $
                        1,063,541





Interest
costs incurred, excluding amortization of discount/premium, were $65.7 million,
$72.4 million and $64.8 million in the years ended December 31, 2008, 2007,
2006, respectively, of which $2.9 million, $3.2 million and $5.8 million were
capitalized, respectively.





7.
            Securities





Our
investments in securities are classified as available-for-sale and recorded at
fair value based on current market prices, and consist of debt and equity
securities.





As of
December 31, 2008, our equity securities consisted primarily of approximately
4.0 million ordinary shares of DIM Vastgoed N.V., or DIM, representing 48.0% of
the total outstanding ordinary shares of DIM. DIM is a public company organized
under the laws of the Netherlands, the shares of which are listed on NYSE
Euronext Amsterdam stock exchange and which operates as a closed-end investment
company owning and operating a portfolio of 21 shopping center properties
aggregating approximately 2.6 million square feet in the southeastern United
States.  In addition, we own approximately $475,000 of preferred stock
of another REIT.





During
the year ended December 31, 2008, we purchased various short term debt
securities with an aggregate principal balance of $132.7 million, at a net
discount of approximately $557,000. As of December 31, 2008, our total
investment in these debt securities, which have various maturities through
January 2010 and are classified as available-for-sale, was $128.4
million.  Interest earned on these securities was $3.1 million during
the year ended December 31, 2008.   There were no comparable
investments for the years ended December 31, 2007 and 2006.





Other-than-temporary
changes in the fair value of the equity and debt investments are included on our
consolidated balance sheets in accumulated other comprehensive income
(loss).  If a decline in fair value is other-than-temporary, then an
impairment is recognized in earnings.  For the year ended December 31,
2008, we recorded a $33.2 million impairment loss in our consolidated statement
of operations with respect to our investment in DIM’s ordinary shares and our
preferred stock holdings.  Refer to note 8 for additional explanation
on the impairment loss recorded.





F-26
 Table of Contents





The
following table reflects the fair value of our investments, together with the
realized losses and unrealized losses that are not deemed
other-than-temporarily:





December 31, 2008
                    
                    
                    December 31, 2007(In
      thousands)
                    
                    
                    (In
      thousands)Investment
                    
                    Fair Value
                    
                    
                    Realized
      Loss
                    
                    
                    Unrealized Loss
                    
                    
                    Fair Value
                    
                    
                    Realized
      Loss
                    
                    
                    Unrealized LossEquity
      securities
                    
                    $
                    32,210
                    
                    
                    $
                    (33,171
                    )
                    
                    $
                    (16,446
                    )
                    
                    $
                    72,299
                    
                    
                    $
                    -
                    
                    
                    $
                    (7,911
                    )Debt
      securities
                    
                    
                    128,375
                    
                    
                    
                    -
                    
                    
                    
                    (4,838
                    )
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -$
                    160,585
                    
                    
                    $
                    (33,171
                    )
                    
                    $
                    (21,284
                    )
                    
                    $
                    72,299
                    
                    
                    $
                    -
                    
                    
                    $
                    (7,911
                    )





8.
            Impairment
      Loss





Goodwill





The
provisions of SFAS No. 142 Goodwill and Other Intangible
Assets require that goodwill and indefinite-lived intangible assets be
tested at least annually for impairment and require reporting units to be
identified for the purpose of assessing potential future impairments of
goodwill. The carrying value of goodwill and indefinite-lived intangibles is
considered impaired when their fair value, as established by appraisal or based
on discounted future cash flows of certain related properties, is less than
their carrying value. During the fourth quarter of 2008, we performed our annual
review of goodwill for impairment.  We projected future cash flows for
all properties with goodwill using a ten year hold period and assumed sale at
year ten using a projected capitalization rate. Fair value was then determined
by applying a risk-adjusted discount rate, which varied by property, to the
future estimated cash flows for each property.  If the carrying amount
of the project exceeded the estimated fair value (including the projected sale
using a capitalization rate) from the property, an impairment charge was
recognized to reduce the carrying value of the project to fair
value.  Seven properties were determined to have goodwill impairments;
accordingly $531,700 was recorded in impairment loss.There were no
comparable goodwill impairment losses incurred in prior periods.





Construction
in progress





As
indicated in Note 2, at December 31, 2008, we reviewed the construction projects
in place on a project-by-project basis in accordance with SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets (“SFAS 144”). We measured the
recoverability of assets by comparing the carrying amount of an asset to its
estimated future undiscounted cash flows.  For the purpose of this
analysis, we used  current development plans and management’s
intention with regard to future development assumptions, including estimated
cash flows required to complete construction, estimated timing to reach
stabilized net operating income, hold period for the asset subsequent to
reaching stabilized net operating income before sale, and the projected sale
price using an assumed capitalization rate.  At the end of 2008, we
elected not to pursue two redevelopment projects.  For the year ended
December 31, 2008, we impaired $3.8 million related to these two
projects.  There were no comparable charges in the years ended
December 31, 2007 and 2006.





Other-Than-Temporary
Impairment of Securities





As of
December 31, 2008, we indirectly owned approximately 4.0 million ordinary shares
of DIM Vastgoed N.V., or DIM, representing 48.0% of the total outstanding
ordinary shares of DIM.  As of December 31, 2008, this investment in
DIM is accounted for as an available-for-sale security because of our inability
to exert significant influence over DIM’s operating or financial policies and,
based on DIM’s organizational and capital structure, we were unable to
participate in the affairs of DIM’s supervisory board.  As an
available-for-sale security, the investment is and has been recorded on our
balance sheets at its fair value based on the market price of the ordinary
shares. Temporary declines in the fair value of those shares have been included
in accumulated other comprehensive loss. Declines that are deemed
other-than-temporary are recognized as an impairment loss in our statement of
operations.





F-27
 Table of Contents





We
evaluate our investments in available-for-sale securities, such as our
investment in DIM, for other than temporary declines each reporting period in
accordance with FAS 115, FSP 115-1 and SAB 103.  We performed this
impairment review with respect to our DIM investment for the year ended December
31, 2008, and we considered the following quantitative and qualitative factors
to determine if an impairment adjustment was needed:





·
              our
      intent and ability to hold the securities for a period of time sufficient
      to allow for any anticipated recovery in fair value;


·
              our
      assessment of the net asset value of the properties held by DIM based upon
      our expertise in the shopping center real estate
  business;


·
              the
      assessment by DIM’s management of its net asset value, or NAV, based upon
      its use of fair value accounting;


·
              the
      financial and operational condition of DIM’s
properties;


·
              market
      and economic conditions that might affect DIM’s
  prospects;


·
              the
      extent to which fair value of DIM is below our cost basis and the period
      of time over which the decline has existed;


·
              the
      relevance of the market price given the thin trading in DIM shares and the
      concentration of share ownership between ourselves and one other
      institutional investor; and


·
            the
      share-price premium that might be warranted given our ownership of a large
      block of the outstanding common
stock.





Following
our review of these factors in the third quarter of 2008, and given the
deteriorating market conditions for real estate equities during that period, we
determined that the decline was other than temporary.  As a result, we
recorded an impairment loss of $32.8 million during the year ended December 31,
2008. This impairment charge represented the difference between our cost basis
of $79.4 million and the market value of $46.6 million on September 30, 2008.
Subsequent to recording the impairment of DIM on September 30, 2008 and through
the year ended December 31, 2008, we purchased an additional 197,000 shares of
DIM and recorded any additional changes in value of our holdings of the security
in other comprehensive income.





As of
December 31, 2008, we reviewed our holding of a preferred stock of a public
REIT for other than temporary declines in fair value, taking into consideration
the factors listed above. As a result of our analysis, we recorded an impairment
loss of $380,000 as of December 31, 2008, representing the difference between
our cost basis of $855,000 and the market value of $475,000 on that
date.





F-28
 Table of Contents





9.
            Consolidating
      Financial Information





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





Condensed Balance Sheet As of December 31,
      2008
                                                                                                  
                                                                                                  Equity One, Inc.
                                                                                                  
                                                                                                  
                                                                                                  Combined Guarantor
    Subsidiaries
                                                                                                  
                                                                                                  
                                                                                                  Non- Guarantor Subsidiaries
                                                                                                  
                                                                                                  
                                                                                                  Eliminating
      Entries
                                                                                                  
                                                                                                  
                                                                                                  ConsolidatedASSETS
                                                                                                  
                                                                                                  (In
      thousands)Properties,
      net
                                                                                                  
                                                                                                  $
                                                                                                  1,019,154
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  274,587
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  484,992
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  1,778,733Investment
      in affiliates
                                                                                                  
                                                                                                  
                                                                                                  628,309
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  (628,309
                                                                                                  )
                                                                                                  
                                                                                                  
                                                                                                  -Other
      assets
                                                                                                  
                                                                                                  
                                                                                                  184,561
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  17,408
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  55,561
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  257,530Total
      Assets
                                                                                                  
                                                                                                  $
                                                                                                  1,832,024
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  291,995
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  540,553
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  (628,309
                                                                                                  )
                                                                                                  
                                                                                                  $
                                                                                                  2,036,263LIABILITIESMortgage
      notes payable
                                                                                                  
                                                                                                  $
                                                                                                  57,491
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  49,951
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  263,635
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  371,077Unsecured
      revolving credit facilities
                                                                                                  
                                                                                                  
                                                                                                  35,500
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  35,500Unsecured
      senior notes payable
                                                                                                  
                                                                                                  
                                                                                                  657,913
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  657,913Unamortized/unaccreted
      premium/(discount) on notes payable
                                                                                                  
                                                                                                  
                                                                                                  (316
                                                                                                  )
                                                                                                  
                                                                                                  
                                                                                                  37
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  5,504
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  5,225Other
      liabilities
                                                                                                  
                                                                                                  
                                                                                                  37,219
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  5,067
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  13,775
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  56,061Total
      Liabilities
                                                                                                  
                                                                                                  
                                                                                                  787,807
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  55,055
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  282,914
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  1,125,776MINORITY
      INTEREST
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  989
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  989STOCKHOLDERS’
      EQUITY
                                                                                                  
                                                                                                  
                                                                                                  1,044,217
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  236,940
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  257,639
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  (629,298
                                                                                                  )
                                                                                                  
                                                                                                  
                                                                                                  909,498Total
      Liabilities and Stockholders' Equity
                                                                                                  
                                                                                                  $
                                                                                                  1,832,024
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  291,995
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  540,553
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  (628,309
                                                                                                  )
                                                                                                  
                                                                                                  $
                                                                                                  2,036,263





F-29
 Table of Contents




Condensed Balance Sheet As of December 31,
      2007
                                                                                  
                                                                                  Equity One, Inc.
                                                                                  
                                                                                  
                                                                                  Combined Guarantor
    Subsidiaries
                                                                                  
                                                                                  
                                                                                  Non- Guarantor Subsidiaries
                                                                                  
                                                                                  
                                                                                  Eliminating Entries
                                                                                  
                                                                                  
                                                                                  ConsolidatedASSETS
                                                                                  
                                                                                  (In
      thousands)Properties,
      net
                                                                                  
                                                                                  $
                                                                                  320,703
                                                                                  
                                                                                  
                                                                                  $
                                                                                  1,258,413
                                                                                  
                                                                                  
                                                                                  $
                                                                                  378,123
                                                                                  
                                                                                  
                                                                                  $
                                                                                  -
                                                                                  
                                                                                  
                                                                                  $
                                                                                  1,957,239Investment
      in affiliates
                                                                                  
                                                                                  
                                                                                  628,309
                                                                                  
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  (628,309
                                                                                  )
                                                                                  
                                                                                  
                                                                                  -Other
      assets
                                                                                  
                                                                                  
                                                                                  81,989
                                                                                  
                                                                                  
                                                                                  
                                                                                  43,874
                                                                                  
                                                                                  
                                                                                  
                                                                                  91,282
                                                                                  
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  217,145Total
      Assets
                                                                                  
                                                                                  $
                                                                                  1,031,001
                                                                                  
                                                                                  
                                                                                  $
                                                                                  1,302,287
                                                                                  
                                                                                  
                                                                                  $
                                                                                  469,405
                                                                                  
                                                                                  
                                                                                  $
                                                                                  (628,309
                                                                                  )
                                                                                  
                                                                                  $
                                                                                  2,174,384LIABILITIESMortgage
      notes payable
                                                                                  
                                                                                  $
                                                                                  45,366
                                                                                  
                                                                                  
                                                                                  $
                                                                                  134,311
                                                                                  
                                                                                  
                                                                                  $
                                                                                  217,435
                                                                                  
                                                                                  
                                                                                  $
                                                                                  -
                                                                                  
                                                                                  
                                                                                  $
                                                                                  397,112Unsecured
      revolving credit facilities
                                                                                  
                                                                                  
                                                                                  37,000
                                                                                  
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  37,000Unsecured
      senior notes payable
                                                                                  
                                                                                  
                                                                                  744,685
                                                                                  
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  744,685Unamortized/unaccreted
      premium/(discount) on notes payable
                                                                                  
                                                                                  
                                                                                  (310
                                                                                  )
                                                                                  
                                                                                  
                                                                                  3,379
                                                                                  
                                                                                  
                                                                                  
                                                                                  6,973
                                                                                  
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  10,042Other
      liabilities
                                                                                  
                                                                                  
                                                                                  69,775
                                                                                  
                                                                                  
                                                                                  
                                                                                  15,536
                                                                                  
                                                                                  
                                                                                  
                                                                                  (16,687
                                                                                  )
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  68,624Total
      Liabilities
                                                                                  
                                                                                  
                                                                                  896,516
                                                                                  
                                                                                  
                                                                                  
                                                                                  153,226
                                                                                  
                                                                                  
                                                                                  
                                                                                  207,721
                                                                                  
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  1,257,463MINORITY
      INTEREST
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  989
                                                                                  
                                                                                  
                                                                                  
                                                                                  989STOCKHOLDERS’
      EQUITY
                                                                                  
                                                                                  
                                                                                  134,485
                                                                                  
                                                                                  
                                                                                  
                                                                                  1,149,061
                                                                                  
                                                                                  
                                                                                  
                                                                                  261,684
                                                                                  
                                                                                  
                                                                                  
                                                                                  (629,298
                                                                                  )
                                                                                  
                                                                                  
                                                                                  915,932Total
      Liabilities and Stockholders' Equity
                                                                                  
                                                                                  $
                                                                                  1,031,001
                                                                                  
                                                                                  
                                                                                  $
                                                                                  1,302,287
                                                                                  
                                                                                  
                                                                                  $
                                                                                  469,405
                                                                                  
                                                                                  
                                                                                  $
                                                                                  (628,309
                                                                                  )
                                                                                  
                                                                                  $
                                                                                  2,174,384





F-30
 Table of Contents




Condensed
      Statement of Operations
                                                                            for
      the year ended
                                                                            December
      31, 2008
                                                                          
                                                                          Equity
      One
                                                                            Inc.
                                                                          
                                                                          
                                                                          Combined
                                                                            Guarantor
                                                                            Subsidiaries
                                                                          
                                                                          
                                                                          Non-
                                                                            Guarantor
                                                                            Subsidiaries
                                                                          
                                                                          
                                                                          Eliminating
      Entries
                                                                          
                                                                          
                                                                          Consolidated(In
      thousands)REVENUE:Minimum
      rents
                                                                          
                                                                          $
                                                                          51,852
                                                                          
                                                                          
                                                                          $
                                                                          88,872
                                                                          
                                                                          
                                                                          $
                                                                          42,688
                                                                          
                                                                          
                                                                          $
                                                                          -
                                                                          
                                                                          
                                                                          $
                                                                          183,412Expense
      recoveries
                                                                          
                                                                          
                                                                          13,857
                                                                          
                                                                          
                                                                          
                                                                          23,494
                                                                          
                                                                          
                                                                          
                                                                          14,576
                                                                          
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          51,927Percentage
      rent
                                                                          
                                                                          
                                                                          217
                                                                          
                                                                          
                                                                          
                                                                          1,106
                                                                          
                                                                          
                                                                          
                                                                          578
                                                                          
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          1,901Management
      and leasing services
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          1,789
                                                                          
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          1,789Total
      revenue
                                                                          
                                                                          
                                                                          65,926
                                                                          
                                                                          
                                                                          
                                                                          115,261
                                                                          
                                                                          
                                                                          
                                                                          57,842
                                                                          
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          239,029EQUITY
      IN SUBSIDIARIES EARNINGS
                                                                          
                                                                          
                                                                          55,623
                                                                          
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          (55,623
                                                                          )
                                                                          
                                                                          
                                                                          -COSTS
      AND EXPENSES:Property
      operating
                                                                          
                                                                          
                                                                          15,603
                                                                          
                                                                          
                                                                          
                                                                          27,696
                                                                          
                                                                          
                                                                          
                                                                          21,085
                                                                          
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          64,384Rental
      property depreciation and amortization
                                                                          
                                                                          
                                                                          11,708
                                                                          
                                                                          
                                                                          
                                                                          23,220
                                                                          
                                                                          
                                                                          
                                                                          10,599
                                                                          
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          45,527General
      and administrative
                                                                          
                                                                          
                                                                          25,438
                                                                          
                                                                          
                                                                          
                                                                          6,063
                                                                          
                                                                          
                                                                          
                                                                          456
                                                                          
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          31,957Total
      costs and expenses
                                                                          
                                                                          
                                                                          52,749
                                                                          
                                                                          
                                                                          
                                                                          56,979
                                                                          
                                                                          
                                                                          
                                                                          32,140
                                                                          
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          141,868INCOME
      BEFORE OTHER INCOME AND EXPENSES, MINORITY INTEREST AND DISCONTINUED
      OPERATIONS
                                                                          
                                                                          
                                                                          68,800
                                                                          
                                                                          
                                                                          
                                                                          58,282
                                                                          
                                                                          
                                                                          
                                                                          25,702
                                                                          
                                                                          
                                                                          
                                                                          (55,623
                                                                          )
                                                                          
                                                                          
                                                                          97,161OTHER
      INCOME AND EXPENSES:Investment
      income
                                                                          
                                                                          
                                                                          4,205
                                                                          
                                                                          
                                                                          
                                                                          46
                                                                          
                                                                          
                                                                          
                                                                          6,081
                                                                          
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          10,332Equity
      in income in unconsolidated joint ventures
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          107
                                                                          
                                                                          
                                                                          
                                                                          1
                                                                          
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          108Other
      Income
                                                                          
                                                                          
                                                                          158
                                                                          
                                                                          
                                                                          
                                                                          594
                                                                          
                                                                          
                                                                          
                                                                          215
                                                                          
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          967Interest
      expense
                                                                          
                                                                          
                                                                          (39,892
                                                                          )
                                                                          
                                                                          
                                                                          (6,803
                                                                          )
                                                                          
                                                                          
                                                                          (14,156
                                                                          )
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          (60,851
                                                                          )Amortization
      of deferred financing fees
                                                                          
                                                                          
                                                                          (1,420
                                                                          )
                                                                          
                                                                          
                                                                          (76
                                                                          )
                                                                          
                                                                          
                                                                          (133
                                                                          )
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          (1,629
                                                                          )Gain
      on sale of real estate
                                                                          
                                                                          
                                                                          205
                                                                          
                                                                          
                                                                          
                                                                          13,916
                                                                          
                                                                          
                                                                          
                                                                          7,421
                                                                          
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          21,542Gain
      on extinguishment of debt
                                                                          
                                                                          
                                                                          6,252
                                                                          
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          221
                                                                          
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          6,473Impairment
      loss
                                                                          
                                                                          
                                                                          (2,295
                                                                          )
                                                                          
                                                                          
                                                                          (71
                                                                          )
                                                                          
                                                                          
                                                                          (35,177
                                                                          )
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          (37,543
                                                                          )INCOME
      BEFORE MINORITY INTEREST, INCOME TAXES AND  DISCONTINUED
      OPERATIONS
                                                                          
                                                                          
                                                                          36,013
                                                                          
                                                                          
                                                                          
                                                                          65,995
                                                                          
                                                                          
                                                                          
                                                                          (9,825
                                                                          )
                                                                          
                                                                          
                                                                          (55,623
                                                                          )
                                                                          
                                                                          
                                                                          36,560Provision
      for income taxes
                                                                          
                                                                          
                                                                          (1,015
                                                                          )
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          (1,015
                                                                          )Minority
      Interest
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          (112
                                                                          )
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          (112
                                                                          )(LOSS)
      INCOME FROM CONTINUING OPERATIONS
                                                                          
                                                                          
                                                                          34,998
                                                                          
                                                                          
                                                                          
                                                                          65,995
                                                                          
                                                                          
                                                                          
                                                                          (9,937
                                                                          )
                                                                          
                                                                          
                                                                          (55,623
                                                                          )
                                                                          
                                                                          
                                                                          35,433DISCONTINUED
      OPERATIONS:Operations
      of income-producing properties sold
                                                                          
                                                                          
                                                                          10
                                                                          
                                                                          
                                                                          
                                                                          80
                                                                          
                                                                          
                                                                          
                                                                          42
                                                                          
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          132Gain
      on disposal of income-producing properties
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          (557
                                                                          )
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          (557
                                                                          )Income
      from discontinued operations
                                                                          
                                                                          
                                                                          10
                                                                          
                                                                          
                                                                          
                                                                          80
                                                                          
                                                                          
                                                                          
                                                                          (515
                                                                          )
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          (425
                                                                          )NET
      (LOSS) INCOME
                                                                          
                                                                          $
                                                                          35,008
                                                                          
                                                                          
                                                                          $
                                                                          66,075
                                                                          
                                                                          
                                                                          $
                                                                          (10,452
                                                                          )
                                                                          
                                                                          $
                                                                          (55,623
                                                                          )
                                                                          
                                                                          $
                                                                          35,008


F-31
 Table of Contents




Condensed
      Statement of Operations
                                                for
      the year ended
                                                December
      31, 2007
                                              
                                              Equity
      One
                                                Inc.
                                              
                                              
                                              Combined
                                                Guarantor
                                                Subsidiaries
                                              
                                              
                                              Non-
                                                Guarantor
                                                Subsidiaries
                                              
                                              
                                              Eliminating
      Entries
                                              
                                              
                                              Consolidated(In
      thousands)REVENUE:Minimum
      rents
                                              
                                              $
                                              32,889
                                              
                                              
                                              $
                                              110,617
                                              
                                              
                                              $
                                              45,916
                                              
                                              
                                              $
                                              -
                                              
                                              
                                              $
                                              189,422Expense
      recoveries
                                              
                                              
                                              9,507
                                              
                                              
                                              
                                              28,892
                                              
                                              
                                              
                                              14,925
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              53,324Percentage
      rent
                                              
                                              
                                              194
                                              
                                              
                                              
                                              1,292
                                              
                                              
                                              
                                              714
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              2,200Management
      and leasing services
                                              
                                              
                                              -
                                              
                                              
                                              
                                              1,163
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              1,163Total
      revenue
                                              
                                              
                                              42,590
                                              
                                              
                                              
                                              141,964
                                              
                                              
                                              
                                              61,555
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              246,109EQUITY
      IN SUBSIDIARIES EARNINGS
                                              
                                              
                                              100,501
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              (100,501
                                              )
                                              
                                              
                                              -COSTS
      AND EXPENSES:Property
      operating
                                              
                                              
                                              7,740
                                              
                                              
                                              
                                              34,429
                                              
                                              
                                              
                                              20,586
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              62,755Rental
      property depreciation and amortization
                                              
                                              
                                              7,062
                                              
                                              
                                              
                                              27,736
                                              
                                              
                                              
                                              11,191
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              45,989General
      and administrative
                                              
                                              
                                              23,206
                                              
                                              
                                              
                                              4,876
                                              
                                              
                                              
                                              118
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              28,200Total
      costs and expenses
                                              
                                              
                                              38,008
                                              
                                              
                                              
                                              67,041
                                              
                                              
                                              
                                              31,895
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              136,944INCOME
      BEFORE OTHER INCOME AND EXPENSES, MINORITY INTEREST AND DISCONTINUED
      OPERATIONS
                                              
                                              
                                              105,083
                                              
                                              
                                              
                                              74,923
                                              
                                              
                                              
                                              29,660
                                              
                                              
                                              
                                              (100,501
                                              )
                                              
                                              
                                              109,165OTHER
      INCOME AND EXPENSES:Investment
      income
                                              
                                              
                                              1,147
                                              
                                              
                                              
                                              30
                                              
                                              
                                              
                                              6,144
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              7,321Equity
      in income in unconsolidated joint ventures
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -Other
      Income
                                              
                                              
                                              310
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              310Interest
      expense
                                              
                                              
                                              (43,381
                                              )
                                              
                                              
                                              (8,292
                                              )
                                              
                                              
                                              (14,847
                                              )
                                              
                                              
                                              -
                                              
                                              
                                              
                                              (66,520
                                              )Amortization
      of deferred financing fees
                                              
                                              
                                              (1,474
                                              )
                                              
                                              
                                              (75
                                              )
                                              
                                              
                                              (129
                                              )
                                              
                                              
                                              -
                                              
                                              
                                              
                                              (1,678
                                              )(Loss)
      on sale of fixed assets
                                              
                                              
                                              (283
                                              )
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              (283
                                              )Gain
      on sale of real estate
                                              
                                              
                                              1,310
                                              
                                              
                                              
                                              708
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              2,018Impairment
      loss
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              (430
                                              )
                                              
                                              
                                              -
                                              
                                              
                                              
                                              (430
                                              )INCOME
      BEFORE MINORITY INTEREST, INCOME TAXES AND  DISCONTINUED
      OPERATIONS
                                              
                                              
                                              62,712
                                              
                                              
                                              
                                              67,294
                                              
                                              
                                              
                                              20,398
                                              
                                              
                                              
                                              (100,501
                                              )
                                              
                                              
                                              49,903Benefit
      for income taxes
                                              
                                              
                                              272
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              272Minority
      Interest
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              (112
                                              )
                                              
                                              
                                              -
                                              
                                              
                                              
                                              (112
                                              )(LOSS)
      INCOME FROM CONTINUING OPERATIONS
                                              
                                              
                                              62,984
                                              
                                              
                                              
                                              67,294
                                              
                                              
                                              
                                              20,286
                                              
                                              
                                              
                                              (100,501
                                              )
                                              
                                              
                                              50,063DISCONTINUED
      OPERATIONS:Operations
      of income-producing properties sold
                                              
                                              
                                              262
                                              
                                              
                                              
                                              1,310
                                              
                                              
                                              
                                              (1,654
                                              )
                                              
                                              
                                              -
                                              
                                              
                                              
                                              (82
                                              )Gain
      on disposal of income-producing properties
                                              
                                              
                                              6,139
                                              
                                              
                                              
                                              10,562
                                              
                                              
                                              
                                              2,703
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              19,404Income
      from discontinued operations
                                              
                                              
                                              6,401
                                              
                                              
                                              
                                              11,872
                                              
                                              
                                              
                                              1,049
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              19,322NET
      (LOSS) INCOME
                                              
                                              $
                                              69,385
                                              
                                              
                                              $
                                              79,166
                                              
                                              
                                              $
                                              21,335
                                              
                                              
                                              $
                                              (100,501
                                              )
                                              
                                              $
                                              69,385


F-32
 Table of Contents




Condensed
      Statement of Operations
                                                  for
      the year ended
                                                  December
      31, 2006
                                                
                                                Equity
      One
                                                  Inc.
                                                
                                                
                                                Combined
                                                  Guarantor
                                                  Subsidiaries
                                                
                                                
                                                Non-
                                                  Guarantor
                                                  Subsidiaries
                                                
                                                
                                                Eliminating
      Entries
                                                
                                                
                                                Consolidated(In
      thousands)REVENUE:Minimum
      rents
                                                
                                                $
                                                34,766
                                                
                                                
                                                $
                                                91,105
                                                
                                                
                                                $
                                                45,963
                                                
                                                
                                                $
                                                -
                                                
                                                
                                                $
                                                171,834Expense
      recoveries
                                                
                                                
                                                9,473
                                                
                                                
                                                
                                                26,288
                                                
                                                
                                                
                                                13,243
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                49,004Percentage
      rent
                                                
                                                
                                                179
                                                
                                                
                                                
                                                1,303
                                                
                                                
                                                
                                                550
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                2,032Management
      and leasing services
                                                
                                                
                                                -
                                                
                                                
                                                
                                                2,067
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                2,067Total
      revenue
                                                
                                                
                                                44,418
                                                
                                                
                                                
                                                120,763
                                                
                                                
                                                
                                                59,756
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                224,937EQUITY
      IN SUBSIDIARIES EARNINGS
                                                
                                                
                                                203,226
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                (203,226
                                                )
                                                
                                                
                                                -COSTS
      AND EXPENSES:Property
      operating
                                                
                                                
                                                9,929
                                                
                                                
                                                
                                                35,410
                                                
                                                
                                                
                                                14,052
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                59,391Rental
      property depreciation and amortization
                                                
                                                
                                                6,787
                                                
                                                
                                                
                                                22,046
                                                
                                                
                                                
                                                11,373
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                40,206General
      and administrative
                                                
                                                
                                                26,414
                                                
                                                
                                                
                                                5,311
                                                
                                                
                                                
                                                180
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                31,905Total
      costs and expenses
                                                
                                                
                                                43,130
                                                
                                                
                                                
                                                62,767
                                                
                                                
                                                
                                                25,605
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                131,502INCOME
      BEFORE OTHER INCOME AND EXPENSES, MINORITY INTEREST AND DISCONTINUED
      OPERATIONS
                                                
                                                
                                                204,514
                                                
                                                
                                                
                                                57,996
                                                
                                                
                                                
                                                34,151
                                                
                                                
                                                
                                                (203,226
                                                )
                                                
                                                
                                                93,435OTHER
      INCOME AND EXPENSES:Investment
      income
                                                
                                                
                                                2,881
                                                
                                                
                                                
                                                266
                                                
                                                
                                                
                                                4,332
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                7,479Equity
      in income in unconsolidated joint ventures
                                                
                                                
                                                -
                                                
                                                
                                                
                                                1,853
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                1,853Other
      Income
                                                
                                                
                                                303
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                303Interest
      expense
                                                
                                                
                                                (33,040
                                                )
                                                
                                                
                                                (5,771
                                                )
                                                
                                                
                                                (14,921
                                                )
                                                
                                                
                                                -
                                                
                                                
                                                
                                                (53,732
                                                )Amortization
      of deferred financing fees
                                                
                                                
                                                (1,282
                                                )
                                                
                                                
                                                (74
                                                )
                                                
                                                
                                                (128
                                                )
                                                
                                                
                                                -
                                                
                                                
                                                
                                                (1,484
                                                )Gain
      on sale of real estate
                                                
                                                
                                                579
                                                
                                                
                                                
                                                (207
                                                )
                                                
                                                
                                                2,173
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                2,545Gain
      on extinguishment of debt
                                                
                                                
                                                542
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                (291
                                                )
                                                
                                                
                                                -
                                                
                                                
                                                
                                                251INCOME
      BEFORE MINORITY INTEREST AND  DISCONTINUED
      OPERATIONS
                                                
                                                
                                                174,497
                                                
                                                
                                                
                                                54,063
                                                
                                                
                                                
                                                25,316
                                                
                                                
                                                
                                                (203,226
                                                )
                                                
                                                
                                                50,650Minority
      Interest
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                (206
                                                )
                                                
                                                
                                                -
                                                
                                                
                                                
                                                (206
                                                )INCOME
      FROM CONTINUING OPERATIONS
                                                
                                                
                                                174,497
                                                
                                                
                                                
                                                54,063
                                                
                                                
                                                
                                                25,110
                                                
                                                
                                                
                                                (203,226
                                                )
                                                
                                                
                                                50,444DISCONTINUED
      OPERATIONS:Operations
      of income-producing properties sold
                                                
                                                
                                                1,977
                                                
                                                
                                                
                                                5,974
                                                
                                                
                                                
                                                (1,000
                                                )
                                                
                                                
                                                -
                                                
                                                
                                                
                                                6,951Gain
      on disposal of income-producing properties
                                                
                                                
                                                481
                                                
                                                
                                                
                                                114,194
                                                
                                                
                                                
                                                4,885
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                119,560Income
      from discontinued operations
                                                
                                                
                                                2,458
                                                
                                                
                                                
                                                120,168
                                                
                                                
                                                
                                                3,885
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                126,511NET
      (LOSS) INCOME
                                                
                                                $
                                                176,955
                                                
                                                
                                                $
                                                174,231
                                                
                                                
                                                $
                                                28,995
                                                
                                                
                                                $
                                                (203,226
                                                )
                                                
                                                $
                                                176,955


F-33
 Table of Contents




Condensed Statement of Cash Flows for the year
      ended December 31, 2008
                            
                            Equity One, Inc.
                            
                            
                            Combined Guarantor
    Subsidiaries
                            
                            
                            Non- Guarantor Subsidiaries
                            
                            
                            Consolidated(In
      thousands)Net
      cash (used in) provided by operating activities
                            
                            $
                            (15,776
                            )
                            
                            $
                            72,178
                            
                            
                            $
                            30,229
                            
                            
                            $
                            86,631INVESTING
      ACTIVITIES:Additions
      to and purchases of rental properties
                            
                            
                            (957
                            )
                            
                            
                            (5,551
                            )
                            
                            
                            (3,206
                            )
                            
                            
                            (9,714
                            )Land
      held for development
                            
                            
                            -
                            
                            
                            
                            (87
                            )
                            
                            
                            -
                            
                            
                            
                            (87
                            )Additions
      to construction in progress
                            
                            
                            (5,820
                            )
                            
                            
                            (17,380
                            )
                            
                            
                            (7,247
                            )
                            
                            
                            (30,447
                            )Proceeds
      from disposal of rental properties
                            
                            
                            550
                            
                            
                            
                            176,855
                            
                            
                            
                            14,500
                            
                            
                            
                            191,905Decrease
      in cash held in escrow
                            
                            
                            54,460
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            54,460Investment
      in joint ventures
                            
                            
                            (4,410
                            )
                            
                            
                            (12,768
                            )
                            
                            
                            -
                            
                            
                            
                            (17,178
                            )Advances
      to joint ventures
                            
                            
                            (265
                            )
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (265
                            )Distributions
      of capital from joint ventures
                            
                            
                            2,966
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            2,966Increase
      in deferred leasing costs
                            
                            
                            (1,952
                            )
                            
                            
                            (2,575
                            )
                            
                            
                            (1,409
                            )
                            
                            
                            (5,936
                            )Additions
      to notes receivable
                            
                            
                            (3
                            )
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (3
                            )Proceeds
      from repayment of notes receivable
                            
                            
                            13
                            
                            
                            
                            4
                            
                            
                            
                            5
                            
                            
                            
                            22Proceeds
      from sale of securities
                            
                            
                            250
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            250Purchase
      of securities
                            
                            
                            (134,667
                            )
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (134,667
                            )Advances
      to affiliates
                            
                            
                            176,346
                            
                            
                            
                            (177,064
                            )
                            
                            
                            718
                            
                            
                            
                            -Net
      cash provided by (used in)  investing activities
                            
                            
                            86,511
                            
                            
                            
                            (38,566
                            )
                            
                            
                            3,361
                            
                            
                            
                            51,306FINANCING
      ACTIVITIES:Repayments
      of mortgage notes payable
                            
                            
                            (9,775
                            )
                            
                            
                            (33,612
                            )
                            
                            
                            (34,929
                            )
                            
                            
                            (78,316
                            )Borrowings
      under mortgage notes
                            
                            
                            65,000
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            65,000Net
      repayments under revolving credit facilities
                            
                            
                            (1,500
                            )
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (1,500
                            )Repayment
      of senior debt
                            
                            
                            (81,518
                            )
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (81,518
                            )Change
      in deferred financing costs
                            
                            
                            (4,119
                            )
                            
                            
                            -
                            
                            
                            
                            1,340
                            
                            
                            
                            (2,779
                            )Proceeds
      from issuance of common stock
                            
                            
                            57,102
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            57,102Stock
      issuance cost
                            
                            
                            (2,161
                            )
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (2,161
                            )Cash
      dividends paid to stockholders
                            
                            
                            (89,611
                            )
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (89,611
                            )Distributions
      to minority interest
                            
                            
                            (112
                            )
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (112
                            )Net
      cash (used in) financing activities
                            
                            
                            (66,694
                            )
                            
                            
                            (33,612
                            )
                            
                            
                            (33,589
                            )
                            
                            
                            (133,895
                            )Net
      increase in cash and cash equivalents
                            
                            
                            4,041
                            
                            
                            
                            -
                            
                            
                            
                            1
                            
                            
                            
                            4,042Cash
      and cash equivalents at beginning of the year
                            
                            
                            1,313
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            1,313Cash
      and cash equivalents at end of the year
                            
                            $
                            5,354
                            
                            
                            $
                            -
                            
                            
                            $
                            1
                            
                            
                            $
                            5,355





F-34
 Table of Contents




Condensed Statement of Cash Flows for the year
      ended December 31, 2007
                                                                    
                                                                    Equity One, Inc.
                                                                    
                                                                    
                                                                    Combined Guarantor
    Subsidiaries
                                                                    
                                                                    
                                                                    Non- Guarantor Subsidiaries
                                                                    
                                                                    
                                                                    Consolidated(In
      thousands)Net
      cash (used in) provided by operating activities
                                                                    
                                                                    
                                                                    (17,171
                                                                    )
                                                                    
                                                                    
                                                                    95,255
                                                                    
                                                                    
                                                                    
                                                                    28,932
                                                                    
                                                                    
                                                                    
                                                                    107,016INVESTING
      ACTIVITIES:Additions
      to and purchases of rental property
                                                                    
                                                                    
                                                                    (2,421
                                                                    )
                                                                    
                                                                    
                                                                    (106,323
                                                                    )
                                                                    
                                                                    
                                                                    1,157
                                                                    
                                                                    
                                                                    
                                                                    (107,587
                                                                    )Land
      held for development
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (2,529
                                                                    )
                                                                    
                                                                    
                                                                    (122
                                                                    )
                                                                    
                                                                    
                                                                    (2,651
                                                                    )Additions
      to construction in progress
                                                                    
                                                                    
                                                                    (58
                                                                    )
                                                                    
                                                                    
                                                                    (14,256
                                                                    )
                                                                    
                                                                    
                                                                    (898
                                                                    )
                                                                    
                                                                    
                                                                    (15,212
                                                                    )Proceeds
      from disposal of rental properties
                                                                    
                                                                    
                                                                    29,833
                                                                    
                                                                    
                                                                    
                                                                    37,793
                                                                    
                                                                    
                                                                    
                                                                    3,647
                                                                    
                                                                    
                                                                    
                                                                    71,273Increase
      in cash held in escrow
                                                                    
                                                                    
                                                                    (52,913
                                                                    )
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (52,913
                                                                    )Increase
      in deferred leasing costs
                                                                    
                                                                    
                                                                    (3,884
                                                                    )
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (3,884
                                                                    )Additions
      to notes receivable
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (14
                                                                    )
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (14
                                                                    )Proceeds
      from repayment of notes receivable
                                                                    
                                                                    
                                                                    4,706
                                                                    
                                                                    
                                                                    
                                                                    26
                                                                    
                                                                    
                                                                    
                                                                    13
                                                                    
                                                                    
                                                                    
                                                                    4,745Proceeds
      from sale of securities
                                                                    
                                                                    
                                                                    2,822
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    2,822Purchase
      of securities
                                                                    
                                                                    
                                                                    (1,181
                                                                    )
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (1,181
                                                                    )Advances
      from (to) affiliates
                                                                    
                                                                    
                                                                    22,271
                                                                    
                                                                    
                                                                    
                                                                    (3,157
                                                                    )
                                                                    
                                                                    
                                                                    (19,114
                                                                    )
                                                                    
                                                                    
                                                                    -Net
      cash (used in) investing activities
                                                                    
                                                                    
                                                                    (825
                                                                    )
                                                                    
                                                                    
                                                                    (88,460
                                                                    )
                                                                    
                                                                    
                                                                    (15,317
                                                                    )
                                                                    
                                                                    
                                                                    (104,602
                                                                    )FINANCING
      ACTIVITIES:Repayment
      of mortgage notes payable
                                                                    
                                                                    
                                                                    (1,860
                                                                    )
                                                                    
                                                                    
                                                                    (6,795
                                                                    )
                                                                    
                                                                    
                                                                    (13,615
                                                                    )
                                                                    
                                                                    
                                                                    (22,270
                                                                    )Net
      repayments under revolving credit facilities
                                                                    
                                                                    
                                                                    (39,500
                                                                    )
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (39,500
                                                                    )Proceeds
      from senior debt offerings
                                                                    
                                                                    
                                                                    148,874
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    148,874Cash
      paid for settlement of interest rate contracts
                                                                    
                                                                    
                                                                    (2,498
                                                                    )
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (2,498
                                                                    )Change
      in deferred financing costs
                                                                    
                                                                    
                                                                    (878
                                                                    )
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (878
                                                                    )Proceeds
      from issuance of common stock
                                                                    
                                                                    
                                                                    3,882
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    3,882Cash
      dividends paid to stockholders
                                                                    
                                                                    
                                                                    (88,599
                                                                    )
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (88,599
                                                                    )Distributions
      to minority interest
                                                                    
                                                                    
                                                                    (112
                                                                    )
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (112
                                                                    )Net
      cash provided by (used in) financing activities
                                                                    
                                                                    
                                                                    19,309
                                                                    
                                                                    
                                                                    
                                                                    (6,795
                                                                    )
                                                                    
                                                                    
                                                                    (13,615
                                                                    )
                                                                    
                                                                    
                                                                    (1,101
                                                                    )Net
      increase in cash and cash equivalents
                                                                    
                                                                    
                                                                    1,313
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    1,313Cash
      and cash equivalents at beginning of the period
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -Cash
      and cash equivalents at end of the period
                                                                    
                                                                    $
                                                                    1,313
                                                                    
                                                                    
                                                                    $
                                                                    -
                                                                    
                                                                    
                                                                    $
                                                                    -
                                                                    
                                                                    
                                                                    $
                                                                    1,313





F-35
 Table of Contents




Condensed Statement of Cash Flows for the year
      ended December 31, 2006
                                                                    
                                                                    Equity One, Inc.
                                                                    
                                                                    
                                                                    Combined Guarantor
    Subsidiaries
                                                                    
                                                                    
                                                                    Non- Guarantor Subsidiaries
                                                                    
                                                                    
                                                                    Consolidated(In
      thousands)Net
      cash (used in) provided by operating activities
                                                                    
                                                                    $
                                                                    (39,286
                                                                    )
                                                                    
                                                                    $
                                                                    106,419
                                                                    
                                                                    
                                                                    $
                                                                    27,510
                                                                    
                                                                    
                                                                    $
                                                                    94,643INVESTING
      ACTIVITIES:Additions
      to and purchases of rental property
                                                                    
                                                                    
                                                                    (5,648
                                                                    )
                                                                    
                                                                    
                                                                    (72,671
                                                                    )
                                                                    
                                                                    
                                                                    (107,687
                                                                    )
                                                                    
                                                                    
                                                                    (186,006
                                                                    )Land
      held for development
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (20,740
                                                                    )
                                                                    
                                                                    
                                                                    (25,044
                                                                    )
                                                                    
                                                                    
                                                                    (45,784
                                                                    )Additions
      to construction in progress
                                                                    
                                                                    
                                                                    (2,462
                                                                    )
                                                                    
                                                                    
                                                                    (32,011
                                                                    )
                                                                    
                                                                    
                                                                    (12,956
                                                                    )
                                                                    
                                                                    
                                                                    (47,429
                                                                    )Proceeds  from
      disposal of rental properties
                                                                    
                                                                    
                                                                    2,569
                                                                    
                                                                    
                                                                    
                                                                    381,348
                                                                    
                                                                    
                                                                    
                                                                    27,173
                                                                    
                                                                    
                                                                    
                                                                    411,090Increase
      in cash held in escrow
                                                                    
                                                                    
                                                                    (1,547
                                                                    )
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (1,547
                                                                    )Increase
      in deferred leasing costs
                                                                    
                                                                    
                                                                    (810
                                                                    )
                                                                    
                                                                    
                                                                    (4,505
                                                                    )
                                                                    
                                                                    
                                                                    (848
                                                                    )
                                                                    
                                                                    
                                                                    (6,163
                                                                    )Additions
      to notes receivable
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (18
                                                                    )
                                                                    
                                                                    
                                                                    (15
                                                                    )
                                                                    
                                                                    
                                                                    (33
                                                                    )Proceeds
      from repayment of notes receivable
                                                                    
                                                                    
                                                                    5,693
                                                                    
                                                                    
                                                                    
                                                                    28
                                                                    
                                                                    
                                                                    
                                                                    14
                                                                    
                                                                    
                                                                    
                                                                    5,735Proceeds
      from sale of securities
                                                                    
                                                                    
                                                                    12,852
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    12,852Purchase
      of securities
                                                                    
                                                                    
                                                                    (434
                                                                    )
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (29,403
                                                                    )
                                                                    
                                                                    
                                                                    (29,837
                                                                    )Advances
      from (to) affiliates
                                                                    
                                                                    
                                                                    151,090
                                                                    
                                                                    
                                                                    
                                                                    (330,322
                                                                    )
                                                                    
                                                                    
                                                                    179,232
                                                                    
                                                                    
                                                                    
                                                                    -Distributions
      from unconsolidated joint ventures from sale of
    property
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    1,935
                                                                    
                                                                    
                                                                    
                                                                    1,935Net
      cash provided by (used in) investing activities
                                                                    
                                                                    
                                                                    161,303
                                                                    
                                                                    
                                                                    
                                                                    (78,891
                                                                    )
                                                                    
                                                                    
                                                                    32,401
                                                                    
                                                                    
                                                                    
                                                                    114,813FINANCING
      ACTIVITIES:Repayments
      of mortgage notes payable
                                                                    
                                                                    
                                                                    (1,619
                                                                    )
                                                                    
                                                                    
                                                                    (27,350
                                                                    )
                                                                    
                                                                    
                                                                    (59,911
                                                                    )
                                                                    
                                                                    
                                                                    (88,880
                                                                    )Net
      repayments under revolving credit facilities
                                                                    
                                                                    
                                                                    (16,665
                                                                    )
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    .
                                                                    
                                                                    
                                                                    
                                                                    (16,665
                                                                    )Proceeds
      from senior debt offering
                                                                    
                                                                    
                                                                    246,868
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    246,868Repayment
      of senior debt
                                                                    
                                                                    
                                                                    (125,000
                                                                    )
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (125,000
                                                                    )Change
      in deferred financing costs
                                                                    
                                                                    
                                                                    (1,947
                                                                    )
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (1,947
                                                                    )Proceeds
      from issuance of common stock
                                                                    
                                                                    
                                                                    8,083
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    8,083Repayment
      of notes receivable from issuance of common stock
                                                                    
                                                                    
                                                                    65
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    65Stock
      issuance costs
                                                                    
                                                                    
                                                                    (69
                                                                    )
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (69
                                                                    )Repurchase
      of common stock
                                                                    
                                                                    
                                                                    (69,103
                                                                    )
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (69,103
                                                                    )Cash
      dividends paid to stockholders
                                                                    
                                                                    
                                                                    (162,704
                                                                    )
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (162,704
                                                                    )Distributions
      to minority interest
                                                                    
                                                                    
                                                                    (28
                                                                    )
                                                                    
                                                                    
                                                                    (178
                                                                    )
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (206
                                                                    )Net
      cash (used in) financing activities
                                                                    
                                                                    
                                                                    (122,119
                                                                    )
                                                                    
                                                                    
                                                                    (27,528
                                                                    )
                                                                    
                                                                    
                                                                    (59,911
                                                                    )
                                                                    
                                                                    
                                                                    (209,558
                                                                    )Net
      increase in cash and cash equivalents
                                                                    
                                                                    
                                                                    (102
                                                                    )
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (102
                                                                    )Cash
      and cash equivalents at beginning of the period
                                                                    
                                                                    
                                                                    102
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    102Cash
      and cash equivalents at end of the period
                                                                    
                                                                    $
                                                                    -
                                                                    
                                                                    
                                                                    $
                                                                    -
                                                                    
                                                                    
                                                                    $
                                                                    -
                                                                    
                                                                    
                                                                    $
                                                                    -





F-36
 Table of Contents





10.
            Property
      Dispositions





As of
December 31, 2008, we had no properties held for sale.





The
following table provides a summary of property disposition activity during the
year ended December 31, 2008:





Date
                                                                        
                                                                        Property
                                                                        City, State
                                                                        
                                                                        Square Feet / Acres
                                                                        
                                                                        
                                                                        Gross Sales Price
                                                                        
                                                                        
                                                                        Gain / (loss) on Sale(In
      thousands)Properties sold to joint venture: partial sale
      with continuing involvement04/01/08
                                                                        
                                                                        Concord
      Outparcel
                                                                        Miami,
      FL
                                                                        
                                                                        
                                                                        0.59
                                                                        
                                                                        
                                                                        
                                                                        2,449
                                                                        
                                                                        
                                                                        
                                                                        -04/01/08
                                                                        
                                                                        Concord
      Shopping Plaza
                                                                        Miami,
      FL
                                                                        
                                                                        
                                                                        298,986
                                                                        
                                                                        
                                                                        
                                                                        48,201
                                                                        
                                                                        
                                                                        
                                                                        (966
                                                                        )04/01/08
                                                                        
                                                                        Shoppes
      at Ibis
                                                                        West
      Palm Beach, FL
                                                                        
                                                                        
                                                                        79,420
                                                                        
                                                                        
                                                                        
                                                                        14,500
                                                                        
                                                                        
                                                                        
                                                                        5,86704/01/08
                                                                        
                                                                        Shoppes
      of Sunset
                                                                        Miami,
      FL
                                                                        
                                                                        
                                                                        21,704
                                                                        
                                                                        
                                                                        
                                                                        5,000
                                                                        
                                                                        
                                                                        
                                                                        (76
                                                                        )04/01/08
                                                                        
                                                                        Shoppes
      of Sunset II
                                                                        Miami,
      FL
                                                                        
                                                                        
                                                                        27,767
                                                                        
                                                                        
                                                                        
                                                                        5,400
                                                                        
                                                                        
                                                                        
                                                                        (30
                                                                        )04/01/08
                                                                        
                                                                        Shoppes
      at Quail Roost
                                                                        Miami,
      FL
                                                                        
                                                                        
                                                                        73,550
                                                                        
                                                                        
                                                                        
                                                                        15,400
                                                                        
                                                                        
                                                                        
                                                                        (40
                                                                        )06/09/08
                                                                        
                                                                        Presidential
      Markets
                                                                        Snellville,
      GA
                                                                        
                                                                        
                                                                        396,408
                                                                        
                                                                        
                                                                        
                                                                        62,309
                                                                        
                                                                        
                                                                        
                                                                        11,13306/09/08
                                                                        
                                                                        Sparkleberry
      Square
                                                                        Columbia,
      SC
                                                                        
                                                                        
                                                                        154,217
                                                                        
                                                                        
                                                                        
                                                                        23,545
                                                                        
                                                                        
                                                                        
                                                                        2,70811/13/08
                                                                        
                                                                        Sparkleberry
      Kroger
                                                                        Columbia,
      SC
                                                                        
                                                                        
                                                                        98,873
                                                                        
                                                                        
                                                                        
                                                                        15,927
                                                                        
                                                                        
                                                                        
                                                                        4,22611/13/08
                                                                        
                                                                        Sparkleberry
      Kohl's
                                                                        Columbia,
      SC
                                                                        
                                                                        
                                                                        85,961
                                                                        
                                                                        
                                                                        
                                                                        8,503
                                                                        
                                                                        
                                                                        
                                                                        (1,238
                                                                        )Sale
      of income producing properties sold to joint venture
                                                                        
                                                                        
                                                                        
                                                                        
                                                                        
                                                                        
                                                                        201,234
                                                                        
                                                                        
                                                                        
                                                                        21,584Sale of income-producing
      properties06/30/08
                                                                        
                                                                        Rosemeade
                                                                        Carrollton,
      TX
                                                                        
                                                                        
                                                                        51,231
                                                                        
                                                                        
                                                                        
                                                                        2,750
                                                                        
                                                                        
                                                                        
                                                                        (557
                                                                        )Sale
      of income producing property
                                                                        
                                                                        
                                                                        
                                                                        
                                                                        
                                                                        
                                                                        2,750
                                                                        
                                                                        
                                                                        
                                                                        (557
                                                                        )Sale of real estate (in
    acres)03/20/08
                                                                        
                                                                        Waterlick
      Outparcel
                                                                        Lynchburg,
      VA
                                                                        
                                                                        
                                                                        7.96
                                                                        
                                                                        
                                                                        
                                                                        550
                                                                        
                                                                        
                                                                        
                                                                        (42
                                                                        )Sale
      of real estate
                                                                        
                                                                        
                                                                        
                                                                        
                                                                        
                                                                        
                                                                        550
                                                                        
                                                                        
                                                                        
                                                                        (42
                                                                        )Total
      Sales
                                                                        
                                                                        
                                                                        
                                                                        
                                                                        
                                                                        $
                                                                        204,534
                                                                        
                                                                        
                                                                        $
                                                                        20,985





F-37
 Table of Contents





Pursuant
to SFAS 144, the accompanying statements of operations have been retrospectively
adjusted to reflect the classification of discontinued operations. The summary
selected operating results for income-producing properties disposed of as of
December 31, 2008, 2007 and 2006 with no significant continuing involvement, are
as follows:





2008
                              
                              
                              2007
                              
                              
                              2006(In
      thousands)Rental
      Revenue
                              
                              $
                              232
                              
                              
                              $
                              8,710
                              
                              
                              $
                              23,078ExpensesProperty
      operating expenses
                              
                              
                              41
                              
                              
                              
                              3,259
                              
                              
                              
                              7,673Rental
      property depreciation and amortization
                              
                              
                              59
                              
                              
                              
                              1,525
                              
                              
                              
                              4,585Interest
      expense
                              
                              
                              
                              
                              
                              
                              587
                              
                              
                              
                              1,790Amortization
      of deferred financing fees
                              
                              
                              -
                              
                              
                              
                              6
                              
                              
                              
                              19Other
      (income) expense
                              
                              
                              -
                              
                              
                              
                              3,415
                              
                              
                              
                              2,060Operations
      of income-producing properties sold
                              
                              $
                              132
                              
                              
                              $
                              (82
                              )
                              
                              $
                              6,951





As a
result of our significant continuing involvement following the sale of the
properties to the GRI joint venture, the operating results of these properties
are included in income from continuing operations for the current reporting
periods up to the time of sale.





2008
                            
                            
                            2007
                            
                            
                            2006(In
      thousands)Rental
      Revenue
                            
                            $
                            7,661
                            
                            
                            $
                            18,453
                            
                            
                            $
                            12,060ExpensesProperty
      operating expenses
                            
                            
                            2,152
                            
                            
                            
                            5,093
                            
                            
                            
                            3,417Rental
      property depreciation and amortization
                            
                            
                            1,572
                            
                            
                            
                            3,701
                            
                            
                            
                            2,293Interest
      expense
                            
                            
                            1,491
                            
                            
                            
                            2,740
                            
                            
                            
                            2,838Other
      (income) expense
                            
                            
                            (2
                            )
                            
                            
                            (2
                            )
                            
                            
                            (5
                            )Operations
      of income-producing properties sold
                            
                            $
                            2,448
                            
                            
                            $
                            6,921
                            
                            
                            $
                            3,517





The
results of operations of these properties (in which we maintained continuing
involvement) for the periods following the date of sale have not been
consolidated, but have been accounted for under the equity method of
accounting.





F-38
 Table of Contents





11.
            Investments in Unconsolidated
      Joint Ventures





During
the year ended December 31, 2008, we entered into two joint ventures for the
purpose of acquiring and managing commercial and retail real
estate.





On
February 22, 2008, we formed a joint venture with Global Retail Investors, LLC,
an entity formed by an affiliate of First Washington Realty, Inc. and the State
of California Public Employees’ Retirement System.  We have a 10%
ownership interest in the GRI joint venture.  On April 1, 2008, the
joint venture agreement was amended and restated in connection with the sale and
contribution of seven income-producing properties and one outparcel to the joint
venture. The aggregate gross sales price of the seven assets was $176.8 million
and the assets were sold in two tranches during the quarter ended June 30,
2008.  The properties had a net book value of $152.6 million, and we
recognized a total gain on sale of approximately $18.5 million, which is net of
approximately $2.4 million of costs incurred in connection with the defeasance
of existing mortgage debt paid for by the purchaser.  At the closings,
$9.3 million of the sale proceeds were contributed by us as our investment in
the joint venture.  On November 13, 2008, we sold an additional two
properties to the joint venture which had a net book value of $21.9
million.  We recognized a total gain on sale of approximately $3.2
million and $1.2 million of the sale proceeds were contributed by us as our
investment in the joint venture.





Pursuant
to SFAS 66, the sale of the properties to the GRI joint venture qualifies as a
partial sale because we retained an equity interest in the buyer, and the gain
on sale amounts noted above were calculated based on 90% of the properties being
sold.  The remaining amount of the gain, which totaled $2.9 million,
is deferred until such time as the entity is liquidated or the assets are
sold.  We have no direct or indirect guarantees of indebtedness
related to this transaction as of December 31, 2008, other than customary
non-recourse carve-out obligations associated with its mortgage
indebtedness.





On April
29, 2008, we entered into a joint venture with an affiliate of DRA Advisors,
LLC  to invest in value-added acquisition
opportunities.  The joint venture is 80% owned by the affiliate of DRA
and 20% owned by us.  During 2008, the venture completed its
acquisition of a portfolio of three properties comprised of one office building
and two neighborhood shopping centers totaling approximately 503,000 square feet
of GLA. We have agreed to manage all three of the properties and will act as
leasing agent for the two retail properties acquired by the joint
venture.  As part of this acquisition, we contributed $3.2 million to
the joint venture.  Our capital contribution represents our pro-rata
portion of the net purchase price, after the assumption by the joint venture of
existing mortgage indebtedness.





The
following is a summary of our investments in unconsolidated joint ventures (in
thousands):





Location
                                
                                Ownership
                                
                                
                                December 31, 2008
                                
                                
                                December 31, 2007GRI
      Venture
                                GA,
      SC, FL
                                
                                
                                10.0
                                %
                                
                                $
                                8,744
                                
                                
                                
                                -DRA
      Venture
                                FL
                                
                                
                                20.0
                                %
                                
                                
                                3,001
                                
                                
                                
                                -Total
      investments in and advances to unconsolidated joint
    ventures
                                
                                
                                
                                
                                
                                
                                $
                                11,745
                                
                                
                                
                                -





Total
equity in earnings from these joint ventures totaled $108,000 for the year ended
December 31, 2008, and fees associated with these joint ventures totaled
approximately $773,000 for the year ended December 31,
2008.   There were no comparable fees or equity in earnings
associated with joint ventures in the same 2007 period.





F-39
 Table of Contents





12.
            Stockholders’
      Equity and Earnings Per Share





Equity





On
September 24, 2008, we entered into an underwriting agreement with several
underwriters with respect to the issue and sale of 2,200,000 shares of our
common stock in an underwritten public offering.  The shares were
offered to the public at $21.47 per share. The issuance of the shares was
registered under the Securities Act of 1933 pursuant to our shelf registration
statement.





Contemporaneous
with the execution of the underwriting agreement, we entered into a common stock
purchase agreement with an affiliate of our largest stockholder, Gazit-Globe,
Ltd., which may be deemed to be controlled by Chaim Katzman, the chairman of our
board of directors.  Under the purchase agreement, Gazit’s affiliate
agreed to purchase 440,000 shares of our common stock at the public offering
price in a private placement. In connection with the purchase agreement, we also
executed a registration rights agreement granting the investor customary demand
and “piggy-back” registration rights.





On
September 29, 2008, we completed the public offering and concurrent private
placement in accordance with the underwriting agreement and purchase agreement.
The offerings resulted in net cash proceeds of approximately $54.7 million to
the company.




On May
11, 2006, our board of directors authorized a $50.0 million share repurchase
plan. On July 24, 2006, the board increased the size of the plan to $100.0
million.  The plan, which does not have an explicit expiration date,
allows, but does not require, the repurchase of common stock in open market and
private transactions.  Under the share repurchase plan, we expended
approximately $69.1 million for approximately 3.0 million shares during the year
ended December 31, 2006.  No shares were acquired during the years
ended December 31, 2007 or 2008.  In furtherance of this
authorization, we have in place a  plan with a broker for
pre-authorized purchases within defined market price limits pursuant to Rule
10b5-1 and other applicable securities regulations.   This plan
may be terminated at any time in our discretion and we may enter into other such
plans.


Dividend
Reinvestment Plan





We had a
Dividend Reinvestment and Share Purchase Plan whereby stockholders could invest
cash distributions and make optional cash purchases of our common
stock.  Effective March 2006, the plan was suspended, with
approximately 5.4 million shares still available for sale under the
Plan.





Earnings
per Share





The
following is a reconciliation of the amounts of net income and shares of common
stock used in calculating basic and diluted per-share income (“EPS”) for the
years ended December 31, 2008, 2007 and 2006:





For the Year Ended December 31,
      2008(In
      thousands, except per share amounts)Income
      (Numerator)
                                
                                
                                Shares
      (Denominator)
                                
                                
                                Per
      Share AmountNet
      Income
                                
                                $
                                35,008Basic
      EPSIncome
      attributable to common stockholders
                                
                                $
                                35,008
                                
                                
                                
                                74,075
                                
                                
                                $
                                0.47Effect
      of Dilutive SecuritiesWalden
      Woods Village, Ltd.
                                
                                
                                112
                                
                                
                                
                                94Unvested
      restricted stock using the treasury stock method
                                
                                
                                -
                                
                                
                                
                                30Stock
      options using the treasury stock method
                                
                                
                                -
                                
                                
                                
                                23112
                                
                                
                                
                                147Diluted
      EPSIncome
      attributable to common stockholders assuming conversions
                                
                                $
                                35,120
                                
                                
                                
                                74,222
                                
                                
                                $
                                0.47





F-40
 Table of Contents





Options
to purchase 900,403 shares of common stock at prices ranging from $23.03 to
$28.05 per share were outstanding at December 31, 2008, but were not included in
the computation of diluted EPS because the option price was greater than the
average market price of common shares.





For the Year Ended December 31,
      2007Income
      (Numerator)
                                        
                                        
                                        Shares
      (Denominator)
                                        
                                        
                                        Per
      Share Amount(In
      thousands, except per share amounts)Net
      Income
                                        
                                        $
                                        69,385Basic
      EPSIncome
      attributable to common stockholders
                                        
                                        $
                                        69,385
                                        
                                        
                                        
                                        73,091
                                        
                                        
                                        $
                                        0.95Effect
      of Dilutive SecuritiesWalden
      Woods Village, Ltd.
                                        
                                        
                                        112
                                        
                                        
                                        
                                        94Unvested
      restricted stock using the treasury method
                                        
                                        
                                        
                                        
                                        
                                        
                                        99Common
      stock options using the treasury method
                                        
                                        
                                        
                                        
                                        
                                        
                                        78112
                                        
                                        
                                        
                                        271Diluted
      EPSIncome
      attributable to common stockholders assuming conversions
                                        
                                        $
                                        69,497
                                        
                                        
                                        
                                        73,362
                                        
                                        
                                        $
                                        0.95





Options
to purchase 119,660 shares of common stock at prices ranging from $26.41 to
$28.05 per share were outstanding at December 31, 2007, but were not included in
the computation of diluted EPS because the option price was greater than the
average market price of common shares.





F-41
 Table of Contents




For the Year Ended December 31,
      2006Income
      (Numerator)
                                      
                                      
                                      Shares
      (Denominator)
                                      
                                      
                                      Per
      Share Amount(In
      thousands, except per share amounts)Net
      Income
                                      
                                      $
                                      176,955Basic
      EPSIncome
      attributable to common stockholders
                                      
                                      $
                                      176,955
                                      
                                      
                                      
                                      73,598
                                      
                                      
                                      $
                                      2.40Effect
      of Dilutive SecuritiesWalden
      Woods Village, Ltd.
                                      
                                      
                                      206
                                      
                                      
                                      
                                      94Unvested
      restricted stock
                                      
                                      
                                      -
                                      
                                      
                                      
                                      439Stock
      options
                                      
                                      
                                      -
                                      
                                      
                                      
                                      193206
                                      
                                      
                                      
                                      726Diluted
      EPSIncome
      attributable to common stockholders assuming conversions
                                      
                                      $
                                      177,161
                                      
                                      
                                      
                                      74,324
                                      
                                      
                                      $
                                      2.38





Options
to purchase 1.8 million shares of common stock at prices ranging from $24.12 to
$28.05 per share were outstanding at December 31, 2006, but were not included in
the computation of diluted EPS because the option price was greater than the
average market price of common shares.





13.
            Share-Based Payment and Other
      Benefit Plans





On June
23, 2000, following shareholder approval, we adopted the Equity One 2000
Executive Incentive Compensation Plan (the “2000 Plan”).  The 2000
Plan provides for grants of stock options, stock appreciation rights, restricted
stock, and deferred stock, other stock-related awards and performance or annual
incentive awards that may be settled in cash, stock or other
property.  The persons eligible to receive an award under the 2000
Plan are our officers, directors, employees and independent
contractors.  Following an amendment to the 2000 Plan, approved by our
stockholders on June 4, 2007, the total number of shares of common stock that
may be issuable under the 2000 Plan is 8.5 million shares, plus (i) the number
of shares with respect to which options previously granted under the 2000 Plan
terminate without being exercised, and (ii) the number of shares that are
surrendered in payment of the exercise price for any awards or any tax
withholding requirements.  In an amendment to the 2000 Plan approved
by our stockholders in July 2004, the compensation committee expanded the list
of business criteria that the committee may use in granting performance awards
and annual incentive awards under the 2000 Plan intended to qualify for the
exclusions from the limitations of Section 162(m) of the Internal Revenue Code
and modified the definition of a “change of control” to include, in addition to
other instances, following approval by stockholders of any reorganization,
merger or consolidation or other transaction or series of transactions if
persons who were stockholders immediately prior to such reorganization, merger
or consolidation or other transaction do not, immediately thereafter, own more
than 50% of the combined voting power of the reorganized, merger or consolidated
company’s then outstanding voting securities (previously the threshold was 26%).
The 2000 Plan will terminate on the earlier of the day before the tenth
anniversary of the stockholders’ approval of the 2000 Plan or the date on which
all shares reserved for issuance under the 2000 Plan have been
issued.





F-42
 Table of Contents





Options





As of
December 31, 2008, we have options outstanding under four share-based payment
plans.  The 2000 Plan authorized the grant of options, common stock
and other share-based awards for up to 8.5 million shares of common stock, of
which 3.4 million shares are available for issuance.  The IRT Property
Company 1998 Long Term Incentive Plan similarly authorized the grant of options,
common stock and other share-based awards for up to 1,462,500 shares of common
stock, of which no shares are available for issuance.  Our 1995 Stock
Option Plan authorized the grant of option awards for up to 1.0 million shares
of common stock, all of which have been issued.  The IRT Property
Company 1989 Stock Option Plan authorized the grant of stock options and other
share-based awards for up to 956,250 shares of common stock, of which no shares
are available for issuance. In addition, in connection with the initial
employment of Jeffrey S. Olson, our Chief Executive Officer, we issued Mr. Olson
options to purchase 364,660 shares of common stock.





The term
of each award is determined by our compensation committee, but in no event can
be longer than ten years from the date of the grant.  The vesting of
the awards is determined by the committee, in its sole and absolute discretion,
at the date of grant of the award.  Dividends are paid on unvested
shares of restricted stock.  Certain options and share awards provide
for accelerated vesting if there is a change in control, as defined in the 2000
Plan.





The fair
value of each option award during 2008 was estimated on the date of grant using
the Black-Scholes-Merton option-pricing model.  Expected volatilities,
dividend yields, employee exercises and employee terminations are primarily
based on historical data.  The risk-free interest rate is based on the
U.S. Treasury yield curve in effect at the time of grant .  We measure
compensation costs for restricted stock awards based on the fair value of our
common stock at the date of the grant and charges to expense such amounts to
earnings ratably over the vesting period. For grants with a graded vesting
schedule we have elected to recognize compensation expense on a straight-line
basis.





The
following table reports stock option activity for the years ended December 31,
2008, 2007 and 2006:





2008
                                      
                                      
                                      2007
                                      
                                      
                                      2006Shares Under Option
                                      
                                      
                                      Weighted-Average Exercise
    Price
                                      
                                      
                                      Shares Under Option
                                      
                                      
                                      Weighted-Average Exercise
    Price
                                      
                                      
                                      Shares Under Option
                                      
                                      
                                      Weighted-Average Exercise
    Price(In
      thousands)
                                      
                                      
                                      
                                      
                                      
                                      (In
      thousands)
                                      
                                      
                                      
                                      
                                      
                                      (In
      thousands)Outstanding
      at the beginning of the year
                                      
                                      
                                      2,325
                                      
                                      
                                      $
                                      23.85
                                      
                                      
                                      
                                      2,437
                                      
                                      
                                      $
                                      22.82
                                      
                                      
                                      
                                      977
                                      
                                      
                                      $
                                      16.00Granted
                                      
                                      
                                      711
                                      
                                      
                                      
                                      20.84
                                      
                                      
                                      
                                      305
                                      
                                      
                                      
                                      23.40
                                      
                                      
                                      
                                      1,843
                                      
                                      
                                      
                                      24.77Exercised
                                      
                                      
                                      (150
                                      )
                                      
                                      
                                      16.09
                                      
                                      
                                      
                                      (412
                                      )
                                      
                                      
                                      17.36
                                      
                                      
                                      
                                      (383
                                      )
                                      
                                      
                                      14.85Forfeited
      or expired
                                      
                                      
                                      (411
                                      )
                                      
                                      
                                      24.99
                                      
                                      
                                      
                                      (5
                                      )
                                      
                                      
                                      27.28
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Outstanding
      at the end of the year
                                      
                                      
                                      2,475
                                      
                                      
                                      $
                                      23.32
                                      
                                      
                                      
                                      2,325
                                      
                                      
                                      $
                                      23.85
                                      
                                      
                                      
                                      2,437
                                      
                                      
                                      $
                                      22.82Exercisable
      at the end of year
                                      
                                      
                                      922
                                      
                                      
                                      $
                                      24.26
                                      
                                      
                                      
                                      678
                                      
                                      
                                      $
                                      22.29
                                      
                                      
                                      
                                      168
                                      
                                      
                                      $
                                      14.93Weighted
      average fair value of options granted during the year
                                      
                                      
                                      
                                      
                                      
                                      $
                                      2.14
                                      
                                      
                                      
                                      
                                      
                                      
                                      $
                                      3.43
                                      
                                      
                                      
                                      
                                      
                                      
                                      $
                                      3.17





The total
cash or other consideration received from options exercised during the years
ended December 31, 2008, 2007 and 2006 was $259,900, $3.8 million and $3.0
million, respectively.





At
December 31, 2008, the aggregate intrinsic value of options exercisable was less
than the exercise price.





The total
intrinsic value of options exercised during the years ended December 31, 2008,
2007 and 2006 was $1.4 million, $3.9 million and $3.6 million,
respectively.





F-43
 Table of Contents





The fair
value of each option grant was estimated on the grant date using the
Black-Scholes pricing model for grants issued after January 1, 2008 and for
options issued before January 1, 2008 with the following assumptions for the
years ended December 31, 2008, 2007 and 2006:





2008
                            
                            
                            2007
                            
                            
                            2006Dividend
      Yield
                            
                            
                            4.9%
      - 7.2
                            %
                            
                            
                            5.1
                            %
                            
                            
                            4.7%
      - 5.0
                            %Risk-free
      interest rate
                            
                            
                            1.7%
      - 3.4
                            %
                            
                            
                            4.1%
      - 4.9
                            %
                            
                            
                            4.6%
      - 4.8
                            %Expected
      option life (years)
                            
                            
                            5.8
      - 6.3
                            
                            
                            
                            4.3
                            
                            
                            
                            3.0
      - 3.3Expected
      volatility
                            
                            
                            21.0%
      - 23.2
                            %
                            
                            
                            20.0%
      - 22.0
                            %
                            
                            
                            20.0
                            %





The
options were granted with an exercise price equivalent to the current stock
price on the grant date or the ten-day average of the stock price prior to the
grant date.





Restricted
Stock Grants





Our
compensation committee grants restricted stock to our officers, directors, and
other employees.  Vesting periods for the restricted stock are
determined by our compensation committee.  We measure compensation
costs for restricted stock awards based on the fair value of our common stock at
the date of the grant and expense such amounts ratably over the vesting
period.  As of December 31, 2008, we had 385,200 shares of non-vested
restricted stock grants outstanding.





The
following table provides a summary of unvested restricted stock activity during
the year ended December 31, 2008:





Unvested Shares
                                        
                                        
                                        Weighted-Average Price(In
      thousands)Unvested
      at December 31, 2007
                                        
                                        
                                        492
                                        
                                        
                                        $
                                        25.52Granted
                                        
                                        
                                        115
                                        
                                        
                                        
                                        22.07Vested
                                        
                                        
                                        (183
                                        )
                                        
                                        
                                        25.10Forfeited
                                        
                                        
                                        (39
                                        )
                                        
                                        
                                        24.64Unvested
      at December 31, 2008
                                        
                                        
                                        385
                                        
                                        
                                        $
                                        24.79





As of
December 31, 2008, there was $12.1 million of total unrecognized compensation
expense related to unvested share-based compensation arrangements (options and
unvested restricted shares) granted under our plans.  This cost is
expected to be recognized over a weighted-average period of 2.09
years.   The total vesting-date value of the shares that vested
during the year ended December 31, 2008 was $3.4 million.





401(k)
Plan





We have a
401(k) defined contribution plan (the “401(k) Plan”) covering substantially all
of our officers and employees which permits participants to defer compensation
up to the maximum amount permitted by law.  We match 100% of each
employee’s contribution up to 3.0% of the employee’s annual compensation and,
thereafter, match 50% of the next 3.0% of the employee’s annual compensation.
Employee’s contributions and our matching contributions vest immediately. Our
contributions to the 401(k) Plan for the years ended December 31, 2008, 2007 and
2006 were $263,000, $249,000, and $295,000, respectively. Effective January 1,
2007, the 401(k) Plan discontinued purchasing publicly traded shares of our
common stock as matching contributions.





F-44
 Table of Contents





Deferred
Compensation Plan





During
2005, we established a non-qualified deferred compensation plan that permits
eligible employees to defer a portion of their compensation. The deferred
compensation liability (included in accounts payable in the accompanying balance
sheet) was $330,000 at December 31, 2008.  We established a grantor
trust (Rabbi Trust) to provide funding for benefits payable under this
plan.  The assets held in the trust at December 31, 2008 amounted to
$330,000.  The Rabbi Trust’s assets consist of short-term cash
investments and a managed portfolio of equity securities.  These
assets are included in other assets in the accompanying balancesheets.In December 2008, the
compensation committee of our board of directors amended the plan to provide for
mandatory distributions of all assets held under the plan in 2009. All such
assets were distributed to participants in the first quarter of 2009 and no
assets remain under the plan.





2004
Employee Stock Purchase Plan





Under the
2004 Employee Stock Purchase Plan (the “Purchase Plan”) (implemented in October
2004), our employees, including our directors who are employees, are eligible to
participate in quarterly plan offerings in which payroll deductions may be used
to purchase shares of  our common stock.  The purchase price
per share is 90% of the average closing price per share of our common stock on
the NYSE on the five trading days that immediately precede the date of purchase,
provided, however, that in no event shall the exercise price per share of common
stock on the exercise date of an offering period be less than the lower 85% of
(i) the market price on the first day of the offering period or (ii) the market
price on the exercise date.





Long-Term
Incentive Compensation Plans





Three of
our executive officers are eligible for long-term incentive cash compensation
subject to a performance-based schedule at the end of an approximate four-year
performance period. In order for participants to receive compensation, our Total
Shareholder Return (“TSR”) over the performance period must exceed 6% and
achieve a certain spread against the average TSR of a defined peer
group.





We
determine the fair value of TSR grants annually based upon a Monte Carlo
simulation model, and recognize compensation expense accordingly over the
vesting period. These liabilities totaled $785,000 at December 31, 2008 as
compared to $681,000 at December 31, 2007.  The level of cash
compensation available depends on the spread between our TSR and the average TSR
of the peer group companies.





14.
            Income
      Taxes





We
elected to be taxed as a REIT under the Internal Revenue Code (“Code”),
commencing with our taxable year ended December 31, 1995.  To qualify
as a REIT, we must meet a number of organizational and operational requirements,
including a requirement that we currently distribute at least 90% of our REIT
taxable income to our stockholders.  Also, at least 95% of our gross
income in any year must be derived from qualifying sources.  The
difference between net income available to common stockholders for financial
reporting purposes and taxable income before dividend deductions relates
primarily to temporary differences, such as real estate depreciation and
amortization, deduction of deferred compensation and deferral of gains on sold
properties utilizing like kind exchanges.  It is our intention to
adhere to these requirements and maintain our REIT status. As a REIT, we
generally will not be subject to corporate level federal income tax, provided
that distribution to our stockholders equal at least the amount of our REIT
taxable income as defined under the Code. We have distributed sufficient taxable
income for the years ended December 31, 2008, 2007 and 2006; therefore, no
federal income or excise taxes were incurred. 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 some of our properties are located,
and for federal income and excise taxes on our undistributed taxable
income.  Accordingly, the only provision for federal income taxes in
our consolidated financial statements relates to our consolidated taxable REIT
subsidiaries (“TRSs”).





F-45
 Table of Contents





Further,
we believe that we have appropriate support for the tax positions taken on our
tax returns and that our accruals for the tax liabilities are adequate for all
years still subject to tax audit after 2004.





The
following table reconciles GAAP net income to taxable income for the years ended
December 31, 2008, 2007 and 2006 (in thousands):





2008
                
                
                2007
                
                
                2006(Estimated)
                
                
                (Actual)
                
                
                (Actual)GAAP
      net income
                
                $
                35,008
                
                
                $
                69,385
                
                
                $
                176,955Net
      loss (income) attributable to taxable REIT subsidiaries
(1)
                
                
                28,820
                
                
                
                (6,251
                )
                
                
                (4,811
                )GAAP
      net income from REIT operations
                
                
                63,828
                
                
                
                63,134
                
                
                
                172,144Book/tax
      difference for depreciation
                
                
                2,836
                
                
                
                669
                
                
                
                (1,453
                )Book/tax
      difference on sale of property
                
                
                (10,530
                )
                
                
                5,995
                
                
                
                (39,674
                )Book/tax
      difference on exercise of stock options and restricted
    shares
                
                
                1,565
                
                
                
                (3,486
                )
                
                
                (7,278
                )Book/tax
      difference for interest expense
                
                
                (560
                )
                
                
                (1,294
                )
                
                
                (3,355
                )Deferred/prepaid/above-
      and below-market rents, net
                
                
                (2,433
                )
                
                
                (2,560
                )
                
                
                (3,427
                )GAAP
      impairment loss
                
                
                4,752
                
                
                
                1,851Subpart
      F income from foreign taxable REIT subsidiary
                
                
                5,488
                
                
                
                5,889
                
                
                
                4,294Other
      book/tax differences, net
                
                
                (1,961
                )
                
                
                (1,533
                )
                
                
                (3,315
                )Adjusted
      taxable income subject to 90% dividend requirements
                
                $
                62,985
                
                
                $
                68,665
                
                
                $
                117,936





(1)
Includes an impairment loss on available-for-sale securities investments of
$32,791 in 2008.










The
following summarizes the tax status of dividends paid:


Years Ended
    December 31,2008
                                      
                                      
                                      2007
                                      
                                      
                                      2006Dividend
      paid per share
                                      
                                      $
                                      1.20
                                      
                                      
                                      $
                                      1.20
                                      
                                      
                                      $
                                      2.20Ordinary
      income
                                      
                                      
                                      56.50
                                      %
                                      
                                      
                                      51.26
                                      %
                                      
                                      
                                      23.62
                                      %Return
      of capital
                                      
                                      
                                      28.51
                                      %
                                      
                                      
                                      20.41
                                      %
                                      
                                      
                                      29.86
                                      %Capital
      gains
                                      
                                      
                                      14.99
                                      %
                                      
                                      
                                      28.33
                                      %
                                      
                                      
                                      46.52
                                      %





Taxable REIT Subsidiaries
("TRS"):





We are
subject to federal, state and local income taxes on the income from our TRS
activities, which includes IRT Capital Corporation II ("IRT") and Southeast US
Holdings, BV (“Southeast”), our wholly owned subsidiaries.





Our
taxable income for book purposes and (provision) benefit for income taxes
relating to our TRS and taxable entities which have been consolidated for
accounting reporting purposes, for the years ended December 31, 2008, 2007, and
2006, are summarized as follows (in thousands):





F-46
 Table of Contents




2008
                                    
                                    
                                    2007
                                    
                                    
                                    2006U.S.
      (loss) income before income taxes
                                    
                                    $
                                    (503
                                    )
                                    
                                    $
                                    90
                                    
                                    
                                    $
                                    517Foreign
      (loss) income before income taxes
                                    
                                    
                                    (27,302
                                    )
                                    
                                    
                                    5,889
                                    
                                    
                                    
                                    4,294Total
      (loss) income before income taxes
                                    
                                    
                                    (27,805
                                    )
                                    
                                    
                                    5,979
                                    
                                    
                                    
                                    4,811Less
      (provision) benefit for income taxes:Current
      federal and state
                                    
                                    
                                    (125
                                    )
                                    
                                    
                                    (676
                                    )
                                    
                                    
                                    (83
                                    )Deferred
      federal and state
                                    
                                    
                                    (890
                                    )
                                    
                                    
                                    948
                                    
                                    
                                    
                                    83Total
      tax (provision) benefit
                                    
                                    
                                    (1,015
                                    )
                                    
                                    
                                    272
                                    
                                    
                                    
                                    -Net
      (loss) income from taxable REIT subsidiary
                                    
                                    $
                                    (28,820
                                    )
                                    
                                    $
                                    6,251
                                    
                                    
                                    $
                                    4,811





The
income tax (provision) benefit differs from the amount computed by applying the
statutory federal income tax rate to taxable income before income taxes as
follows (in thousands):





2008
                                        
                                        
                                        2007
                                        
                                        
                                        2006Federal
      provision at statutory tax rate (34%)
                                        
                                        $
                                        9,454
                                        
                                        
                                        $
                                        (2,033
                                        )
                                        
                                        $
                                        (1,636
                                        )State
      taxes, net of federal benefit
                                        
                                        
                                        19
                                        
                                        
                                        
                                        (3
                                        )
                                        
                                        
                                        (19
                                        )Participation
      exemption
                                        
                                        
                                        (8,072
                                        )
                                        
                                        
                                        1,778
                                        
                                        
                                        
                                        1,287Foreign
      tax rate differential
                                        
                                        
                                        (1,092
                                        )
                                        
                                        
                                        236
                                        
                                        
                                        
                                        172Other
                                        
                                        
                                        (65
                                        )
                                        
                                        
                                        (169
                                        )
                                        
                                        
                                        36Valuation
      allowance (increase) decrease
                                        
                                        
                                        (1,259
                                        )
                                        
                                        
                                        463
                                        
                                        
                                        
                                        160Total
      tax provision (benefit)
                                        
                                        $
                                        (1,015
                                        )
                                        
                                        $
                                        272
                                        
                                        
                                        $
                                        -





Our
deferred tax assets and liabilities at December 31, 2008 and 2007, were as
follows (in thousands):





2008
                                
                                
                                2007Deferred
      tax assets:Disallowed
      interest
                                
                                $
                                2,329
                                
                                
                                $
                                1,313Other
                                
                                
                                44
                                
                                
                                
                                -Net
      operating loss
                                
                                
                                129
                                
                                
                                
                                10Valuation
      allowance
                                
                                
                                (1,334
                                )
                                
                                
                                (75
                                )Total
      deferred tax assets
                                
                                $
                                1,168
                                
                                
                                $
                                1,248Deferred
      tax liabilities:Other
      real estate investments
                                
                                
                                (2,527
                                )
                                
                                
                                (1,721
                                )Other
                                
                                
                                (50
                                )
                                
                                
                                (46
                                )Total
      deferred tax liabilities
                                
                                
                                (2,577
                                )
                                
                                
                                (1,767
                                )Net
      deferred tax liability
                                
                                $
                                (1,409
                                )
                                
                                $
                                (519
                                )





F-47
 Table of Contents





The net
deferred tax liability is included in the caption Other liabilities on the
accompanying Consolidated Balance Sheets at December 31, 2008 and 2007. The tax
deduction for interest paid by the TRS to the REIT is subject to certain
limitations pursuant to Federal tax law. Such interest may only be deducted in
any tax year in which the TRSs’ income exceeds certain thresholds. Such
disallowed interest may be carried forward and utilized in future years, subject
to the same limitation. At December 31, 2008, IRT had approximately $6.1 million
of disallowed interest carry forwards, with a tax value of approximately $2.3
million.  This carry forward does not expire.  In prior
years, valuations of the operating assets held by IRT indicated that the
ultimate disposition of these assets would generate sufficient taxable income to
fully utilize this deduction.  However, due to the economic downturn,
we have determined that it is more likely than not that IRT will not have
sufficient income in the future in order to fully utilize the interest expense
that had been disallowed and, accordingly, has recorded a valuation allowance of
$1.2 million. Southeast had a net operating loss carry forward of $0.4 million
at December 31, 2008 with a tax value of approximately $0.1 million. This carry
forward has no expiration period. A valuation allowance has been established for
this asset.





15.
            Future
      Minimum Rental Income





Our
properties are leased to tenants under operating leases with expiration dates
extending to the year 2032.  Future minimum rents under non-cancelable
operating leases as of December 31, 2008, excluding tenant reimbursements of
operating expenses and percentage rent based on tenants’ sales volume are as
follows:





Year Ending
                        
                        Amount(In
      thousands)2009
                        
                        
                        166,4632010
                        
                        
                        147,0552011
                        
                        
                        125,3042012
                        
                        
                        100,4302013
                        
                        
                        79,322Thereafter
                        
                        
                        415,788Total
                        
                        $
                        1,034,362





F-48
 Table of Contents





16.
            Other
      Income





The
following table summarizes other income detail information (in
thousands):





Year Ended
December 31,2008
                              
                              
                              2007
                              
                              
                              2006(In
      thousands)Other
      IncomeEasement
      Income
                              
                              $
                              593
                              
                              
                              $
                              -
                              
                              
                              $
                              -Legal
      Settlements
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              303Forfeited
      Deposits
                              
                              
                              203
                              
                              
                              
                              -
                              
                              
                              
                              -Related
      Party Income
                              
                              
                              135
                              
                              
                              
                              247
                              
                              
                              
                              -Miscellaneous
      Income
                              
                              
                              36
                              
                              
                              
                              63
                              
                              
                              
                              -$
                              967
                              
                              
                              $
                              310
                              
                              
                              $
                              303





Included
in other income in the year ended December 31, 2008 is $593,000 associated with
an easement granted on one of our properties for the use of a retention
pond.  In addition, we retained an earnest money deposit of $203,000
related to the termination of a land sale contract. We received $135,000 in
reimbursements of costs incurred by us to provide accounting reconciliation
services to Gazit Globe, Ltd, one of our principal stockholders.





17.
            Commitments
      and Contingent Liabilities





As of
December 31, 2008 and 2007, we had pledged letters of credit totaling $12.9
million and $4.7 million, respectively, as additional security for financial and
other obligations.





We have
committed to fund approximately $2.2 million, based on current plans and
estimates, to complete pending development and redevelopment projects. These
obligations, comprising principally construction contracts, are generally due as
the work is performed and are expected to be financed by the funds available
under our credit facilities.





Certain
of our properties are subject to ground leases, which are accounted for as
operating leases and have annual obligations of approximately $40,000.
Additionally, we have operating lease agreements for office space in which we
have an annual obligation of approximately $425,000.





We are
subject to litigation in the normal course of business. However, we do not
believe that any of the litigation outstanding as of December 31, 2008 will have
a material adverse effect on our financial condition results of operations or
cash flows.





18.
            Fair Value
      Measurements





In
September 2006, the FASB issued SFAS 157.  SFAS 157 establishes a
framework for measuring fair value, which includes a hierarchy based on the
quality of inputs used to measure fair value and provides specific disclosure
requirements based on the hierarchy.





Fair
Value Hierarchy





SFAS 157
requires the categorization of financial assets and liabilities, based on the
inputs to the valuation technique, into a three-level fair value hierarchy. The
fair value hierarchy gives the highest priority to the quoted prices in active
markets for identical assets and liabilities and lowest priority to unobservable
inputs. The various levels of the SFAS 157 fair value hierarchy are described as
follows:





F-49
 Table of Contents





·
            Level 1 — Financial assets and
      liabilities whose values are based on unadjusted quoted market prices for
      identical assets and liabilities in an active market that we have the
      ability to access.





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





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





SFAS 157
requires the use of observable market data, when available, in making fair value
measurements. When inputs used to measure fair value fall within different
levels of the hierarchy, the level within which the fair value measurement is
categorized is based on the lowest level input that is significant to the fair
value measurement.





Recurring
Fair Value Measurements





The
following table presents our fair value hierarchy for those assets and
liabilities measured at fair value on a recurring basis as of December 31,
2008:





Fair Value Measurements(In
      thousands)Quoted
      Prices in Active Markets for Identical Assets
                                
                                
                                Significant
      Other Observable InputsDescription
                                
                                (Level 1)
                                
                                
                                (Level 2)Available-for-sale-securities
                                
                                $
                                32,210
                                
                                
                                $
                                128,375Interest
      rate swap
                                
                                
                                -
                                
                                
                                
                                949Total
                                
                                $
                                32,210
                                
                                
                                $
                                129,324





Valuation
Methods





Interest
rate swap – This financial instrument is valued under an income approach using
industry-standard models that consider various assumptions, including time
value, volatility factors, current market and contractual prices for the
underlying, and counterparty non-performance risk.  Substantially all
of these assumptions are observable in the marketplace throughout the full term
of the instrument, can be derived from observable data or are supported by
observable levels at which transactions are executed in the
marketplace.





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





F-50
 Table of Contents





19.
            Environmental
      Matters





We are
subject to numerous environmental laws and regulations.  The operation
of dry cleaning and gas station facilities at our shopping centers are the
principal environmental concerns. We require that the tenants who operate these
facilities do so in material compliance with current laws and regulations and we
have established procedures to monitor their operations. Where available, we
have applied and been accepted into state sponsored environmental
programs.  Several properties in the portfolio will require or are
currently undergoing varying levels of environmental
remediation.  However, we have environmental insurance policies
covering most of our properties. Management believes that the ultimate
disposition of currently known environmental matters will not have a material
effect on our financial position, liquidity or operations.





20.
            Subsequent
      Events





In
January of 2009, we repurchased and cancelled approximately $12.1 million
principal amount of our unsecured outstanding senior notes payable for a total
consideration of $8.3 million.





In
January of 2009, we realized approximately $42.8 million of cash through various
investment activities in relation to our investments in debt
securities.  Of the $42.8 million realized, $30.5 million was the
result of a scheduled maturity, $7.6 million was a direct result of the sale of
certain securities above par and prior to scheduled maturity, and $4.7 million
was the result of a tender offer by the issuer earlier than the scheduled
maturity.





On
January 11, 2009, we entered into an agreement to acquire approximately 1.2
million ordinary shares of DIM Vastgoed N.V. (“DIM”) from Homburg Invest Inc.
(“Homburg”). Under the agreement, we issued on January 14, 2009, 866,373 shares
of our common stock in exchange for a total of 1,237,676 DIM shares or share
equivalents (or an exchange ratio of 0.7 shares of our common stock per DIM
share). In addition, we obtained from Homburg voting rights with respect to
another 766,573 DIM shares that Homburg has the right to acquire on January 1,
2011. Subject to certain conditions, the agreement also provides for us to
acquire these DIM shares or share equivalents at the same 0.7 exchange ratio (or
an aggregate of 536,601 shares of our common stock) from Homburg once Homburg
has acquired them. The agreement also provided for customary registration rights
with respect to our common stock issued to Homburg. As a result of the initial
exchange and the voting rights agreement, we have voting control over
approximately 74.6% of DIM’s outstanding ordinary shares, including the
approximately 4.0 million DIM shares we owned prior to year-end and excluding
treasury shares. Based on
our current assumption that we will demonstrate control over DIM as of the first
quarter of 2009, we anticipate consolidating the financial results and balance
sheet of DIM into our financial statements at such time. Finally,
we are still evaluating the accounting treatment of this increased investment
both relating to its prior treatment under the cost method and the allocation of
the purchase price.  Given recent accounting guidance, our acquisition
may be treated as a multistep acquisition and, therefore, have an effect on
earnings in the three months ending March 31, 2009.





F-51
 Table of Contents




First Quarter(1)
                                    
                                    
                                    Second Quarter(1)
                                    
                                    
                                    Third Quarter(1)
                                    
                                    
                                    Fourth Quarter(1)
                                    
                                    
                                    Total(2)2008:Total
      revenues
                                    
                                    $
                                    63,302
                                    
                                    
                                    $
                                    60,894
                                    
                                    
                                    $
                                    56,716
                                    
                                    
                                    $
                                    58,117
                                    
                                    
                                    $
                                    239,029Income
      from continuing operations
                                    
                                    $
                                    20,793
                                    
                                    
                                    $
                                    29,863
                                    
                                    
                                    $
                                    (21,338
                                    )
                                    
                                    $
                                    6,115
                                    
                                    
                                    $
                                    35,433Net
      income
                                    
                                    $
                                    20,854
                                    
                                    
                                    $
                                    29,418
                                    
                                    
                                    $
                                    (21,395
                                    )
                                    
                                    $
                                    6,131
                                    
                                    
                                    $
                                    35,008Basic
      per share dataIncome
      from continuing operations
                                    
                                    $
                                    0.28
                                    
                                    
                                    $
                                    0.41
                                    
                                    
                                    $
                                    (0.29
                                    )
                                    
                                    $
                                    0.08
                                    
                                    
                                    $
                                    0.48Net
      Income
                                    
                                    $
                                    0.28
                                    
                                    
                                    $
                                    0.40
                                    
                                    
                                    $
                                    (0.29
                                    )
                                    
                                    $
                                    0.08
                                    
                                    
                                    $
                                    0.47Diluted
      per share dataIncome
      from continuing operations
                                    
                                    $
                                    0.28
                                    
                                    
                                    $
                                    0.41
                                    
                                    
                                    $
                                    (0.29
                                    )
                                    
                                    $
                                    0.08
                                    
                                    
                                    $
                                    0.48Net
      income
                                    
                                    $
                                    0.28
                                    
                                    
                                    $
                                    0.40
                                    
                                    
                                    $
                                    (0.29
                                    )
                                    
                                    $
                                    0.08
                                    
                                    
                                    $
                                    0.47
 
 
 —————————
 (1)
              Reclassified
      to reflect the reporting of discontinued
  operations.
 (2)
              The
      sum of quarterly earnings per share amounts may differ from annual
      earnings per share.


F-52
 Table of Contents




21.           Quarterly
Financial Data (unaudited)
 
 First Quarter(1)
                                    
                                    
                                    Second Quarter(1)
                                    
                                    
                                    Third Quarter(1)
                                    
                                    
                                    Fourth Quarter(1)
                                    
                                    
                                    Total(2)2007:Total
      revenues
                                    
                                    $
                                    61,366
                                    
                                    
                                    $
                                    62,989
                                    
                                    
                                    $
                                    61,182
                                    
                                    
                                    $
                                    60,572
                                    
                                    
                                    $
                                    246,109Income
      from continuing operations
                                    
                                    $
                                    17,369
                                    
                                    
                                    $
                                    12,777
                                    
                                    
                                    $
                                    11,476
                                    
                                    
                                    $
                                    8,441
                                    
                                    
                                    $
                                    50,063Net
      income
                                    
                                    $
                                    20,019
                                    
                                    
                                    $
                                    12,868
                                    
                                    
                                    $
                                    10,666
                                    
                                    
                                    $
                                    25,832
                                    
                                    
                                    $
                                    69,385Basic
      per share dataIncome
      from continuing operations
                                    
                                    $
                                    0.24
                                    
                                    
                                    $
                                    0.17
                                    
                                    
                                    $
                                    0.16
                                    
                                    
                                    $
                                    0.11
                                    
                                    
                                    $
                                    0.68Net
      Income
                                    
                                    $
                                    0.27
                                    
                                    
                                    $
                                    0.18
                                    
                                    
                                    $
                                    0.15
                                    
                                    
                                    $
                                    0.35
                                    
                                    
                                    $
                                    0.95Diluted
      per share dataIncome
      from continuing operations
                                    
                                    $
                                    0.23
                                    
                                    
                                    $
                                    0.17
                                    
                                    
                                    $
                                    0.16
                                    
                                    
                                    $
                                    0.11
                                    
                                    
                                    $
                                    0.68Net
      income
                                    
                                    $
                                    0.27
                                    
                                    
                                    $
                                    0.17
                                    
                                    
                                    $
                                    0.14
                                    
                                    
                                    $
                                    0.35
                                    
                                    
                                    $
                                    0.95
 
 
 —————————
 (1)
              Reclassified
      to reflect the reporting of discontinued
  operations.
 (2)
              The
      sum of quarterly earnings per share amounts may differ from annual
      earnings per share.


F-53
 Table of Contents





SCHEDULE
III


Equity
One, Inc.





REAL
ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION


December
31, 2008


(in
thousands)






INITIAL
      COST TO COMPANY
                                                
                                                
                                                
                                                
                                                
                                                GROSS
      AMOUNTS AT WHICHCapitalized
                                                
                                                
                                                CARRIED
      AT CLOSE OF PERIODSubsequent
      to
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                Dep-Encum-
                                                
                                                
                                                
                                                
                                                
                                                Building
      &
                                                
                                                
                                                Acquisition
      or
                                                
                                                
                                                
                                                
                                                
                                                Building
      &
                                                
                                                
                                                
                                                
                                                
                                                Accumulated
                                                
                                                
                                                Date
      of
                                                
                                                Date
                                                
                                                reciableProperty
                                                Location
                                                
                                                brances
                                                
                                                
                                                Land
                                                
                                                
                                                Improvements
                                                
                                                
                                                Improvements
                                                
                                                
                                                Land
                                                
                                                
                                                Improvements
                                                
                                                
                                                Total
                                                
                                                
                                                Depreciation
                                                
                                                
                                                Construction
                                                
                                                Acquired
                                                
                                                Life
      (yrs)2400
      PGA
                                                FL
                                                
                                                $
                                                -
                                                
                                                
                                                $
                                                1,418
                                                
                                                
                                                $
                                                -
                                                
                                                
                                                $
                                                -
                                                
                                                
                                                $
                                                1,418
                                                
                                                
                                                $
                                                -
                                                
                                                
                                                $
                                                1,418
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                
                                                03/20/06
                                                
                                                
                                                404101
      South I-85 Industrial
                                                NC
                                                
                                                
                                                -
                                                
                                                
                                                
                                                1,619
                                                
                                                
                                                
                                                950
                                                
                                                
                                                
                                                349
                                                
                                                
                                                
                                                1,619
                                                
                                                
                                                
                                                1,299
                                                
                                                
                                                
                                                2,918
                                                
                                                
                                                
                                                (280
                                                )
                                                
                                                1956,1963
                                                
                                                02/12/03
                                                
                                                
                                                40Alafaya
      Commons
                                                FL
                                                
                                                
                                                -
                                                
                                                
                                                
                                                6,858
                                                
                                                
                                                
                                                10,720
                                                
                                                
                                                
                                                1,285
                                                
                                                
                                                
                                                6,858
                                                
                                                
                                                
                                                12,005
                                                
                                                
                                                
                                                18,863
                                                
                                                
                                                
                                                (1,662
                                                )
                                                
                                                1987
                                                
                                                02/12/03
                                                
                                                
                                                40Alafaya
      Village
                                                FL
                                                
                                                
                                                3,970
                                                
                                                
                                                
                                                1,444
                                                
                                                
                                                
                                                4,967
                                                
                                                
                                                
                                                512
                                                
                                                
                                                
                                                1,444
                                                
                                                
                                                
                                                5,479
                                                
                                                
                                                
                                                6,923
                                                
                                                
                                                
                                                (415
                                                )
                                                
                                                1986
                                                
                                                04/20/06
                                                
                                                
                                                40Ambassador
      Row
                                                LA
                                                
                                                
                                                -
                                                
                                                
                                                
                                                3,880
                                                
                                                
                                                
                                                10,570
                                                
                                                
                                                
                                                593
                                                
                                                
                                                
                                                3,880
                                                
                                                
                                                
                                                11,163
                                                
                                                
                                                
                                                15,043
                                                
                                                
                                                
                                                (1,670
                                                )
                                                
                                                1980
                                                
                                                02/12/03
                                                
                                                
                                                40Ambassador
      Row Courtyard
                                                LA
                                                
                                                
                                                -
                                                
                                                
                                                
                                                3,110
                                                
                                                
                                                
                                                9,208
                                                
                                                
                                                
                                                1,930
                                                
                                                
                                                
                                                3,110
                                                
                                                
                                                
                                                11,138
                                                
                                                
                                                
                                                14,248
                                                
                                                
                                                
                                                (1,801
                                                )
                                                
                                                1986
                                                
                                                02/12/03
                                                
                                                
                                                40Atlantic
      Village
                                                FL
                                                
                                                
                                                -
                                                
                                                
                                                
                                                1,190
                                                
                                                
                                                
                                                4,760
                                                
                                                
                                                
                                                1,091
                                                
                                                
                                                
                                                1,190
                                                
                                                
                                                
                                                5,851
                                                
                                                
                                                
                                                7,041
                                                
                                                
                                                
                                                (2,439
                                                )
                                                
                                                1984
                                                
                                                06/30/95
                                                
                                                
                                                40Banco
      Popular Building
                                                FL
                                                
                                                
                                                -
                                                
                                                
                                                
                                                3,363
                                                
                                                
                                                
                                                1,566
                                                
                                                
                                                
                                                243
                                                
                                                
                                                
                                                3,363
                                                
                                                
                                                
                                                1,809
                                                
                                                
                                                
                                                5,172
                                                
                                                
                                                
                                                (219
                                                )
                                                
                                                1971
                                                
                                                09/27/05
                                                
                                                
                                                40Bay
      Pointe Plaza
                                                FL
                                                
                                                
                                                -
                                                
                                                
                                                
                                                4,655
                                                
                                                
                                                
                                                5,870
                                                
                                                
                                                
                                                83
                                                
                                                
                                                
                                                4,655
                                                
                                                
                                                
                                                5,953
                                                
                                                
                                                
                                                10,607
                                                
                                                
                                                
                                                (946
                                                )
                                                
                                                1984
                                                
                                                02/12/03
                                                
                                                
                                                40Beauclerc
      Village
                                                FL
                                                
                                                
                                                -
                                                
                                                
                                                
                                                651
                                                
                                                
                                                
                                                2,242
                                                
                                                
                                                
                                                761
                                                
                                                
                                                
                                                651
                                                
                                                
                                                
                                                3,003
                                                
                                                
                                                
                                                3,654
                                                
                                                
                                                
                                                (1,150
                                                )
                                                
                                                1962
                                                
                                                05/15/98
                                                
                                                
                                                40Belfair
      Towne Village
                                                SC
                                                
                                                
                                                10,243
                                                
                                                
                                                
                                                11,071
                                                
                                                
                                                
                                                10,037
                                                
                                                
                                                
                                                4,132
                                                
                                                
                                                
                                                11,238
                                                
                                                
                                                
                                                14,002
                                                
                                                
                                                
                                                25,240
                                                
                                                
                                                
                                                (1,855
                                                )
                                                
                                                2000
                                                
                                                12/22/03
                                                
                                                
                                                40Bird
      Ludlum
                                                FL
                                                
                                                
                                                6,742
                                                
                                                
                                                
                                                4,088
                                                
                                                
                                                
                                                16,318
                                                
                                                
                                                
                                                851
                                                
                                                
                                                
                                                4,088
                                                
                                                
                                                
                                                17,169
                                                
                                                
                                                
                                                21,257
                                                
                                                
                                                
                                                (6,327
                                                )
                                                
                                                1988
                                                
                                                08/11/94
                                                
                                                
                                                40Bluebonnet
      Village
                                                LA
                                                
                                                
                                                -
                                                
                                                
                                                
                                                2,790
                                                
                                                
                                                
                                                4,231
                                                
                                                
                                                
                                                1,376
                                                
                                                
                                                
                                                2,449
                                                
                                                
                                                
                                                5,948
                                                
                                                
                                                
                                                8,397
                                                
                                                
                                                
                                                (735
                                                )
                                                
                                                1983
                                                
                                                02/12/03
                                                
                                                
                                                40Bluffs
      Square Shoppes
                                                FL
                                                
                                                
                                                9,590
                                                
                                                
                                                
                                                3,232
                                                
                                                
                                                
                                                9,917
                                                
                                                
                                                
                                                341
                                                
                                                
                                                
                                                3,232
                                                
                                                
                                                
                                                10,258
                                                
                                                
                                                
                                                13,489
                                                
                                                
                                                
                                                (2,690
                                                )
                                                
                                                1986
                                                
                                                08/15/00
                                                
                                                
                                                33Boca
      Village
                                                FL
                                                
                                                
                                                7,782
                                                
                                                
                                                
                                                3,385
                                                
                                                
                                                
                                                10,174
                                                
                                                
                                                
                                                432
                                                
                                                
                                                
                                                3,385
                                                
                                                
                                                
                                                10,606
                                                
                                                
                                                
                                                13,991
                                                
                                                
                                                
                                                (2,414
                                                )
                                                
                                                1978
                                                
                                                08/15/00
                                                
                                                
                                                37Boynton
      Plaza
                                                FL
                                                
                                                
                                                7,069
                                                
                                                
                                                
                                                2,943
                                                
                                                
                                                
                                                9,100
                                                
                                                
                                                
                                                178
                                                
                                                
                                                
                                                2,943
                                                
                                                
                                                
                                                9,278
                                                
                                                
                                                
                                                12,221
                                                
                                                
                                                
                                                (2,355
                                                )
                                                
                                                1978
                                                
                                                08/15/00
                                                
                                                
                                                33BridgeMill
                                                GA
                                                
                                                
                                                8,608
                                                
                                                
                                                
                                                8,593
                                                
                                                
                                                
                                                6,310
                                                
                                                
                                                
                                                624
                                                
                                                
                                                
                                                8,593
                                                
                                                
                                                
                                                6,934
                                                
                                                
                                                
                                                15,526
                                                
                                                
                                                
                                                (1,110
                                                )
                                                
                                                2000
                                                
                                                11/13/03
                                                
                                                
                                                40Brookside
      Plaza
                                                CT
                                                
                                                
                                                -
                                                
                                                
                                                
                                                2,290
                                                
                                                
                                                
                                                26,260
                                                
                                                
                                                
                                                3,682
                                                
                                                
                                                
                                                2,291
                                                
                                                
                                                
                                                29,941
                                                
                                                
                                                
                                                32,232
                                                
                                                
                                                
                                                (2,499
                                                )
                                                
                                                1985
                                                
                                                01/12/06
                                                
                                                
                                                40Buckhead
      Station
                                                GA
                                                
                                                
                                                26,806
                                                
                                                
                                                
                                                27,138
                                                
                                                
                                                
                                                45,277
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                27,138
                                                
                                                
                                                
                                                45,277
                                                
                                                
                                                
                                                72,415
                                                
                                                
                                                
                                                (2,373
                                                )
                                                
                                                1996
                                                
                                                03/09/07
                                                
                                                
                                                40Butler
      Creek
                                                GA
                                                
                                                
                                                -
                                                
                                                
                                                
                                                2,808
                                                
                                                
                                                
                                                7,648
                                                
                                                
                                                
                                                1,793
                                                
                                                
                                                
                                                2,808
                                                
                                                
                                                
                                                9,441
                                                
                                                
                                                
                                                12,249
                                                
                                                
                                                
                                                (1,789
                                                )
                                                
                                                1990
                                                
                                                07/15/03
                                                
                                                
                                                40Carrollwood
                                                FL
                                                
                                                
                                                -
                                                
                                                
                                                
                                                2,756
                                                
                                                
                                                
                                                6,553
                                                
                                                
                                                
                                                1,004
                                                
                                                
                                                
                                                2,756
                                                
                                                
                                                
                                                7,557
                                                
                                                
                                                
                                                10,312
                                                
                                                
                                                
                                                (1,232
                                                )
                                                
                                                1970
                                                
                                                02/12/03
                                                
                                                
                                                40Cashmere
      Corners
                                                FL
                                                
                                                
                                                4,662
                                                
                                                
                                                
                                                1,435
                                                
                                                
                                                
                                                5,707
                                                
                                                
                                                
                                                512
                                                
                                                
                                                
                                                1,947
                                                
                                                
                                                
                                                5,707
                                                
                                                
                                                
                                                7,655
                                                
                                                
                                                
                                                (1,185
                                                )
                                                
                                                2001
                                                
                                                08/15/00
                                                
                                                
                                                40Centre
      Pointe Plaza
                                                NC
                                                
                                                
                                                -
                                                
                                                
                                                
                                                2,081
                                                
                                                
                                                
                                                4,411
                                                
                                                
                                                
                                                910
                                                
                                                
                                                
                                                2,081
                                                
                                                
                                                
                                                5,321
                                                
                                                
                                                
                                                7,403
                                                
                                                
                                                
                                                (953
                                                )
                                                
                                                1989
                                                
                                                02/12/03
                                                
                                                
                                                40Chapel
      Trail Plaza
                                                FL
                                                
                                                
                                                -
                                                
                                                
                                                
                                                3,641
                                                
                                                
                                                
                                                5,777
                                                
                                                
                                                
                                                2,713
                                                
                                                
                                                
                                                3,641
                                                
                                                
                                                
                                                8,490
                                                
                                                
                                                
                                                12,131
                                                
                                                
                                                
                                                (622
                                                )
                                                
                                                1996
                                                
                                                05/10/06
                                                
                                                
                                                40Charlotte
      Square
                                                FL
                                                
                                                
                                                3,225
                                                
                                                
                                                
                                                4,155
                                                
                                                
                                                
                                                4,414
                                                
                                                
                                                
                                                126
                                                
                                                
                                                
                                                4,155
                                                
                                                
                                                
                                                4,540
                                                
                                                
                                                
                                                8,695
                                                
                                                
                                                
                                                (779
                                                )
                                                
                                                1980
                                                
                                                02/12/03
                                                
                                                
                                                40Chastain
      Square
                                                GA
                                                
                                                
                                                3,366
                                                
                                                
                                                
                                                10,689
                                                
                                                
                                                
                                                5,937
                                                
                                                
                                                
                                                291
                                                
                                                
                                                
                                                10,689
                                                
                                                
                                                
                                                6,228
                                                
                                                
                                                
                                                16,917
                                                
                                                
                                                
                                                (961
                                                )
                                                
                                                1981
                                                
                                                02/12/03
                                                
                                                
                                                40Chelsea
      Place
                                                FL
                                                
                                                
                                                -
                                                
                                                
                                                
                                                2,591
                                                
                                                
                                                
                                                6,491
                                                
                                                
                                                
                                                1,158
                                                
                                                
                                                
                                                2,591
                                                
                                                
                                                
                                                7,649
                                                
                                                
                                                
                                                10,240
                                                
                                                
                                                
                                                (1,124
                                                )
                                                
                                                1992
                                                
                                                02/12/03
                                                
                                                
                                                40Chestnut
      Square
                                                NC
                                                
                                                
                                                -
                                                
                                                
                                                
                                                1,189
                                                
                                                
                                                
                                                1,326
                                                
                                                
                                                
                                                3,534
                                                
                                                
                                                
                                                1,189
                                                
                                                
                                                
                                                4,860
                                                
                                                
                                                
                                                6,048
                                                
                                                
                                                
                                                (311
                                                )
                                                
                                                1985
                                                
                                                02/12/03
                                                
                                                
                                                40Commerce
      Crossing
                                                GA
                                                
                                                
                                                -
                                                
                                                
                                                
                                                2,013
                                                
                                                
                                                
                                                1,301
                                                
                                                
                                                
                                                403
                                                
                                                
                                                
                                                2,013
                                                
                                                
                                                
                                                1,704
                                                
                                                
                                                
                                                3,717
                                                
                                                
                                                
                                                (454
                                                )
                                                
                                                1988
                                                
                                                02/12/03
                                                
                                                
                                                40Conway
      Crossing
                                                FL
                                                
                                                
                                                -
                                                
                                                
                                                
                                                2,615
                                                
                                                
                                                
                                                5,818
                                                
                                                
                                                
                                                1,907
                                                
                                                
                                                
                                                2,615
                                                
                                                
                                                
                                                7,725
                                                
                                                
                                                
                                                10,340
                                                
                                                
                                                
                                                (1,125
                                                )
                                                
                                                2002
                                                
                                                02/12/03
                                                
                                                
                                                40Coral
      Reef Shopping Center
                                                FL
                                                
                                                
                                                -
                                                
                                                
                                                
                                                16,465
                                                
                                                
                                                
                                                4,376
                                                
                                                
                                                
                                                449
                                                
                                                
                                                
                                                16,465
                                                
                                                
                                                
                                                4,825
                                                
                                                
                                                
                                                21,291
                                                
                                                
                                                
                                                (300
                                                )
                                                
                                                1968
                                                
                                                09/01/06
                                                
                                                
                                                40Corporate
                                                FL
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                242
                                                
                                                
                                                
                                                (1,296
                                                )
                                                
                                                
                                                -
                                                
                                                
                                                
                                                (1,054
                                                )
                                                
                                                
                                                (1,054
                                                )
                                                
                                                
                                                15
                                                
                                                
                                                various
                                                
                                                variousCountry
      Club Plaza
                                                LA
                                                
                                                
                                                -
                                                
                                                
                                                
                                                1,294
                                                
                                                
                                                
                                                2,060
                                                
                                                
                                                
                                                143
                                                
                                                
                                                
                                                1,294
                                                
                                                
                                                
                                                2,203
                                                
                                                
                                                
                                                3,497
                                                
                                                
                                                
                                                (425
                                                )
                                                
                                                1982
                                                
                                                02/12/03
                                                
                                                
                                                40Countryside
      Shops
                                                FL
                                                
                                                
                                                -
                                                
                                                
                                                
                                                11,343
                                                
                                                
                                                
                                                13,853
                                                
                                                
                                                
                                                3,099
                                                
                                                
                                                
                                                11,343
                                                
                                                
                                                
                                                16,952
                                                
                                                
                                                
                                                28,295
                                                
                                                
                                                
                                                (2,476
                                                )
                                                
                                                1986
                                                
                                                02/12/03
                                                
                                                
                                                40Crossroads
      Square
                                                FL
                                                
                                                
                                                -
                                                
                                                
                                                
                                                3,592
                                                
                                                
                                                
                                                4,401
                                                
                                                
                                                
                                                5,785
                                                
                                                
                                                
                                                3,592
                                                
                                                
                                                
                                                10,186
                                                
                                                
                                                
                                                13,778
                                                
                                                
                                                
                                                (1,592
                                                )
                                                
                                                1973
                                                
                                                08/15/00
                                                
                                                
                                                40Cutler
      Ridge
                                                FL
                                                
                                                
                                                -
                                                
                                                
                                                
                                                1,064
                                                
                                                
                                                
                                                326
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                1,064
                                                
                                                
                                                
                                                326
                                                
                                                
                                                
                                                1,390
                                                
                                                
                                                
                                                (25
                                                )
                                                
                                                1972
                                                
                                                09/14/06
                                                
                                                
                                                40CVS
      Plaza
                                                FL
                                                
                                                
                                                -
                                                
                                                
                                                
                                                995
                                                
                                                
                                                
                                                3,090
                                                
                                                
                                                
                                                1,386
                                                
                                                
                                                
                                                995
                                                
                                                
                                                
                                                4,476
                                                
                                                
                                                
                                                5,471
                                                
                                                
                                                
                                                (533
                                                )
                                                
                                                2004
                                                
                                                07/23/99
                                                
                                                
                                                40Daniel
      Village
                                                GA
                                                
                                                
                                                3,679
                                                
                                                
                                                
                                                3,439
                                                
                                                
                                                
                                                8,352
                                                
                                                
                                                
                                                47
                                                
                                                
                                                
                                                3,439
                                                
                                                
                                                
                                                8,399
                                                
                                                
                                                
                                                11,837
                                                
                                                
                                                
                                                (1,256
                                                )
                                                
                                                1956
                                                
                                                02/12/03
                                                
                                                
                                                40Dolphin
      Village
                                                FL
                                                
                                                
                                                -
                                                
                                                
                                                
                                                17,404
                                                
                                                
                                                
                                                10,098
                                                
                                                
                                                
                                                409
                                                
                                                
                                                
                                                17,607
                                                
                                                
                                                
                                                10,304
                                                
                                                
                                                
                                                27,911
                                                
                                                
                                                
                                                (1,036
                                                )
                                                
                                                1967
                                                
                                                01/04/06
                                                
                                                
                                                40Douglas
      Commons
                                                GA
                                                
                                                
                                                4,383
                                                
                                                
                                                
                                                3,681
                                                
                                                
                                                
                                                7,588
                                                
                                                
                                                
                                                75
                                                
                                                
                                                
                                                3,681
                                                
                                                
                                                
                                                7,663
                                                
                                                
                                                
                                                11,344
                                                
                                                
                                                
                                                (1,152
                                                )
                                                
                                                1988
                                                
                                                02/12/03
                                                
                                                
                                                40El
      Novillo
                                                FL
                                                
                                                
                                                -
                                                
                                                
                                                
                                                250
                                                
                                                
                                                
                                                1,000
                                                
                                                
                                                
                                                151
                                                
                                                
                                                
                                                250
                                                
                                                
                                                
                                                1,151
                                                
                                                
                                                
                                                1,401
                                                
                                                
                                                
                                                (418
                                                )
                                                
                                                1970
                                                
                                                04/30/98
                                                
                                                
                                                40Elmwood
      Oaks
                                                LA
                                                
                                                
                                                -
                                                
                                                
                                                
                                                4,088
                                                
                                                
                                                
                                                8,221
                                                
                                                
                                                
                                                622
                                                
                                                
                                                
                                                4,088
                                                
                                                
                                                
                                                8,843
                                                
                                                
                                                
                                                12,931
                                                
                                                
                                                
                                                (1,393
                                                )
                                                
                                                1989
                                                
                                                02/12/03
                                                
                                                
                                                40Fairview
      Oaks
                                                GA
                                                
                                                
                                                4,148
                                                
                                                
                                                
                                                1,929
                                                
                                                
                                                
                                                6,187
                                                
                                                
                                                
                                                1,628
                                                
                                                
                                                
                                                1,929
                                                
                                                
                                                
                                                7,815
                                                
                                                
                                                
                                                9,744
                                                
                                                
                                                
                                                (1,142
                                                )
                                                
                                                1997
                                                
                                                02/12/03
                                                
                                                
                                                40Forest
      Village
                                                FL
                                                
                                                
                                                4,209
                                                
                                                
                                                
                                                4,997
                                                
                                                
                                                
                                                3,206
                                                
                                                
                                                
                                                738
                                                
                                                
                                                
                                                3,397
                                                
                                                
                                                
                                                5,544
                                                
                                                
                                                
                                                8,941
                                                
                                                
                                                
                                                (1,170
                                                )
                                                
                                                2000
                                                
                                                01/28/99
                                                
                                                
                                                40Ft.
      Caroline
                                                FL
                                                
                                                
                                                -
                                                
                                                
                                                
                                                938
                                                
                                                
                                                
                                                2,800
                                                
                                                
                                                
                                                448
                                                
                                                
                                                
                                                738
                                                
                                                
                                                
                                                3,449
                                                
                                                
                                                
                                                4,186
                                                
                                                
                                                
                                                (1,235
                                                )
                                                
                                                1985
                                                
                                                01/24/94
                                                
                                                
                                                40Galleria
                                                NC
                                                
                                                
                                                -
                                                
                                                
                                                
                                                1,493
                                                
                                                
                                                
                                                3,875
                                                
                                                
                                                
                                                864
                                                
                                                
                                                
                                                1,493
                                                
                                                
                                                
                                                4,739
                                                
                                                
                                                
                                                6,232
                                                
                                                
                                                
                                                (682
                                                )
                                                
                                                1986
                                                
                                                02/12/03
                                                
                                                
                                                40Grand
      Marche
                                                LA
                                                
                                                
                                                -
                                                
                                                
                                                
                                                304
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                304
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                304
                                                
                                                
                                                
                                                -
                                                
                                                
                                                1969
                                                
                                                02/12/03
                                                
                                                
                                                40Grassland
      Crossing
                                                GA
                                                
                                                
                                                5,058
                                                
                                                
                                                
                                                3,656
                                                
                                                
                                                
                                                7,885
                                                
                                                
                                                
                                                512
                                                
                                                
                                                
                                                3,656
                                                
                                                
                                                
                                                8,397
                                                
                                                
                                                
                                                12,053
                                                
                                                
                                                
                                                (1,220
                                                )
                                                
                                                1996
                                                
                                                02/12/03
                                                
                                                
                                                40Greenwood
                                                FL
                                                
                                                
                                                -
                                                
                                                
                                                
                                                4,117
                                                
                                                
                                                
                                                10,295
                                                
                                                
                                                
                                                2,828
                                                
                                                
                                                
                                                4,117
                                                
                                                
                                                
                                                13,123
                                                
                                                
                                                
                                                17,240
                                                
                                                
                                                
                                                (1,918
                                                )
                                                
                                                1982
                                                
                                                02/12/03
                                                
                                                
                                                40Hairston
      Center
                                                GA
                                                
                                                
                                                -
                                                
                                                
                                                
                                                1,644
                                                
                                                
                                                
                                                642
                                                
                                                
                                                
                                                1
                                                
                                                
                                                
                                                1,644
                                                
                                                
                                                
                                                643
                                                
                                                
                                                
                                                2,288
                                                
                                                
                                                
                                                (56
                                                )
                                                
                                                2000
                                                
                                                08/25/05
                                                
                                                
                                                40Hamilton
      Ridge
                                                GA
                                                
                                                
                                                -
                                                
                                                
                                                
                                                5,612
                                                
                                                
                                                
                                                7,167
                                                
                                                
                                                
                                                1,460
                                                
                                                
                                                
                                                5,612
                                                
                                                
                                                
                                                8,627
                                                
                                                
                                                
                                                14,239
                                                
                                                
                                                
                                                (1,341
                                                )
                                                
                                                2002
                                                
                                                12/18/03
                                                
                                                
                                                40Hampton
      Oaks
                                                GA
                                                
                                                
                                                -
                                                
                                                
                                                
                                                835
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                5,636
                                                
                                                
                                                
                                                835
                                                
                                                
                                                
                                                5,636
                                                
                                                
                                                
                                                6,471
                                                
                                                
                                                
                                                -
                                                
                                                
                                                n/a
                                                
                                                11/30/06Homestead
      Gas Station
                                                FL
                                                
                                                
                                                -
                                                
                                                
                                                
                                                1,170
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                93
                                                
                                                
                                                
                                                1,170
                                                
                                                
                                                
                                                93
                                                
                                                
                                                
                                                1,263
                                                
                                                
                                                
                                                (1
                                                )
                                                
                                                1959
                                                
                                                11/08/04
                                                
                                                
                                                40Hunters
      Creek
                                                FL
                                                
                                                
                                                -
                                                
                                                
                                                
                                                1,562
                                                
                                                
                                                
                                                5,445
                                                
                                                
                                                
                                                2,283
                                                
                                                
                                                
                                                1,562
                                                
                                                
                                                
                                                7,728
                                                
                                                
                                                
                                                9,290
                                                
                                                
                                                
                                                (1,040
                                                )
                                                
                                                1998
                                                
                                                09/23/03
                                                
                                                
                                                40Kirkman
      Shoppes
                                                FL
                                                
                                                
                                                9,056
                                                
                                                
                                                
                                                3,222
                                                
                                                
                                                
                                                9,714
                                                
                                                
                                                
                                                251
                                                
                                                
                                                
                                                3,222
                                                
                                                
                                                
                                                9,965
                                                
                                                
                                                
                                                13,188
                                                
                                                
                                                
                                                (2,538
                                                )
                                                
                                                1973
                                                
                                                08/15/00
                                                
                                                
                                                33Lago
      Mar
                                                FL
                                                
                                                
                                                -
                                                
                                                
                                                
                                                4,216
                                                
                                                
                                                
                                                6,609
                                                
                                                
                                                
                                                1,118
                                                
                                                
                                                
                                                4,216
                                                
                                                
                                                
                                                7,727
                                                
                                                
                                                
                                                11,943
                                                
                                                
                                                
                                                (1,116
                                                )
                                                
                                                1995
                                                
                                                02/12/03
                                                
                                                
                                                40Lake
      Mary
                                                FL
                                                
                                                
                                                23,074
                                                
                                                
                                                
                                                7,092
                                                
                                                
                                                
                                                13,878
                                                
                                                
                                                
                                                6,710
                                                
                                                
                                                
                                                7,092
                                                
                                                
                                                
                                                20,588
                                                
                                                
                                                
                                                27,680
                                                
                                                
                                                
                                                (5,848
                                                )
                                                
                                                1988
                                                
                                                11/09/95
                                                
                                                
                                                40Lake
      St. Charles
                                                FL
                                                
                                                
                                                3,638
                                                
                                                
                                                
                                                1,497
                                                
                                                
                                                
                                                3,768
                                                
                                                
                                                
                                                15
                                                
                                                
                                                
                                                1,497
                                                
                                                
                                                
                                                3,783
                                                
                                                
                                                
                                                5,279
                                                
                                                
                                                
                                                (700
                                                )
                                                
                                                1999
                                                
                                                09/21/01
                                                
                                                
                                                40Lancaster
      Plaza
                                                SC
                                                
                                                
                                                -
                                                
                                                
                                                
                                                317
                                                
                                                
                                                
                                                153
                                                
                                                
                                                
                                                (36
                                                )
                                                
                                                
                                                317
                                                
                                                
                                                
                                                117
                                                
                                                
                                                
                                                434
                                                
                                                
                                                
                                                (34
                                                )
                                                
                                                1971
                                                
                                                02/12/03
                                                
                                                
                                                40Lancaster
      Shopping Center
                                                SC
                                                
                                                
                                                -
                                                
                                                
                                                
                                                280
                                                
                                                
                                                
                                                120
                                                
                                                
                                                
                                                8
                                                
                                                
                                                
                                                280
                                                
                                                
                                                
                                                128
                                                
                                                
                                                
                                                408
                                                
                                                
                                                
                                                (21
                                                )
                                                
                                                1963
                                                
                                                02/12/03
                                                
                                                
                                                40Lantana
      Village
                                                FL
                                                
                                                
                                                -
                                                
                                                
                                                
                                                1,350
                                                
                                                
                                                
                                                7,978
                                                
                                                
                                                
                                                895
                                                
                                                
                                                
                                                1,350
                                                
                                                
                                                
                                                8,873
                                                
                                                
                                                
                                                10,223
                                                
                                                
                                                
                                                (2,278
                                                )
                                                
                                                1976
                                                
                                                01/06/98
                                                
                                                
                                                40Laurel
      Walk Apartments
                                                NC
                                                
                                                
                                                -
                                                
                                                
                                                
                                                2,065
                                                
                                                
                                                
                                                4,491
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                2,065
                                                
                                                
                                                
                                                4,491
                                                
                                                
                                                
                                                6,555
                                                
                                                
                                                
                                                (346
                                                )
                                                
                                                1985
                                                
                                                10/31/05
                                                
                                                
                                                40Lutz
      Lake
                                                FL
                                                
                                                
                                                7,420
                                                
                                                
                                                
                                                3,619
                                                
                                                
                                                
                                                5,199
                                                
                                                
                                                
                                                1,163
                                                
                                                
                                                
                                                3,619
                                                
                                                
                                                
                                                6,362
                                                
                                                
                                                
                                                9,982
                                                
                                                
                                                
                                                (940
                                                )
                                                
                                                2002
                                                
                                                02/12/03
                                                
                                                
                                                40Mableton
      Crossing
                                                GA
                                                
                                                
                                                3,611
                                                
                                                
                                                
                                                3,331
                                                
                                                
                                                
                                                6,403
                                                
                                                
                                                
                                                266
                                                
                                                
                                                
                                                3,331
                                                
                                                
                                                
                                                6,669
                                                
                                                
                                                
                                                10,001
                                                
                                                
                                                
                                                (991
                                                )
                                                
                                                1997
                                                
                                                02/12/03
                                                
                                                
                                                40Macland
      Pointe
                                                GA
                                                
                                                
                                                5,498
                                                
                                                
                                                
                                                3,462
                                                
                                                
                                                
                                                4,814
                                                
                                                
                                                
                                                20
                                                
                                                
                                                
                                                3,462
                                                
                                                
                                                
                                                4,834
                                                
                                                
                                                
                                                8,296
                                                
                                                
                                                
                                                (748
                                                )
                                                
                                                1992
                                                
                                                02/12/03
                                                
                                                
                                                40Madison
      Centre
                                                AL
                                                
                                                
                                                3,366
                                                
                                                
                                                
                                                1,424
                                                
                                                
                                                
                                                5,187
                                                
                                                
                                                
                                                53
                                                
                                                
                                                
                                                1,424
                                                
                                                
                                                
                                                5,240
                                                
                                                
                                                
                                                6,664
                                                
                                                
                                                
                                                (1,144
                                                )
                                                
                                                1997
                                                
                                                02/12/03
                                                
                                                
                                                40Mandarin
      Landing
                                                FL
                                                
                                                
                                                -
                                                
                                                
                                                
                                                4,443
                                                
                                                
                                                
                                                4,747
                                                
                                                
                                                
                                                9,228
                                                
                                                
                                                
                                                4,443
                                                
                                                
                                                
                                                13,975
                                                
                                                
                                                
                                                18,418
                                                
                                                
                                                
                                                (1,847
                                                )
                                                
                                                1976
                                                
                                                12/10/99
                                                
                                                
                                                40
 
 S-2
 Table of Contents
 
 INITIAL
      COST TO COMPANY
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  GROSS
      AMOUNTS AT WHICHCapitalized
                                                  
                                                  
                                                  CARRIED
      AT CLOSE OF PERIODSubsequent
      to
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  Dep-Encum-
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  Building
      &
                                                  
                                                  
                                                  Acquisition
      or
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  Building
      &
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  Accumulated
                                                  
                                                  
                                                  Date
      of
                                                  
                                                  Date
                                                  
                                                  reciableProperty
                                                  Location
                                                  
                                                  brances
                                                  
                                                  
                                                  Land
                                                  
                                                  
                                                  Improvements
                                                  
                                                  
                                                  Improvements
                                                  
                                                  
                                                  Land
                                                  
                                                  
                                                  Improvements
                                                  
                                                  
                                                  Total
                                                  
                                                  
                                                  Depreciation
                                                  
                                                  
                                                  Construction
                                                  
                                                  Acquired
                                                  
                                                  Life
      (yrs)Mandarin
      Mini
                                                  FL
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  362
                                                  
                                                  
                                                  
                                                  1,148
                                                  
                                                  
                                                  
                                                  318
                                                  
                                                  
                                                  
                                                  362
                                                  
                                                  
                                                  
                                                  1,466
                                                  
                                                  
                                                  
                                                  1,828
                                                  
                                                  
                                                  
                                                  (538
                                                  )
                                                  
                                                  1982
                                                  
                                                  05/10/94
                                                  
                                                  
                                                  40Marco
      Town Center
                                                  FL
                                                  
                                                  
                                                  7,846
                                                  
                                                  
                                                  
                                                  3,872
                                                  
                                                  
                                                  
                                                  11,966
                                                  
                                                  
                                                  
                                                  721
                                                  
                                                  
                                                  
                                                  3,872
                                                  
                                                  
                                                  
                                                  12,687
                                                  
                                                  
                                                  
                                                  16,559
                                                  
                                                  
                                                  
                                                  (2,829
                                                  )
                                                  
                                                  2001
                                                  
                                                  08/15/00
                                                  
                                                  
                                                  37Mariners
      Crossing
                                                  FL
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  1,262
                                                  
                                                  
                                                  
                                                  4,447
                                                  
                                                  
                                                  
                                                  2,524
                                                  
                                                  
                                                  
                                                  1,511
                                                  
                                                  
                                                  
                                                  6,723
                                                  
                                                  
                                                  
                                                  8,233
                                                  
                                                  
                                                  
                                                  (1,052
                                                  )
                                                  
                                                  1989
                                                  
                                                  09/12/00
                                                  
                                                  
                                                  40Market
      Place
                                                  GA
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  1,667
                                                  
                                                  
                                                  
                                                  4,078
                                                  
                                                  
                                                  
                                                  185
                                                  
                                                  
                                                  
                                                  1,667
                                                  
                                                  
                                                  
                                                  4,263
                                                  
                                                  
                                                  
                                                  5,930
                                                  
                                                  
                                                  
                                                  (654
                                                  )
                                                  
                                                  1976
                                                  
                                                  02/12/03
                                                  
                                                  
                                                  40McAlphin
      Square
                                                  GA
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  3,536
                                                  
                                                  
                                                  
                                                  6,963
                                                  
                                                  
                                                  
                                                  403
                                                  
                                                  
                                                  
                                                  3,536
                                                  
                                                  
                                                  
                                                  7,366
                                                  
                                                  
                                                  
                                                  10,902
                                                  
                                                  
                                                  
                                                  (1,236
                                                  )
                                                  
                                                  1979
                                                  
                                                  02/12/03
                                                  
                                                  
                                                  40Meadows
                                                  FL
                                                  
                                                  
                                                  5,837
                                                  
                                                  
                                                  
                                                  2,304
                                                  
                                                  
                                                  
                                                  6,670
                                                  
                                                  
                                                  
                                                  99
                                                  
                                                  
                                                  
                                                  2,304
                                                  
                                                  
                                                  
                                                  6,769
                                                  
                                                  
                                                  
                                                  9,073
                                                  
                                                  
                                                  
                                                  (1,200
                                                  )
                                                  
                                                  1997
                                                  
                                                  05/23/02
                                                  
                                                  
                                                  40Medical
      & Merchants
                                                  FL
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  10,323
                                                  
                                                  
                                                  
                                                  12,174
                                                  
                                                  
                                                  
                                                  (19
                                                  )
                                                  
                                                  
                                                  10,323
                                                  
                                                  
                                                  
                                                  12,155
                                                  
                                                  
                                                  
                                                  22,477
                                                  
                                                  
                                                  
                                                  (1,542
                                                  )
                                                  
                                                  1993
                                                  
                                                  05/27/04
                                                  
                                                  
                                                  40Middle
      Beach Shopping Center
                                                  FL
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  2,195
                                                  
                                                  
                                                  
                                                  5,542
                                                  
                                                  
                                                  
                                                  5
                                                  
                                                  
                                                  
                                                  2,195
                                                  
                                                  
                                                  
                                                  5,547
                                                  
                                                  
                                                  
                                                  7,742
                                                  
                                                  
                                                  
                                                  (706
                                                  )
                                                  
                                                  1994
                                                  
                                                  12/23/03
                                                  
                                                  
                                                  40Midpoint
      Center
                                                  FL
                                                  
                                                  
                                                  6,381
                                                  
                                                  
                                                  
                                                  5,417
                                                  
                                                  
                                                  
                                                  6,705
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  5,417
                                                  
                                                  
                                                  
                                                  6,705
                                                  
                                                  
                                                  
                                                  12,121
                                                  
                                                  
                                                  
                                                  (380
                                                  )
                                                  
                                                  2002
                                                  
                                                  12/08/06
                                                  
                                                  
                                                  40Milestone
      Plaza
                                                  SC
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  11,576
                                                  
                                                  
                                                  
                                                  9,031
                                                  
                                                  
                                                  
                                                  20
                                                  
                                                  
                                                  
                                                  11,576
                                                  
                                                  
                                                  
                                                  9,051
                                                  
                                                  
                                                  
                                                  20,627
                                                  
                                                  
                                                  
                                                  (536
                                                  )
                                                  
                                                  1995
                                                  
                                                  08/25/06
                                                  
                                                  
                                                  40North
      Village Center
                                                  SC
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  2,860
                                                  
                                                  
                                                  
                                                  2,774
                                                  
                                                  
                                                  
                                                  23
                                                  
                                                  
                                                  
                                                  2,860
                                                  
                                                  
                                                  
                                                  2,797
                                                  
                                                  
                                                  
                                                  5,657
                                                  
                                                  
                                                  
                                                  (729
                                                  )
                                                  
                                                  1984
                                                  
                                                  02/12/03
                                                  
                                                  
                                                  40NSB
      Regional
                                                  FL
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  3,217
                                                  
                                                  
                                                  
                                                  8,896
                                                  
                                                  
                                                  
                                                  89
                                                  
                                                  
                                                  
                                                  3,217
                                                  
                                                  
                                                  
                                                  8,985
                                                  
                                                  
                                                  
                                                  12,202
                                                  
                                                  
                                                  
                                                  (1,369
                                                  )
                                                  
                                                  1987
                                                  
                                                  02/12/03
                                                  
                                                  
                                                  40Oak
      Hill
                                                  FL
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  690
                                                  
                                                  
                                                  
                                                  2,760
                                                  
                                                  
                                                  
                                                  650
                                                  
                                                  
                                                  
                                                  690
                                                  
                                                  
                                                  
                                                  3,410
                                                  
                                                  
                                                  
                                                  4,100
                                                  
                                                  
                                                  
                                                  (988
                                                  )
                                                  
                                                  1985
                                                  
                                                  12/07/95
                                                  
                                                  
                                                  40Oakbrook
                                                  FL
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  7,706
                                                  
                                                  
                                                  
                                                  16,079
                                                  
                                                  
                                                  
                                                  3,692
                                                  
                                                  
                                                  
                                                  7,706
                                                  
                                                  
                                                  
                                                  19,771
                                                  
                                                  
                                                  
                                                  27,477
                                                  
                                                  
                                                  
                                                  (3,499
                                                  )
                                                  
                                                  1974
                                                  
                                                  08/15/00
                                                  
                                                  
                                                  40Oaktree
      Plaza
                                                  FL
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  1,589
                                                  
                                                  
                                                  
                                                  2,275
                                                  
                                                  
                                                  
                                                  193
                                                  
                                                  
                                                  
                                                  1,589
                                                  
                                                  
                                                  
                                                  2,468
                                                  
                                                  
                                                  
                                                  4,057
                                                  
                                                  
                                                  
                                                  (173
                                                  )
                                                  
                                                  1985
                                                  
                                                  10/16/06
                                                  
                                                  
                                                  40Old
      Kings Commons
                                                  FL
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  1,420
                                                  
                                                  
                                                  
                                                  5,005
                                                  
                                                  
                                                  
                                                  391
                                                  
                                                  
                                                  
                                                  1,420
                                                  
                                                  
                                                  
                                                  5,396
                                                  
                                                  
                                                  
                                                  6,816
                                                  
                                                  
                                                  
                                                  (804
                                                  )
                                                  
                                                  1988
                                                  
                                                  02/12/03
                                                  
                                                  
                                                  40Park
      Promenade
                                                  FL
                                                  
                                                  
                                                  5,935
                                                  
                                                  
                                                  
                                                  2,670
                                                  
                                                  
                                                  
                                                  6,444
                                                  
                                                  
                                                  
                                                  507
                                                  
                                                  
                                                  
                                                  2,670
                                                  
                                                  
                                                  
                                                  6,951
                                                  
                                                  
                                                  
                                                  9,621
                                                  
                                                  
                                                  
                                                  (2,113
                                                  )
                                                  
                                                  1987
                                                  
                                                  01/31/99
                                                  
                                                  
                                                  40Parkwest
      Crossing
                                                  NC
                                                  
                                                  
                                                  4,467
                                                  
                                                  
                                                  
                                                  1,788
                                                  
                                                  
                                                  
                                                  6,727
                                                  
                                                  
                                                  
                                                  158
                                                  
                                                  
                                                  
                                                  1,788
                                                  
                                                  
                                                  
                                                  6,885
                                                  
                                                  
                                                  
                                                  8,674
                                                  
                                                  
                                                  
                                                  (1,060
                                                  )
                                                  
                                                  1990
                                                  
                                                  02/12/03
                                                  
                                                  
                                                  40Paulding
      Commons
                                                  GA
                                                  
                                                  
                                                  5,714
                                                  
                                                  
                                                  
                                                  3,848
                                                  
                                                  
                                                  
                                                  11,985
                                                  
                                                  
                                                  
                                                  85
                                                  
                                                  
                                                  
                                                  3,848
                                                  
                                                  
                                                  
                                                  12,070
                                                  
                                                  
                                                  
                                                  15,917
                                                  
                                                  
                                                  
                                                  (1,807
                                                  )
                                                  
                                                  1991
                                                  
                                                  02/12/03
                                                  
                                                  
                                                  40Pavilion
                                                  FL
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  10,827
                                                  
                                                  
                                                  
                                                  11,299
                                                  
                                                  
                                                  
                                                  2,657
                                                  
                                                  
                                                  
                                                  10,827
                                                  
                                                  
                                                  
                                                  13,956
                                                  
                                                  
                                                  
                                                  24,783
                                                  
                                                  
                                                  
                                                  (1,880
                                                  )
                                                  
                                                  1982
                                                  
                                                  02/04/04
                                                  
                                                  
                                                  40Piedmont
      Peachtree Crossing
                                                  GA
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  34,338
                                                  
                                                  
                                                  
                                                  17,992
                                                  
                                                  
                                                  
                                                  626
                                                  
                                                  
                                                  
                                                  34,338
                                                  
                                                  
                                                  
                                                  18,618
                                                  
                                                  
                                                  
                                                  52,956
                                                  
                                                  
                                                  
                                                  (1,546
                                                  )
                                                  
                                                  1978
                                                  
                                                  03/06/06
                                                  
                                                  
                                                  40Pine
      Island
                                                  FL
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  8,557
                                                  
                                                  
                                                  
                                                  12,860
                                                  
                                                  
                                                  
                                                  219
                                                  
                                                  
                                                  
                                                  8,557
                                                  
                                                  
                                                  
                                                  13,079
                                                  
                                                  
                                                  
                                                  21,636
                                                  
                                                  
                                                  
                                                  (3,155
                                                  )
                                                  
                                                  1983
                                                  
                                                  08/26/99
                                                  
                                                  
                                                  40Pine
      Ridge Square
                                                  FL
                                                  
                                                  
                                                  6,880
                                                  
                                                  
                                                  
                                                  6,528
                                                  
                                                  
                                                  
                                                  9,850
                                                  
                                                  
                                                  
                                                  2,520
                                                  
                                                  
                                                  
                                                  6,528
                                                  
                                                  
                                                  
                                                  12,370
                                                  
                                                  
                                                  
                                                  18,898
                                                  
                                                  
                                                  
                                                  (1,873
                                                  )
                                                  
                                                  1986
                                                  
                                                  02/12/03
                                                  
                                                  
                                                  40Plaza
      Acadienne
                                                  LA
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  2,108
                                                  
                                                  
                                                  
                                                  168
                                                  
                                                  
                                                  
                                                  19
                                                  
                                                  
                                                  
                                                  2,108
                                                  
                                                  
                                                  
                                                  187
                                                  
                                                  
                                                  
                                                  2,295
                                                  
                                                  
                                                  
                                                  (29
                                                  )
                                                  
                                                  1980
                                                  
                                                  02/12/03
                                                  
                                                  
                                                  40Plaza
      Alegre
                                                  FL
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  2,011
                                                  
                                                  
                                                  
                                                  9,191
                                                  
                                                  
                                                  
                                                  367
                                                  
                                                  
                                                  
                                                  2,011
                                                  
                                                  
                                                  
                                                  9,558
                                                  
                                                  
                                                  
                                                  11,569
                                                  
                                                  
                                                  
                                                  (2,145
                                                  )
                                                  
                                                  2003
                                                  
                                                  02/26/02
                                                  
                                                  
                                                  40Point
      Royale
                                                  FL
                                                  
                                                  
                                                  3,068
                                                  
                                                  
                                                  
                                                  3,720
                                                  
                                                  
                                                  
                                                  5,005
                                                  
                                                  
                                                  
                                                  1,665
                                                  
                                                  
                                                  
                                                  3,720
                                                  
                                                  
                                                  
                                                  6,670
                                                  
                                                  
                                                  
                                                  10,390
                                                  
                                                  
                                                  
                                                  (2,172
                                                  )
                                                  
                                                  1970
                                                  
                                                  07/27/95
                                                  
                                                  
                                                  40Powers
      Ferry Plaza
                                                  GA
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  3,236
                                                  
                                                  
                                                  
                                                  5,227
                                                  
                                                  
                                                  
                                                  486
                                                  
                                                  
                                                  
                                                  3,236
                                                  
                                                  
                                                  
                                                  5,713
                                                  
                                                  
                                                  
                                                  8,949
                                                  
                                                  
                                                  
                                                  (1,038
                                                  )
                                                  
                                                  1979
                                                  
                                                  02/12/03
                                                  
                                                  
                                                  40Prosperity
      Centre
                                                  FL
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  4,597
                                                  
                                                  
                                                  
                                                  13,838
                                                  
                                                  
                                                  
                                                  731
                                                  
                                                  
                                                  
                                                  4,597
                                                  
                                                  
                                                  
                                                  14,569
                                                  
                                                  
                                                  
                                                  19,166
                                                  
                                                  
                                                  
                                                  (3,225
                                                  )
                                                  
                                                  1993
                                                  
                                                  08/15/00
                                                  
                                                  
                                                  40Providence
      Square
                                                  NC
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  1,112
                                                  
                                                  
                                                  
                                                  2,575
                                                  
                                                  
                                                  
                                                  696
                                                  
                                                  
                                                  
                                                  1,112
                                                  
                                                  
                                                  
                                                  3,271
                                                  
                                                  
                                                  
                                                  4,382
                                                  
                                                  
                                                  
                                                  (514
                                                  )
                                                  
                                                  1973
                                                  
                                                  02/12/03
                                                  
                                                  
                                                  40Quincy
      Star Market
                                                  MA
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  6,121
                                                  
                                                  
                                                  
                                                  18,444
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  6,121
                                                  
                                                  
                                                  
                                                  18,444
                                                  
                                                  
                                                  
                                                  24,566
                                                  
                                                  
                                                  
                                                  (2,108
                                                  )
                                                  
                                                  1965
                                                  
                                                  10/07/04
                                                  
                                                  
                                                  40Regency
      Crossing
                                                  FL
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  1,982
                                                  
                                                  
                                                  
                                                  6,524
                                                  
                                                  
                                                  
                                                  99
                                                  
                                                  
                                                  
                                                  1,982
                                                  
                                                  
                                                  
                                                  6,623
                                                  
                                                  
                                                  
                                                  8,605
                                                  
                                                  
                                                  
                                                  (992
                                                  )
                                                  
                                                  1986
                                                  
                                                  02/12/03
                                                  
                                                  
                                                  40Ridge
      Plaza
                                                  FL
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  3,905
                                                  
                                                  
                                                  
                                                  7,450
                                                  
                                                  
                                                  
                                                  1,393
                                                  
                                                  
                                                  
                                                  3,905
                                                  
                                                  
                                                  
                                                  8,843
                                                  
                                                  
                                                  
                                                  12,748
                                                  
                                                  
                                                  
                                                  (2,167
                                                  )
                                                  
                                                  1984
                                                  
                                                  08/15/00
                                                  
                                                  
                                                  40River
      Green (land)
                                                  GA
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  2,587
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  794
                                                  
                                                  
                                                  
                                                  2,587
                                                  
                                                  
                                                  
                                                  794
                                                  
                                                  
                                                  
                                                  3,381
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  n/a
                                                  
                                                  09/27/05Riverside
      Square
                                                  FL
                                                  
                                                  
                                                  7,058
                                                  
                                                  
                                                  
                                                  6,423
                                                  
                                                  
                                                  
                                                  8,260
                                                  
                                                  
                                                  
                                                  996
                                                  
                                                  
                                                  
                                                  6,423
                                                  
                                                  
                                                  
                                                  9,256
                                                  
                                                  
                                                  
                                                  15,680
                                                  
                                                  
                                                  
                                                  (1,474
                                                  )
                                                  
                                                  1987
                                                  
                                                  02/12/03
                                                  
                                                  
                                                  40Riverview
      Shopping Center
                                                  NC
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  2,277
                                                  
                                                  
                                                  
                                                  4,745
                                                  
                                                  
                                                  
                                                  1,874
                                                  
                                                  
                                                  
                                                  2,202
                                                  
                                                  
                                                  
                                                  6,694
                                                  
                                                  
                                                  
                                                  8,896
                                                  
                                                  
                                                  
                                                  (899
                                                  )
                                                  
                                                  1973
                                                  
                                                  02/12/03
                                                  
                                                  
                                                  40Ross
      Plaza
                                                  FL
                                                  
                                                  
                                                  6,316
                                                  
                                                  
                                                  
                                                  2,115
                                                  
                                                  
                                                  
                                                  6,346
                                                  
                                                  
                                                  
                                                  545
                                                  
                                                  
                                                  
                                                  2,115
                                                  
                                                  
                                                  
                                                  6,891
                                                  
                                                  
                                                  
                                                  9,006
                                                  
                                                  
                                                  
                                                  (1,669
                                                  )
                                                  
                                                  1984
                                                  
                                                  08/15/00
                                                  
                                                  
                                                  33Ryanwood
      Square
                                                  FL
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  2,281
                                                  
                                                  
                                                  
                                                  6,880
                                                  
                                                  
                                                  
                                                  672
                                                  
                                                  
                                                  
                                                  2,281
                                                  
                                                  
                                                  
                                                  7,552
                                                  
                                                  
                                                  
                                                  9,833
                                                  
                                                  
                                                  
                                                  (1,352
                                                  )
                                                  
                                                  1987
                                                  
                                                  08/15/00
                                                  
                                                  
                                                  40Salerno
      Village Square
                                                  FL
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  2,596
                                                  
                                                  
                                                  
                                                  1,511
                                                  
                                                  
                                                  
                                                  4,937
                                                  
                                                  
                                                  
                                                  2,291
                                                  
                                                  
                                                  
                                                  6,753
                                                  
                                                  
                                                  
                                                  9,044
                                                  
                                                  
                                                  
                                                  (850
                                                  )
                                                  
                                                  1987
                                                  
                                                  05/06/02
                                                  
                                                  
                                                  40Salisbury
      Marketplace
                                                  NC
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  3,118
                                                  
                                                  
                                                  
                                                  5,099
                                                  
                                                  
                                                  
                                                  373
                                                  
                                                  
                                                  
                                                  3,118
                                                  
                                                  
                                                  
                                                  5,472
                                                  
                                                  
                                                  
                                                  8,591
                                                  
                                                  
                                                  
                                                  (835
                                                  )
                                                  
                                                  1987
                                                  
                                                  02/12/03
                                                  
                                                  
                                                  40Sawgrass
      Promenade
                                                  FL
                                                  
                                                  
                                                  7,782
                                                  
                                                  
                                                  
                                                  3,280
                                                  
                                                  
                                                  
                                                  9,351
                                                  
                                                  
                                                  
                                                  924
                                                  
                                                  
                                                  
                                                  3,280
                                                  
                                                  
                                                  
                                                  10,275
                                                  
                                                  
                                                  
                                                  13,555
                                                  
                                                  
                                                  
                                                  (2,725
                                                  )
                                                  
                                                  1982
                                                  
                                                  08/15/00
                                                  
                                                  
                                                  40Seven
      Hills
                                                  FL
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  2,167
                                                  
                                                  
                                                  
                                                  5,167
                                                  
                                                  
                                                  
                                                  621
                                                  
                                                  
                                                  
                                                  2,167
                                                  
                                                  
                                                  
                                                  5,788
                                                  
                                                  
                                                  
                                                  7,955
                                                  
                                                  
                                                  
                                                  (748
                                                  )
                                                  
                                                  1991
                                                  
                                                  02/12/03
                                                  
                                                  
                                                  40Shaw's
      @ Medford
                                                  MA
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  7,750
                                                  
                                                  
                                                  
                                                  11,390
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  7,750
                                                  
                                                  
                                                  
                                                  11,390
                                                  
                                                  
                                                  
                                                  19,140
                                                  
                                                  
                                                  
                                                  (1,296
                                                  )
                                                  
                                                  1995
                                                  
                                                  10/07/04
                                                  
                                                  
                                                  40Shaw's
      @ Plymouth
                                                  MA
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  4,917
                                                  
                                                  
                                                  
                                                  12,199
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  4,917
                                                  
                                                  
                                                  
                                                  12,199
                                                  
                                                  
                                                  
                                                  17,115
                                                  
                                                  
                                                  
                                                  (1,387
                                                  )
                                                  
                                                  1993
                                                  
                                                  10/07/04
                                                  
                                                  
                                                  40Sheridan
                                                  FL
                                                  
                                                  
                                                  64,876
                                                  
                                                  
                                                  
                                                  38,888
                                                  
                                                  
                                                  
                                                  36,241
                                                  
                                                  
                                                  
                                                  4,314
                                                  
                                                  
                                                  
                                                  38,888
                                                  
                                                  
                                                  
                                                  40,555
                                                  
                                                  
                                                  
                                                  79,442
                                                  
                                                  
                                                  
                                                  (5,488
                                                  )
                                                  
                                                  1973
                                                  
                                                  07/14/03
                                                  
                                                  
                                                  40Sherwood
      South
                                                  LA
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  833
                                                  
                                                  
                                                  
                                                  2,412
                                                  
                                                  
                                                  
                                                  927
                                                  
                                                  
                                                  
                                                  746
                                                  
                                                  
                                                  
                                                  3,426
                                                  
                                                  
                                                  
                                                  4,172
                                                  
                                                  
                                                  
                                                  (684
                                                  )
                                                  
                                                  1972
                                                  
                                                  02/12/03
                                                  
                                                  
                                                  40Shipyard
      Plaza
                                                  MS
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  1,337
                                                  
                                                  
                                                  
                                                  1,653
                                                  
                                                  
                                                  
                                                  424
                                                  
                                                  
                                                  
                                                  1,337
                                                  
                                                  
                                                  
                                                  2,077
                                                  
                                                  
                                                  
                                                  3,414
                                                  
                                                  
                                                  
                                                  (370
                                                  )
                                                  
                                                  1987
                                                  
                                                  02/12/03
                                                  
                                                  
                                                  40Shoppes
      at Andros Isle
                                                  FL
                                                  
                                                  
                                                  6,086
                                                  
                                                  
                                                  
                                                  6,009
                                                  
                                                  
                                                  
                                                  7,832
                                                  
                                                  
                                                  
                                                  83
                                                  
                                                  
                                                  
                                                  6,009
                                                  
                                                  
                                                  
                                                  7,915
                                                  
                                                  
                                                  
                                                  13,924
                                                  
                                                  
                                                  
                                                  (453
                                                  )
                                                  
                                                  2000
                                                  
                                                  12/08/06
                                                  
                                                  
                                                  40Shoppes
      at Silverlakes
                                                  FL
                                                  
                                                  
                                                  1,875
                                                  
                                                  
                                                  
                                                  10,306
                                                  
                                                  
                                                  
                                                  10,131
                                                  
                                                  
                                                  
                                                  1,874
                                                  
                                                  
                                                  
                                                  10,306
                                                  
                                                  
                                                  
                                                  12,005
                                                  
                                                  
                                                  
                                                  22,311
                                                  
                                                  
                                                  
                                                  (1,785
                                                  )
                                                  
                                                  1995
                                                  
                                                  02/12/03
                                                  
                                                  
                                                  40Shoppes
      of Eastwood
                                                  FL
                                                  
                                                  
                                                  5,555
                                                  
                                                  
                                                  
                                                  1,688
                                                  
                                                  
                                                  
                                                  6,976
                                                  
                                                  
                                                  
                                                  76
                                                  
                                                  
                                                  
                                                  1,688
                                                  
                                                  
                                                  
                                                  7,052
                                                  
                                                  
                                                  
                                                  8,740
                                                  
                                                  
                                                  
                                                  (1,192
                                                  )
                                                  
                                                  1999
                                                  
                                                  06/28/02
                                                  
                                                  
                                                  40Shoppes
      of Jonathan's Landing
                                                  FL
                                                  
                                                  
                                                  2,706
                                                  
                                                  
                                                  
                                                  1,146
                                                  
                                                  
                                                  
                                                  3,442
                                                  
                                                  
                                                  
                                                  51
                                                  
                                                  
                                                  
                                                  1,146
                                                  
                                                  
                                                  
                                                  3,493
                                                  
                                                  
                                                  
                                                  4,639
                                                  
                                                  
                                                  
                                                  (772
                                                  )
                                                  
                                                  1997
                                                  
                                                  08/15/00
                                                  
                                                  
                                                  37Shoppes
      of North Port
                                                  FL
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  1,452
                                                  
                                                  
                                                  
                                                  5,807
                                                  
                                                  
                                                  
                                                  179
                                                  
                                                  
                                                  
                                                  1,452
                                                  
                                                  
                                                  
                                                  5,986
                                                  
                                                  
                                                  
                                                  7,438
                                                  
                                                  
                                                  
                                                  (1,242
                                                  )
                                                  
                                                  1991
                                                  
                                                  12/05/00
                                                  
                                                  
                                                  40Shops
      at Skylake
                                                  FL
                                                  
                                                  
                                                  12,504
                                                  
                                                  
                                                  
                                                  15,226
                                                  
                                                  
                                                  
                                                  7,206
                                                  
                                                  
                                                  
                                                  23,678
                                                  
                                                  
                                                  
                                                  15,226
                                                  
                                                  
                                                  
                                                  30,884
                                                  
                                                  
                                                  
                                                  46,110
                                                  
                                                  
                                                  
                                                  (5,101
                                                  )
                                                  
                                                  1999
                                                  
                                                  08/19/97
                                                  
                                                  
                                                  40Shops
      of Huntcrest
                                                  GA
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  5,706
                                                  
                                                  
                                                  
                                                  7,641
                                                  
                                                  
                                                  
                                                  9
                                                  
                                                  
                                                  
                                                  5,706
                                                  
                                                  
                                                  
                                                  7,650
                                                  
                                                  
                                                  
                                                  13,356
                                                  
                                                  
                                                  
                                                  (1,224
                                                  )
                                                  
                                                  2003
                                                  
                                                  02/12/03
                                                  
                                                  
                                                  40Siegen
      Village
                                                  LA
                                                  
                                                  
                                                  3,718
                                                  
                                                  
                                                  
                                                  4,329
                                                  
                                                  
                                                  
                                                  9,691
                                                  
                                                  
                                                  
                                                  40
                                                  
                                                  
                                                  
                                                  4,329
                                                  
                                                  
                                                  
                                                  9,731
                                                  
                                                  
                                                  
                                                  14,060
                                                  
                                                  
                                                  
                                                  (1,804
                                                  )
                                                  
                                                  1988
                                                  
                                                  02/12/03
                                                  
                                                  
                                                  40Smyth
      Valley Crossing
                                                  VA
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  2,537
                                                  
                                                  
                                                  
                                                  3,890
                                                  
                                                  
                                                  
                                                  16
                                                  
                                                  
                                                  
                                                  2,537
                                                  
                                                  
                                                  
                                                  3,906
                                                  
                                                  
                                                  
                                                  6,443
                                                  
                                                  
                                                  
                                                  (576
                                                  )
                                                  
                                                  1989
                                                  
                                                  02/12/03
                                                  
                                                  
                                                  40South
      Beach
                                                  FL
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  9,545
                                                  
                                                  
                                                  
                                                  19,228
                                                  
                                                  
                                                  
                                                  1,951
                                                  
                                                  
                                                  
                                                  9,545
                                                  
                                                  
                                                  
                                                  21,179
                                                  
                                                  
                                                  
                                                  30,724
                                                  
                                                  
                                                  
                                                  (3,256
                                                  )
                                                  
                                                  1990
                                                  
                                                  02/12/03
                                                  
                                                  
                                                  40South
      Point
                                                  FL
                                                  
                                                  
                                                  7,821
                                                  
                                                  
                                                  
                                                  7,142
                                                  
                                                  
                                                  
                                                  7,098
                                                  
                                                  
                                                  
                                                  23
                                                  
                                                  
                                                  
                                                  7,142
                                                  
                                                  
                                                  
                                                  7,121
                                                  
                                                  
                                                  
                                                  14,263
                                                  
                                                  
                                                  
                                                  (408
                                                  )
                                                  
                                                  2003
                                                  
                                                  12/08/06
                                                  
                                                  
                                                  40Spalding
      Village
                                                  GA
                                                  
                                                  
                                                  8,722
                                                  
                                                  
                                                  
                                                  3,384
                                                  
                                                  
                                                  
                                                  5,005
                                                  
                                                  
                                                  
                                                  1,298
                                                  
                                                  
                                                  
                                                  4,709
                                                  
                                                  
                                                  
                                                  4,978
                                                  
                                                  
                                                  
                                                  9,687
                                                  
                                                  
                                                  
                                                  (996
                                                  )
                                                  
                                                  1989
                                                  
                                                  02/12/03
                                                  
                                                  
                                                  40St.
      Lucie Land
                                                  FL
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  7,728
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  1,740
                                                  
                                                  
                                                  
                                                  7,728
                                                  
                                                  
                                                  
                                                  1,740
                                                  
                                                  
                                                  
                                                  9,467
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  n/a
                                                  
                                                  11/27/06Stanley
      Market Place
                                                  NC
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  396
                                                  
                                                  
                                                  
                                                  669
                                                  
                                                  
                                                  
                                                  4,932
                                                  
                                                  
                                                  
                                                  396
                                                  
                                                  
                                                  
                                                  5,601
                                                  
                                                  
                                                  
                                                  5,997
                                                  
                                                  
                                                  
                                                  (345
                                                  )
                                                  
                                                  1980
                                                  
                                                  02/12/03
                                                  
                                                  
                                                  40Star's
      @ Cambridge
                                                  MA
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  11,358
                                                  
                                                  
                                                  
                                                  13,854
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  11,358
                                                  
                                                  
                                                  
                                                  13,854
                                                  
                                                  
                                                  
                                                  25,212
                                                  
                                                  
                                                  
                                                  (1,578
                                                  )
                                                  
                                                  1953
                                                  
                                                  10/07/04
                                                  
                                                  
                                                  40Summerlin
      Square
                                                  FL
                                                  
                                                  
                                                  2,311
                                                  
                                                  
                                                  
                                                  2,187
                                                  
                                                  
                                                  
                                                  7,989
                                                  
                                                  
                                                  
                                                  338
                                                  
                                                  
                                                  
                                                  2,187
                                                  
                                                  
                                                  
                                                  8,327
                                                  
                                                  
                                                  
                                                  10,514
                                                  
                                                  
                                                  
                                                  (2,241
                                                  )
                                                  
                                                  1986
                                                  
                                                  06/10/98
                                                  
                                                  
                                                  40Sun
      Point
                                                  FL
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  4,025
                                                  
                                                  
                                                  
                                                  4,228
                                                  
                                                  
                                                  
                                                  1,435
                                                  
                                                  
                                                  
                                                  4,025
                                                  
                                                  
                                                  
                                                  5,663
                                                  
                                                  
                                                  
                                                  9,688
                                                  
                                                  
                                                  
                                                  (366
                                                  )
                                                  
                                                  1984
                                                  
                                                  05/05/06
                                                  
                                                  
                                                  40Sunlake-Equity
      One LLC
                                                  FL
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  16,095
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  19,340
                                                  
                                                  
                                                  
                                                  10,706
                                                  
                                                  
                                                  
                                                  24,729
                                                  
                                                  
                                                  
                                                  35,435
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  n/a
                                                  
                                                  02/01/05Tamarac
      Town Square
                                                  FL
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  4,742
                                                  
                                                  
                                                  
                                                  5,610
                                                  
                                                  
                                                  
                                                  478
                                                  
                                                  
                                                  
                                                  4,742
                                                  
                                                  
                                                  
                                                  6,088
                                                  
                                                  
                                                  
                                                  10,830
                                                  
                                                  
                                                  
                                                  (1,020
                                                  )
                                                  
                                                  1987
                                                  
                                                  02/12/03
                                                  
                                                  
                                                  40Tarpon
      Heights
                                                  LA
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  1,133
                                                  
                                                  
                                                  
                                                  631
                                                  
                                                  
                                                  
                                                  167
                                                  
                                                  
                                                  
                                                  1,133
                                                  
                                                  
                                                  
                                                  798
                                                  
                                                  
                                                  
                                                  1,931
                                                  
                                                  
                                                  
                                                  (107
                                                  )
                                                  
                                                  1982
                                                  
                                                  02/12/03
                                                  
                                                  
                                                  40The
      Boulevard
                                                  LA
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  1,360
                                                  
                                                  
                                                  
                                                  1,675
                                                  
                                                  
                                                  
                                                  385
                                                  
                                                  
                                                  
                                                  1,360
                                                  
                                                  
                                                  
                                                  2,060
                                                  
                                                  
                                                  
                                                  3,420
                                                  
                                                  
                                                  
                                                  (525
                                                  )
                                                  
                                                  1976
                                                  
                                                  02/12/03
                                                  
                                                  
                                                  40The
      Crossing
                                                  LA
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  1,591
                                                  
                                                  
                                                  
                                                  3,650
                                                  
                                                  
                                                  
                                                  729
                                                  
                                                  
                                                  
                                                  1,591
                                                  
                                                  
                                                  
                                                  4,379
                                                  
                                                  
                                                  
                                                  5,969
                                                  
                                                  
                                                  
                                                  (637
                                                  )
                                                  
                                                  1988
                                                  
                                                  02/12/03
                                                  
                                                  
                                                  40
  S-3
 Table of Contents
 INITIAL
      COST TO COMPANY
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  GROSS
      AMOUNTS AT WHICHCapitalized
                                                                  
                                                                  
                                                                  CARRIED
      AT CLOSE OF PERIODSubsequent
      to
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  Dep-Encum-
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  Building
      &
                                                                  
                                                                  
                                                                  Acquisition
      or
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  Building
      &
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  Accumulated
                                                                  
                                                                  
                                                                  Date
      of
                                                                  
                                                                  Date
                                                                  
                                                                  reciableProperty
                                                                  Location
                                                                  
                                                                  brances
                                                                  
                                                                  
                                                                  Land
                                                                  
                                                                  
                                                                  Improvements
                                                                  
                                                                  
                                                                  Improvements
                                                                  
                                                                  
                                                                  Land
                                                                  
                                                                  
                                                                  Improvements
                                                                  
                                                                  
                                                                  Total
                                                                  
                                                                  
                                                                  Depreciation
                                                                  
                                                                  
                                                                  Construction
                                                                  
                                                                  Acquired
                                                                  
                                                                  Life
      (yrs)The
      Plaza at St. Lucie West
                                                                  FL
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  790
                                                                  
                                                                  
                                                                  
                                                                  3,082
                                                                  
                                                                  
                                                                  
                                                                  996
                                                                  
                                                                  
                                                                  
                                                                  790
                                                                  
                                                                  
                                                                  
                                                                  4,078
                                                                  
                                                                  
                                                                  
                                                                  4,869
                                                                  
                                                                  
                                                                  
                                                                  (287
                                                                  )
                                                                  
                                                                  
                                                                  
                                                                  08/15/00
                                                                  
                                                                  
                                                                  40Thomasville
      Commons
                                                                  NC
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  1,212
                                                                  
                                                                  
                                                                  
                                                                  4,567
                                                                  
                                                                  
                                                                  
                                                                  1,779
                                                                  
                                                                  
                                                                  
                                                                  1,212
                                                                  
                                                                  
                                                                  
                                                                  6,346
                                                                  
                                                                  
                                                                  
                                                                  7,557
                                                                  
                                                                  
                                                                  
                                                                  (920
                                                                  )
                                                                  
                                                                  1991
                                                                  
                                                                  02/12/03
                                                                  
                                                                  
                                                                  40Town
      & Country
                                                                  FL
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  2,499
                                                                  
                                                                  
                                                                  
                                                                  4,397
                                                                  
                                                                  
                                                                  
                                                                  431
                                                                  
                                                                  
                                                                  
                                                                  2,503
                                                                  
                                                                  
                                                                  
                                                                  4,824
                                                                  
                                                                  
                                                                  
                                                                  7,327
                                                                  
                                                                  
                                                                  
                                                                  (694
                                                                  )
                                                                  
                                                                  1993
                                                                  
                                                                  02/12/03
                                                                  
                                                                  
                                                                  40Treasure
      Coast Plaza
                                                                  FL
                                                                  
                                                                  
                                                                  3,202
                                                                  
                                                                  
                                                                  
                                                                  1,359
                                                                  
                                                                  
                                                                  
                                                                  9,728
                                                                  
                                                                  
                                                                  
                                                                  2,122
                                                                  
                                                                  
                                                                  
                                                                  1,359
                                                                  
                                                                  
                                                                  
                                                                  11,850
                                                                  
                                                                  
                                                                  
                                                                  13,209
                                                                  
                                                                  
                                                                  
                                                                  (1,600
                                                                  )
                                                                  
                                                                  1983
                                                                  
                                                                  02/12/03
                                                                  
                                                                  
                                                                  40Unigold
                                                                  FL
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  4,304
                                                                  
                                                                  
                                                                  
                                                                  6,413
                                                                  
                                                                  
                                                                  
                                                                  1,451
                                                                  
                                                                  
                                                                  
                                                                  4,304
                                                                  
                                                                  
                                                                  
                                                                  7,864
                                                                  
                                                                  
                                                                  
                                                                  12,168
                                                                  
                                                                  
                                                                  
                                                                  (1,353
                                                                  )
                                                                  
                                                                  1987
                                                                  
                                                                  02/12/03
                                                                  
                                                                  
                                                                  40Union
      City Commons (land)
                                                                  GA
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  8,084
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  812
                                                                  
                                                                  
                                                                  
                                                                  8,084
                                                                  
                                                                  
                                                                  
                                                                  812
                                                                  
                                                                  
                                                                  
                                                                  8,896
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  n/a
                                                                  
                                                                  06/22/06Venice
      Plaza
                                                                  FL
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  2,755
                                                                  
                                                                  
                                                                  
                                                                  450
                                                                  
                                                                  
                                                                  
                                                                  3,286
                                                                  
                                                                  
                                                                  
                                                                  2,755
                                                                  
                                                                  
                                                                  
                                                                  3,736
                                                                  
                                                                  
                                                                  
                                                                  6,491
                                                                  
                                                                  
                                                                  
                                                                  (921
                                                                  )
                                                                  
                                                                  1971
                                                                  
                                                                  02/12/03
                                                                  
                                                                  
                                                                  40Venice
      Shopping Center
                                                                  FL
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  3,857
                                                                  
                                                                  
                                                                  
                                                                  2,562
                                                                  
                                                                  
                                                                  
                                                                  158
                                                                  
                                                                  
                                                                  
                                                                  3,857
                                                                  
                                                                  
                                                                  
                                                                  2,720
                                                                  
                                                                  
                                                                  
                                                                  6,577
                                                                  
                                                                  
                                                                  
                                                                  (406
                                                                  )
                                                                  
                                                                  1968
                                                                  
                                                                  03/31/04
                                                                  
                                                                  
                                                                  40Village
      at Northshore
                                                                  LA
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  1,034
                                                                  
                                                                  
                                                                  
                                                                  10,128
                                                                  
                                                                  
                                                                  
                                                                  (4
                                                                  )
                                                                  
                                                                  
                                                                  1,034
                                                                  
                                                                  
                                                                  
                                                                  10,124
                                                                  
                                                                  
                                                                  
                                                                  11,157
                                                                  
                                                                  
                                                                  
                                                                  (1,481
                                                                  )
                                                                  
                                                                  1988
                                                                  
                                                                  02/12/03
                                                                  
                                                                  
                                                                  40Walden
      Woods
                                                                  FL
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  950
                                                                  
                                                                  
                                                                  
                                                                  3,780
                                                                  
                                                                  
                                                                  
                                                                  1,355
                                                                  
                                                                  
                                                                  
                                                                  950
                                                                  
                                                                  
                                                                  
                                                                  5,135
                                                                  
                                                                  
                                                                  
                                                                  6,085
                                                                  
                                                                  
                                                                  
                                                                  (2,029
                                                                  )
                                                                  
                                                                  1985
                                                                  
                                                                  01/01/99
                                                                  
                                                                  
                                                                  40Wal-Mart
      Stores, Inc.
                                                                  LA
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  2,688
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  2,688
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  2,688
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  1985
                                                                  
                                                                  02/12/03
                                                                  
                                                                  
                                                                  40Walton
      Plaza
                                                                  GA
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  869
                                                                  
                                                                  
                                                                  
                                                                  2,827
                                                                  
                                                                  
                                                                  
                                                                  31
                                                                  
                                                                  
                                                                  
                                                                  869
                                                                  
                                                                  
                                                                  
                                                                  2,858
                                                                  
                                                                  
                                                                  
                                                                  3,727
                                                                  
                                                                  
                                                                  
                                                                  (423
                                                                  )
                                                                  
                                                                  1990
                                                                  
                                                                  02/12/03
                                                                  
                                                                  
                                                                  40Waterstone
                                                                  FL
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  1,820
                                                                  
                                                                  
                                                                  
                                                                  8,030
                                                                  
                                                                  
                                                                  
                                                                  457
                                                                  
                                                                  
                                                                  
                                                                  1,820
                                                                  
                                                                  
                                                                  
                                                                  8,487
                                                                  
                                                                  
                                                                  
                                                                  10,307
                                                                  
                                                                  
                                                                  
                                                                  (745
                                                                  )
                                                                  
                                                                  2005
                                                                  
                                                                  04/10/92
                                                                  
                                                                  
                                                                  40Webster
      Plaza
                                                                  MA
                                                                  
                                                                  
                                                                  7,826
                                                                  
                                                                  
                                                                  
                                                                  5,033
                                                                  
                                                                  
                                                                  
                                                                  14,465
                                                                  
                                                                  
                                                                  
                                                                  1,087
                                                                  
                                                                  
                                                                  
                                                                  5,033
                                                                  
                                                                  
                                                                  
                                                                  15,552
                                                                  
                                                                  
                                                                  
                                                                  20,585
                                                                  
                                                                  
                                                                  
                                                                  (950
                                                                  )
                                                                  
                                                                  1963
                                                                  
                                                                  10/12/06
                                                                  
                                                                  
                                                                  40Wesley
      Chapel Crossing
                                                                  GA
                                                                  
                                                                  
                                                                  2,935
                                                                  
                                                                  
                                                                  
                                                                  6,389
                                                                  
                                                                  
                                                                  
                                                                  4,311
                                                                  
                                                                  
                                                                  
                                                                  833
                                                                  
                                                                  
                                                                  
                                                                  6,389
                                                                  
                                                                  
                                                                  
                                                                  5,144
                                                                  
                                                                  
                                                                  
                                                                  11,533
                                                                  
                                                                  
                                                                  
                                                                  (760
                                                                  )
                                                                  
                                                                  1989
                                                                  
                                                                  02/12/03
                                                                  
                                                                  
                                                                  40West
      Lakes Plaza
                                                                  FL
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  2,141
                                                                  
                                                                  
                                                                  
                                                                  5,789
                                                                  
                                                                  
                                                                  
                                                                  405
                                                                  
                                                                  
                                                                  
                                                                  2,141
                                                                  
                                                                  
                                                                  
                                                                  6,194
                                                                  
                                                                  
                                                                  
                                                                  8,335
                                                                  
                                                                  
                                                                  
                                                                  (1,978
                                                                  )
                                                                  
                                                                  1984
                                                                  
                                                                  11/06/96
                                                                  
                                                                  
                                                                  40West
      Roxbury Shaw's Plaza
                                                                  MA
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  9,223
                                                                  
                                                                  
                                                                  
                                                                  13,588
                                                                  
                                                                  
                                                                  
                                                                  1,506
                                                                  
                                                                  
                                                                  
                                                                  9,207
                                                                  
                                                                  
                                                                  
                                                                  15,110
                                                                  
                                                                  
                                                                  
                                                                  24,317
                                                                  
                                                                  
                                                                  
                                                                  (1,658
                                                                  )
                                                                  
                                                                  1973
                                                                  
                                                                  10/07/04
                                                                  
                                                                  
                                                                  40Westport
      Outparcels
                                                                  FL
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  1,347
                                                                  
                                                                  
                                                                  
                                                                  1,010
                                                                  
                                                                  
                                                                  
                                                                  2
                                                                  
                                                                  
                                                                  
                                                                  1,347
                                                                  
                                                                  
                                                                  
                                                                  1,012
                                                                  
                                                                  
                                                                  
                                                                  2,359
                                                                  
                                                                  
                                                                  
                                                                  (61
                                                                  )
                                                                  
                                                                  1990
                                                                  
                                                                  09/14/06
                                                                  
                                                                  
                                                                  40Westport
      Plaza
                                                                  FL
                                                                  
                                                                  
                                                                  4,456
                                                                  
                                                                  
                                                                  
                                                                  3,609
                                                                  
                                                                  
                                                                  
                                                                  3,446
                                                                  
                                                                  
                                                                  
                                                                  761
                                                                  
                                                                  
                                                                  
                                                                  4,180
                                                                  
                                                                  
                                                                  
                                                                  3,637
                                                                  
                                                                  
                                                                  
                                                                  7,816
                                                                  
                                                                  
                                                                  
                                                                  (391
                                                                  )
                                                                  
                                                                  2002
                                                                  
                                                                  12/17/04
                                                                  
                                                                  
                                                                  40Westridge
                                                                  GA
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  1,266
                                                                  
                                                                  
                                                                  
                                                                  4,390
                                                                  
                                                                  
                                                                  
                                                                  2,024
                                                                  
                                                                  
                                                                  
                                                                  1,696
                                                                  
                                                                  
                                                                  
                                                                  5,984
                                                                  
                                                                  
                                                                  
                                                                  7,680
                                                                  
                                                                  
                                                                  
                                                                  (388
                                                                  )
                                                                  
                                                                  2003
                                                                  
                                                                  02/12/03
                                                                  
                                                                  
                                                                  40Whole
      Foods @ Swampscott
                                                                  MA
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  5,139
                                                                  
                                                                  
                                                                  
                                                                  6,539
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  5,139
                                                                  
                                                                  
                                                                  
                                                                  6,539
                                                                  
                                                                  
                                                                  
                                                                  11,677
                                                                  
                                                                  
                                                                  
                                                                  (741
                                                                  )
                                                                  
                                                                  1967
                                                                  
                                                                  10/07/04
                                                                  
                                                                  
                                                                  40Williamsburg
      @ Dunwoody
                                                                  GA
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  4,347
                                                                  
                                                                  
                                                                  
                                                                  3,615
                                                                  
                                                                  
                                                                  
                                                                  751
                                                                  
                                                                  
                                                                  
                                                                  4,347
                                                                  
                                                                  
                                                                  
                                                                  4,366
                                                                  
                                                                  
                                                                  
                                                                  8,713
                                                                  
                                                                  
                                                                  
                                                                  (647
                                                                  )
                                                                  
                                                                  1983
                                                                  
                                                                  02/12/03
                                                                  
                                                                  
                                                                  40Willowdale
      Shopping Center
                                                                  NC
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  2,073
                                                                  
                                                                  
                                                                  
                                                                  6,499
                                                                  
                                                                  
                                                                  
                                                                  1,004
                                                                  
                                                                  
                                                                  
                                                                  2,073
                                                                  
                                                                  
                                                                  
                                                                  7,503
                                                                  
                                                                  
                                                                  
                                                                  9,576
                                                                  
                                                                  
                                                                  
                                                                  (1,322
                                                                  )
                                                                  
                                                                  1986
                                                                  
                                                                  02/12/03
                                                                  
                                                                  
                                                                  40Winchester
      Plaza
                                                                  AL
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  2,221
                                                                  
                                                                  
                                                                  
                                                                  8,784
                                                                  
                                                                  
                                                                  
                                                                  22
                                                                  
                                                                  
                                                                  
                                                                  2,221
                                                                  
                                                                  
                                                                  
                                                                  8,805
                                                                  
                                                                  
                                                                  
                                                                  11,026
                                                                  
                                                                  
                                                                  
                                                                  (462
                                                                  )
                                                                  
                                                                  2006
                                                                  
                                                                  02/28/05
                                                                  
                                                                  
                                                                  40Windy
      Hill
                                                                  SC
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  941
                                                                  
                                                                  
                                                                  
                                                                  1,906
                                                                  
                                                                  
                                                                  
                                                                  659
                                                                  
                                                                  
                                                                  
                                                                  987
                                                                  
                                                                  
                                                                  
                                                                  2,518
                                                                  
                                                                  
                                                                  
                                                                  3,506
                                                                  
                                                                  
                                                                  
                                                                  (268
                                                                  )
                                                                  
                                                                  1968
                                                                  
                                                                  04/08/04
                                                                  
                                                                  
                                                                  40Woodruff
                                                                  SC
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  2,420
                                                                  
                                                                  
                                                                  
                                                                  5,482
                                                                  
                                                                  
                                                                  
                                                                  345
                                                                  
                                                                  
                                                                  
                                                                  2,420
                                                                  
                                                                  
                                                                  
                                                                  5,826
                                                                  
                                                                  
                                                                  
                                                                  8,246
                                                                  
                                                                  
                                                                  
                                                                  (929
                                                                  )
                                                                  
                                                                  1995
                                                                  
                                                                  12/23/03
                                                                  
                                                                  
                                                                  40Young
      Circle
                                                                  FL
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  13,410
                                                                  
                                                                  
                                                                  
                                                                  8,895
                                                                  
                                                                  
                                                                  
                                                                  35
                                                                  
                                                                  
                                                                  
                                                                  13,409
                                                                  
                                                                  
                                                                  
                                                                  8,933
                                                                  
                                                                  
                                                                  
                                                                  22,340
                                                                  
                                                                  
                                                                  
                                                                  (853
                                                                  )
                                                                  
                                                                  1962
                                                                  
                                                                  05/19/05
                                                                  
                                                                  
                                                                  40Grand
      Total
                                                                  
                                                                  
                                                                  $
                                                                  371,077
                                                                  
                                                                  
                                                                  $
                                                                  706,657
                                                                  
                                                                  
                                                                  $
                                                                  1,068,312
                                                                  
                                                                  
                                                                  $
                                                                  199,915
                                                                  
                                                                  
                                                                  $
                                                                  702,152
                                                                  
                                                                  
                                                                  $
                                                                  1,272,732
                                                                  
                                                                  
                                                                  $
                                                                  1,974,884
                                                                  
                                                                  
                                                                  $
                                                                  (196,151
                                                                  )






S-4
 Table of Contents





SCHEDULE
III


Equity
One, Inc.





REAL
ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION


December
31, 2008





Year
      ended 12/31/08
                                
                                
                                Year
      ended 12/31/07
                                
                                
                                Year
      ended 12/31/06(In
      thousands)Reconciliation of total real
      estate carrying value:Balance at beginning of
      year
                                
                                $
                                2,129,890
                                
                                
                                $
                                2,030,947
                                
                                
                                $
                                2,020,475Additions during
      period:Improvements
                                
                                
                                38,850
                                
                                
                                
                                31,258
                                
                                
                                
                                36,698Acquisitions
                                
                                
                                -
                                
                                
                                
                                139,446
                                
                                
                                
                                270,931Deductions during
      period:Cost of real estate sold/written
      off
                                
                                
                                (193,856
                                )
                                
                                
                                (71,761
                                )
                                
                                
                                (297,157
                                )Balance at end of
      year
                                
                                $
                                1,974,884
                                
                                
                                $
                                2,129,890
                                
                                
                                $
                                2,030,947Reconciliation of accumulated
      depreciation:Balance at beginning of
      year
                                
                                $
                                (172,651
                                )
                                
                                $
                                (144,829
                                )
                                
                                $
                                (132,925
                                )Depreciation
      expense
                                
                                
                                (39,071
                                )
                                
                                
                                (39,921
                                )
                                
                                
                                (37,684
                                )Cost of real estate sold/written
      off
                                
                                
                                15,571
                                
                                
                                
                                12,099
                                
                                
                                
                                25,780Balance at end of
      year
                                
                                $
                                (196,151
                                )
                                
                                $
                                (172,651
                                )
                                
                                $
                                (144,829
                                )Aggregate cost for federal income
      tax purposes
                                
                                $
                                1,436,618
                                
                                
                                $
                                1,887,755
                                
                                
                                $
                                1,999,063





S-5
 Table of Contents





SCHEDULE
IV


Equity
One, Inc.


MORTGAGE
LOANS ON REAL ESTATE


December
31, 2008





Year Ended
December 31,2008
                            
                            
                            2007
                            
                            
                            2006(In
      thousands)Balance
      at beginning of period
                            
                            $
                            -
                            
                            
                            $
                            4,700
                            
                            
                            $
                            10,381Additions
      during period:New
      loans
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -Reductions
      during period:Collection
      of principal
                            
                            
                            -
                            
                            
                            
                            (4,700
                            )
                            
                            
                            (5,681
                            )Balance
      at end of period
                            
                            $
                            -
                            
                            
                            $
                            -
                            
                            
                            $
                            4,700





S-6
 Table of Contents





INDEX TO
EXHIBITS








EXHIBIT NO.
                  DESCRIPTION12.1
                  Ratio
      of Earnings to Fixed Charges21.1
                  List
      of Subsidiaries of the Registrant23.1
                  Consent
      of Ernst & Young LLP31.1
                  Certification
      of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 200231.2
                  Certification
      of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 200232.1
                  Certification
      of Chief Executive Officer and Chief Financial Officer pursuant to 18
      U.S.C. 1350, as created by Section 906 of the Sarbanes-Oxley Act of
      2002






E-1