The way Mathias J. DeVito sees it, he did nearly everything a developer should. He stopped building shopping malls in 1987. He didn't load up on undeveloped land in the 1980s. And he doesn't have a lot of empty office buildings. So why is his stock such a punching bag?
Mr. DeVito is chairman of the Rouse Co., the state's best-known developer, founder and developer of Columbia, Md., and the builder of high-profile projects such as Harborplace that have helped stumbling cities all over the country regain their footing.
But Rouse is also at the top of the over-the-counter market's list of stocks most heavily sold short, meaning some on Wall Street are betting on Rouse to stumble.
To the 61-year-old Mr. DeVito, it's simple. His baby is being thrown out with the real estate bath water.
"It's very difficult to elevate the company out of this morass, but we really are in good shape," he insists. "We're different. . . . Five years ago we, as a company, said the country is getting overbuilt. We really began to withdraw from new projects."
Such is Mr. DeVito's job lately, insisting to a skeptical world that Columbia-based Rouse is different, even as real estate developers like Canadian giant Olympia & York founder. Rouse's stock dipped below $13 a share last week, hitting a 52-week low before rebounding to close at $14 Friday. It traded above $21 a share last year.
Those selling the stock short, of course, have other ideas. The "shorts" have sold more than 2.5 million borrowed Rouse shares, betting they can replace the borrowed shares by buying stock after its price falls even more -- allowing them to pocket the difference.
The 2.5 million shares add up to 83 days' worth of normal trading volume in Rouse's stock, a measure of how confident the short sellers are that a rising stock price won't force them to cover their positions in a hurry. The short position in the next-most-shorted stock would take 71 normal trading days to cover, the third one only 37 days.
But as the recession's impact lingers, Rouse is battling to counter conventional wisdom that regional malls populated by full-price stores are ready to get beaten up by lower-cost centers featuring off-price retailers.
Rouse is also fighting the skepticism of those who think the company's finances don't add up -- a debate that soon becomes an arcane fight over accounting procedures.
Indeed, the company sparks two debates among people who follow such things: one about finances and the other about long-term fundamentals.
The financial debate is over whether Rouse is so weighed down by debt payments that it cannot run its existing properties and still make money. Rouse says any financial problem is in short sellers' imagination -- or in their lack of understanding about real estate.
The question about fundamentals is whether malls, which provided about 90 percent of Rouse's operating earnings in recent years, can keep up with smaller shopping centers. Also, will mall tenants, such as department stores and full-price specialty retailers, be able to keep up with faster-growing
discounters such as Wal-Mart and Circuit City? Rouse says yes, but others say it is not a settled question.
The malls "won't go out of business," said Kurt Barnard, a NORTHEAST
Burlington Center Burlington, N.J.
Chapel Square New Haven, Conn.
Cherry Hill Cherry Hill, N.J.
Eastfield Mall Springfield, Mass.
Echelon Mall Voorhees, N.J.
Easton Square Easton, Pa.
Faneuil Hall Marketplace Boston
The Gallery at Market East Philadelphia
Paramus Park Paramus, N.J.
Plymouth Meeting Montgomery County, Pa.
South Street Seaport New York
Staten Island Mall Staten Island, N.Y.
Willowbrook Wayne, N.J.
Woodbridge Center Woodbridge, N.J.
Augusta Mall Augusta, Ga.
The Mall at Columbia Columbia
Columbus Square Columbus, Ga.
The Gallery at Harborplace Baltimore
Governor's Square Tallahassee, Fla.
Harundale Mall Glen Burnie
Jacksonville Landing Jacksonville, Fla.
Midtown Square Charlotte, N.C.
Military Circle Norfolk, Va.
Mondawmin Mall Baltimore
The Shops at National Place Washington, D.C.
Outlet Square Atlanta
Owings Mills Mall Owings Mills
Perimeter Mall Atlanta
South Dekalb Decatur, Ga.
Talbottown Easton, Md.
Tampa Bay Center Tampa, Fla.
Town and Country Center Miami
Underground Atlanta Atlanta
Village of Cross Keys Baltimore
White Marsh Mall White Marsh
Beachwood Place Cleveland
College Square Mall Cedar Falls, Iowa
Franklin Park Toledo, Ohio
The Grand Avenue Milwaukee
Greengate Mall Greensburg, Pa.
Keosippi Mall Keokuk, Iowa
Muscatine Mall Muscatine, Iowa
North Grand Mall Ames, Iowa
Randhurst Center Mount Prospect, Ill.
Ridgedale Center Minnetonka, Minn.
Salem Mall Dayton, Ohio
St. Louse Union Station St. Louis, Mo.
Southland Center Taylor, Mich.
The Mall at St. Matthews Louisville, Ky.
Westland Mall West Burlington, Iowa
SOUTHWEST and WEST
Almeda Mall Houston
The Shops at Arizona Center Phoenix
The Citadel Colorado Springs, Colo.
Fashion Island Newport Beach, Calif.
Highland Mall Austin, Texas
Hulen Mall Fort Worth, Texas
Mall St. Vincent Shreveport, La.
North Star San Antonio, Texas
Northwest Arkansas Mall Fayetteville, Ark.
Northwest Mall Houston
Oakwood New Orleans
Pioneer Place Portland, Ore.
Riverwalk New Orleans
Salem Centre Salem, Ore.
Santa Monica Place Santa Monica, Calif.
The Shops at Tabor Center Denver
Westlake Center Seattle