Profit soars 40% for Rouse Higher retail rents, strong land sales fuel third-quarter surge

November 14, 1997|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

Driven by increased retail rents and better-than-expected land sales, Rouse Co. reported yesterday that its third-quarter earnings jumped 40 percent from a year ago to $48.2 million.

The Columbia-based real estate concern also pointed to a rise in earnings before depreciation and deferred taxes for office and mixed-use projects such as the Legg Mason Tower/Gallery at Harborplace, as a primary factor behind the results for the period ended Sept. 30. Revenue in the quarter rose just 3 percent, however, to $234.3 million.

For the first three quarters of 1997, Rouse generated earnings before depreciation and deferred taxes of $130.6 million, also a 40 percent gain from the comparable period a year ago. Revenue for the first nine months of the year climbed 18 percent, to $688.1 million.

"The first nine months of operations were excellent and on target," said Anthony W. Deering, Rouse's chairman and chief executive officer. "Not only will 1997 be an excellent, record-breaking year, but the outlook for 1998 looks just as exciting."

The retail gains, which comprise the largest segment of the company's income, came despite the sale of properties and loss of management fees for projects in Atlanta and Houston, and the disruption caused by the expansion and renovation of projects such as the Mall in Columbia, where Rouse is expanding and adding Nordstrom and Lord & Taylor department stores.

Analysts also attributed the earnings rise to the substantial gains in land sales, office and mixed-use properties and the influence of the Howard Hughes Corp.

"Their land sales were exceptionally strong in the quarter, and that was one of the keys to their ability to outperform Wall Street estimates," said Cathy C. Creswell, a BT Alex. Brown Inc. principal who follows Rouse.

Still, Creswell said Rouse's future earnings potential depends largely on how well the company's retail portfolio performs.

"Retail is a tough business, but they've been putting money into their malls over the past several years, and we expect to see this kind of performance continue," she said.

"We're looking for double-digit increases from their retail portfolio next year as well," she added.

Pub Date: 11/14/97

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