April 08, 1998
REBUFFED six weeks ago in its effort to acquire New York mall owner Corporate Property Investors Inc., the Rouse Co. didn't wallow in despair. It made an acquisition Monday that similarly positions the company as a national retail real-estate giant.
The Columbia-based firm has purchased seven malls in six states, including Towson Town Center, from TrizecHahn Corp. for $1.1 billion. Rouse has been in an acquisition mode since becoming a real estate investment trust, or REIT, in January. The company, founded as a mortgage corporation in 1939, was one of the last major real estate firms to switch.
REIT status exempts a company from income taxes if it distributes 95 percent of its earnings to shareholders as dividends.
Rouse was outbid for CPI by rival Simon DeBartolo Group Inc. of Indianapolis. Buying CPI would have included advantages missing from the TrizecHahn transaction. CPI is a "paired-share" REIT, meaning it can control non-real estate businesses, such as stores inside malls.
Imagine the potential return to investors if Rouse could also own the stores inside its White Marsh Mall or the Gallery at Harborplace.
But the deal with TrizecHahn has a certain symmetry: The old Trizec Corp. controlled a 22 percent share of Rouse stock in the 1980s.
The TrizecHahn transaction in some ways confirms Rouse's belief in the shopping mall concept.
Some questioned that commitment with the sale of Harundale Mall in Glen Burnie, the enclosed shopping center that was considered innovative when the late James W. Rouse opened it in 1958.
But Harundale -- being redone as a strip shopping center by new owner Manekin Corp. -- suffered from competition from younger malls. Rouse knows people still like clustered, controlled shopping environments with easy parking.
The seven TrizecHahn malls bring the number in Rouse's portfolio to 53. It controls eight shopping centers in the Baltimore area. Forty years after Harundale, Rouse is racing to stay ahead in the fickle business of retail malls.
Pub Date: 4/08/98
