Record first quarter at Rouse Earnings up 56% as land sales double, rental business thrives

Real estate

May 13, 1998|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

The Rouse Co. reported record results yesterday that were up 56 percent for the first quarter of the year, the result of strong land sales, new projects and increased occupancy and rental rates.

The Columbia-based real estate concern generated operational income for the quarter ended March 31 of $57.5 million, the first three-month reporting period since the company converted to a real estate investment trust at the start of the year.

On a per-share basis, Rouse's funds from operations rose 46 percent, to 76 cents a share, while revenue increased 29 percent, to $272.1 million.

"A 46 percent increase in their earnings per share is tops for companies in the mall sector, and it shows that they've done an excellent job of executing their game plan of redeveloping retail centers and delivering new projects," said David M. Fick, a senior analyst at Legg Mason Wood Walker Inc.

Funds from operations is generally defined as net income plus depreciation and before any extraordinary items. This figure is considered the best measure of a REIT's performance because it is used to calculate dividends.

The company attributed the gains to land sales of $24.6 million, double the comparable period last year; an 11 percent gain in retail operational income, to $29.2 million, and $8 million in earnings from office and mixed-use projects, a 28 percent increase vs. a year ago.

"The success in all areas of our business will allow the company to produce strong overall growth compared to 1997 and set the stage for future growth," said Anthony W. Deering, Rouse's chairman and chief executive officer.

Rouse debuted four new projects or additions in the first quarter, in Atlanta and Augusta, Ga., and Phoenix and a $100 million project, called Oviedo Marketplace, in Orlando, Fla.

Twenty other projects are in the offing, including new Lord & Taylor department stores in White Marsh, Columbia and Owings Mills.

Rouse's retail earnings are likely to get another bump by October, when the REIT completes a $1.1 billion acquisition of seven malls from Toronto-based TrizecHahn Corp., including TowsonTown Center.

To pay the TrizecHahn bill, fund other acquisitions and develop new projects, Rouse announced plans this month to sell as much as $2 billion in new common stock and other securities.

Shares of Rouse closed yesterday at $30.625, down 25 cents.

Pub Date: 5/13/98

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