Rouse's 4th quarter flat after land sales drop

But REIT's earnings set an annual record

dividend is raised 7%Earnings

February 26, 1999|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

The Rouse Co. reported flat earnings yesterday of $50.7 million in the final quarter of 1998, results that dampened an otherwise record financial year at the company.

The Columbia-based real estate investment trust's (REIT) fourth-quarter funds from operations of 66 cents a share represent a 3 percent drop from the comparable period in 1997.

The results also fell short of expectations on Wall Street, which had predicted that Rouse would produce funds from operations -- the key gauge of a REIT's performance -- of 68 cents a share, according to First Call Corp.

Rouse attributed the drop to nonrecurring corporate expenses and diminished land sales, which fell 38 percent in the quarter to $6.3 million. The company noted, however, that land sales for the year rose 3.6 percent to a record $48.8 million.

Revenue in the quarter that ended Dec. 31 rose 5 percent to $255.9 million.

Still, Rouse produced record funds from operations of $204.8 million, $2.69 per share, for the year. Those figures represent increases of 13 percent and 9 percent, respectively, from 1997.

"We had strong performance from each of our three lines of business, while mak- ing progress on our strategic objectives," Anthony W. Deering, Rouse's chairman and chief executive, said of the 1998 performance.

Rouse, which owns and operates more than 300 properties nationwide and is the developer of both Columbia and Summerlin, Nev., generated revenue for all of 1998 of $977.2 million, a 5.3 percent gain from 1997.

The company attributed the annual increase to its $1.6 billion in acquisitions, new project openings and expansions and the sale of nonstrategic assets, such as smaller shopping centers and its two hotels.

Rouse's three primary lines of business -- retail, office and mixed-use projects and land sales -- also all generated record results for the year, boosting its bottom line.

Of the three, earnings from retail projects led the way with a 14 percent gain over 1997.

"We're very pleased with the earnings of the company's core portfolio," said David M. Fick, a senior analyst at Legg Mason Wood Walker Inc. who tracks Rouse. "The primary issue is the potential volatility of earnings because of land sales."

With the strength of its 1998 performance, Rouse raised its quarterly dividend by 7 percent, to 30 cents a share from 28 cents.

"It's a signal of how good we feel about 1999," Deering said.

Deering said he expects Rouse to produce double-digit increases in both funds from operations and earnings per share.

Rouse stock fell 0.187 cents per share to close at $23.625 yesterday.

Pub Date: 2/26/99

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