Rouse Co. reports record year

Operations funds up 23% in 4th quarter

February 23, 2000|By Kristine Henry | Kristine Henry,SUN STAFF

A strong fourth quarter helped bring record year-end results for the Rouse Co.s three operating units, the company said yesterday.

The Columbia-based real estate investment trusts funds from operations (FFO), a key gauge for REITs, rose 23 percent to $62.6 million, or 80 cents a share, in the three months that ended Dec. 31.

We had a strong quarter and strong year in every sector, particularly in the retail area, said Rouse Chairman and Chief Executive Officer Anthony W. Deering.

For the year, FFO was up 15 percent to $235.5 million, or $2.97 per share. Deering said the retail success was particularly heartening for a year in which electronic commerce was all the buzz.

Its very reassuring in an environment of doubters to have a good year, he said.

Retail centers, which make up the bulk of Rouses holdings, had the lowest increase in funds from operations -- 9 percent -- but contributed the most at $46 million.

The largest increase came from land sales operations, which saw its FFO up 51 percent to $9.5 million.

That unit was helped in Columbia by land sales for big-box retailers, restaurants and offices.

In Nevada's planned community of Summerlin, residential sales were the strongest among all such communities in the country, the company said.

High occupancy levels -- 95 percent at year end -- helped drive Rouses office and mixed-use portfolio FFO up 36 percent to $13.9 million.

The company had a great quarter, said David M. Fick, a principal at Legg Mason Wood Walker Inc. who analyzes Rouse. Retail occupancy was 96 percent, up from 91 percent in 1997, and thats a huge accomplishment on their part.

He said Rouses strategy of selling off less-attractive properties and focusing on a high-end portfolio has allowed it to get $403 in sales per square foot -- up from $371 in 1998 -- and well above the industry average of $260.

Analysts had been expecting 81 cents a share for the quarter, but Fick said he isnt concerned about the penny difference.

There are enough fluctuations in their earnings that its very close to what was expected, he said.

Net earnings for the quarter were $51.7 million, up 165 percent. Deering said had it not been for the sale of a shopping center in Santa Monica, Calif., net earnings would have been flat.

For the year, net earnings were up 29 percent to $135.3 million.

Revenue in the quarter was up 3 percent to $263 million; for the year it was up 6 percent to $1 billion.

We expect the strong performance for our operating properties and our community development operations to continue into 2000, Deering said.

Rouse shares closed unchanged at $21.875 yesterday before the release of its earnings report.

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