Rouse Co. yesterday credited land sales and the performance of its retail centers and office properties with boosting its second-quarter funds from operations 31 percent above the corresponding period last year.
FFO, a key measure of real estate investment trust performance, was $63.1 million, or 82 cents a diluted share, in the three months that ended June 30.
That compares with $48.3 million, or 61 cents a share, posted for the second quarter of 1999, and exceeded analysts' estimates by 4 cents a share.
The Columbia-based real estate company said all of its lines of business, buoyed by the strong economy, were doing well.
"There was an absence of problems and a surplus of things going on," said Jeffrey H. Donahue, executive vice president and chief financial officer. "We're encouraged that our strategy of pursuing high-quality projects is paying off."
Net earnings were $33.8 million in the second quarter, or 44 cents a share.
David M. Fick, a principal at Legg Mason Wood Walker Inc., who analyzes Rouse, said the company's land sales made the difference in the quarter. Rouse got an unexpected bump of $7.5 million from the sale of a parcel next to Bridgewater Commons mall in New Jersey.
The company beat Fick's estimate by 5 cents a share.
"On the fundamentals, the company continues to perform solidly," he said. "Land sales were very strong for the quarter, and the office properties did well. The second half of the year should be better than the first because that's when the bulk of retail sales come in."
Occupancy at Rouse's malls slipped slightly to 92 percent from 93.5 percent, he noted. But he said he expected it to reach 95 percent by year-end.
Rouse Co. operates more than 250 properties in 22 states that include office, retail, research and development and industrial space. It developed the communities of Columbia and Summerlin, Nev., sites of much of its land sales. Land sales produced $20.4 million of the FFO in the second quarter.
The company has been selling properties to reduce its debt, buy back some common stock and fund development equity.
Four retail expansions were completed during the first half of the year.
Nordstrom also announced plans to open department stores at eight Rouse retail developments in the next three or four years.
The expansions and high occupancy rates contributed to FFO of $36.7 million in the second quarter, up 5 percent from the numbers posted for the year-earlier quarter.
Strong performance from several cities' downtowns and high occupancy boosted FFO for the company's office and other properties to $13.2 million in the second quarter, up 11 percent from the year before.
Rouse shares slipped 6.25 cents $26.3125 yesterday.