Rouse Co.'s 3rd quarter beats analysts' forecasts

Key measure rises 11%, to $67.6 million

`business as usual'

November 06, 2001|By Meredith Cohn | Meredith Cohn,SUN STAFF

The Rouse Co. reported yesterday that the company's financial results were better than analysts expected in the third quarter, which ended Sept. 30, just weeks after the terrorist attacks in New York and Washington.

Rouse's funds from operations, a key measure of performance for real estate investment trusts, were up 11 percent.

The Columbia-based company said performance was good in all three operating lines - retail centers; office and other properties; and community development. Rouse is the developer of the planned communities of Columbia and of Summerlin, Nev.

"It has been the most extraordinary and tragic September that our country has ever experienced and certainly had a devastating impact on our economy," Anthony W. Deering, Rouse's chairman and chief executive, said during a conference call with analysts. "The Rouse Co. was basically spared the devastating consequences."

The analysts questioned Deering about the fallout from the attacks and the economic downturn on the quarter and the year. But he said the impacts, while significant, have not been as severe in retail as they've been on hotels. Rouse closed its shopping malls early on Sept. 11 and closed South Street Seaport in Lower Manhattan for one week.

"In the last month, we've gotten back more to business as usual," he said.

Funds from operations, or FFO, were $67.6 million, or 89 cents a diluted share, in the third quarter, compared with $60.7 million, or 79 cents a diluted share, for the corresponding period in 2000.

The consensus analysts' estimate was 86 cents a share for the quarter.

For the first nine months of the year, Rouse's FFO was $203.7 million, or $2.68 a diluted share, compared with $188.2 million, or $2.45 a diluted share, for the year-ago period.

Net earnings were $29.2 million for the third quarter of 2001, compared with $74.1 million in 2000.

For the first nine months of this year, net earnings were $86.4 million, compared with net earnings of $139.3 million a year ago.

Last year's results include a large gain from the transfer of approximately 90 percent of the company's interest in North Star, a regional center in San Antonio, Texas.

Retail centers' net operating income grew by 3 percent in the third quarter, and tenant sales growth and occupancy levels were unchanged.

Office and other properties had a decline in net operating income because of the transfer of several Las Vegas properties to a joint venture in the fourth quarter of 2000.

Net operating income from community development, which is mainly land sales in Columbia and Summerlin, was up 14 percent for the quarter.

Rouse also said yesterday that it expects to convert to UPREIT, or umbrella partnership real estate investment trust, status as early as the first quarter of 2002. Under that structure, owners contribute property and the REIT contributes equity to a partnership. An UPREIT facilitates acquisitions by affording tax benefits to the property owners.

Shares of Rouse closed at $27.46 on the New York Stock Exchange yesterday, up 45 cents.

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