Despite the Rouse Co.'s unprofitable 1990 and first quarter of 1991,its shareholders appeared content with company management's efforts to cut their losses in a recessionary real estate market.

At the company's annual meeting Thursday, shareholders watched a slide show that included a smiling woman offering two bottles of wine over trays of pasta salad while R. Harwood Beville, executive vice president foroperations, delivered an upbeat assessment of Rouse's upscale shopping mall business.

Although sales are off 1 percent, he said "considering that we are in the midst of a recession, this is a relatively healthy performance."

But that was in light of announcements by Richard McCauley, senior vice president, general counsel and secretary, that sales in the company's 79 retail centers had experienced "the worst January we've had in many years."

"I'm satisfied with the way the top brass has engineered this," said stockholder Gene Turano, who has been attending meetings religiously since he first bought shares in the 1960s.

And despite the fact that his shares were trading at $18 Wednesday,after trading at $26 two years ago, Turano was satisfied with his investment.

"If all my stocks did as well as this one, I'd be in a lot better financial position," he said.

He said he bought his shares at $8.50, and they have since split three times, meaning his original investment has been multiplied by 17.

Another shareholder, Louis Levy of Bethesda, compared the company's position in the stock market to that of a person sprayed by a skunk.

Being in the commercial real estate business puts Rouse in the company of troubled savings and loans, banks and other developers.

"It's kind of like guilt byassociation. People say, 'If you're in this business, you can't be doing well.' But look, they are doing well."

That was evidenced by reports showing revenues increasing, from $498 million in 1989 to $530 million in 1990, continued in the first quarter of 1991 with $134 million, up from $119 million in the first quarter of 1990.

Only four people asked questions after Rouse officers gave their presentation, and none of those questioned the company's strategy during the recession.

Particularly hard-hit by the poor economy last year were land sales in Columbia, which totaled a disappointing $22,991,000 in 1990 compared to $35,359,000 in 1989.

Earnings from those sales suffered an even greater drop, from $12.2 million in 1989 to $6.6 million in 1990.

Those drops contributed to a $1.8 million net loss in 1990, compared to a $9.7 million profit in 1989.

McCauley said the downturn is a direct result of the recession and banks' reluctance tolend money to developers.

The company's first-quarter report, released last week, showed Columbia land sales improving, with $3.5 million in earnings before depreciation and deferred taxes, compared to $1.1 million during the first three months of 1990. The improvement was attributed to commercial land sales near industrial parks in eastern Columbia.

Diagrams and aerial photographs of the four Columbia projects under way hung on the wall of the meeting room.

One of theprojects, the Gateway Commerce Center, involves remodeling the former General Electric Range and Microwave plants for use as distributioncenters and finding a new tenant for GE's existing distribution center. The latter building, the largest in the county at nearly 1 million square feet, will be vacant by the end of 1992.

Leasing or selling the former GE property, which Rouse bought back from the appliancegiant at the beginning of this year, may be difficult in light of company policy outlined at the meeting.

Despite the poor market for commercial real estate, Douglas McGregor, executive vice president for development, said the company would avoid reducing their prices to increase sales volume.

But Gerald Brock, vice president and seniordevelopment director, said the former GE property has a competitive advantage being an existing buildings with unmatched size.

Other Columbia projects under way include the Columbia Restaurant Park, formerly known as the Benson Business Center, which has development commitments from a hotel, a gas station, a fast-food outlet and one restaurant.

Development should start within 30 days on the first segmentof River Hill, Columbia's 10th village, Brock said, and the company is now grading the site for a village shopping center in Hickory Ridge.

One reason the company is not facing larger losses is that in 1988 its executives foresaw a saturation of the commercial real estatemarket, and began cutting back on new development and shifting to renovating and improving existing properties.

Because of that policy, the company is not locked into building speculative retail centers or office buildings as some developers are.

"In short, we're in anexcellent position to show strong increases in earnings when the economy begins to improve," Mathias J. DeVito, chairman and CEO, told the shareholders.

Shareholder Charles Cherry of Calvert County said management is handling the recession well, "much better than a lot ofbanks."

The meeting was conducted in the former Kittamaqundi Room, re-named the Spear Center for late company president Michael Spear.

Company executives and shareholders observed a moment of silence in memory of Spear, who was killed with his wife, Judy, and daughter,Jodi, in the Aug. 24 crash of his private plane.


.. .. .. .. .. .. .. .. .. .. .. .1989 .. .. .. .. .. .. .. .. .. .. 1990

Revenues .. .. .. .. .. .$498.1 million .. .. .. .. .. .. $529.57 million

Net Earnings (Loss) .. .. 9.73 million .. .. .. .. .. .. .(1.81) million

.. .. .. .. .. .. .. .. .. .. .. ...Year thru March 31

.. .. .. .. .. .. .. .. .. .. .. .1990 .. .. .. .. .. .. .. .. .. .. 1991

Revenues .. .. .. .. .. .$119.4 million .. .. .. .. .. . . $134.2 million

Net Loss .. .. .. .. .. .. .3.5 million .. .. .. .. .. .. .. .603 million

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