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Rouse profits grow, so will 2 malls Columbia to get a Lord & Taylor; Vegas space to double

The Rouse Co. said yesterday that its common stock earnings skyrocketed 40 percent in the first quarter, results that will help fuel plans to significantly expand its Fashion Show Mall in Las Vegas and Mall in Columbia projects.

In Columbia, Rouse will add to its department store roster of Hecht's, Sears, Roebuck & Co., J. C. Penney & Co. and a pending Nordstrom, which intends to accelerate construction and open in 1999, a year ahead of schedule.

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When it opens in early 1999, on the site of a Mall in Columbia parking garage, the Lord & Taylor will likely be its second in a local Rouse project. Last month, The Sun reported that the May Department Stores Co., which owns Hecht's, is also considering Owings Mills Mall as a store location.

At Fashion Show Mall, Rouse will add a Bloomingdale's as well as a Lord & Taylor department store, and 350,000 square feet of small retail- and entertainment-oriented space as part of a plan to more than double the mall space and parking there.

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When completed in 2000, the mall on the 2-mile Las Vegas Strip will contain 1.8 million square feet, including anchors Neiman-Marcus, Saks Fifth Avenue and Dillard's.

In all, the Las Vegas and Columbia expansions are part of a $1 billion capital-investment program by Rouse, aimed at enhancing its $4.8 billion portfolio.

Rouse can afford to add to its projects. The Columbia-based real estate concern's earnings before depreciation and deferred taxes of $35.7 million in the three-month period ended March 31 represents the latest in a series of high double-digit surges in its numbers.

"We have made substantial progress over the past two years in (( positioning each of the properties in our retail portfolio to become one of the dominant shopping centers in its market," said Anthony W. Deering, Rouse's chairman and chief executive.

"When combined with the expansions and renovations under way, we are well on our way to achieving our goal of operating a portfolio made up of the highest quality projects by the year 2000. We are particularly pleased to be progressing toward this objective while at the same time continuing to report record financial results."

While pleased with its numbers and expansions, though, Rouse is cautioning stockholders that earnings from its 75 retail projects will likely be flat in 1997, according to a quarterly letter being delivered to shareholders.

The company attributes the anticipated low single-digit increases to construction and renovation activity at more than a dozen centers; retail bankruptcies that continue to erode occupancy levels; the sale of 14 lower-end projects that generated earnings; and flat merchant sales growth, which affects Rouse percentage rental incomes.

"The company is continuing to do what it needs to do to generate good results in the near term and position itself for the long term," said James C. Lucas, a NatWest Securities analyst who follows Rouse.

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"They're getting rid of bottom-tier shopping centers, and they're seeing benefits from the Hughes Corp. acquisition. While their planned renovations will have a short-term impact to earnings, longer term we believe they'll help significantly."

Pub Date: 5/14/97



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