Pace may slow, Rouse CEO warns Despite strong '97 and 1st quarter, Deering tempers optimism; Addresses shareholders; Commercial real estate


While Rouse Co. had a banner 1997 and a record first quarter this year, its chief executive cautioned shareholders at its annual meeting yesterday to not be overly optimistic.

Nonetheless, after a strong year of land sales and new projects, the Columbia-based real estate concern approved paying a dividend of 28 cents, a 12 percent increase over last quarter's dividend of 25 cents, said Anthony W. Deering, Rouse's chairman, president and chief executive officer.

"We really had an outstanding year," said Deering. "The first quarter may be indicative of what we will see for the rest of the year, but we don't think we can maintain that pace."

Deering did tell about 600 shareholders at the company's Columbia headquarters that he predicts double-digit earnings growth for 1998.

Rouse's earnings for 1997 were $167.3 million, compared to $16.3 million in 1996. The surge was credited to the reversal of $124.2 million of deferred income tax liability which is no longer required since the company converted to a real estate investment trust at the start of this year.

The company's retail centers earned $123.1 million before noncash charges in 1997, a 3 percent increase over the $119.3 million the previous year. The company posted the gain despite selling seven retail centers, Deering said.

"We are experiencing more earnings despite fewer properties due to the improved quality of the company's remaining properties," he said. "Disposition, expansion and renovation make up the heart of our strategic plan."

Earnings from land sales in the company's community development operations in Columbia and Summerlin, Nev., amounted to $47.1 million for 1997, the first full year of Summerlin results.

Rouse's portfolio of office, mixed use and other properties earned $26.6 million before noncash charges in 1997, compared to $15.9 million in 1996. The gain included a full year of results from operations of the Howard Hughes Corp., which was acquired in June 1996.

"The Hughes acquisition has proven to be a real winner. The same will be true with Trizec-Hahn," Deering said.

Rouse is completing a $1.1 billion acquisition of seven malls from Toronto-based TrizecHahn Corp., including Towson Town Center.

Fueling the company success is its retail activity, Deering said. "Development is as important as acquisitions," Deering said. "We have to invest in properties to keep them successful. Retail is about change and vitality."

"The Mall in Columbia is a study in how it should be done," he said.

Yesterday, Deering announced another piece of the mall's $150 million expansion and renovation -- the addition of 60,000 square feet of retail space in 1999. A Bibelot bookstore is the first tenant to sign a lease for the new space, said David Tripp, a Rouse spokesman.

In 2000, Rouse plans to consolidate the mall's two food courts, and open new restaurants and a cinema. "It's possible the cinema would be a multiplex, but we don't know yet," Tripp said. "And the size of the cinema will determine how many restaurants we will have." Shares of Rouse closed yesterday at $30.50, up 18.75 cents.

Pub Date: 5/15/98

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