The Rouse Co. reported yesterday that income from its retail centers and land sales, as well as lower debt and a decrease in outstanding shares, contributed to a first-quarter increase in funds from operations of close to 12 percent.
The Columbia-based real estate investment trust that developed the city of Columbia and Harborplace reported funds from operations of $70.55 million, or 93 cents a diluted share, in the quarter that ended March 31. That's compared with FFO of $63.14 million, or 82 cents a diluted share, in the first quarter of 2000. FFO is the key gauge of a trust's income.
The company said its three operating lines reported strong results, with its retail-center net operating income at $85.37 million in the first quarter, compared with $81.84 million in the corresponding quarter of 2000. Occupancy averaged 93 percent in the quarter.
Community development land sales produced net operating income of $26.56 million, compared with $19.87 million in 2000. Officials said this result was better than expected and could produce year-end results that outpace those of 2000.
Office and other properties' net operating income dropped in the first quarter to $31.59 million from $33.32 million in the first quarter of 2000. Few major leases were signed.
Total net operating income for the company was $138.44 million, a 5 percent increase over the first quarter of 2000, when it was $132.12 million.
Net earnings were $31.26 million, or 40 cents a diluted share, in the first quarter, compared with $31.37 million, or 40 cents a diluted share, in the corresponding quarter of 2000.
David Fick, a managing director at Legg Mason Wood Walker Inc., said Rouse beat his earnings estimate by 8 cents a share and Wall Street's consensus estimate by 9 cents a share.
"Rouse had a great quarter," he said. "We were heartened by their core mall portfolio and their land sales results. The bulk of that [earnings increase] comes from their land sales performance driven by the very strong Las Vegas economy that continues to outperform almost everyone's expectations."
Said Anthony W. Deering, Rouse's chairman and chief executive officer: "This was an excellent beginning to the new year. Notwithstanding the spate of negative stories about the economy in general and retailing in particular, our centers maintained their high occupancy levels, comparable space sales of merchants increased and re-leasing of existing space produced significantly higher new rents. In addition, land sales in our two major community development projects, Columbia and Summerlin, Nevada, produced record results. We have set the stage for an excellent year in 2001."
Rouse raised cash in the second half of 2000 by contributing its interest in 37 office buildings in Las Vegas and North Star, a regional shopping center in San Antonio, to joint ventures. The company used the proceeds during that time last year to reduce its debt and repurchase shares of company stock, boosting this year's results.
Rouse operates more than 250 office, retail and industrial spaces in 22 states. Its shares closed yesterday at $26.10, down 10 cents.