Rouse's funds from operations down in first quarter


Rouse Co. reported yesterday lower funds from operations for the first quarter of the year, mostly because of reduced land sales and a mall deal that was delayed.

The Columbia-based company said its stock was diluted from the sale of 16.7 million additional shares of common stock sold in January to help pay for all or parts of eight premier malls and other assets from Rodamco North America NV. The deal - part of a $5.3 billion acquisition split among three mall companies and expected to close by tomorrow - had been delayed by a shareholder lawsuit forcing Rouse to hold onto the cash longer than it had expected.

But Rouse said, and analysts agreed, that the malls were still a good deal.

The result was FFO - a key measure of a real estate investment trust's performance - of $70.94 million in the quarter that ended March 31, compared with FFO of $72.64 million in the first quarter of 2001. Per share, the FFO was 80 cents this year, compared with 96 cents last year.

Louis W. Taylor, a Deutsche Bank analyst, said Rouse exceeded his FFO estimate by 3 cents.

"Retail occupancy was a little better than a year ago; land sales were a little better than we thought," Taylor said. "With the Rodamco transaction about closed, they can go back to focusing on the core business. ... With Merrick Park, Fashion Show and seasonal land sales, they should finish the year pretty strong."

Net operating income from the company's retail centers increased 6 percent, to $95.02 million, from $89.64 million in last year's first quarter, according to the company.

From Rouse's portfolio of office and other properties, net operating income declined 3 percent to $30.89 million from $31.85 million in the year-earlier quarter.

Net operating income from land sales, primarily in Rouse's communities of Columbia and Summerlin, Nev., was also down, to $138.08 million from $143.03 million in the 2001 quarter.

Rouse Chairman and Chief Executive Officer Anthony W. Deering predicted stronger land sales later in the year because homebuilders' desire for the company's properties has proved greater than expected. The company is preparing lots for sale.

Also making him optimism were the addition of the Rodamco assets and opening and expansion this year of two shopping centers, the Village of Merrick Park in Coral Gables, Fla., and Fashion Show in Las Vegas.

"The completion of the acquisition of the Rodamco assets, strong second-half land sales and the additions of the Village of Merrick Park and Fashion Show, should make 2002 an outstanding year, and all the elements are in place for very strong performance in 2003," Deering said.

Rouse's shares rose 86 cents to $3.12 yesterday.

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