- The Washington Times - Tuesday, December 3, 2002

Shares of the Rouse Co., a Columbia, Md., mall developer, rose 40 cents yesterday after news of a solid holiday shopping weekend.
The increase helped maintain analysts' confidence in the company, which has managed to avoid the troubles seen by many others in the real estate sector.
Shares of the company closed at $30.20 yesterday on the New York Stock Exchange. They have risen about $1, or 3.4 percent, this year. In the third financial quarter the company earned $33.2 million (33 cents per share) compared with $29.2 million (37 cents) during the comparable quarter a year ago.
Office vacancies have increased in the past year, and many developers and real estate investment trusts (REITs) with large office assets have suffered. The Standard and Poor's REIT index has fallen about 9 percent in the past six months.
Analysts credit Rouse's success to its heavy activity in mall development, a relatively stable sector of real estate. The company owns scores of shopping centers and malls across the country. Its holdings in this region include Owings Mills, Towson Town Center, White Marsh, and Harborplace in Baltimore's Inner Harbor.
"[The companys success] is really a function of what properties they're into," said Louis Taylor, a real estate analyst with Deutsche Bank in New York. "They have stable occupancy, and they're still seeing an increase in rental rates as they sign up new tenants."
The Rouse Co.'s own recent quarterly reports are a reflection of recent real estate trends. Operating income from retail centers was $123.1 million in the third financial quarter, compared with $94.4 million during the comparable quarter a year ago. Meanwhile, non-retailassets, including office properties, brought in $30 million, down from $32.5 million last year.
"Our retail returns are about flat, but if you compare it to the other real estate sectors, that's pretty good performance," said David Tripp, vice president of investor relations.
Mr. Tripp said the company will probably finish the year with 95 percent occupancy at its malls. He said retailers that some retailers are downsizing, but most that do end up staying in the malls owned by Rouse, because they attract consumers with relatively high incomes.
The company is perhaps best known for developing Columbia, one of the nation's most famous planned communities. It also operates Summerlin, Nev., a similar planned community it developed in 1988. Both Columbia and Summerlin have taken off in recent years because of low interest rates that have spawned a housing boom.
"Both have had extremely good years," Mr. Taylor said. "The last few years have been terrific."
Analysts estimated that mall traffic over the weekend rose nearly 10 percent, indicating a relatively strong holiday shopping season. Noting this, Merrill Lynch real estate analyst Steve Sakwa said he expected Rouse to earn 1 cent per share more from operations this year and next. He had previously set a $34 year-end price target on the company, and said that with dividends, investors can expect a 18.5 percent return from Rouse over the next 12 months. The company currently pays a 39 cent per share quarterly dividend.


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