Profits improve for big Vegas developer

Tuesday, July 30, 2002 | 11:05 a.m.

The Rouse Co., a Maryland company that is developing Summerlin and the Fashion Show on the Las Vegas Strip, Monday reported a higher profit in the second quarter.

The real estate investment trust's second-quarter profit, or funds from operations, was $73.7 million, or 78 cents a share. That's compared to a profit of $67.9 million, or 90 cents a share, in the same quarter a year ago.

The lower profit per share is due to a significant increase in number of shares outstanding, which jumped from 68 million shares a year ago to 86 million shares at the end of the second quarter of this year.

Part of that increase in outstanding shares was due to Rouse's sale in the first quarter of nearly 17 million shares of common stock, which raised $457 million for the company's purchase of eight U.S. regional retail centers owned by Dutch shopping center developer Rodamco.

The earnings results were in line with a Thomson First Call estimate based on a survey of seven analysts.

The developer partly attributed its improved second-quarter performance to the completion of its purchase of Rodamco assets. The company also said it was able to generate higher rental revenues from its retail properties around the nation.

Net operating income for the company's retail centers was $105.2 million in the second quarter, a 16 percent increase from the $90.4 million net operating income the retail-centers division posted in the same quarter a year ago.

Net operating income in Rouse's office portfolio was $30.7 million in the second quarter, compared to $31.6 million in the second quarter of 2001. The falloff came from a drop in portfolio occupancy rates, which declined from 94 percent a year ago to 89 percent in the second quarter of this year.

And net operating income in Rouse's community-development division dropped as a result of continued slow land sales in and around its master-planned communities of Columbia, Md., and Summerlin, a 22,000-acre community in northwest Las Vegas.

Rouse also said retailers have committed to leasing nearly 90 percent of the store space in the first phase of its Fashion Show expansion. The addition's first phase is scheduled to open Nov. 1 with new anchors Nordstrom and Bloomingdale's Home, as well as 175,000 square feet of smaller store space.

The second phase of the $800 million expansion is scheduled to open in fall 2003, with Lord & Taylor joining the anchor tenant lineup.

When work is complete at the site, the shopping center will have more than doubled in size, from 869,000 square feet to 1.9 million square feet.

The REIT also said it plans to build a pedestrian bridge over the Strip that will link the Fashion Show to Steve Wynn's Le Reve hotel-casino across the Strip.

Rouse's stock was up in early trading today, rising to $31.63 a share after closing Monday at $31.20.