june 2004
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JUNE 2004. The Rouse Company. - PowerPoint PPT PresentationTRANSCRIPT
JUNE 2004
Headquartered in Columbia, Maryland, The Rouse Company is a premier real estate development and management company (book value of assets totals $7.9 billion) that, through its subsidiaries and affiliates, operates approximately 150 properties encompassing retail, office, and other commercial space in 23 states.
Rouse focuses its business activities on 3 segments:Retail CentersCommunity Development Office and Other Properties
Rouse is the developer of the premier master-planned communities of Columbia and Fairwood inMaryland; Summerlin, Nevada, just outside of Las Vegas; The Woodlands in Houston, Texas; and a new project, Bridgelands, on the western side of Houston.
The Rouse Company
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$291.4
Community Development22%
$843.2
Retail Centers63%
Office and Other Properties15%
$201.0
The Rouse Company2003 Revenue Contribution
2
(in Millions)
$280.0
$327.2
$365.3 $368.3 $375.7
$469.8
$545-$555
$508.9
$100
$575
1997 1998 1999 2000 2001 2002 2003 2004Est.
(1) Excludes leasing at development projects, space >10,000 square feet and terms of two years or less.
Retail Centers
3
Rouse presently owns and manages a retail portfolio of 37 retail centers, 4 community shopping centers, and 6 mixed-use projects, totaling approximately 40 million square feet. The portfolio includes some of the premier retail properties in the United States:
Bridgewater Commons Bridgewater, NJ
Faneuil Hall Marketplace Boston, MA
Fashion Show Las Vegas, NV
Oakbrook Center Oakbrook, IL
Perimeter Mall Atlanta, GA
Water Tower Place Chicago, IL
Sales per square foot were $439 for the rolling 12 months ended March 31, 2004. Average occupancy was 93% during the first quarter of 2004. Effective rent (minimum plus percentage rent) to sales ratio of 9%. Total rent to sales ratio of 14%.
For the rolling 12 months ended March 31, 2004, base rent gains (cash basis) of $47.33 against base rent losses (cash basis) of $40.45. (1)
Net Operating Income
Millions
Retail Center Geographic Diversity
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Denver
Augusta
Tallahassee
Orlando
New Orleans - 2
Minneapolis
Las Vegas - 4
Durham
Portland
Austin
Fort Worth - 2
San Antonio
Salt Lake City
Seattle
Boston
New York City - 2
Louisville
Detroit - 2
Atlanta
Palm Beach
Cleveland
Phoenix
Baltimore / Columbia - 8
New Jersey - 4Chicago - 2
Miami - 2
Wilmington
Providence
Highland Mall
Mall St. Matthews
Paramus Park
Perimeter Mall
Willowbrook
Woodbridge Center
Retail CentersProperties Owned & Managed for more than 25 Years
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1977
Square Footage
Department Stores
Net Operating Income
Compound Annual Growth Rate of NOI
5.8 Million
16
$15.9 Million
7.4 Million
23
$108.8 Million
7.7 %
2003
$15.8$17.5
$20.8$22.9
$24.8$26.6
$34.3$36.4
$39.6$42.2
$45.6
$52.2
$56.9$59.6
$61.8
$67.0$70.6
$75.4$78.1
$76.5
$83.2
$87.0
$92.3
$97.6$99.4
$108.8
$508.9
$0
$115
19
77
19
78
19
79
19
80
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81
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82
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83
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84
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85
19
86
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87
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88
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89
19
90
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91
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92
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93
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94
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95
19
96
19
97
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98
19
99
20
00
20
01
20
02
20
03
$75.41995
Millions
$108.82003
$56.91990
$22.91980
Compound Annual Growth Rate: 7.7%
Net Operating IncomeRetail Centers Owned and Operated for 25 Years
6
$36.41985
$92.32000
A+
A
B
C
Total
Rating 2
50
94
210
254
608
Number of Centers
Percent ofTotal
8 %
15 %
35 %
42 %
100 %
(1) Includes malls owned by the seven largest REITs plus 98 independently owned centers(2) Rouse’s internal rating system based on sales volume, productivity, anchor performance, regional demographics,
quality of tenancy and competitive position in local market.
U.S. Retail CentersMall Rankings (1)
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(1) Excludes urban centers, projects with less than two anchors, and centers open less than one year. (2) Includes current and recently opened development projects.
1993 Portfolio51 Centers
Current Portfolio31 Centers
Total RegionalCenters (1)
2007 Portfolio (2)
34 Centers
Mall Ranking
A+ or A B C
5 10% 13 25% 33
19 61% 10 32% 2 7%
Number Percent Number Percent Number Percent
22 65% 12 35% --
Rouse Regional Centers
8
65%
Rouse Regional Center RankingsAs of 12/31/03
19 Centers61% of TotalBeachwood Place
Bridgewater Commons
Christiana Mall
Fashion Place
Fashion Show
Lakeside Mall
North Star
Oakbrook Center
Park Meadows
Perimeter Mall
Providence Place
Ridgedale Center
Staten Island Mall
The Streets at Southpoint
The Mall in Columbia
Towson Town Center
Water Tower Place
Willowbrook Mall
Woodbridge Center
10 Centers32% of TotalAugusta Mall
Collin Creek
Governor's Square
Highland Mall
Hulen Mall
Mall St. Matthews
Oakwood Center
Paramus Park
Southland
White Marsh
2 Centers7% of Total Oviedo Marketplace
Owings Mills
A+ or A B C
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(1) Excludes urban centers, projects with less than two anchors, and centers open less than one year(2) Comparable tenants, excluding spaces >10,000 s.f., for the rolling 12 months ended March 31, 2004.(3) For the first quarter of 2004.
2004 Sales per Square Foot (2)
Center Ranking
A+ or A
B
C
Regional Centers (1) 2004 AverageOccupancy (3)
% 2004 NetOperating Income
$ 489
$ 357
$ 286
94 %
94 %
91 %
73 %
24 %
3 %
Rouse Regional CentersKey Performance Measures
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11
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Rouse has developed two of the most successful master-planned communities in the United States.
Columbia, Maryland: Columbia now has a population of 96,000, residing in 34,100 apartments, condominiums and single-family homes.
Summerlin, Nevada: Summerlin has been the best selling master-planned community in the United States for 10 of the last 11 years.
From 1997 - 2003 Land sales have generated almost $500
million of net operating income. Current value of land assets has more than
doubled. Rouse recently began development of the 9,000
acre master-planned community of Bridgelands, Texas
Rouse acquired a 52.5% economic interest in The Woodlands in December 2003.
The available land within each community is fully entitled.
NOI from community development was $41.3 million for the first quarter of 2004, up 38% from 2003’s first quarter. NOI for 2004 should exceed 2003’s contribution of $123.9 million.
Development of Planned Communities
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$49.2 $48.0$51.6
$69.9
$78.0$86.2
$123.9
$0
$125
1997 1998 1999 2000 2001 2002 2003
Net Operating Income
Millions
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Community Development at RouseTurning Raw Dirt into Valuable Land
Build infrastructure
Purchase or otherwise control land
Create and gain approval for master plan
Obtain subdivision approvals
Achieve necessary entitlements
Develop amenities
Achieve critical mass and milestones
Use credibility to participatein broader political process
Manage land sales and development program
Rouse sells high-margin finished land
Rouse sells land when appropriate
Rouse invests to build community and its infrastructure TIME
Rouseacquiresraw and/orentitled land
Size (acres)
Saleable acres
Current residents
Residents at completion
Current employment
2002 employment (10 mile ring demographics)
Number of firms
Total employees
% white collar
22,500
6,700
66,700
170,000
14,400
24,671
384,809
55%
Summerlin
9,000
6,700
--
50,000
--
8,412
78,375
58%
Bridgelands
15,300
1,500
96,500
105,500
91,000
16,844
234,427
64%
Columbia (1)
27,000
5,100
72,000
125,000
30,000
8,690
78,310
61%
Woodlands
(1) Includes Fairwood in Prince George’s County, MD.
Rouse Master-Planned Communities
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THE WOODLANDSTHE WOODLANDS
BRIDGELANDSBRIDGELANDS
Houston Community Development
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Large, steadily growing population center Fourth largest U.S. city, seventh largest MSA Houston MSA has 4.7 million residents 25% increase 1990 - 2000
Houston’s strong economic growth is expected to continue. Annual job growth of 60,000 since 1995 2003-2007 population growth is projected to be in excess of 7%. Employment growth over this period is projected to be 9.3%.
Per capita income remains high 26% higher than the state of Texas 18% higher than the United States
Certain key employers are continuing to hireWal-Mart, Inc. McDonalds Corporation
ExxonMobil Corp. University of Texas Anderson Cancer Center
Halliburton Company Hewlett-Packard
The Kroger Company Baylor College of Medicine
Houston Economy
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Thirty year track record
70,000 residents primarily in single-family homes
900 businesses employing 30,000
The Woodlands has consistently outsold the other 15 leading master-planned communities in Houston.
Average housing starts over the last 10 years have been over 1,200 per year.
The next closest community has been just under 600 per year.
Average new-home price in 2003 is $293,000.
Attractive amenities
One of the highest ranking schooldistricts in the Houston area
Provides homeowners with investment protection in a market with no zoning
Projected build-out of eight to ten years
The Woodlands
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25 miles northwest of downtown Houston, off US 290
Current major access projects will enhance site access
Beautiful natural landscape
8,060 acres originally purchased
950 acres subsequently added
Over 17,000 single family units projected
Over 900 acres of commercial use
First land sales in late 2005
Bridgelands Overview
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Rouse owns and manages a portfolio of office, industrial and other commercial properties totaling approximately 9 million square feet, primarily in the Baltimore / Washington and Las Vegas / Summerlin markets.
Total portfolio occupancy is relatively stable, 85% at March 31,2004.
The decline in 2001 was due to the Company’s transfer of 37 office / industrial properties in Las Vegas in late 2000. Subsequent declines, related to a nationwide office slump, reduced demand with an oversupply of space and additional dispositions.
Office and Other Properties
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$94.7$98.3
$130.8$138.7
$127.9 $125.0 $122.2
$90-$95
$0
$150
1997 1998 1999 2000 2001 2002 2003 2004Est.
Net Operating Income
Millions
Rouse optimizes its real estate portfolio through the acquisition, development, expansion and disposition of assets over time.
Major transactions over last ten yearsAcquisitionsJune 1996 $520 million acquisition of The Hughes Corporation and its assets, including the 22,500 acre master-planned community of Summerlin, NV, Fashion Show Mall, and other land parcels and commercial buildings in Las Vegas.December 1998 $1 billion acquisition of TrizecHahn’s interests in four regional centers.In 1997 sales averaged $405/SF at these projects. In 2003 sales averaged $502/SF.May 2002 $1.5 billion acquisition of Rodamco North America’s interests in eight regional centers. In 2003 sales averaged $473/SF at these projects.2002 - 2003 More than $500 million of individual asset acquisitions.June 2003 Acquired 8,000 acres in West Houston for the development of the community of Bridgelands.December 2003 $400 million acquisition of CEI’s 52.5% economic interest in The Woodlands.March 2004 Acquired Providence Place.
DispositionsSince 1993 Rouse has disposed of interests in more than 45 retail projects and more than 40 office/industrial buildings. March 2002 $100 million sale of interests in Columbia’s 12 village centers.May 2003 $548 million sale of six Philadelphia area projects.December 2003 - February 2004 $233 million disposition of interests in Hughes Center in Las Vegas.
Strategic Asset Management
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$411.0
$451.4
$537.0$559.8 $561.6
$722.2
$651.7
$300
$750
1997 1998 1999 2000 2001 2002 2003
Total Net Operating Income
22
Millions
66.0%
61.0%
57.6%
54.8% 54.9%
52.6%
50%
70%
1998 1999 2000 2001 2002 2003
Reduction in Leverage
23(2) Includes the effect of the Hughes Center disposition
(1) Includes JV debt
Debt (1) /Gross Asset Value
(2)
(1) 2004 dividend represents the annual rate of the dividend approved by the Company’s Board of Directors for the first half of 2004.
Common Stock Dividend
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$0.00
$2.00
1978 80 82 84 86 88 90 92 94 96 98 2000 2002 2004
$0.16
$0.31$0.40
$0.52$0.60 $0.60
$0.68
$0.88
$1.12
$1.32$1.42
$1.56
$1.68
$1.88
C.A.G.R. = 14% (26 years)
$0.07
(1)
The Rouse Culture
Business Conduct and Ethics Policy
The Rouse Board of Directors
Board Committees
The Audit Committee
Internal Audit
Quarterly Business Reviews
Corporate GovernanceRouse’s History and Established Practices
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One of the highest-quality diversified real estate portfolios in the public arena
Professional, experienced management team, free from conflicts of interest
A long history of emphasizing long term value creation for shareholders (publicly-owned since 1956)
An increasing common stock cash dividend since 1978
Low dividend payout ratio, allowing for significant reinvestment in operating business
Investment grade credit since the mid-1980’s (reaffirmed by S&P and Moody’s, March 2004)
Opportunity for future growth through development, management, ownership, acquisition and disposition of high-quality real estate
Investment Highlights
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