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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the Fiscal Year Ended December 31,1999
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
Commission File No 0-1743
THE ROUSE COMPANY
(Exact name of registrant as specified in its charter)
Maryland 52-0735512
-------- ----------
(State or other jurisdiction of) (I.R.S. Employer
incorporation or organization Identification No.)
10275 Little Patuxent Parkway
Columbia, Maryland 21044-3456
------------------ ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (410) 992-6000
--------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
- ------------------- -----------------------
Common Stock (par value 1c per share) New York Stock Exchange
- -------------------------------------
9 1/4% Cumulative Quarterly Income Preferred Securities New York Stock Exchange
- ---------------------------------------------------
Series B Convertible Preferred Stock
- ------------------------------------
(par value 1c per share) New York Stock Exchange
- ------------------------
Securities registered pursuant to Section 12(g) of the Act:
NONE
----
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months for (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No ____
-----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. _____
As of March 17, 2000, there were outstanding 70,606,005 shares of the
registrant's common stock, par value 1c, which is the only class of common or
voting stock of the registrant. As of that date, the aggregate market value of
the shares of common stock held by nonaffiliates of the registrant (based on the
closing price as reported in The Wall Street Journal, Eastern Edition) was
----------------------------------------
approximately $1,487,138,980
Documents Incorporated by Reference
The specified portions of the Annual Report to Shareholders for the fiscal year
ended December 31, 1999 are incorporated by reference into Parts I, II, and IV.
Definitive Proxy Statement to be filed pursuant to Regulation 14A on or before
April 12, 2000 is incorporated by reference into Part III.
================================================================================
Part I
------
Item 1. Business.
Item 1 (a). General Development of Business.
The Rouse Company (the "Company") was incorporated as a business
corporation under the laws of the State of Maryland in 1956. Its principal
offices are located at The Rouse Company Building, Columbia, Maryland
21044. Its telephone number is (410) 992-6000. The Company, through its
subsidiaries, affiliates and "Non-REIT Subsidiaries" (as defined below), is
engaged or has a material financial interest in (i) the ownership,
management, acquisition and development of income-producing and other real
estate in the United States, including retail centers, office buildings,
mixed-use projects and community retail centers, and the management of one
retail center in Canada, and (ii) the development and sale of land in
Maryland and the Las Vegas, Nevada metropolitan area for residential,
commercial and industrial uses. "Non-REIT Subsidiaries" are companies as to
which substantially all (at least 98%) of the financial interest is held by
the Company, but in which The Rouse Company Incentive Compensation
Statutory Trust, an entity that is neither owned nor controlled by the
Company, owns 91% of the voting stock.
In December 1997, the Company determined that it would elect to be taxed as
a real estate investment trust (REIT) effective January 1, 1998. The
Company believes that it has met the qualifications for REIT status since
January 1, 1998, and it intends to meet the qualifications in the future
and to distribute at least 95% of its REIT taxable income (determined after
taking into account any net operating loss deduction) to stockholders.
Accordingly, management does not believe that the Company will be liable
for payment of significant income taxes (except, possibly, in certain
states). All dividends on common stock paid subsequent to December 31, 1997
have been distributions of ordinary income.
Developments in 1999
During the third and fourth quarters of 1998, subsidiaries of the Company
purchased ownership interests in seven retail centers from TrizecHahn
Centers Inc. for approximately $1.2 billion. The centers are Park Meadows
Mall in suburban Denver, Colorado, Towson Town Center in suburban
Baltimore, Maryland, The Fashion Show on "The Strip" in Las Vegas, Nevada
(in which a Company subsidiary already held a 75% ownership interest),
Fashion Place in Salt Lake City, Utah, Bridgewater Commons Mall in
Bridgewater, New Jersey, Valley
I-1
Fair in San Jose, California and Westdale Mall in Cedar Rapids, Iowa. Upon
completion of the acquisitions, subsidiaries of the Company held 100%
ownership interests in these centers, except that the subsidiaries held a
50% interest in Valley Fair and a 20.5% interest in Westdale Mall. At the
time of the acquisitions, the Company decided to hold for sale its
interests in Valley Fair and Westdale Mall. In June 1999, the Company sold
its interest in Valley Fair for proceeds approximating the acquisition
cost.
On February 1, 1999, a wholly owned subsidiary of the Company completed the
establishment of a joint venture (the "Four State Venture"), relating to
four retail centers, with a venture (the "Morgan/NYSTRS Venture")
consisting of the J.P. Morgan Strategic Property Fund and the New York
State Teachers' Retirement System. The centers were acquired in 1998 from
TrizecHahn Centers Inc., and are Park Meadows Mall, Towson Town Center,
Fashion Place and Bridgewater Commons Mall. The total cost of the retail
center assets and related liabilities contributed to the Four State Venture
were approximately $957 million and $542 million, respectively. The
Morgan/NYSTRS Venture made a $271 million cash contribution to the Four
State Venture, which is approximately 65% of the Company's net cost of the
properties. The Company subsidiary effectively has a 35% ownership interest
in the Four State Venture, while the Morgan/NYSTRS Venture has a 65%
ownership interest.
In September 1999, the Company announced that it would pursue developing a
strategy to sell interests in certain office and industrial properties and
land parcels, and use the proceeds to repay debt and repurchase (subject to
certain price restrictions) up to $250 million of the Company's common
stock. Management subsequently identified the specific properties the
Company may sell (mostly office and industrial buildings in the Baltimore-
Washington corridor and certain business parks in Las Vegas) and was
developing alternative disposition plans and structures at December 31,
1999. As of December 31, 1999, the Company had repurchased approximately
1.6 million shares of common stock for approximately $34.8 million.
I-2
Item 1(b). Financial Information About Industry Segments.
Information required by Item 1(b) is incorporated herein by reference to
note 8 of the notes to consolidated financial statements included in the
1999 Annual Report to Shareholders.
As noted in Item 1(a), the Company is a real estate company engaged,
through its subsidiaries, affiliates and having a material financial
interest, through its Non-REIT Subsidiaries, in most aspects of the real
estate industry, including the management, acquisition and development of
income-producing and other properties, both retail and commercial,
community development and management, and land development. These business
segments are further described below.
Item 1(c). Narrative Description of Business.
Retail Centers:
- --------------
As set forth in Item 2, at December 31, 1999, the 46 regional retail
centers owned, in whole or in part, or operated by subsidiaries or
affiliates of the Company or by Non-REIT Subsidiaries, aggregated
42,791,000 square feet, including 25,012,000 square feet owned by or leased
to department stores. The activities involved in operating and managing
retail centers include: negotiating lease terms with present and
prospective tenants, identifying and attracting desirable new tenants,
conducting local market and consumer research, developing and implementing
short- and long-term merchandising and leasing programs, assisting tenants
in the presentation of their merchandise and the layout of their stores and
store fronts, and maintaining the building and common areas.
In conjunction with other partners or investors, the Company, through its
subsidiaries and affiliates and Non-REIT subsidiaries, acquires interests
in completed retail centers, with the Company (or, beginning December 31,
1997, its Non-REIT Subsidiaries) having management responsibility and
earning incentive fees. Affiliates of the Company (or, beginning December
31, 1997, Non-REIT Subsidiaries) also provide management services for
centers developed and owned by others under management agreements that also
provide for incentive fees and, in some instances, equity interests in the
centers. As of December 31, 1999, Non-REIT Subsidiaries of the Company
managed 10 such centers, which are included in the figures in the preceding
paragraph and aggregated 10,608,000 square feet of leasable space,
6,061,000 square feet of which was department store space.
I-3
The Howard Research And Development Corporation ("HRD", a Non-REIT
Subsidiary of the Company) and its subsidiaries own and/or manage 12
community retail centers with 914,000 square feet of leasable space, The
Mall in Columbia (which is included in the second preceding paragraph) and
other properties in Columbia, Maryland. Howard Hughes Properties, Limited
Partnership ("HHPLP", a majority owned affiliate of the Company) and its
subsidiaries and affiliates own interests in 2 community retail centers
with 238,000 square feet of leasable space in Summerlin, Nevada.
Office, Mixed-Use and Other Properties:
- --------------------------------------
HHPLP and its subsidiaries and affiliates own and/or manage 65 office and
industrial buildings with 4,189,000 square feet of leasable space, and
other properties in and around Las Vegas, Nevada. HRD and its subsidiaries
own and/or manage 12 office and industrial buildings with 1,099,000 square
feet of leasable space and other properties in Columbia, Maryland.
Other subsidiaries of the Company own and operate 5 mixed-use projects with
a total of 686,000 square feet of leasable retail space, a 90,000 square
foot cinema and 1,891,000 square feet of leasable office space. Other
subsidiaries of the Company own, in whole or in part, 72 office and
industrial buildings with a total of 4,889,000 square feet of leasable
space.
The activities involved in operating and managing office, mixed-use and
other properties include: negotiating lease terms with present and
prospective tenants, identifying and attracting desirable new tenants,
conducting local market and consumer research, developing and implementing
short- and long-term merchandising and leasing programs, assisting tenants
in the presentation of their merchandise and the layout of their stores and
store fronts, and maintaining the building and common areas.
Development:
- -----------
The Company, through its subsidiaries, affiliates and Non-REIT
subsidiaries, renovates and expands existing retail centers and develops
suburban and downtown retail centers, mixed-use projects and master-planned
business parks, primarily for ownership. In addition, the Company is
capable of serving as the master developer for certain mixed-use projects,
with the Company generally owning at least the retail component of such
projects. The activities involved in the development, renovation and
expansion of retail centers, mixed-use projects and master-planned business
parks include: initial market and consumer research, evaluating and
acquiring land sites, obtaining necessary public approvals, engaging
architectural and engineering
I-4
firms to design the project, estimating development costs, developing and
testing pro forma operating statements, selecting a general contractor,
arranging construction and permanent financing, identifying and obtaining
department stores and other tenants, negotiating lease terms, negotiating
partnership and joint venture agreements and promoting new, renovated or
expanded retail centers, mixed-use projects and master-planned business
parks.
The Company and certain subsidiaries, affiliates and Non-REIT Subsidiaries
are in the construction or development stage of announced projects,
primarily the development of new retail centers, expansions of existing
retail centers and mixed-use projects, and expansions of existing master-
planned business parks in Las Vegas, Nevada.
Land Sales Operations:
- ---------------------
HRD, a Non-REIT Subsidiary of the Company, is the developing entity of
Columbia, Maryland, which is located in the Baltimore-Washington corridor.
HRD owns approximately 1,500 salable acres of land in and around Columbia,
and, through its subsidiaries and affiliates, develops and sells this land
to builders and other developers for residential, commercial and industrial
uses. The Hughes Corporation and Howard Hughes Properties, Inc.
(collectively "Hughes", Non-REIT Subsidiaries of the Company) and their
subsidiaries and affiliates are the developers of Summerlin, Nevada, which
is located immediately north and west of Las Vegas, Nevada. Hughes owns
approximately 8,200 salable acres of land in Summerlin, and develops and
sells this land to builders and other developers for residential and
commercial uses. Other affiliates or subsidiaries of the Company may also
purchase some of this land for their own development purposes. Non-REIT
Subsidiaries of the Company, directly or through affiliates, are also
presently involved in community development and related land sales
elsewhere in Maryland, and are developing or holding for sale parcels of
land elsewhere in Nevada and California.
In all aspects of the Company's business pertaining to the ownership,
management, acquisition or development of income-producing and other real
estate, the Company and its subsidiaries, affiliates and Non-REIT
Subsidiaries operate in highly competitive markets. With respect to the
leasing and operation or management of developed properties, each project
faces market competition from existing and future developments in its
geographical market area.
The Company's affiliates and Non-REIT Subsidiaries also face competition in
and around Columbia, Maryland and Las Vegas, Nevada with respect to the
development and sale of land for residential, commercial and industrial
uses.
I-5
Neither the Company's business, taken as a whole, nor any of its operating
segments, is seasonal in nature.
Federal, state and local statutes and regulations relating to the
protection of the environment have previously had no material effect on the
Company's business. Future development opportunities of the Company may
involve additional capital and other expenditures in order to comply with
such statutes and regulations. It is impossible at this time to predict
with any certainty the magnitude of any such expenditures or the long-range
effect, if any, on the Company's operations. Compliance with such laws has
had no material adverse effect on the operating results or competitive
position of the Company in the past; the Company anticipates that they will
have no material adverse effect on its future operating results or its
competitive position in the industry.
None of the Company's operating segments depends upon a single customer or
a few customers, the loss of which would have a materially adverse effect
on the segment. No customer accounts for 10 percent or more of the
consolidated revenues of the Company.
The Company, its subsidiaries and affiliates and Non-REIT Subsidiaries
employed 4,140 full-time and part-time employees at December 31, 1999.
I-6
Item 2. Properties.
The Company leases its headquarters building (approximately 127,000 square
feet) in Columbia, Maryland for an initial term of 30 years which expires
in 2003 with options for two 15-year renewal periods. The lease on the
headquarters building is accounted for as a capital lease.
Information respecting the Company's operating properties is incorporated
herein by reference to the "Projects of The Rouse Company" table in pages
42 through 44 of Exhibit 13 to this Form 10-K. The ownership of virtually
all properties is subject to mortgage financing. The table of projects
includes properties managed by Non-REIT Subsidiaries of the Company for a
fee as identified in notes (c) and (d) to the table. Excluding such managed
properties, certain of the remaining properties are subject to leases which
provide an option to purchase (or repurchase) the property and/or to renew
the leases for one or more renewal periods. The years of expiration
indicated below assume all options to extend the terms of leases are
exercised. The properties subject to such leases in whole or part
(including properties owned by Non-REIT Subsidiaries) are as follows:
Nature of Year of expiration
Property interest of lease
-------- -------- --------
Arizona Center Leasehold Various dates from
2017 to 2050
Augusta Mall Leasehold 2068
Bayside Marketplace Leasehold by joint venture 2062
Columbia Mall, Inc. - Leasehold and fee 2020
American City Building
Columbia Mall, Inc. - Leasehold and fee 2012
Exhibit Building
Echelon Mall Leasehold 2008
Faneuil Hall Marketplace Leasehold 2074
Fashion Place Mall Leasehold 2059
First National Bank Plaza Leasehold 2013
Franklin Park Leasehold and fee by joint venture 2024
The Gallery at Market East Leasehold 2082
I-7
Item 2. Properties, continued.
Nature of Year of expiration
Property interest of lease
- -------- -------- --------
Governor's Square Leasehold 2054
Harborplace Leasehold 2054
Highland Mall Leasehold and fee by joint venture 2070
The Jacksonville Landing Leasehold 2057
Mall St. Matthews Leasehold 2053
Midtown Square Leasehold 2055
Pioneer Place Leasehold 2076
Plymouth Meeting Leasehold 2063
Riverwalk Leasehold and fee by joint venture 2076
South Street Seaport Leasehold 2031
Tampa Bay Center Leasehold and fee by joint venture 2047
Westlake Center Leasehold by joint venture 2043
I-8
Item 3. Legal Proceedings.
None.
I-9
Item 4. Submission of Matters to a Vote of Security Holders.
None.
I-10
Executive Officers of the Registrant.
The executive officers of the Company as of March 26, 2000 are:
Present office and Date of election Business or professional
position with the or appointment to experience during the past
Executive Officer Age Company present office five years
- ----------------- --- ------------------ ----------------- --------------------------
Anthony W. Deering 55 Chairman of the Board, 2/25/97 Chairman of the Board, President and
President and 2/25/93 Chief Executive Officer of the Company;
Chief Executive Officer 2/23/95 formerly President and Chief Executive
Officer of the Company
Jeffrey H. Donahue 53 Executive Vice-President 12/3/98 Executive Vice-President and Chief Financial
and Chief Financial Officer 9/23/93 Officer of the Company; formerly Senior Vice-
President and Chief Financial Officer of the
Company
Duke S. Kassolis 48 Senior Vice-President 7/1/99 Senior Vice-President and Director, Property
and Director, Property 9/23/93 Operations; formerly Senior Vice-President
Operations and Director of Office and Mixed-Use
Operations of the Company
Douglas A. McGregor 57 Vice Chairman and Chief 12/3/98 Vice Chairman and Chief Operating Officer;
Operating Officer formerly Executive Vice-President for
Development and Operations of the Company
Robert Minutoli 49 Senior Vice-President 9/23/93 Senior Vice-President and Director of
and Director of 8/17/93 New Business of the Company
New Business
I-11
Executive Officers of the Registrant.
Present office and Date of election Business or professional
position with the or appointment to experience during the past
Executive Officer Age Company present office five years
- ----------------- --- ------------------ ----------------- --------------------------
Robert D. Riedy 54 Senior Vice-President 9/23/93 Senior Vice-President and Director of
and Director of Retail 8/17/93 Retail Leasing of the Company
Leasing
Alton J. Scavo 53 Senior Vice-President and 9/23/93 Senior Vice-President and Director of
Director of the 8/17/93 the Community Development Division of
Community Development the Company and General Manager of
Division and General Columbia
Manager of Columbia
Jerome D. Smalley 50 Executive Vice-President 12/3/98 Executive Vice-President - Development;
- Development formerly Senior Vice-President and Director
of the Commercial and Office Development
Division of the Company
Daniel C. Van Epp 45 Senior Vice-President 5/13/99 Senior Vice-President of the Company and
of the Company and President of The Howard Hughes Corporation;
President of The Howard formerly Vice-President, West Coast Community
Hughes Corporation Development Division of the Company and
Executive Vice-President, The Howard Hughes
Corporation
The term of office of each officer is until election of a successor or otherwise
at the pleasure of the Board of Directors.
There is no arrangement or understanding between any of the above-listed
officers and any other person pursuant to which any such officer was elected as
an officer, except with respect to Anthony W. Deering. See Exhibit 10 to this
Form 10-K.
None of the above-listed officers has any family relationship with any director
or other executive officer.
I-12
Part II
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Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters.
Information required by Item 5 is incorporated herein by reference to
page 28 of Exhibit 13.
Item 6. Selected Financial Data.
Information required by Item 6 is incorporated by reference to
page 27 of Exhibit 13.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Information required by Item 7 is incorporated herein by reference to
pages 29 through 38 of Exhibit 13.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
Information required by Item 7A is incorporated herein by reference to
pages 37 and 38 of Exhibit 13.
Item 8. Financial Statements and Supplementary Data.
Financial Statements required by Item 8 are set forth in the Index to
Financial Statements and Schedules on page IV-2.
Supplementary data required by Item 8 are incorporated herein by
reference to page 28 of Exhibit 13.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
II-1
Part III
--------
The information required by Items 10, 11, 12 and 13 (except that information
regarding executive officers called for by Item 10 that is contained in Part I)
is incorporated herein by reference from the definitive proxy statement that the
Company intends to file pursuant to Regulation 14A on or before April 12, 2000.
III-1
Part IV
-------
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) 1. and 2. Financial Statements and Schedules:
Reference is made to the Index to Financial Statements and Schedules on
page IV-2.
(b) Reports on Form 8-K:
Current Report on Form 8-K filed February 24, 2000 disclosing that the
Company had adopted a classified board structure.
(c) Exhibits required by Item 601 of Regulation S-K.
Exhibit No.
-----------
3 Articles of Incorporation and Bylaws
10 Material Contracts
12.1 Ratio of earnings to fixed charges
12.2 Ratio of earnings to combined fixed charges and Preferred stock
dividend requirements
13 Annual report to security holders
21 Subsidiaries of the Registrant
IV-1, continued
Part IV, Continued
------------------
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K,
Continued
(c) Exhibits required by Item 601 of Regulation S-K, continued
Exhibit No.
-----------
23.1 Consent of KPMG LLP, Independent Auditors
23.2 Consent of KPMG LLP, Independent Auditors
24 Power of Attorney
27 Financial Data Schedule
99 Additional Exhibits:
99.1 Form 11-K Annual Report of The Rouse Company
Savings Plan for the year ended December 31, 1999
99.2 Factors affecting future operating results
(d) Separate Financial Statements and Schedules of Subsidiaries not
consolidated:
Reference is made to the Index to Financial Statements and Schedules on
page IV-2.
IV-1, continued
The Rouse Company
Index to Financial Statements and Schedules
Page
----
Independent Auditors' Report IV-3
Financial Statements:
The Rouse Company and Subsidiaries included on pages 4 through 31 of
Exhibit 13 incorporated herein by reference:
Consolidated Balance Sheets at December 31, 1999 and 1998
Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31, 1999, 1998 and 1997
Consolidated Statements of Changes in Shareholders' Equity for the Years Ended December 31, 1999, 1998 and 1997
Consolidated Statements of Cash Flows for the Years Ended December 31, 1999, 1998 and 1997
Notes to Consolidated Financial Statements
Schedules:
Real Estate Ventures Owned by The Rouse Company Incentive Compensation Statutory Trust and The Rouse Company:
Independent Auditors' Report IV-4
Combined Consolidated Balance Sheets at December 31, 1999 and 1998 IV-5
Combined Consolidated Statements of Operations for the Years Ended December 31, 1999 and 1998 IV-6
Combined Consolidated Statements of Changes in Shareholders' Equity (Deficit) for the Years Ended
December 31, 1999 and 1998 IV-7
Combined Consolidated Statements of Cash Flows for the Year Ended December 31, 1999 and 1998 IV-8
Notes to Combined Consolidated Financial Statements IV-10
The Rouse Company and Subsidiaries as of December 31, 1999 or for the years ended December 31, 1999, 1998 and 1997:
Schedule II Valuation and Qualifying Accounts IV-18
Schedule III Real Estate and Accumulated Depreciation IV-19
Schedule IV Mortgage Loans on Real Estate IV-33
Real Estate Ventures Owned by The Rouse Company Incentive Compensation Statutory Trust and The Rouse
Company as of December 31, 1999 or for the years Ended December 31, 1999 and 1998:
Schedule II Valuation and Qualifying Accounts IV-35
Schedule III Real Estate and Accumulated Depreciation IV-36
All other schedules have been omitted as not applicable or not required, or because the required information is included in
the related financial statements or notes thereto.
IV-2
INDEPENDENT AUDITORS' REPORT
----------------------------
The Board of Directors and Shareholders
The Rouse Company:
We have audited the consolidated financial statements and the related
financial statement schedules of The Rouse Company and subsidiaries as listed
in the accompanying index. These consolidated financial statements and
financial statement schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of The Rouse
Company and subsidiaries as of December 31, 1999 and 1998, and the results of
their operations and their cash flows for each of the years in the three-year
period ended December 31, 1999, in conformity with generally accepted
accounting principles. Also in our opinion, the related financial statement
schedules referred to above, when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly, in all
material respects, the information set forth therein.
KPMG LLP
Baltimore, Maryland
February 24, 2000
IV-3
INDEPENDENT AUDITORS' REPORT
The Board of Trustees
The Rouse Company Incentive Compensation Statutory Trust
and
The Board of Directors
The Rouse Company:
We have audited the accompanying combined consolidated financial statements and
the related financial statement schedules of Real Estate Ventures owned by The
Rouse Company Incentive Compensation Statutory Trust and The Rouse Company as
listed in the accompanying index. These combined consolidated financial
statements and financial statement schedules are the responsibility of the
Ventures' management. Our responsibility is to express an opinion on these
financial statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the combined consolidated financial statements referred to
above present fairly, in all material respects, the financial position of Real
Estate Ventures owned by The Rouse Company Incentive Compensation Statutory
Trust and The Rouse Company as of December 31, 1999 and 1998, and the results of
their operations and their cash flows for the years then ended in conformity
with generally accepted accounting principles. Also in our opinion, the related
financial statement schedules, when considered in relation to the basic combined
consolidated financial statements taken as a whole, present fairly, in all
material respects, the information set forth therein.
KPMG LLP
Baltimore, Maryland
February 24, 2000
IV-4
Real Estate Ventures Owned by
The Rouse Company Incentive Compensation Statutory Trust and
The Rouse Company
COMBINED CONSOLIDATED BALANCE SHEETS
December 31, 1999 and 1998
(in thousands)
Assets
------
Property: 1999 1998
---- ----
Operating properties:
Property and deferred costs of projects........................ $465,828 $326,860
Less accumulated depreciation and amortization................. 87,039 82,390
-------- --------
378,789 244,470
Properties in development......................................... 26,924 66,442
Investment land and land held for development and sale............ 257,773 278,155
-------- --------
Total property................................................. 663,486 589,067
Cash and cash equivalents........................................... 8,194 ---
Accounts and notes receivable, including advances to The Rouse
Company of $112,310 in 1998........................................ 88,765 200,748
Deferred income taxes............................................... 36,564 53,660
Prepaid expenses and other assets................................... 58,526 41,352
Investments in and advances to unconsolidated real estate ventures.. 107,813 22,689
-------- --------
Total............................................................. $963,348 $907,516
======== ========
Liabilities and Shareholders' Equity (Deficit)
----------------------------------------------
Liabilities:
Debt:
Borrowings from The Rouse Company................................. $514,792 $487,419
Other borrowings.................................................. 350,646 332,945
-------- -------
Total debt..................................................... 865,438 820,364
-------- -------
Bank overdraft...................................................... --- 17,382
Deferred revenue.................................................... 73,341 93,278
Accounts payable, accrued expenses and other liabilities............ 45,184 20,230
Redeemable Series A Preferred stock................................. 50,000 50,000
Commitments and contingencies
Shareholders' equity (deficit):
Common stock........................................................ 5 5
Additional paid-in capital.......................................... 141,495 141,495
Accumulated deficit................................................. (212,115) (235,238)
-------- --------
Net shareholders' deficit......................................... (70,615) (93,738)
-------- --------
Total............................................................. $963,348 $907,516
======== ========
The accompanying notes are an integral part of these statements.
IV-5
Real Estate Ventures Owned by
The Rouse Company Incentive Compensation Statutory Trust and
The Rouse Company
COMBINED CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended December 31, 1999 and 1998
(in thousands)
1999 1998
-------- --------
Revenues:
Land sales..................................................... $191,705 $165,461
Rentals and tenant services.................................... 75,212 73,811
Property management fees....................................... 16,375 18,254
Other.......................................................... 18,759 24,484
-------- --------
302,051 282,010
Cost of land sales and related administration.................... 110,923 97,169
Other operating expenses, exclusive of provision for bad debts,
depreciation and amortization.................................. 65,010 63,822
Interest expense................................................. 68,222 68,146
Provision for bad debts.......................................... 554 359
Depreciation and amortization.................................... 13,004 10,585
Equity in earnings (loss) of unconsolidated real estate ventures. (425) 811
Gain on dispositions of assets and other provisions, net......... 408 15,856
-------- --------
Earnings before income taxes and extraordinary losses.......... 44,321 58,596
-------- --------
Income taxes, primarily federal:
Current........................................................ 2,597 5,478
Deferred....................................................... 17,096 16,582
-------- --------
19,693 22,060
-------- --------
Earnings before extraordinary losses........................... 24,628 36,536
Extraordinary losses, net........................................ --- 1,127
-------- --------
Net earnings................................................... $ 24,628 $ 35,409
======== ========
The accompanying notes are an integral part of these statements.
IV-6
Real Estate Ventures Owned by
The Rouse Company Incentive Compensation Statutory Trust and
The Rouse Company
COMBINED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
Years ended December 31, 1999 and 1998
(in thousands)
Additional
Common paid-in Accumulated
stock capital deficit Total
---------- ---------- ----------- ----------
Balance at December 31, 1997............................ $ 5 $ 141,495 $ (265,797) $ (124,297)
Net earnings............................................ --- --- 35,409 35,409
Dividends on common stock............................... --- --- (4,850) (4,850)
---------- --------- ---------- ----------
Balance at December 31, 1998............................ 5 141,495 (235,238) (93,738)
Net earnings............................................ --- --- 24,628 24,628
Dividends on common stock and other distributions, net.. --- --- (1,505) (1,505)
---------- --------- ---------- ----------
Balance at December 31, 1999............................ $ 5 $ 141,495 $ (212,115) $ (70,615)
========== ========= ========== ==========
The accompanying notes are an integral part of these statements.
IV-7
Real Estate Ventures Owned by
The Rouse Company Incentive Compensation Statutory Trust and
The Rouse Company
COMBINED CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 1999 and 1998
(in thousands)
1999 1998
--------- --------
Cash flows from operating activities
Rents and other revenues received................................... $ 107,434 $107,533
Proceeds from land sales............................................ 155,702 124,152
Interest received................................................... 544 479
Land development expenditures....................................... (72,927) (82,917)
Operating expenditures.............................................. (75,697) (88,965)
Interest paid....................................................... (65,380) (69,017)
Income taxes paid................................................... (2,839) (2,997)
--------- --------
Net cash provided (used) by operating activities.................. 46,837 (11,732)
--------- --------
Cash flows from investing activities
Expenditures for properties in development and improvements to
existing properties funded by debt................................ (90,797) (75,302)
Expenditures for property acquisitions.............................. --- (10,054)
Expenditures for investment in unconsolidated real estate ventures.. (90,379) ---
Proceeds from sales of operating properties......................... 6,619 69,063
Expenditures for improvements to existing properties funded by
cash provided by operating activities.............................. (4,930) (3,162)
Repayments of advances to The Rouse Company, net.................... 112,310 19,522
Other............................................................... --- (624)
--------- --------
Net cash used by investing activities............................. (67,177) (557)
--------- --------
Cash flows from financing activities
Proceeds from issuance of property debt............................. 39,752 110,799
Repayments of property debt:
Scheduled principal payments...................................... (5,603) (5,433)
Other payments.................................................... (8,803) (23,834)
Borrowings (repayments) of other debt, net.......................... 27,373 (67,005)
Increase (decrease) in bank overdraft............................... (17,382) 2,984
Dividends on common stock and other distributions, net.............. (1,505) (4,850)
Other............................................................... (5,298) (372)
--------- --------
Net cash provided by financing activities......................... 28,534 12,289
--------- --------
Net change in cash and cash equivalents............................. 8,194 ---
Cash and cash equivalents at beginning of year...................... --- ---
--------- --------
Cash and cash equivalents at end of year............................ $ 8,194 $ ---
========= ========
The accompanying notes are an integral part of these statements.
IV-8
Reconciliation of Net Earnings to Net Cash
Provided (Used) by Operating Activities
1999 1998
--------- ---------
Net earnings................................................. $ 24,628 $ 35,409
Adjustments to reconcile net earnings to net cash
provided (used) by operating activities:
Depreciation and amortization.............................. 13,004 10,585
Gain on dispositions of assets, net........................ (2,635) (15,856)
Extraordinary losses, net.................................. --- 1,127
Provision for bad debts.................................... 554 359
Decrease (increase) in:
Accounts and notes receivable........................... (902) (42,950)
Other assets............................................ (3,944) 2,264
Increase (decrease) in accounts payable, accrued expenses
and other liabilities................................... (14,927) 5,069
Deferred income taxes...................................... 17,096 16,582
Other, net................................................. 13,963 (24,321)
-------- --------
Net cash provided (used) by operating activities............. $ 46,837 $(11,732)
======== ========
================================================================================
Schedule of Noncash Investing and Financing Activities
Debt assumed by purchasers of land........................... $ 16,616 $ 14,836
======== ========
IV-9
Real Estate Ventures Owned by
The Rouse Company Incentive Compensation Statutory Trust and
The Rouse Company
NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999 and 1998
(1) Summary of significant accounting policies
(a) Basis of presentation
The combined consolidated financial statements include the accounts of the real
estate ventures (Ventures) owned by The Rouse Company Incentive Compensation
Statutory Trust (Trust) and The Rouse Company (Company). The Ventures include
the following entities:
. The Howard Research And Development Corporation and subsidiaries
. The Hughes Corporation and subsidiaries
. Howard Hughes Properties, Inc.
. Rouse Property Management, Inc.
. HRD Properties, Inc. and subsidiaries
The combined consolidated financial statements also include the accounts of
partnerships in which the Ventures have majority interest and control.
Investments in other entities are accounted for using the equity method.
Significant intercompany balances and transactions are eliminated.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
judgments that affect the reported amounts of assets and liabilities and
disclosures of contingencies at the date of the financial statements and
revenues and expenses recognized during the reporting period. Significant
estimates are inherent in the preparation of the Ventures' financial statements.
Actual results could differ from those estimates.
Certain amounts for 1998 have been reclassified to conform to the
presentation for 1999.
The Ventures were initiated on December 31, 1997, when certain wholly owned
subsidiaries of the Company issued 91% of their voting common stock to the
Trust, an entity which is neither owned nor controlled by the Company, for an
aggregate consideration of $1,400,000. These sales were made at fair value and
as part of the Company's plan to meet the qualifications for status as a Real
Estate Investment Trust (REIT). The Company retained the remaining voting stock
of the Ventures and holds all outstanding shares of nonvoting common and/or
preferred stock and, in certain cases, mortgage loans receivable from the
Ventures which, taken together, comprise substantially all (at least 98%) of the
financial interest in them.
Due to the Company's continuing financial interest in the Ventures, the
Ventures retained the Company's historical cost basis of the assets acquired and
liabilities assumed on the date of sale of their voting common stock to the
Trust. The condensed, combined consolidated balance sheet of the Ventures at
December 31, 1997, is summarized as follows (in thousands):
Assets:
Operating properties, net................................ $ 211,385
Properties in development................................ 23,144
Investment land and land held for development and sale... 266,477
Properties held for sale................................. 46,289
Advances to the Company.................................. 131,832
Other.................................................... 169,876
----------
Total.................................................. $ 849,003
==========
Liabilities and shareholders' deficit:
Borrowings from the Company.............................. $ 538,586
Other borrowings......................................... 280,595
Other liabilities........................................ 104,119
Redeemable Series A Preferred stock...................... 50,000
Shareholders' deficit.................................... (124,297)
----------
Total.................................................. $ 849,003
==========
IV-10
(b) Description of business
Through their subsidiaries and affiliates, the Ventures acquire, develop and/or
manage income-producing properties and develop and sell land for residential,
commercial and other uses. The income-producing properties consist of retail
centers and office and industrial properties. The retail centers include The
Mall in Columbia, a regional shopping center in Columbia, Maryland, and several
community shopping centers, in the Columbia area. The office and industrial
properties are located in Columbia and Las Vegas, Nevada. Land development and
sales operations are predominantly related to large-scale, long-term community
development projects in Columbia and Summerlin, Nevada.
(c) Property
Properties to be developed or held and used in operations are carried at cost
reduced for impairment losses, where appropriate. Properties held for sale are
carried at cost reduced for valuation allowances, where appropriate.
Acquisition, development and construction costs of properties in development and
land development projects are capitalized including, where applicable, salaries
and related costs, real estate taxes, interest and preconstruction costs. The
preconstruction stage of development of an operating property (or an expansion
of an existing property) includes efforts and related costs to secure land
control and zoning, evaluate feasibility and complete other initial tasks which
are essential to development. These costs are transferred to construction and
development in progress when the preconstruction tasks are completed. Provision
is made for potentially unsuccessful preconstruction efforts by charges to
operations. Development and construction costs and costs of significant
improvements, replacements and renovations at operating properties are
capitalized, while costs of maintenance and repairs are expensed as incurred.
Direct costs associated with financing and leasing of operating properties
are capitalized as deferred costs and amortized using the interest or straight-
line methods, as appropriate, over the periods benefited by the expenditures.
Depreciation of operating properties is computed using the straight-line
method. Properties are generally depreciated using composite lives ranging from
40 to 55 years producing effective annual rates of depreciation ranging from
1.6% to 2.5%.
If events or circumstances indicate that the carrying value of an operating
property to be held and used or a land development project may be impaired, a
recoverability analysis is performed based on estimated nondiscounted future
cash flows to be generated from the property or project. If the analysis
indicates that the carrying value is not recoverable from future cash flows, the
property or project is written down to estimated fair value and an impairment
loss is recognized.
Properties held for sale are carried at the lower of their carrying values
(i.e., cost less accumulated depreciation and any impairment loss recognized,
where applicable) or estimated fair values less costs to sell. The net carrying
values of operating properties are classified as properties held for sale when
marketing of the properties for sale is authorized by management. Depreciation
of these properties is discontinued at that time, but operating revenues,
interest and other operating expenses continue to be recognized until the date
of sale.
(d) Sales of property
Gains from sales of operating properties and revenues from land sales are
recognized using the full accrual method provided that various criteria relating
to the terms of the transactions and any subsequent involvement by the Ventures
with the properties sold are met. Gains or revenues relating to transactions
which do not meet the established criteria are deferred and recognized when the
criteria are met or using the installment or cost recovery methods, as
appropriate in the circumstances. For land sale transactions under terms of
which the Ventures are required to perform additional services and incur
significant costs after title has passed, revenues and costs of sales are
recognized proportionately on a percentage of completion basis.
Cost of land sales is generally determined as a specified percentage of
land sales revenues recognized for each land development project. The cost
percentages used are based on estimates of development costs and sales revenues
to completion of each project and are revised periodically for changes in
estimates or development plans. The specific identification method is used to
determine cost of sales of certain parcels of land.
Certain of the land assets of the Ventures are the subject of a Contingent
Stock Agreement (Agreement) between the Company and the former owners of the
land or their successors (the beneficiaries). Under the Agreement, and subject
to various terms and conditions, the Company is required to issue shares of its
common stock (or, in certain circumstances, Increasing Rate Cumulative Preferred
stock) to the beneficiaries based on the appraised values of the assets at
specified "termination dates" from 2000 to 2009 and/or cash flows generated from
the development and/or sale of the assets prior to the termination dates.
The Company has retained full responsibility for its obligations under the
Agreement. These obligations are unsecured and have not been guaranteed by the
Ventures. Accordingly, the Agreement imposes no direct or contingent li-
IV-11
abilities on the Ventures and all related costs or expenses are recognized by
the Company.
(e) Leases
Leases which transfer substantially all the risks and benefits of ownership to
tenants are considered finance leases and the present values of the minimum
lease payments and the estimated residual values of the leased properties, if
any, are accounted for as receivables. Leases which transfer substantially all
the risks and benefits of ownership to the Ventures are considered capital
leases and the present values of the minimum lease payments are accounted for as
property and liabilities.
In general, minimum rent revenues are recognized when due from tenants;
however, estimated collectible minimum rent revenues under leases which provide
for varying rents over their terms are averaged over the terms of the leases.
f) Income taxes
Deferred income taxes are accounted for using the asset and liability method.
Under this method, deferred income taxes are recognized for temporary
differences between the financial reporting bases of assets and liabilities and
their respective tax bases and for operating loss and tax credit carryforwards
based on enacted tax rates expected to be in effect when such amounts are
realized or settled. However, deferred tax assets are recognized only to the
extent that it is more likely than not that they will be realized based on
consideration of available evidence, including tax planning strategies and other
factors.
(g) Cash and cash equivalents
Short-term investments with maturities at dates of purchase of three months or
less are classified as cash equivalents.
(h) Information about financial instruments
Fair values of financial instruments approximate their carrying values in the
financial statements except for debt for which fair value information is
provided in note 6.
(2) Property
Operating properties and deferred costs of projects at December 31, 1999 and
1998 are summarized as follows (in thousands):
1999 1998
---------- -----------
Buildings and improvements.......... $398,469 $ 289,902
Land................................ 32,950 26,023
Deferred costs...................... 33,443 10,472
Furniture and equipment............. 966 463
---------- -----------
Total............................ $465,828 $ 326,860
========== ===========
Depreciation expense for 1999 and 1998 was $11,673,000 and $9,668,000,
respectively, and amortization expense was $1,331,000 and $917,000,
respectively.
Investment land and land held for development and sale at December 31, 1999
and 1998 is summarized as follows (in thousands):
1999 1998
--------- -----------
Land under development.............. $131,854 $ 131,663
Finished land....................... 70,107 70,747
Raw land............................ 55,812 75,745
--------- -----------
Total............................ $257,773 $ 278,155
========= ===========
(3) Investments in and advances to unconsolidated real estate ventures
Investments in and advances to unconsolidated real estate ventures at
December 31, 1999 and 1998 are summarized as follows (in thousands):
1999 1998
--------- -----------
Investments in properties owned jointly with the Company....... $ 86,777 $ ---
Investments in other unconsolidated real estate ventures....... 21,036 22,689
--------- ---------
Total............................................... $ 107,813 $ 22,689
========= =========
Investments in properties owned jointly with the Company consist of a
limited partnership interest
IV-12
in a retail center and limited partnership interests in partnerships that own a
mixed-use property. The Ventures made additional capital contributions to the
limited partnerships in 1999 which then repaid certain loans from the Company.
The condensed, combined balance sheets of these limited partnerships at
December 31, 1999 and their condensed combined statements of operations for 1999
are summarized as follows (in thousands):
Total assets, primarily property............... $140,099
=========
Liabilities, primarily long-term debt.......... $ 96,576
Venturers' equity.............................. 43,523
---------
Total liabilities and venturers' equity...... $140,099
=========
Revenues....................................... $ 15,698
Operating and interest expenses................ 15,686
Depreciation and amortization.................. 3,656
---------
Net loss..................................... $ (3,644)
=========
The Ventures' share of the losses of these partnerships was approximately
$2,000,000 in 1999.
(4) Accounts and notes receivable
Accounts and notes receivable at December 31, 1999 and 1998 are summarized as
follows (in thousands):
1999 1998
--------- ----------
Accounts receivable, primarily accrued rents and
income under tenant leases........................... $ 11,934 $ 11,547
Notes receivable from sales of operating properties.... 1,197 1,221
Notes receivable from sales of land.................... 76,417 76,504
Interest bearing advances to the Company............... -- 99,018
Noninterest bearing advances to the Company............ -- 13,292
--------- ----------
89,548 201,582
Less allowance for doubtful receivables 783 834
--------- ----------
Total............................................. $ 88,765 $ 200,748
========= ==========
Accounts and notes receivable due after one year at December 31, 1999 and
1998 were $47,156,000 and $41,263,000, respectively.
Credit risk with respect to receivables from tenants is not highly
concentrated due to the large number of tenants. The Ventures perform credit
evaluations of prospective new tenants and require security deposits in certain
circumstances. Tenants' compliance with the terms of their leases is monitored
closely, and the allowance for doubtful receivables is established based on
analyses of the risk of loss on specific tenant accounts, historical trends and
other relevant information. Notes receivable from sales of land are primarily
due from builders at the community development project in Summerlin. The
Ventures perform credit evaluations of the builders and generally require
substantial down payments (at least 20%) on all land sales that they finance.
These notes and notes from sales of operating properties are generally secured
by first liens on the related properties.
Advances to the Company are unsecured and without a stated due date.
Interest is charged (with limited exceptions) at the same rate that is charged
on the Ventures' credit facilities borrowings described in note 6. Interest on
these advances was $2,647,000 in 1999 and $9,067,000 in 1998.
(5) Pension and postretirement plans
Substantially all of the employees of the Ventures are eligible to participate
in a defined benefit pension plan (the "funded plan") sponsored by the Company.
In addition, employees whose defined benefits exceed the limits of the funded
plan are eligible to participate in separate, nonqualified unfunded plans
sponsored by the Company. Benefits under the pension plans are based on the
participants' years of service and compensation. The Ventures reimburse the
Company for their share of the annual benefit cost under the plan. The Ventures'
pension cost was $3,386,000 in 1999
IV-13
and $2,485,000 in 1998.
Full-time employees of the Ventures who meet minimum age and service
requirements are eligible to receive postretirement medical and life insurance
benefits under a plan sponsored by the Company. The Ventures reimburse the
Company for their share of the annual benefit costs under the plan, which
include a portion of the cost of participants' life insurance coverage and
contributions (based on years of service) to the cost of participants' medical
insurance coverage, subject to a maximum annual contribution. The Ventures'
postretirement benefit cost was $561,000 in 1999 and $606,000 in 1998.
(6) Debt
Debt at December 31, 1999 and 1998 is summarized as follows (in thousands):
1999 1998
---------- ----------
Borrowings from the Company:
Deed of trust notes payable......... $ 333,907 $ 362,167
Credit lines........................ 59,674 60,911
Other loans......................... 121,211 64,341
---------- ----------
514,792 487,419
Mortgages payable - other lenders...... 347,905 317,176
Other debt............................. 2,741 15,769
---------- ----------
Total............................... $ 865,438 $ 820,364
========== ==========
The deed of trust notes payable to the Company are secured by certain land
and operating properties and general assignments of rents. These notes are due
December 31, 2012, and minimum principal payments, based on a thirty-year
amortization schedule, are due quarterly. Specified principal payments are also
required when land is released from the deed of trust; however, payments made
due to partial releases reduce or offset the required quarterly payments. Notes
aggregating $319,907,000 bear interest at 12.25% through December 2000, and at
the greater of the prime rate plus 3.75% or 10% thereafter to maturity or
repayment. The remaining notes bear interest at 12.25% throughout their terms.
Interest on the notes was $43,052,000 in 1999 and $45,671,000 in 1998.
The Ventures have five separate credit line facilities with the Company
that provide for aggregate borrowings of up to $115,000,000. These facilities
may be used for various purposes, including acquisitions, development and other
corporate needs, subject to specified terms and conditions. The credit
facilities are available to December 31, 2012. Borrowings are secured by deeds
of trust on certain land assets. Borrowings under the credit facilities bear
interest at 9% through December 2001, and at the greater of the prime rate plus
3.75% or 10% thereafter. Interest on the credit line facilities was $4,553,000
in 1999 and $1,193,000 in 1998.
Other loans payable to the Company are unsecured and are due in equal
annual installments over periods to 2024. The notes bear interest at a variable
rate (8.5% at December 31, 1999) which is based on the weighted-average interest
rate of certain borrowings of the Company and subsidiaries. Interest on the
other loans was $9,930,000 in 1999 and $6,476,000 in 1998.
The mortgages payable to other lenders are secured by deeds of trust or
mortgages on properties and general assignments of rents. This debt matures at
various dates through 2017 and, at December 31, 1999, bears interest at a
weighted-average effective rate of 7.70%. At December 31, 1999, approximately
$236,663,000 of the mortgages were payable to one lender.
Other debt bears interest at a weighted-average effective rate of 6.92% at
December 31, 1999.
The annual maturities of debt at December 31, 1999 are summarized as follows
(in thousands):
Borrowings
from the Other
Company Borrowings Total
---------- ---------- ---------
2000................................ $ 6,558 $ 5,725 $ 12,283
2001................................ 9,364 6,640 16,004
2002................................ 6,253 7,117 13,370
2003................................ 6,483 7,173 13,656
2004................................ 5,992 29,043 35,035
IV-14
Subsequent to 2004.................. 480,142 294,948 775,090
---------- ---------- ---------
Total............................ $514,792 $350,646 $ 865,438
========== ========== =========
Total interest costs were $85,407,000 in 1999 and $83,411,000 in 1998, of
which $17,185,000 and $15,265,000, respectively, were capitalized.
During 1998, the Ventures incurred extraordinary losses related to
extinguishments of debt prior to scheduled maturity of $1,863,000, less related
deferred income tax benefits of $736,000. The sources of funds used to pay the
debt and fund the prepayment penalties, where applicable, were refinancings of
the related properties.
The carrying amounts of the borrowings from the Company approximate fair
value at December 31, 1999 and 1998. The carrying amounts and estimated fair
values of the Ventures' other debt at December 31, 1999 and 1998 are
summarized as follows (in thousands):
1999 1998
--------------------------- ------------------------------
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
------------ ---------- ------------ -----------
Fixed rate debt................ $ 348,950 $ 332,102 $ 326,060 $ 342,962
Variable rate debt............. 1,696 1,696 6,885 6,885
------------ ---------- ------------ -----------
Total.................... $ 350,646 $ 333,798 $ 332,945 $ 349,847
============ ========== ============ ===========
Fair value estimates are made at a specific point in time, are subjective
in nature and involve uncertainties and matters of significant judgment.
Settlement of the Ventures' debt obligations at fair value may not be possible
and may not be a prudent management decision.
(7) Income taxes
Income tax expense is reconciled to the amount computed by applying the Federal
corporate tax rate as follows (in thousands):
1999 1998
-------- ---------
Tax at statutory rate on earnings before
income taxes and extraordinary losses......... $ 15,512 $ 20,509
Increase in valuation allowance................. 3,802 952
State income taxes, net of Federal income
tax benefit and valuation allowance
attributable to state taxes................... 379 599
-------- ---------
Income tax expense.............................. $ 19,693 $ 22,060
======== =========
The net deferred tax asset at December 31, 1999 and 1998 is summarized as
follows (in thousands):
1999 1998
-------- ---------
Total deferred tax assets....................... $ 70,093 $ 79,979
Valuation allowance............................. 4,754 952
Total deferred tax liabilities.................. 28,775 21,367
-------- ---------
Net deferred tax asset.......................... $ 36,564 $ 53,660
======== =========
The tax effects of temporary differences and loss carryforwards included in
the net deferred tax asset at December 31, 1999 and 1998 are summarized as
follows (in thousands):
1999 1998
--------- ----------
Property, primarily differences in depreciation and
amortization, the tax basis of land assets and
treatment of interest and certain other costs ....... $ 7,411 $ 41,740
Operating loss and tax credit carryforwards............ 26,031 11,295
Other.................................................. 3,122 625
--------- ----------
Total................................................ $ 36,564 $ 53,660
========= ==========
IV-15
The net operating losses carried forward from December 31, 1999 for Federal
income tax purposes aggregate approximately $80,056,000. The loss carryforwards
will begin to expire in 2005.
As indicated above, the deferred tax assets relate primarily to differences
in the book and tax bases of property (particularly land assets) and to
operating loss carryforwards for Federal income tax purposes. A valuation
allowance has been established due to significant uncertainty of realizing
certain loss carryforwards. Based on projections of future taxable income,
management believes that it is more likely than not that the deferred tax
assets, net of the valuation allowance, will be realized. The amount of the
deferred tax assets considered realizable could be reduced in the near term,
however, if estimates of future taxable income are reduced.
(8) Gain on dispositions of assets and other provisions, net
Gain on dispositions of assets and other provisions, net, is summarized as
follows (in thousands):
1999 1998
-------- ---------
Net gain on operating properties............. $ 2,635 $ 15,879
Other, net................................... (2,227) (23)
-------- ---------
Total..................................... $ 408 $ 15,856
======== =========
The net gain on operating properties in 1999 relates primarily to the sale
of two office/industrial buildings. The other net loss for 1999 relates
primarily to the Ventures' share of the costs of the Company's consolidation of
the management and administration of its Retail Operations and Office and Mixed-
Use Operations divisions into a single Property Operations Division, integration
of certain operating, administrative, and support functions of the Hughes
Division into other divisions and adoption of a voluntary early retirement
program in which employees who met certain criteria were eligible to
participate.
The net gain on operating properties in 1998 relates primarily to sales of
a hotel property and two office/industrial buildings.
9) Series A Preferred Stock
Howard Hughes Properties, Inc. (HHPI) has issued 25,000 shares of Series A
Preferred stock to the Company. The shares have a liquidation preference of
$2,000 per share and earn dividends at an annual rate of 9.9% of the liquidation
preference. Dividends are cumulative, however, no dividends were paid during
1999 or 1998 because HHPI incurred tax losses. Dividends in arrears at December
31, 1999 aggregated $8,900,000. At the option of the Company, the shares are
redeemable at any time to December 31, 2017 at a price of $2,000 per share.
(10) Leases
The Ventures, as lessee, have entered into operating leases expiring at various
dates through 2062. Rents under such leases aggregated $473,000 in 1999 and
1998. In addition, real estate taxes, insurance and maintenance expenses are
obligations of the Ventures. Minimum rent payments due under operating leases in
effect at December 31, 1999 are summarized as follows (in thousands):
2000.................................. $ 428
2001.................................. 428
2002.................................. 428
2003.................................. 258
2004.................................. 258
Subsequent to 2004.................... 14,868
--------
Total............................... $ 16,668
========
IV-16
Space in the Ventures' operating properties is leased to approximately 720
tenants. In addition to minimum rents, the majority of the retail center leases
provide for percentage rents when the tenants' sales volumes exceed stated
amounts, and the majority of the retail center and office leases provide for
other rents which reimburse the Ventures for certain of their operating
expenses. Rents from tenants are summarized as follows (in thousands):
1999 1998
--------- ---------
Minimum rents....................... $ 51,110 $ 47,977
Percentage rents.................... 1,067 996
Other rents......................... 23,035 24,838
--------- ---------
Total............................ $ 75,212 $ 73,811
========= =========
The minimum rents to be received from tenants under operating leases in
effect at December 31, 1999 are summarized as follows (in thousands):
2000................................ $ 49,181
2001................................ 44,026
2002................................ 37,596
2003................................ 32,092
2004................................ 23,619
Subsequent to 2004.................. 66,955
---------
Total............................ $ 253,469
=========
(11) Other transactions with The Rouse Company
Under an informal agreement, the Company provides various services to the
Ventures, including accounting, data processing, legal, leasing, finance, and
other administrative and support functions. The Ventures reimburse the Company
for the cost of these services, determined in accordance with the Company's
established cost accounting practices. Under terms of a license agreement, the
Ventures paid the Company fees of $500,000 and $1,000,000 in 1999 and 1998,
respectively, in consideration for the right to use the Company's name in their
property management operations. The fee under the license agreement is
determined annually based on various operating factors. Operating expenses for
1999 and 1998 include license fees and service cost reimbursements to the
Company of approximately $8,750,000 and $8,305,000, respectively. The Ventures
also reimburse the Company for costs of any services it provides with respect to
development of operating properties. These costs were approximately $2,073,000
in 1999 and $2,198,000 in 1998, and related primarily to development of an
expansion of a regional shopping center and new office buildings in Columbia and
Summerlin.
(12) Other commitments and contingencies
Commitments for the construction and development of properties in the ordinary
course of business and other commitments not set forth elsewhere amount to
approximately $31,500,000 at December 31, 1999.
Certain of the Ventures have guaranteed payment of the Company's
obligations under a credit facility with a group of lenders, subject to various
terms and conditions. At December 31, 1999, outstanding borrowings under the
facility were $174,000,000.
The Ventures are defendants in various litigation matters arising in the
ordinary course of business, some of which involve claims for damages that are
substantial in amount. Some of these litigation matters are covered by
insurance. In the opinion of management, adequate provision has been made for
losses with respect to litigation matters, where appropriate, and the ultimate
resolution of such litigation matters is not likely to have a material effect on
the combined financial position of the Ventures. Due to the Ventures'
fluctuating net earnings, it is not possible to predict whether the
resolution of these matters is likely to have a material effect on the Ventures'
combined net earnings and it is, therefore, possible that the resolution
of these matters could have such an effect in a future period.
IV-17
Schedule II
-----------
THE ROUSE COMPANY AND SUBSIDIARIES
Valuation and Qualifying Accounts
Years ended December 31, 1999, 1998 and 1997
(in thousands)
Additions
------------------------
Balance at Charged to Charged to Balance at
beginning costs and other end of
Descriptions of year expenses accounts Deductions year
------------ ---------- ---------- ---------- ---------- ----------
Year ended December 31, 1999:
Allowance for doubtful receivables $ 19,828 $ 8,548 $ --- $ 3,503 /(1)/ $ 24,873
========== ========== ========== ========== ==========
Preconstruction reserve $ 15,908 $ --- $ --- $ 10,661 /(3)/ $ 5,247
========== ========== ========== ========== ==========
Year ended December 31, 1998:
Allowance for doubtful receivables $ 21,311 $ 7,735 $ --- $ 9,218 /(1)/ $ 19,828
========== ========== ========== ========== ==========
Valuation allowance - properties held for sale $ 37,952 $ --- $ --- $ 37,952 /(2)/ $ ---
========== ========== ========== ========== ==========
Preconstruction reserve $ 17,351 $ 1,700 $ --- $ 3,143 /(3)/ $ 15,908
========== ========== ========== ========== ==========
Year ended December 31, 1997:
Allowance for doubtful receivables $ 28,153 $ 5,766 $ --- $ 12,608 /(1)/ $ 21,311
========== ========== ========== ========== ==========
Valuation allowance - properties held for sale $ 35,671 $ 26,249 $ --- $ 23,968 /(2)/ $ 37,952
========== ========== ========== ========== ==========
Preconstruction reserve $ 16,317 $ 2,800 $ --- $ 1,766 /(3)/ $ 17,351
========== ========== ========== ========== ==========
Notes:
(1) Balances written off as uncollectible.
(2) Allowance related to properties sold.
(3) Costs of unsuccessful projects written off and other deductions.
IV-18
Schedule III
------------
THE ROUSE COMPANY AND SUBSIDIARIES
Real Estate and Accumulated Depreciation (note 1)
December 31, 1999
(in thousands)
Costs capitalized subsequent Gross amount at which carried
Initial cost to Company to acquisition at close of period
------------------------- ----------------------------- ------------------------------
Buildings Buildings
and and
Encum- Improvements Improve Carrying Improve
Description brances Land (note 3) ments costs (note 2) Land ments Total
- ----------- -------- --------- ------------ ---------- -------------- -------- --------- ---------
Operating Properties:
The Fashion Show $ 73,255 $35,036 $120,347 $ 12,302 $- $35,036 $132,649 $167,685
Retail Center
Las Vegas, NV
Arizona Center 98,574 98 -- 154,955 98 154,955 155,053
Mixed-Use project
Phoenix, AZ
South Street Seaport 56,302 -- -- 147,653 -- -- 147,653 147,653
Retail Center
New York, NY
Woodbridge Center 130,646 26,301 -- 119,920 -- 26,301 119,920 146,221
Retail Center
Woodbridge, NJ
Beachwood Place 118,133 10,673 -- 129,427 -- 10,673 129,427 140,100
Retail Center
Beachwood, OH
Fashion Place Mall 116,033 19,379 119,715 766 -- 19,379 120,481 139,860
Retail Center
Salt Lake City, UT
Owings Mills 61,000 19,735 -- 115,914 -- 19,735 115,914 135,649
Retail Center
Baltimore County, MD
Oviedo Marketplace 69,485 11,745 -- 112,644 -- 11,745 112,644 124,389
Retail Center
Orlando, FL
Pioneer Place 122,810 -- -- 121,445 -- -- 121,445 121,445
Mixed-Use project
Portland, OR
Westlake Center 92,295 10,582 -- 101,242 -- 10,582 101,242 111,824
Mixed-Use project
Seattle, WA
Life on
Accumulated Date of which depre-
depreciation completion ciation in
latest
and of Date income state-
Description amortization construction acquired ment is computed
- ----------- ------------ ------------ -------- ----------------
Operating Properties:
The Fashion Show $ 13,734 03/81 06/96 Note 9
Retail Center
Las Vegas, NV
Arizona Center 36,721 07/83 N/A Note 9
Mixed-Use project
Phoenix, AZ
South Street Seaport 31,513 07/83 N/A Note 9
Retail Center
New York, NY
Woodbridge Center 30,682 03/71 N/A Note 9
Retail Center
Woodbridge, NJ
Beachwood Place 11,598 08/78 N/A Note 9
Retail Center
Beachwood, OH
Fashion Place Mall 2,526 03/72 10/98 Note 9
Retail Center
Salt Lake City, UT
Owings Mills 15,506 07/86 N/A Note 9
Retail Center
Baltimore County, MD
Oviedo Marketplace 4,666 03/98 N/A Note 9
Retail Center
Orlando, FL
Pioneer Place 27,580 03/90 N/A Note 9
Mixed-Use project
Portland, OR
Westlake Center 25,576 10/88 N/A Note 9
Mixed-Use project
Seattle, WA
IV-19
THE ROUSE COMPANY AND SUBSIDIARIES
Real Estate and Accumulated Depreciation (note 1)
December 31, 1999
(in thousands)
Costs capitalized subsequent Gross amount at which carried
Initial cost to Company to acquisition at close of period
----------------------- ---------------------------- -----------------------------
Buildings Buildings
and and
Encum- Improvements Improve Carrying Improve
Description brances Land Note 3 ments costs Land ments Total
----------- ------- ---- ------ ----- ----- ---- ----- -----
The Gallery at Harborplace $ 105,118 $ 6,648 $ -- $ 104,463 $ -- $ 6,648 $ 104,463 $ 111,111
Mixed-Use project
Baltimore, MD
Mall St. Matthews 70,374 -- -- 105,750 -- -- 105,750 105,750
Retail Center
Louisville, KY
Paramus Park 72,000 13,475 -- 85,260 -- 13,475 85,260 98,735
Retail Center
Paramus, NJ
Bayside Marketplace 75,504 -- -- 98,305 -- -- 98,305 98,305
Retail Center
Miami, FL
Governor's Square 69,922 -- -- 84,768 -- -- 84,768 84,768
Retail Center
Tallahassee, FL
Moorestown Mall 42,000 13,549 65,596 441 -- 13,549 66,037 79,586
Retail Center
Burlington County, NJ
Oakwood Center 53,070 15,938 -- 60,861 -- 15,938 60,861 76,799
Retail Center
Gretna, LA
Plymouth Meeting 34,327 702 -- 75,881 -- 702 75,881 76,583
Retail Center
Montgomery County, PA
Faneuil Hall Marketplace 52,761 -- -- 75,170 -- -- 75,170 75,170
Retail Center
Boston, MA
Cherry Hill Mall 77,404 14,767 -- 59,158 -- 14,767 59,158 73,925
Retail Center
Cherry Hill, NJ
Hulen Mall 63,338 7,575 -- 63,859 -- 7,575 63,859 71,434
Retail Center
Ft. Worth, TX
Accumulated Date of Life on
depreciation completion which depreciation
and of Date in latest income
amortization construction acquired statement is compute
------------ ------------ -------- --------------------
The Gallery at Harborplace $ 24,792 09/87 N/A Note 9
Mixed-Use project
Baltimore, MD
Mall St. Matthews 20,579 03/62 N/A Note 9
Retail Center
Louisville, KY
Paramus Park 12,838 03/74 N/A Note 9
Retail Center
Paramus, NJ
Bayside Marketplace 19,555 04/87 N/A Note 9
Retail Center
Miami, FL
Governor's Square 10,048 08/79 N/A Note 9
Retail Center
Tallahassee, FL
Moorestown Mall 3,325 03/63 12/97 Note 9
Retail Center
Burlington County, NJ
Oakwood Center 11,056 10/82 N/A Note 9
Retail Center
Gretna, LA
Plymouth Meeting 11,518 02/66 N/A Note 9
Retail Center
Montgomery County, PA
Faneuil Hall Marketplace 11,433 08/76 N/A Note 9
Retail Center
Boston, MA
Cherry Hill Mall 19,573 10/61 N/A Note 9
Retail Center
Cherry Hill, NJ
Hulen Mall 11,556 08/77 N/A Note 9
Retail Center
Ft. Worth, TX
IV-20
THE ROUSE COMPANY AND SUBSIDIARIES
Real Estate and Accumulated Depreciation (note 1)
December 31, 1999
(in thousands)
Costs capitalized subsequent Gross amount at which carried
Initial cost to Company to acquisition at close of period
----------------------- ---------------------------- -----------------------------
Buildings Buildings
and and
Encum- Improvements Improve Carrying Improve
Description brances Land Note 3 ments costs Land ments Total
----------- ------- ---- ------ ----- ----- ---- ----- -----
Riverwalk $ 11,056 $ -- $ -- $ 70,982 $ -- $ -- $ 70,982 $ 70,982
Retail Center
New Orleans, LA
Augusta Mall 59,791 4,698 -- 64,974 -- 4,698 64,974 69,672
Retail Center
Augusta, GA
Echelon Mall 58,296 6,160 -- 63,063 -- 6,160 63,063 69,223
Retail Center
Voorhees, NJ
Harborplace 35,905 -- -- 57,602 -- -- 57,602 57,602
Retail Center
Baltimore, MD
Perimeter Mall 67,049 -- -- 52,078 -- -- 52,078 52,078
Retail Center
Atlanta, GA
Blue Cross & Blue Shield 29,097 1,000 -- 44,756 -- 1,000 44,756 45,756
Building I
Office Building
Baltimore, MD
3800 Howard Hughes Parkway 38,596 3,622 38,438 2,614 -- 3,622 41,052 44,674
Office Building
Las Vegas, NV
Exton Square 63,843 1,408 -- 42,685 -- 1,408 42,685 44,093
Retail Center
Exton, PA
White Marsh 40,544 4,390 -- 33,583 -- 4,390 33,583 37,973
Retail Center
Baltimore, MD
The Jacksonville Landing 11,851 -- -- 34,775 -- -- 34,775 34,775
Retail Center
Jacksonville, FL
Village of Cross Keys 14,855 925 -- 29,286 -- 925 29,286 30,211
Mixed-Use project
Baltimore, MD
Accumulated Date of Life on
depreciation completion which depreciation
and of Date in latest income
amortization construction acquired statement is compute
------------ ------------ -------- --------------------
Riverwalk $ 12,935 08/86 N/A Note 9
Retail Center
New Orleans, LA
Augusta Mall 6,303 08/78 N/A Note 9
Retail Center
Augusta, GA
Echelon Mall 11,386 09/70 N/A Note 9
Retail Center
Voorhees, NJ
Harborplace 9,723 07/80 N/A Note 9
Retail Center
Baltimore, MD
Perimeter Mall 5,932 08/71 N/A Note 9
Retail Center
Atlanta, GA
Blue Cross & Blue Shield 11,302 07/89 N/A Note 9
Building I
Office Building
Baltimore, MD
3800 Howard Hughes Parkway 5,330 11/86 06/96 Note 9
Office Building
Las Vegas, NV
Exton Square 10,658 03/73 N/A Note 9
Retail Center
Exton, PA
White Marsh 9,428 08/81 N/A Note 9
Retail Center
Baltimore, MD
The Jacksonville Landing 13,079 06/87 N/A Note 9
Retail Center
Jacksonville, FL
Village of Cross Keys 8,417 09/65 N/A Note 9
Mixed-Use project
Baltimore, MD
IV-21
THE ROUSE COMPANY AND SUBSIDIARIES
Real Estate and Accumulated Depreciation (note 1)
December 31, 1999
(in thousands)
Costs capitalized subsequent Gross amount at which carried
Initial cost to Company to acquisition at close of period
----------------------- ---------------------------- -----------------------------
Buildings Buildings
and and
Encum- Improve Improve Carrying Improve
Description brances Land ments ments costs Land ments Total
----------- ------- ---- ----- ----- ----- ---- ----- -----
Willowbrook $ 38,436 $ 853 $ -- $ 29,249 $ -- $ 853 $ 29,249 30,102
Retail Center
Wayne, NJ
3773 Howard Hughes Parkway 22,040 1,738 22,625 3,502 -- 1,738 26,127 27,865
Office Building
Las Vegas, NV
North Star -- 168 -- 26,767 -- 168 26,767 26,935
Retail Center
San Antonio, TX
Alexander & Alexander 17,712 1,000 -- 25,820 -- 1,000 25,820 26,820
Building II
Office Building
Baltimore, MD
3960 Howard Hughes Parkway 23,920 800 -- 23,843 -- 800 23,843 24,643
Office Building
Las Vegas, NV
The Gallery at Market East -- -- -- 24,500 -- -- 24,500 24,500
Retail Center
Philadelphia, PA
Senate Plaza 15,818 3,488 20,379 299 -- 3,488 20,678 24,166
Office Building
Camp Hill, PA
Hunt Valley 75 16,883 6,659 14,187 704 -- 6,659 14,891 21,550
Office Building
Hunt Valley, MD
Franklin Park 25,499 653 -- 19,999 -- 653 19,999 20,652
Retail Center
Toledo, OH
Mondawmin Mall 3,218 2,251 -- 18,154 -- 2,251 18,154 20,405
Retail Center
Baltimore, MD
Accumulated Date of Life on
depreciation completion which depreciation
and of Date in latest income
Description amortization construction acquired statement is compute
----------- ------------ ------------ -------- --------------------
Willowbrook $ 8,014 09/69 N/A Note 9
Retail Center
Wayne, NJ
3773 Howard Hughes Parkway 2,444 11/95 6/96 Note 9
Office Building
Las Vegas, NV
North Star 4,561 09/60 N/A Note 9
Retail Center
San Antonio, TX
Alexander & Alexander 7,222 09/87 N/A Note 9
Building II
Office Building
Baltimore, MD
3960 Howard Hughes Parkway 2,011 04/98 6/96 Note 9
Office Building
Las Vegas, NV
The Gallery at Market East 7,776 08/77 N/A Note 9
Retail Center
Philadelphia, PA
Senate Plaza 737 07/72 N/A Note 9
Office Building
Camp Hill, PA
Hunt Valley 75 696 07/84 12/98 Note 9
Office Building
Hunt Valley, MD
Franklin Park 4,755 07/71 N/A Note 9
Retail Center
Toledo, OH
Mondawmin Mall 7,478 01/78 N/A Note 9
Retail Center
Baltimore, MD
IV-22
THE ROUSE COMPANY AND SUBSIDIARIES
Real Estate and Accumulated Depreciation (note 1)
December 31, 1999
(in thousands)
Costs capitalized subsequent Gross amount at which carried
Initial cost to Company to acquisition at close of period
----------------------- ---------------------------- -----------------------------
Buildings Buildings
and and
Encum- Improve Improve Carrying Improve
Description brances Land ments ments costs Land ments Total
----------- ------- ---- ----- ----- ----- ---- ----- -----
Blue Cross & Blue Shield $ 10,613 $ 1,000 $ -- $ 16,591 $ -- $ 1,000 $ 16,591 $ 17,591
Building II
Office Building
Baltimore, MD
3753 / 3763 Howard Hughes 10,714 3,844 12,018 724 -- 3,844 12,742 16,586
Parkway
Office Building
Las Vegas, NV
Highland Mall 4,731 13 -- 16,535 -- 13 16,535 16,548
Retail Center
Austin, TX
Alexander & Alexander 10,878 650 -- 15,825 -- 650 15,825 16,475
Building I
Office Building
Baltimore, MD
Centerpointe 6,851 4,012 11,302 166 -- 4,012 11,468 15,480
Office Building
Hunt Valley, MD
3930 Howard Hughes Parkway 6,150 3,108 11,279 593 -- 3,108 11,872 14,980
Office Building
Las Vegas, NV
Canyon Center 12,338 2,081 7,161 5,348 -- 2,081 12,509 14,590
Office Building
Las Vegas, NV
Shilling Plaza South 6,068 5,437 7,402 1,408 -- 5,437 8,810 14,247
Office Building
Hunt Valley, MD
Canyon Center C&D -- 1,723 -- 11,835 -- 1,723 11,835 13,558
Office Building/Industrial
Las Vegas, NV
3980 Howard Hughes 10,406 879 5,583 6,230 -- 879 11,813 12,692
Office Building
Las Vegas, NV
Accumulated Life on
depreciation Date of which depreciation
and completion Date in latest income
Description amortization construction acquired statement is compute
----------- ------------ ------------ -------- --------------------
Blue Cross & Blue Shield $ 3,818 08/90 N/A Note 9
Building II
Office Building
Baltimore, MD
3753 / 3763 Howard Hughes 1,441 10/91 6/96 Note 9
Parkway
Office Building
Las Vegas, NV
Highland Mall 4,801 08/71 N/A Note 9
Retail Center
Austin, TX
Alexander & Alexander 5,330 11/88 N/A Note 9
Building I
Office Building
Baltimore, MD
Centerpointe 410 07/87 12/98 Note 9
Office Building
Hunt Valley, MD
3930 Howard Hughes Parkway 2,373 12/94 06/96 Note 9
Office Building
Las Vegas, NV
Canyon Center 1,099 03/98 06/96 Note 9
Office Building
Las Vegas, NV
Shilling Plaza South 438 07/87 12/98 Note 9
Office Building
Hunt Valley, MD
Canyon Center C&D 794 06/98 06/96 Note 9
Office Building/Industrial
Las Vegas, NV
3980 Howard Hughes 942 04/97 06/96 Note 9
Office Building
Las Vegas, NV
IV-23
THE ROUSE COMPANY AND SUBSIDIARIES
Real Estate and Accumulated Depreciation (note 1)
December 31, 1999
(in thousands)
Costs capitalized subsequent Gross amount at which carried
Initial cost to Company to acquisition at close of period
------------------------- ---------------------------- -----------------------------
Buildings Buildings
and and
Encum- Improvements Improve Carrying Improve
Description brances Land (note 3) ments costs Land ments Total
----------- ------- ---- ------- ----- ----- ---- ----- -----
Crossing Business
Center Phase III
Office Building
Las Vegas, NV $ 8,325 $2,842 $1,416 $8,303 $ -- $2,842 $9,719 $12,561
Shilling Plaza North
Office Building
Hunt Valley, MD 7,805 4,024 8,059 15 -- 4,024 8,074 12,098
Riverspark 2/Building 2
Office Building/Industrial
Columbia, MD 1,471 3,358 7,955 -- -- 3,358 7,955 11,313
Trails Village Center
Community Retail Center
Las Vegas, NV 10,030 2,921 -- 7,221 -- 2,921 7,221 10,142
Crossing Business
Center Phase I
Office Building
Las Vegas, NV 7,512 1,326 7,951 539 -- 1,326 8,490 9,816
3770 Howard Hughes Parkway
Office Building
Las Vegas, NV 5,397 691 8,010 916 -- 691 8,926 9,617
Inglewood Office II
Office Building
Landover, MD 6,179 2,261 7,304 -- -- 2,261 7,304 9,565
201 International Circle
Office Building
Hunt Valley, MD 4,004 5,168 3,763 295 -- 5,168 4,058 9,226
Metro Plaza
Retail Center
Baltimore, MD 136 202 -- 8,751 -- 202 8,751 8,953
Equinox @ CBC
Office Building
Las Vegas, NV 6,911 1,257 398 6,600 -- 1,257 6,998 8,255
Life on
Accumulated Date of which depre-
depreciation completion ciation in latest
and of Date income state-
Description amortization construction acquired ment is computed
----------- ------------ ------------ -------- ----------------
Crossing Business
Center Phase III
Office Building
Las Vegas, NV $ 1,210 09/96 06/96 Note 9
Shilling Plaza North
Office Building
Hunt Valley, MD 291 07/80 12/98 Note 9
Riverspark 2/Building 2
Office Building/Industrial
Columbia, MD 287 07/87 12/98 Note 9
Trails Village Center
Community Retail Center
Las Vegas, NV 267 05/98 06/96 Note 9
Crossing Business
Center Phase I
Office Building
Las Vegas, NV 905 12/94 06/96 Note 9
3770 Howard Hughes Parkway
Office Building
Las Vegas, NV 1,760 10/90 06/96 Note 9
Inglewood Office II
Office Building
Landover, MD 264 07/86 12/98 Note 9
201 International Circle
Office Building
Hunt Valley, MD 193 07/82 12/98 Note 9
Metro Plaza
Retail Center
Baltimore, MD 3,976 N/A 12/82 Note 9
Equinox @ CBC
Office Building
Las Vegas, NV 466 12/97 06/96 Note 9
IV-24
THE ROUSE COMPANY AND SUBSIDIARIES
Real Estate and Accumulated Depreciation (note 1)
December 31, 1999
(in thousands)
Costs capitalized subsequent Gross amount at which carried
Initial cost to Company to acquisition at close of period
-------------------------- ---------------------------- -----------------------------
Buildings Buildings
and and
Encum- Improvements Improve Carrying Improve
Description brances Land (note 3) ments costs Land ments Total
----------- ------- ---- ------------ ----- ----- ---- ----- -----
Inglewood Office Center I $ 5,028 $ 1,940 $ 5,867 $ 160 $ -- $ 1,940 $ 6,027 $ 7,967
Office Building
Landover, MD
Montgomery Ward 6,007 607 7,213 39 -- 607 7,252 7,859
Office Building/Industrial
Las Vegas, NV
Tampa Bay Center 24,714 920 -- 3,785 -- 920 3,785 4,705
Retail Center
Tampa, FL
Crossing Business 5,461 357 7,097 3 -- 357 7,100 7,457
Center Phase II
Office Building
Las Vegas, NV
840 Grier 5,933 963 1,430 4,959 -- 963 6,389 7,352
Office Building/Industrial
Las Vegas, NV
Ambassador Center 4,307 1,385 5,282 9 -- 1,385 5,291 6,676
Office Building
Woodlawn, MD
USA Group 7,102 1,196 4,880 551 -- 1,196 5,431 6,627
Office Building/Industrial
Las Vegas, NV
Inglewood Tech V 4,226 2,889 3,654 26 -- 2,889 3,680 6,569
Industrial Building
Landover, MD
Raytheon -- 422 6,133 -- -- 422 6,133 6,555
Office Building/Industrial
Las Vegas, NV
Canyon Business Center -- 1,188 -- 5,287 -- 1,188 5,287 6,475
Phase V
Office Building/Industrial
Las Vegas, NV
First National Bank Plaza 5,065 -- -- 6,330 -- -- 6,330 6,330
Office Building
Mt. Prospect, IL
Life on
Accumulated Date of which depre-
depreciation completion ciation in
latest
and of Date income state-
Description amortization construction acquired ment is computed
----------- ------------ ------------ -------- ----------------
Inglewood Office Center I $ 220 07/82 12/98 Note 9
Office Building
Landover, MD
Montgomery Ward 708 10/95 06/96 Note 9
Office Building/Industrial
Las Vegas, NV
Tampa Bay Center -- 08/79 N/A Note 9
Retail Center
Tampa, FL
Crossing Business 642 12/95 06/96 Note 9
Center Phase II
Office Building
Las Vegas, NV
840 Grier 533 03/97 06/96 Note 9
Office Building/Industrial
Las Vegas, NV
Ambassador Center 191 07/85 12/98 Note 9
Office Building
Woodlawn, MD
USA Group 238 11/98 06/96 Note 9
Office Building/Industrial
Las Vegas, NV
Inglewood Tech V 137 07/86 12/98 Note 9
Industrial Building
Landover, MD
Raytheon 569 11/92 06/96 Note 9
Office Building/Industrial
Las Vegas, NV
Canyon Business Center 465 03/98 06/96 Note 9
Phase V
Office Building/Industrial
Las Vegas, NV
First National Bank Plaza 2,074 07/81 N/A Note 9
Office Building
Mt. Prospect, IL
IV-25
THE ROUSE COMPANY AND SUBSIDIARIES
Real Estate and Accumulated Depreciation (note 1)
December 31, 1999
(in thousands)
Costs capitalized subsequent Gross amount at which carried
Initial cost to Company to acquisition at close of period
------------------------- ----------------------------- ---------------------------------
Buildings Buildings
and and
Encum- Improvements Improve Carrying Improve
Description brances Land (note 3) ments costs Land ments Total
----------- ------- ------- -------------- ------------- ------------ ------- ---------- --------
Plaza East $4,472 $ 911 $5,299 $ 91 $ -- $ 911 $5,390 $6,301
Office Building/Industrial
Las Vegas, NV
420 Pilot 3,992 1,066 (140) 5,257 -- 1,066 5,117 6,183
Office Building/Industrial
Las Vegas, NV
Pulaski 11 3,849 1,099 4,708 -- -- 1,099 4,708 5,807
Industrial Building
Baltimore, MD
Rutherford 5 2,229 614 5,123 -- -- 614 5,123 5,737
Industrial Building
Woodlawn, MD
Rutherford 60 3,774 1,250 4,445 16 -- 1,250 4,461 5,711
Industrial Building
Woodlawn, MD
Plaza West 4,299 195 5,360 125 -- 195 5,485 5,680
Office Building/Industrial
Las Vegas, NV
Inglewood Tech IV 1,582 2,222 3,365 57 -- 2,222 3,422 5,644
Industrial Building
Landover, MD
980 Kelley Johnson 3,150 815 4,772 38 -- 815 4,810 5,625
Office Building/Industrial
Las Vegas, NV
975 Kelley Johnson 2,844 378 5,211 -- -- 378 5,211 5,589
Office Building/Industrial
Las Vegas, NV
Riverspark Building A 3,562 1,461 4,053 -- -- 1,461 4,053 5,514
Industrial Building
Columbia, MD
Hunt Valley 49 3,531 1,575 3,892 -- -- 1,575 3,892 5,467
Industrial Building
Hunt Valley, MD
Life on
which depre
Accumulated Date of ciation in
depreciation completion latest
and of Date income state-
Description amortization construction acquired ment is computed
----------- ------------ ------------ -------- ----------------
Plaza East $ 544 12/93 06/96 Note 9
Office Building/Industrial
Las Vegas, NV
420 Pilot 585 09/96 06/96 Note 9
Office Building/Industrial
Las Vegas, NV
Pulaski 11 170 07/69 12/98 Note 9
Industrial Building
Baltimore, MD
Rutherford 5 185 07/72 12/98 Note 9
Industrial Building
Woodlawn, MD
Rutherford 60 161 07/72 12/98 Note 9
Industrial Building
Woodlawn, MD
Plaza West 560 11/95 06/96 Note 9
Office Building/Industrial
Las Vegas, NV
Inglewood Tech IV 124 07/86 12/98 Note 9
Industrial Building
Landover, MD
980 Kelley Johnson 492 05/92 06/96 Note 9
Office Building/Industrial
Las Vegas, NV
975 Kelley Johnson 552 11/90 06/96 Note 9
Office Building/Industrial
Las Vegas, NV
Riverspark Building A 146 09/85 12/98 Note 9
Industrial Building
Columbia, MD
Hunt Valley 49 141 02/82 12/98 Note 9
Industrial Building
Hunt Valley, MD
IV-26
THE ROUSE COMPANY AND SUBSIDIARIES
Real Estate and Accumulated Depreciation (note 1)
December 31, 1999
(in thousands)
Costs capitalized subsequent Gross amount at which carried
Initial cost to Company to acquisition at close of period
-------------------------- ---------------------------- -----------------------------
Buildings Buildings
and and
Encum- Improvements Improve Carrying Improve
Description brances Land (note 3) ments costs Land ments Total
----------- ------- ------- --------------- ------------ ------------ ------- ---------- --------
750 Pilot $ -- $ 842 $ -- $4,461 $ -- $ 842 $4,461 $5,303
Office Building/Industrial
Las Vegas, NV
3960/3980 Parking Garage -- 576 -- 4,678 -- 576 4,678 5,254
Parking Garage
Las Vegas, NV
Hunt Valley 36 3,354 1,239 3,954 -- -- 1,239 3,954 5,193
Industrial Building
Hunt Valley, MD
The Grand Avenue -- -- -- 3,506 -- -- 3,506 3,506
Retail Center
Milwaukee, WI
950 Pilot 2,075 769 -- 4,186 -- 769 4,186 4,955
Office Building/Industrial
Las Vegas, NV
731 Pilot 3,908 862 -- 4,030 -- 862 4,030 4,892
Office Building/Industrial
Las Vegas, NV
711 Pilot 3,106 469 -- 4,376 -- 469 4,376 4,845
Office Building/Industrial
Las Vegas, NV
Owen Brown 2 -- 1,247 3,452 85 -- 1,247 3,537 4,784
Office Building/Industrial
Columbia, MD
Rutherford 46 3,165 1,079 3,697 -- -- 1,079 3,697 4,776
Industrial Building
Woodlawn, MD
Hunt Valley 72 -- 1,301 3,473 -- -- 1,301 3,473 4,774
Industrial Building
Hunt Valley, MD
Hunt Valley 70 -- 2,367 2,286 102 -- 2,367 2,388 4,755
Industrial Building
Hunt Valley, MD
Life on
which depre-
Accumulated Date of ciation in
depreciation completion latest
and of Date income state-
Description amortization construction acquired ment is computed
----------- ------------ ------------ -------- ----------------
750 Pilot $ 567 2/98 N/A Note 9
Office Building/Industrial
Las Vegas, NV
3960/3980 Parking Garage 198 05/97 06/96 Note 9
Parking Garage
Las Vegas, NV
Hunt Valley 36 143 02/76 12/98 Note 9
Industrial Building
Hunt Valley, MD
The Grand Avenue -- 08/82 N/A Note 9
Retail Center
Milwaukee, WI
950 Pilot 512 08/90 06/96 Note 9
Office Building/Industrial
Las Vegas, NV
731 Pilot 357 10/95 06/96 Note 9
Office Building/Industrial
Las Vegas, NV
711 Pilot 377 11/95 06/96 Note 9
Office Building/Industrial
Las Vegas, NV
Owen Brown 2 Office 126 6/82 12/98 Note 9
Building/Industrial
Columbia, MD
Rutherford 46 133 02/88 12/98 Note 9
Industrial Building
Woodlawn, MD
Hunt Valley 72 125 6/83 12/98 Note 9
Industrial Building
Hunt Valley, MD
Hunt Valley 70 88 6/82 12/98 Note 9
Industrial Building
Hunt Valley, MD
IV-27
THE ROUSE COMPANY AND SUBSIDIARIES
Real Estate and Accumulated Depreciation (note 1)
December 31, 1999
(in thousands)
Costs capitalized subsequent Gross amount at which carried
Initial cost to Company to acquisition at close of period
------------------------- ------------------------------- --------------------------------
Buildings Buildings
and and
Encum- Improvements Improve Carrying Improve
Description brances Land (note 3) ments costs Land ments Total
----------- ------- ---- ------------ ------- -------- ---- ------- -----
1181 Grier Drive $ 1,852 $ 565 $ 3,073 $ 1,005 $ -- $ 565 $ 4,078 $ 4,643
Office Building/Industrial
Las Vegas, NV
Riverspark 2/Building 3 1,104 1,334 3,159 132 -- 1,334 3,291 4,625
Office Building/Industrial
Columbia, MD
Hunt Valley 46 -- 2,193 2,416 -- -- 2,193 2,416 4,609
Industrial Building
Hunt Valley, MD
Rutherford 29 -- 673 3,866 7 -- 673 3,873 4,546
Industrial Building
Woodlawn, MD
Sheraton Parking Garage -- 1,789 2,722 -- -- 1,789 2,722 4,511
Parking Garage
Baltimore, MD
1151 Grier Drive 2,626 707 3,568 153 -- 707 3,721 4,428
Office Building/Industrial
Las Vegas, NV
21 Governors Court -- 988 3,158 156 -- 988 3,314 4,302
Office Building/Industrial
Baltimore, MD
Other properties and related
investments less than
5% of total 104,402 45,199 76,778 66,433 -- 45,199 143,211 188,410
------------------------------------- ----------------------- -----------------------------------
Total Operating
Properties 2,615,998 380,465 704,134 2,727,357 -- 380,465 3,431,491 3,811,956
------------------------------------- ----------------------- -----------------------------------
Life on
Accumulated Date of which depre
depreciation completion ciation in latest
and of Date income state
Description amortization construction acquired ment is computed
----------- ------------ ------------ -------- ----------------
1181 Grier Drive $ 507 10/89 6/96 Note 9
Office Building/Industrial
Las Vegas, NV
Riverspark 2/Building 3 142 6/87 12/98 Note 9
Office Building/Industrial
Columbia, MD
Hunt Valley 46 87 6/67 12/98 Note 9
Industrial Building
Hunt Valley, MD
Rutherford 29 140 9/85 12/98 Note 9
Industrial Building
Woodlawn, MD
Sheraton Parking Garage 98 7/85 12/98 Note 9
Parking Garage
Baltimore, MD
1151 Grier Drive 480 5/88 6/96 Note 9
Office Building/Industrial
Las Vegas, NV
21 Governors Court 130 6/81 12/98 Note 9
Office Building/Industrial
Baltimore, MD
Other properties and related
investments less than
5% of total 23,563
-------
Total Operating Properties 574,837
-------
IV-28
THE ROUSE COMPANY AND SUBSIDIARIES
Real Estate and Accumulated Depreciation (note 1)
December 31, 1999
(in thousands)
Costs capitalized
Initial cost to subsequent Gross amount at which carried
Company to acquisition at close of period
----------------- ---------------------- -----------------------------
Buildings Buildings
and and
Encum- Improve Improve Carrying Improve
Description brances Land ments ments costs Land ments Total
----------- ------- ---- ----- ----- ----- ---- ----- -----
Properties in Development:
Exton Square Expansion $ -- $ 3,530 $ -- $94,821 $ -- $ 3,530 $94,821 $98,351
Expansion of retail center
Exton, PA
Pioneer Place Expansion -- 2,813 -- 43,565 -- 2,813 43,565 46,378
Expansion of mixed-use project
Portland, OR
The Fashion Show -- 27,166 -- 13,484 -- 27,166 13,484 40,650
Expansion
Expansion of retail center
Las Vegas, NV
Moorestown Mall Expansion -- -- -- 32,238 -- -- 32,238 32,238
Expansion of retail center
Morrestown, NJ
The Village of Merrick -- 12,177 -- 16,561 -- 12,177 16,561 28,738
Park
New Retail Center
Coral Gables, FL
Arizona Center 12,800 -- -- 12,992 -- -- 12,992 12,992
Developed/developable land
under master lease
Phoenix, AZ
Perimeter Mall Expansion -- -- -- 5,290 -- -- 5,290 5,290
Expansion of retail center
Atlanta, GA
Paramus Park Expansion -- -- -- 5,151 -- -- 5,151 5,151
Expansion of retail center
Paramus, NJ
Oviedo/Sears Expansion -- -- -- 3,016 -- -- 3,016 3,016
Expansion of retail center
Orlando, FL
Life on
Accumulated which depre-
depreciation Date of ciation in latest
and completion of Date income state-
Description amortization construction acquired ment is computed
- ----------- ------------ ------------ -------- ----------------
Properties in Development:
Exton Square Expansion $ -- N/A N/A N/A
Expansion of retail center
Exton, PA
Pioneer Place Expansion -- N/A N/A N/A
Expansion of mixed-use project
Portland, OR
The Fashion Show -- N/A N/A N/A
Expansion
Expansion of retail center
Las Vegas, NV
Moorestown Mall Expansion -- N/A N/A N/A
Expansion of retail center
Morrestown, NJ
The Village of Merrick -- N/A N/A N/A
Park
New Retail Center
Coral Gables, FL
Arizona Center -- N/A N/A N/A
Developed/developable land
under master lease
Phoenix, AZ
Perimeter Mall Expansion -- N/A N/A N/A
Expansion of retail center
Atlanta, GA
Paramus Park Expansion -- N/A N/A N/A
Expansion of retail center
Paramus, NJ
Oviedo/Sears Expansion -- N/A N/A N/A
Expansion of retail center
Orlando, FL
IV-29
THE ROUSE COMPANY AND SUBSIDIARIES
Real Estate and Accumulated Depreciation (note 1)
December 31, 1999
(in thousands)
Costs capitalized subsequent Gross amount at which carried
Initial cost to Company to acquisition at close of period
-------------------------------- --------------------------- ---------------------------------
Buildings Buildings
and and
Encum- Improve Improve Carrying Improve
Description brances Land ments ments costs Land ments Total
----------- ----------- ----------- ---------- ----------- ---------- --------- ----------- ---------
Owings Mills $ -- $ 2,765 $ -- $ -- $ -- $ 2,765 $ -- $ 2,765
Developable land
Baltimore County, MD
Pre-construction costs - -- -- -- 8,589 -- -- 8,589 8,589
various projects
Pre-construction reserve -- -- -- (5,246) -- -- (5,246) (5,246)
Other projects less than
5% of total -- 4,197 -- 4,949 -- 4,197 4,949 9,146
------------------------------------ -------------------------- ----------------------------------
Total Properties
in Development 12,800 52,648 -- 235,410 -- 52,648 235,410 288,058
------------------------------------ -------------------------- ----------------------------------
Properties held for sale:
Westdale Mall -- -- 6,276 -- -- -- 6,276 6,276
Investment in unconsolidated
real estate venture
Cedar Rapids, IO
Midtown Square -- -- -- 4,708 -- -- 4,708 4,708
Retail Center
Charlotte, NC
Other properties held for
sale, less than 5% of total -- -- -- -- -- -- -- --
------------------------------------ -------------------------- ----------------------------------
Total Properties Held
For Sale -- -- 6,276 4,708 -- -- 10,984 10,984
------------------------------------ -------------------------- ----------------------------------
Total Property $2,628,798 $433,113 $710,410 $2,967,475 $ -- $433,113 $3,677,885 $4,110,998
==================================== ========================== ==================================
Life on
Accumulated which depre-
depreciation Date of ciation in
and completion of Date income state-
Description amortization construction acquired ment is computed
----------- ------------ ------------- -------- ----------------
Owings Mills N/A N/A N/A N/A
Developable land
Baltimore County, MD
Pre-construction costs - N/A N/A N/A N/A
various projects
Pre-construction reserve N/A N/A N/A N/A
Other projects less than N/A N/A N/A N/A
5% of total
Total Properties
in Development
Properties held for sale:
Westdale Mall -- 07/79 10/98 N/A
Investment in unconsolidated
real estate venture
Cedar Rapids, IO
Midtown Square -- 10/59 N/A N/A
Retail Center
Charlotte, NC
Other properties held for sale,
less than 5% of total --
------------
Total Properties Held For Sale --
------------
Total Property $ 574,837
============
IV-30
Schedule III continued
----------------------
THE ROUSE COMPANY AND SUBSIDIARIES
Real Estate and Accumulated Depreciation (note 1)
December 31, 1999
Notes:
(1) Reference is made to notes 1, 3 and 6 to the consolidated financial
statements.
(2) The determination of these amounts is not practicable and, accordingly,
they are included in improvements.
(3) Buildings and improvements include deferred costs of $101,028,000 at
December 31, 1999.
(4) The changes in total cost of properties for the years ended December 31,
1999, 1998 and 1997 are as follows (in thousands):
1999 1998 1997
---- ---- ----
Balance at beginning of year $ 5,051,981 $3,332,363 $3,691,600
Additions, at cost 228,759 336,007 317,705
Cost of properties acquired --- 1,593,062 84,743
Additions to land held for
development and sale --- --- 134,447
Cost of land sales (7,211) (21,885) (131,310)
Retirements, sales and other
dispositions (1,117,396) (185,866) (114,435)
Property of subsidiaries in which a
majority voting interest was sold
to an affiliate --- --- (621,338)
Additions to preconstruction reserve --- (1,700) (2,800)
Provision for loss on operating properties (45,135) --- (26,249)
------------- ---------- ----------
Balance at end of year $ 4,110,998 $5,051,981 $3,332,363
============= ========== ==========
(5) Reference is made to the consolidated statements of cash flows for
explanation of noncash consideration included in property additions.
(6) Reference is made to note 2 to the consolidated financial statements for
explanation of transactions with affiliates.
IV-31
Schedule III continued
----------------------
THE ROUSE COMPANY AND SUBSIDIARIES
Real Estate and Accumulated Depreciation (note 1)
December 31, 1999
Notes:
(7) The changes in accumulated depreciation and amortization for the years
ended December 31, 1999, 1998 and 1997 are as follows (in thousands):
1999 1998 1997
---- ---- ----
Balance at beginning of year $ 578,311 $ 515,229 $ 552,201
Depreciation and amortization
charged to operations 100,329 84,068 86,009
Retirements, sales and other, net (103,803) (20,986) (50,814)
Accumulated depreciation on properties
of subsidiaries in which a majority
voting interest was sold to an
affiliate --- --- (72,167)
---------- --------- ---------
Balance at end of year $ 574,837 $ 578,311 $ 515,229
========== ========= =========
(8) The aggregate cost of properties for Federal income tax purposes is
approximately $3,637,947,000 at December 31, 1999.
(9) Reference is made to note 1(c) to the consolidated financial statements for
information related to depreciation.
(10) Reference is made to note 10 to the consolidated financial statements for
information related to provisions for losses on real estate assets.
(11) Certain amounts for prior years have been reclassified to conform to the
presentation for 1999.
(12) Total costs are reduced by impairment losses on certain buildings and
improvements. Reference is made to note 10 to the consolidated financial
statements for information related to the losses.
IV-32
Schedule IV
-----------
THE ROUSE COMPANY AND SUBSIDIARIES
Mortgage Loans On Real Estate
December 31, 1999
(in thousands)
Principal
amount of loans
subject to
Final delinquent
maturity date Periodic Face amount Carrying principal or
Description (Note 1) Interest rate (Note 1) payment terms Prior liens of mortgages amount of mortgages interest
-------------------- ------------- -------------- ------------- ----------- ------------ ------------------- ---------------
Howard Research
And Development
Corporation and
Subsidiaries Note 2 Dec. 31, 2012 Note 1 N/A $178,724 $ 178,724 None
Howard Hughes
Properties, Inc. Note 2 Dec. 31, 2012 Note 1 N/A 141,183 141,183 None
HRD Properties, Inc.
and Subsidiaries Note 3 Dec. 31, 2012 Note 1 N/A 14,000 14,000 None
-------- --------
$333,907 $ 333,907
======== ========
IV-33
Schedule IV, continued
----------------------
THE ROUSE COMPANY AND SUBSIDIARIES
MORTGAGE LOANS ON REAL ESTATE
December 31, 1999
Notes:
(1) The deed of trust notes receivable of the Company are secured by certain
land and operating properties and general assignments of rents of the
Real Estate Ventures owned by The Rouse Company Incentive Compensation
Statutory Trust and The Rouse Company. These notes are due December 31,
2012 and minimum principal payments, based on a thirty-year amortization
schedule, are due quarterly. Specified principal payments are also
required when land is released from the deed of trust; however, payments
made due to partial releases reduce or offset the required quarterly
payments.
(2) The notes bear interest at 12.25% through December 2000, and at the
greater of the prime rate plus 3.75% or 10% thereafter to maturity or
repayment.
(3) The note bears interest at 12.25% throughout the term.
1999 1998
------------- --------------
(4) Balance at beginning of year $ 362,167,000 $ 380,232,000
Collections of principal (28,260,000) (18,065,000)
------------- -------------
Balance at end of year $ 333,907,000 $ 362,167,000
============= =============
(5) The deed of trust notes are carried in investments in and advances to
unconsolidated real estate ventures on the Company's balance sheets at
December 31, 1999 and 1998. See note 2 to the consolidated financial
statements regarding transactions that gave rise to the deed of trust
notes.
IV-34
REAL ESTATE VENTURES OWNED BY
THE ROUSE COMPANY INCENTIVE COMPENSATION STATUTORY TRUST AND THE ROUSE COMPANY
Valuation and Qualifying Accounts
Years ended December 31, 1999 and 1998
(in thousands)
Additions
----------------------
Balance at Charged to Charged to Balance at
beginning costs and other end of
Descriptions of year expenses accounts Deductions (1) year
------------ ---------- ---------- ---------- -------------- ----------
Year ended December 31, 1999:
Allowance for doubtful receivables $ 834 $ 554 $ --- $ 605 $ 783
========== ========= ========== ========= ========
Deferred tax asset valuation allowance $ 952 $ 3,802 $ --- $ --- $ 4,754
========== ========= ========== ========= ========
Preconstruction reserve $ --- $ 2,854 $ --- $ --- $ 2,854
========== ========= ========== ========= ========
Year ended December 31, 1998:
Allowance for doubtful receivables $ 830 $ 359 $ --- $ 355 $ 834
========== ========= ========== ========= ========
Deferred tax asset valuation allowance $ --- $ 952 $ --- $ --- $ 952
========== ========= ========== ========= ========
Note:
(1) Balances written off as uncollectible.
IV-35
Schedule III
------------
REAL ESTATE VENTURES OWNED BY
THE ROUSE COMPANY INCENTIVE COMPENSATION STATUTORY TRUST
AND THE ROUSE COMPANY
Real Estate and Accumulated Depreciation (note 1)
December 31, 1999
(in thousands)
Costs capitalized subsequent Gross amount at which
Initial cost to Company to acquisition carried at close of period
----------------------- ---------------------------- --------------------------
Buildings Buildings
and and
Encum- Improve Improve Carrying Improve
Description brances Land ments ments costs Land ments Total
----------- ------- ---- ----- ----- ----- ---- ----- -----
Operating Properties:
The Mall in Columbia $ 189,142 $ 6,788 $ -- $ 171,891 $ -- $ 6,788 $ 171,891 $ 178,679
Retail Center
Columbia, MD
White Marsh 59,587 6,392 -- 43,051 -- 6,392 43,051 49,443
Retail Center
Baltimore, MD
Seventy Columbia Corp Ctr 28,677 856 -- 24,266 -- 856 24,266 25,122
Office Building
Columbia, MD
Forty Columbia Corp Ctr 15,590 636 -- 15,379 -- 636 15,379 16,015
Office Building
Columbia, MD
Fifty Columbia Corp Ctr 15,611 463 -- 15,253 -- 463 15,253 15,716
Office Building
Columbia, MD
Sixty Columbia Corp Ctr 14,863 1,050 -- 14,640 -- 1,050 14,640 15,690
Office Building
Columbia, MD
Thirty Columbia Corp Ctr 16,417 1,160 -- 10,455 -- 1,160 10,455 11,615
Office Building
Columbia, MD
Hickory Ridge Village Ctr 13,390 907 -- 9,969 -- 907 9,969 10,876
Village Center
Columbia, MD
Accumulated Life on
depreciation Date of which depreciation
and completion Date in latest income
amortization construction acquired statement is compute
------------ ------------ -------- --------------------
Operating Properties:
The Mall in Columbia $ 15,991 8/71 N/A Note 7
Retail Center
Columbia, MD
White Marsh 5,887 8/81 N/A Note 7
Retail Center
Baltimore, MD
Seventy Columbia Corp Ctr 6,039 6/92 N/A Note 7
Office Building
Columbia, MD
Forty Columbia Corp Ctr 5,411 6/87 N/A Note 7
Office Building
Columbia, MD
Fifty Columbia Corp Ctr 4,703 11/89 N/A Note 7
Office Building
Columbia, MD
Sixty Columbia Corp Ctr 374 2/99 N/A Note 7
Office Building
Columbia, MD
Thirty Columbia Corp Ctr 4,404 4/86 N/A Note 7
Office Building
Columbia, MD
Hickory Ridge Village Ctr 1,865 6/92 N/A Note 7
Village Center
Columbia, MD
IV-36
REAL ESTATE VENTURES OWNED BY
THE ROUSE COMPANY INCENTIVE COMPENSATION STATUTORY TRUST
AND THE ROUSE COMPANY
Real Estate and Accumulated Depreciation (note 1)
December 31, 1999
(in thousands)
Costs capitalized subsequent Gross amount at which
Initial cost to Company to acquisition carried at close of period
----------------------- ---------------------------- --------------------------
Buildings Buildings
and and
Encum- Improve Improve Carrying Improve
Description brances Land ments ments costs Land ments Total
----------- ------- ---- ----- ----- ----- ---- ----- -----
Dorsey Search Village Ctr $ 14,544 $ 911 $ -- $ 9,844 $ -- $ 911 $ 9,844 $ 10,755
Village Center
Columbia, MD
Twenty Columbia Corp Ctr 9,565 927 -- 9,628 -- 927 9,628 10,555
Office Building
Columbia, MD
American City Building 6,070 -- -- 10,251 -- -- 10,251 10,251
Office Building
Columbia, MD
Harper's Choice 9,550 546 -- 9,647 -- 546 9,647 10,193
Village Center
Columbia, MD
10000 W. Charleston Arbors -- 537 -- 9,312 -- 537 9,312 9,849
Office Building
Las Vegas, NV
Ten Columbia Corp Ctr 5,432 733 -- 7,668 -- 733 7,668 8,401
Office Building
Columbia, MD
Wilde Lake 3,264 1,486 -- 6,741 -- 1,486 6,741 8,227
Village Center
Columbia, MD
Kings Contrivance 11,271 1,072 -- 7,084 -- 1,072 7,084 8,156
Village Center
Columbia, MD
Accumulated Life on
depreciation Date of which depreciation
and completion Date in latest income
amortization construction acquired statement is compute
------------ ------------ -------- --------------------
Dorsey Search Village Ctr $2,541 9/89 N/A Note 7
Village Center
Columbia, MD
Twenty Columbia Corp Ctr 4,233 6/81 N/A Note 7
Office Building
Columbia, MD
American City Building 8,934 3/69 N/A Note 7
Office Building
Columbia, MD
Harper's Choice 2,952 6/71 N/A Note 7
Village Center
Columbia, MD
10000 W. Charleston Arbors 185 5/99 N/A Note 7
Office Building
Las Vegas, NV
Ten Columbia Corp Ctr 3,100 9/81 N/A Note 7
Office Building
Columbia, MD
Wilde Lake 3,679 7/67 N/A Note 7
Village Center
Columbia, MD
Kings Contrivance 2,470 6/86 N/A Note 7
Village Center
Columbia, MD
IV-37
REAL ESTATE VENTURES OWNED BY
THE ROUSE COMPANY INCENTIVE COMPENSATION STATUTORY TRUST
AND THE ROUSE COMPANY
Real Estate and Accumulated Depreciation (note 1)
December 31, 1999
(in thousands)
Costs capitalized subsequent Gross amount at which
Initial cost to Company to acquisition carried at close of period
----------------------- ---------------------------- -------------------------------
Buildings Buildings
and and
Encum- Improve Improve Carrying Improve
Description brances Land ments ments costs Land ments Total
----------- --------- --------- --------- --------- -------- ------- --------- --------
Columbia Crossing $ 8,255 $ 1,527 $ -- $ 6,376 $ -- $ 1,527 $6,376 $7,903
Village Center
Columbia, MD
Long Reach Village Ctr 5,646 1,009 -- 5,309 -- 1,009 5,309 6,318
Village Center
Columbia, MD
Oakland Mills 2,353 1,746 -- 3,860 -- 1,746 3,860 5,606
Retail Center
Columbia, MD
250 Pilot Road -- 335 -- 5,139 -- 335 5,139 5,474
Office Building
Las Vegas, NV
Dobbin Road 4,739 426 -- 4,912 -- 426 4,912 5,338
Village Center
Columbia, MD
585 Pilot Road -- 307 -- 4,200 -- 307 4,200 4,507
Office Building
Las Vegas, NV
625 Pilot Road -- 294 -- 3,321 -- 294 3,321 3,615
Office Building
Las Vegas, NV
Teachers Building 3,074 -- -- 3,155 -- -- 3,155 3,155
Office Building
Columbia, MD
Accumulated Life on
depreciation Date of which depreciation
and completion of Date in latest income
Description amortization construction acquired statement is computed
----------- ------------ ------------ -------- ---------------------
Columbia Crossing $ 466 11/98 N/A Note 7
Village Center
Columbia, MD
Long Reach Village Ctr 1,424 6/74 N/A Note 7
Village Center
Columbia, MD
Oakland Mills 390 6/69 N/A Note 7
Retail Center
Columbia, MD
250 Pilot Road 86 5/99 N/A Note 7
Office Building
Las Vegas, NV
Dobbin Road 1,784 6/83 N/A Note 7
Village Center
Columbia, MD
585 Pilot Road 60 6/99 N/A Note 7
Office Building
Las Vegas, NV
625 Pilot Road 93 6/99 N/A Note 7
Office Building
Las Vegas, NV
Teachers Building 865 6/69 N/A Note 7
Office Building
Columbia, MD
IV-38
REAL ESTATE VENTURES OWNED BY
THE ROUSE COMPANY INCENTIVE COMPENSATION STATUTORY TRUST
AND THE ROUSE COMPANY
Real Estate and Accumulated Depreciation (note 1)
December 31, 1999
(in thousands)
Costs capitalized subsequent Gross amount at which
Initial cost to Company to acquisition carried at close of period
----------------------- ---------------------------- ------------------------------
Buildings Buildings
and and
Encum- Improve Improve Carrying Improve
Description brances Land ments ments costs Land ments Total
- --------------- -------- -------- ----------- --------- ---------- --------- --------- --------
Ridgley Building $ 2,255 $ 670 $ -- $ 3,132 $ -- $ 670 $ 3,132 $ 3,802
Office Building
Columbia, MD
Sterrett Building 2,297 308 -- 2,737 -- 308 2,737 3,045
Office Building
Columbia, MD
Lynx Lane 2,451 150 -- 2,842 -- 150 2,842 2,992
Retail Center
Columbia, MD
Other properties and related 14,310 1,714 -- 12,816 -- 1,714 12,816 14,530
--------------------------------- ----------------------- --------------------------------
investments less than
5% of total
Total Operating
Properties 458,353 32,950 -- 432,878 -- 32,950 432,878 465,828
--------------------------------- ----------------------- --------------------------------
Properties in Development:
3993 Howard Hughes Parkway -- 755 20,972 755 20,972 21,727
New Office Building
Las Vegas, NV
Columbia Mall -- -- -- 1,811 -- -- 1,811 1,811
Expansion of retail center
Columbia, MD
Accumulated Life on
depreciation Date of which depreciation
and completion of Date in latest income
amortization construction acquired statement is computed
------------ ------------- -------- ---------------------
Ridgley Building $ 1,608 6/72 N/A Note 7
Office Building
Columbia, MD
Sterrett Building 1,330 6/72 N/A Note 7
Office Building
Columbia, MD
Lynx Lane 1,332 6/73 N/A Note 7
Retail Center
Columbia, MD
Other properties and related 4,833
------------
investments less than
5% of total
Total Operating
Properties 87,039
------------
Properties in Development:
3993 Howard Hughes Parkway N/A N/A N/A Note 7
New Office Building
Las Vegas, NV
Columbia Mall N/A N/A N/A Note 7
Expansion of retail center
Columbia, MD
IV-39
REAL ESTATE VENTURES OWNED BY
THE ROUSE COMPANY INCENTIVE COMPENSATION STATUTORY TRUST
AND THE ROUSE COMPANY
Real Estate and Accumulated Depreciation (note 1)
December 31, 1999
(in thousands)
Costs capitalized subsequent Gross amount at which
Initial cost to Company to acquisition carried at close of period
------------------------ --------------------------- ----------------------------
Buildings Buildings
and and
Encum- Improve Improve Carrying Improve
Description brances Land ments ments costs Land ments Total
----------- -------- -------- ---------- --------- ---------- ------- -------- ---------
Arizona Hotel $ -- $ -- $ -- $ 1,422 $ -- $ -- $ 1,422 $ 1,422
New Hotel Ground Lease
Phoenix, AZ
Airport Center 50 -- -- -- 467 -- -- 467 467
New Office Building
Las Vegas, NV
Village 12 Arbors East 1,409 -- -- 262 -- -- 262 262
New Office Building
Las Vegas, NV
Other projects less than 5% of total -- -- -- 1,235 -- -- 1,235 1,235
-------------------------------- --------------------- ----------------------------
Total Properties
held in Development 1,409 755 -- 26,169 -- 755 26,169 26,924
-------------------------------- --------------------- ----------------------------
Accumulated Life on
depreciation Date of which depreciation
and completion of Date in latest income
Description amortization construction acquired statement is computed
----------- ------------- ------------- -------- ---------------------
Arizona Hotel N/A N/A N/A N/A
New Hotel Ground Lease
Phoenix, AZ
Airport Center 50 N/A N/A N/A N/A
New Office Building
Las Vegas, NV
Village 12 Arbors East N/A N/A N/A N/A
New Office Building
Las Vegas, NV
Other projects less than 5% of total N/A N/A N/A N/A
Total Properties
held in Development
IV-40
REAL ESTATE VENTURES OWNED BY
THE ROUSE COMPANY INCENTIVE COMPENSATION STATUTORY TRUST
AND THE ROUSE COMPANY
Real Estate and Accumulated Depreciation (note 1)
December 31, 1999
(in thousands)
Costs capitalized subsequent Gross amount at which
Initial cost to Company to acquisition carried at close of period
-------------------------- ----------------------------- -------------------------------
Buildings Buildings
and and
Encum- Improve Improve Carrying Improve
Description brances Land ments ments costs Land ments Total
----------- -------- ------- ---------- --------- -------- ------- --------- --------
Land held for development and
sale:
Columbia $ 45,912 $ 53,000 $ -- $ 45,230 $ -- $ 98,230 $ -- $ 98,230
Land in various stages of
development
Columbia, MD
Summerlin 148,318 89,076 -- 6,205 -- 95,281 -- 95,281
Land in various stages of
development
Las Vegas, NV
Nevada Investment Land 28,503 20,631 -- 13,246 -- 33,877 -- 33,877
Canyon Springs 14,000 12,872 -- 11,910 -- 24,782 -- 24,782
Land held for development
Riverside County, CA
Bridgewater Commons -- 5,469 -- 59 -- 5,528 -- 5,528
Land held for sale
Bridgewater, NJ
Other, less than 5% of
total -- 55 -- 20 -- 75 -- 75
------------------------------- ----------------------- --------------------------------
Total land held for
development and sale 236,733 181,103 -- 76,670 -- 257,773 -- 257,773
------------------------------- ----------------------- --------------------------------
Total Property $696,495 $214,808 $ -- $535,717 $ -- $291,478 $459,047 $750,525
=============================== ======================= ================================
Accumulated Life on
depreciation Date of which depreciation
and completion of Date in latest income
Description amortization construction acquired statement is computed
----------- ------------ ------------- -------- ---------------------
Land held for development and
sale:
Columbia N/A N/A 9/85 N/A
Land in various stages of
development
Columbia, MD
Summerlin N/A N/A 6/96 N/A
Land in various stages of
development
Las Vegas, NV
Nevada Investment Land N/A N/A 6/96 N/A
Canyon Springs N/A N/A 7/89 N/A
Land held for development
Riverside County, CA
Bridgewater Commons N/A N/A 7/89 N/A
Land held for sale
Bridgewater, NJ
Other, less than 5% of
total N/A
-------------
Total land held for
development and sale --
-------------
Total Property $ 87,039
=============
IV-41
REAL ESTATE VENTURES OWNED BY
THE ROUSE COMPANY INCENTIVE COMPENSATION STATUTORY TRUST
AND THE ROUSE COMPANY
Real Estate and Accumulated Depreciation (note 1)
December 31, 1999
Notes:
(1) Reference is made to notes 1, 2 and 6 to the combined consolidated
financial statements.
(2) The determination of these amounts is not practicable and, accordingly,
they are included in improvements.
(3) Buildings and improvements include deferred costs of $33,443,000 at
December 31, 1999.
(4) The changes in total cost of properties for the years ended December 31,
1999 and 1998 is as follows (in thousands):
1999 1998
--------- ----------
Balance at beginning of year $ 671,457 $ 619,295
Additions, at cost 110,360 68,672
Cost of properties acquired --- 10,054
Additions to land held for
development and sale 73,240 124,674
Cost of land sales (92,515) (123,050)
Retirements, sales and other
dispositions (9,163) (28,188)
Additions to preconstruction reserve (2,854) ---
--------- ----------
Balance at end of year $ 750,525 $ 671,457
========= ==========
IV-42
Schedule III continued
----------------------
REAL ESTATE VENTURES OWNED BY
THE ROUSE COMPANY INCENTIVE COMPENSATION STATUTORY TRUST
AND THE ROUSE COMPANY
Real Estate and Accumulated Depreciation (note 1)
December 31, 1999
Notes:
(5) The changes in accumulated depreciation and amortization for the years
ended December 31, 1999 and 1998 is as follows (in thousands):
1999 1998
---- ----
Balance at beginning of year $ 82,390 $72,000
Depreciation and amortization
charged to operations 13,004 10,585
Retirements, sales and other, net (8,355) (195)
-------- -------
Balance at end of year $ 87,039 $82,390
======== =======
(6) The aggregate cost of properties for Federal income tax purposes is
approximately $956,039,000 at December 31, 1999.
(7) Reference is made to note 1(c) to the combined consolidated financial
statements for information related to depreciation.
IV-43
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
The Rouse Company
By:________________________________________
Anthony W. Deering March 30, 2000
Chairman of the Board, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Principal Executive Officer:
___________________________________________
Anthony W. Deering March 30, 2000
Chairman of the Board, President
and Chief Executive Officer
Principal Financial Officer:
___________________________________________
Jeffrey H. Donahue March 30, 2000
Executive Vice President and
Chief Financial Officer
Principal Accounting Officer:
___________________________________________
Melanie M. Lundquist March 30, 2000
Vice President and Controller
IV-44
Board of Directors:
David H. Benson, Jeremiah E. Casey, Platt W. Davis, Anthony W. Deering,
Rohit M. Desai, Mathias J. DeVito, Juanita T. James, Thomas J. McHugh, Hanne M.
Merriman, Roger W. Schipke, Alexander B. Trowbridge and Gerard J. M. Vlak.
By: _____________________________________
Anthony W. Deering March 30, 2000
For himself and as
Attorney-in-fact for
the above-named persons
IV-45