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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITITES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the Fiscal Year Ended December 31,2000
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 1(cent) 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 1(cent) 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, 2001, there were outstanding 68,755,913 shares of the
registrant's common stock, par value 1 cent, 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 $1,675,071,707.
Documents Incorporated by Reference
The specified portions of the Annual Report to Shareholders for the fiscal year
ended December 31, 2000 are incorporated by reference into Parts I, II and IV.
Definitive Proxy Statement to be filed pursuant to Regulation 14A on or before
April 11, 2001 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 village
centers, and (ii) the development and sale of land, primarily in Columbia,
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
(the "Trust"), an entity that is neither owned nor controlled by the Company,
owns 91% of the voting stock.
The Company elected to be taxed as a real estate investment trust (REIT)
pursuant to the Internal Revenue Code of 1986, as amended, effective January 1,
1998. In general, a corporation that distributes at least 90% of its REIT
taxable income to shareholders in any taxable year and complies with certain
other requirements (relating primarily to the nature of its assets and the
sources of its revenues) is not subject to Federal income taxation to the extent
of the income which it distributes. Management believes that the Company met the
qualifications for REIT status as of December 31, 2000 and intends for it to
meet the qualifications in the future and to distribute at least 90% of its REIT
taxable income (determined after taking into account any net operating loss
deduction) to shareholders in 2001 and subsequent years. The Company will elect
to treat certain Non-REIT Subsidiaries as Taxable REIT Subsidiaries (TRS), which
will be subject to Federal and state income taxes beginning in 2001. Except with
respect to the TRS, management does not believe that the Company will be liable
for significant income taxes at the Federal level or in most of the states in
which it operates in 2001 and future years. All dividends on common
I-1
stock paid subsequent to December 31, 1997 have been distributions of ordinary
income.
Developments in 2000 and 2001
Relying on certain provisions of the REIT Modernization Act, which was
enacted into law in December 1999, the Company negotiated agreements in the
fourth quarter of 2000 to acquire the voting stock of the Non-REIT Subsidiaries
owned by the Trust. On January 2, 2001, the Company exchanged 137,928 shares of
common stock for the Trust's shares of voting common stock of the Non-REIT
Subsidiaries. The shares acquired by the Company constitute all of the Trust's
interests in the Non-REIT Subsidiaries. The fair value of the consideration
exchanged was approximately $3.5 million. As a result of this transaction, the
Company owns 100% of the voting common stock of the Non-REIT Subsidiaries.
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, fund development costs and
repurchase (subject to certain price restrictions) up to $250 million of the
Company's common stock. In January 2000, the Company completed disposition and
transaction structuring plans and began marketing interests in the identified
properties. In 2000, the Company sold several of the identified buildings in the
Baltimore-Washington corridor and contributed its ownership interests in
industrial buildings in two Las Vegas business parks to a real estate venture
from which the Company received a cash distribution and a minority interest in
the venture. The Company used a portion of the cash proceeds from these and
other transactions to repurchase approximately $66 million (2.8 million shares)
of its common stock. Since 1999, the Company has repurchased approximately $101
million (4.4 million shares) of its common stock. In January 2001, the Company
ceased actively marketing substantially all of the remaining buildings in the
Baltimore-Washington corridor as a result of the Company pursuing other
strategies to obtain additional liquidity. However, the Company may dispose of
these and other properties as opportunities arise.
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 2000
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.
I-3
Item 1(c). Narrative Description of Business.
Retail Centers:
--------------
As set forth in Item 2, at December 31, 2000, the 42 regional retail
centers and retail components of 5 mixed-use projects owned, in whole or in
part, or operated by subsidiaries or affiliates of the Company or by Non-REIT
Subsidiaries, aggregated 39,778,000 square feet, including 23,506,000 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, 2000,
Non-REIT Subsidiaries of the Company managed 5 such centers, which are included
in the figures in the preceding paragraph and aggregated 5,171,000 square feet
of leasable space, 2,859,000 square feet of which was department store space.
The Howard Research And Development Corporation ("HRD", a Non-REIT
Subsidiary of the Company) and its subsidiaries own and/or manage 12 village
centers with 1,223,000 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 village centers with 238,000 square feet of leasable space in
Summerlin, Nevada.
Office and Other Properties:
---------------------------
HHPLP and its subsidiaries and affiliates own and/or manage 40 office and
industrial buildings with 2,107,000 square feet of leasable space, and other
properties in and around Las Vegas, Nevada. HRD and its subsidiaries own and/or
manage
I-4
12 office buildings with 1,135,000 square feet of leasable space and other
properties in Columbia, Maryland.
Other subsidiaries of the Company own and operate 5 mixed-use projects with
leasable retail space (included in the fourth preceding paragraph) and 1,880,000
square feet of leasable office space. Other subsidiaries of the Company own, in
whole or in part, 65 office and industrial buildings with a total of 4,438,000
square feet of leasable space.
The activities involved in operating and managing office and other
properties include: negotiating lease terms with present and prospective
tenants, identifying and attracting desirable new tenants, conducting local
market research, developing and implementing short- and long-term and leasing
programs, assisting tenants in the layout of their spaces 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 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
expansions of an existing master-planned business park in Las Vegas, Nevada.
I-5
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 1,300 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 7,800 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.
General
-------
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.
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
I-6
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 3,749 full-time and part-time employees at December 31, 2000.
I-7
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 45 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. 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 are as follows:
Nature of Year of expiration
Property interest of lease
-------- -------- --------
American City Building Leasehold and Fee 2020
Arizona Center Leasehold Various dates from
2017 to 2050
Augusta Mall Leasehold 2068
Bayside Marketplace Leasehold by joint venture 2062
Echelon Mall Leasehold 2008
Exhibit Building Leasehold and Fee 2012
Faneuil Hall Marketplace Leasehold 2074
Fashion Place Mall Leasehold 2059
First National Bank Plaza Leasehold 2013
Franklin Park Leasehold and Fee by 2024
Joint Venture
The Gallery at Market East Leasehold 2082
Governor's Square Leasehold 2054
Harborplace Leasehold 2054
Highland Mall Leasehold and Fee by 2070
Joint Venture
I-8
Nature of Year of expiration
Property interest of lease
-------- -------- --------
The Jacksonville Landing Leasehold 2057
Mall St. Matthews Leasehold 2053
Pioneer Place Leasehold 2076
Plymouth Meeting Leasehold 2063
Riverwalk Leasehold and fee by joint 2076
venture
South Street Seaport Leasehold 2031
Tampa Bay Center Leasehold and fee by joint 2047
venture
Westdale Mall Leasehold by joint venture
Westlake Center Leasehold 2043
I-9
Item 3. Legal Proceedings.
None.
I-10
Item 4. Submission of Matters to a Vote of Security Holders.
None.
I-11
Executive Officers of the Registrant.
The executive officers of the Company as of March 26, 2001 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 56 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 54 Executive Vice-President 12/3/98 Executive Vice-President and Chief Financial
and Chief Financial 9/23/93 Officer of the Company; formerly Senior Vice-
Officer President and Chief Financial Officer of the
Company
Duke S. Kassolis 49 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 58 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 50 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-12
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 55 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 54 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 51 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 46 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.
None of the above-listed officers has any family relationship with any director
or other executive officer.
I-13
Part II
-------
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 41 of Exhibit 13.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
Information required by Item 7A is incorporated herein by reference to
page 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-3.
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 11, 2001.
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-3.
(b) Reports on Form 8-K:
Current Report on Form 8-K filed January 17, 2001 disclosing that the
Company had acquired the voting stock of certain real estate ventures
in which the Company held majority financial interests, but only 9% of
the voting stock.
(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
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
99 Additional Exhibits:
99.1 Form 11-K Annual Report of The Rouse Company
Savings Plan for the year ended December 31, 2000
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-3.
IV-2
The Rouse Company
Index to Financial Statements and Schedules
Page
----
Independent Auditors' Report IV-4
Financial Statements:
The Rouse Company and Subsidiaries included on pages 2 through 28 of
Exhibit 13 incorporated herein by reference:
Consolidated Balance Sheets at December 31, 2000 and 1999
Consolidated Statements of Operations and Comprehensive Income for the
Years Ended December 31, 2000, 1999 and 1998
Consolidated Statements of Changes in Shareholders' Equity for
the Years Ended December 31, 2000, 1999 and 1998
Consolidated Statements of Cash Flows for the Years Ended December 31,
2000, 1999 and 1998
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-5
Combined Consolidated Balance Sheets at December 31, 2000
and 1999 IV-6
Combined Consolidated Statements of Operations for the Years Ended December 31, 2000, 1999 and 1998 IV-7
Combined Consolidated Statements of Changes in Shareholders' Equity (Deficit) for the Years Ended December 31,
2000, 1999 and 1998 IV-8
Combined Consolidated Statements of Cash Flows for the Year Ended December 31, 2000, 1999 and 1998 IV-9
Notes to Combined Consolidated Financial Statements IV-11
The Rouse Company and Subsidiaries as of December 31, 2000 or for the Years Ended December 31, 2000, 1999 and
1998:
Schedule II Valuation and Qualifying Accounts IV-21
Schedule III Real Estate and Accumulated Depreciation IV-22
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, 2000 or for the Years Ended December 31, 2000, 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-3
INDEPENDENT AUDITORS' REPORT
----------------------------
The Board of Directors and Shareholders
The Rouse Company:
We have audited the consolidated financial statements of The Rouse Company and
subsidiaries as listed in the accompanying index. In connection with our audits
of the consolidated financial statements, we have also audited the financial
statement schedules 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 auditing standards generally accepted
in the United States of America. 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, 2000 and 1999, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 2000, in conformity with accounting principles generally
accepted in the United States of America. 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 22, 2001
IV-4
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 combined consolidated financial statements of Real Estate
Ventures owned by The Rouse Company Incentive Compensation Statutory Trust and
The Rouse Company as listed in the accompanying index. In connection with our
audits of the combined consolidated financial statements, we have also audited
the financial statement schedules 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 auditing standards generally accepted
in the United States of America. 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, 2000 and 1999, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 2000, in conformity with accounting principles generally
accepted in the United States of America. 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 22, 2001
IV-5
Real Estate Ventures Owned by
The Rouse Company Incentive Compensation Statutory Trust and
The Rouse Company
COMBINED CONSOLIDATED BALANCE SHEETS
December 31, 2000 and 1999
(in thousands)
Assets
Property: 2000 1999
---- ----
Operating properties:
Property and deferred costs of projects............................. $ 433,389 $ 412,757
Less accumulated depreciation and amortization...................... 96,384 80,523
----------- -----------
337,005 332,234
Properties in development............................................... 23,582 26,920
Investment land and land held for development and sale.................. 250,510 257,773
----------- -----------
Total property...................................................... 611,097 616,927
Cash and cash equivalents.................................................... 15 7,784
Accounts and notes receivable................................................ 64,269 88,549
Deferred income taxes ....................................................... 20,264 36,564
Prepaid expenses and other assets ........................................... 75,539 60,039
Investments in and advances to unconsolidated real estate ventures........... 106,892 112,039
----------- -----------
Total assets............................................................ $ 878,076 $ 921,902
=========== ===========
Liabilities
Debt:
Borrowings from The Rouse Company....................................... $ 450,710 $ 514,792
Other borrowings ....................................................... 326,290 310,103
----------- -----------
Total debt.......................................................... 777,000 824,895
----------- -----------
Deferred revenue............................................................. 63,381 73,341
Accounts payable, accrued expenses and other liabilities..................... 38,506 44,281
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.......................................................... (192,311) (212,115)
----------- -----------
Total shareholders' deficit............................................. (50,811) (70,615)
----------- -----------
Total liabilities and shareholders' deficit............................. $ 878,076 $ 921,902
=========== ===========
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 OPERATIONS
Years ended December 31, 2000, 1999 and 1998
(in thousands)
2000 1999 1998
---- ---- ----
Revenues:
Land sales................................................................. $ 214,533 $ 192,390 $ 165,651
Rentals and tenant services................................................ 74,980 63,684 64,482
Property management fees................................................... 16,067 16,375 18,254
Other...................................................................... 6,476 8,635 9,481
----------- ----------- -----------
312,056 281,084 257,868
Cost of land sales and related administration................................... 110,702 111,295 96,948
Other operating expenses, exclusive of provision for bad debts,
depreciation and amortization.............................................. 48,367 46,454 45,347
Interest expense................................................................ 62,919 65,039 65,224
Provision for bad debts......................................................... 622 521 232
Depreciation and amortization................................................... 15,804 11,957 9,541
Other provisions and losses, net................................................ --- 2,227 23
----------- ----------- -----------
Earnings before income taxes, equity in earnings (losses) of
unconsolidated real estate ventures, gains on operating
properties, net and extraordinary losses................................. 73,642 43,591 40,553
Current income tax provision.................................................... (3,117) (2,597) (5,478)
Deferred income tax provision................................................... (25,033) (17,096) (16,582)
Equity in earnings (losses) of unconsolidated real estate ventures ............. 3,736 (1,905) 2,164
----------- ----------- -----------
Earnings before gains on operating properties, net and
extraordinary losses..................................................... 49,228 21,993 20,657
Gains on operating properties, net.............................................. --- 2,635 15,879
----------- ----------- -----------
Earnings before extraordinary losses....................................... 49,228 24,628 36,536
Extraordinary losses, net....................................................... 13,349 --- 1,127
----------- ----------- -----------
Net earnings............................................................... $ 35,879 $ 24,628 $ 35,409
=========== =========== ===========
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 CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
Years ended December 31, 2000, 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)
Net earnings.............................................. --- --- 35,879 35,879
Dividends on common stock and Preferred stock............. --- --- (16,075) (16,075)
--------- ---------- ----------- -----------
Balance at December 31, 2000.............................. $ 5 $ 141,495 $ (192,311) $ (50,811)
========= ========== =========== ===========
The accompanying notes are an integral part of these statements.
IV-8
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, 2000, 1999 and 1998
(in thousands)
2000 1999 1998
---- ---- ----
Cash flows from operating activities
Proceeds from land sales.................................................... $ 211,569 $ 155,702 $ 124,152
Rents and other revenues received........................................... 105,540 98,943 98,617
Interest received........................................................... 496 544 479
Land development expenditures............................................... (80,726) (72,927) (82,917)
Operating expenditures...................................................... (70,419) (71,804) (84,087)
Interest paid............................................................... (63,192) (62,127) (65,992)
Income taxes paid........................................................... (5,462) (2,839) (2,997)
----------- ----------- -----------
Net cash provided (used) by operating activities....................... 97,806 45,492 (12,745)
----------- ----------- -----------
Cash flows from investing activities
Expenditures for properties in development and improvements to
existing properties funded by debt..................................... (30,445) (87,739) (74,317)
Expenditures for property acquisitions...................................... --- --- (10,054)
Expenditures for improvements to existing properties funded by
cash provided by operating activities.................................. (2,251) (4,905) (3,052)
Proceeds from sales of operating properties................................. 975 6,619 69,063
Expenditures for investments in unconsolidated real estate ventures......... (4,944) (93,265) (912)
Distributions from unconsolidated real estate ventures...................... 25,561 --- ---
Repayments of advances to The Rouse Company, net............................ --- 112,310 19,522
Other....................................................................... 65 --- (624)
----------- ----------- -----------
Net cash used by investing activities.................................. (11,039) (66,980) (374)
----------- ----------- -----------
Cash flows from financing activities
Proceeds from issuance of property debt..................................... --- 39,752 110,799
Repayments of property debt:
Scheduled principal payments........................................... (6,200) (5,000) (4,875)
Other payments......................................................... --- (8,803) (23,834)
Repayments of deed of trust notes........................................... (76,787) (28,260) (18,066)
Borrowings (repayments) of other debt, net.................................. 3,403 55,633 (48,939)
Increase (decrease) in bank overdraft....................................... --- (17,247) 3,256
Dividends paid and other distributions, net................................. (16,075) (1,505) (4,850)
Other....................................................................... 1,123 (5,298) (372)
----------- ----------- -----------
Net cash provided (used) by financing activities....................... (94,536) 29,272 13,119
----------- ----------- -----------
Net change in cash and cash equivalents..................................... (7,769) 7,784 ---
Cash and cash equivalents at beginning of year.............................. 7,784 --- ---
----------- ----------- -----------
Cash and cash equivalents at end of year.................................... $ 15 $ 7,784 $ ---
=========== =========== ===========
The accompanying notes are an integral part of these statements.
IV-9
Real Estate Ventures Owned by
The Rouse Company Incentive Compensation Statutory Trust and
The Rouse Company
COMBINED CONSOLIDATED STATEMENTS OF CASH FLOWS, continued
Years ended December 31, 2000, 1999 and 1998
(in thousands)
Reconciliation of Net Earnings to Net Cash
Provided (Used) by Operating Activities
2000 1999 1998
---- ---- ----
Net earnings.................................................................... $ 35,879 $ 24,628 $ 35,409
Adjustments to reconcile net earnings to net cash
provided (used) by operating activities:
Depreciation and amortization.............................................. 15,804 11,957 9,541
Gains on operating properties, net......................................... --- (2,635) (15,879)
Extraordinary losses, net.................................................. 13,349 --- 1,127
Provision for bad debts.................................................... 622 521 232
Decrease (increase) in:
Accounts and notes receivable.......................................... 23,658 (462) (43,154)
Other assets........................................................... 5,609 (4,531) 2,852
Increase (decrease) in accounts payable, accrued expenses
and other liabilities.................................................. (16,690) (15,225) 5,401
Deferred income taxes...................................................... 25,033 17,096 16,582
Other, net................................................................. (5,458) 14,143 (24,856)
--------- -------- ---------
Net cash provided (used) by operating activities................................ $ 97,806 $ 45,492 $ (12,745)
========= ======== =========
Schedule of Noncash Investing and Financing Activities
Debt assumed by purchasers of land.............................................. $ 5,089 $ 16,616 $ 14,836
Debt assumed in acquisition of other assets..................................... 28,011 --- ---
Property contributed to unconsolidated real estate ventures..................... 20,232 --- ---
Debt related to property contributed to unconsolidated real estate ventures:
Borrowings from The Rouse Company.......................................... 12,780 --- ---
Other borrowings........................................................... 535 --- ---
========= ======== =========
IV-10
Real Estate Ventures Owned by
The Rouse Company Incentive Compensation Statutory Trust and
The Rouse Company
NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2000, 1999 and 1998
(1) Summary of significant accounting policies
(a) Description of business
Through their subsidiaries and affiliates, the real estate ventures (Ventures)
owned by The Rouse Company Incentive Compensation Statutory Trust (Trust) and
The Rouse Company (Company) acquire, develop and 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 buildings. The retail centers include The Mall in Columbia, a
regional shopping center in Columbia, Maryland, and several village 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.
(b) Basis of presentation
The combined consolidated financial statements of 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 accounting
principles generally accepted in the United States of America 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.
Effective in the fourth quarter of 2000, the Ventures adopted the Emerging
Issues Task Force consensus on Issue 00-1, "Investor Balance Sheet and Income
Statement Display under the Equity Method for Investments in Certain
Partnerships and Other Ventures (EITF 00-1)." The consensus requires that the
proportionate share method of accounting (under which an entity records its
share of the assets, liabilities, revenues and expenses of partnerships and
other ventures in which it has joint interest and control) be discontinued,
except in limited circumstances. As a result of adopting this consensus, the
Ventures' share of the net assets of a venture in which they have joint interest
and control is carried in investments in and advances to unconsolidated real
estate ventures in the balance sheets and their share of net earnings is carried
in equity in earnings (losses) of unconsolidated real estate ventures in the
statements of operations.
The adoption of EITF 00-1 affected previously reported balances as follows:
1999
----
Decrease in:
Total property................................................. $ 43,422
Other assets................................................... 2,257
Total debt..................................................... (40,544)
Other liabilities.............................................. (907)
---------
Net increase in investments in and advances to unconsolidated
real estate ventures........................................... $ 4,228
=========
IV-11
1999 1998
---- ----
Decrease in:
Revenues................................................................... $ 8,931 $ 8,712
Operating expenses, exclusive of depreciation and amortization............. (3,327) (3,393)
Interest expense........................................................... (3,253) (3,025)
Depreciation and amortization.............................................. (977) (941)
-------- --------
Net increase in equity in earnings (losses) of unconsolidated real
estate ventures............................................................ $ 1,374 $ 1,353
======== ========
In addition to reclassifications attributable to the adoption of EITF 00-1,
certain other amounts for prior years have been reclassified to conform to the
presentation for 2000.
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. 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.
Relying on the REIT Modernization Act, the Company negotiated an agreement
to reacquire the voting stock of the Ventures owned by the Trust and on January
2, 2001, the Company exchanged 137,928 shares of common stock for the Trust's
shares of voting stock in the Ventures. The voting shares acquired by the
Company constitute all of the Trust's interests in the Ventures. The fair value
of the consideration exchanged was approximately $3.5 million. As a result of
this transaction, the Company owns 100% of the voting common stock of the
Ventures, and accordingly, the Ventures will be consolidated in the Company's
financial statements from the date of the acquisition.
(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. Provisions are 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 undiscounted 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. Fair values are determined based on estimated future cash flows
using appropriate discount and capitalization rates.
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
the properties are actively marketed for sale. 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. If active
marketing ceases, the properties are reclassified as operating, depreciation is
resumed and deferred selling costs, if any, are expensed.
IV-12
(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 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 terms of the Agreement,
additional shares of the Company's common stock (or in certain circumstances,
Increasing Rate Cumulative Preferred stock) are issuable to the beneficiaries
based on the appraised values of four defined groups of acquired assets at
specified "termination dates" from 2000 to 2009 and/or cash flows generated from
the development and/or sale of those 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 liabilities
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.
IV-13
(2) Property
Operating properties and deferred costs of projects at December 31, 2000 and
1999 are summarized as follows (in thousands):
2000 1999
---- ----
Buildings and improvements............................... $ 395,709 $ 377,502
Land..................................................... 25,798 26,557
Deferred costs........................................... 9,808 7,773
Furniture and equipment.................................. 2,074 925
Total.................................................. --------- ---------
$ 433,389 $ 412,757
========= =========
Depreciation expense for 2000, 1999 and 1998 was $14.4 million, $10.8 million
and $8.8 million, respectively, and amortization expense was $1.4 million, $1.2
million and $.7 million, respectively.
Properties in development include construction and development in progress
and preconstruction costs. Construction and development in progress includes
land and land improvements of $6.9 million and $.8 million at December 31, 2000
and 1999, respectively.
Investment land and land held for development and sale at December 31, 2000
and 1999 is summarized as follows (in thousands):
2000 1999
---- ----
Land under development................................... $154,785 $131,854
Finished land............................................ 41,109 70,107
Raw land................................................. 54,616 55,812
Total................................................. -------- --------
$250,510 $257,773
======== ========
(3) Investments in and advances to unconsolidated real estate ventures
Investments in and advances to unconsolidated real estate ventures at December
31, 2000 and 1999 are summarized as follows (in thousands):
2000 1999
---- ----
Investments in properties consolidated by the Company....... $ 75,956 $ 92,076
Investments in other unconsolidated real estate ventures.... 30,936 19,963
---------- ----------
Total.................................................... $ 106,892 $ 112,039
========== ==========
Investments in properties consolidated by the Company at December 31, 2000
and 1999 consist of limited partnership interests in retail centers, mixed-use
properties and office and industrial buildings which are controlled by the
Company. These investments are accounted for using the equity method of
accounting. In 2000, the Ventures contributed ownership interests in three
office properties to a limited partnership controlled by the Company in exchange
for a minority interest in that partnership. Additionally, the Venture received
capital distributions of $25.6 million from two other limited partnerships and
used the proceeds to repay certain loans from the Company. The condensed,
combined balance sheets of these partnerships at December 31, 2000 and 1999 and
their condensed combined statements of earnings are summarized as follows (in
thousands):
2000 1999
---- ----
Total assets, primarily property..................... $ 630,185 $ 759,183
========= =========
Liabilities, primarily long-term debt................ $ 350,974 $ 477,787
Venturers' equity.................................... 279,211 281,396
--------- ---------
Total liabilities and venturers' equity........... $ 630,185 $ 759,183
========= =========
IV-14
2000 1999 1998
---- ---- ----
Revenues............................................. $121,015 $121,342 $112,209
Operating and interest expenses...................... 82,212 86,111 95,031
Depreciation and amortization........................ 17,877 21,966 13,617
Other gains (losses), net............................ (702) 6,854 437
-------- -------- --------
Net earnings.................................... $ 20,224 $ 20,119 $ 3,998
======== ======== ========
The Ventures' share of the net earnings in these partnerships was
approximately $1.4 million in 2000 and $.8 million in 1998. In 1999, the
Ventures' share of operations in these partnerships was a loss of
approximately $.6 million.
Investments in other unconsolidated real estate ventures consist
primarily of partnership interests in retail centers and properties in
development. These investments are accounted for using the equity or cost
method, as appropriate. The December 31, 2000 and 1999 condensed, combined
balance sheets of these partnerships accounted for using the equity method
and their condensed, combined statements of earnings are summarized as
follows (in thousands):
2000 1999
---- ----
Total assets, primarily property..................... $ 90,413 $ 88,600
======== ========
Liabilities, primarily debt.......................... $ 86,308 $ 81,007
Venturers' equity.................................... 4,105 7,593
-------- --------
Total liabilities and venturers' equity......... $ 90,413 $ 88,600
======== ========
2000 1999 1998
---- ---- ----
Revenues............................................. $ 21,310 $ 20,378 $ 19,529
Operating and interest expenses...................... 14,636 17,357 14,306
Depreciation and amortization........................ 1,981 1,909 1,812
-------- -------- --------
Net earnings.................................... $ 4,693 $ 1,112 $ 3,411
======== ======== ========
The Ventures' share of the net earnings in these partnerships was
approximately $2.3 million in 2000 and $1.4 million in 1998. In 1999, the
Ventures' share of the operations in these partnerships was a loss of $1.3
million.
(4) Accounts and notes receivable
Accounts and notes receivable at December 31, 2000 and 1999 are summarized
as follows (in thousands):
2000 1999
---- ----
Accounts receivable, primarily accrued rents and
income under tenant leases......................... $ 7,357 $ 11,524
Notes receivable from sales of operating properties.. 994 1,197
Notes receivable from sales of land.................. 56,408 76,417
-------- --------
64,759 89,138
Less allowance for doubtful receivables.............. 490 589
-------- --------
Total........................................... $ 64,269 $ 88,549
======== ========
Accounts and notes receivable due after one year at December 31, 2000
and 1999 were $30.8 million and $47.2 million, 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
IV-15
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.
The Ventures had advances to the Company that were repaid in 1999.
Interest on these advances was $2.6 million in 1999 and $9 million 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 $1.6
million in 2000 and $3.3 million in 1999 and $2.5 million 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 $.5 million in
2000 and $.6 million in each of 1999 and 1998.
(6) Debt
Debt at December 31, 2000 and 1999 is summarized as follows (in thousands):
2000 1999
---- ----
Borrowings from the Company:
Deed of trust notes payable..................... $279,202 $333,907
Credit lines.................................... 56,441 59,674
Other loans..................................... 115,067 121,211
-------- --------
Mortgages payable - other lenders................. 450,710 514,792
Other debt........................................ 309,446 307,362
Total........................................ 16,844 2,741
-------- --------
$777,000 $824,895
======== ========
IV-16
The deed of trust notes payable to the Company are secured by certain
land and operating properties and general assignments of rents. In 2000,
the Ventures and the Company modified the terms of one of the notes to
provide for payment prior to its scheduled maturity. The modified terms
required payment of $37.9 million in December 2000 and the remaining
principal in January 2001. The remaining 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 $265,264,000 bear interest at 12.25% through December 2001, 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 $39.7 million in 2000, $43.1 million in
1999 and $45.7 million in 1998.
The Ventures have five separate credit line facilities with the
Company that provide for aggregate borrowings of up to $115 million. 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 $1.4 million in 2000, $4.6 million in 1999
and $1.2 million in 1998.
Other loans payable to the Company are unsecured and are due at
various dates through 2008. The notes bear interest at a variable rate
(8.25% at December 31, 2000) which is based on the weighted-average
interest rate of certain borrowings of the Company and subsidiaries.
Interest on the other loans was $11.4 million in 2000, $9.9 million in 1999
and $6.5 million 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, 2000, bears
interest at a weighted-average effective rate of 7.7%. At December 31,
2000, approximately $193,665,000 of the mortgages were payable to one
lender.
Other debt consists of special improvement district bonds with various
maturity dates through February 2020 and bears interest at a weighted-
average effective rate of 7.6% at December 31, 2000.
The annual maturities of debt at December 31, 2000 are summarized as
follows (in thousands):
Borrowings
from the Other
Company Borrowings Total
------- ---------- -----
2001........................ $147,142 $ 13,341 $ 160,483
2002........................ 6,190 6,841 13,031
2003........................ 6,278 6,870 13,148
2004........................ 6,379 28,710 35,089
2005........................ 6,493 7,067 13,560
Subsequent to 2005.......... 278,228 263,461 541,689
-------- --------- ---------
Total.................. $450,710 $ 326,290 $ 777,000
======== ========= =========
The amount due to the Company in 2001 was paid using the proceeds from
borrowings under a line of credit facility obtained in December 2000 and
additional borrowings under the credit line facilities with the Company.
The credit facility obtained in December 2000 is with a group of lenders
and provides for unsecured borrowings of up to $140 million. Advances under
the facility bear interest at a variable rate of LIBOR plus 1%. The
facility is available to 2003, subject to a one-year renewal option. There
were no borrowings under this facility in 2000.
Total interest costs were $77.1 million in 2000, $82.2 million in 1999
and $80.5 million in 1998, of which $14.2 million, $17.2 million and $15.3
million, respectively, were capitalized.
In 2000, the Ventures incurred an extraordinary loss of $13.3 million
(prepayment penalty of $22.1 million, net of deferred tax benefit of $8.8
million) in connection with the extinguishment of a deed of trust note
payable to the Company as discussed above. Proceeds from operating cash
flows were used to pay the penalty. In 1998, the Ventures incurred
extraordinary losses related to extinguishments of debt held by other
lenders prior to scheduled maturity of $1.9 million, less related deferred
income tax benefits of $.8 million. The sources of funds used to pay the
debt and fund the prepayment penalties, where applicable, were refinancings
of the related properties.
IV-17
The carrying amounts of the borrowings from the Company approximate
fair value at December 31, 2000 and 1999. The carrying amounts and
estimated fair values of the Ventures' other debt at December 31, 2000 and
1999 are summarized as follows (in thousands):
2000 1999
---- ----
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
------ ---------- ------ ----------
Fixed rate debt........... $325,144 $328,052 $ 308,407 $ 293,045
Variable rate debt........ 1,146 1,146 1,696 1,696
-------- -------- --------- ---------
Total................ $326,290 $329,198 $ 310,103 $ 294,741
======== ======== ========= =========
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 attributable to continuing operations is reconciled to
the amount computed by applying the Federal corporate tax rate as follows
(in thousands):
2000 1999 1998
---- ---- ----
Tax at statutory rate on earnings before
income taxes and extraordinary losses........... $ 27,164 $ 15,512 $ 20,509
Increase (decrease) in valuation allowance........ (291) 3,802 952
State income taxes, net of Federal income
tax benefit and valuation allowance
attributable to state taxes..................... 1,277 379 599
-------- -------- --------
Income tax expense................................ $ 28,150 $ 19,693 $ 22,060
======== ======== ========
The net deferred tax asset at December 31, 2000 and 1999 is summarized as
follows (in thousands):
2000 1999
---- ----
Total deferred tax assets........... $ 58,613 $ 70,093
Total deferred tax liabilities...... (33,886) (28,775)
Valuation allowance................. (4,463) (4,754)
-------- --------
Net deferred tax asset......... $ 20,264 $ 36,564
======== ========
The tax effects of temporary differences and loss carryforwards
included in the net deferred tax asset at December 31, 2000 and 1999 are
summarized as follows (in thousands):
2000 1999
---- ----
Property, primarily differences in depreciation and
amortization, the tax basis of land assets and
treatment of interest and certain other costs... $ (13,123) $ 7,411
Operating loss and tax credit carryforwards........ 29,954 26,031
Other.............................................. 3,433 3,122
--------- --------
Total............................... $ 20,264 $ 36,564
========= ========
IV-18
The net operating losses carried forward from December 31, 2000 for
Federal income tax purposes aggregate approximately $91.8 million. 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 the uncertainty
of realizing certain operating 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) Other provisions and losses, net
In 1999, other provisions and losses, net consisted primarily of 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.
(9) Gains on operating properties, net
The net gain on operating properties in 1999 relates primarily to the sale
of two office/industrial buildings. The net gain on operating properties in
1998 relates primarily to sales of a hotel property and two
office/industrial buildings.
(10) 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. Cumulative dividends through December 31,
2000 of $14.9 million were paid in 2000. 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.
(11) Leases
The Ventures, as lessee, have entered into operating leases expiring at
various dates through 2062. Rents under such leases aggregated $.5 million
in each of 2000, 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, 2000 are
summarized as follows (in thousands):
2001................................ $ 487
2002................................ 451
2003................................ 280
2004................................ 260
2005................................ 258
Subsequent to 2005.................. 14,611
--------
Total.......................... $ 16,347
========
Space in the Ventures' operating properties is leased to tenants under
operating leases. 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):
2000 1999 1998
---- ---- ----
Minimum rents....................... $ 53,437 $ 45,229 $ 42,110
Percentage rents.................... 901 805 734
Other rents......................... 20,642 17,650 21,638
--------- -------- ---------
Total.......................... $ 74,980 $ 63,684 $ 64,482
========= ======== =========
IV-19
Minimum rents to be received from tenants under operating leases in
effect at December 31, 2000 are summarized as follows (in thousands):
2001....................................... $ 52,299
2002....................................... 46,565
2003....................................... 41,478
2004....................................... 32,279
2005....................................... 23,489
Subsequent to 2005......................... 74,837
--------
Total................................. $270,947
========
(12) 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 $.5 million in each of
2000 and 1999 and $1.0 million in 1998, 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 2000, 1999 and 1998 include
license fees and service cost reimbursements to the Company of
approximately $12.1 million, $8.8 million and $8.3 million, 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 $2.0 million, $2.1 million and $2.2 million in 2000,
1999 and 1998, respectively, and related primarily to development of an
expansion of a regional shopping center and new office buildings in
Columbia and Summerlin.
(13) 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 $15.6 million at December 31, 2000.
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, 2000, outstanding borrowings
by the Company under the facility were $198 million.
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-20
Schedule II
-----------
THE ROUSE COMPANY AND SUBSIDIARIES
Valuation and Qualifying Accounts
Years ended December 31, 2000, 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 year
------------ -------------- --------------- --------------- ---------- ----------
Year ended December 31, 2000:
Allowance for doubtful receivables $ 23,570 $ 6,683 $ --- $ 7,645 (1) $ 22,608
============= ============= ============= =========== ============
Preconstruction reserve $ 5,247 $ 4,691 $ --- $ 2,362 (3) $ 7,576
============= ============= ============= =========== ============
Year ended December 31, 1999:
Allowance for doubtful receivables $ 19,014 $ 7,972 $ --- $ 3,416 (1) $ 23,570
============= ============= ============= =========== ============
Preconstruction reserve $ 15,908 $ --- $ --- $ 10,661 (3) $ 5,247
============= ============= ============= =========== ============
Year ended December 31, 1998:
Allowance for doubtful receivables $ 20,749 $ 7,042 $ --- $ 8,777 (1) $ 19,014
============= ============= ============= =========== ============
Valuation allowance - properties held for sale $ 37,952 $ --- $ --- $ 37,952 (2) $ ---
============= ============= ============= =========== ============
Preconstruction reserve $ 17,351 $ 1,700 $ --- $ 3,143 (3) $ 15,908
============= ============= ============= =========== ============
Notes:
(1) Balances written off as uncollectible.
(2) Allowance related to properties sold.
(3) Costs of unsuccessful projects written off and other deductions.
IV-21
Schedule III
------------
THE ROUSE COMPANY AND SUBSIDIARIES
Real Estate and Accumulated Depreciation (note 1)
December 31, 2000
(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 Improvements
Description brances Land ments ments costs (note 2) Land (note 3) Total
----------- ------- ---- ----- ----- -------------- ---- -------- -----
Operating Properties:
Pioneer Place $134,720 $ 2,813 $ -- $ 172,383 $ -- $ 2,813 $ 172,383 $ 175,196
Mixed-Use Project
Portland, OR
Fashion Show 71,118 35,036 120,347 12,691 -- 35,036 133,038 168,074
Retail Center
Las Vegas, NV
Exton Square 94,379 4,979 -- 160,931 -- 4,979 160,931 165,910
Retail Center
Exton, PA
South Street Seaport 54,191 -- -- 153,145 -- -- 153,145 153,145
Retail Center
New York, NY
Arizona Center 85,179 98 -- 151,697 -- 98 151,697 151,795
Mixed-Use Project
Phoenix, AZ
Woodbridge Center 128,646 26,301 -- 120,061 -- 26,301 120,061 146,362
Retail Center
Woodbridge, NJ
Fashion Place 114,297 19,379 119,715 1,675 -- 19,379 121,390 140,769
Retail Center
Salt Lake City, UT
Beachwood Place 116,473 10,673 -- 128,994 -- 10,673 128,994 139,667
Retail Center
Cleveland, OH
Oviedo Marketplace 70,000 9,594 -- 128,604 -- 9,594 128,604 138,198
Retail Center
Orlando, FL
Owings Mills 61,000 21,639 -- 115,747 -- 21,639 115,747 137,386
Retail Center
Baltimore, MD
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:
Pioneer Place $ 32,054 03/90 N/A Note 8
Mixed-Use Project
Portland, OR
Fashion Show 15,131 03/81 06/96 Note 8
Retail Center
Las Vegas, NV
Exton Square 14,870 03/73 N/A Note 8
Retail Center
Exton, PA
South Street Seaport 33,642 07/83 N/A Note 8
Retail Center
New York, NY
Arizona Center 39,533 07/83 N/A Note 8
Mixed-Use Project
Phoenix, AZ
Woodbridge Center 33,387 03/71 N/A Note 8
Retail Center
Woodbridge, NJ
Fashion Place 4,536 03/72 10/98 Note 8
Retail Center
Salt Lake City, UT
Beachwood Place 14,429 08/78 N/A Note 8
Retail Center
Cleveland, OH
Oviedo Marketplace 7,392 03/98 N/A Note 8
Retail Center
Orlando, FL
Owings Mills 16,990 07/86 N/A Note 8
Retail Center
Baltimore, MD
IV - 22
THE ROUSE COMPANY AND SUBSIDIARIES
Real Estate and Accumulated Depreciation (note 1)
December 31, 2000
(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 Improvements
Description brances Land ments ments costs (note 2) Land (note 3) Total
----------- ------- ---- --------- -------- --------------- ------- -------- -----
Moorestown Mall $60,060 $13,549 $ 65,596 $ 44,432 $-- $13,549 $110,028 $123,577
Retail Center
Moorestown, NJ
Westlake Center 71,000 10,582 -- 100,819 -- 10,582 100,819 111,401
Mixed-Use Project
Seattle, WA
The Gallery at Harborplace 95,170 6,648 -- 104,649 -- 6,648 104,649 111,297
Mixed-Use Project
Baltimore, MD
Mall St. Matthews 69,458 -- -- 107,552 -- -- 107,552 107,552
Retail Center
Louisville, KY
Paramus Park 72,000 13,476 -- 87,832 -- 13,476 87,832 101,308
Retail Center
Paramus, NJ
Bayside Marketplace 74,105 -- -- 97,850 -- -- 97,850 97,850
Retail Center
Miami, FL
Faneuil Hall Marketplace 52,330 -- -- 84,768 -- -- 84,768 84,768
Retail Center
Boston, MA
Governor's Square 68,949 -- -- 81,906 -- -- 81,906 81,906
Retail Center
Tallahassee, FL
Plymouth Meeting 33,829 702 -- 76,745 -- 702 76,745 77,447
Retail Center
Plymouth Meeting, PA
Oakwood Center 52,478 15,938 -- 61,480 -- 15,938 61,480 77,418
Retail Center
Gretna, LA
Augusta Mall 58,103 4,697 -- 70,642 -- 4,697 70,642 75,339
Retail Center
Augusta, GA
Life on
Accumulated Date of which depre-
depreciation completion ciation in latest
and of Date income state-
Description amortization construction acquired ment is computed
----------- ------------ ------------ -------- ------------------
Moorestown Mall $ 6,006 03/63 12/97 Note 8
Retail Center
Moorestown, NJ
Westlake Center 28,220 10/88 N/A Note 8
Mixed-Use Project
Seattle, WA
The Gallery at Harborplace 27,356 09/87 N/A Note 8
Mixed-Use Project
Baltimore, MD
Mall St. Matthews 23,359 03/62 N/A Note 8
Retail Center
Louisville, KY
Paramus Park 15,099 03/74 N/A Note 8
Retail Center
Paramus, NJ
Bayside Marketplace 20,829 04/87 N/A Note 8
Retail Center
Miami, FL
Faneuil Hall Marketplace 13,126 08/76 N/A Note 8
Retail Center
Boston, MA
Governor's Square 10,968 08/79 N/A Note 8
Retail Center
Tallahassee, FL
Plymouth Meeting 14,312 02/66 N/A Note 8
Retail Center
Plymouth Meeting, PA
Oakwood Center 12,589 10/82 N/A Note 8
Retail Center
Gretna, LA
Augusta Mall 9,744 08/78 N/A Note 8
Retail Center
Augusta, GA
IV-23
THE ROUSE COMPANY AND SUBSIDIARIES
Real Estate and Accumulated Depreciation (note 1)
December 31, 2000
(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 Improvements
Description brances Land ments ments costs (note 2) Land (note 3) Total
- ---------------------------- -------- ---------- ----------- ---------- -------------- -------- ------------ -----
Cherry Hill Mall $ 76,429 $ 14,767 $ -- $ 59,161 $ -- $ 14,767 $ 59,161 $ 73,928
Retail Center
Cherry Hill, NJ
Riverwalk 11,288 -- -- 71,745 -- -- 71,745 71,745
Retail Center
New Orleans, LA
Hulen Mall 62,509 7,575 -- 63,116 -- 7,575 63,116 70,691
Retail Center
Ft. Worth, TX
Echelon Mall 57,171 6,160 -- 63,152 -- 6,160 63,152 69,312
Retail Center
Voorhees, NJ
Harborplace 34,981 -- -- 58,023 -- -- 58,023 58,023
Retail Center
Baltimore, MD
Blue Cross & Blue Shield 26,581 1,000 -- 44,269 -- 1,000 44,269 45,269
Building I
Office Building
Baltimore, MD
3800 Howard Hughes Parkway 37,869 3,622 38,438 2,649 -- 3,622 41,087 44,709
Office Building/Industrial
Las Vegas, NV
The Jacksonville Landing -- -- -- 34,970 -- -- 34,970 34,970
Retail Center
Jacksonville, FL
Village of Cross Keys 14,489 925 -- 30,435 -- 925 30,435 31,360
Mixed-Use Project
Baltimore, MD
Westdale Mall 23,033 653 30,495 103 -- 653 30,598 31,251
Retail Center
Cedar Rapids, IA
Life on
which depre-
Accumulated Date of ciation in
depreciation completion latest
and of Date income state-
Description amortization construction acquired ment is computed
- ------------------------------- ------------ ------------ -------- ----------------
Cherry Hill Mall $ 20,263 10/61 N/A Note 8
Retail Center
Cherry Hill, NJ
Riverwalk 14,247 08/86 N/A Note 8
Retail Center
New Orleans, LA
Hulen Mall 12,512 08/77 N/A Note 8
Retail Center
Ft. Worth, TX
Echelon Mall 12,985 09/70 N/A Note 8
Retail Center
Voorhees, NJ
Harborplace 11,154 07/80 N/A Note 8
Retail Center
Baltimore, MD
Blue Cross & Blue Shield 12,242 07/89 N/A Note 8
Building I
Office Building
Baltimore, MD
3800 Howard Hughes Parkway 9,014 11/86 06/96 Note 8
Office Building/Industrial
Las Vegas, NV
The Jacksonville Landing 14,418 06/87 N/A Note 8
Retail Center
Jacksonville, FL
Village of Cross Keys 9,537 09/65 N/A Note 8
Mixed-Use Project
Baltimore, MD
Westdale Mall 551 07/79 10/98 Note 8
Retail Center
Cedar Rapids, IA
IV-24
THE ROUSE COMPANY AND SUBSIDIARIES
Real Estate and Accumulated Depreciation (note 1)
December 31, 2000
(in thousands)
Costs capitalized
subsequent Gross amount at which carried
Initial cost to Company to acquisition at close of period
------------------------- --------------------- ------------------------------
Buildings Buildings
and Carrying and
Encum- Improve- Improve- costs Improvements
Description brances Land ments ments (note 2) Land (note 3) Total
----------- -------- ---------- ----------- ---------- --------- ----- ------------ ------
3773 Howard Hughes Parkway $21,672 $1,739 $22,625 $ 3,496 -- 1,739 26,121 27,860
Office Building
Las Vegas, NV
Alexander & Alexander 17,216 1,000 -- 26,728 -- 1,000 26,728 27,728
Building II
Office Building
Baltimore, MD
Hunt Valley 75 16,473 8,136 14,187 3,795 -- 8,136 17,982 26,118
Office Building
Baltimore, MD
3960 Howard Hughes Parkway 23,585 800 -- 24,894 -- 800 24,894 25,694
Office Building
Las Vegas, NV
The Gallery at Market East -- -- -- 24,693 -- -- 24,693 24,693
Retail Center
Philadelphia, PA
Mondawmin Mall 2,203 2,251 -- 18,509 -- 2,251 18,509 20,760
Retail Center
Baltimore, MD
Blue Cross & Blue Shield 9,697 1,000 -- 16,413 -- 1,000 16,413 17,413
Building II
Office Building
Baltimore, MD
3753 / 3763 Howard Hughes 10,445 3,844 12,018 738 -- 3,844 12,756 16,600
Parkway
Office Building
Las Vegas, NV
Alexander & Alexander 10,327 650 -- 15,728 -- 650 15,728 16,378
Building I
Office Building
Baltimore, MD
Senate Plaza 15,207 2,284 13,319 361 -- 2,284 13,680 15,964
Office Building
Camp Hill, PA
Life on
Accumulated Date of which depre-
depreciation completion ciation in latest
and of Date income state-
Description amortization construction acquired ment is computed
----------- ------------ ------------ -------- -----------------
3773 Howard Hughes Parkway 3,267 11/95 6/96 Note 8
Office Building
Las Vegas, NV
Alexander & Alexander 8,119 09/87 N/A Note 8
Building II
Office Building
Baltimore, MD
Hunt Valley 75 815 07/84 12/98 Note 8
Office Building
Baltimore, MD
3960 Howard Hughes Parkway 1,792 4/98 6/96 Note 8
Office Building
Las Vegas, NV
The Gallery at Market East 8,196 08/77 N/A Note 8
Retail Center
Philadelphia, PA
Mondawmin Mall 8,351 01/78 N/A Note 8
Retail Center
Baltimore, MD
Blue Cross & Blue Shield 4,172 08/90 N/A Note 8
Building II
Office Building
Baltimore, MD
3753 / 3763 Howard Hughes 1,903 10/91 6/96 Note 8
Parkway
Office Building
Las Vegas, NV
Alexander & Alexander 5,800 11/88 N/A Note 8
Building I
Office Building
Baltimore, MD
Senate Plaza 2,048 07/72 12/98 Note 8
Office Building
Camp Hill, PA
IV-25
THE ROUSE COMPANY AND SUBSIDIARIES
Real Estate and Accumulated Depreciation (note 1)
December 31, 2000
(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 Improvements
Description brances Land ments ments costs (note 2) Land (note 3) Total
- ----------- ------- ---- ----- ----- -------------- ---- -------- -----
Tampa Bay Center $20,530 $11,281 $ -- $ 4,024 $ -- $11,281 $ 4,024 $ 15,305
Retail Center
Tampa, FL
Centerpointe 6,685 3,855 11,302 128 -- 3,855 11,430 15,285
Office Building
Baltimore, MD
3930 Howard Hughes Parkway 5,400 3,108 11,279 410 -- 3,108 11,689 14,797
Office Building
Las Vegas, NV
Canyon Center C&D 153 1,723 -- 12,853 -- 1,723 12,853 14,576
Office Building/Industrial
Las Vegas, NV
Canyon Center 12,228 2,081 7,161 5,255 -- 2,081 12,416 14,497
Office Building
Las Vegas, NV
Schilling Plaza South 5,921 5,000 7,402 1,286 -- 5,000 8,688 13,688
Office Building
Baltimore, MD
Schilling Plaza North 7,498 4,470 8,059 908 -- 4,470 8,967 13,437
Office Building
Baltimore, MD
3980 Howard Hughes Parkway 10,226 879 5,583 6,193 879 11,776 12,655
Office Building --
Las Vegas, NV
Crossing Business 8,276 2,842 1,416 8,257 -- 2,842 9,673 12,515
Center Phase III
Office Building
Las Vegas, NV
Inglewood Office II 5,935 2,233 7,304 879 -- 2,233 8,183 10,416
Office Building
Prince George's County, MD
Life on
Accumulated Date of which depre-
depreciation completion ciation in latest
and of Date income state-
Description amortization construction acquired ment is computed
- ----------- ------------ ------------ -------- ----------------
Tampa Bay Center $ 1,316 08/76 N/A Note 8
Retail Center
Tampa, FL
Centerpointe 426 07/87 12/98 Note 8
Office Building
Baltimore, MD
3930 Howard Hughes Parkway 2,512 12/94 06/96 Note 8
Office Building
Las Vegas, NV
Canyon Center C&D 1,807 06/98 06/96 Note 8
Office Building/Industrial
Las Vegas, NV
Canyon Center 1,500 03/98 06/96 Note 8
Office Building
Las Vegas, NV
Schilling Plaza South 457 07/87 12/98 Note 8
Office Building
Baltimore, MD
Schilling Plaza North 302 07/80 12/98 Note 8
Office Building
Baltimore, MD
3980 Howard Hughes Parkway 1,348 04/97 06/96 Note 8
Office Building
Las Vegas, NV
Crossing Business 1,558 09/96 06/96 Note 8
Center Phase III
Office Building
Las Vegas, NV
Inglewood Office II 567 07/86 12/98 Note 8
Office Building
Prince George's County, MD
IV - 26
THE ROUSE COMPANY AND SUBSIDIARIES
Real Estate and Accumulated Depreciation (note 1)
December 31, 2000
(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 Improvements
Description brances Land ments ments costs (note 2) Land (note 3) Total
- ----------- ------- ---- ----- ----- -------------- ---- -------- -----
201 International Circle $3,905 $5,464 $3,763 $ 647 $ -- $5,464 $4,410 $ 9,874
Office Building
Baltimore, MD
Crossing Business 7,343 1,326 7,951 494 -- 1,326 8,445 9,771
Center Phase I
Office Building
Las Vegas, NV
3770 Howard Hughes Parkway 5,263 691 8,010 856 -- 691 8,866 9,557
Office Building
Las Vegas, NV
Riverspark 2/Building 2 1,435 2,783 6,594 -- -- 2,783 6,594 9,377
Office Building/Industrial
Columbia, MD
Inglewood Office Center I 4,904 2,245 5,867 1,068 -- 2,245 6,935 9,180
Office Building
Prince George's County, MD
Metro Plaza -- 202 -- 8,736 -- 202 8,736 8,938
Retail Center
Baltimore, MD
Riverspark Building B 2,148 2,117 2,545 3,940 -- 2,117 6,485 8,602
Industrial Building
Columbia, MD
10190 Covington Cross 6,880 1,257 398 6,595 -- 1,257 6,993 8,250
Office Building
Las Vegas, NV
USA Group 6,897 1,197 4,880 1,452 -- 1,197 6,332 7,529
Office Building / Industrial
Las Vegas, NV
Crossing Business 5,513 357 7,071 -- -- 357 7,071 7,428
Center Phase II
Office Building / Industrial
Las Vegas, NV
Life on
Accumulated Date of which depre-
depreciation completion ciation in latest
and of Date income state-
Description amortization construction acquired ment is computed
- ----------- ------------ ------------ -------- ----------------
201 International Circle $ 201 07/82 12/98 Note 8
Office Building
Baltimore, MD
Crossing Business 1,161 12/94 06/96 Note 8
Center Phase I
Office Building
Las Vegas, NV
3770 Howard Hughes Parkway 2,060 10/90 06/96 Note 8
Office Building
Las Vegas, NV
Riverspark 2/Building 2 298 07/87 12/98 Note 8
Office Building/Industrial
Columbia, MD
Inglewood Office Center I 501 07/82 12/98 Note 8
Office Building
Prince George's County, MD
Metro Plaza 4,259 N/A 12/82 Note 8
Retail Center
Baltimore, MD
Riverspark Building B 95 7/85 12/98 Note 8
Industrial Building
Columbia, MD
10190 Covington Cross 671 12/97 06/96 Note 8
Office Building
Las Vegas, NV
USA Group 453 11/98 06/96 Note 8
Office Building / Industrial
Las Vegas, NV
Crossing Business 813 12/95 06/96 Note 8
Center Phase II
Office Building / Industrial
Las Vegas, NV
IV - 27
THE ROUSE COMPANY AND SUBSIDIARIES
Real Estate and Accumulated Depreciation (note 1)
December 31, 2000
(in thousands)
Costs capitalized subsequent
Initial cost to Company to acquisition
----------------------- -----------------------------
Buildings
and
Encum- Improve- Improve- Carrying
Description brances Land ments ments costs (note 2)
----------- ------- ---- ----- ----- --------------
Inglewood Tech IV $ 1,543 $ 2,576 $ 3,365 $ 846 $ --
Industrial Building
Prince George's County, MD
Canyon Business Center Phase V 99 1,188 -- 5,587 --
Office Building / Industrial
Las Vegas, NV
Raytheon 169 422 6,134 -- --
Office Building / Industrial
Las Vegas, NV
Plaza East 4,453 910 5,297 34 --
Office Building / Industrial
Las Vegas, NV
Inglewood Tech V 4,060 2,736 3,494 -- --
Industrial Building
Prince George's County, MD
First National Bank Plaza 4,928 -- -- 6,149 --
Office Building
Mt. Prospect, IL
Hunt Valley 49 3,392 1,718 3,892 357 --
Industrial Building
Baltimore, MD
Plaza West 4,279 195 5,360 122 --
Office Building / Industrial
Las Vegas, NV
Other properties and related
investments less than
5% of total 62,900 54,171 70,822 61,310 --
------------------------------------ -------------------------
Total Operating Properties 2,321,623 371,537 641,689 2,765,967 --
------------------------------------ -------------------------
Gross amount at which carried
at close of period
-------------------------------------
Life on
Buildings Accumulated Date of which depre-
and depreciation completion ciation in latest
Improvements and of Date income state-
Land (note 3) Total amortization construction acquired ment is computed
---- -------- ----- ------------ ------------ -------- ----------------
Inglewood Tech IV $ 2,576 $ 4,211 $ 6,787 $ 282 07/86 12/98 Note 8
Industrial Building
Prince George's County, MD
Canyon Business Center Phase V 1,188 5,587 6,775 915 03/98 06/96 Note 8
Office Building / Industrial
Las Vegas, NV
Raytheon 422 6,134 6,556 739 11/92 06/96 Note 8
Office Building / Industrial
Las Vegas, NV
Plaza East 910 5,331 6,241 695 12/93 06/96 Note 8
Office Building / Industrial
Las Vegas, NV
Inglewood Tech V 2,736 3,494 6,230 267 07/86 12/98 Note 8
Industrial Building
Prince George's County, MD
First National Bank Plaza -- 6,149 6,149 2,140 07/81 N/A Note 8
Office Building
Mt. Prospect, IL
Hunt Valley 49 1,718 4,249 5,967 146 02/82 12/98 Note 8
Industrial Building
Baltimore, MD
Plaza West 195 5,482 5,677 723 11/95 06/96 Note 8
Office Building / Industrial
Las Vegas, NV
Other properties and related
investments less than
5% of total 54,171 132,132 186,303 24,891
----------------------------------------------------
Total Operating Properties 371,537 3,407,656 3,779,193 608,061
----------------------------------------------------
IV - 28
THE ROUSE COMPANY AND SUBSIDIARIES
Real Estate and Accumulated Depreciation (note 1)
December 31, 2000
(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 Improvements
Description brances Land ments ments costs (note 2) Land (note 3) Total
----------- ------- ---- ----- ----- -------------- ---- -------- -----
Properties in Development:
Fashion Show Expansion $ -- $ 23,539 $ -- $ 48,401 $ -- $ 23,539 $ 48,401 $ 71,940
Expansion of Retail Center
Las Vegas, NV
Arizona Center 12,800 13,893 -- -- -- 13,893 -- 13,893
Developed/Developable Land
Under Master Lease
Phoenix, AZ
Paramus Park Expansion -- -- -- 8,328 -- -- 8,328 8,328
Expansion of Retail Center
Paramus, NJ
La Cantera Center -- -- -- 4,395 -- -- 4,395 4,395
New Retail Center
San Antonio, TX
Fashion Place Expansion -- -- -- 3,384 -- -- 3,384 3,384
Expansion of Retail Center
Salt Lake City, UT
Exton Square Expansion -- -- -- 3,272 -- -- 3,272 3,272
Expansion of Retail Center
Exton, PA
Summerlin Town Center -- -- -- 1,450 -- -- 1,450 1,450
New Retail Center
Summerlin, NV
Pre-Construction Costs - -- -- -- 8,873 -- -- 8,873 8,873
Various Projects
Pre-Construction Reserve -- -- -- (5,226) -- -- (5,226) (5,226)
Other projects less than 5%
of total -- 2,786 -- 2,148 -- 2,786 2,148 4,934
------------------------------- -------------------------- ------------------------------
Total Properties
in Development 12,800 40,218 -- 75,025 -- 40,218 75,025 115,243
------------------------------- -------------------------- ------------------------------
Life on
which depre-
Accumulated ciation in
depreciation Date of latest
and completion of Date income statement
Description amortization construction acquired is computed
----------- ------------ ------------ -------- -----------
Properties in Development:
Fashion Show Expansion N/A N/A N/A N/A
Expansion of Retail Center
Las Vegas, NV
Arizona Center N/A N/A N/A N/A
Developed/Developable Land
Under Master Lease
Phoenix, AZ
Paramus Park Expansion N/A N/A N/A N/A
Expansion of Retail Center
Paramus, NJ
La Cantera Center N/A N/A N/A N/A
New Retail Center
San Antonio, TX
Fashion Place Expansion N/A N/A N/A N/A
Expansion of Retail Center
Salt Lake City, UT
Exton Square Expansion N/A N/A N/A N/A
Expansion of Retail Center
Exton, PA
Summerlin Town Center N/A N/A N/A N/A
New Retail Center
Summerlin, NV
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 5% of total N/A N/A N/A N/A
Total Properties
in Development
IV-29
THE ROUSE COMPANY AND SUBSIDIARIES
Real Estate and Accumulated Depreciation (note 1)
December 31, 2000
(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 Improvements
Description brances Land ments ments costs (note 2) Land (note 3) Total
----------- ------- ---- ----- ----- -------------- ---- -------- -----
Property Held for Sale :
Hunt Valley 72 $ 3,042 $ 1,250 $ 3,298 $ -- $ -- $ 1,250 $ 3,298 $ 4,548
Industrial Building
Baltimore, MD
-- --
---------------------------------- ---------------------------- --------------------------------
Total $2,337,465 $413,005 $644,987 $2,840,992 $ -- $413,005 $3,485,979 $3,898,984
================================== ============================ ================================
Life on
which depre-
Accumulated ciation in
depreciation Date of latest
and completion of Date income statement
Description amortization construction acquired is computed
----------- ------------ ------------ -------- -----------
Property Held for Sale :
Hunt Valley 72 $ -- 6/83 12/98 N/A
Industrial Building
Baltimore, MD
-----------
Total $ 608,061
===========
IV-30
Schedule III, continued
-----------------------
THE ROUSE COMPANY AND SUBSIDIARIES
Real Estate and Accumulated Depreciation (note 1)
December 31, 2000
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 $102,494,000 at
December 31, 2000.
(4) The changes in total cost of properties for the years ended December 31,
2000, 1999 and 1998 are as follows (in thousands):
2000 1999 1998
---------- ---------- ----------
Balance at beginning of year $3,888,455 $4,826,913 $3,134,334
Additions, at cost 216,731 219,374 308,500
Cost of properties acquired 44,685 --- 1,593,062
Cost of land sales --- (7,211) (21,885)
Retirements, sales and other dispositions (246,196) (1,105,486) (185,398)
Additions to preconstruction reserve (4,691) --- (1,700)
Provision for loss on operating properties --- (45,135) ---
---------- ---------- ----------
Balance at end of year $3,898,984 $3,888,455 $4,826,913
========== ========== ==========
(5) Reference is made to the consolidated statements of cash flows for
explanation of noncash consideration included in property additions.
IV-31
Schedule III, continued
-----------------------
THE ROUSE COMPANY AND SUBSIDIARIES
Real Estate and Accumulated Depreciation (note 1)
December 31, 2000
Notes:
(6) The changes in accumulated depreciation and amortization for the years
ended December 31, 2000, 1999 and 1998 are as follows (in thousands):
2000 1999 1998
-------- --------- ---------
Balance at beginning of year $527,737 $ 525,098 $ 467,956
Depreciation and amortization
charged to operations 90,307 94,532 77,660
Retirements, sales and other, net (9,983) (91,893) (20,518)
-------- --------- ---------
Balance at end of year $608,061 $ 527,737 $ 525,098
======== ========= =========
(7) The aggregate cost of properties for Federal income tax purposes is
approximately $3,397,391,000 at December 31, 2000.
(8) Reference is made to note 1(c) to the consolidated financial statements
for information related to depreciation.
(9) Certain amounts for prior years have been reclassified to conform to the
presentation for 2000.
IV-32
Schedule IV
-----------
THE ROUSE COMPANY AND SUBSIDIARIES
Mortgage Loans On Real Estate
December 31, 2000
(in thousands)
Principal amount
of loans
subject to
Final Carrying delinquent
maturity date Periodic Face amount amount of principal or
Description (Note 1) Interest rate (Note 1) payment terms Prior liens of mortgages mortgages interest
- --------------------- ------------- -------------- ------------- ----------- ------------ -------------- -----------------
Howard Research
And Development
Corporation and
Subsidiaries Note 2 Jan. 31, 2001 Note 1 N/A $140,000 $140,000 None
Howard Hughes
Properties, Inc. Note 2 Dec. 31, 2012 Note 1 N/A 125,264 125,264 None
HRD Properties, Inc.
and Subsidiaries Note 3 Dec. 31, 2012 Note 1 N/A 13,938 13,938 None
------------ ------------
$279,202 $279,202
============ ============
IV - 33
Schedule IV, continued
----------------------
THE ROUSE COMPANY AND SUBSIDIARIES
MORTGAGE LOANS ON REAL ESTATE
December 31, 2000
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 ("Trust") and The Rouse Company. In 2000,
the Company and the Trust negotiated an agreement that provides for
the prepayment of the Howard Research and Development Corporation and
Subsidiaries note. Under the agreement, the revised due date of the
note is January 31, 2001. The other 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 interest rate on the notes was 12.25% through December 2000, and
the greater of prime rate plus 3.75% or 10% thereafter to maturity or
repayment.
(3) The note bears interest at 12.25% throughout the term.
2000 1999 1998
------------- ------------- -------------
(4) Balance at beginning of year $ 333,907,000 $ 362,167,000 $ 380,232,000
Collections of principal (54,705,000) (28,260,000) (18,065,000)
------------- ------------- -------------
Balance at end of year $ 279,202,000 $ 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.
See note 2 to the consolidated financial statements regarding
transactions that gave rise to the deed of trust notes.
IV - 34
SCHEDULE II
-----------
REAL ESTATE VENTURES OWNED BY
THE ROUSE COMPANY INCENTIVE COMPENSATION STATUTORY TRUST AND THE ROUSE COMPANY
Valuation and Qualifying Accounts
Years ended December 31, 2000, 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 year
------------ ---------- ---------- ---------- ----------- ----------
Year ended December 31, 2000:
Allowance for doubtful receivables $ 589 $ 622 $ --- $ 721 (1) $ 490
========== ========== ========== ========== ==========
Deferred tax asset valuation allowance $ 4,754 $ 17 $ --- $ 308 (2) $ 4,463
========== ========== ========== ========== ==========
Preconstruction reserve $ --- $ 749 $ --- $ --- $ 749
========== ========== ========== ========== ==========
Year ended December 31, 1999:
Allowance for doubtful receivables $ 673 $ 521 $ --- $ 605 (1) 589
========== ========== ========== ========== ==========
Deferred tax asset valuation allowance $ 952 $ 3,802 $ --- $ --- $ 4,754
========== ========== ========== ========== ==========
Year ended December 31, 1998:
Allowance for doubtful receivables $ 830 $ 232 $ --- $ 389 (1) 673
========== ========== ========== ========== ==========
Deferred tax asset valuation allowance $ --- $ 952 $ --- $ --- $ 952
========== ========== ========== ========== ==========
Notes:
(1) Balances written off as uncollectible.
(2) Recognition of deferred tax benefits previously reserved for through the
valuation allowance account.
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, 2000
(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 Improvements
Description brances Land ments ments costs (note 2) Land (note 3) Total
----------- ------- ---- ----- ----- -------------- ---- -------- -----
Operating Properties:
The Mall in Columbia $176,532 $ 6,788 $ -- $ 173,246 $ -- $ 6,788 $173,246 $ 180,034
Retail Center
Columbia, MD
3993 Howard Hughes Pkwy -- 755 -- 26,313 -- 755 26,313 27,068
Office Building
Las Vegas, NV
Seventy Columbia Corp Ctr 26,984 857 -- 24,369 -- 857 24,369 25,226
Office Building
Columbia, MD
Forty Columbia Corp Ctr 14,551 636 -- 15,631 -- 636 15,631 16,267
Office Building
Columbia, MD
Fifty Columbia Corp Ctr 14,759 463 -- 15,531 -- 463 15,531 15,994
Office Building
Columbia, MD
Sixty Columbia Corp Ctr 14,643 1,050 -- 14,484 -- 1,050 14,484 15,534
Office Building
Columbia, MD
Thirty Columbia Corp Ctr 15,595 1,160 -- 10,714 -- 1,160 10,714 11,874
Office Building
Columbia, MD
Hickory Ridge 11,946 907 -- 10,075 -- 907 10,075 10,982
Village Center
Columbia, MD
Accumulated Life on
depreciation Date of which depreciation
and completion Date in latest income
Description amortization construction acquired statement is computed
----------- ------------ ------------ -------- ---------------------
Operating Properties:
The Mall in Columbia $ 21,274 8/71 N/A Note 7
Retail Center
Columbia, MD
3993 Howard Hughes Pkwy 1,277 1/00 N/A Note 7
Office Building
Las Vegas, NV
Seventy Columbia Corp Ctr 6,835 6/92 N/A Note 7
Office Building
Columbia, MD
Forty Columbia Corp Ctr 6,058 6/87 N/A Note 7
Office Building
Columbia, MD
Fifty Columbia Corp Ctr 5,255 11/89 N/A Note 7
Office Building
Columbia, MD
Sixty Columbia Corp Ctr 838 2/99 N/A Note 7
Office Building
Columbia, MD
Thirty Columbia Corp Ctr 4,947 4/86 N/A Note 7
Office Building
Columbia, MD
Hickory Ridge 2,117 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, 2000
(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 Improvements
Description brances Land ments ments costs (note 2) Land (note 3) Total
----------- ------- ---- ----- ----- -------------- ---- -------- -----
Twenty Columbia Corp Ctr $ 8,898 $ 927 $ -- $ 9,803 -- $ 927 $ 9,803 $ 10,730
Office Building
Columbia, MD
Dorsey Search 13,126 911 -- 9,782 -- 911 9,782 10,693
Village Center
Columbia, MD
American City Building 5,413 -- -- 10,659 -- -- 10,659 10,659
Office Building
Columbia, MD
10000 W. Charleston Arbors 139 537 -- 9,552 -- 537 9,552 10,089
Office Building
Summerlin, NV
Harper's Choice 9,043 546 -- 9,533 -- 546 9,533 10,079
Village Center
Columbia, MD
Ten Columbia Corp Ctr 4,785 733 -- 7,991 -- 733 7,991 8,724
Office Building
Columbia, MD
Wilde Lake 2,864 1,486 -- 6,785 -- 1,486 6,785 8,271
Village Center
Columbia, MD
Kings Contrivance 10,506 1,072 -- 7,159 -- 1,072 7,159 8,231
Village Center
Columbia, MD
Accumulated Life on
depreciation Date of which depreciation
and completion Date in latest income
amortization construction acquired statement is computed
------------ ------------ -------- ---------------------
Twenty Columbia Corp Ctr $ 4,669 6/81 N/A Note 7
Office Building
Columbia, MD
Dorsey Search 2,789 9/89 N/A Note 7
Village Center
Columbia, MD
American City Building 9,390 3/69 N/A Note 7
Office Building
Columbia, MD
10000 W. Charleston Arbors 810 5/99 N/A Note 7
Office Building
Summerlin, NV
Harper's Choice 3,355 6/71 N/A Note 7
Village Center
Columbia, MD
Ten Columbia Corp Ctr 3,483 9/81 N/A Note 7
Office Building
Columbia, MD
Wilde Lake 4,113 7/67 N/A Note 7
Village Center
Columbia, MD
Kings Contrivance 2,680 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, 2000
(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 Improvements
Description brances Land ments ments costs (note 2) Land (note 3) Total
----------- ------- ---- -------- -------- -------------- ---- ------------ -----
Columbia Crossing $ 7,703 $ 1,527 $ -- $ 6,276 $ -- $ 1,527 $ 6,276 $ 7,803
Retail Center
Columbia, MD
Oakland Mills 2,060 1,746 -- 3,884 -- 1,746 3,884 5,630
Village Center
Columbia, MD
Dobbin Road 3,730 426 -- 4,857 -- 426 4,857 5,283
Village Center
Columbia, MD
Long Reach 5,326 34 -- 5,218 -- 34 5,218 5,252
Village Center
Columbia, MD
Ridgley Building 2,164 670 -- 3,386 -- 670 3,386 4,056
Office Building
Columbia, MD
Sterrett Building 1,956 308 -- 2,844 -- 308 2,844 3,152
Office Building
Columbia, MD
Lynx Lane 2,200 147 -- 2,886 -- 147 2,886 3,033
Village Center
Columbia, MD
Other properties and
related investments
less than 5% of total 16,156 2,112 -- 16,613 -- 2,112 16,613 18,725
---------------------------- ------------------------- ------------------------------------
Total Operating
Properties 371,079 25,798 -- 407,591 -- 25,798 407,591 433,389
---------------------------- ------------------------- ------------------------------------
Accumulated Life on
depreciation Date of which depreciation
and completion Date in latest income
Description amortization construction acquired statement is computed
----------- ------------ ------------ -------- ---------------------
Columbia Crossing $ 734 11/98 N/A Note 7
Retail Center
Columbia, MD
Oakland Mills 624 6/69 N/A Note 7
Village Center
Columbia, MD
Dobbin Road 1,994 6/83 N/A Note 7
Village Center
Columbia, MD
Long Reach 1,735 6/74 N/A Note 7
Village Center
Columbia, MD
Ridgley Building 1,774 6/72 N/A Note 7
Office Building
Columbia, MD
Sterrett Building 1,462 6/72 N/A Note 7
Office Building
Columbia, MD
Lynx Lane 1,484 6/73 N/A Note 7
Village Center
Columbia, MD
Other properties and
related
investments less than
5% of total 6,687
------------
Total Operating
Properties 96,384
------------
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, 2000
(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 Improvements
Description brances Land ments ments costs (note 2) Land (note 3) Total
----------- ------- ---- ----- ----- -------------- ---- -------- -----
Properties in Development:
Columbia Mall $ -- $ -- $ -- $ 9,934 $ -- $ -- $ 9,934 $ 9,934
Expansion of Retail Center
Columbia, MD
Corporate Pointe - Phase I -- 2,645 -- 5,101 -- 2,645 5,101 7,746
New Office Building
Summerlin, NV
Canyon Pointe -- 3,412 -- 70 -- 3,412 70 3,482
New Retail Center
Summerlin, NV
Bahama Breeze -- 835 -- 213 -- 835 213 1,048
New Restaurant Site
Las Vegas, NV
Arizona Hotel -- -- -- 748 -- -- 748 748
New Hotel Ground Lease
Phoenix, AZ
Other projects less than 5% -- -- -- 624 -- -- 624 624
of total
------------------------------- --------------------- ---------------------------------
Total Properties Held
in Development -- 6,892 -- 16,690 -- 6,892 16,690 23,582
------------------------------- --------------------- ---------------------------------
Accumulated Life on
depreciation Date of which depreciation
and completion Date in latest income
Description amortization construction acquired statement is computed
----------- ------------ ------------ -------- ----------------------
Properties in Development:
Columbia Mall N/A N/A N/A N/A
Expansion of Retail Center
Columbia, MD
Corporate Pointe - Phase I N/A N/A N/A N/A
New Office Building
Summerlin, NV
Canyon Pointe N/A N/A N/A N/A
New Retail Center
Summerlin, NV
Bahama Breeze N/A N/A N/A N/A
New Restaurant Site
Las Vegas, NV
Arizona Hotel N/A N/A N/A N/A
New Hotel Ground Lease
Phoenix, AZ
Other projects less than 5% N/A N/A N/A N/A
of total ----
Total Properties Held
in Development N/A
----
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, 2000
(in thousands)
Costs capitalized subsequent
Initial cost to Company to acquisition
----------------------- ----------------------------
Buildings
and
Encum- Improve- Improve- Carrying
Description brances Land ments ments costs (note 2)
----------- -------- ---- ----- -------- --------------
Land Held for Development and
Sale:
Summerlin $176,376 $ 89,076 $ -- $ 50,061 $ --
Land in Various Stages of
Development
Summerlin, NV
Columbia 38,627 53,000 -- 33,499 --
Land in Various Stages of
Development
Columbia, MD
Canyon Springs 13,937 12,872 -- 11,910 --
Land Held for Development
Riverside County, CA
Other, less than 5% of
total -- 55 -- 37 --
--------------------------------- ----------------------------
Total Land Held for
Development and Sale 228,940 155,003 -- 95,507 --
--------------------------------- ----------------------------
Total $600,019 $187,693 $ -- $ 519,788 $ --
================================= ============================
Gross amount at which
carried at close of period
----------------------------------
Buildings Accumulated Life on
and depreciation Date of which depreciation
Improvements and completion Date in latest income
Description Land (note 3) Total amortization construction acquired statement is computed
----------- ---- -------- ----- ------------ ------------ -------- ---------------------
Land Held for Development a
Sale
Summerlin $ 139,137 $ -- $ 139,137 N/A N/A 6/96 N/A
Land in Various Stages of
Development
Summerlin, NV
Columbia 86,499 -- 86,499 N/A N/A 9/85 N/A
Land in Various Stages of
Development
Columbia, MD
Canyon Springs 24,782 -- 24,782 N/A N/A 7/89 N/A
Land Held for Development
Riverside County, CA
Other, less than 5% of
total 92 -- 92 --
----------------------------------------------
Total Land Held for
Development and Sale 250,510 -- 250,510 --
----------------------------------------------
Total $ 283,200 $424,281 $ 707,481 $96,384
==============================================
IV-40
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, 2000
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 $9,808,000 at
December 31, 2000.
(4) The changes in total cost of properties for the years ended December
31, 2000, 1999 and 1998 is as follows (in thousands):
2000 1999 1998
---------- ---------- ----------
Balance at beginning of year $ 697,450 $ 620,064 $ 569,214
Additions, at cost 29,871 105,632 67,360
Cost of properties acquired --- --- 10,054
Additions to land held for
development and sale 94,324 73,240 124,674
Cost of land sales (91,036) (92,515) (123,050)
Retirements, sales and other
dispositions (22,379) (8,971) (28,188)
Additions to preconstruction reserve (749) --- ---
---------- ---------- ----------
Balance at end of year $ 707,481 $ 697,450 $ 620,064
========== ========== ==========
IV-41
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, 2000
Notes:
(5) The changes in accumulated depreciation and amortization for the years
ended December 31, 2000, 1999 and 1998 is as follows (in thousands):
2000 1999 1998
------------ ------------ ------------
Balance at beginning of year $ 80,524 $ 76,731 $ 67,385
Depreciation and amortization
charged to operations 15,804 11,957 9,541
Retirements, sales and other, net 56 (8,164) (195)
------------ ------------ ------------
Balance at end of year $ 96,384 $ 80,524 $ 76,731
============ ============ ============
(6) The aggregate cost of properties for Federal income tax purposes is
approximately $762,860,000 at December 31, 2000.
(7) Reference is made to note 1(c) to the combined consolidated financial
statements for information related to depreciation.
IV-42
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: /s/ Anthony W. Deering
------------------------------------
Anthony W. Deering March 30, 2001
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:
/s/ Anthony W. Deering
- ----------------------------------------
Anthony W. Deering March 30, 2001
Chairman of the Board, President
and Chief Executive Officer
Principal Financial Officer:
/s/ Jeffrey H. Donahue
- ----------------------------------------
Jeffrey H. Donahue March 30, 2001
Executive Vice President and
Chief Financial Officer
Principal Accounting Officer:
/s/ Melanie M. Lundquist
- -----------------------------------------
Melanie M. Lundquist March 30, 2001
Vice President and Corporate Controller
IV-43
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 and Gerard J. M. Vlak.
By: /s/ Anthony W. Deering
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Anthony W. Deering March 30, 2001
For himself and as
Attorney-in-fact for
the above-named persons
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