UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 10-K

 

 

COMMISSION FILE NUMBER 001-11543

 

THE ROUSE COMPANY LP

(Exact name of registrant as specified in its charter)

 

 

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 (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   ý   No   o

 

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.   ý

 

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).

Yes     o    No     ý

 

As of June 30, 2004, the aggregate market value of the voting and non-voting common equity held by nonaffiliates of the registrant (based on the closing price as reported in The Wall Street Journal, Eastern Edition) was approximately $3,335,044,409. 

 

Documents Incorporated by Reference

 

None

 

 

Part I

 

Item 1.    Business.

 

All references to numbered Notes are to specific footnotes to the Consolidated Financial Statements of The Rouse Company LP as included in this Annual Report on Form 10-K (“Annual Report”) and the descriptions included in such Notes are incorporated into the applicable Item by reference. The following discussion should be read in conjunction with such Consolidated Financial Statements and related Notes.

 

General Development of Business

 

The Rouse Company LP (“we,” “TRCLP,” “us,” or the “Company”) is the successor company to The Rouse Company, which was incorporated as a business corporation under the laws of the State of Maryland in 1956.  TRCLP succeeded to the business of The Rouse Company by a merger with TRCLP (the “Merger”) completed on November 12, 2004. The Merger (see Note 1) resulted in TRCLP being a subsidiary of General Growth Properties, Inc. (“GGP” or “General Growth”), the second largest publicly traded real estate investment trust (“REIT”) in the United States, incorporated in Delaware and headquartered in Chicago, Illinois. Prior to the Merger, The Rouse Company was one of the largest publicly traded real estate companies in the United States.

 

General Growth is primarily engaged in the ownership, management, leasing, acquisition, development and expansion of regional mall and community shopping centers, primarily in the United States. General Growth engages in real estate business through its subsidiaries and affiliates, including us. Our primary business is the acquisition, development and management of retail centers, office buildings, mixed-use projects and other commercial properties across the United States. We are also the developer of master-planned communities in and around Columbia, Maryland; Summerlin, Nevada and Houston, Texas.

 

Until the Merger, we had elected to be taxed as a REIT pursuant to the Internal Revenue Code of 1986, as amended, effective January 1, 1998.  In 2001, we elected to treat certain subsidiaries as Taxable REIT Subsidiaries (“TRS”), which are subject to Federal and state income taxes. As a subsidiary of General Growth, which is also a REIT, we continue to conduct our community development activities in TRS.

 

We have five business segments: retail centers, office and other properties, community development, commercial development and corporate. The retail centers segment includes the operation and management of regional shopping centers, downtown specialty marketplaces, the retail components of mixed-use projects and community retail centers. The office and other properties segment includes the operation and management of office and industrial properties and the nonretail components of the mixed-use projects. The community development segment includes the development and sale of land, primarily in large-scale, long-term community development projects in and around Columbia, Maryland; Summerlin, Nevada and Houston, Texas. The commercial development segment includes the evaluation of all potential new development projects (including expansions of existing properties) and acquisition opportunities and the management of them through the development or acquisition process. Prior to the Merger, the corporate segment was responsible for shareholder and director services, financial management, strategic planning and certain other general and support functions. Subsequent to the Merger, the majority of the activities relating to the corporate segment are expected to be performed by other operating units within GGP.

 

I-1

 

We make all key strategic decisions for our wholly-owned properties and, in connection with certain properties owned through joint ventures (“Unconsolidated Real Estate Affiliates”), such strategic decisions are made with our venture partners.  We are also the asset manager for our wholly-owned properties and, through management contracts, most of our unconsolidated real estate affiliates.  As the asset manager, we execute the strategic decisions and directly oversee the day-to-day activities such as leasing, construction management, data processing, maintenance, accounting, marketing, promotional services and security oversight.  We conduct the management activities relating to those unconsolidated real estate affiliates through one of our taxable REIT subsidiaries.  As of December 31, 2004, this taxable REIT subsidiary managed 19 properties with the remaining properties owned by unconsolidated real estate affiliates managed by the applicable joint venture partners.

 

The majority of the income from our properties is derived from rents received through long-term leases with tenants.  These long-term leases generally require the tenants to pay base rent which is a fixed amount specified in the lease.  The base rent is often subject to scheduled increases during the term of the lease.  Another component of income from our retail tenants is overage rent.  Overage rent is paid by a tenant generally if their sales exceed an agreed upon minimum amount.  Overage rent is calculated by multiplying the sales in excess of the minimum amount by a percentage defined in the lease.  In addition, our long-term leases generally contain a provision for us to recover certain expenses incurred in the day-to-day operations of the respective properties including common area maintenance and real estate taxes.  The recovery amount is generally related to the tenant’s pro-rata share of space in the property.

 

The shopping center industry is continually evolving with competitive pressures requiring the ongoing re-evaluation of approaches to shopping center management and leasing.  Management’s strategies to increase equity value and cash flow include:

•      the integration of mass merchandise retailers with traditional department stores;

•      specialty leasing;

•      the inclusion of entertainment-oriented tenants;

•      proactive property management and leasing (including revisions to the mix of tenants at a center);

•      operating cost reductions including those resulting from economies of scale;

•      strategic expansions;

•      redevelopments;

•      capital reinvestment and acquisitions; and

•      selective new shopping center developments and concepts.

Management believes that these approaches should enable us to operate and grow successfully in today’s highly-competitive environment.

 

I-2

 

We use the following terms in this Annual Report:

•      Anchor - a department store or other large retail store;

•      GLA - gross leaseable retail space, including Anchors and all other leaseable areas;

•      Freestanding GLA - gross leaseable area of freestanding retail stores in locations that are not attached to the primary complex of buildings that comprise a shopping center;

•      Mall GLA - gross leaseable retail space, excluding both Anchors and Freestanding GLA;

•      Mall Stores - stores (other than Anchors) that are typically specialty retailers who lease space in the structure including, or attached to, the primary complex of buildings that comprise a shopping center; and

•      Total Mall Stores sales - the gross revenue from product sales to customers generated by the Mall Stores.

 

Since December 31, 2003, we have continued our strategy of selectively acquiring retail centers. In addition, we have continued to realign our office and industrial portfolio by disposing of interests in buildings not located in our master-planned communities of Columbia, Maryland and Summerlin, Nevada, or not part of class “A” urban mixed-use projects. The following is a summary of the more significant acquisitions and dispositions since December 31, 2003:

 

•      On December 31, 2003 we acquired, for approximately $185 million, certain office buildings and a 52.5% economic interest in entities (which we refer to as the “Woodlands Entities”) that own The Woodlands, a master-planned community in the Houston, Texas metropolitan area, from Crescent Real Estate Equities Limited Partnership.  In connection with this acquisition, we agreed to dispose of Hughes Center, a master-planned business park in Las Vegas, Nevada, comprising eight office buildings totaling approximately 1.1 million square feet, nine ground leases and approximately 13 acres of developable land.  The sales of two of the office buildings and two of the ground leases closed in December 2003.  The remaining properties in Hughes Center were classified as held for sale at December 31, 2003.  In January, February and April 2004, we disposed of the remaining assets in Hughes Center for approximately $182 million.

•      In January 2004, we acquired for approximately $32 million our partners’ interests in the joint venture that is developing Fairwood, a master-planned community in Prince George’s County, Maryland, increasing our ownership to 100%.

•      In February 2004, we agreed to purchase Providence Place, a regional retail center in Providence, Rhode Island, for $270 million in cash and the assumption by us of $306.9 million in property debt.  We closed this transaction in March 2004.

•      In March 2004, we sold our interests in Westdale Mall, a retail center in Cedar Rapids, Iowa for cash of $1.3 million and the assumption by the buyer of $20 million of mortgage debt.

•      In April 2004, we sold most of our interest in Westin New York, a hotel in New York City.

•      In November 2004, we purchased Oxmoor Center, a regional retail center in Louisville, Kentucky, for approximately $63.5 million in cash and the assumption by us of $66.5 million in mortgage debt.

 

Financial Information about Industry Segments

 

Information regarding our segments is incorporated herein by reference to Note 9.

 

I-3

 

Narrative Description of the Business

 

Retail Centers:

 

At December 31, 2004, we owned, in whole or in part, and operated:

 

•      30 regional retail centers encompassing 34.6 million square feet, including 21.7 million square feet leased to or owned by department stores;

•      5 downtown specialty marketplaces with 1.0 million square feet of leaseable space;

•      Retail components of 9 mixed-use projects aggregating 2.5 million square feet of leaseable space; and

•      4 community retail centers in Baltimore, Maryland and Summerlin, Nevada with 0.8 million square feet of leaseable space.

 

The table below shows the largest tenants by trade name as of December 31, 2004 based on consolidated rents.

 

Tenant Name				Percentage of Consolidated Rents
Victoria’s Secret				1.59%
The Gap (1)				1.27%
Foot Locker				1.16%
Abercrombie & Fitch				1.16%
New York & Company				0.97%
American Eagle Outfitters				0.96%
Children’s Place, The				0.94%
Banana Republic (1)				0.93%
GapKids-BabyGap (1)				0.85%

 

(1) Under common ownership by The Gap, Inc.

 

While the market share of traditional department store anchors have been declining, strong anchors continue to play an important role in maintaining customer traffic in our retail centers. Generally, higher levels of customer traffic will result in higher tenant sales, a greater demand for space by other tenants and more favorable leasing terms (including higher minimum rents) for our space.

 

Most anchors at our retail centers own their buildings, the land under them and, in some cases, adjacent parking areas. Some anchors enter into long-term lease agreements at rates that are generally lower than the rents charged to other tenants at the retail center. Accordingly, anchors do not provide a significant source of revenues in our operating results. Anchors typically enter into reciprocal easement and other agreements that cover items such as operational matters, initial construction and future expansion.

 

I-4

 

The following table summarizes the Anchor sites within our portfolio (including our unconsolidated real estate affiliates) as of December 31, 2004 and identifies the owners of the Anchors and the trade names on their stores:

 

Owner/Trade Name		Locations
May Company
Filene’s		1
Foley’s		5
Hecht’s		5
Lord & Taylor		12
Marshall Field’s		3
Marshall Field’s Men & Home		2
Marshall Field’s Women		2
Robinson-May		1
Strawbridge’s		1
		32
Federated Department Stores
Bloomingdale’s		3
Bloomingdale’s Home		2
Burdines-Macy’s		2
Lazarus		1
Macy’s		9
Macy’s Home		1
Rich’s-Macy’s		2
Rich’s Furniture		1
		21
Sears		18
JCPenney		17
Dillard’s		15
Nordstrom		12
Mervyn’s		4
Saks Incorporated
Saks Fifth Avenue		4
AMC Theatres		3
Neiman Marcus		3
Dick's Sporting Goods		3
Other sites		6
Unoccupied sites		4
Total Anchor sites		142

 

May Department Stores Company and Federated Department Stores, Inc. announced a merger agreement in February 2005 with a closing expected in the third quarter of 2005. We have 9 properties with both a May and Federated Anchor.

 

I-5

 

Office and Other Properties:

 

At December 31, 2004, we owned, in whole or in part, and operated:

 

•      Office components of 9 mixed-use projects with approximately 2.7 million square feet of leaseable space;

•      28 office and industrial buildings with approximately 1.1 million square feet of leaseable space and other properties in and around Las Vegas, Nevada;

•      17 office and industrial buildings with approximately 1.4 million square feet of leaseable space in Columbia, Maryland; and

•      56 office and industrial buildings with approximately 3.8 million square feet of leaseable space primarily in the Baltimore-Washington corridor or in the Houston, Texas metropolitan area.

 

As of December 31, 2004, our largest tenants in terms of aggregate annualized effective rents in our office properties are as follows:

 

Tenant				Percentage of Annualized Rent
Pinnacle West Capital Corp./APS				7.03%
Carefirst of Maryland				6.47%
Bechtel SAIC Company, LLC				4.37%
Snell & Wilmer, LLP				3.81%
Highmark, Inc.				2.32%
Bullivant Houser Bailey				1.52%
Enterprise Group, Inc.				1.17%
AON Service Corporation				1.08%

 

Development:

 

We renovate, expand and redevelop existing retail centers and develop suburban and urban retail centers, mixed-use projects and office and industrial buildings primarily for ourselves or ventures in which we have invested.

 

We recently completed the development of Fashion Show, in Las Vegas, Nevada.  The first phase of this redevelopment opened in November 2002, and the second phase opened in October 2003.  We are planning new retail center developments in San Antonio, Texas; Dade County, Florida; and Summerlin, Nevada.

 

Community Development

 

We are the developer of the master-planned communities of Columbia, Maryland; Summerlin, Nevada; Bridgelands, Texas; The Woodlands, Texas; and Fairwood, Maryland as described below. We develop and sell land in these communities to builders and other developers for residential, commercial and other uses.  We may also develop some of this land for our own purposes. Columbia is located in the Baltimore-Washington corridor and encompasses approximately 18,000 acres.  We own approximately 700 saleable acres of land in and around Columbia, including the adjacent communities of Emerson and Stone Lake.

 

I-6

 

Summerlin is located immediately north and west of Las Vegas and encompasses approximately 22,500 acres.  We own approximately 6,900 saleable acres of land in Summerlin.

 

In May 2003, we acquired approximately 8,060 acres of land, which we have named Bridgelands, to be developed and sold in the western Houston, Texas metropolitan area. During the remainder of 2003 and in 2004, we purchased additional parcels and now own approximately 10,000 acres of contiguous land of which approximately 7,300 acres are saleable. We began development activities on Bridgelands in 2004 and expect to begin selling portions of this land in 2005.

 

On December 31, 2003 we acquired certain office buildings and a 52.5% economic interest in The Woodlands, a master-planned community in the Houston, Texas metropolitan area, from Crescent Real Estate Equities Limited Partnership.  Assets owned by the Woodlands Entities at the time of acquisition included approximately 7,600 acres of land, three golf course complexes, a resort conference center, a hotel, interests in seven office buildings and other assets. Two of the office buildings were sold during 2004.

 

We are developing Fairwood, a community in Prince George’s County, Maryland.  Fairwood contains over 1,000 acres of unimproved land at December 31, 2004.

 

We sell land in our community development projects for residential, commercial and other purposes.  Sales for residential purposes are generally to 5 to 10 builders in each community.  In Summerlin, the most active purchasers of residential land were Woodside Homes, William Lyon Homes and Ryland Homes.  In 2004, sales to these three homebuilders accounted for 48% of all residential sales in Summerlin.  In and around Columbia (including Fairwood), the most active purchasers of residential land were Ryland Homes, Patriot Homes, Miller and Smith Homes and Goodier Builders.  In 2004, sales to these four homebuilders accounted for 67% of all residential sales in our Maryland community development projects.

 

Competition

 

Each of our retail centers competes with other retail centers in their market areas to attract tenants.  The presence of these competitive properties could have a material adverse effect on our ability to lease space and the rents we charge.  We believe that the attractiveness of a particular retail center to prospective tenants and, therefore, the ability to demand higher rents and maintain high occupancy levels depends largely on the historical and potential sales productivity of the center.  We believe that potential sales productivity depends on numerous factors including the location of the property, its access to transportation routes, the type and quality of its anchor and other tenants, and the demographics of the residents in its primary trade area.  We believe that many of our retail centers have strong positions in their trade areas because of their locations, the quality of their anchor and other tenant mixes and high sales productivity.  Each of our retail centers is also affected by retailers using alternative formats to market and/or distribute their merchandise, including discount retailers, e-commerce retailers and catalog retailers.

 

I-7

 

Each of our office and other properties competes for tenants in the markets in which they operate.  We believe that the office and other properties we own in our master-planned communities are attractive in relation to competing properties because they are concentrated in the commercial centers of these communities. We believe the office components of our major mixed-use properties are desirable to prospective tenants due to their quality and downtown locations.  There is significant competition for tenants among office properties because, among other things, the supply of office space is adequate to meet tenant demand.  Given these conditions, we seek to concentrate our investments in office and other properties in our master-planned communities.

 

In our community development business, we compete with other landholders in the Baltimore-Washington, Las Vegas and Houston markets.  Significant factors affecting our competition in this business include:

 

•      the size and scope of our master-planned communities;

•      the recreational and cultural amenities available within the communities;

•      the commercial centers in the communities; and

•      the relationships of the developer with homebuilders.

 

We believe our community development projects offer significant advantages when viewed against these criteria.

 

Environmental Matters

 

Under various Federal, state and local laws and regulations, an owner of real estate is liable for the costs of removal or remediation of certain hazardous or toxic substances on such real estate.  These laws often impose such liability without regard to whether the owner knew of, or was responsible for, the presence of such hazardous or toxic substances.  The costs of remediation or removal of such substances may be substantial, and the presence of such substances, or the failure to promptly remediate such substances, may adversely affect the owner’s ability to sell such real estate or to borrow using such real estate as collateral.  In connection with its ownership and operation of our properties, we, or the relevant property venture through which the property is owned, may be potentially liable for such costs.

 

Substantially all of our properties have been subject to environmental assessments, which are intended to discover information regarding, and to evaluate the environmental condition of, the surveyed and surrounding properties.  The Phase I environmental assessments included a historical review, a public records review, a preliminary investigation of the site and surrounding properties, screening for the presence of asbestos, polychlorinated biphenyls (“PCBs”) and underground storage tanks and the preparation and issuance of a written report, but do not include soil sampling or subsurface investigations.  A Phase II assessment, when necessary, was conducted to further investigate any issues raised by the Phase I assessment.  In each case where Phase I and/or Phase II assessments resulted in specific recommendations for remedial actions required by law, management has either taken or scheduled the recommended action.

 

I-8

 

Neither the Phase I nor the Phase II assessments have revealed any environmental liability that we believe would have a material effect on our overall business, assets or results of operations, nor are we aware of the existence of any such liability.  Nevertheless, it is possible that these assessments do not reveal all environmental liabilities or that there are material environmental liabilities of which we are unaware.  Moreover, no assurances can be given that future laws, ordinances or regulations will not impose any material environmental liability or the current environmental condition of our properties will not be adversely affected by tenants and occupants of the properties, by the condition of properties in the vicinity of our properties (such as the presence on such properties of underground storage tanks) or by third parties unrelated to us.

 

In 2002, the President and Congress approved the Yucca Mountain site in Nevada for development of a repository site for highly radioactive materials.  Yucca Mountain is located approximately 100 miles from Las Vegas.  For the project to proceed, other approvals are necessary, including a license from the U.S. Nuclear Regulatory Commission or NRC.  The Department of Energy’s 2003 Strategic Plan, dated September 30, 2003, listed the licensing, construction and operation of the repository site at Yucca Mountain by 2010 as a major goal.  In July 2004, the United States Court of Appeals for the D.C. Circuit rejected a number of challenges brought by the State of Nevada, local governmental units, environmental groups and trade associations with respect to the proposed Yucca Mountain repository and invalidated a portion of the EPA’s and NRC’s regulations governing the proposed repository.

 

Future development opportunities may require 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 our operations.  Compliance with such laws has had no material adverse effect on our operating results or competitive position in the past.

 

Employees

 

As of March 1, 2005, we had no employees as all individuals working at our properties were employed by other subsidiaries of General Growth.

 

Insurance

 

We have comprehensive liability, fire, flood, earthquake, terrorist, extended coverage and rental loss insurance.  Our management believes that all of our properties are adequately covered by insurance.

 

Available Information

 

Information on the Company can be found on the Internet at www.generalgrowth.com.  The website contains information about General Growth and the Company. As the Company is a subsidiary of General Growth, information with respect to our Corporate Governance Principles, charters of the Audit Committee, Compensation Committee, and Nominating/Governance Committee of our Board of Directors and our Business Conduct and Ethics Policy (including any subsequent amendments to, or waivers from, our Business Conduct and Ethics Policy) can be found by reference to those applicable documents for GGP.  Copies of each of GGP’s and our filings with the SEC on Form 10-K, Form 10-Q and Form 8-K and all amendments to those reports can be viewed and downloaded free of charge from the website as soon as reasonably practicable after the reports and amendments are electronically filed with or furnished to the SEC.

 

I-9

 

Any of the above documents, and any of our reports on Form 10-K, Form 10-Q and Form 8-K and all amendments to those reports, can also be obtained in print without charge by any shareholder who requests them by writing David Lozano, Investor Relations Coordinator, General Growth Properties, Inc. 110 N. Wacker Drive, Chicago, IL 60606, or by email at David.Lozano@generalgrowth.com.

 

Item 2. Properties.

 

Information regarding our operating properties, including those owned by unconsolidated real estate affiliates as of December 31, 2004, is presented in the following tables.  Anchors include all stores with GLA greater than 30,000 square feet. To the extent a property does not have any anchor space, significant tenants have been included.  The ownership of most of our properties is subject to mortgage financing. Some of our properties are subject to ground leases, all of which provide an option to purchase the underlying land and typically provide us a right of first refusal in the event of a proposed sale of the land by the landlord. Information regarding encumbrances on these properties is included in Schedule III of this Annual Report.

 

I-10

 

OPERATING PROPERTIES

 

Consolidated Retail Centers (Note 1)		Date of Opening or Acquisition (Note 3)		Anchors/Significant Tenants		Retail Square Footage
						Mall Only		Total Center
Arizona Center, Phoenix, AZ (Note 4)		11/90		AMC Arizona Center 24		168,469		168,469
Augusta Mall, Augusta, GA (Note 4)		8/78		Dillard’s; JCPenney; Rich’s-Macy’s; Sears; Rich’s Furniture		317,195		1,066,418
Bayside Marketplace, Miami, FL (Note 4)		4/87		The Disney Store; Victoria’s Secret		223,821		223,821
Beachwood Place, Cleveland, OH		8/78		Dillard’s; Nordstrom; Saks Fifth Avenue		348,594		912,941
Collin Creek, Plano, TX		9/95		Dillard’s; Foley’s; JCPenney; Mervyn’s; Sears		322,991		1,113,074
The Mall in Columbia, Columbia, MD		8/71		Hecht’s; JCPenney; Lord & Taylor; Nordstrom; Sears; L.L.Bean; AMC Columbia 14		584,092		1,384,260
Faneuil Hall Marketplace, Boston, MA (Note 4)		8/76		Ann Taylor; Crate & Barrel		197,946		197,946
Fashion Place, Salt Lake City, UT (Note 4)		10/98		Dillard’s; Nordstrom; Sears		310,191		876,164
Fashion Show, Las Vegas, NV		6/96		Dillard’s; Macy’s; Neiman Marcus; Nordstrom; Robinsons-May; Saks Fifth Avenue; Bloomingdale’s Home		530,766		1,764,562
The Gallery at Harborplace, Baltimore, MD		9/87		Brooks Brothers, Forever 21; Gap		132,992		132,992
Governor’s Square, Tallahassee, FL (Note 4)		8/79		Burdines-Macy’s; Dillard’s; JCPenney; Sears		346,118		1,037,723
Harborplace, Baltimore, MD (Note 4)		7/80		Ann Taylor; J Crew		141,320		141,320
Hulen Mall, Ft. Worth, TX		8/77		Dillard’s; Foley’s; Sears		344,557		941,127
Lakeside Mall, Sterling Heights, MI		5/02		JCPenney; Lord & Taylor; Marshall Field’s Men & Home; Marshall Field’s Women; Sears		508,132		1,458,432
Mall St. Matthews, Louisville, KY (Note 4)		3/62		Dillard’s (two stores); JCPenney		376,979		1,094,684
Metro Plaza, Baltimore, MD		10/56		Dollar Store; Social Services		135,031		135,031
Mondawmin Mall, Baltimore, MD		10/56		New York & Company; Stop, Shop & Save		319,277		319,277
North Star, San Antonio, TX		9/60		Dillard’s; Foley’s; Macy’s; Mervyn’s; Saks Fifth Avenue		466,246		1,259,073
Oakwood Center, Gretna, LA		10/82		Dillard’s; JCPenney; Mervyn’s; Sears; Marshalls		353,873		952,220
Oviedo Marketplace, Orlando, FL		3/98		Burdines-Macy’s; Dillard’s; Sears; Regal Cinemas 22		333,788		951,672
Owings Mills, Baltimore, MD		7/86		Hecht’s; JCPenney; Macy’s; AMC Owings Mills 17		436,410		1,083,447
Oxmoor Center, Louisville, KY		11/04		Dick's Sporting Goods; Lazarus; Sears; Von Maur		282,979		930,045
Paramus Park, Paramus, NJ		3/74		Macy’s; Sears; Fortunoff		311,170		770,227
Pioneer Place, Portland, OR (Note 4)		3/90		Saks Fifth Avenue		308,134		368,134
Providence Place		3/04		Filene’s; Lord & Taylor; Nordstrom		748,439		1,271,439
Ridgedale Center, Minneapolis, MN (Note 4)		1/89		JCPenney; Marshall Field’s Men & Home; Marshall Field’s Women; Sears		332,162		1,034,542
Riverwalk, New Orleans, LA (Note 4)		8/86		Abercrombie & Fitch; Victoria’s Secret		187,649		187,649
South Street Seaport, New York, NY (Note 4)		7/83		Ann Taylor; Brookstone		285,385		285,385
Southland Center, Taylor, MI		1/89		JCPenney; Marshall Field’s; Mervyn’s		282,592		865,629
Staten Island Mall, Staten Island, NY		11/80		JCPenney; Macy’s; Sears; Macy’s Home		614,905		1,272,268
The Streets at South Point, Durham, NC		5/02		Hecht’s; JCPenney; Nordstrom; Sears; Belk		580,475		1,327,396
The Village of Cross Keys, Baltimore, MD		9/65		Elizabeth Arden Spa, Talbots, Williams Sonoma		73,982		73,982
Westlake Center, Seattle, WA		10/88		Express Womens, PF Chang’s		104,631		104,631
White Marsh, Baltimore, MD		8/81		Hecht’s; JCPenney; Macy’s; Sears		366,451		1,151,045
Willowbrook, Wayne, NJ		9/69		Bloomingdale’s; Lord & Taylor; Macy’s; Sears		494,614		1,522,614
Woodbridge Center, Woodbridge, NJ		3/71		JCPenney; Lord & Taylor; Macy’s; Sears; Fortunoff; Dick's Sporting Goods		549,608		1,634,643
				Total Consolidated Centers in Operation		12,421,964		30,014,282

 

I-11

 

Bridgewater Commons, Bridgewater, NJ		12/98		Bloomingdale’s; Lord & Taylor; Macy’s		377,971		880,847
Christiana Mall, Newark, DE		5/03		JCPenney; Lord & Taylor; Macy’s; Strawbridge’s		312,182		1,083,586
Highland Mall, Austin, TX (Note 4)		8/71		Dillard’s (two stores); Foley’s; JCPenney		381,548		1,100,289
Mizner Park, Boca Raton, FL (Note 4)		12/03		Robb & Stucky		156,715		236,537
Oakbrook Center, Oak Brook, IL		5/02		Lord & Taylor; Marshall Field’s; Neiman Marcus; Nordstrom; Sears; Bloomingdale’s Home		813,450		2,003,216
Park Meadows, Littleton, CO		7/98		Dillard’s; Foley’s; JCPenney; Nordstrom; Dick's Sporting Goods		607,651		1,630,561
Perimeter Mall, Atlanta, GA		8/71		Bloomingdale’s; Nordstrom; Rich’s-Macy’s		499,064		1,284,880
Towson Town Center, Baltimore, MD		10/98		Hecht’s; Nordstrom; Nordstrom Rack		515,158		965,287
Village Centers in Summerlin, NV Centerpointe		9/01		—		144,635		144,635
Village Centers in Summerlin, NV Lake Meade		5/97		—		68,528		68,528
Village Centers in Summerlin, NV Trails Village Partnrs		5/97		—		169,660		169,660
Village of Merrick Park, Coral Gables, FL (Note 4)		9/02		Neiman Marcus; Nordstrom		407,304		737,304
Water Tower Place, Chicago, IL		5/02		Lord & Taylor; Marshall Field’s		285,718		712,761
				Total Proportionate Share Centers in Operation (Note 2)		4,739,584		11,018,091
				Total Retail Centers in Operation		17,161,548		41,032,373

 

Note 1—Includes projects wholly owned by subsidiaries of the Company and projects in which the Company has a majority interest and control.

 

Note 2—Includes projects owned by unconsolidated real estate affiliates or partnerships in which the Company’s interest is at least 30%.

 

Note 3—Date of acquisition is the date the Company first acquired an interest in the property.

 

Note 4—Property subject to ground lease.

 

I-12

 

Office and Other Properties in Operation

 

Consolidated Office and Other Properties (Note 1)		Location		Square Feet
Arizona Center (Note 3)		Phoenix, AZ
Garden Office Pavilion				113,481
One Arizona Center Office Tower				321,682
Two Arizona Center Office Tower				452,713
The Gallery at Harborplace		Baltimore, MD
Office Tower				260,901
Pioneer Place (Note 3)		Portland, OR
Office Tower				282,270
Village of Cross Keys		Baltimore, MD
Village Square Offices				72,668
Quadrangle Offices				109,317
Westlake Center (Note 3)		Seattle, WA
Office Tower				346,072
Columbia Industrial (6 buildings)		Columbia, MD
Riverspark I Building A				75,786
Riverspark I Building B				46,740
Riverspark I Building C				37,633
Riverspark II Building 1				38,539
Riverspark II Building 2				62,336
Riverspark II Building 3				45,314
Columbia Office (11 buildings)		Columbia, MD
10 Columbia Corporate Center				86,789
20 Columbia Corporate Center				102,912
30 Columbia Corporate Center				128,576
40 Columbia Corporate Center				139,416
50 Columbia Corporate Center				111,877
60 Columbia Corporate Center				101,982
70 Columbia Corporate Center				169,898
American City Building				116,182
Exhibit Building				18,962
Ridgely Building				39,111
Teacher’s Building (CA Building)				43,369
Hunt Valley Business Center (17 buildings)		Baltimore, MD
Shawan Center – 201 International				78,417
Shawan Center - Centerpointe				127,919
Schilling North				98,786
Schilling South				106,257
Building 5				41,102
Building 12				68,387
Building 25				64,106

 

I-13

 

Building 32				46,851
Building 35				29,790
Building 36				71,572
Building 43				55,249
Building 44				21,247
Building 55				67,312
Building 55A				67,953
Building 72				72,228
Building 75				210,638
Loveton 9				52,452
Owings Mills Town Center (4 buildings)		Baltimore, MD
One Owings Mills				130,536
Two Owings Mills				193,577
Three Owings Mills				272,271
Four Owings Mills				117,658
Rutherford Business Center (20 buildings)		Baltimore, MD
Ambassador A				7,453
Ambassador B				11,144
Ambassador C				10,945
Ambassador D				50,906
Parkview 1				29,457
Parkview 2				8,879
Parkview 3				9,001
Parkview 4				9,018
Rutherford Building 4				46,971
Rutherford Building 5				63,865
Rutherford Building 6				65,673
Rutherford Building 10				84,946
Rutherford Building 12				58,606
Rutherford Building 29				59,202
Rutherford Building 30				59,057
Rutherford Building 46				38,930
Rutherford Building 60				83,435
15 Governor’s Court				14,568
17 Governor’s Court				14,701
21 Governor’s Court				56,098

 

I-14

 

Summerlin Commercial (28 buildings)		Summerlin, NV
10190 Covington Cross Drive				74,723
10000 Covington Cross – WS				35,867
9950/80 Covington Cross (5 buildings)				81,712
1251/81 Town Center Drive (4 buildings)				54,168
1201/41 Town Center Drive (1 building)				75,936
9901/21 Covington Cross (3 buildings)				57,110
1160/80 Town Center Drive (2 buildings)				104,567
1120/40 Town Center Drive (2 buildings)				103,852
1635 Village Center Circle				49,411
1645 Village Center Circle				38,539
1551 Hillshire Drive				69,500
10000 West Charleston				71,388
Corporate Point Building 2				41,390
Corporate Point Building 3				68,346
10450 West Charleston				71,607
Crossing Business Center #6				52,975
Crossing Business Center #7				58,950
Woodlands Office (4 buildings)		Houston, TX		267,383
Other Office Projects (6 buildings)
Faneuil Hall Marketplace – Office		Boston, MA		155,205
Triangle I		Baltimore, MD		24,340
Triangle II		Baltimore, MD		17,605
Triangle III		Baltimore, MD		21,021
Triangle IV		Baltimore, MD		11,352
Senate Plaza		Camp Hill, PA		221,352
		Total Consolidated Office and Other Properties		7,929,988

 

I-15

 

Mizner Park		Boca Raton, FL
Office Plaza				104,108
Office Tower				163,821
Oakbrook Center Office		Oak Brook, IL
Professional Building				60,216
East Building				76,029
North Building				103,671
Village of Merrick Park		Coral Gables, FL		100,790
Water Tower Place Office		Chicago, IL		86,185
Woodlands Office/Industrial (5 buildings)		Houston, TX		347,599
		Total Proportionate Share Office and Other Properties (Note 2)		1,042,419
		Total Office and Other Properties in Operation		8,972,407

 

Note 1—Includes projects wholly owned by subsidiaries of the Company and projects in which the Company has a majority interest and control.

 

Note 2—Includes projects owned by unconsolidated real estate affiliates or partnerships in which the Company’s interest is at least 30%.

 

Note 3—Property subject to ground lease.

 

				Project Square Footage
Projects Under Construction or in Development		Department Stores/Anchor Tenants		Total		Tenant Space
Bridgewater Commons Expansion, Bridgewater, NJ		Macy’s Expansion		140,000		90,000
Kendall Town Center, Miami, FL		Dillard’s; Muvico 20		778,000		140,000
Perimeter Mall, Atlanta, GA		Dillard’s		200,000		—
The Shops at La Cantera, San Antonio, TX		Dillard’s; Foley’s; Neiman Marcus; Nordstrom		1,300,000		380,000
Summerlin Centre, Summerlin, NV (Phase I)		2-3 anchors		850,000		350,000
The Crossing Business Center, Summerlin, NV		Office/Industrial		55,000		55,000
		Total Projects Under Construction or in Development		3,323,000		1,015,000

 

I-16

 

Item 3. Legal Proceedings.

 

We are not currently involved in any material litigation nor, to our knowledge, is any material litigation currently threatened against us, the properties or any of the unconsolidated real estate affiliates.  For information about certain environmental matters, see “Item 1 - Business - Environmental Matters.”

 

Item 4. Submission of Matters to a Vote of Security Holders.

 

On August 19, 2004, The Rouse Company executed a definitive Merger Agreement with GGP. The Merger required the approval of a majority of the holders of The Rouse Company common stock. A special meeting of stockholders was held for such purpose on November 9, 2004. A total of 103,687,720 shares were eligible to vote. The following votes of the stockholders were obtained:

 

Matter		Number of Shares for		Opposed		Abstained
Approval of Merger Agreement between The Rouse Company and GGP dated August 19, 2004		75,477,476		230,629*		55,821

* Includes broker non-votes.

 

I-17

Part II

 

Item 5. Market for the Registrant’s Common Equity and Related Stockholder Matters.

 

The Rouse Company’s common stock was, until the Merger on November 12, 2004, listed on the New York Stock Exchange (“NYSE”) and was traded under the symbol “RSE.” Immediately following the Merger, the common stock was delisted from the NYSE and through a series of transactions, The Rouse Company was converted to a limited partnership with all of the partnership interests now held by GGP or its subsidiaries.

 

The following table summarizes the high and low sales prices per share of The Rouse Company common stock as reported by the NYSE, and the distributions per share of common stock declared for each such period prior to the Merger.

 

2004		Price						Declared
Quarter Ended		High			Low			Distribution
March 31		$	53.28		$	46.00		$	0.47
June 30		53.91			40.11			0.47
September 30		67.09			47.28			0.47
December 31		N/A			N/A			2.59

 

2003		Price						Declared
Quarter Ended		High			Low			Distribution
March 31		$	35.19		$	30.45		$	0.42
June 30		39.40			34.33			0.42
September 30		41.90			38.13			0.42
December 31		47.22			41.90			0.42

 

II-1

 

Item 6. Selected Financial Data.

 

The following table (in thousands)  sets forth selected financial data which is derived from, and should be read in conjunction with, the Consolidated Financial Statements and the related Notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in this Annual Report. 

 

 

II-2

 

 

Note:

(1)                Net Operating Income (“NOI”) data included in this five-year summary is presented by segment.  Consistent with the requirements of Statement of Financial Accounting Standards No. 131, “Disclosures about Segments of an Enterprise and Related Information,” segment data are reported using the performance measure and accounting policies used for internal reporting to management.  The performance measure is NOI.  We define NOI as net earnings (computed in accordance with U.S. generally accepted accounting principles), excluding cumulative effects of changes in accounting principles, net gains (losses) on dispositions of interests in operating properties not developed for sale, net of income taxes, impairment losses on operating properties, other provisions and losses, real estate depreciation and amortization, current and deferred income taxes and interest and other financing expenses.  Other financing expenses are defined in Note 2 below.  The accounting policies of the segments are the same as those of the Company, except that we account for the majority financial interest ventures (prior to our 2001 acquisition of voting stock) on a consolidated basis rather than using the equity method; we account for real estate ventures in which we have joint interest and control and certain other minority interest ventures (“proportionate share ventures”) using the proportionate share method rather than the equity method; we include our share of NOI less interest and other financing expenses of other unconsolidated minority interest ventures (“other ventures”) in revenues; and we include discontinued operations and minority interests in NOI rather than presenting them separately.  These differences affect only the reported revenues and operating expenses of the segments and have no effect on our reported net earnings. NOI is not a measure of operating results or cash flows from operating activities as defined by U.S. generally accepted accounting principles.  Additionally, NOI is not indicative of cash available to fund cash needs and should not be considered an alternative to cash flows as a measure of liquidity.

 

(2)                Ground rent, interest and other financing expenses include interest expense, distributions on The Rouse Company-obligated mandatorily redeemable preferred securities and other subsidiary preferred stock, ground rent expense and certain preference returns to partners, net of interest income earned on corporate investments, and are determined using the segment accounting policies discussed in Note 1 above.

 

II-3