AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
NOVEMBER 13, 1995
Registration Nos. 33-63279 and 33-63279-01
================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
__________________
ROUSE CAPITAL THE ROUSE COMPANY
(Exact name of registrant as (Exact name of registrant as
specified in its charter) specified in its charter)
Delaware Maryland
(State or other jurisdiction of (State or other jurisdiction of
incorporation or organization) incorporation or organization)
Applied For 52-0735512
(I.R.S. Employer Identification (I.R.S. Employer Identification
No.) No.)
c/o The Rouse Company 10275 Little Patuxent Parkway
10275 Little Patuxent Parkway Columbia, Maryland 21044-3456
Columbia, Maryland 21044-3456 (410) 992-6000
(410) 992-6000
(Address including zip code, (Address including zip code,
and telephone number, and telephone number,
including area code, of including area code, of
registrant's principal registrant's principal
executive offices) executive offices)
__________________
Bruce I. Rothschild
Vice President,
General Counsel and Secretary
10275 Little Patuxent Parkway
Columbia, Maryland 21044-3456
(410) 992-6000
(Name, address including zip code, and telephone number,
including area code, of agent for service)
__________________
Copies to:
Timothy E. Peterson Joseph C. Shenker
Fried, Frank, Harris, Shriver & Sullivan & Cromwell
Jacobson 250 Park Avenue
One New York Plaza New York, New York 10177
New York, New York 10004 (212) 558-4000
(212) 859-8000
__________________
Approximate date of commencement of proposed sale to public:
As soon as practicable after the Registration Statement becomes
effective.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans,
please check the following box. [ ]
If any of the securities being registered on this Form are to
be offered on a delayed or continuous basis pursuant to Rule 415
under the Securities Act of 1933, other than securities offered
only in connection with dividend or interest reinvestment plans,
check the following box. [x]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following box and
list the Securities Act registration statement number of the
earlier effective registration statement for the same offering.
[ ]
If delivery of the prospectus is expected to be made pursuant
to Rule 434, please check the following box. [ ]
__________________
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
Proposed Proposed
Maximum Maximum
Title of Securities Amount Aggregate Aggregate Amount of
to be Registered to be Price Per Offering Registration
Registered Security Price Fee
(1) (2)(3) (2)(3) (4)
---------- -------- -------- ------------
<S> <C> <C> <C> <C>
Rouse Capital % 4,600,000
Cumulative Quarterly Preferred $25.00 $115,000,000 $39,656
Income Preferred Securities
Securities
The Rouse Company
Guarantee with
respect to Rouse
Capital %
Cumulative Quarterly
Income Preferred
Securities (5)(6)
The Rouse Company
% Junior
Subordinated
Debentures due
2025 (7)
Total 4,600,000 $25.00 $115,000,000 $39,656
Preferred
Securities
<FN>
(1) Includes 600,000 Preferred Securities subject to the Underwriters'
over-allotment option.
(2) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(a) and (n).
(3) Exclusive of accrued interest and distributions, if any.
(4) Previously paid.
(5) No separate consideration will be received for The Rouse Company
Guarantee or Expense Agreement.
(6) This registration is deemed to include the rights of holders of
the Preferred Securities under the Guarantees and certain backup
undertakings as described in the Registration Statement.
(7) The Junior Subordinated Debentures will be purchased by Rouse
Capital with the proceeds of the sale of the Preferred Securities.
No separate consideration will be received for the Junior Subordinated
Debentures.
</TABLE>
----------
The registrants hereby amend this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the registrants shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
=================================================================
<PAGE>1
Information contained herein is subject to completion or amendment.
A registration statement relating to these securities
has been filed with the Securities and Exchange Commission.
These securities may not be sold nor may offers to buy be
accepted prior to the time the registration statement becomes
effective. This Prospectus shall not constitute an offer to sell
or the solicitation of an offer to buy nor shall there be any
sale of these securities in any State in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such State.
Subject to Completion, Dated NOVEMBER 13, 1995
4,000,000 Preferred Securities
ROUSE CAPITAL
% Cumulative Quarterly Income Preferred Securities
(QUIPS*)
(liquidation amount $25 per Preferred Security)
guaranteed to the extent Issuer has funds as set forth herein by,
THE ROUSE COMPANY
------------
The % Cumulative Quarterly Income Preferred Securities
(the "Preferred Securities") offered hereby represent preferred
undivided beneficial interests in the assets of Rouse Capital, a
statutory business trust formed under the laws of the State of
Delaware (the "Issuer" or the "Trust"). The Rouse Company, a
Maryland corporation ("Rouse" or the "Company"), is the owner of
the common securities (the "Common Securities") representing
undivided beneficial interests in the assets of the Issuer. The
First National Bank of Chicago and Michael J. Majchrzak are the
Property Trustee and the Delaware Trustee, respectively, of the
Issuer. The Issuer exists for the sole purpose of issuing the
Preferred Securities and the Common Securities and investing the
proceeds thereof in % Junior Subordinated Debentures due 2025
(the "Junior Subordinated Debentures") issued by Rouse, and the
ability of the Issuer to make distributions and pay other amounts
on the Preferred Securities is solely dependent upon Rouse making
payments on the Junior Subordinated Debentures as and when
required. The holders of the Preferred Securities will have a
preference, with respect to cash distributions and amounts
payable on liquidation, redemption or otherwise over the holders
of the Common Securities issued by the Issuer only if there is an
Event of Default (as defined in "Description of the Preferred
Securities - Events of Default; Notice"). See "Description of
the Preferred Securities - Subordination of Common Securities"
and "- Liquidation Distribution Upon Dissolution".
Holders of the Preferred Securities will be entitled to
receive cumulative cash distributions accruing from the date of
original issuance and payable quarterly in arrears on March 31,
June 30, September 30 and December 31 of each year, commencing
December 31, 1995, at the rate of % per annum of the
liquidation amount of $25 per Preferred Security. Rouse has the
right to defer payments of interest on the Junior Subordinated
Debentures by extending the interest payment period thereon at
any time for up to 20 consecutive quarters (each an "Extension
Period"). If interest payments are so deferred, distributions on
the Preferred Securities will also be deferred. During an
Extension Period, distributions will continue to accrue and
holders of Preferred Securities will be required to accrue
interest income for United States federal income tax purposes.
See "Description of the Junior Subordinated Debentures - Option
to Extend Interest Payment Period" and "Certain United States
Federal Income Tax Considerations - Potential Extension of
Interest Payment Period and Original Issue Discount".
The payment of distributions out of moneys held by the Issuer
and payments on liquidation of the Issuer or the redemption of
Preferred Securities, as set forth below, are guaranteed to the
extent set forth herein by Rouse (the "Guarantee"). See
"Description of the Guarantee". If Rouse fails to make interest
payments on the Junior Subordinated Debentures held by the
Issuer, the Issuer will not have sufficient funds to pay
distributions on the Preferred Securities. The Guarantee does
not cover payment of distributions when the Issuer does not have
sufficient funds to pay such distributions. In such event, the
remedy of a holder of Preferred Securities is to enforce the
rights of the Issuer under the Junior Subordinated Debentures
held by the Issuer. Rouse's obligations under the Guarantee are
subordinated and junior in right of payment to all other
liabilities of Rouse (including the Junior Subordinated
Debentures) except any liabilities that may be made pari passu
with or subordinate to the Guarantee expressly by their terms.
The Preferred Securities are subject to mandatory
redemption upon repayment of the Junior Subordinated Debentures
at maturity or their earlier redemption, at $25 per Preferred
Security plus accumulated and unpaid distributions to the
Redemption Date (as defined under "Description of the Preferred
Securities - Redemption Procedures"), whether or not earned or
declared, to the date of payment. See "Description of the Preferred
Securities - Redemption". Rouse will have the option at any
time on or after , 2000 to redeem the Junior
Subordinated Debentures, in whole or in part, with the proceeds
of one or more Equity Issuances (as defined under "Description of
the Preferred Securities - Redemption"), at a cash redemption
price of 100% of the principal amount thereof, plus accrued
interest to the date of redemption. Rouse also will have the
right at any time, upon occurrence of a Tax Event (as defined
under "Description of the Preferred Securities - Redemption"), to
redeem the Junior Subordinated Debentures, in whole but not in
part. See "Description of the Junior Subordinated
Debentures - Optional Redemption".
The Junior Subordinated Debentures are subordinated and
junior in right of payment to all Senior Indebtedness (as defined
under "Description of the Junior Subordinated
Debentures - Subordination") of Rouse. As of September 30, 1995,
Rouse had approximately $541 million of principal amount of
Senior Indebtedness. Because Rouse is a holding company whose
assets consist substantially of the stock of its subsidiaries,
the Junior Subordinated Debentures are also structurally
subordinated and junior in right of payment to indebtedness for
money borrowed and capitalized lease obligations of Rouse's
subsidiaries which aggregated $2,077 million at September 30,
1995. The terms of the Junior Subordinated Debentures do not
limit Rouse's ability to incur additional Senior Indebtedness or
subsidiary indebtedness. See "Description of the Junior
Subordinated Debentures - Subordination".
In the event of the liquidation of the Issuer, the holders of
the Preferred Securities will be entitled to receive for each
Preferred Security a liquidation preference of $25 plus accrued
and unpaid distributions thereon, whether or not earned or
declared, to the date of payment (the "Liquidation Amount"),
subject to certain limitations, unless in connection with such
liquidation, Junior Subordinated Debentures are distributed to
the holders of Preferred Securities. See "Description of the
Preferred Securities - Liquidation Distribution Upon
Dissolution".
The Preferred Securities have been approved for listing on
the New York Stock Exchange, subject to notice of issuance, under
the symbol "RSEPrZ".
The Preferred Securities will be represented by global
certificates registered in the name of The Depository Trust
Company ("DTC") or its nominee. Beneficial interests in the
Preferred Securities will be shown on, and transfers thereof will
be effected only through, records maintained by participants in
DTC. Except as described herein, Preferred Securities in
certificated form will not be issued in exchange for the global
certificates. See "Description of Preferred Securities - Book-
Entry-Only Issuance - The Depository Trust Company".
----------
See "Risk Factors" beginning on page 11 hereof for certain
information relevant to an investment in the Preferred
Securities, including the period and circumstances during which
and under which payment on the Preferred Securities and the
Junior Subordinated Debentures may be deferred and the related
United States federal income tax consequences.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
----------
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON
OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO
THE CONTRARY IS UNLAWFUL.
----------
<TABLE>
<CAPTION>
Initial
Public Proceeds
Offering Underwriting to the
Price Commission (1) Issuer (2)(3)
-------- -------------- -------------
<S> <C> <C> <C>
Per Preferred Security. . $ (2) $
Total (4). . . . . . . . . $ (2) $
- ----------
<FN>
(1) The Issuer and Rouse have agreed to indemnify the several
Underwriters (as defined in "Underwriting") against certain
liabilities, including liabilities under the Securities Act
of 1933, as amended. See "Underwriting".
(2) In view of the fact that the proceeds of the sale of the
Preferred Securities will be used to purchase the Junior
Subordinated Debentures, the Underwriting Agreement provides
that Rouse will pay to the Underwriters, as compensation
("Underwriters' Compensation") for their arranging the
investment therein of such proceeds, $ per Preferred
Security (or $ in the aggregate). See
"Underwriting".
(3) Expenses of the offering, which are payable by Rouse, are
estimated to be $524,956.
(4) The Issuer and Rouse have granted the Underwriters an option
for 30 days to purchase up to an additional 600,000 Preferred
Securities at the initial public offering price per Preferred
Security, solely to cover over-allotments. Rouse will pay
Underwriters' Compensation in the amount per Preferred
Security set forth in Note 2 with respect to each such
additional Preferred Security. If such option is exercised
in full, the total Initial Public Offering Price,
Underwriting Commission and Proceeds to the Issuer will be
$ , $ and $ ,
respectively. See "Underwriting".
</TABLE>
The Preferred Securities offered hereby are offered severally
by the Underwriters, as specified herein, and subject to receipt
and acceptance by them and subject to their right to reject any
order in whole or in part. It is expected that delivery of the
Preferred Securities will be made only in book-entry form through
the facilities of DTC on or about , 1995.
- ----------
* Quips is a servicemark of Goldman, Sachs & Co.
Goldman, Sachs & Co.
Alex. Brown & Sons
Incorporated
Lehman Brothers
Merrill Lynch & Co.
Smith Barney Inc.
----------
The date of this Prospectus is , 1995.
<PAGE>2
[PHOTOS]
____________
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-
ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE
MARKET PRICE OF THE PREFERRED SECURITIES OFFERED HEREBY AT LEVELS
ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE,
IN THE OVER-THE-COUNTER MARKET, OR OTHERWISE. SUCH STABILIZING,
IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
----------
<PAGE>3
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and
should be read in conjunction with, the more detailed information
and financial data included elsewhere or incorporated by
reference in this Prospectus. Unless otherwise specified,
references herein to "Rouse" or "the Company" refer to The Rouse
Company and its consolidated subsidiaries. Prospective investors
should carefully read the entire Prospectus.
Rouse Capital
The Issuer is a statutory business trust recently formed
under the laws of the State of Delaware. All of the Issuer's
Common Securities are owned by Rouse.
The Issuer exists for the exclusive purposes of issuing the
Preferred Securities and the Common Securities, purchasing the
Junior Subordinated Debentures with the proceeds thereof and
engaging in activities necessary or incidental to the foregoing.
The payment by the Issuer of distributions due on the Preferred
Securities is completely dependent on its receipt of interest
payments from Rouse on the Junior Subordinated Debentures.
The Rouse Company
Rouse is one of the largest publicly-traded real estate
companies in the United States. Rouse develops, acquires, owns
and manages income-producing properties across the United States.
At November 1, 1995, Rouse managed a portfolio of operating
properties consisting of retail centers and office, mixed-use and
other properties, totaling more than 58 million square feet in
almost 200 buildings. Rouse also develops and sells land
primarily in and around Columbia, Maryland.
The Offering
Securities Offered. . . . . . . 4,000,000 of the Issuer's
% Cumulative Quarterly Income
Preferred Securities. In
addition, the Issuer and Rouse
have granted the Underwriters
an option for 30 days to
purchase up to an additional
600,000 Preferred Securities
at the initial public offering
price, solely to cover over-
allotments.
Distributions. . . . . . . . . Distributions on the
Preferred Securities will be
payable at a rate per annum of
% of the stated liquidation
amount of $25 per Preferred
Security and will cumulate
from , 1995. Subject
to the distribution deferral
provisions described in "-
Distribution Deferral
Provisions" below,
distributions will be payable
quarterly in arrears on March
31, June 30, September 30 and
December 31 of each year,
commencing December 31, 1995.
Distributions that are in
arrears for more than one
quarter will bear interest at
a rate per annum of %,
compounded quarterly. The
ability of the Issuer to make
distributions on the Preferred
Securities is completely
dependent on its receipt of
interest payments from Rouse
on the Junior Subordinated
Debentures. See "Description
of the Preferred
<PAGE>4
Securities - Distributions".
The holders of the Preferred
Securities will have a
preference with respect to
cash distributions and amounts
payable on liquidation,
redemption or otherwise over
the holders of the Common
Securities only if there is an
Event of Default. See
"Description of the Preferred
Securities - Subordination of
Common Securities" and
"-Liquidation Distribution
Upon Dissolution".
Distribution Deferral
Provisions . . . . . . . . Rouse has the right, at
any time and from time to
time, to extend any interest
payment period on the Junior
Subordinated Debentures for a
period of up to 20 consecutive
quarters, as described below
under "- Junior Subordinated
Debentures". Quarterly
distributions on the Preferred
Securities would be deferred
by the Issuer (but would
continue to accumulate and
would compound quarterly and
Additional Amounts (as defined
under "Description of the
Preferred Securities -
Distributions"), intended to
provide quarterly compounding
on distribution arrearages,
would also accumulate) during
any such period. If an
extension of an interest
payment period occurs, holders
of Preferred Securities will
continue to accrue interest
income for United States
federal income tax purposes in
advance of any corresponding
cash distribution. See "Risk
Factors - Option to Extend
Interest Payment Period; Tax
Consequences" and "Certain
United States Federal Income
Tax Considerations - Potential
Extension of Interest Payment
Period and Original Issue
Discount".
Liquidation Preference . . . . $25 per Preferred
Security, plus an amount equal
to any accumulated and unpaid
distributions (whether or not
earned or declared) to the
date of payment. See
"Description of the Preferred
Securities - Liquidation
Distribution Upon
Dissolution".
Redemption. . . . . . . . . . . Upon the repayment of any
Junior Subordinated
Debentures, whether at
maturity or upon earlier
redemption, the proceeds from
such repayment will be applied
to redeem Preferred Securities
and Common Securities having
an aggregate Liquidation
Amount equal to the principal
amount of the Junior
Subordinated Debentures
redeemed. 97% of such
proceeds will be allocated to
the redemption of Preferred
Securities and 3% will be
allocated to the redemption of
Common Securities. The
redemption price for each
Preferred Security selected
for redemption will be equal
to $25 plus
<PAGE>5
accumulated and unpaid
distributions to the date of
redemption, whether or not
earned or declared. Rouse has
the option to redeem the
Junior Subordinated Debentures
(i) at any time on or after
, 2000, in whole or in part,
with the proceeds of one or
more Equity Issuances and
(ii) at any time, in whole but
not in part, upon the
occurrence of a Tax Event.
See "Description of the
Preferred Securities -
Redemption" and "Description
of the Junior
Subordinated Debentures -
Optional Redemption".
Guarantee. . . . . . . . . . . Rouse will fully,
irrevocably and
unconditionally guarantee, on
a subordinated basis and to
the extent set forth herein,
the payment in full of
(i) accrued and unpaid
distributions on the Preferred
Securities, if and only to the
extent the Issuer has funds
sufficient to make such
payment therefor, (ii) the
Redemption Price with respect
to the Preferred Securities
called for redemption, if and
only to the extent the Issuer
has funds sufficient to make
such payment and (iii) upon a
voluntary or involuntary
dissolution, winding-up or
termination of the Issuer
(other than in connection with
a redemption of all of the
Preferred Securities), the
lesser of (a) the aggregate
Liquidation Amount, to the
extent the Issuer has funds
sufficient to make such
payment, and (b) the amount of
assets of the Issuer remaining
available for distribution to
holders of the Preferred
Securities in liquidation of
the Issuer. The Guarantee
will be unsecured and will
rank (i) subordinate and
junior in right of payment to
all liabilities of Rouse
(including the Junior
Subordinated Debentures but
excluding liabilities that are
made pari passu with or
subordinate to the Guarantee
expressly by their terms) and
(ii) senior to Rouse's Series
A Convertible Preferred Stock,
liquidation value $50.00 per
share, and Rouse's common
stock. The Guarantee is a
guarantee of payment and not
of collection. See "Risk
Factors _ Rights Under the
Guarantee" and "Description of
the Guarantee _ General" and "
_ Status of the
Guarantee".
Voting Rights. . . . . . . . . Generally, holders of the
Preferred Securities will not
have any voting rights.
However, the vote of a
majority in aggregate
Liquidation Amount of
outstanding Preferred
Securities will be required to
approve any amendment to the
Trust Agreement or any
proposed action by the
trustees thereunder that would
(i) adversely affect the
powers, preferences or special
rights of the
<PAGE>6
holders of the Preferred Securities
or (ii) cause the dissolution,
winding-up or termination of
the Issuer (other than
pursuant to the Trust
Agreement). In addition, the
approval of at least a
majority in aggregate
Liquidation Amount of
outstanding Preferred
Securities is required to
approve (i) any amendment to
the Indenture that would
adversely affect the holders
of the Preferred Securities
and (ii) any waiver of an
Event of Default under the
Indenture or Rouse's
obligation to comply with any
covenant thereunder. If an
Event of Default under the
Indenture has occurred and is
continuing and the Debenture
Trustee or the holders of at
least 25% of the outstanding
principal amount of the Junior
Subordinated Debentures fail
to declare the principal of
and interest on the Junior
Subordinated Debentures
immediately due and payable,
then the holders of at least
25% of the aggregate
Liquidation Amount of
outstanding Preferred
Securities shall have the
right to do the same. See
"Description of the Preferred
Securities - Voting Rights"
and "Description of the Junior
Subordinated Debentures -
Events of Default".
Distribution of Junior
Subordinated Debentures
Debentures Upon the Occurrence
of Certain Events. . . . . . . In the event that (i) Rouse
becomes bankrupt or insolvent
or is dissolved or liquidated
or (ii) a Tax Event occurs,
the Issuer may be dissolved
and liquidated and the holders
of the Preferred Securities
and Common Securities shall
receive Junior Subordinated
Debentures having an aggregate
principal amount equal to the
aggregate Liquidation Amount
of the outstanding Preferred
Securities (together with any
Additional Amounts, if
applicable), in lieu of
payment of the aggregate
Liquidation Amount of such
Preferred Securities and
Common Securities (together
with any Additional Amounts,
if applicable), which payment
would be subject to such
assets of the Issuer available
for distribution after
satisfaction of liabilities to
creditors. See "Description
of the Preferred Securities -
Liquidation Distribution Upon
Dissolution".
Junior Subordinated Debentures . The Junior Subordinated
Debentures will mature on
, 2025, and
will bear interest at the rate
of % per annum, payable
quarterly in arrears on March
31, June 30, September 30 and
December 31 of each year,
commencing December 31, 1995.
Such payment period may be
extended from time to time by
Rouse (during
<PAGE>7
which period interest would
continue to accrue and
compound quarterly) for a
period of up to 20 consecutive
quarters (each, an "Extension
Period"). Prior to the
termination of any Extension
Period of less than 20
consecutive quarters, Rouse
may further extend the
interest payment period as
long as such Extension Period,
as further extended, does not
exceed 20 consecutive quarters
and does not extend beyond the
maturity of the Junior
Subordinated Debentures. Upon
the termination of any
Extension Period and the
payment of all amounts then
due, Rouse may select a new
Extension Period, subject to
the terms of the preceding
sentence. No interest shall
be due during an Extension
Period until the end of such
period. If Rouse extends an
interest payment period, Rouse
will be prohibited from paying
dividends or distributions on
certain of its capital stock
or other securities and making
certain other restricted
payments until quarterly
interest payments are resumed
and all accumulated and unpaid
interest (including any
interest payable to effect
quarterly compounding) on the
Junior Subordinated Debentures
is brought current. The
payment of the principal of
and interest on the Junior
Subordinated Debentures will
be subordinated in right of
payment to all Senior
Indebtedness (as defined under
"Description of the Junior
Subordinated Debentures _
Subordination") of Rouse. As
of September 30, 1995, Rouse
had approximately $541 million
of principal amount of Senior
Indebtedness. In addition,
because Rouse is a holding
company whose assets consist
substantially of the stock of
its subsidiaries the Junior
Subordinated Debentures will
be structurally subordinated
and junior in right of payment
to indebtedness for money
borrowed and capitalized lease
obligations of Rouse's
subsidiaries, which as of
September 30, 1995 aggregated
$2,077 million. As described
above under " _ Redemption",
Rouse has the option to redeem
the Junior Subordinated
Debentures under certain
circumstances. See
"Description of the Junior
Subordinated Debentures" and
"Risk Factors - Subordination
of Guarantee and Junior
Subordinated Debentures;
Limited Preference Rights of
Preferred Securities".
Use of Proceeds. . . . . . . . . The Issuer will invest
the proceeds received from the
sale of the Preferred
Securities and the Common
Securities in the Junior
Subordinated Debentures.
After paying the expenses
associated with the offering
made hereby, Rouse
<PAGE>8
will use the net proceeds to
retire or reduce certain of
its outstanding debt, to fund
development projects and/or
property acquisitions, and for
general corporate purposes.
See "Use of Proceeds".
Form of Preferred Securities . . The Preferred Securities
will be represented by a
global certificate or
certificates registered in the
name of DTC or its nominee.
Beneficial interests in the
Preferred Securities will be
evidenced by, and transfers
thereof will be effected only
through, records maintained by
participants in DTC. Except
as described herein, Preferred
Securities in certificated
form will not be issued in
exchange for the global
certificate or certificates.
See "Description of the
Preferred Securities - Book-
Entry-Only Issuance - The
Depository Trust Company".
<PAGE>9
Summary Selected Financial Data of Rouse
The following summary financial information of the Company
for the years ended December 31, 1994, 1993 and 1992 and the nine
months ended September 30, 1995 and 1994 was derived from the
Company's consolidated financial statements and five-year
comparison of selected financial data contained in its Annual
Report on Form 10-K for the year ended December 31, 1994 and its
Quarterly Reports on Form 10-Q for the quarters ended September
30, 1995 and 1994 and is qualified in its entirety by such
documents. See "Incorporation of Certain Documents by
Reference". The selected financial information of the Company
for the years ended December 31, 1992, 1991 and 1990 was derived
from the audited consolidated financial statements of the Company
for such periods and the balance sheet information for the
quarter ended September 30, 1994 was derived from the unaudited
consolidated financial statements of the Company for such period
which, in each case, have not been incorporated herein by
reference. Results for the nine months ended September 30, 1995
and 1994 are unaudited. Results for the nine months ended
September 30, 1995 are not necessarily indicative of results for
the year ending December 31, 1995. The following financial
information should be read in conjunction with the Company's
consolidated financial statements and notes thereto incorporated
by reference into and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included elsewhere
in this Prospectus.
<TABLE>
<CAPTION>
Nine Months
Ended
September 30, Year Ended December 31,
=================== ====================================================
1995 1994 1994 1993 1992 1991 1990
======== ======== ======== ========= ========= ========= ==========
(in thousands, except ratios and per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Operating results
data:
Revenues from
continuing
operations. . . . . $495,316 $489,846 $671,171 $646,805 $597,105 $573,498 $529,570
Earnings (loss) from
continuing
operations. . . . . 3,939 2,155 6,606 (1,291) (15,849) 2,424 (1,165)
Earnings (loss) from
continuing
operations available
for common
shareholders per
share of common
stock. . . . . . . . (.15) (.16) (.14) (.27) (.33) .05 (.07)
Balance sheet data:
Total assets-cost
basis . . . . . . 2,929,637 2,897,922 2,915,860 2,874,982 2,726,281 2,637,452 2,614,877
Total assets-current
value basis (5) . . -- -- 4,736,961 4,588,636 4,214,819 4,174,093 4,362,153
Debt, capital leases
and redeemable
Preferred stock . . 2,617,637 2,550,453 2,532,920 2,473,596 2,498,983 2,374,527 2,344,095
Shareholders' equity
(deficit):
Historical cost
basis . . . . . . 54,483 80,763 95,026 113,151 (34,848) 17,328 25,339
Current value basis
(5) . . . . . -- -- 1,614,245 1,525,606 1,188,896 1,274,070 1,470,088
Shareholders' equity
(deficit) per share
of common stock:
Historical cost
basis (6) . . . . .93 1.42 1.63 1.98 (.74) .36 .53
Current value basis
(5)(6) . . . -- -- 27.75 26.75 25.50 26.60 30.10
Other selected data:
Earnings before
depreciation and
deferred taxes from
operations (EBDT) . 76,978 67,115 94,710 78,281 52,282 46,820 50,290
Net cash provided by
(used in):
Operating activities. . 69,525 79,008 113,775 101,149 66,630 67,226 35,057
Investing activities. . (64,087) (143,272) (178,551) (154,446) (144,836) (96,210) (248,532)
Financing activities. . (28,633) 41,086 40,618 47,068 98,914 17,271 246,968
Ratio of earnings to
fixed charges
(8)(9)(10) . . . . . 1.05 1.04 1.06 1.01 -- -- --
Ratio of earnings to
combined fixed
charges and
Preferred stock
dividend
requirements
(1)(2)(3) . . . . . -- -- -- -- -- -- --
Consolidated
coverage ratio (4) . 1.48 1.42 1.44 1.37 1.25 1.24 1.29
Cash dividends per
share of common
stock for the period. . .60 .51 .68 .62 .60 .60 .60
Cash dividends per
share of convertible
Preferred stock for
the period . . . . . 2.43 2.43 3.25 2.83 -- -- --
Market price per
share of common
stock at end of
period (7) . . . 22.00 19.13 19.25 17.75 18.00 18.25 14.50
Market price per
share of convertible
Preferred stock at
end of period . . . 54.88 51.13 48.50 53.75 -- -- --
Weighted average
common shares
outstanding . . . . 47,779 47,563 47,565 47,411 47,994 48,157 48,019
Number of common
shares outstanding
at end of period . 47,921 47,568 47,571 47,562 47,292 48,193 48,130
Number of
convertible
Preferred stock
shares outstanding
at end of period . . 4,505 4,025 4,505 4,025 -- -- --
</TABLE>
<PAGE>10
- --------------------
(1) The pro forma ratio of earnings to combined fixed
charges and Preferred stock dividend requirements for the
year ended December 31, 1994 and the nine months ended
September 30, 1995, adjusted to give effect to the
issuance of the Preferred Securities and the use of the
proceeds therefrom, are not materially different from the
historical ratios.
(2) The ratio of earnings to combined fixed charges and
Preferred stock dividend requirements is computed by
dividing total fixed charges and amounts of pre-tax
earnings required to cover Preferred stock dividend
requirements into net earnings (loss) before income
taxes, extraordinary loss and cumulative effect of change
in accounting principle, adjusted for minority interest
in earnings, amortization of interest costs previously
capitalized and certain other items other than
capitalized interest. Fixed charges include interest
costs, the estimated interest component of rent expense
and certain other items.
(3) Total fixed charges and Preferred stock dividend
requirements exceeded the Company's earnings available
for fixed charges and Preferred stock dividend
requirements by $9,597,000 and $9,752,000 for the nine
months ended September 30,1995 and 1994, respectively,
and $8,934,000, $17,722,000, $29,449,000, $10,347,000,
and $28,363,000 for the years ended December 31, 1994,
1993, 1992, 1991 and 1990, respectively.
(4) Consolidated coverage ratio is the ratio of earnings
before depreciation and deferred taxes from operations
(EBDT) plus consolidated interest expense to consolidated
interest expense. Consolidated interest expense includes
dividends on redeemable Preferred Stock (retired for
financial reporting purposes in 1990), which are included
because the stock was subject to mandatory redemption
requirements for cash.
(5) Current value basis financial information is not
presented for interim periods.
(6) Historical cost basis shareholders' equity per share
of common stock and current value basis shareholders'
equity per share of common stock assume the conversion of
the Company's Series A Convertible Preferred stock.
(7) The market price of common stock of the Company as of
the close of business on November 7, 1995 was $21.50 per
share.
(8) The ratio of earnings to fixed charges is computed by
dividing fixed charges into net earnings (loss) before
income taxes, extraordinary loss and cumulative effect of
change in accounting principle, adjusted for minority
interest in earnings, amortization of interest costs
previously capitalized and certain other items, plus fixed
charges other than capitalized interest. Fixed charges
include interest costs, the estimated interest component of
rent expense and certain other items.
(9) Total fixed charges exceeded the Company's earnings
available for fixed charges by $29,449,000, $10,347,000 and
$24,575,000 for the years ended December 31, 1992, 1991 and
1990, respectively.
(10) The pro forma ratio of earnings to fixed charges for
the year ended December 31, 1994 and the nine months ended
September 30, 1995, adjusted to give effect to the issuance
of the Preferred Securities and the use of the proceeds,
therefrom, are not materially different from the historical
ratios.
<PAGE>11
RISK FACTORS
Prospective purchasers of Preferred Securities should
carefully review the information contained elsewhere in this
Prospectus and should particularly consider the following
matters:
Subordination of Guarantee and Junior Subordinated Debentures;
Limited Preference Rights of Preferred Securities
Rouse's obligations under the Junior Subordinated
Debentures are subordinate and junior in right of payment to all
other liabilities of Rouse, except the Guarantee, trade credit
and any liabilities that may be made pari passu with or
subordinate to the Junior Subordinated Debentures expressly by
their terms. Rouse's obligations under the Guarantee are
subordinated and junior in right of payment to all other
liabilities of Rouse (including the Junior Subordinated
Debentures) except any liabilities that may be made pari passu
with or subordinate to the Guarantee expressly by their terms.
As of September 30, 1995, Rouse had approximately $541 million of
Senior Indebtedness outstanding. As a holding company,
substantially all of Rouse's assets consist of stock and other
equity interests of its subsidiaries. Except to the extent that
Rouse may itself be a creditor with recognized claims against
Rouse's subsidiaries, the claims of the holders of the Junior
Subordinated Debentures to assets of the subsidiaries of Rouse
effectively are subordinated to the claims of the direct
creditors of the subsidiaries of Rouse. At September 30, 1995,
Rouse's subsidiaries had $2,077 million of indebtedness
outstanding for money borrowed and capitalized lease obligations.
None of the terms of the Preferred Securities, the Junior
Subordinated Debentures or the Guarantee limit Rouse's ability to
incur additional Senior Indebtedness or subsidiary indebtedness.
See "Description of the Guarantee - Status of the Guarantee" and
"Description of the Junior Subordinated
Debentures - Subordination".
The ability of the Issuer to pay amounts due on the Preferred
Securities is solely dependent upon Rouse making payments on the
Junior Subordinated Debentures as and when required.
The holders of the Preferred Securities will have a
preference with respect to cash distributions and amounts payable
on liquidation, redemption or otherwise over the holders of the
Common Securities only if there is an Event of Default. See
"Description of the Preferred Securities - Subordination of
Common Securities" and "- Liquidation Distribution Upon
Dissolution".
Option to Extend Interest Payment Period; Tax Consequences
Rouse has the right under the Indenture (as defined under
"Description of Preferred Securities - Distributions") to extend
the interest payment period from time to time on the Junior
Subordinated Debentures for a period not exceeding 20 consecutive
quarters. During any such extended interest payment period,
quarterly distributions on the Preferred Securities would be
deferred (but would continue to accrue with interest thereon) by
the Issuer. In the event that Rouse exercises this right, during
such period Rouse may not declare or pay dividends or
distributions (other than dividends or distributions in common
stock of Rouse or other security junior in right of payment to
the Junior Subordinated Debentures) on, or redeem, purchase,
acquire, or make a liquidation payment with respect to any of its
capital stock, or make any guarantee payment with respect to the
foregoing (other than payments under the Guarantee), or
repurchase, or cause any of its subsidiaries to repurchase, any
security of Rouse ranking pari passu with or subordinate to the
Junior Subordinated Debentures (except on a ratable basis with
securities ranking pari passu with the Junior Subordinated
Debentures). Prior to the termination of any such extended
interest payment period, Rouse may further extend the interest
payment period, provided that such extended interest payment
period together with all such previous and further extensions
thereof may not exceed 20 consecutive quarters and that such
extended interest payment period may not extend beyond the
maturity date of the Junior Subordinated Debentures. Upon the
termination of any extended interest payment period and the
payment of all amounts then due, Rouse may select a new extended
interest payment period, subject to the foregoing requirements.
If Rouse should
<PAGE>12
determine to exercise its extension right in the future or the
market perceives that Rouse is likely at any time to exercise
such right, the market price of the Preferred Securities may be
adversely affected. Rouse currently has no intention to exercise
its right to extend interest payment periods on the Junior
Subordinated Debentures. See "Description of the Preferred
Securities - Distributions" and "Description of the Junior
Subordinated Debentures - Option to Extend Interest Payment
Period".
Should an extended interest payment period occur, holders
of Preferred Securities will continue to recognize interest
income for United States federal income tax purposes. As a
result, such a holder will be required to include such interest
in gross income for United States federal income tax purposes in
advance of the receipt of the deferred cash distributions, and
such holder will not receive such deferred cash distributions
from the Issuer related to such income if such holder disposes of
its Preferred Securities prior to the record date for payment of
distributions. See "Certain United States Federal Income Tax
Considerations - Potential Extension of Interest Payment Period
and Original Issue Discount".
Rights Under the Guarantee
The Guarantee will be qualified as an indenture under the
Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"). The First National Bank of Chicago will act as indenture
trustee under the Guarantee for the purposes of compliance with
the Trust Indenture Act (the "Guarantee Trustee"). The Guarantee
Trustee will hold the Guarantee for the benefit of the holders of
the Preferred Securities and will also be the trustee for the
Junior Subordinated Debentures and the Property Trustee (as
defined under "Description of the Preferred Securities").
The Guarantee guarantees on a subordinated basis to the
holders of the Preferred Securities the payment (but not the
collection) of (i) any accrued and unpaid distributions required
to be paid on the Preferred Securities, if and only to the extent
the Issuer has funds sufficient to make such payment, (ii) the
Redemption Price, including all accrued and unpaid distributions,
with respect to Preferred Securities called for redemption by the
Issuer, if and only to the extent the Issuer has funds sufficient
to make such payment therefor and (iii) upon a voluntary or
involuntary dissolution, winding-up or termination of the Issuer
(other than in connection with a redemption of all of the
Preferred Securities), the lesser of (a) the aggregate
Liquidation Amount, to the extent the Issuer has funds sufficient
to make such payment and (b) the amount of assets of the Issuer
remaining available for distribution to holders of the Preferred
Securities in liquidation of the Issuer. If, upon a dissolution,
winding up or termination as described above, the Issuer
distributes the Junior Subordinated Debentures in lieu of making
payment on the Preferred Securities, the Guarantee will cease to
be of any effect because the Guarantee extends only to the
Preferred Securities, which will have been redeemed. The holders
of a majority in aggregate Liquidation Amount of the Preferred
Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the
Guarantee Trustee or to direct the exercise of any trust or other
power conferred upon the Guarantee Trustee under the Guarantee.
If the Guarantee Trustee fails to enforce the Guarantee, any
holder of Preferred Securities may institute a legal proceeding
directly against Rouse to enforce its rights under the Guarantee
without first instituting a legal proceeding against the Issuer,
the Guarantee Trustee or any other person or entity. If Rouse
were to default on its obligations under the Junior Subordinated
Debentures, the Issuer would lack available funds for the payment
of distributions or amounts payable on redemption of the
Preferred Securities or otherwise, and in such event holders of
the Preferred Securities would not be able to rely upon the
Guarantee for payment of such amounts. Instead, holders of the
Preferred Securities would be required to rely on the enforcement
by the Property Trustee of its rights, as registered holder of
the Junior Subordinated Debentures, against Rouse pursuant to the
terms of the Junior Subordinated Debentures. See "Description of
the Guarantee - Status of the Guarantee" and "Description of the
Junior Subordinated Debentures - Subordination". The Trust
Agreement provides that each holder of Preferred Securities by
acceptance thereof agrees to the provisions of the Guarantee and
the Indenture.
<PAGE>13
Tax Event
Upon the occurrence of a Tax Event, Rouse has the right to
(i) redeem the Junior Subordinated Debentures, in whole but not
in part, in which event the Issuer will redeem the Preferred
Securities or (ii) distribute the Junior Subordinated Debentures
to holders of the Preferred Securities. See "Description of the
Preferred Securities - Redemption". As a result, the holders of
Preferred Securities upon the occurrence of a Tax Event, would
receive cash equal to the liquidation preference of the Preferred
Securities plus accrued and unpaid distributions thereon to the
date of payment, whether or not earned or declared, or,
alternatively, would receive Junior Subordinated Debentures equal
to the liquidation preference of such Preferred Securities. See
"Certain United States Federal Income Tax Consequences - Receipt
of Junior Subordinated Debentures in Liquidation of Rouse
Capital" for a description of the consequences related to the
distribution of Junior Subordinated Debentures.
Limited Voting Rights
Holders of Preferred Securities will have limited voting
rights and, except upon the occurrence of an Event of Default
under the Trust Agreement, will not be entitled to vote to
appoint, remove or replace the Property Trustee or the
Administrative Trustees (as defined under "Rouse Capital") or to
increase or decrease the number of Administrative Trustees, which
voting rights are vested exclusively in the holder of the Common
Securities unless and until an Event of Default has occurred and
is continuing. If an Event of Default has occurred and is
continuing, the Property Trustee or the Administrative Trustees
may be removed by the holders of a majority in aggregate
liquidation amount of the Preferred Securities. If any proposed
amendment to the Trust Agreement provides for, or the Trustees
otherwise propose to effect, (i) any action that would adversely
affect the powers, preferences or special rights of the holders
of the Preferred Securities, whether by way of amendment to the
Trust Agreement or otherwise, or (ii) the dissolution, winding-up
or termination of the Issuer, other than pursuant to the Trust
Agreement, then the holders of outstanding Preferred Securities
will be entitled to vote on such amendment or proposal, and such
amendment or proposal shall not be effective except with the
approval of the holders of at least a majority in aggregate
Liquidation Amount of such outstanding Preferred Securities. See
"Description of the Preferred Securities - Voting Rights". In
addition, certain modifications may be made to the Indenture
without the consent of the holders of the Preferred Securities.
See "Description of the Junior Subordinated Debentures -
Modification of the Indenture".
Trading Characteristics of the Preferred Securities
The Preferred Securities have been approved for listing as
an equity security on the New York Stock Exchange, subject to
notice of issuance, under the symbol "RSEPrZ". Accordingly, the
Preferred Securities are expected to trade at a price that takes
into account the value, if any, of accrued and unpaid
distributions; thus, purchasers will not pay for and sellers will
not receive any accrued and unpaid interest with respect to their
undivided interests in the Junior Subordinated Debentures owned
through the Preferred Securities that is not included in the
trading price of the Preferred Securities. However, interest on
the Junior Subordinated Debentures will be included in the gross
income of holders of Preferred Securities who are United States
Persons (as defined under "Certain United States Federal Income
Tax Considerations - General") as it accrues, rather than when it
is paid. See "Certain United States Federal Income Tax
Considerations - Income from Preferred Securities" and "- Sale of
Preferred Securities". Because the Preferred Securities pay a
dividend at a fixed rate based upon the fixed interest rate
payable on the Junior Subordinated Debentures, the trading price
of the Preferred Securities may decline if interest rates
rise.
Real Estate Investment Risks
General. Real property investments are subject to varying
degrees of risk. The Company's revenues and the value of its
properties may be adversely affected by the general economic
climate, the local economic climate and local real estate
conditions, including the perceptions of prospective tenants of
the
<PAGE>14
attractiveness of the property; the ability of the Company to
provide adequate management, maintenance and insurance; the
inability to collect rent due to bankruptcy or insolvency of
tenants or otherwise; and increased operating costs. Real estate
values may also be adversely affected by such factors as
applicable laws, including tax laws, interest rate levels and the
availability of financing.
Illiquidity of Real Estate. Real estate investments are
relatively illiquid and therefore may tend to limit the ability
of the Company to react promptly in response to changes in
economic or other conditions.
Development Risks. New project development is subject to a
number of risks, including risks of availability of financing,
construction delays or cost overruns that may increase project
costs, risks that the properties will not achieve anticipated
occupancy levels or sustain anticipated lease levels, and new
project commencement risks such as receipt of zoning, occupancy
and other required governmental permits and authorizations and
the incurrence of development costs in connection with projects
that are not pursued to completion.
Dependence on Rental Income from Real Property. The
Company's cash flow and results of operations would be adversely
affected if a significant number of tenants were unable to meet
their obligations or if the Company were unable to lease a
significant amount of space in its operating properties on
economically favorable lease terms. In the event of default by a
tenant, the Company may experience delays in enforcing its rights
as lessor and may incur substantial costs in protecting its
investment. The bankruptcy or insolvency of a major tenant may
have an adverse effect on its operating properties affected.
Competition. There are numerous other developers, managers
and owners of real estate that compete with the Company in
seeking management and leasing revenues, land for development,
properties for acquisition and disposition and tenants for
properties.
Uninsured Loss. The Company carries comprehensive
liability, fire, extended coverage and rent loss insurance with
respect to its properties with policy specifications and insured
limits customary for similar properties. There are, however,
certain types of losses (generally of a catastrophic nature, such
as wars or earthquakes) which may be either uninsurable or not
economically insurable. Should an uninsured loss occur with
respect to a property, the Company could lose both its invested
capital in and anticipated profits from the property.
Environmental Matters. Under various federal, state and
local environmental laws, ordinances and regulations, a current
or previous owner or operator of real property may become liable
for the costs of removal or remediation of hazardous or toxic
substances on, under or in such property. Such laws often impose
liability without regard to whether the owner or operator knew
of, or was responsible for, the presence of such hazardous or
toxic substances. The presence of hazardous or toxic substances,
or the failure to remediate properly such substances when
present, may adversely affect the owner's ability to sell or rent
such real property or to borrow using such real property as
collateral. Persons who arrange for the disposal or treatment of
hazardous or toxic wastes may be liable for the costs of removal
or remediation of such wastes at the disposal or treatment
facility, regardless of whether such facility is owned or
operated by such person. Other federal, state and local laws,
ordinances and regulations require abatement or removal of
certain asbestos-containing materials in the event of demolition
or certain renovations or remodelling, impose certain worker
protection and notification requirements and govern emissions of
and exposure to asbestos fibers in the air. The operation and
subsequent removal of certain underground storage tanks also are
regulated by federal and state laws. In connection with its
ownership, operation and management of properties, the Company
could be held liable for the costs of remedial action with
respect to such regulated substances or tanks or related claims.
In addition to clean-up actions brought by federal, state and
local agencies, the presence of hazardous wastes on a property
could result in personal injury or similar claims by private
plaintiffs. Such costs or liabilities may exceed the value of
such real estate. Notwithstanding the above, the Company has not
been notified by any private party or governmental authority of
any non-compliance, liability or other claim in connection with
<PAGE>15
any of its properties, nor is the Company aware of any
environmental condition with respect to any of its properties
that it believes will involve any material expenditure.
Cost of Compliance with Americans with Disabilities Act.
The Company's properties are subject to the requirements of the
Americans with Disabilities Act (the "ADA"), which generally
requires that public accommodations, including office buildings,
retail centers and hotels be made accessible to disabled persons.
The Company has surveyed each of its properties and believes that
it is in substantial compliance with the ADA and that it will not
be required to make substantial capital expenditures to address
the requirements of the ADA. The Company has developed an ADA
Compliance Plan and has budgeted for and moved forward with the
removal of those barriers to access that are readily achievable.
The Company believes that implementation of its ADA Compliance
Plan will not have a material adverse effect on its financial
condition.
ROUSE CAPITAL
Rouse Capital is a statutory business trust formed under
Delaware law pursuant to (i) a trust agreement executed by Rouse,
as depositor for the Issuer, and The First National Bank of
Chicago, as property trustee (the "Property Trustee"), and
Michael J. Majchrzak, as Delaware trustee (the "Delaware
Trustee"), and (ii) the filing of a certificate of trust with the
Delaware Secretary of State on September 29, 1995. Such trust
agreement will be amended and restated in its entirety (as so
amended and restated, the "Trust Agreement") substantially in the
form filed as an exhibit to the Registration Statement of which
this Prospectus forms a part. The Trust Agreement will be
qualified as an indenture under the Trust Indenture Act. The
Property Trustee will act as sole trustee under the Trust
Agreement for the purposes of compliance with the Trust Indenture
Act. The Issuer exists for the exclusive purposes of (i) issuing
the Preferred Securities and Common Securities representing
undivided beneficial interests in the assets of the Issuer, (ii)
purchasing the Junior Subordinated Debentures with the proceeds
from sale of the Common Securities and the Preferred Securities
and (iii) engaging in only those other activities necessary or
incidental thereto. All of the Common Securities are owned by
Rouse, and Rouse has agreed in the Indenture to maintain such
ownership. The Common Securities will rank pari passu, and
payments will be made thereon pro rata, with the Preferred
Securities, except that upon the occurrence and continuance of an
Event of Default under the Trust Agreement, the rights of the
holders of the Common Securities to payment in respect of
distributions and payments upon liquidation, redemption and
otherwise will be subordinated to the rights of the holders of
the Preferred Securities. Rouse will acquire Common Securities
having an aggregate liquidation amount equal to 3% of the total
capital of the Issuer. The Issuer has a term of approximately 55
years, but may terminate earlier as provided in the Trust
Agreement. The Issuer's business and affairs will be conducted
by the Property Trustee, the Delaware Trustee and the
Administrative Trustees. The holder of the Common Securities, or
the holders of at least a majority in the aggregate Liquidation
Amount of then outstanding Preferred Securities, if an Event of
Default has occurred and is continuing, will be entitled to
appoint, remove or replace the Trustees (as defined under
"Description of the Preferred Securities") of the Issuer.
The duties and obligations of the Trustees shall be
governed by the Trust Agreement. Patricia H. Dayton, Jeffrey H.
Donahue and George L. Yungmann, all officers of Rouse, will be
appointed as administrative trustees of the Trust (in such
capacity, the "Administrative Trustees") pursuant to the terms of
the Trust Agreement. Under the Trust Agreement, the
Administrative Trustees will have certain duties and powers,
including, but not limited to, the delivery of certain notices to
the holders of the Preferred Securities, the appointment of the
Preferred Securities Paying Agent (as defined under "Description
of the Preferred Securities - Redemption Procedures") and the
Preferred Securities Registrar (as defined in "Description of the
Preferred Securities - Registrar and Transfer Agent"), the
registering of transfers of the Preferred Securities and the
Common Securities and preparing and filing on behalf of the Trust
all United States federal, state and local tax information and
returns and reports required to be filed by or in respect of the
Trust. Under the Trust Agreement, the Property Trustee will have
certain duties and powers, including, but not limited to, holding
legal title to the Junior Subordinated Debentures on behalf of
<PAGE>16
the Trust, the collection of payments in respect of the Junior
Subordinated Debentures, maintenance of the Payment Account (as
defined in the Trust Agreement), the sending of default notices
with respect to the Preferred Securities and the distribution of
the assets of the Trust in the event of a winding-up of the
Trust. See "Description of the Preferred Securities".
Rouse will pay all fees and expenses related to the Issuer and
the offering of the Preferred Securities.
The principal office of the Issuer is located at 10275
Little Patuxent Parkway, Columbia, Maryland 21044-3456 and its
telephone number is (410) 992-6000.
THE ROUSE COMPANY
The Rouse Company (the "Company" or "Rouse") is one of the
largest publicly-traded real estate companies in the United
States. The Company develops, acquires, owns and manages income-
producing properties across the United States. The Company also
develops and sells land almost exclusively related to activities
in Columbia, Maryland.
Operating Properties
The Company manages a portfolio of operating properties
totaling more than 58 million square feet in almost 200
buildings, classified into two business categories: (i) retail
centers and (ii) office, mixed-use and other properties.
Retail Centers. Major retail properties owned and managed
by the Company include Willowbrook, Woodbridge Center and Paramus
Park in New Jersey and Faneuil Hall Marketplace, South Street
Seaport and Harborplace in the downtowns of Boston, New York and
Baltimore, respectively. The Company manages 75 retail centers
totaling 47,218,000 square feet of space and including 153
department stores and 20,925,000 square feet of small store gross
leasable area. Included in the 75 retail centers are eight
Columbia village centers (824,000 sq. ft.) and five centers
(636,000 sq. ft. of small shops) that are parts of large, mixed-
use projects. The remaining 62 centers include 53 regional malls
(17,811,000 sq. ft. of mall space) that primarily are in the
suburbs of major metropolitan areas and typically have three or
more department stores attached, and also include nine specialty
retail centers (1,654,000 sq. ft.) that are in the downtowns of
major cities and do not have department stores attached.
The majority of the Company's revenues, Earnings Before
Depreciation and Deferred Taxes ("EBDT") and Current Value
Shareholders' Equity is derived from its retail centers,
particularly those where the Company has a significant ownership
interest in the centers. The 62 retail centers (excluding eight
Columbia village centers and five mixed-use projects) include 44
centers where the Company has ownership interests ranging from
30% to 100%. In the remaining 18 centers, the Company's
ownership interest is generally 10% or less, and the Company
normally receives fees for management, leasing and development
activities and an incentive participation in the growth of the
centers' cash flows and values.
Office, Mixed-Use and Other Properties. The Company manages
more than 100 office/industrial buildings totaling approximately
11,353,000 square feet of gross leasable area. Of this total,
1,842,000 square feet is located in seven buildings which are
part of major mixed-use projects in Phoenix, Baltimore, Seattle
and Portland; 3,056,000 square feet is located in Columbia in
projects that are wholly-owned; 728,000 square feet is located in
Owings Mills, Maryland in four buildings that are jointly-owned;
501,000 square feet is located at or near retail centers; and the
remaining 5,226,000 square feet is primarily located in the
Baltimore-Washington corridor and is part of a joint venture
owned by the Company (5%) and Teachers Insurance and Annuity
Association of America (95%).
The Company owns and manages two hotels, one each in Baltimore
and Columbia, and has an ownership interest in one additional
hotel in Baltimore.
<PAGE>17
Land Sales
The Company, through its subsidiaries and affiliates, develops
and sells land primarily in and around Columbia, Maryland, which
is a new town launched by the Company in 1962. Today, Columbia
has a population of nearly 80,000 and is home to 2,500 businesses
which employ 56,000 people. There are presently approximately
2,000 acres of net saleable land available for residential,
commercial and industrial uses. Subsidiaries of the Company may
develop and own certain projects in Columbia, primarily retail
centers and office buildings.
Development and Acquisition Activities
The majority of the Company's operating properties were
developed by the Company or its subsidiaries. At the present
time, the Company has publicly announced that it is developing a
major new regional shopping center in Orlando, Florida; is
expanding several existing retail centers (Beachwood Place in
Cleveland, Perimeter Mall in Atlanta, Northwest Arkansas Mall in
Fayetteville, Oakwood Center in suburban New Orleans and
Burlington Center in Burlington, New Jersey); has recently
acquired interests in Collin Creek Mall in Plano, Texas and
Brandywine Square in Exton, Pennsylvania; has recently acquired
the remaining unowned partnership interests in Santa Monica Place
in Santa Monica, California and Paramus Park in Paramus, New
Jersey; and is investigating additional new retail center
development, expansions and potential acquisitions. Any such new
retail center development, expansion or acquisition will be
funded using cash generated from operations, from the issuance of
additional equity securities or from the proceeds of any
additional indebtedness.
Projects of the Company
Set forth below is a table that provides information with
respect to the Company's (i) retail centers in operation,
(ii) retail centers under construction, (iii) office projects in
operation, (iv) hotel projects in operation, (v) properties in
operation in Columbia, Maryland, (vi) office projects owned by
Rouse-Teachers Properties, Inc. and (vii) industrial projects
owned by Rouse-Teachers Properties, Inc.
<PAGE>18
<TABLE>
<CAPTION>
Retail Square Footage
Date of Total Mall
Opening or Department Stores Center Only
Retail Centers in Operation Acquisition
<S> <C> <C> <C> <C>
Almeda Mall, Houston,TX (a) 10/68 Foley's; JCPenney 802,000 294,000
The Shops at Arizona
Center, Phoenix, AZ (a) 11/90 _ 151,000 151,000
Augusta Mall, Augusta,GA (b) 8/78 Rich's; R.H. Macy; 902,000 313,000
JCPenney; Sears
Bayside Marketplace,
Miami, FL (b) 4/87 _ 223,000 223,000
Beachwood Place, 8/78 Saks Fifth Avenue; 453,000 228,000
Cleveland, OH (b) Dillard's
Burlington Center, 8/82 Strawbridge & 567,000 246,000
Burlington, NJ (d) Clothier; Sears
Cherry Hill, Cherry 10/61 Strawbridge & 1,285,000 544,000
Hill, NJ (a) Clothier; R.H.
Macy; JCPenney
The Citadel, Colorado 8/80 Mervyn's; JCPenney; 1,097,000 460,000
Springs, CO (d) Foley's; Dillard's
College Square, Cedar 8/80 Von Maur; Younkers; 560,000 313,000
Falls, IA (d) Wal-Mart
Collin Creek Mall, 9/95 Dillard's; Foley's; 1,123,000 333,000
Plano, Texas (b) Sears; JCPenny;
Mervyn's
The Mall in Columbia, 8/71 Woodward & Lothrop; 876,000 421,000
Columbia, MD (a) Hecht's; Sears
Eastfield Mall, 4/68 Sears; Filene's; 674,000 217,000
Springfield, MA (a) JCPenney
Echelon Mall, Voorhees,NJ (a) 9/70 Strawbridge & 1,065,000 481,000
Clothier; JCPenney;
Boscov's
Exton Square, Exton, PA (a) 3/73 Strawbridge & 443,000 253,000
Clothier
Faneuil Hall Marketplace, 8/76 _ 215,000 215,000
Boston, MA (a)
Fashion Island, Newport 8/90 The Broadway; I. 1,215,000 593,000
Beach, CA (c) Magnin;
Robinson's-May;
Neiman Marcus
Franklin Park, Toledo, OH (b) 7/71 Hudson's; JCPenney; 1,082,000 313,000
Jacobson's; Lion
The Gallery at Harborplace, 9/87 _ 139,000 139,000
Baltimore, MD (a)
The Gallery at Market East, 8/77 Strawbridge & 1,320,000 360,000
Philadelphia, PA (a)(c) Clothier; JCPenney
Governor's Square, Tallahassee, 8/79 Burdine's; Sears; 1,031,000 340,000
FL (b) JCPenney; Dillard's
The Grand Avenue, Milwaukee, 8/82 Marshall Field; The 842,000 242,000
WI (a) Boston Store
Greengate Mall, 8/65 Lazarus; Montgomery 612,000 233,000
Greensburg, PA (a) Ward
Harborplace, Baltimore, MD (a) 7/80 _ 136,000 136,000
<PAGE>19
<CAPTION>
Retail Square Footage
Date of Total Mall
Opening or Department Stores Center Only
Retail Centers in Operation Acquisition
<S> <C> <C> <C> <C>
Harundale Mall, Glen 10/58 Value City 309,000 232,000
Burnie, MD (b)
Highland Mall, Austin, TX (b) 8/71 Dillard's; 1,099,000 367,000
JCPenney; Foley's
Hulen Mall, Ft. Worth, TX (a) 8/77 Foley's; Montgomery 924,000 327,000
Ward; Dillard's
The Jacksonville Landing, 6/87 _ 128,000 128,000
Jacksonville, FL (a)
Mall St. Matthews, St. 3/62 JCPenney; Bacon's; 965,000 345,000
Matthews, KY (a) Dillard's
Marshall Town Center, 8/80 JCPenney; Younkers; 340,000 153,000
Marshalltown, IA (d) Menard's
Midtown Square, Charlotte, 10/59 Burlington Coat 235,000 190,000
NC (a) Factory
Mondawmin (a)/Metro Plaza (b), 1/78; _ 496,000 496,000
Baltimore, MD 12/82
Muscatine Mall, 8/80 JCPenney; Von Maur; 347,000 186,000
Muscatine, IA (d) Wal-Mart
The Shops at National 5/84 _ 125,000 125,000
Place, Washington, D.C. (a)
North Grand, Ames, IA (d) 8/80 JCPenney; Sears; 350,000 157,000
Younkers
North Star, San Antonio, TX (b) 9/60 Dillard's; Foley's; 1,288,000 487,000
Saks Fifth Avenue;
Marshall Field;
Mervyn's
Northwest Arkansas Mall, 8/80 JCPenney; Sears; 554,000 242,000
Fayetteville, AR (d) Dillard's
Northwest Mall, Houston, TX (a) 10/68 Foley's; JCPenney 800,000 292,000
Oakwood Center, Gretna, LA (a) 10/82 Sears; Dillard's; 960,000 362,000
Mervyn's; Maison
Blanche
Outlet Square, Atlanta, GA (a) 7/83 Burlington Coat 326,000 183,000
Factory; Marshalls
Owings Mills, Baltimore 7/86 R.H. Macy; Hecht's; 809,000 325,000
County, MD (a) Saks Fifth Avenue
Paramus Park, Paramus, NJ (a) 3/74 Abraham & Straus; 755,000 279,000
Sears
Perimeter Mall, Atlanta, GA (b) 8/71 Rich's; JCPenney; 1,224,000 444,000
R.H. Macy
Pioneer Place, Portland, OR (a) 3/90 Saks Fifth Avenue 220,000 160,000
Plymouth Meeting, Montgomery 2/66 Strawbridge & 784,000 442,000
County, PA (a) Clothier; Hess
Randhurst, Mt. Prospect, IL (d) 7/81 Carson, Pirie, 1,324,000 591,000
Scott; JCPenney;
Montgomery Ward;
Kohls
Ridgedale Center, Minnetonka, 1/89 Carson, Pirie, 1,039,000 334,000
MN (d) Scott; Dayton's; JC
Penney; Sears
<PAGE>20
<CAPTION>
Retail Square Footage
Date of Total Mall
Opening or Department Stores Center Only
Retail Centers in Operation Acquisition
<S> <C> <C> <C> <C>
Riverwalk, New Orleans, 8/86 _ 179,000 179,000
LA (a)
St. Louis Union Station, 8/85 _ 172,000 172,000
St. Louis, MO (a)
Salem Centre, Salem, OR (d) 6/90 Meier & Frank; 649,000 211,000
JCPenney; Mervyn's;
Nordstrom
Salem Mall, Dayton, OH (a) 10/66 Lazarus; Sears; 817,000 312,000
JCPenney
Santa Monica Place, 10/80 The Broadway; 570,000 287,000
Santa Monica, CA (a) Robinson's -- May
Sherway Gardens, Toronto, 12/78 Eaton's; The Bay 968,000 474,000
ONT (c)
South DeKalb, Decatur, GA (a) 7/78 Rich's; JCPenney 691,000 329,000
Southland, Taylor, MI (d) 1/89 Hudson's; Mervyn's; 903,000 320,000
JCPenney
South Street Seaport, 7/83 _ 257,000 257,000
New York, NY (a)
Staten Island Mall, 11/80 Sears; R.H. Macy; 1,224,000 618,000
Staten Island, NY (d) JCPenney
Mall St. Vincent, 8/80 Sears; Dillard's 557,000 200,000
Shreveport, LA (c)
Talbottown, Easton, MD (a) 3/57 JCPenney 90,000 71,000
Tampa Bay Center, Tampa, FL (b) 8/76 Burdine's; Sears; 883,000 325,000
Montgomery Ward
Town and Country 2/88 Sears; Marshalls; 645,000 467,000
Center, Miami, FL (c) Mervyn's
Underground Atlanta, 6/89 _ 219,000 219,000
Atlanta, GA (c)
Village of Cross Keys, 9/65 _ 68,000 68,000
Baltimore, MD (a)
Westlake Center, Seattle, WA (b) 10/88 Nordstrom; Bon 723,000 118,000
Marche
Westland Mall, West 8/80 JCPenney; Younkers 344,000 175,000
Burlington, IA (d)
White Marsh, Baltimore 8/81 R.H. Macy; 1,178,000 359,000
County, MD (a) JCPenney; Hecht's;
Sears; Woodward &
Lothrop
Willowbrook, Wayne, NJ (b) 9/69 R.H. Macy; 1,499,000 485,000
Steinbach's;
Stern's; Sears
Woodbridge Center, 3/71 Abraham & Straus; 1,544,000 560,000
Woodbridge, NJ (a) JCPenney; Stern's;
Steinbach's;
Fortunoff
Total Retail
Centers in
Operation 46,394,000 20,101,000
<PAGE>21
<CAPTION>
Retail Square Footage
Retail Centers Under Construction Department Stores Total Mall
or in Development Center Only
<S> <C> <C> <C>
Beachwood Place Expansion, Cleveland, OH Nordstrom 459,000 90,000
Northwest Arkansas Mall Expansion, JCPenney; 310,000 70,000
Fayetteville, AR Dillard's
Oakwood Center Expansion, Gretna, LA JCPenney 125,000 _
Burlington Center Expansion, JCPenney 102,000 _
Burlington, NJ
Total Retail
Centers Under
Construction or
in Development 996,000 160,000
<CAPTION>
Office Projects in Operation Location Square
Feet
<S> <C> <C>
300 East Lombard (c) Baltimore, MD 233,000
Quadrangle at Cross Keys (a) Baltimore, MD 106,000
Village Square at Cross Keys (a) Baltimore, MD 79,000
Legg Mason Tower (a) Baltimore, MD 265,000
Schilling Center (a) Hunt Valley, MD 55,000
Alexander & Alexander Building (b) Owings Mills, MD 143,000
Alexander & Alexander Building II (b) Owings Mills, MD 198,000
Blue Cross & Blue Shield Building I (b) Owings Mills, MD 270,000
Blue Cross & Blue Shield Building II (b) Owings Mills, MD 117,000
One Arizona Center (a) Phoenix, AZ 322,000
Two Arizona Center (a) Phoenix, AZ 444,000
First National Bank Plaza (a) Mt. Prospect, IL 66,000
Faneuil Hall Marketplace (a) Boston, MA 147,000
Pioneer Place (a) Portland, OR 284,000
Westlake Center (b) Seattle, WA 342,000
Total Office
Projects in Operation 3,071,000
<CAPTION>
Hotel Projects in Operation Location Rooms
<S> <C> <C>
Cross Keys Inn (a) Baltimore, MD 148
Stouffer Harborplace Hotel Baltimore, MD 622
<CAPTION>
Columbia Properties in Operation Type of Project Square Feet
<S> <C> <C>
The Mall in Columbia*(a) Retail 876,000
Dobbin Center (b) Community Retail 219,000
Dorsey's Search Village Center (a) Community Retail 86,000
Harper's Choice Village Center (a) Community Retail 81,000
<PAGE>22
<CAPTION>
<S> <C> <C>
Hickory Ridge Village Center (a) Community Retail 97,000
King's Contrivance Village Center (a) Community Retail 107,000
Long Reach Village Center (a) Community Retail 77,000
Oakland Mills Village Center (a) Community Retail 62,000
Wilde Lake Village Center (a) Community Retail 95,000
10 Corporate Center (a) Office 89,000
Amdahl Building (a) Office 105,000
American City Building (a) Office 111,000
Columbia Center Building (a) Office 44,000
Dorsey's Search Office Building (a) Office 20,000
Exhibit Building (a) Office 20,000
PaineWebber Building (a) Office 134,000
Parkside (a) Office 112,000
RWD Building (a) Office 137,000
Re/Max Building (a) Office 39,000
Reliance Building (a) Office 38,000
The Ryland Group Headquarters (a) Office 167,000
Oakland Building (a) R&D/Industrial 145,000
Gateway Commerce Center 1, 2 & 20 (a) Industrial 1,895,000
Columbia Inn (a) Hotel 289 rooms
Total Columbia
Properties in
Operation 4,756,000
<FN>
* Also listed in previous table of Retail Centers in Operation
(a) Projects are wholly-owned by subsidiaries of the Company.
(b) Projects are owned by joint ventures or partnerships and are
managed by subsidiaries of the Company for a fee. The Company's
ownership interest, through its subsidiaries, is at least 50% (except
for North Star and Willowbrook in which the Company has 37 1/2% interests
and Collin Creek Mall in which the Company has a 30% interest).
(c) Projects are managed by subsidiaries of the Company for a fee plus
a share of cash flow.
(d) Projects are owned by partnerships or wholly owned (Staten Island
Mall, Randhurst and Burlington Center) by subsidiaries of the Company
and are managed by subsidiaries of the Company for a fee plus a share
of cash flow and a share of proceeds from sales or refinancings. The
Company's ownership interest in the partnerships is determined based
upon the results of operations.
</TABLE>
<TABLE>
<CAPTION>
Office Projects Owned by Rouse- Location Square Feet
Teachers Properties, Inc.
<S> <C> <C>
Triangle Business Center Baltimore, MD 75,000
Owen Brown I Columbia, MD 46,000
Sieling Tech Center Columbia, MD 76,000
RiversPark I & II Columbia, MD 306,000
Center Pointe Hunt Valley, MD 130,000
<PAGE>23
<S> <C> <C>
201 International Circle Hunt Valley, MD 79,000
Loveton Center 9 Hunt Valley, MD 53,000
11011 McCormick Road Hunt Valley, MD 57,000
Schilling Plaza North Hunt Valley, MD 96,000
Schilling Plaza South Hunt Valley, MD 108,000
One Hunt Valley Hunt Valley, MD 225,000
Inglewood Office Centres 1, 2 Prince George's County, MD 222,000
Inglewood Tech Centers I, II, III, IV & V Prince George's County, MD 316,000
Silver Spring Metro Plaza Silver Spring, MD 692,000
Ambassador Center Woodlawn, MD 83,000
15 - 17 Governor's Court Woodlawn, MD 29,000
21 Governor's Court Woodlawn, MD 56,000
Parkview Center Woodlawn, MD 58,000
Harbourside Tampa, FL 147,000
One & Two Prestige Place Tampa, FL 144,000
McCormick Center I, II & III Tampa, FL 202,000
Gateway Centers I & II Raleigh, NC 116,000
Senate Plaza Camp Hill, PA 231,000
Total Office
Projects Owned by
Rouse-Teachers
Properties, Inc. 3,547,000
<CAPTION
Industrial Projects Owned by Rouse-
Teachers Properties, Inc. Location Square Feet
<S> <C> <C>
Pulaski Industrial Park Essex, MD 157,000
Hunt Valley Business Community Hunt Valley, MD 950,000
Rutherford Business Center Woodlawn, MD 572,000
Total Industrial
Projects Owned by
Rouse-Teachers
Properties, Inc. 1,679,000
</TABLE>
The principal executive office of the Company is located at
10275 Little Patuxent Parkway, Columbia, Maryland 21044-3456 and
its telephone number is (410) 992-6000.
USE OF PROCEEDS
The proceeds from the sale of the Preferred Securities and
the Common Securities will be invested in the Junior Subordinated
Debentures issued pursuant to the Indenture. The net proceeds to
be received by the Company from the sale of the Junior
Subordinated Debentures are estimated to be approximately
$ ($ , assuming exercise of the
over-allotment option). Approximately $80 million of the net
proceeds will be used primarily to retire or reduce outstanding
Company debt, debt carrying a Company guarantee of repayment and
higher rate nonrecourse property debt. The specific debt that
will be reduced or retired will be determined based on the best
economic interests of the Company. The
<PAGE>24
remaining net proceeds will be used for general corporate
purposes. Prior to such uses, the net proceeds will be invested
in high-quality, short-term instruments.
CAPITALIZATION
The following table sets forth the consolidated
capitalization of the Company and its subsidiaries at
September 30, 1995 and as adjusted to give effect to (i) the sale
of the Preferred Securities offered hereby (without deduction of
Underwriters' Compensation or expenses and assuming the
over-allotment option is not exercised) and (ii) the application
of the proceeds therefrom.
<TABLE>
<CAPTION>
September 30, 1995
(in thousands)
Actual Adjusted
<S> <C> <C>
Current portion of debt and capital lease obligations... $123,371 $114,951
Long-term debt.......................................... $2,438,271 $2,366,190
Long-term portion of capital lease obligations.......... 55,995 55,995
Company-obligated mandatorily redeemable preferred
securities of subsidiary Trust holding solely
Company Subordinated Debt Securities (1).............. - 100,000
Shareholders' equity:
Preferred stock, par value $.01 per share;
50,000,000 shares authorized; 4,505,009 shares
of Series A Convertible Preferred stock, par value
$.01 per share, issued and outstanding................ 45 45
Common stock, par value $.01 per share; 250,000,000
shares authorized; 47,921,499 shares issued
and outstanding....................................... 479 479
Additional paid-in capital.............................. 309,231 309,231
Accumulated deficit..................................... (255,272) (255,272)
Total shareholders' equity............................ 54,483 54,483
Total capitalization.................................. $2,548,749 $2,576,668
- --------------
<FN>
(1) As described herein, the assets of the Issuer include $100
million aggregate principal amount of % Junior
Subordinated Debentures of Rouse which will constitute
approximately 97% of the total assets of the Issuer.
</TABLE>
<PAGE>25
SELECTED FINANCIAL DATA OF ROUSE
The following selected financial information of the Company
for the years ended December 31, 1994, 1993 and 1992 and the nine
months ended September 30, 1995 and 1994 was derived from the
Company's consolidated financial statements and five-year
comparison of selected financial data contained in its Annual
Report on Form 10-K for the year ended December 31, 1994 and its
Quarterly Reports on Form 10-Q for the quarters ended September
30, 1995 and 1994 and is qualified in its entirety by such
documents. See "Incorporation of Certain Documents by
Reference". The selected financial information of the Company
for the years ended December 31, 1992, 1991 and 1990 was derived
from the audited consolidated financial statements of the Company
for such periods and the balance sheet information for the
quarter ended September 30, 1994 was derived from the unaudited
consolidated financial statements of the Company for such period
which, in each case, have not been incorporated herein by
reference. Results for the nine months ended September 30, 1995
and 1994 are unaudited. Results for the nine months ended
September 30, 1995 are not necessarily indicative of results for
the year ending December 31, 1995. The following financial
information should be read in conjunction with the Company's
consolidated financial statements and notes thereto incorporated
by reference into and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included elsewhere
in this Prospectus.
<TABLE>
<CAPTION>
Nine Months Ended
September 30, Year Ended December 31,
---------------------- ---------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ---------- ---------- ---------
(in thousands, except ratios and per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Operating result data:
Revenues from continuing
operations............... $ 495,316 $ 489,846 $ 671,171 $ 646,805 $ 597,105 $ 573,498 $ 529,570
Earnings (loss) from
continuing operations.... 3,939 2,155 6,606 (1,291) (15,849) 2,424 (1,165)
Earnings (loss) from
continuing operations
available for common
shareholders per share
of common stock.......... (.15) (.16) (.14) (.27) (.33) .05 (.07)
Balance sheet data:
Total assets-cost basis.. 2,929,637 2,897,922 2,915,860 2,874,982 2,726,281 2,637,452 2,614,877
Total assets-current
value basis (5).......... -- -- 4,736,961 4,588,636 4,217,819 4,174,093 4,362,153
Debt, capital leases and
redeemable Preferred
stock.................... 2,617,637 2,550,453 2,532,920 2,473,596 2,498,983 2,374,527 2,344,095
Shareholders' equity
(deficit):
Historical cost basis.... 54,483 80,763 95,026 113,151 (34,848) 17,328 25,339
Current value basis (5).. -- -- 1,614,245 1,525,606 1,188,896 1,274,070 1,470,088
Shareholders' equity
(deficit) per share
of common stock:
Historical cost basis(6). .93 1.42 1.63 1.98 (.74) .36 .53
Current value
basis(5)(6)............ -- -- 27.75 26.75 25.50 26.60 30.10
Other selected data:
Earnings before
depreciation and
deferred taxes from
operations (EBDT)....... 76,978 67,115 94,710 78,281 52,282 46,820 50,290
Net cash provided by
(used in):
Operating activities..... 69,525 79,008 113,775 101,149 66,630 67,226 35,057
Investing activities..... (64,087) (143,272) (178,551) (154,446) (144,836) (96,210) (248,532)
Financing activities..... (28,633) 41,086 40,618 47,068 98,914 17,271 246,968
Ratio of earnings to
fixed charges
(8)(9)(10).............. 1.05 1.04 1.06 1.01 -- -- --
Ratio of earnings to
combined fixed
charges and Preferred
stock dividend
requirements (1)(2)(3).. -- -- -- -- -- -- --
Consolidated coverage
ratio (4).................. 1.48 1.42 1.44 1.37 1.25 1.24 1.29
Cash dividends per share
of common stock for the
period..................... .60 .51 .68 .62 .60 .60 .60
Cash dividends per
share of convertible
Preferred stock for
the period................. 2.43 2.43 3.25 2.83 -- -- --
Market price per share of
common stock at end of
period (7)................. 22.00 19.13 19.25 17.75 18.00 18.25 14.50
Market price per share of
convertible Preferred
stock at end of period..... 54.88 51.13 48.50 53.75 -- -- --
Weighted average common
shares outstanding........ 47,779 47,563 47,565 47,411 47,994 48,157 48,019
Number of common shares
outstanding at end of
period..................... 47,921 47,568 47,571 47,562 47,292 48,193 48,130
Number of convertible
Preferred stock shares
outstanding at end of
period..................... 4,505 4,025 4,505 4,025 -- -- --
<FN>
<PAGE>26
- ----------
<FN>
(1) The pro forma ratio of earnings to combined fixed
charges and Preferred stock dividend requirements for the
year ended December 31, 1994 and the nine months ended
September 30, 1995, adjusted to give effect to the issuance
of the Preferred Securities and the use of the proceeds
therefrom, are not materially different from the historical
ratios.
(2) The ratio of earnings to combined fixed charges and
Preferred stock dividend requirements is computed by
dividing total fixed charges and amounts of pre-tax earnings
required to cover Preferred stock dividend requirements into
net earnings (loss) before income taxes, extraordinary loss
and cumulative effect of change in accounting principle,
adjusted for minority interest in earnings, amortization of
interest costs previously capitalized and certain other
items other than capitalized interest. Fixed charges
include interest costs, the estimated interest component of
rent expense and certain other items.
(3) Total fixed charges and Preferred stock dividend
requirements exceeded the Company's earnings available for
fixed charges and Preferred stock dividend requirements by
$9,597,000 and $9,752,000 for the nine months ended
September 30,1995 and 1994, respectively, and $8,934,000,
$17,722,000, $29,449,000, $10,347,000, and $28,363,000 for
the years ended December 31, 1994, 1993, 1992, 1991 and
1990, respectively.
(4) Consolidated coverage ratio is the ratio of earnings
before depreciation and deferred taxes from operations
(EBDT) plus consolidated interest expense to consolidated
interest expense. Consolidated interest expense includes
dividends on redeemable Preferred Stock (retired for
financial reporting purposes in 1990), which are included
because the stock was subject to mandatory redemption
requirements for cash.
(5) Current value basis financial information is not
presented for interim periods.
(6) Historical cost basis shareholders' equity per share of
common stock and current value basis shareholders' equity
per share of common stock assume the conversion of the
Company's Series A Convertible Preferred stock.
(7) The market price of common stock of the Company as of the
close of business on November 7, 1995 was $21.50 per share.
(8) The ratio of earnings to fixed charges is computed by
dividing fixed charges into net earnings (loss) before income
taxes, extraordinary loss and cumulative effect of change in
accounting principle, adjusted for minority interest in
earnings, amortization of interest costs previously
capitalized and certain other items, plus fixed charges other
than capitalized interest. Fixed charges include interest
costs, the estimated interest component of rent expense and
certain other items.
(9) Total fixed charges exceeded the Company's earnings
available for fixed charges by $29,449,000, $10,347,000 and
$24,575,000 for the years ended December 31, 1992, 1991 and
1990, respectively.
(10)The pro forma ratio of earnings to fixed charges for the
year ended December 31, 1994 and the nine months ended
September 30, 1995, adjusted to give effect to the issuance of
the Preferred Securities and the use of the proceeds,
therefrom, are not materially different from the historical
ratios.
</FN>
</TABLE>
<PAGE>27
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
The Company's primary business is the acquisition,
development and management of income-producing real estate
projects. The Company operates a diversified portfolio of real
estate properties located across the United States. In addition,
the Company develops and sells land, primarily in Columbia,
Maryland.
Management believes that the Company's financial position
is sound and that its liquidity and capital resources are
adequate. The Company has continued to achieve strong financial
results in recent periods, despite the generally difficult market
conditions in the real estate and retailing industries. These
results have been made possible by several factors, including the
continued strong performance of the Company's lesser, major
market retail centers and Columbia land sales operations,
refinancing of a significant amount of project-related debt at
lower interest rates, particularly in 1993 and the first half of
1994, and, to a larger extent, dispositions or modifications of
the terms of agreements relating to properties which were
performing below expectations.
Operating Results
Years Ended December 31, 1994, 1993 and 1992
This discussion and analysis of operating results covers each
of the Company's four business segments as management believes
that a segment analysis provides the most effective means of
understanding the Company's business. Note 11 to the
consolidated financial statements for the years ended December
31, 1994, 1993 and 1992 incorporated by reference into this
Prospectus should be referred to when reading this discussion.
Operating Properties. The Company reports the results of its
operating properties in two categories: retail centers ("retail"
properties) and office, mixed-use and other properties
("office/mixed-use" properties).
The Company's tenant leases provide the foundation for the
performance of its retail and office/mixed-use properties. In
addition to minimum rents, the majority of retail and office
tenant leases provide for other rents which reimburse the Company
for most of its operating expenses. Substantially all of the
Company's retail leases also provide for additional rent based on
tenant sales (percentage rent) in excess of stated levels. As
leases expire, space is re-leased, minimum rents are generally
adjusted to market rates, expense reimbursement provisions are
updated and new percentage rent levels are established for retail
leases.
Most of the Company's operating properties are financed with
long-term, fixed rate, nonrecourse debt and, therefore, are not
directly affected by changes in interest rates. Although the
interest rates on this debt do not fluctuate, certain loans
provide for additional payments to the Company's lenders based on
operating results and, in some instances, a share of a property's
residual value upon sale or refinancing. Certain lenders' rights
to participation in residual value expire upon maturity of the
related loans.
Revenues from retail properties increased $22,877,000 in 1994
and $35,118,000 in 1993. The increase in 1994 was attributable
to expansions opened in 1994, a full year of operations of
expansions opened and properties acquired in 1993 and increases
in effective rents due to re-leasing efforts. The increase was
also due to higher occupancy levels at the Company's larger,
major market retail centers and increased lease cancellation
payments received as a result of tenant restructuring or
downsizing. These increases were partially offset by the
disposition of a retail center in the first quarter of 1994.
<PAGE>28
A substantial portion of the increase in 1993 was attributable
to changes in the composition of the Company's portfolio of
retail properties during the year, including acquisitions of
interests in retail centers in the first and second quarters and
the openings of expansions in the first and third quarters, and
to a full year of operations for properties opened or acquired
during 1992. The increase in revenues also reflects higher
average occupancy levels, increased rents from temporary and
seasonal tenants, re-leasing of space at higher effective rents
and improved recoveries of operating expenses from tenants at
certain properties.
Total operating and interest expenses for retail properties
increased by $8,965,000 in 1994 and $19,959,000 in 1993,
including increased depreciation and amortization of $2,662,000
and $1,508,000, respectively. The increase in 1994 was
attributable to costs relating to expansions opened in 1994 and a
full year of operations of expansions opened and properties
acquired in 1993, higher occupancy levels at many of the
Company's larger, major market retail centers and higher interest
costs related to floating rate debt. These increases were
partially mitigated by the effects of the disposition of a retail
center in the first quarter of 1994 and lower effective interest
expense on fixed rate property debt due to debt repayments and
refinancing at certain properties. The increase in 1993 was
attributable primarily to the changes in the Company's portfolio
of retail properties described above, partially offset by
reductions in interest expense due to debt reductions, lower
interest rates on floating rate debt and refinancing at certain
properties.
Revenues from office/mixed-use properties increased $2,540,000
in 1994 and $7,395,000 in 1993. Total operating and interest
expenses for office/mixed-use properties increased $1,835,000 in
1994 and $3,490,000 in 1993, including increased depreciation and
amortization of $1,324,000 and $529,000, respectively. The
increase in revenues in 1994 was attributable primarily to higher
occupancy levels at office and hotel properties and a full year
of operations of properties opened in 1993, partially offset by
lower recoveries of operating expenses at two office properties
where the tenants began paying certain operating expenses
directly in 1994. The increase in expenses in 1994 was due
principally to a full year of operations of properties opened in
1993 and higher occupancy levels at office and hotel properties,
partially offset by lower operating expenses at the two office
properties referred to above. Also, lower interest expense at
certain properties due to debt reductions, refinancing and the
exercise, in the second quarter of 1994, of an option in a loan
agreement to reduce the effective interest rate on that loan,
partially mitigated the overall increase in interest and
operating expenses in 1994.
The increases in revenues and expenses in 1993 were due
principally to operations of two industrial buildings in Columbia
which opened in 1993 and an office building in Columbia opened in
1992. The increase in expenses in 1993 was partially offset by a
reduction in interest expense due to debt reductions, lower
interest rates on floating rate debt and the expiration of
certain interest rate exchange agreements.
Land Sales. The Company's land sales operations relate
primarily to the city of Columbia. Generally, revenues and
operating income from land sales are affected by such factors as
the availability to purchasers of construction and permanent
mortgage financing at acceptable interest rates, consumer and
business confidence, availability of saleable land for particular
uses and management's decisions to sell, develop or retain land.
Land sales revenues were $35,232,000 in 1994, $35,313,000 in
1993 and $29,137,000 in 1992. The increase in revenues in 1993
were attributable primarily to higher sales of land for
residential uses, and to a lesser extent, commercial land for
retail and other uses.
Land sales costs and expenses were $24,905,000 in 1994,
$23,480,000 in 1993 and $19,289,000 in 1992. The increases in
costs and expenses in 1994 and 1993 were attributable primarily
to higher operating and interest expenses due to lower levels of
land development activity on projects other than Columbia. The
increase in 1993 was also due to increased cost of sales due to
higher sales revenues.
Development. Development expenses were $6,989,000 in 1994,
$4,348,000 in 1993 and $4,916,000 in 1992. These costs consist
primarily of additions to the pre-construction reserve and new
business costs.
<PAGE>29
The pre-construction reserve is maintained to provide for
costs of projects in the pre-construction phase of development,
including retail center renovation and expansion opportunities,
which may not go forward to completion. Additions to the pre-
construction reserve were $3,400,000 in 1994, $2,900,000 in 1993
and $3,050,000 in 1992. New business costs relate primarily to
the initial evaluation of acquisition and development
opportunities. New business costs were $3,094,000 in 1994,
$953,000 in 1993 and $1,371,000 in 1992. The increases in these
costs in 1994 are due to the Company's more aggressive pursuit of
new development and acquisition opportunities.
Corporate. Corporate revenues consist of interest income
earned on temporary investments, including investments of unused
proceeds from refinancing of certain properties. Corporate
interest expense relates primarily to interest on the convertible
subordinated debentures, unused proceeds from refinancing of
certain properties and a portion of the unsecured 8.5% notes, net
of capitalized interest on corporate funds temporarily invested
in projects under development. Corporate expenses also include
general and administrative costs.
Corporate interest income was $2,892,000 in 1994, $3,862,000
in 1993 and $2,851,000 in 1992. The decrease in 1994 was
attributable primarily to lower average investment balances. The
increase in 1993 was attributable to higher average investment
balances as a result of proceeds from the offerings of the 8.5%
unsecured notes and Preferred stock and refinancing of certain
retail properties in 1992. The Company earned higher interest
rates in 1994 and lower interest rates in 1993 on its investment
balances which consisted primarily of short-term U.S. government
and agency obligations in both years.
Corporate interest costs were $13,934,000 in 1994, $18,571,000
in 1993 and $20,396,000 in 1992. Of such amounts, $2,564,000,
$2,158,000 and $1,984,000 were capitalized in 1994, 1993 and
1992, respectively, on funds invested in development projects.
The decreases in corporate interest costs in 1994 and 1993 are
attributable primarily to the redemption of a $100,000,000 issue
of convertible subordinated debentures in May 1993. The decrease
in 1993 was partially offset by the issuance of the 8.5%
unsecured notes. A portion of the proceeds of the 8.5% unsecured
notes and proceeds from refinancing of certain retail properties
completed in 1992 were used to refinance certain land and
operating property debt and to finance improvements to a number
of operating properties during 1994 and 1993. The interest costs
on loan proceeds used for other segments are included in the
operating results of those segments, reducing corporate interest
costs. The higher level of interest capitalized in 1994, when
compared to 1993 and 1992, reflects higher levels of corporate
funds invested in development projects consistent with the
Company's more aggressive pursuit of development opportunities in
1994.
Gain (Loss) on Dispositions of Assets and Other Provisions,
Net. The loss on dispositions of assets and other provisions,
net, for 1994 consists primarily of losses totaling $8,045,000
incurred on dispositions of the Company's interests in two retail
centers, a hotel and an office building and a provision for loss
of $2,212,000 (recorded in the fourth quarter) on an investment
in an industrial building which is subject to a contract for
sale. These losses were partially offset by a gain of $2,761,000
related to the disposition of an interest in a retail center the
Company continues to manage.
The loss on dispositions of assets and other provisions, net,
for 1993 consists primarily of a provision for loss on investment
in a retail center recorded in the fourth quarter. This loss was
recognized based on management's determination that the Company
would not continue to support the property (which is financed by
nonrecourse loans) under the existing arrangements with lenders,
public authorities and others involved and that it was unlikely
that the Company would recover all of its investment in the
property based on forecasts of future cash flows.
The loss on dispositions of assets and other provisions, net,
for 1992 consists primarily of costs incurred in connection with
a private placement with the Company and seven institutional
investors of 9.5 million shares of common stock of the Company
previously owned by Trizec Investments Corporation ($2,231,000)
and provisions for losses on a marketable equity security and
certain other investments based on management's determination
that the declines in their fair values were other than temporary
($4,156,000).
<PAGE>30
Extraordinary Losses, Net of Related Income Tax Benefits. The
extraordinary losses in 1994, 1993 and 1992 resulted from early
extinguishments or required partial early redemptions of debt and
aggregated $6,824,000, $12,322,000 and $530,000, respectively,
net of deferred income tax benefits of $2,377,000, $4,271,000 and
$182,000, respectively.
Net Earnings (Loss). The Company had net earnings of
$2,159,000 in 1994 and net losses of $9,342,000 in 1993 and
$16,197,000 in 1992. The Company's operating income (after
depreciation and amortization) was $21,259,000 in 1994 and
$8,841,000 in 1993 and its operating loss was $15,529,000 in
1992. The improvements in operating income in 1994 and 1993 were
due primarily to the factors described above. Net earnings
(loss) for each year was affected by unusual and/or nonrecurring
items. The most significant of these are the items discussed
above in gain (loss) on dispositions of assets and other
provisions, net, and extraordinary losses, net of related income
tax benefits.
Earnings Before Depreciation and Deferred Taxes. The
Company uses a supplemental performance measure along with net
earnings (loss) to report its operating results. This measure,
referred to as Earnings Before Depreciation and Deferred Taxes
("EBDT"), is not a measure of operating results or cash flows
from operating activities as defined by generally accepted
accounting principles. Additionally, EBDT is not necessarily
indicative of cash available to fund cash needs, including the
payment of dividends, and should not be considered as an
alternative to cash flows as a measure of liquidity. However,
the Company believes that EBDT provides relevant information
about its operations and is necessary, along with net earnings
(loss), for an understanding of its operating results.
Depreciation and amortization are excluded from EBDT because,
based on the Company's current value basis reporting, its
operating properties are worth substantially more than their
undepreciated historical cost. Deferred income taxes are
excluded from EBDT because payments of income taxes have not been
and are not anticipated in the near term to be, significant to
the Company. Current federal and state income taxes are included
as reductions of EBDT. Gain (loss) on dispositions of assets and
other provisions, net, and extraordinary losses, net of related
income tax benefits, represent unusual and/or nonrecurring items
and are therefore excluded from EBDT.
EBDT was $94,710,000 in 1994, $78,281,000 in 1993 and
$52,282,000 in 1992. The significant changes in various revenue
and expense elements comprising EBDT by segment are described
above. The increases in EBDT in 1994 and 1993 were due primarily
to improved results from the operating properties business
segment, particularly retail properties.
EBDT from retail properties was $103,978,000 in 1994,
$87,248,000 in 1993 and $70,966,000 in 1992 and increased at
rates of 19.2% and 22.9% in 1994 and 1993, respectively. The
increases in EBDT for 1994 and 1993 reflect the effects of re-
leasing of space at higher effective rents, the operating results
of recently expanded properties and debt reductions and
refinancing at certain properties. The increase for 1993 also
reflects slightly higher average occupancy levels and tenant
sales. Average occupancy and tenant sales for the Company's
portfolio of retail properties decreased slightly in 1994 when
compared to 1993; however, occupancy and sales actually improved
at many of the Company's larger, major market retail centers,
most of which are wholly-owned or at least 50% owned, and sales
of high-performing merchants (i.e., those paying percentage
rents) increased by 3.4%. These factors had a disproportionate
effect on EBDT and more than offset the effects of the overall
decrease in occupancy and tenant sales.
Office/mixed-use properties had EBDT of $4,273,000 in 1994 and
$2,283,000 in 1993 and incurred a loss before depreciation and
deferred taxes of $2,127,000 in 1992. The growth in EBDT in 1994
was attributable primarily to improved average occupancy levels
at certain office and hotel properties, the operations of two
industrial buildings in Columbia opened in 1993 and lower
interest expense due to debt reductions, refinancing and the
exercise, in the second quarter of 1994, of an option in a loan
agreement to reduce the effective interest rate on that loan.
The growth in EBDT in 1993 was attributable primarily to improved
occupancy at several Columbia office properties and urban mixed-
use projects and lower interest expense due to debt reductions,
lower interest rates on floating rate debt and the expiration of
certain interest rate exchange agreements.
<PAGE>31
Financial Condition, Liquidity and Capital Resources.
Management believes that the current values of the Company's
assets and liabilities are the most realistic indicators of the
Company's financial strength and future profitability. Current
values of the Company's interests in operating properties,
including interests in unconsolidated real estate ventures and
properties held for development and sale, represent the present
values of forecasted net operating cash flows from these
properties - the Company's most significant assets. Since 1976,
revaluation equity, the aggregate increment of current value over
cost basis net book value of the Company's assets and
liabilities, has increased at a compound annual rate of 15%. The
majority of the Company's revaluation equity relates to prime
regional shopping centers. Larger, major market retail centers
continue to be a favored real estate investment and required
investor yields in 1994 remained relatively unchanged from 1993.
Revaluation equity increased $107 million or 7.6% to $1.52
billion at December 31, 1994. The increase was due primarily to
higher levels of rents used in the forecasts of cash flows from
retail properties and is consistent with the Company's leasing
activities and operating results for 1994. Refinancing and other
changes in financial arrangements at certain projects also
increased forecasted cash flows from operating properties. In
addition, the current value of publicly-traded debt not
specifically related to interests in properties decreased.
Cost basis shareholders' equity decreased to $95,026,000 at
December 31, 1994 from $113,151,000 at December 31, 1993. The
decrease was due primarily to the payment of regular quarterly
dividends on the common and Preferred stocks, partially offset by
the issuance of additional shares of Preferred stock.
The Company had cash and cash equivalents and investments
in marketable securities totaling $79,547,000 and $107,959,000 at
December 31, 1994 and 1993, respectively, including $2,001,000
and $4,422,000, respectively, held for restricted uses.
Net cash provided by operating activities was $113,775,000,
$101,149,000 and $66,630,000 in 1994, 1993 and 1992,
respectively. The changes in cash provided by operating
activities were due primarily to the factors described in the
discussion and analysis of operating results. In addition, the
level of net cash provided by operating activities is affected by
the timing of receipt of revenues (including land sales proceeds)
and the payment of operating and interest expenses and land
development costs.
In 1994 and 1993, over 80% of the Company's debt was
represented by mortgages and bonds collateralized by operating
properties. Scheduled principal payments on property debt were
$46,750,000, $20,735,000 and $17,907,000 in 1994, 1993 and 1992,
respectively. The increase in 1994 was due primarily to the
effects of refinancing certain office/mixed-use properties. The
annual maturities of debt for the next five years include balloon
payments of $83,748,000 in 1995, $33,585,000 in 1996, $87,507,000
in 1997, $38,682,000 in 1998 and $106,074,000 in 1999. The
balloon payments for 1995 include $56,337,000 related to a retail
center mortgage which is due in December. The Company expects to
refinance the mortgage on a long term basis at or prior to its
scheduled maturity. The Company is confident that it will be
able to make the other balloon payments or arrange to refinance
or extend their maturities at or prior to the scheduled repayment
dates. In January 1995, the Company extinguished approximately
$96,800,000 of fixed rate property debt prior to its scheduled
maturity and incurred an extraordinary loss of approximately
$7,100,000, net of related deferred income tax benefits.
Proceeds from a variable rate loan of $96,800,000 obtained in
January 1995 and due in February 1996 and available cash were
used to retire the debt and fund the prepayment penalty. The
Company believes it will be able to refinance this loan on a long
term basis at or prior to its scheduled maturity. The Company is
continually evaluating sources of capital, and management
believes there are reasonable and satisfactory sources available
for all requirements without necessitating property sales.
Cash expenditures for properties in development and
improvements to existing properties funded by debt were
$78,628,000, $87,243,000 and $83,377,000 in 1994, 1993 and 1992,
respectively. A substantial portion of the costs of properties
in development is financed with construction or similar loans.
Typically, long term fixed rate debt financing is arranged
concurrently with the construction financing prior to the
commencement of construction. Management anticipates that
acceptable methods of financing
<PAGE>32
development projects with fixed rate, nonrecourse debt will
continue to be available. Improvements to existing properties
funded by debt consist primarily of costs of renovation and
remerchandising programs and other capital improvement costs.
The Company's share of these costs has been financed primarily
from proceeds of refinancing of the related properties or other
properties, credit line borrowings and a portion of the proceeds
of the 8.5% unsecured notes issued in January 1993. The interest
costs on these financings are included in the operating results
of the operating properties segment.
Cash expenditures for acquisitions of interests in
properties were $94,113,000 in 1994, $34,967,000 in 1993 and
$38,806,000 in 1992. A substantial portion of these costs has
been financed using nonrecourse debt. The acquisitions in 1994
consist primarily of the purchase of land underlying a retail
center and the related equity interest of the former lessor. The
acquisitions in 1993 and 1992 consist primarily of purchases of
partners' interests in retail properties.
The Company has available sources of capital in addition to
those discussed above. The Company's equity interests in its
operating properties and properties held for development and sale
(principally Columbia land) and land in development represent a
source of funds either through sales or refinancing. The
aggregate equity value of these interests as of December 31, 1994
was approximately $2,339,000,000. The Company also has lines of
credit available totaling $159,720,000 which can be used to fund
property acquisition costs, finance other corporate needs, repay
existing indebtedness or provide corporate liquidity, subject to
approval by the lenders. In addition, in February 1995, the
Company registered $150,000,000 of unsecured notes for issuance
to the public from time to time through February 1997. The
Company intends to use the proceeds from these notes to repay
existing recourse indebtedness.
The agreements relating to certain of the lines of credit,
the 8.5% unsecured notes, the unsecured notes registered in
February 1995 and certain other loans impose limitations on the
Company. The most restrictive of these limit the Company's
ability to incur certain types of additional debt if the Company
does not maintain specified debt service coverage ratios. The
agreements also impose restrictions on sale, lease and certain
other transactions, subject to various exclusions and
limitations. These restrictions have not limited the Company's
normal business activities.
Three and Nine Months Ended September 30, 1995
Operating Results
Operating Properties. Revenues from retail centers
increased $94,000 and $3,948,000 while total operating and
interest expenses decreased $2,121,000 and $7,143,000 for the
three and nine months ended September 30, 1995 as compared to the
same periods in 1994. The increases in revenues are attributable
to the operations of expansions opened in August 1994 and March
1995, higher effective rents on re-leased space, and, for the
nine month period, increased tenant lease cancellation payments.
These increases have been partially offset by the effects of
slightly lower occupancy levels, lower recoveries of operating
expenses, as discussed below, the dispositions of properties in
the first quarter of 1994 and second quarter of 1995, and for the
three month period, decreased tenant lease cancellation payments.
The decreases in expenses are attributable to the aforementioned
property dispositions, lower recoverable expenses as a result of
operating expense reduction efforts and milder winter conditions
experienced in the Northeast, lower bad debt expenses due to
recoveries of amounts previously reserved and lower interest
expense due to debt restructurings and refinancings completed in
1994 or early 1995. These decreases were partially offset by an
increase in expenses associated with the operations of the
expansions referred to above.
Revenues from office, mixed-use and other properties
decreased $602,000 and $146,000 and total operating and interest
expenses decreased $1,801,000 and $1,955,000 for the three and
nine months ended September 30, 1995 as compared to the same
periods in 1994. The decreases in revenues are attributable
primarily to dispositions of properties in the third quarter of
1994 and the second quarter of 1995, lower recoveries of
operating expenses and, for the three month period, decreased
tenant lease cancellation payments. These decreases have been
partially offset by higher occupancy at certain hotel
<PAGE>33
and office properties in Columbia and for the nine month
period, increased tenant lease cancellation payments. The
decreases in total operating and interest expenses are
attributable primarily to the aforementioned property
dispositions, lower bad debt expenses due to recoveries of
amounts previously reserved, lower operating expenses at certain
projects and lower depreciation expense as the Company
discontinued depreciating an industrial building it intends to
sell. These decreases are partially offset by expenses at two
industrial buildings in Columbia which opened in the second
quarter of 1994 and higher interest expense on a mixed-use
project. Interest on this project loan was lower in the first
quarter of 1994 because the Company exercised an option in the
loan agreement to make a specified payment and reduce the
effective interest rate on the loan retroactive to the beginning
of its term. The payment was less than the interest previously
accrued, and the difference was recorded as a reduction to
interest expense in the quarter.
Land Sales. Revenues from land sales decreased $2,754,000
and $7,227,000 and total costs and expenses decreased $1,009,000
and $4,191,000 for the three and nine months ended September 30,
1995, as compared to the same periods in 1994. The decreases in
revenues relate to lower sales of land for commercial/other uses
in Columbia. The decreases in costs and expenses are
attributable primarily to decreased costs of sales due to lower
sales revenues.
Development. These costs consist primarily of additions to
the pre-construction reserve and new business costs. The pre-
construction reserve is maintained to provide for costs of
projects which may not go forward to completion. New business
costs relate primarily to the initial evaluation of acquisition
and development opportunities. These costs decreased $1,606,000
and $978,000 for the three and nine months ended September 30,
1995 as compared to the same periods in 1994. The decreases are
due primarily to reduced provisions required for projects in the
pre-construction stage due to progress made in the development
process, particularly in the third quarter of 1995.
Corporate. Corporate interest costs were $3,275,000 and
$3,754,000 for the three months ended September 30, 1995 and
1994, respectively, and $10,479,000 and $10,322,000 for the nine
months ended September 30, 1995 and 1994, respectively. Of such
amounts, $981,000 and $734,000 were capitalized during the three
months ended September 30, 1995 and 1994, respectively, and
$2,642,000 and $1,750,000 were capitalized during the nine months
ended September 30, 1995 and 1994, respectively, on funds
invested in development projects. The decrease in corporate
interest costs for the three month period is due to a lower level
of debt used for corporate purposes.
Gain (Loss) on Dispositions of Assets and Other Provisions,
Net. The net loss in 1995 relates primarily to provisions for
losses on several retail center properties the Company has
decided to sell and is actively marketing ($16,058,000). These
provisions for losses were recognized based on the estimated fair
values of the individual properties less costs to sell. These
losses were partially offset by a gain related to the disposition
of an interest in a retail center property ($1,940,000).
The net loss in 1994 relates primarily to provisions for
losses on investments in two operating properties ($7,728,000)
and damages to a retail property as a result of an earthquake
($446,000). The provisions for losses were recognized based on
management's determination that the Company would not continue to
support the projects under the existing arrangements with lenders
and/or partners and that it was unlikely that the Company would
recover all of its investments in these projects based on
forecasts of future cash flows. These losses were partially
offset by a gain related to the disposition of an interest in a
property the Company continues to manage ($2,768,000).
Earnings Before Depreciation and Deferred Taxes. EBDT was
$76,978,000 for the nine months ended September 30, 1995, an
increase of 15% over $67,115,000 in the comparable period of
1994. The significant changes in various revenue and expense
elements comprising EBDT are described above. The increase in
1995 is due primarily to improved operating results from retail
properties.
EBDT from retail centers was $80,576,000, an increase of
15% over $70,245,000 in the comparable period in 1994. The
increase in EBDT from retail centers reflects increased rents on
re-leased space, recent productive expansions of a number of
centers, implementation of effective cost reduction programs
<PAGE>34
at the Company's properties, lease termination payments from some
departing retailers and refinancings and restructures of debt,
management and ownership agreements.
Financial Condition and Liquidity.
Shareholders' equity decreased $40,543,000 from $95,026,000 at
December 31, 1994 to $54,483,000 at September 30, 1995. The
decrease was due principally to the payment of regular quarterly
dividends on the Company's common and Preferred stocks, and to a
lesser extent, the Company's net loss for the nine months ended
September 30, 1995.
The Company had cash and cash equivalents and investments
in marketable securities totaling $31,740,000 and $79,547,000 at
September 30, 1995 and December 31, 1994, respectively, including
$640,000 and $2,001,000, respectively, restricted for use in the
development of certain properties.
In February 1995, the Company registered $150,000,000 of
unsecured notes for issuance to the public from time to time
through February 1997. The notes can be issued, subject to
market conditions, for varying terms of nine months or longer at
fixed or floating rates based upon market indices at the time of
issuance. Proceeds of these notes have been or will be used
primarily to repay higher rate or recourse indebtedness of the
Company. As of September 30, 1995, the Company had issued
$100,300,000 of notes, the proceeds of which were used to repay
higher rate and/or recourse indebtedness.
The Company has lines of credit of $158,920,000 of which
$119,920,000 was available at September 30, 1995. These lines of
credit may be used to provide corporate liquidity, fund property
acquisition costs and finance other corporate needs, subject to
lenders' approvals. They may also be utilized to pay some
portion of existing debt, including maturities in 1995 and 1996.
As of September 30, 1995, debt due in one year was $121,302,000.
Approximately $71,790,000 of this debt relates to a retail center
mortgage due in February 1996. The Company expects to refinance
this mortgage on a long-term basis at or prior to its scheduled
maturity. The Company continues to actively evaluate new sources
of capital and is confident that it will be able to make these
payments, arrange to refinance these maturities prior to their
scheduled repayment dates, or take advantage of new sources of
capital without necessitating property sales.
Net cash provided by operating activities was $69,525,000
and $79,008,000 for the nine months ended September 30, 1995 and
1994, respectively. The factors discussed previously under the
operating results of the four major business segments,
particularly lower land sale revenues, and, in 1995, funding of
certain pension obligations affected the level of net cash
provided by operating activities.
Net cash used in investing activities was $64,087,000 and
$143,272,000 for the nine months ended September 30, 1995 and
1994, respectively. The decrease in net cash used of $79,165,000
occurred because of the higher level of property acquisition
expenditures incurred in 1994 ($66,118,000) and because net sales
and redemptions of marketable securities (primarily short-term
U.S. Treasury securities) increased $15,185,000 in 1995. The
property acquisitions in 1995 consist of the purchases of
partnership interests in three retail centers. The property
acquisitions in 1994 consisted primarily of the purchase of land
underlying a retail center together with the related equity
interest of the former lessor.
Net cash used in financing activities was $28,633,000 for
the nine months ended September 30, 1995 while net cash provided
by financing activities was $41,086,000 for the nine months ended
September 30, 1994. Net cash used in financing activities in
1995 is attributable primarily to scheduled principal payments on
property debt and the payment of dividends, partially offset by
the issuance of other debt and property debt to partially fund
the property acquisitions described above. Net cash provided by
financing activities in 1994 was attributable primarily to the
issuance of property debt to fund the property acquisition
described above partially offset by scheduled principal payments
on property debt and the payment of dividends.
<PAGE>35
DESCRIPTION OF THE PREFERRED SECURITIES
The Trust Agreement among Rouse, as Depositor (the
"Depositor"), The First National Bank of Chicago, as the Property
Trustee, Michael J. Majchrzak, as the Delaware Trustee, and the
three Administrative Trustees named in the Trust Agreement
(together with the Property Trustee and the Delaware Trustee, the
"Trustees"), authorizes the issuance of the Preferred Securities
by the Issuer. The Preferred Securities and the Common
Securities (together, the "Issuer Securities") will be issued by
the Administrative Trustees on behalf of the Issuer pursuant to
the terms of the Trust Agreement. The Preferred Securities
represent undivided beneficial interests in the assets of the
Issuer and entitle the holders thereof to a preference in certain
circumstances with respect to distributions and amounts payable
on redemption or liquidation over the Common Securities, as well
as other benefits as described in the Trust Agreement. The
following summaries contain the material information concerning
the Trust Agreement but do not purport to be complete and are
subject to, and are qualified in their entirety by reference to,
all the provisions of the Trust Agreement, including the
definitions therein of certain terms, and the Trust Indenture
Act. Wherever particular sections or defined terms of the Trust
Agreement are referred to, such sections or defined terms are
incorporated herein by reference. Section references used herein
are references to provisions of the Trust Agreement unless
otherwise stated. The Trust Agreement is filed as an exhibit to
the Registration Statement of which this Prospectus forms a
part.
General
All of the Common Securities are owned by Rouse. The
Common Securities rank pari passu, and payments will be made
thereon pro rata, with the Preferred Securities except as
described under "- Subordination of Common Securities". (Section
4.03). Legal title to the Junior Subordinated Debentures will be
held in the name of the Issuer and held in trust for the benefit
of the holders of the Issuer Securities. (Section 2.09). The
Guarantee is a full and unconditional guarantee on a subordinated
basis with respect to the Preferred Securities but does not
guarantee payment of distributions or amounts payable on
redemption or liquidation of the Preferred Securities when the
Issuer does not have funds sufficient to make such payments.
Subject to applicable law (including, without limitation,
United States federal securities law), Rouse or its subsidiaries
may at any time and from time to time purchase outstanding
Preferred Securities by tender, in the open market or by private
agreement.
Distributions
The distributions payable on each Preferred Security will
be pro rata with the Common Securities and will be entitled to a
preference fixed at a rate per annum of % of the stated
Liquidation Amount of $25 per Preferred Security. Distributions
that are in arrears for more than one quarter will bear interest
on the amount thereof at the rate per annum of %, compounded
quarterly. The term "distributions" as used herein includes any
such interest payable, unless otherwise stated, and shall also
include any Additional Amounts with respect to the Preferred
Securities. "Additional Amounts" means the amount of Additional
Interest Attributable to Deferral (as defined under "Description
of the Junior Subordinated Debentures - Additional Interest")
paid by Rouse on the Junior Subordinated Debentures. See
"Description of the Junior Subordinated Debentures - Additional
Interest". The amount of distributions payable for any period
will be computed on the basis of a 360-day year of twelve 30-day
months. (Section 4.01(a) and 4.01(b)).
Distributions on the Preferred Securities will be
cumulative, will accrue from , 1995, the date of
initial issuance thereof, and will be payable quarterly in
arrears, on March 31, June 30, September 30 and December 31 of
each year, commencing December 31, 1995, except as otherwise
described below. In the event that any date on which
distributions are otherwise payable on the Preferred Securities
is not a Business Day (as defined below), payment of the
distribution payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest
or other payment in respect of any such delay) except that, if
such Business Day is in the next succeeding calendar year,
payment of such distribution shall be made on the immediately
preceding Business Day, in each case with the same force
<PAGE>36
and effect as if made on such date (each date on which
distributions are otherwise payable in accordance with the
foregoing, a "Distribution Date"). A "Business Day" shall mean
any day other than (x) a Saturday or a Sunday, (y) a day on which
banks in Maryland or the City of New York are authorized or
obligated by law or executive order to remain closed or (z) a day
on which the corporate trust office of the Property Trustee or
the principal corporate trust office of the Debenture Trustee (as
defined under "Description of the Junior Subordinated
Debentures") is closed for business. (Section 4.01(a)).
Rouse has the right under the Indenture to extend the
interest payment period from time to time on the Junior
Subordinated Debentures to a period of up to 20 consecutive
quarters, with the consequence that quarterly distributions on
the Preferred Securities would be deferred (but would continue to
accrue with interest thereon, including interest payable on
unpaid interest at the rate per annum set forth above, compounded
quarterly) by the Issuer during any such extended interest
payment period. In the event that Rouse exercises this right,
during such period Rouse may not declare or pay any dividend or
distribution (other than a dividend or distribution in common
stock of Rouse or other security junior in right of payment to
the Junior Subordinated Debentures) on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its
capital stock, or make any guarantee payments with respect to the
foregoing (other than payments under the Guarantee), or
repurchase or cause any subsidiary to repurchase any security of
Rouse ranking pari passu with or subordinate to the Junior
Subordinated Debentures (except on a ratable basis with
securities ranking pari passu with the Junior Subordinated
Debentures). Prior to the termination of any such extended
interest payment period, Rouse may further extend the interest
payment period, provided that such extended interest payment
period together with all such previous and further extensions
thereof may not exceed 20 consecutive quarters or extend beyond
the maturity of the Junior Subordinated Debentures. Upon the
termination of any extended interest payment period and the
payment of all amounts then due, Rouse may select a new extended
interest payment period, subject to the foregoing requirements.
See "Description of the Junior Subordinated Debentures -
Interest" and "- Option to Extend Interest Payment Period".
It is anticipated that the income of the Issuer available
for distribution to the holders of the Preferred Securities will
be limited to payments under the Junior Subordinated Debentures
which the Issuer will purchase with the proceeds from the
issuance and sale of the Common Securities and the Preferred
Securities. See "Description of the Junior Subordinated
Debentures". If Rouse does not make interest payments on the
Junior Subordinated Debentures, the Property Trustee will not
have funds available to pay distributions on the Preferred
Securities. The payment of distributions (if and to the extent
the Issuer has funds sufficient to make such payments) is
guaranteed on a subordinated basis by Rouse to the extent set
forth herein under "Description of the Guarantee - Status of the
Guarantee".
Distributions on the Preferred Securities will be payable
to the holders thereof as they appear on the register for the
Preferred Securities of the Issuer on the relevant record dates,
which, as long as the Preferred Securities remain in book-entry-
only form, will be one Business Day prior to the relevant
Distribution Date. Subject to any applicable laws and
regulations and the provisions of the Trust Agreement, each such
payment will be made as described under "- Book-Entry-Only
Issuance - The Depository Trust Company" below. In the event the
Preferred Securities do not remain in book-entry-only form, the
relevant record date shall be the date 15 days prior to the
relevant Distribution Date, whether or not a Business Day.
(Section 4.01 (d)).
Redemption
Upon the repayment of the Junior Subordinated Debentures,
whether at maturity or upon earlier redemption as provided in the
Indenture, the proceeds from such repayment shall be applied by
the Property Trustee to redeem a Like Amount (as defined below)
of Issuer Securities, upon not less than 30 nor more than 60
days' notice, at $25 per Preferred Security plus accumulated and
unpaid distributions to the Redemption Date, whether or not
earned or declared (the "Redemption Price"). Such payment in
redemption shall be made to the extent that the Trust has funds
available for such payment. Rouse may not redeem the Junior
Subordinated Debentures in part unless all accrued and unpaid
interest (including any Additional Interest) has been paid in
full on all outstanding Junior Subordinated Debentures for all
<PAGE>37
quarterly interest periods terminating on or prior to the date
of redemption and no Extension Period is in effect. See
"Description of the Junior Subordinated Debentures - Optional
Redemption".
Rouse has the right to redeem the Junior Subordinated
Debentures (a) on or after , 2000, in whole or in
part, with the proceeds of one or more Equity Issuances or (b) at
any time, in whole but not in part, on the occurrence of a Tax
Event unless Rouse determines to distribute the Junior
Subordinated Debentures to the holders of the Preferred
Securities, subject to the conditions described under
"Description of the Junior Subordinated Debentures - Optional
Redemption". If (i) a Tax Event shall occur and be continuing
and (ii) Rouse elects to redeem the Junior Subordinated
Debentures, notice of redemption shall be given by the Property
Trustee, mailed to holders of Issuers Securities not less than 30
nor more than 60 days prior to the Redemption Date.
"Capital Stock" of the Company means any and all shares,
interests, participations or other equivalents (however
designated) of the Company's capital stock (including, without
limitation, common stock and preferred stock) or other equity
interests whether now outstanding or issued after the date of the
Indenture.
"Equity Issuance" means (i) an issuance by Rouse of its
Capital Stock or (ii) a PIPS Issuance.
"Like Amount" means (i) with respect to a redemption of
Issuer Securities, Issuer Securities having an aggregate
Liquidation Amount equal to the principal amount of Junior
Subordinated Debentures to be contemporaneously redeemed in
accordance with the Indenture and (ii) with respect to a
distribution of Junior Subordinated Debentures to holders of
Issuer Securities in connection with a Tax Event or a liquidation
of the Issuer upon the bankruptcy, dissolution or liquidation of
Rouse, Junior Subordinated Debentures having a principal amount
equal to the aggregate Liquidation Amount of the Issuer
Securities of the holder to whom such Junior Subordinated
Debentures are distributed.
"PIPS Issuance" means an issuance by the Issuer or any
affiliate of Rouse of periodic income preferred securities which
are substantially comparable in economic effect to the Preferred
Securities, the proceeds of which are invested in debt securities
of Rouse which are substantially comparable in economic effect to
the Junior Subordinated Debentures.
"Tax Event" means the receipt by the Issuer or the Company,
as the case may be, of an opinion of counsel experienced in such
matters to the effect that, as a result of (i) any amendment to,
clarification of, or change (including any announced prospective
change) in, the laws or treaties (or any regulations thereunder)
of the United States or any political subdivision or taxing
authority thereof or therein affecting taxation, (ii) any
judicial decision, official administrative pronouncement, ruling,
regulatory procedure, notice or announcement (including any
notice or announcement of intent to adopt such procedures or
regulations) ("Administrative Action") or (iii) any amendment to,
clarification of, or change in the official position or the
interpretation of such Administrative Action or judicial decision
or any interpretation or pronouncement that provides for a
position with respect to such Administrative Action or judicial
decision that differs from the theretofore generally accepted
position, in each case, by any legislative body, court,
governmental authority or regulatory body, irrespective of the
manner in which such amendment, clarification or change is made
known, which amendment, clarification, or change is effective or
such pronouncement or decision is announced on or after the first
date of issuance of the Preferred Securities, there is more than
an insubstantial risk that (a) the Issuer is, or will be, subject
to United States federal income tax with respect to interest
received on the Junior Subordinated Debentures, (b) interest
payable by the Company on the Junior Subordinated Debentures is
not, or will not be, fully deductible for United States federal
income tax purposes or (c) the Issuer is, or will be, subject to
more than a de minimis amount of other taxes, duties or other
governmental charges.
Redemption Procedures
Preferred Securities redeemed on each date fixed for
redemption (the "Redemption Date") shall be redeemed at the
Redemption Price with the proceeds from the contemporaneous
redemption of Junior Subordinated Debentures. Redemptions of the
Preferred Securities will be made and the Redemption
<PAGE>38
Price will be payable on each Redemption Date only to the extent
that the Issuer has funds sufficient for the payment of such
Redemption Price. (Section 4.02(d)). See "- Subordination of
Common Securities".
If the Property Trustee gives a notice of redemption in
respect of Preferred Securities (which notice will be
irrevocable), then, by 12:00 noon, New York time, on the
Redemption Date, the Property Trustee will, so long as the
Preferred Securities are in book-entry-only form and to the
extent that the Trust has funds immediately available for payment
of the applicable Redemption Price, irrevocably deposit with DTC
funds sufficient to pay the Redemption Price and, at the
direction of the Depositor, will give DTC irrevocable
instructions and authority to pay the Redemption Price to the
holders of the Preferred Securities. See "- Book-Entry-Only
Issuance - The Depository Trust Company". If the Preferred
Securities are no longer in book-entry-only form, the Property
Trustee, to the extent that the Trust has funds immediately
available for the payment of the Redemption Price, will
irrevocably deposit with the paying agent for the Preferred
Securities (the "Preferred Securities Paying Agent") funds
sufficient to pay the applicable Redemption Price and will give
the Preferred Securities Paying Agent irrevocable instructions
and authority to pay the Redemption Price to the holders thereof
upon surrender of their certificates evidencing Preferred
Securities. Notwithstanding the foregoing, distributions payable
on or prior to the Redemption Date for any Preferred Securities
called for redemption shall be payable to the holders of such
Preferred Securities on the relevant record dates for the related
Distribution Dates. If notice of redemption shall have been
given and funds deposited as required, then upon the date of such
deposit, all rights of holders of such Preferred Securities so
called for redemption will cease, except the right of the holders
of such Preferred Securities to receive the Redemption Price, but
without interest on such Redemption Price, and such Preferred
Securities will cease to be outstanding. In the event that any
date fixed for redemption of Preferred Securities is not a
Business Day, then payment of the Redemption Price payable on
such date will be made on the next succeeding day which is a
Business Day (and without any interest or other payment in
respect of any such delay), except that, if such Business Day
falls in the next calendar year, such payment will be made on the
immediately preceding Business Day. In the event that payment of
the Redemption Price in respect of Preferred Securities called
for redemption is improperly withheld or refused and not paid
either by the Issuer or by Rouse pursuant to the Guarantee
described herein under "Description of the Guarantee",
distributions on such Preferred Securities will continue to
accrue from the original Redemption Date to the date of payment,
in which case the actual payment date will be considered the date
fixed for redemption for purposes of calculating the Redemption
Price. (Section 4.02(e)).
If less than all the outstanding Issuer Securities are to
be redeemed on a Redemption Date, then the aggregate amount to be
paid shall be allocated 3% to the Common Securities and 97% to
the Preferred Securities. The particular Preferred Securities to
be redeemed will be selected not more than 60 days prior to the
Redemption Date by the Property Trustee from the outstanding
Preferred Securities not previously called for redemption, by
such method as the Property Trustee shall deem fair and
appropriate and which may provide for the selection for
redemption of portions (equal to $25 or integral multiples
thereof) of the aggregate Liquidation Amount of Preferred
Securities. The Property Trustee shall promptly notify the
Preferred Securities Securities Registrar (as defined under "-
Registrar and Transfer Agent"), in writing, of the Preferred
Securities selected for redemption and, in the case of any
Preferred Securities selected for partial redemption, the
Liquidation Amount thereof to be redeemed. For purposes of the
Trust Agreement, unless the context otherwise requires, all
provisions relating to the redemption of Preferred Securities
will relate, in the case of any Preferred Securities redeemed or
to be redeemed only in part, to the portion of the aggregate
Liquidation Amount of Preferred Securities that has been or is to
be redeemed. (Section 4.02(f)).
Subordination of Common Securities
Payment of distributions (including Additional Amounts, if
applicable) on, and the Redemption Price of, the Issuer
Securities, as applicable, shall be made pro rata based on the
aggregate liquidation amount of the Issuer Securities; provided,
however, that if on any Distribution Date or Redemption Date an
Event of Default (as defined herein, see "- Events of Default;
Notice") under the Indenture shall have occurred and be
continuing, no payment of any distribution (including Additional
Amounts, if applicable) on, or Redemption Price of, any Common
Security, and no other payment on account of the redemption,
<PAGE>39
liquidation or other acquisition of Common Securities, shall be
made unless payment in full in cash of all accumulated and unpaid
distributions (including Additional Amounts, if applicable) on
all outstanding Preferred Securities for all distribution periods
terminating on or prior thereto, or in the case of payment of the
Redemption Price the full amount of such Redemption Price on all
outstanding Preferred Securities called for redemption, shall
have been made or provided for, and all funds available to the
Property Trustee shall first be applied to the payment in full in
cash of all distributions (including Additional Amounts, if
applicable) on, or Redemption Price of, Preferred Securities then
due and payable. (Section 4.03(a)).
In the case of any Event of Default under the Trust Agreement,
the holders of Common Securities will be deemed to have waived
any right to act with respect to any such Event of Default under
the Trust Agreement until the effect of all such Events of
Default with respect to the Preferred Securities have been cured,
waived or otherwise eliminated. Until any such Events of Default
under the Trust Agreement with respect to the Preferred
Securities have been so cured, waived or otherwise eliminated,
the Property Trustee shall act solely on behalf of the holders of
the Preferred Securities and not the holder of the Common
Securities, and only the holders of the Preferred Securities will
have the right to direct the Property Trustee to act on their
behalf. (Section 4.03(b)).
Liquidation Distribution Upon Dissolution
Pursuant to the Trust Agreement, the Issuer shall dissolve
and be liquidated by the Trustees on the first to occur of: (i)
December 31, 2050, the expiration of the term of the Trust; (ii)
the bankruptcy, insolvency, dissolution or liquidation of Rouse;
(iii) the occurrence of a Tax Event and a related required
redemption of the Preferred Securities for cash or the
distribution of Junior Subordinated Debentures to holders of
Issuer Securities as described further below; (iv) the redemption
of all of the Preferred Securities; and (v) upon the entry of a
decree of judicial dissolution of the Trust. (Sections 9.01 and
9.02).
If an early termination occurs as described in clause (ii)
above or if upon the occurrence of a Tax Event, Rouse chooses to
distribute the Junior Subordinated Debentures to the holders of
the Issuer Securities, the Issuer shall be liquidated by the
Trustees as expeditiously as the Trustees determine to be
appropriate by causing the Property Trustee to distribute to each
holder of Preferred Securities and Common Securities, after
satisfaction of liabilities to creditors of the Trust, a Like
Amount of Junior Subordinated Debentures (and Additional Amounts,
if applicable), unless such distribution is determined by the
Property Trustee not to be practical, in which event such holders
will be entitled to receive, out of the assets of the Issuer
available for distribution to holders after satisfaction of
liabilities to creditors of the Trust, an amount equal to, in the
case of holders of Preferred Securities, the aggregate of the
stated Liquidation Amount of $25 per Preferred Security plus
accrued and unpaid distributions thereon to the date of payment,
whether or not earned or declared (such amount being the
"Liquidation Distribution"). If such Liquidation Distribution
can be paid only in part because the Issuer has insufficient
assets available to pay in full the aggregate Liquidation
Distribution, then the amounts payable directly by the Issuer on
the Preferred Securities shall be paid on a pro rata basis. The
holder of the Common Securities will be entitled to receive
distributions upon any such dissolution pro rata with the holders
of the Preferred Securities; except that, if an Event of Default
(as defined herein, see "- Events of Default; Notice") has
occurred and is continuing, the holder of the Common Securities
will be entitled to receive such distributions only after the
holders of the Preferred Securities have been paid in full. If
the Junior Subordinated Debentures are distributed to the holders
of the Preferred Securities, Rouse will use its reasonable
efforts to have the Junior Subordinated Debentures listed on the
New York Stock Exchange or such other exchange upon which
Preferred Securities are then listed (Section 9.04).
Events of Default; Notice
"Events of Default" as defined in Section 501 of the
Indenture (see "Description of the Junior Subordinated Debentures
- - Events of Default") constitute the only "Events of Default"
under the Trust Agreement with respect to the Preferred
Securities issued thereunder.
<PAGE>40
The Indenture provides that any one or more of the
following described events that has occurred and is continuing
constitutes an "Event of Default" with respect to the Junior
Subordinated Debentures:
(a) failure for 30 days to pay any interest on the
Junior Subordinated Debentures, including any Additional
Interest in respect thereof, when due (subject to the deferral
of any due date in the case of an Extension Period); or
(b) failure to pay any principal on the Junior
Subordinated Debentures when due, whether at maturity, upon
redemption by declaration or otherwise; or
(c) failure to observe or perform in any material
respect any other covenant contained in the Indenture for 90
days after written notice to Rouse from the Debenture Trustee
or the holders of at least 25% in principal amount of the
outstanding Junior Subordinated Debentures; or
(d) certain events in bankruptcy, insolvency or
reorganization of Rouse, but not a voluntary or involuntary
dissolution.
Within five Business Days after the occurrence of any Event of
Default actually known to the Property Trustee, the Property
Trustee shall transmit notice of such Event of Default to the
holders of Preferred Securities, the Administrative Trustees and
the Depositor, unless such Event of Default shall have been cured
or waived. (Section 8.02).
Unless an Event of Default shall have occurred and be
continuing, any Trustee may be removed at any time by act of the
holder of the Common Securities. If an Event of Default has
occurred and is continuing, any Trustee may be removed at such
time by written act of the holders of a majority in aggregate
Liquidation Amount of the outstanding Preferred Securities,
delivered to such Trustee (in its individual capacity and on
behalf of the Issuer). No registration or removal of a Trustee
and no appointment of a successor trustee shall be effective
until the acceptance of appointment by the successor Trustee in
accordance with the provisions of the Trust Agreement (Section
8.10).
If an Event of Default has occurred and is continuing, the
Preferred Securities shall have a preference over the Common
Securities upon dissolution of the Issuer as described above.
See "- Liquidation Distribution Upon Dissolution".
Merger or Consolidation of a Trustee
Any Person (as defined in the Trust Agreement) into which
the Property Trustee or, if not a natural person, the Delaware
Trustee or any Administrative Trustee may be merged or with which
it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which any such Trustee shall be a
party, or any Person succeeding to all or substantially all the
corporate trust business of any such Trustee, shall be the
successor to such Trustee under the Trust Agreement, provided
such Person is otherwise qualified and eligible. (Section
8.12).
Voting Rights
Except as provided below and as described under "Description
of the Guarantee - Amendments and Assignment" and as otherwise
required by law, the holders of the Preferred Securities will
have no voting rights. (Section 6.01(a)).
Subject to the provisions described below under
"-Modification of the Trust Agreement", if any proposed amendment
to the Trust Agreement provides for, or the Trustees otherwise
propose to effect, (i) any action that would adversely affect the
powers, preferences or special rights of the holders of the
Preferred Securities, whether by way of amendment to the Trust
Agreement or otherwise, or (ii) the dissolution, winding-up or
termination of the Issuer, other than pursuant to the Trust
Agreement, then the holders of outstanding Preferred Securities
will be entitled to vote on such amendment or proposal, and
<PAGE>41
such amendment or proposal shall not be effective except with
the approval of the holders of at least a majority in aggregate
Liquidation Amount of such outstanding Preferred Securities.
(Section 6.01(c)).
So long as any Junior Subordinated Debentures are in the
name of the Trust and are held by the Property Trustee in trust
for the benefit of the holders of the Issuer Securities, the
Property Trustee shall not (i) direct the time, method and place
of conducting any proceeding for any remedy available to the
Debenture Trustee (as defined under "Description of the Junior
Subordinated Debentures"), or executing any trust or power
conferred on the Debenture Trustee with respect to the Junior
Subordinated Debentures, (ii) waive any past default which is
waivable under Section 513 of the Indenture, (iii) exercise any
right to rescind or annul a declaration that the principal of all
the Junior Subordinated Debentures shall be due and payable or
(iv) consent to any amendment, modification or termination of the
Indenture or the Junior Subordinated Debentures, where such
consent shall be required, without, in each case, obtaining the
prior approval of the holders of at least a majority in aggregate
Liquidation Amount of the outstanding Preferred Securities;
provided, however, that where a consent under the Indenture would
require the consent of each holder of Junior Subordinated
Debentures affected thereby, no such consent shall be given by
the Property Trustee without the prior consent of each holder of
Preferred Securities. The Property Trustee shall not revoke any
action previously authorized or approved by a vote of the holders
of the outstanding Preferred Securities. The Property Trustee
shall notify all holders of the Preferred Securities of any
notice of default received from the Debenture Trustee. In
addition to obtaining the foregoing approvals of the holders of
the Preferred Securities, prior to taking any of the foregoing
actions, the Trustees shall obtain an opinion of counsel
experienced in such matters to the effect that the Issuer will
not be classified as an association taxable as a corporation for
United States federal income tax purposes on account of such
action. (Section 6.01(b)).
Any required approval of holders of Preferred Securities
may be given at a separate meeting of holders of Preferred
Securities convened for such purpose or pursuant to written
consent. The Administrative Trustees will cause a notice of any
meeting at which holders of Preferred Securities are entitled to
vote, or of any matter upon which action by written consent of
such holders is to be taken, to be given to each holder of record
of Preferred Securities in the manner set forth in the Trust
Agreement. (Sections 6.02 and 6.06).
No vote or consent of the holders of Preferred Securities will
be required for the Issuer to redeem and cancel Preferred
Securities in accordance with the Trust Agreement.
For purposes of any vote of the holders of the Preferred
Securities, any Preferred Securities that are held by Rouse, any
Trustee or any affiliate of Rouse or any Trustee, shall, for
purposes of such vote or consent, be treated as if they were not
outstanding.
Co-Property Trustees and Separate Property Trustee
Unless an Event of Default under the Trust Agreement shall
have occurred and be continuing, at any time or times, for the
purpose of meeting the legal requirements of the Trust Indenture
Act or of any jurisdiction in which any part of the Trust
Property (as defined in the Trust Agreement) may at the time be
located, the holder of the Common Securities and the
Administrative Trustees shall have power to appoint, and upon the
written request of the Administrative Trustees, Rouse, as
Depositor, shall for such purpose join with the Administrative
Trustees in the execution, delivery and performance of all
instruments and agreements necessary or proper to appoint, one or
more persons approved by the Property Trustee either to act as co-
property trustee, jointly with the Property Trustee, of all or
any part of such Trust Property, or to act as separate trustee of
any such property, in either case with such powers as may be
provided in the instrument of appointment, and to vest in such
person or persons in such capacity, any property, title, right or
power deemed necessary or desirable, subject to the provisions of
the Trust Agreement. If Rouse, as Depositor, does not join in
such appointment within 15 days after the receipt by it of a
request so to do, or in case an Event of Default under the
Indenture has occurred and is continuing, the Property Trustee
alone shall have the power to make such appointment. (Section
8.09).
<PAGE>42
Payment and Paying Agent
Payments in respect of the Preferred Securities shall be
made to DTC, which shall credit the relevant accounts at DTC on
the applicable Distribution Dates or, if the Preferred Securities
are not held by DTC, such payments shall be made at the office or
agency of the Preferred Securities Paying Agent maintained for
such purpose, or at the option of the Property Trustee, by check
mailed to the address of the holder entitled thereto as such
address shall appear on the securities register. The Preferred
Securities Paying Agent shall initially be The First National
Bank of Chicago. The Preferred Securities Paying Agent shall be
permitted to resign as Preferred Securities Paying Agent upon 30
days' written notice to the Administrative Trustees, the Property
Trustee and Rouse. In the event that The First National Bank of
Chicago chooses no longer to be the Preferred Securities Paying
Agent, the Administrative Trustees shall appoint a successor
(which shall be a bank or trust company).acceptable to the
Property Trustee and Rouse to act as Preferred Securities Paying
Agent (Sections 4.04 and 5.09).
Book-Entry-Only Issuance - The Depository Trust Company
DTC will act as securities depository for the Preferred
Securities. The Preferred Securities will be issued only as
fully-registered securities registered in the name of Cede & Co.
(DTC's nominee). One or more fully-registered global Preferred
Security certificates will be issued, representing in the
aggregate the total number of Preferred Securities, and will be
deposited with DTC.
DTC has informed the Issuer and Rouse that it is a limited-
purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform
Commercial Code, and a "clearing agency" registered pursuant to
the provisions of Section 17A of the Exchange Act. DTC holds
securities that its participants ("Participants") deposit with
DTC. DTC also facilitates the settlement of securities
transactions among Participants through electronic computerized
book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates.
Direct Participants include securities brokers and dealers
(including the Underwriters), banks, trust companies, clearing
corporations and certain other organizations ("Direct
Participants"). DTC is owned by a number of its Direct
Participants and by the New York Stock Exchange, the American
Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to
others such as securities brokers and dealers, banks and trust
companies that clear through or maintain a custodial relationship
with a Direct Participant, either directly or indirectly
("Indirect Participants"). The rules applicable to DTC and its
Participants are on file with the Commission.
Purchases of Preferred Securities within the DTC system
must be made by or through Direct Participants, which will
receive a credit for the Preferred Securities on DTC's records.
The ownership interest of each actual purchaser of each Preferred
Security ("Beneficial Owner") is in turn to be recorded on the
Direct Participants and Indirect Participants' records.
Beneficial Owners will not receive written confirmation from DTC
of their purchases, but Beneficial Owners are expected to receive
written confirmations providing details of the transactions, as
well as periodic statements of their holdings, from the Direct
Participants or Indirect Participants through which the
Beneficial Owners purchased Preferred Securities. Transfers of
ownership interests in the Preferred Securities are to be
accomplished by entries made on the books of Participants acting
on behalf of Beneficial Owners. Beneficial Owners will not
receive certificates representing their ownership interests in
Preferred Securities, except as described below.
DTC has no knowledge of the actual Beneficial Owners of the
Preferred Securities; DTC's records reflect only the identity of
the Direct Participants to whose accounts such Preferred
Securities are credited, which may or may not be the Beneficial
Owners. The Participants are responsible for keeping account of
their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to
Direct Participants, by Direct Participants to Indirect
Participants, and by Direct Participants and Indirect
Participants to Beneficial
<PAGE>43
Owners will be governed by arrangements among them, subject to
any statutory or regulatory requirements as may be in effect from
time to time.
Redemption notices shall be sent to DTC. If less than all of
the Preferred Securities are being redeemed, DTC's practice is to
determine by lot the amount of the interest of each Direct
Participant in such series to be redeemed.
Although voting with respect to the Preferred Securities is
limited to the holders of record of the Preferred Securities, in
those cases where a vote is required, neither DTC nor Cede & Co.,
will itself consent or vote with respect to Preferred Securities.
Under its usual procedures, DTC would mail an Omnibus Proxy to
the Issuer as soon as possible after the record date. The
Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to
those Direct Participants to whose accounts the Preferred
Securities are credited on the record date (identified in a
listing attached to the Omnibus Proxy).
Distribution payments on the Preferred Securities will be made
by the Issuer to DTC. DTC's practice is to credit Direct
Participants' accounts on the relevant payment date in accordance
with their respective holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payments on such
payment date. Payments by Participants to Beneficial Owners will
be governed by standing instructions and customary practices and
will be the responsibility of such Participant and not of DTC,
the Issuer, Rouse or any Trustee, subject to any statutory or
regulatory requirements as may be in effect from time to time.
Payment of distributions to DTC is the responsibility of the
Issuer, disbursement of such payments to Direct Participants is
the responsibility of DTC, and disbursement of such payments to
the Beneficial Owners is the responsibility of Direct and
Indirect Participants.
The Preferred Securities will be delivered in certificated
form if (i) DTC ceases to be registered as a clearing agency
under the Exchange Act or is no longer willing or able to provide
securities depository services with respect to the Preferred
Securities, (ii) Rouse so determines or (iii) there is an Event
of Default under the Junior Subordinated Debentures.
The information in this section concerning DTC and DTC's book-
entry system has been obtained from sources that the Company and
the Issuer believe to be reliable. None of the Issuer, Rouse or
any Trustee has any responsibility for the performance by DTC or
its Participants of their respective obligations as described
herein or under the rules and procedures governing their
respective operations.
Registrar and Transfer Agent
The First National Bank of Chicago will act as registrar and
transfer agent for the Preferred Securities (the "Preferred
Securities Registrar"). (Section 5.04).
As described under "- Book-Entry-Only Issuance - The
Depository Trust Company", so long as the Preferred Securities
are in book-entry form, registration of transfers and exchanges
of Preferred Securities will be made through Direct Participants
and Indirect Participants in DTC. If physical certificates
representing the Preferred Securities are issued, registration of
transfers and exchanges of Preferred Securities will be effected
without charge by or on behalf of the Issuer, but, in the case of
a transfer, upon payment (with the giving of such indemnity as
the Issuer or Rouse may require) in respect of any tax or other
governmental charges which may be imposed in relation to it.
(Section 5.04).
The Issuer will not be required to register or cause to be
registered any transfer of Preferred Securities during a period
beginning 15 days prior to the mailing of notice of redemption of
Preferred Securities and ending on the day of such mailing.
(Section 5.04).
Information Concerning the Property Trustee
The Property Trustee, other than during the occurrence and
continuance of a default by Rouse in performance of the Trust
Agreement, undertakes to perform only such duties as are
specifically set forth
<PAGE>44
in the Trust Agreement and, after an Event of Default under
the Trust Agreement, must exercise the same degree of care and
skill as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs. Subject
to this provision, the Property Trustee is under no obligation to
exercise any of the powers vested in it by the Trust Agreement at
the request of any holder of Issuer Securities unless it is
offered reasonable indemnity against the costs, expenses and
liabilities that might be incurred thereby.
Rouse and certain of its subsidiaries maintain deposit
accounts and conduct other banking transactions with the Property
Trustee in the ordinary course of their businesses.
Modification of the Trust Agreement
From time to time, Rouse and the Trustees may, without the
consent of any holders of the Issuer Securities, amend the Trust
Agreement for specified purposes, including, among other things,
(i) to cure ambiguities, correct or supplement any provision of
the Trust Agreement which may be inconsistent with any other
provision thereof or to make any other provisions with respect to
matters or questions arising under the Trust Agreement, which
shall not be inconsistent with the other provisions of the Trust
Agreement, or (ii) to ensure that the Trust will not be
classified for United States federal income tax purposes as an
association taxable as a corporation and will not be required to
register as an "investment company" under the Investment Company
Act of 1940, as amended (the "1940 Act"); provided, however, that
such amendment or action shall not adversely affect the rights of
any holder of the Issuer Securities. The Trust Agreement
contains provisions permitting Rouse and the Trustees, with the
consent of the holders of not less than a majority in aggregate
liquidation amount of the outstanding Issuer Securities, to
modify the Trust Agreement in a manner affecting the rights of
the holders of the Issuer Securities; provided that no such
modification may, without the consent of the holder of each
outstanding Issuer Security, (i) change the amount, timing, place
of payment or currency of any distribution on the Issuer
Securities or otherwise adversely affect the amount of any
distribution required to be made in respect of the Issuer
Securities as of a specified date, (ii) restrict the right of any
holder of the Issuer Securities to institute suit for the
enforcement of any payment under the Trust Agreement, (iii)
modify the purposes of the Trust, (iv) authorize or issue any
interest in the Trust other than as currently contemplated by the
Trust Agreement, (v) change the Redemption Price or modify the
redemption procedures with respect to Issuer Securities or (vi)
affect the limited liability of any holder of Preferred
Securities. (Section 10.02).
Governing Law
The Trust Agreement will be governed by, and construed in
accordance with, the laws of the State of Delaware. (Section
10.05).
Miscellaneous
The Preferred Securities have been approved for listing on
the New York Stock Exchange, subject to notice of issuance, under
the symbol "RSEPrZ".
The Administrative Trustees are authorized and directed to
conduct the affairs of the Issuer and to operate the Issuer so
that the Issuer will not be deemed to be an "investment company"
required to be registered under the 1940 Act or taxed as a
corporation for United States federal income tax purposes and so
that the Junior Subordinated Debentures will be treated as
indebtedness of Rouse for United States federal income tax
purposes. In this connection Rouse and the Administrative
Trustees are authorized to take any action, not inconsistent with
applicable law, the certificate of trust of the Issuer or the
Trust Agreement that Rouse or any of the Administrative Trustees
determines in their discretion to be necessary or desirable or
convenient for such purposes, as long as such action does not
adversely affect the interests of the holders of the Preferred
Securities. (Section 2.07(d)).
The Property Trustee will act as sole trustee under the
Trust Agreement for the purposes of compliance with the Trust
Indenture Act.
<PAGE>45
The Preferred Securities will, upon issuance, be validly
issued, fully paid and non-assessable. Holders of the Issuer
Securities have no preemptive rights.
DESCRIPTION OF THE GUARANTEE
Set forth below is a summary of information concerning the
Guarantee that will be executed and delivered by Rouse for the
benefit of the holders from time to time of Preferred Securities.
The Guarantee will be qualified as an indenture under the Trust
Indenture Act. The First National Bank of Chicago will act as
indenture trustee (the "Guarantee Trustee") under the Guarantee
for the purposes of compliance with the Trust Indenture Act. The
terms of the Guarantee will be those set forth in such Guarantee
and those made part of such Guarantee by the Trust Indenture Act.
This summary contains all material information concerning the
Guarantee but does not purport to be complete and is subject in
all respects to the provisions of, and is qualified in its
entirety by reference to, the Guarantee, which is filed as an
exhibit to the Registration Statement of which this Prospectus
forms a part, and the Trust Indenture Act. The Guarantee Trustee
will hold the Guarantee for the benefit of the holders of the
Preferred Securities.
General
Rouse will fully, irrevocably and unconditionally agree on
a subordinated basis, to the extent set forth herein, to pay the
Guarantee Payments (as defined below) in full to the holders of
the Preferred Securities, as and when due, regardless of any
defense, right of set-off or counterclaim that the Issuer may
have or assert other than the defense of payment. The following
payments with respect to the Preferred Securities, to the extent
not paid by or on behalf of the Issuer (the "Guarantee
Payments"), will be subject to the Guarantee: (i) any accrued and
unpaid distributions required to be paid on the Preferred
Securities, if and only to the extent the Issuer has funds
sufficient to make such payment, (ii) the Redemption Price with
respect to any Preferred Securities called for redemption by the
Issuer, if and only to the extent the Issuer has funds sufficient
to make such payment and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of the Issuer (other than
in connection with a redemption of all of the Preferred
Securities), the lesser of (a) the aggregate Liquidation Amount,
to the extent the Issuer has funds sufficient to make such
payment, and (b) the amount of assets of the Issuer remaining
available for distribution to holders of Preferred Securities in
liquidation of the Issuer. Rouse's obligation to make a
Guarantee Payment may be satisfied by direct payment of the
required amounts by Rouse to the holders of Preferred Securities
or by causing the Issuer to pay such amounts to such holders.
The Guarantee will be a full and unconditional guarantee on a
subordinated basis, but will apply only to the extent that the
Issuer has funds sufficient to make such payments, and is not a
guarantee of collection. If Rouse does not make interest
payments on the Junior Subordinated Debentures held by the
Issuer, it is expected that the Issuer will not pay distributions
on the Preferred Securities. Rouse's obligations under the
Guarantee are subordinated and junior in right of payment to all
other liabilities of Rouse (including the Junior Subordinated
Debentures) except any liabilities that may be made pari passu
with or subordinate to the Guarantee expressly by their terms.
See "- Status of the Guarantee".
Amendments and Assignment
Except with respect to any changes that do not adversely
affect the rights of holders of Preferred Securities (in which
case no consent of holders of Preferred Securities will be
required), the terms of the Guarantee may be changed only with
the prior approval of the holders of not less than a majority in
aggregate Liquidation Amount of the outstanding Preferred
Securities. All guarantees and agreements contained in the
Guarantee shall bind the successors, assigns, receivers, trustees
and representatives of Rouse and shall inure to the benefit of
the holders of the Preferred Securities then outstanding.
<PAGE>46
Events of Default
An event of default under the Guarantee will occur upon the
failure of Rouse to perform any of its payment obligations
thereunder. The holders of a majority in aggregate Liquidation
Amount of the Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any
remedy available to the Guarantee Trustee in respect of the
Guarantee or to direct the exercise of any trust or other power
conferred upon the Guarantee Trustee under the Guarantee.
If the Guarantee Trustee fails to enforce the Guarantee,
any holder of Preferred Securities may institute a legal
proceeding directly against Rouse to enforce its rights under
such Guarantee without first instituting a legal proceeding
against the Issuer, the Guarantee Trustee or any other person or
entity.
Rouse will be required to provide annually to the Guarantee
Trustee a statement as to the performance by Rouse of certain of
its obligations under the Guarantee and as to any default in such
performance. Rouse will also be required to file annually with
the Guarantee Trustee an officer's certificate as to Rouse's
compliance with all conditions under the Guarantee.
Information Concerning the Guarantee Trustee
The Guarantee Trustee, other than during the occurrence and
continuance of a default by Rouse in performance of the
Guarantee, undertakes to perform only such duties as are
specifically set forth in the Guarantee and, after default with
respect to the Guarantee, must exercise the same degree of care
and skill as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs. Subject
to this provision, the Guarantee Trustee is under no obligation
to exercise any of the powers vested in it by the Guarantee at
the request of any holder of Preferred Securities unless it is
offered reasonable indemnity against the costs, expenses and
liabilities that might be incurred thereby.
Rouse and certain of its subsidiaries maintain deposit
accounts and conduct other banking transactions with the
Guarantee Trustee in the ordinary course of their businesses.
Termination of the Guarantee
The Guarantee will terminate and be of no further force and
effect upon full payment of the Redemption Price of all Preferred
Securities, the distribution of Junior Subordinated Debentures to
holders of Preferred Securities in exchange for all of the
Preferred Securities or upon payment in full of the amounts
payable upon liquidation of the Issuer. Notwithstanding the
foregoing, the Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any holder of
Preferred Securities must restore payment of any sums paid under
the Preferred Securities or the Guarantee.
Status of the Guarantee
The Guarantee will constitute an unsecured obligation of
Rouse and will rank (i) subordinate and junior in right of
payment to all liabilities of Rouse (including the Junior
Subordinated Debentures but excluding liabilities that may be
made pari passu with or subordinate to the Guarantee expressly by
their terms), and (ii) senior to Rouse's Series A Convertible
Preferred Stock, liquidation value $50.00 per share, and Rouse's
common stock. The Trust Agreement provides that each holder of
Preferred Securities by acceptance thereof agrees to the
subordination provisions and other terms of the Guarantee.
Because Rouse is a holding company whose assets consist
substantially of the stock of its subsidiaries, Rouse's
obligations under the Guarantee are effectively subordinated to
the claims of the direct creditors of its subsidiaries. See
"Risk Factors - Subordination of Guarantee and Junior
Subordinated Debentures; Limited Preference Rights of Preferred
Securities".
The Guarantee will constitute a guarantee of payment and not
of collection (i.e., the guaranteed party may institute a legal
proceeding directly against the Guarantor to enforce its rights
under the Guarantee without first instituting a legal proceeding
against any other person or entity).
<PAGE>47
Governing Law
The Guarantee will be governed by and construed in accordance
with the laws of the State of New York.
The Expense Agreement
Pursuant to the Expense Agreement entered into by Rouse
pursuant to the Trust Agreement (the "Expense Agreement"), Rouse
will irrevocably and unconditionally guarantee to each person or
entity to whom the Issuer becomes indebted or liable, the full
payment of any indebtedness, expenses or liabilities of the
Issuer, other than obligations of the Issuer to pay to the
holders of any Issuer Securities the amounts due such holders
pursuant to the terms of the Issuer Securities.
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES
Set forth below is a description of the specific terms of
the Junior Subordinated Debentures which the Issuer will purchase
with the proceeds of the issuance and sale of the Common
Securities and the Preferred Securities. The following
description contains all material information concerning the
Junior Subordinated Debentures but does not purport to be
complete and is qualified in its entirety by reference to the
description in the Indenture (the "Indenture"), dated as of
, 1995, between Rouse and The First National Bank of Chicago, as
trustee with respect to the Junior Subordinated Debentures (the
"Debenture Trustee"), which is filed as an exhibit to the
Registration Statement of which this Prospectus forms a part, and
the Trust Indenture Act. Whenever particular sections or defined
terms in the Indenture are referred to herein, such sections or
defined terms are incorporated by reference herein. Section
references used herein are references to provisions of the
Indenture unless otherwise noted.
General
The Junior Subordinated Debentures will be limited in
aggregate principal amount to $103.1 million ($118.6 million if
the over-allotment option is exercised), such amount being the
sum of the aggregate stated liquidation amounts of the Preferred
Securities and the Common Securities. The Junior Subordinated
Debentures will be unsecured, subordinated obligations of Rouse
which will rank junior to all of Rouse's Senior Indebtedness (as
defined in "- Subordination"). (Section 1101).
The entire outstanding principal amount of the Junior
Subordinated Debentures will become due and payable, together
with any accrued and unpaid interest thereon, including any
Additional Interest (as defined in "- Additional Interest"), on
, 2025.
Optional Redemption
On or after , 2000 Rouse will have the
right, at any time and from time to time, to redeem the Junior
Subordinated Debentures, in whole or in part, with the proceeds
of one or more Equity Issuances, at a cash redemption price equal
to 100% of the principal amount of the Junior Subordinated
Debentures being redeemed, together with any accrued and unpaid
interest thereon, including any Additional Interest, to the
redemption date.
If a Tax Event shall occur and be continuing, Rouse shall
have the right to either (i) redeem the Junior Subordinated
Debentures, in whole but not in part, at a redemption price equal
to 100% of the principal amount of Junior Subordinated Debentures
then outstanding plus any accrued and unpaid interest, including
any Additional Interest, to the redemption date or (ii) direct
the Trustees to distribute a Like Amount of Junior Subordinated
Debentures to each holder of a Preferred Security, provided, in
the case of clause (ii), that the Trust shall have received an
opinion of counsel to the effect that the holders of the
Preferred Securities will not recognize any gain or loss for
United States federal income tax purposes as a result of such
distribution. (Section 1201).
<PAGE>48
For so long as the Issuer is the holder of all the
outstanding Junior Subordinated Debentures, the proceeds of any
such redemption will be used by the Issuer to redeem Preferred
Securities and the Common Securities in accordance with their
terms. Rouse may not redeem the Junior Subordinated Debentures
in part unless all accrued and unpaid interest (including any
Additional Interest) has been paid in full on all outstanding
Junior Subordinated Debentures for all quarterly interest periods
terminating on or prior to the date of redemption and no
Extension Period is in effect. (Section 1201).
Any optional redemption of the Junior Subordinated
Debentures shall be made upon not less than 30 nor more than 60
days' notice to the holders thereof, as provided in the
Indenture. (Section 1205).
Interest
The Junior Subordinated Debentures shall bear interest at
the rate of % per annum from the date of original issuance.
Such interest is payable quarterly in arrears on March 31, June
30, September 30 and December 31 of each year (each, an "Interest
Payment Date"), commencing December 31, 1995, to the person in
whose name each Junior Subordinated Debenture is registered,
subject to certain exceptions, at the close of business on the
Business Day next preceding such Interest Payment Date. It is
anticipated that the Junior Subordinated Debentures will be in
the name of the Trust and will be held by the Property Trustee
for the benefit of the holders of the Issuer Securities.
The amount of interest payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months.
(Section 310). In the event that any date on which interest is
payable on the Junior Subordinated Debentures is not a Business
Day, then payment of the interest payable on such date will be
made on the next succeeding day which is a Business Day (and
without any interest or other payment in respect of any such
delay), except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same
force and effect as if made on the date the payment was
originally payable.
Option to Extend Interest Payment Period
Rouse shall have the right at any time during the term of
the Junior Subordinated Debentures to extend the interest payment
period from time to time to a period of up to 20 consecutive
quarters (each, an "Extension Period"), during which periods
interest will compound quarterly and Rouse shall have the right
to make partial payments of interest on any Interest Payment
Date. At the end of any such Extension Period, Rouse must pay
all interest then accrued and unpaid together with Additional
Interest (as defined under "- Additional Interest"). However,
during any such Extension Period, Rouse may not declare or pay
any dividend or distribution (other than a dividend or
distribution in common stock of Rouse or other security junior in
right of payment to the Junior Subordinated Debentures) on, or
redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock, or make any guarantee
payments with respect to the foregoing (other than payments under
the Guarantee) or repurchase, or cause any subsidiary to
repurchase any security of Rouse ranking pari passu with or
subordinate to the Junior Subordinated Debentures (except on a
ratable basis with any securities ranking pari passu with the
Junior Subordinated Debentures). Prior to the termination of any
such Extension Period, Rouse may further extend the interest
payment period, provided that such Extension Period together with
all such previous and further extensions thereof may not exceed
20 consecutive quarters or extend beyond the maturity date of the
Junior Subordinated Debentures. Upon the termination of any such
Extension Period and the payment of all amounts then due, Rouse
may select a new Extension Period, subject to the foregoing
requirements. Except for Additional Interest Attributable to
Taxes (as defined under "-Additional Interest"), no interest
shall be due and payable during an Extension Period, except at
the end thereof. So long as the Issuer shall be the sole holder
of record of the Junior Subordinated Debentures, Rouse must give
the Property Trustee, the Administrative Trustees and the
Debenture Trustee notice of its selection of such Extension
Period at least ten Business Days prior to the earlier of (i) the
date the distributions on the Preferred Securities are payable or
(ii) the date the Administrative Trustees are required to give
notice to the New York Stock Exchange or other applicable self-
regulatory organization or to holders of the Preferred Securities
of the record date for the payment of such distribution or the
date such distributions are payable, but in any event not less
than two Business Days
<PAGE>49
prior to such record date. The Debenture Trustee will be
required to give notice of Rouse's selection of such Extension
Period to the holders of the Preferred Securities. If the Issuer
shall not be the sole holder of record of the Junior Subordinated
Debentures, Rouse shall give the holders of the Junior
Subordinated Debentures notice of its selection of such Extension
Period ten Business Days prior to the earlier of (i) the Interest
Payment Date or (ii) the date the Issuer is required to give
notice to the New York Stock Exchange or other applicable self-
regulatory organization, or to holders of the Junior Subordinated
Debentures, of the record or payment date of such related
interest payment, but in any event not less than two Business
Days prior to such record date. (Section 301).
Additional Interest
If at any time the Issuer shall be required to pay any
interest on distributions in arrears in respect of the Preferred
Securities pursuant to the terms thereof, Rouse will pay as
interest to the Issuer as the holder of the Junior Subordinated
Debentures an amount of additional interest ("Additional Interest
Attributable to Deferral") equal to such interest on
distributions in arrears. Accordingly, in such circumstances
Rouse will, to the fullest extent permitted by applicable law,
pay interest upon interest in order to provide for quarterly
compounding on the Junior Subordinated Debentures. In addition,
if the Issuer would be required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other
than withholding taxes) imposed by the United States or any other
taxing authority, then, in any such case, Rouse will also pay
such amounts as shall be required so that the net amounts
received and retained by the Issuer after paying such taxes,
duties, assessments or governmental charges will be not less than
the amounts the Issuer would have received had no such taxes,
duties, assessments or governmental charges been imposed
("Additional Interest Attributable to Taxes" and together with
Additional Interest Attributable to Deferral, "Additional
Interest").
Set-Off
Notwithstanding anything to the contrary in the Indenture,
Rouse shall have the right to set-off any payment it is otherwise
required to make thereunder to the extent Rouse has theretofore
made, or is concurrently on the date of such payment making, a
payment under the Guarantee. (Section 311).
Subordination
The Junior Subordinated Debentures are subordinated in
right of payment to the prior payment in full in cash or cash
equivalents of all Senior Indebtedness (as defined herein).
(Sections 101 and 1101). In the event of: (a) any insolvency or
bankruptcy case or proceeding, or any receivership, liquidation,
reorganization or other similar case or proceeding in connection
therewith, relative to Rouse or to its creditors, as such, or to
its assets, (b) any liquidation, dissolution or other winding up
of Rouse, whether voluntary or involuntary and whether or not
involving insolvency or bankruptcy or (c) any assignment for the
benefit of creditors or any other marshaling of assets and
liabilities of Rouse (except a distribution in connection with a
consolidation of Rouse with, or the merger of Rouse into, another
entity or the liquidation or dissolution of Rouse following
conveyance, transfer or lease of its properties and assets
substantially as an entirety to another entity upon the terms and
conditions described below under "- Consolidation, Merger and
Sale"), the holders of all Senior Indebtedness will be entitled
to receive payment in full in cash or cash equivalents of all
amounts due or to become due thereon, before the holders of
Junior Subordinated Debentures are entitled to receive any
payment on account of principal of or interest on the Junior
Subordinated Debentures; and any payment or distribution of
assets of Rouse of any kind or character, whether in cash,
property or securities, by set-off or otherwise, to which the
holders of the Junior Subordinated Debentures or the Debenture
Trustee would be entitled but for the provisions of the Indenture
relating to subordination (excluding certain permitted
subordinated securities) shall be paid by the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee,
agent or other person making such payment or distribution
directly to the holders of Senior Indebtedness ratably according
to the aggregate amounts remaining unpaid on account of the
Senior Indebtedness to the extent necessary to make payment in
full in cash or cash equivalents of all Senior Indebtedness
remaining unpaid. In the event that, notwithstanding the
foregoing, the Debenture Trustee or any holder of the Junior
Subordinated
<PAGE>50
Debentures shall have received payment or distribution of
assets of Rouse of any kind or character (excluding certain
permitted subordinated securities) before all Senior Indebtedness
is paid in full or payment thereof provided for, then such
payment or distribution shall be paid over or delivered to the
trustee in bankruptcy, receiver, liquidating trustee, custodian,
assignee, agent or other person making payment or distribution of
assets of Rouse for application to the payment of all Senior
Indebtedness remaining unpaid to the extent necessary to pay all
Senior Indebtedness in full in cash or cash equivalents. (Section
1102).
As of September 30, 1995, the Senior Indebtedness of Rouse
was approximately $541 million. As a holding company,
substantially all of Rouse's assets consist of the stock of its
subsidiaries. Except to the extent that Rouse may itself be a
creditor with recognized claims against Rouse's subsidiaries, the
claims of the holders of the Junior Subordinated Debentures to
assets of subsidiaries of Rouse effectively are subordinated to
the claims of direct creditors of the subsidiaries of Rouse. At
September 30, 1995, Rouse's subsidiaries had $2,077 million of
indebtedness outstanding for money borrowed and capitalized lease
obligations.
The term "Senior Indebtedness" shall mean the principal of,
premium, if any, interest on and any other payment due pursuant
to any of the following, whether outstanding at the date of
execution of the Indenture or thereafter incurred, created or
assumed:
(a) all indebtedness of Rouse (other than any
obligations to trade creditors) evidenced by notes,
debentures, bonds or other securities sold by Rouse for money
borrowed and capitalized lease obligations of Rouse;
(b) all indebtedness of others of the kinds described in
the preceding clause (a) with an express written obligation of
Rouse to repay the principal amount of the debt during the
full term of the indebtedness; and
(c) all renewals, extensions or refundings of
indebtedness of the kinds described in either of the preceding
clauses (a) or (b),
unless, in the case of any particular indebtedness, lease
obligation, guarantee, renewal, extension or refunding, the
instrument creating or evidencing the same or the assumption or
guarantee of the same expressly provides that such indebtedness,
lease obligation, renewal, extension or refunding is expressly
made pari passu with or subordinate to the Junior Subordinated
Debentures. (Section 101).
The Indenture does not limit the aggregate amount of Senior
Indebtedness or subsidiary indebtedness that may be incurred.
Certain Covenants of Rouse
Pursuant to the Indenture, Rouse will covenant that it will
not declare or pay any dividend or distribution (other than a
dividend or distribution in common stock of Rouse or other
security junior in right of payment to the Junior Subordinated
Debentures) on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock, or
make any guarantee payments with respect to the foregoing (other
than payments under the Guarantee), or repurchase, or cause any
of its subsidiaries to repurchase, any security of Rouse ranking
pari passu with or subordinate to the Junior Subordinated
Debentures (except on a ratable basis with any securities ranking
pari passu with the Junior Subordinated Debentures) if at such
time (i) there shall have occurred any event of which Rouse has
actual knowledge that (a) with the giving of notice or the lapse
of time, or both, would constitute an Event of Default under the
Indenture and (b) in respect of which Rouse shall not have taken
reasonable steps to cure, (ii) Rouse shall be in default with
respect to its payment of any obligations under the Guarantee or
(iii) Rouse shall have given notice of its selection of an
Extension Period as provided in the Indenture (which notice shall
not have been rescinded) and such Extension Period, or any
extension thereof, shall have commenced and be continuing. Rouse
will also covenant (i) to maintain 100% ownership of the Common
Securities of the Issuer, (ii) not to voluntarily dissolve, wind-
up or terminate the Issuer, except in
<PAGE>51
connection with the distribution of the Junior Subordinated
Debentures to the holders of the Preferred Securities in
liquidation of the Issuer or in connection with certain mergers,
consolidations or amalgamations permitted by the Trust Agreement
and (iii) to use its reasonable efforts, consistent with the
terms and provisions of the Trust Agreement, to cause the Issuer
to remain a business trust and otherwise not to be classified as
an association taxable as a corporation for United States federal
income tax purposes. "Subsidiary" is defined to mean "any Person
a majority of the equity ownership or the voting stock of which
is at the time owned, directly or indirectly, by the Company or
by one or more other Subsidiaries or by the Company and one or
more other Subsidiaries." (Section 1005).
Events of Default
The Indenture provides that any one or more of the following
described events that has occurred and is continuing constitutes
an "Event of Default" with respect to the Junior Subordinated
Debentures:
(a) failure for 30 days to pay any interest on the
Junior Subordinated Debentures, including any Additional
Interest in respect thereof, when due (subject to the deferral
of any due date in the case of an Extension Period); or
(b) failure to pay any principal on the Junior
Subordinated Debentures when due, whether at maturity, upon
redemption by declaration or otherwise; or
(c) failure to observe or perform in any material
respect any other covenant contained in the Indenture for 90
days after written notice to Rouse from the Debenture Trustee
or the holders of at least 25% in principal amount of the
outstanding Junior Subordinated Debentures; or
(d) certain events in bankruptcy, insolvency or
reorganization of Rouse, but not a voluntary or involuntary
dissolution. (Section 501).
The holders of a majority in outstanding principal amount
of the Junior Subordinated Debentures have the right to direct
the time, method and place of conducting any proceeding for any
remedy available to the Debenture Trustee. (Section 512). The
Debenture Trustee or the holders of not less than 25% in
aggregate outstanding principal amount of the Junior Subordinated
Debentures may declare the principal and interest, including
Additional Interest, due and payable immediately upon an Event of
Default, and should the Debenture Trustee or such holders of
Junior Subordinated Debentures fail to make such declaration, the
holders of at least 25% in aggregate Liquidation Amount of
outstanding Preferred Securities shall have such right. The
holders of a majority in aggregate outstanding principal amount
of the Junior Subordinated Debentures may annul such declaration
and waive the default if the default has been cured or waived and
a sum sufficient to pay all matured installments of interest and
principal due otherwise than by acceleration and any Additional
Interest has been deposited with the Debenture Trustee. (Section
502).
The holders of a majority in outstanding principal amount
of the Junior Subordinated Debentures affected thereby may, on
behalf of the holders of all the Junior Subordinated Debentures,
waive any past default, except a default in the payment of
principal or interest, including Additional Interest (unless such
default has been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by
acceleration and any Additional Interest has been deposited with
the Debenture Trustee) or a default in respect of a covenant or
provision which under the Indenture cannot be modified or amended
without the consent of the holder of each outstanding Junior
Subordinated Debenture. (Section 513). Rouse is required to file
annually with the Debenture Trustee a certificate as to whether
or not Rouse is in compliance with all the conditions and
covenants applicable to it under the Indenture. (Section
1004).
In case any Event of Default shall occur and be continuing,
the Property Trustee will have the right to declare the principal
of and the interest on the Junior Subordinated Debentures
(including any Additional Interest) and any other amounts payable
under the Indenture to be forthwith due and payable and to
enforce its other rights as a creditor with respect to the Junior
Subordinated Debentures. (Section 502).
<PAGE>52
An involuntary dissolution of the Issuer prior to
redemption or maturity of the Junior Subordinated Debentures
would not constitute an Event of Default with respect to the
Junior Subordinated Debentures. If the Issuer is dissolved, any
of the following, among other things, could occur: (i) a
distribution of the Junior Subordinated Debentures to the holders
of the Preferred Securities after satisfaction of liabilities to
creditors of the Trust, (ii) a cash distribution to the holders
of the Preferred Securities out of the sale of assets of the
Issuer, after satisfaction of liabilities to creditors of the
Trust or (iii) a permitted redemption at par of the Junior
Subordinated Debentures, and a consequent redemption of a Like
Amount of the Preferred Securities, at the option of Rouse under
the circumstances described under "- Optional Redemption".
Form, Exchange, and Transfer
The Junior Subordinated Debentures will be issuable only in
registered form, without coupons and only in denominations of $25
and integral multiples thereof. (Section 302).
The Junior Subordinated Debentures, if distributed to holders
of Preferred Securities pursuant to the dissolution of the
Issuer, will initially be issued as a registered security in
global form (a "Global Security"). In the event that Junior
Subordinated Debentures are issued in certificated form, such
Junior Subordinated Debentures will be in denominations of $25
and integral multiples thereof and may be transferred or
exchanged at the offices described below.
Subject to the terms of the Indenture, Junior Subordinated
Debentures may be presented for registration of transfer or
exchange (duly endorsed or accompanied by satisfactory
instruments of transfer) at the office of the security registrar
of the Junior Subordinated Debentures (the "Debenture Registrar")
or at the office of any transfer agent designated by Rouse for
such purpose. No service charge will be made for any
registration of transfer or exchange of Junior Subordinated
Debentures, but, in the case of a transfer, Rouse may require
payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. Such
transfer or exchange will be effected when the Debenture
Registrar or such transfer agent, as the case may be, is
satisfied with the documents of transfer, title and identity of
the person making the request. Rouse has appointed the Debenture
Trustee as the initial Debenture Registrar. (Section 305). Rouse
may at any time designate additional transfer agents or rescind
the designation of any transfer agent or approve a change in the
office through which any transfer agent acts. (Section 1002).
If the Junior Subordinated Debentures are to be redeemed in
part, Rouse will not be required to issue, register the transfer
of or exchange any Junior Subordinated Debentures during a period
beginning at the opening of business 15 days before the day of
mailing of a notice of redemption of any such Junior Subordinated
Debentures that may be selected for redemption and ending at the
close of business on the day of such mailing, except the
unredeemed portion of any such Junior Subordinated Debentures
being redeemed in part. (Section 305).
Payment and Paying Agents
Payment of interest on a Junior Subordinated Debenture on
any Interest Payment Date will be made to the person in whose
name such Junior Subordinated Debenture (or one or more
predecessor securities) is registered at the close of business on
the Regular Record Date (as defined in the Indenture) for such
interest. (Section 307). Payments on Junior Subordinated
Debentures issued as a Global Security will be made to DTC, as
the depository for the Junior Subordinated Debentures.
Principal of and any interest (including Additional
Interest) on the Junior Subordinated Debentures will be payable
at the office of such paying agent or paying agents (the
"Debenture Paying Agent") as Rouse may designate for such purpose
from time to time, except that at the option of Rouse payment of
any interest may be made by check mailed to the address of the
person entitled thereto as such address appears in the Security
Register or by wire transfer (Section 301). The corporate trust
office of the Debenture Trustee in The City of New York is
designated as Rouse's sole Debenture Paying Agent for payments
with respect to the Junior Subordinated Debentures. Rouse may at
any time designate
<PAGE>53
additional Debenture Paying Agents or rescind the designation
of any Debenture Paying Agent or approve a change in the office
through which any Paying Agent acts. (Section 1002).
Information Concerning the Debenture Trustee
The Debenture Trustee, other than during the occurrence and
continuance of a default by Rouse in performance of the
Indenture, undertakes to perform only such duties as are
specifically set forth in the Indenture and, after an Event of
Default under the Indenture, must exercise the same degree of
care and skill as a prudent person would exercise or use under
the circumstances in the conduct of his or her own affairs.
Subject to this provision, the Debenture Trustee is under no
obligation to exercise any of the powers vested in it by the
Indenture at the request of any holder of Preferred Securities or
Junior Subordinated Debentures unless it is offered reasonable
indemnity against the costs, expenses and liabilities that might
be incurred thereby. (Section 603).
Rouse and certain of its subsidiaries maintain deposit
accounts and conduct other banking transactions with the
Debenture Trustee in the ordinary course of their businesses.
Modification of the Indenture
From time to time, Rouse and the Debenture Trustee may,
without the consent of the holders of the Junior Subordinated
Debentures, amend, waive or supplement the Indenture for
specified purposes of evidencing the succession of another person
to Rouse and the assumption by such successor of Rouse's
obligations under the Indenture and on the Junior Subordinated
Debentures, adding to the covenants of Rouse for the benefit of
the holders of the Junior Subordinated Debentures or surrendering
any right or power conferred upon Rouse by the Indenture or the
Junior Subordinated Debentures, evidencing and providing the
acceptance of the appointment of a successor Debenture Trustee,
curing ambiguities, defects or inconsistencies, qualifying, or
maintaining the qualification of, the Indenture under the Trust
Indenture Act, or making any other change that does not adversely
affect the rights of any holder of Junior Subordinated Debentures
(Section 901). The Indenture contains provisions permitting
Rouse and the Debenture Trustee, with the consent of the holders
of not less than a majority in principal amount of the
outstanding Junior Subordinated Debentures, to modify the
indenture in a manner affecting the rights of the holders of the
Junior Subordinated Debentures; provided that no such
modification may, without the consent of the holder of each
outstanding Junior Subordinated Debenture, (i) change the fixed
maturity of the Junior Subordinated Debentures, or reduce the
principal amount thereof, or reduce the rate or extend the time
of payment of interest thereon, (ii) change the place or currency
of payment of principal or interest on the Junior Subordinated
Debentures, (iii) change the subordination provisions in a manner
adverse to the holders of the Junior Subordinated Debentures or
the Preferred Securities, (iv) change the date on which the
Junior Subordinated Debentures may be redeemed at the option of
Rouse to an earlier date, (v) reduce the percentage of principal
amount of Junior Subordinated Debentures, the holders of which
are required to consent to any such modification of the Indenture
or (vi) modify certain provisions of the Indenture relating to
the waiver of past defaults or compliance by Rouse with the
covenants therein. The Indenture also requires the consent of
the holders of the Preferred Securities in respect of certain
amendments to or termination of the Indenture and with respect to
compliance by Rouse with certain covenants in the Indenture.
(Sections 901 and 902).
Consolidation, Merger and Sale
Rouse may not consolidate with or merge into or convey,
transfer or lease its properties and assets substantially as an
entirety to any person (a "Successor Person"), and may not permit
any person to merge into, or convey, transfer or lease its
properties and assets substantially as an entirety to Rouse,
unless: (i) the Successor Person (if any) is a corporation,
partnership or trust organized and validly existing under the
laws of any domestic jurisdiction, and assumes Rouse's
obligations on the Junior Subordinated Debentures, the Indenture,
the Trust Agreement, the Guarantee and the Expense Agreement;
(ii) immediately after giving effect to the transaction and
treating any indebtedness which becomes an obligation of Rouse or
any subsidiary as a result of the transaction as having been
incurred by it or any Subsidiary at the time of the transaction,
no Event of Default, and no event which, after notice
<PAGE>54
or lapse of time, would become an Event of Default, shall have
occurred and be continuing; (iii) such transaction does not give
rise to any breach or violation of the Trust Agreement or the
Guarantee; and (iv) certain other conditions are met. (Section
801).
Satisfaction and Discharge
Under the terms of the Indenture, Rouse will be discharged
from any and all obligations in respect of the Junior
Subordinated Debentures (except in each case for certain
obligations to register the transfer or exchange of Junior
Subordinated Debentures, pay Additional Interest Attributable to
Taxes, compensate, indemnify and reimburse the Debenture Trustee,
replace stolen, lost or mutilated Junior Subordinated Debentures
and hold moneys for payment in trust) if all authenticated and
delivered Junior Subordinated Debentures (other than certain
stolen, lost, or mutilated Junior Subordinated Debentures and
Junior Subordinated Debentures for which payment money was
segregated and then discharged) have been delivered to the
Debenture Trustee for cancellation or if Rouse deposits with the
Debenture Trustee, in trust, moneys in an amount sufficient to
pay all the principal of, and interest on, the Junior
Subordinated Debentures on the dates such payments are due in
accordance with the terms of the Junior Subordinated Debentures.
(Section 401).
Governing Law
The Indenture and the Junior Subordinated Debentures will
be governed by, and construed in accordance with, the laws of the
State of New York. (Section 112).
Miscellaneous
All covenants and agreements of Rouse contained in the
Indenture will bind its successors and assigns. (Section
109).
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEE
General
As long as payments of interest and other payments are made
when due on the Junior Subordinated Debentures, such payments
will be sufficient to cover distributions and other payments due
on the Preferred Securities, primarily because (i) the aggregate
principal amount of Junior Subordinated Debentures will be equal
to the sum of the aggregate stated liquidation amount of the
Preferred Securities and the Common Securities; (ii) the interest
rate and interest and other payment dates on the Junior
Subordinated Debentures will match the distribution rate and
distribution and other payment dates for the Preferred
Securities; (iii) the Expense Agreement entered into by Rouse
pursuant to the Trust Agreement provides that Rouse shall pay for
all, and the Issuer shall not be obligated to pay, directly or
indirectly, for any costs, expenses and liabilities of the
Issuer, including any income taxes, duties and other governmental
charges, and all costs and expenses with respect thereto, to
which the Issuer may become subject, except for United States
withholding taxes and the lssuer's obligations to holders of the
Preferred Securities under the Trust Agreement and the Preferred
Securities; and (iv) the Trust Agreement further provides that
the Trustees shall not cause or permit the Issuer to, among other
things, engage in any activity that is not consistent with the
limited purposes of the Issuer.
Taken together, Rouse's obligations under the Junior
Subordinated Debentures, the Trust Agreement, the Expense
Agreement, and the Guarantee provide a full, irrevocable and
unconditional guarantee of payments of distributions and other
amounts due on the Preferred Securities to the extent provided
therein. If and to the extent that Rouse does not make payments
on the Junior Subordinated Debentures, the Issuer will not pay
distributions or other amounts due on the Preferred
Securities.
<PAGE>55
If the Guarantee Trustee fails to enforce the Guarantee, a
holder of a Preferred Security may institute a legal proceeding
directly against Rouse to enforce its rights under the Guarantee
without first instituting a legal proceeding against the Issuer
or any other person or entity.
The Preferred Securities evidence the rights of the holders
thereof to the assets of the Issuer, a trust that exists for the
sole purpose of issuing the Issuer Securities and investing the
proceeds thereof in debt securities of Rouse, while the Junior
Subordinated Debentures represent indebtedness of Rouse. A
principal difference between the rights of a holder of a
Preferred Security and a holder of a Junior Subordinated
Debenture is that a holder of a Junior Subordinated Debenture
will accrue, and (subject to the permissible extension of any
interest payment period) is entitled to receive, interest on the
principal amount of Junior Subordinated Debentures held, while a
holder of Preferred Securities is only entitled to receive
distributions if and to the extent the Issuer has funds
sufficient for the payment of such distributions.
Should an Event of Default under the Indenture occur and be
continuing, the holders of the Preferred Securities would
initially be limited to relying on the Property Trustee, as the
sole holder of the Junior Subordinated Debentures, or to the
Debenture Trustee, acting for the benefit of the Property
Trustee, to enforce their rights under the Indenture. The
holders of the Preferred Securities would not be able to exercise
directly any remedies available to the holder of the Junior
Subordinated Debentures unless the Property Trustee or the
Debenture Trustee, acting for the benefit of the Property
Trustee, fails to do so. In such event, the holders of at least
25% in aggregate Liquidation Amount of the outstanding Preferred
Securities would have such right.
If an early termination event (as described in "Description
of the Preferred Securities - Liquidation Distribution Upon
Dissolution") with respect to the Trust occurs, thereby giving
rise to the dissolution and liquidation of the Trust, any of the
following, among other things, could occur: (i) a distribution of
the Junior Subordinated Debentures to the holders of the
Preferred Securities after satisfaction of liabilities to
creditors of the Trust, (ii) a cash distribution to the holders
of the Preferred Securities out of the sale of assets of the
Issuer, after satisfaction of liabilities to creditors of the
Trust or (iii) a permitted redemption at par of the Junior
Subordinated Debentures, and a consequent redemption of a Like
Amount of the Preferred Securities, at the option of Rouse under
the circumstances described under "Description of the Junior
Subordinated Debentures - Optional Redemption". If the Junior
Subordinated Debentures are distributed, the holders will be able
to exercise directly rights of the holders of Junior Subordinated
Debentures under the Indenture.
Upon any voluntary or involuntary dissolution, winding-up
or termination of the Issuer, the holders of Preferred Securities
will be entitled to receive as a preference, out of assets
available for distribution to holders, the Liquidation
Distribution in cash or Junior Subordinated Debentures. See
"Description of the Preferred Securities - Liquidation
Distribution Upon Dissolution". Upon any voluntary or
involuntary liquidation or bankruptcy of Rouse, the holders of
Junior Subordinated Debentures would be subordinated creditors of
Rouse, subordinated in right payment to all Senior Indebtedness,
but entitled to receive payment in full of principal, premium, if
any, and interest, before any stockholders of Rouse receive
payments or distributions. Since Rouse is Guarantor under the
Guarantee and has agreed as Depositor, to pay for all costs,
expenses and liabilities of the Issuer (other than United States
withholding taxes and other than the Issuer's obligations to
Preferred Security holders under the Trust Agreement and the
Preferred Securities), the positions of a holder of Preferred
Securities and a holder of Junior Subordinated Debentures
relative to other creditors and to stockholders of Rouse in the
event of liquidation or bankruptcy of Rouse would be
substantially the same.
A default or event of default under any Senior Indebtedness
would not constitute a default or Event of Default under the
Junior Subordinated Debentures. Subject to Rouse's right to
extend an interest payment period from time to time for up to 20
consecutive quarters, failure to make required payments on the
Junior Subordinated Debentures would constitute an Event of
Default under the Indenture.
<PAGE>56
Accounting Treatment
For financial reporting purposes, the Trust will be treated
as a subsidiary of Rouse and, accordingly, the accounts of the
Trust will be included in the consolidated financial statements
of Rouse. The Preferred Securities will be presented as a
separate line item in the consolidated balance sheet of Rouse
entitled "Company-obligated mandatorily redeemable Preferred
Securities of subsidiary Trust holding solely Company
Subordinated Debt Securities", and appropriate disclosures about
the Preferred Securities, the Guarantee and the Junior
Subordinated Debentures will be included in the notes to the
consolidated financial statements. See "Capitalization". For
financial reporting purposes, Rouse will record distributions
payable on the Preferred Securities as operating expenses.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
General
This discussion is a summary of the principal United States
federal income tax considerations that may be relevant to
prospective purchasers of Preferred Securities and represents the
opinion of Fried, Frank, Harris, Shriver & Jacobson (a
partnership including professional corporations), special counsel
to Rouse and the Issuer, insofar as it relates to matters of law
and legal conclusions with respect thereto. This discussion is
based upon current provisions of the Internal Revenue Code of
1986, as amended (the "Code"), existing and proposed Treasury
Regulations thereunder and current administrative rulings and
court decisions, all of which are subject to change, possibly
retroactively. Subsequent changes may cause tax consequences to
vary substantially from the consequences described below.
This discussion is limited to the United States federal income
tax consequences to persons who purchase Preferred Securities at
original issue for their initial offering price who are "United
States Persons" (as defined below), and who hold the Preferred
Securities as "capital assets" within the meaning of Section 1221
of the Code. This summary does not address all aspects of United
States federal income taxation that may be applicable to a
particular holder of Preferred Securities (a "Holder") in light
of such Holder's particular circumstances, or to certain types of
Holders that may be subject to special treatment under the United
States federal income tax laws (e.g., S corporations, banks,
insurance companies, tax-exempt organizations, dealers in
securities or currencies, taxpayers subject to the alternative
minimum tax, Holders that will hold Preferred Securities as part
of a position in a "straddle" or as part of a "hedging" or
"conversion" transaction for United States federal income tax
purposes, or Holders who have a "functional currency" other than
the United States dollar), and does not discuss any aspects of
state, local or foreign tax laws or any estate or gift tax
considerations. Accordingly, each prospective Holder of
Preferred Securities should consult such Holder's own tax advisor
in analyzing the United States federal, state, local and foreign
tax consequences of the purchase, ownership and disposition of
Preferred Securities. As used herein, the term "United States
Person" means a citizen or resident of the United States, a
corporation or partnership created or organized under the laws of
the United States or any political subdivision thereof or
therein, or any estate or trust the income of which is subject to
United States federal income taxation regardless of its source.
Income from Preferred Securities
The Issuer will not be classified as an association taxable as
a corporation for United States federal income tax purposes.
Each Holder will be treated as owning an undivided beneficial
interest in the Junior Subordinated Debentures. Accordingly,
each Holder will be required to include in such Holder's gross
income such Holder's share of the interest income accrued with
respect to the Junior Subordinated Debentures whether or not
actually distributed to the Holder.
Sales of Preferred Securities
A Holder will generally recognize gain or loss on the sale
or other taxable disposition of a Preferred Security, including a
redemption for cash, equal to the difference (if any) between the
amount realized
<PAGE>57
from such sale or other taxable disposition and the Holder's
adjusted tax basis in the Preferred Security. A Holder's
adjusted tax basis in a Preferred Security generally will equal
the issue price of such Preferred Security increased by the
amount of original issue discount previously includible in the
gross income of such Holder, and decreased by the amount of any
payments received on such Preferred Security. Any gain or loss
recognized by a Holder on the sale of a Preferred Security held
for more than one year generally will be taxable as long-term
capital gain or loss, and otherwise will be short-term capital
gain or loss. Under current law, net long-term capital gains of
individuals may be taxed at lower rates than items of ordinary
income. The deductibility of capital losses is subject to
limitations.
Potential Extension of Interest Payment Period and Original Issue
Discount
Under the Indenture, and as described under "Description of
the Junior Subordinated Debentures - Option to Extend Interest
Payment Period", Rouse has the option to extend, from time to
time, the interest payment period on the Junior Subordinated
Debentures to a period not exceeding 20 consecutive quarters, but
not beyond the maturity date of the Junior Subordinated
Debentures. Rouse's option to extend the interest payment period
will cause the Junior Subordinated Debentures to be treated as
issued with "original issue discount" for United States federal
income tax purposes. Accordingly, a Holder will recognize
interest income (i.e., original issue discount) under a constant
yield basis over the term of the Junior Subordinated Debentures
(including any Extension Period), regardless of the receipt of
cash with respect to the period to which such income is
attributable. Thus, during an Extension Period a Holder will be
required to include interest in gross income in advance of the
receipt of cash. In addition, any Holder who disposes of a
Preferred Security prior to the record date for the payment of
distributions following such Extension Period will include
interest in gross income, but will not receive any cash
distributions relating to interest that accrued during, and was
includible in gross income with respect to, such Extention
Period.
Receipt of Junior Subordinated Debentures in Liquidation of
Rouse Capital
Under certain circumstances, as described under
"Description of Preferred Securities - Liquidation Distribution
Upon Dissolution", Junior Subordinated Debentures may be
distributed to the Holders in liquidation of the Issuer. Under
current United States federal income tax law, such a distribution
would not be a taxable event to a Holder and each Holder would
have the same tax basis and holding period in the Junior
Subordinated Debentures prior to and following such
liquidation.
Backup Withholding Tax and Information Reporting
Backup withholding at a rate of 31% and certain information
reporting requirements may apply to payments on, and proceeds
from the disposition of, a Preferred Security. Backup
withholding will generally apply to a Holder unless such Holder
(a) is a corporation or comes within certain exempt categories
and, when required, demonstrates this fact, or (b) provides an
accurate taxpayer identification number.
Any amounts withheld under the backup withholding rules
from a payment to a Holder will be allowed as a credit or as a
refund against such Holder's United States federal income tax
liability, provided the required information is furnished to the
Internal Revenue Service.
These backup withholding tax and information reporting rules
are subject to proposed Treasury Regulations and currently are
under review by the United States Treasury. Accordingly, the
application of these rules to Holders is subject to change.
<PAGE>58
UNDERWRITING
Subject to the terms and conditions of the Underwriting
Agreement, Rouse and the Issuer have agreed that the Issuer will
issue and sell to each of the Underwriters named below
(collectively, the "Underwriters"), and each of the Underwriters,
for whom Goldman, Sachs & Co., Alex. Brown & Sons Incorporated,
Lehman Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Smith Barney Inc. are acting as representatives
(the "Representatives"), has severally agreed to purchase from
the Issuer the respective number of Preferred Securities set
forth opposite its name below:
<TABLE>
<CAPTION>
Number of
Preferred
Underwriter Securities
<S> <C>
Goldman, Sachs & Co.
Alex. Brown & Sons
Incorporated
Lehman Brothers Inc.
Merrill Lynch, Pierce, Fenner &
Smith Incorporated
Smith Barney Inc.
Total 4,000,000
=========
</TABLE>
Under the terms and conditions of the Underwriting Agreement,
the Underwriters are committed to take and pay for all the
Preferred Securities offered hereby, if any are taken.
The Underwriters propose to offer the Preferred Securities in
part directly to the public at the initial public offering price
set forth on the cover page of this Prospectus, and in part to
certain securities dealers at such price less a concession of
$ per Preferred Security. The Underwriters may allow, and such
dealers may reallow, a concession not in excess of $
per Preferred Security to certain brokers and dealers. After the
Preferred Securities are released for sale to the public, the
offering price and other selling terms may from time to time be
varied by the Representatives.
The Issuer and Rouse have granted the Underwriters an option
exercisable for 30 days after the date of this Prospectus to
purchase up to 600,000 additional Preferred Securities to cover
over-allotments, if any, at the initial public offering price
(with additional Underwriters' Compensation), as set forth on the
cover page of this Prospectus. If the Underwriters exercise
their over-allotment option, the Underwriters have severally
agreed, subject to certain conditions, to purchase approximately
the same percentage thereof that the number of Preferred
Securities to be purchased by each of them, as shown in the
foregoing table, bears to the 4,000,000 Preferred Securities
initially offered hereby.
In view of the fact that the proceeds of the sale of the
Preferred Securities (together with the proceeds of the sale by
the Issuer to Rouse of the Common Securities) will be used to
purchase the Junior Subordinated Debentures, the Underwriting
Agreement provides that Rouse will pay as compensation to the
Underwriters ("Underwriters' Compensation") a commission of
$ per Preferred Security.
Rouse and the Issuer have agreed, during the period beginning
from the date of this Prospectus and continuing to and including
the earlier of (i) the date, after the closing date, on which the
distribution of the Preferred Securities and the Guarantee
ceases, as determined by the Underwriters, or (ii) 90 days after
the closing date, not to offer, sell, contract to sell, or
otherwise dispose of any Preferred Securities, any other
interests of the Issuer, or any preferred stock or any other
securities of the Issuer or Rouse which, in each case, are
substantially similar to the Preferred Securities (including any
guarantee of such securities) or any securities convertible into
or exchangeable for Preferred Securities, preferred stock or such
substantially similar securities of either the Issuer or Rouse,
without the prior written consent of the Representatives.
<PAGE>59
Prior to this offering, there has been no public market for
the Preferred Securities. The Preferred Securities have been
approved for listing on the New York Stock Exchange (the
"Exchange"), subject to notice of issuance, under the symbol
"RSEPrZ". In order to meet one of the requirements for listing
the Preferred Securities on the Exchange, the Underwriters will
undertake to sell lots of 100 or more Preferred Securities to a
minimum of 400 beneficial holders. Trading of the Preferred
Securities on the Exchange is expected to commence within a seven-
day period after the initial delivery of the Preferred
Securities. The Representatives have advised Rouse that they
intend to make a market in the Preferred Securities prior to
commencement of trading on the Exchange, but they are not
obligated to do so and may discontinue any such market making at
any time without notice.
The Issuer and Rouse have agreed to indemnify the Underwriters
against certain liabilities, including liabilities under the
Securities Act of 1933, as amended.
Certain of the Underwriters engage in transactions with, and
from time to time have performed services for, Rouse in the
ordinary course of business.
EXPERTS
The audited consolidated financial statements and schedules of
Rouse and its consolidated subsidiaries incorporated herein by
reference are incorporated by reference in reliance upon (1) the
report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated herein by reference, and the authority
of that firm as experts in accounting and auditing, and (2) with
respect to the current value basis financial statements, the
report of Landauer Associates, Inc., real estate counselors and
consultants, incorporated herein by reference, and upon the
authority of that firm as experts in real estate consultation.
VALIDITY OF SECURITIES
Certain matters of Delaware law relating to the validity of
the Preferred Securities, the validity of the Trust Agreement and
the formation of the Issuer are being passed upon by Richards,
Layton & Finger, Wilmington, Delaware, special Delaware counsel
to Rouse and the Issuer. The validity of the Preferred
Securities, the Guarantee and the Junior Subordinated Debentures
will be passed upon on behalf of the Issuer and Rouse by Fried,
Frank, Harris, Shriver & Jacobson (a partnership including
professional corporations), New York, New York. The validity of
the Preferred Securities, the Guarantee and the Junior
Subordinated Debentures will be passed upon on behalf of the
Underwriters by Sullivan & Cromwell, New York, New York, counsel
to the Underwriters. Sullivan & Cromwell will rely upon the
opinion of Richards, Layton & Finger as to certain matters of
Delaware law and Fried, Frank, Harris, Shriver & Jacobson and
Sullivan & Cromwell will rely upon the opinion of Bruce I.
Rothschild, Esq., Vice President, General Counsel and Secretary
of Rouse as to matters of Maryland law. As of November 1, 1995,
Mr. Rothschild held options to purchase 14,000 shares of the
Company's Common Stock, of which options to purchase 5,250 shares
were presently exercisable, and also held 3,035 shares of the
Company's Common Stock in his account under the Company's 401(k)
Savings Plan.
AVAILABLE INFORMATION
Rouse is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files reports, proxy
statements and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and
other information filed by Rouse may be inspected and copied at
the public reference facilities maintained by the Commission in
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the Commission's Regional Offices located at Seven World Trade
Center, 13th Floor, New York, New York 10048 and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such materials may be obtained upon written request
from the Public Reference Section of the
<PAGE>60
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates. In addition, such material may also be
inspected and copied at the offices of The New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005, on
which certain of Rouse's securities are listed.
Rouse and the Issuer have filed with the Commission a
registration statement on Form S-3 (together with all amendments
and exhibits, referred to as the "Registration Statement") under
the Securities Act of 1933, as amended. This Prospectus does not
contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further
information, reference is hereby made to the Registration
Statement.
No separate financial statements of the Issuer are included
herein. Rouse considers that such financial statements would not
be material to holders of the Preferred Securities because (i)
all of the Common Securities of the Issuer are owned by Rouse, a
reporting company under the Exchange Act; (ii) the Issuer has no
independent operations, but exists for the sole purpose of
issuing securities representing undivided beneficial interests in
the assets of the Issuer and investing the proceeds thereof in
the Junior Subordinated Debentures; and (iii) the obligations of
the Issuer under the Preferred Securities, to the extent funds
are legally available therefor, are fully, irrevocably and
unconditionally guaranteed to the extent the Issuer has funds
sufficient to make such payment, as set forth herein by Rouse.
Rouse has, through the Guarantee, the Trust Agreement, the Junior
Subordinated Debentures and the Expense Agreement, taken
together, fully irrevocably and unconditionally guaranteed all of
the Issuer's obligations under the Preferred Securities to the
extent set forth in such agreements (and as described herein).
Holders of the Preferred Securities will receive annual
reports of Rouse containing audited financial statements upon
request.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by Rouse
pursuant to the Exchange Act, are incorporated herein by
reference:
1. Rouse's Annual Report on Form 10-K for the year ended
December 31, 1994.
2. Rouse's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1995.
3. Rouse's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1995 (the "June 10-Q").
4. Rouse's Amendment to the June 10-Q, filed September
21,1995.
5. Rouse's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1995.
All other documents filed by Rouse pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this Prospectus and prior to the termination of this offering
shall be deemed to be incorporated by reference in this
Prospectus and to be a part hereof from the respective dates of
the filing of such documents.
Any statement contained herein or in a document all or a
portion of which is incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
Rouse will provide without charge to each person, including a
beneficial owner, to whom a copy of this Prospectus has been
delivered, upon the written or oral request of any such person, a
copy of any and all of the documents incorporated herein by
reference into this Prospectus, other than exhibits to such
documents (unless such exhibits are specifically incorporated by
reference in such documents). Requests
<PAGE>61
for such copies should be directed to David L. Tripp, Vice President
and Director of Investor Relations, The Rouse Company, 10275 Little
Patuxent Parkway, Columbia, Maryland 21044-3456, Telephone: (410) 992-
6000.
<PAGE>62
No person has been
authorized to give any
information or make any
representations other than
those contained in this
Prospectus and, if given or
made, such information or
representations must not be
relied upon as having been
authorized. This Prospectus
does not constitute an offer
to sell or the solicitation of
an offer to buy securities
other than the securities to
which it relates or an offer
to sell or the solicitation of
an offer to buy such
securities in any
circumstances in which such
offer or solicitation is 4,000,000
unlawful. Neither the
delivery of this Prospectus Preferred Securities
nor any sale made hereunder
shall, under any ROUSE CAPITAL
circumstances, create any
implication that there has
been no change in the affairs
of the Issuer or Rouse since % Cumulative
the date hereof or that the Quarterly Income Preferred
information contained herein Securities
or therein is correct as of
any time subsequent to the
date of such information. guaranteed to the extent
However, in the event of any set forth herein by
material change, this
Prospectus will be amended or
supplemented to reflect such
change as required by
applicable federal and state
law. THE ROUSE COMPANY
_______________
----------
TABLE OF CONTENTS PROSPECTUS
----------
Page
Prospectus Summary.........
Risk Factors...............
Rouse Capital.............. Goldman, Sachs & Co.
The Rouse Company.......... Alex. Brown & Sons
Use of Proceeds............ Incorporated
Capitalization............. Lehman Brothers
Selected Financial Data Merrill Lynch & Co.
of Rouse.................. Smith Barney Inc.
Results of Operations......
Description of the
Preferred Securities......
Description of the Representatives of the
Guarantee................. Underwriters
Description of the Junior
Subordinated Debentures...
Relationship Among the
Preferred Securities,
the Junior Subordinated
Debentures and the
Guarantee.................
Certain United States
Federal Income Tax
Considerations............
Underwriting...............
Experts....................
Validity of Securities.....
Available Information......
Incorporation of Certain
Documents by Reference....
<PAGE>63
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission
registration fee $ 39,656
Printing expenses 125,000
Rating agency fees 80,000
New York Stock Exchange listing fee 44,300
Trustee's fees 30,000
Legal fees and expenses 105,000
Accounting expenses 30,000
Blue Sky fees and expenses 36,000
Other 35,000
--------
Total $524,956
========
</TABLE>
Item 15. Indemnification of Directors and Officers
Article IX of the Bylaws of the Company provides that
directors and officers of the Company shall be indemnified by the
Company to the fullest extent permitted by Maryland law as now or
hereafter in force, including the advance of related expenses.
If any determination is required under applicable law as to
whether a director or officer is entitled to indemnification,
such determination shall be made by independent legal counsel
retained by the Company and appointed by either the Board of
Directors or the Chief Executive Officer. Paragraph (f) of
Article Seventh of the Amended and Restated Articles of
Incorporation of the Company provides that to the fullest extent
permitted by Maryland statutory or decisional law, as amended or
interpreted, no director or officer of the Company shall be
personally liable to the Company or its stockholders for money
damages. A copy of Section 2-418 of the Corporations and
Associations Article of the Annotated Code of Maryland is
included as an Exhibit to this Registration Statement.
The Company maintains directors and officers insurance on
behalf of its directors, officers and certain other persons
against any liability asserted against them in any such capacity.
The form of Underwriting Agreement contained in Exhibit
1.1 provides for indemnification of the directors and officers
signing the Registration Statement and certain controlling
persons of the Company against certain liabilities, including
certain liabilities under the Securities Act of 1933, as amended,
in certain instances by each underwriter participating in an
offering of the Preferred Securities.
Item 16. Exhibits
Set forth below is a list of the exhibits included as part of
this Registration Statement.
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- ---------------------------------------------------------------------------
<S> <C>
[dagger]1.1 Form of Underwriting Agreement
**4.1 Certificate of Trust of Rouse Capital
[dagger]4.2 Form of Trust Agreement
[dagger]4.3 Form of Indenture between Rouse and The First National
Bank of Chicago, as Debenture Trustee
[dagger]4.4 Form of Preferred Securities (included in Exhibit 4.2)
[dagger]4.5 Form of Junior Subordinated Debenture (included in Exhibit 4.3)
<PAGE>64
<S> <C>
[dagger]4.6 Form of Guarantee by Rouse and The First National Bank
of Chicago, as Guarantee Trustee
[dagger]4.7 Form of Agreement as to Expenses and Liabilities
[dagger]5.1 Opinion of Richards, Layton & Finger re validity of
Preferred Securities
[dagger]5.2 Opinion of Fried, Frank, Harris, Shriver & Jacobson re
validity of Guarantee and Junior Subordinated
Debentures
[dagger]5.3 Opinion of Bruce I. Rothschild, Esq.
[dagger]8.1 Opinion of Fried, Frank, Harris, Shriver & Jacobson re
tax matters
*12.1 Computation of Ratio of Earnings to Combined Fixed Charges
and Preferred Dividends
*12.2 Computation of Ratio of Earnings to Fixed Charges
*12.3 Computation of Consolidated Coverage Ratio
*23.1 Consent of KPMG Peat Marwick LLP, independent auditors
*23.2 Consent of Landauer Associates, Inc., independent real estate consultants
[dagger]23.3 Consent of Richards, Layton & Finger (included in Exhibit 5.1 above)
[dagger]23.4 Consent of Fried, Frank, Harris, Shriver & Jacobson
(included in Exhibit 5.2 above)
[dagger]23.5 Consent of Bruce I. Rothschild, Esq. (included in Exhibit 5.3 above)
[dagger]23.6 Consent of Fried, Frank, Harris, Shriver & Jacobson
(included in Exhibit 8.1 above)
*24.1 Power of Attorney, dated September 28, 1995.
*24.2 Power of Attorney, dated September 28, 1995.
[dagger]25.1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of The First National
Bank of Chicago, as Debenture Trustee under the
Indenture
[dagger]25.2 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of The First National
Bank of Chicago, as Trustee under the Trust
Agreement of the Issuer
[dagger]25.3 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of The First National
Bank of Chicago, as Guarantee Trustee under the
Guarantee
99.1 Section 2-418 of the Corporations and Associations Article of
the Annotated Code of Maryland (which is
incorporated by reference from the Exhibits to the
Company's Form S-3 Registration Statement (No. 33-56646))
<FN>
- --------------------
* Filed herewith.
** Previously filed.
[dagger] To be filed by amendment.
</TABLE>
Item 17. Undertakings
The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
registration statement:
(i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of this registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate,
represent a fundamental change in the information set
forth in this registration statement; notwithstanding the
foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in
the form of prospectus filed with the Commission pursuant
to Rule 424(b) under the Securities Act of 1933 if, in the
aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee"
table in the effective registration statement; and
<PAGE>65
(iii) to include any material information with respect
to the plan of distribution not previously disclosed in
this registration statement or any material change to such
information in this registration statement;
provided, however, that the undertakings set forth in
paragraphs (1)(i) and (ii) above do not apply if the
information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports
filed by the registrants pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-
effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
The undersigned registrants hereby undertake that, for
purposes of determining any liability under the Securities Act of
1933, each filing of the registrants' annual reports pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers,
and controlling persons of the registrants pursuant to the
foregoing provisions or otherwise, the registrants have been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrants of expenses incurred
or paid by a director, officer, or controlling person of the
registrants in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer, or controlling
person in connection with the securities being registered, the
registrants will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the questions whether such
indemnification by them is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
The undersigned registrants hereby undertake to provide to the
underwriter, at the closing specified in the underwriting
agreements, certificates in such denominations and registered in
such names as required by the underwriter to permit prompt
delivery to each purchaser.
The undersigned registrants hereby undertake that:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form
of prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of prospectus
filed by the registrants pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of
this registration statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under
the Securities Act of 1933, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
The undersigned registrants hereby undertake to file an
application for the purpose of determining the eligibility of the
trustees to act under subsection (a) of Section 310 of the Trust
Indenture Act in
<PAGE>66
accordance with the rules and regulations
prescribed by the Commission under Section 305(b)(2) of the Trust
Indenture Act.
<PAGE>67
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
The Rouse Company certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form
S-3 and has duly caused this amendment to the Registration
Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the County of Howard, State of
Maryland, on the 13th day of November, 1995.
THE ROUSE COMPANY
By: /s/ George L. Yungmann
----------------------
George L. Yungmann
Senior Vice President
and Controller
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following
persons in the capacities and on the date indicated.
Principal Executive
Officers:
* President, November 13, 1995
- ------------------ Chief Executive
Anthony W. Deering Officer and
Director
Principal Financial
Officer:
* Senior Vice November 13, 1995
- ------------------ President and
Jeffrey H. Donahue Chief Financial
Officer
Principal Accounting
Officer:
/s/ George L. Yungmann Senior Vice November 13, 1995
- ---------------------- President and
George L. Yungmann Controller
*By: /s/ Mathias J.DeVito November 13, 1995
---------------------
Mathias J. DeVito
Attorney-in-Fact
<PAGE>68
THE BOARD OF DIRECTORS
David H. Benson, Jeremiah E. Casey, Anthony W. Deering, Rohit M.
Desai, Mathias J. DeVito, Juanita T. James, Thomas J. McHugh,
Hanne M. Merriman, Roger W. Schipke and Alexander F. Trowbridge.
/s/ Mathias J. DeVito For himself November 13, 1995
- --------------------- and as Attorney-
Mathias J. DeVito in-Fact for the
Attorney-in-Fact above-named
members of
the Board of
Directors
<PAGE>69
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
Rouse Capital certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and
has duly caused this amendment to the Registration Statement to
be signed on its behalf by the undersigned thereunto duly
authorized, in the County of Howard, State of Maryland, on the
13th day of November, 1995.
ROUSE CAPITAL
By: THE ROUSE COMPANY, as
Depositor
By: /s/ George L. Yungmann*
-----------------------
George L. Yungmann
Senior Vice President
and Controller
<PAGE>70
DRAFT - 11/8/95
EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -------------------------------------------------------------------------
<S> <C>
[dagger]1.1 Form of Underwriting Agreement
**4.1 Certificate of Trust of Rouse Capital
[dagger]4.2 Form of Trust Agreement
[dagger]4.3 Form of Indenture between Rouse and The First National
Bank of Chicago, as Debenture Trustee
[dagger]4.4 Form of Preferred Securities (included in Exhibit 4.2)
[dagger]4.5 Form of Junior Subordinated Debenture (included in Exhibit 4.3)
[dagger]4.6 Form of Guarantee by Rouse and The First National Bank
of Chicago, as Guarantee Trustee
[dagger]4.7 Form of Agreement as to Expenses and Liabilities
[dagger]5.1 Opinion of Richards, Layton & Finger re validity of
Preferred Securities
[dagger]5.2 Opinion of Fried, Frank, Harris, Shriver & Jacobson re
validity of Guarantee and Junior Subordinated
Debentures
[dagger]5.3 Opinion of Bruce I. Rothschild, Esq.
[dagger]8.1 Opinion of Fried, Frank, Harris, Shriver & Jacobson re
tax matters
*12.1 Computation of Ratio of Earnings to Combined Fixed Charges
and Preferred Dividends
*12.2 Computation of Ratio of Earnings to Fixed Charges
*12.3 Computation of Consolidated Coverage Ratio
*23.1 Consent of KPMG Peat Marwick LLP, independent auditors
*23.2 Consent of Landauer Associates, Inc., independent real
estate consultants
[dagger]23.3 Consent of Richards, Layton & Finger (included in Exhibit 5.1 above)
[dagger]23.4 Consent of Fried, Frank, Harris, Shriver & Jacobson
(included in Exhibit 5.2 above)
[dagger]23.5 Consent of Bruce I. Rothschild, Esq. (included in Exhibit 5.3 above)
[dagger]23.6 Consent of Fried, Frank, Harris, Shriver & Jacobson
(included in Exhibit 8.1 above)
*24.1 Power of Attorney, dated September 28, 1995.
*24.2 Power of Attorney, dated September 28, 1995.
[dagger]25.1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of The First National
Bank of Chicago, as Debenture Trustee under the
Indenture
[dagger]25.2 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of The First National
Bank of Chicago, as Trustee under the Trust
Agreement of the Issuer
[dagger]25.3 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of The First National
Bank of Chicago, as Guarantee Trustee under the
Guarantee
99.1 Section 2-418 of the Corporations and Associations Article of
the Annotated Code of Maryland (which is
incorporated by reference from the Exhibits to the
Company's Form S-3 Registration Statement (No. 33-
56646))
- --------------------
<FN>
* Filed herewith.
** Previously filed.
[dagger] To be filed by amendment.
</TABLE>
<PAGE>71
<TABLE>
THE ROUSE COMPANY AND SUBSIDIARIES
Computation of Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividend Requirements
(dollars in thousands)
<CAPTION>
Nine Months Ended
September 30, Year Ended December 31,
-------------------- ----------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings (loss) before
income taxes, extraordinary
loss and cumulative effect
of change in accounting
principle $8,415 $5,931 $13,336 $3,072 $(20,783) $5,245 $257
Fixed charges:
Interest costs 164,213 163,786 220,971 219,705 221,907 219,538 200,469
Capitalized interest (5,236) (5,033) (7,388) (8,899) (15,098) (21,243) (29,947)
Amortization of debt
issuance costs 1,924 1,649 2,146 2,801 3,571 3,173 2,833
Portion of rental expense
representative of
interest factor (1) 5,042 7,600 10,788 15,988 14,739 15,265 12,465
Support for debt service
costs provided to
affiliates accounted for
under the equity method 0 0 0 31 389 1,106 2,081
Adjustments to earnings (loss):
Minority interest in earnings
of majority-owned
subsidiaries having fixed
charges 1,716 1,574 2,234 1,909 1,747 2,118 1,698
Undistributed earnings of
less than 50%-owned
subsidiaries 0 0 (564) (68) (84) (540) (222)
Previously capitalized
interest amortized into
earnings:
Depreciation of operating
properties (2) 2,823 2,752 3,670 3,605 3,474 3,145 2,683
Cost of land sales (3) 987 1,376 1,580 1,627 1,295 928 956
Earnings available for
combined fixed charges
and Preferred stock
dividend requirements -------- -------- -------- -------- -------- -------- --------
$179,884 $179,635 $246,773 $239,771 $211,157 $228,735 $193,273
======== ======== ======== ======== ======== ======== ========
Combined fixed charges and
Preferred stock dividend
requirements:
Interest costs $164,213 $163,786 $220,971 $219,705 $221,907 $219,538 $200,469
Amortization of debt
issuance costs 1,924 1,649 2,146 2,801 3,571 3,173 2,833
Portion of rental expense
representative of interest
factor (1) 5,042 7,600 10,788 15,988 14,739 15,265 12,465
Support for debt service
costs provided to affiliates
accounted for under the
equity method 0 0 0 31 389 1,106 2,081
Preferred stock dividend
requirements (4) 18,302 16,352 21,802 18,968 0 0 3,788
Total combined fixed charges
and Preferred stock -------- -------- -------- -------- -------- -------- --------
dividend requirements $189,481 $189,387 $255,707 $257,493 $240,606 $239,082 $221,636
======== ======== ======== ======== ======== ======== ========
Ratio of earnings to combined
fixed charges and Preferred
stock dividend requirements - - - - - - -
======== ======== ======== ======== ======== ======== ========
<FN>
(1) Includes (a) 80% of minimum rentals, the portion of such
rentals considered to be a reasonable estimate of the
interest factor and (b) 100% of contingent rentals of
$1,597,000 and $4,150,000 for the nine months ended September
30, 1995 and 1994, respectively, and $6,232,000, $10,006,000,
$8,106,000, $8,458,000 and $5,588,000 for the years ended
December 31, 1994, 1993, 1992, 1991 and 1990,
respectively.
(2)Represents an estimate of depreciation of capitalized
interest costs based on the Company's established
depreciation policy and an analysis of interest costs
capitalized since 1971.
(3)Represents 10% of costs of land sales, the portion of such
cost considered to be a reasonable estimate of the interest
factor.
(4)Represents estimated pre-tax earnings required to cover
Preferred stock dividends. Amount in 1990 was for dividends
on Redeemable Preferred stock, which was acquired by a
subsidiary and retired for financial reporting purposes in
1990. Amounts in 1995, 1994 and 1993 are for Convertible
Preferred stock, which the Company issued in 1993. All
amounts are calculated based on actual Preferred stock
dividends and an estimated effective tax rate of 40%.
(5)Total combined fixed charges and Preferred stock
dividend requirements exceeded the Company's earnings
available for combined fixed charges and Preferred stock
dividend requirements by $9,597,000 and $9,752,000 for the
nine months ended September 30, 1995 and 1994, respectively,
and by $8,934,000, $17,722,000, $29,449,000, $10,347,000, and
$28,363,000 for the years ended December 31, 1994, 1993,
1992, 1991, and 1990, respectively.
</TABLE>
<PAGE>72
<TABLE>
Exhibit 12.1
THE ROUSE COMPANY AND SUBSIDIARIES
Computation of Ratio of Earnings to Fixed Charges
(dollars in thousands)
<CAPTION>
Nine Months Ended
September 30, Year Ended December 31,
------------------ ---------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings (loss) before
income taxes, extraordinary
loss and cumulative effect
of change in accounting
principle $8,415 $5,931 $13,336 $3,072 $(20,783) $5,245 $257
Fixed charges:
Interest costs 164,213 163,786 220,971 219,705 221,907 219,538 200,469
Capitalized interest (5,236) (5,033) (7,388) (8,899) (15,098) (21,243) (29,947)
Amortization of debt
issuance costs 1,924 1,649 2,146 2,801 3,571 3,173 2,833
Portion of rental expense
representative of interest
factor (1) 5,042 7,600 10,788 15,988 14,739 15,265 12,465
Support for debt service
costs provided to
affiliates accounted for
under the equity method 0 0 0 31 389 1,106 2,081
Adjustments to earnings (loss):
Minority interest in
earnings of majority-owned
subsidiaries having fixed
charges 1,716 1,574 2,234 1,909 1,747 2,118 1,698
Undistributed earnings of
less than 50%-owned
subsidiaries 0 0 (564) (68) (84) (540) (222)
Previously capitalized
interest amortized into
earnings:
Depreciation of operating
properties (2) 2,823 2,752 3,670 3,605 3,474 3,145 2,683
Cost of land sales (3) 987 1,376 1,580 1,627 1,295 928 956
------- -------- -------- -------- -------- -------- --------
Earnings available
for fixed charges $179,884 $179,635 $246,773 $239,771 $211,157 $228,735 $193,273
======== ======== ======== ======== ======== ======== ========
Fixed charges:
Interest costs $164,213 $163,786 $220,971 $219,705 $221,907 $219,538 $200,469
Amortization of debt
issuance costs 1,924 1,649 2,146 2,801 3,571 3,173 2,833
Portion of rental expense
representative of interest
factor (1) 5,042 7,600 10,788 15,988 14,739 15,265 12,465
Support for debt service
costs provided to affiliates
accounted for under the
equity method 0 0 0 31 389 1,106 2,081
-------- -------- -------- -------- -------- -------- --------
Total fixed charges $171,179 $173,035 $233,905 $238,525 $240,606 $239,082 $217,848
======== ======== ======== ======== ======== ======== ========
Ratio of earnings to
fixed charges 1.05 1.04 1.06 1.01 - - -
======== ======== ======== ======== ======== ======== ========
<FN>
(1) Includes (a) 80% of minimum rentals, the portion of such
rentals considered to be a reasonable estimate of the
interest factor and (b) 100% of contingent rentals of
$1,597,000 and $4,150,000 for the nine months ended
September 30, 1995 and 1994, respectively, and $6,232,000,
$10,006,000, $8,106,000, $8,458,000 and $5,588,000 for the
years ended December 31, 1994, 1993, 1992, 1991 and 1990,
respectively.
(2) Represents an estimate of depreciation of capitalized
interest costs based on the Company's established
depreciation policy and an analysis of interest costs
capitalized since 1971.
(3) Represents 10% of costs of land sales, the portion of such
cost considered to be a reasonable estimate of the interest
factor.
(4) Total fixed charges exceeded the Company's earnings
available for fixed charges by $29,449,000, $10,347,000, and
$24,575,000 for the years ended December 31, 1992, 1991 and
1990, respectively.
</TABLE>
<PAGE>73
<TABLE>
Exhibit 12.3
THE ROUSE COMPANY AND SUBSIDIARIES
Computation of Consolidated Coverage Ratio
(dollars in thousands)
<CAPTION>
Nine Months Ended
September 30, Year Ended December 31,
------------------ ------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings before depreciation
and deferred taxes from
operations (EBDT) $76,978 $67,115 $94,710 $78,281 $52,282 $46,820 $50,290
Consolidated interest
expense 158,977 158,753 213,583 210,806 206,809 198,295 170,522
Preferred stock dividends (1) -- -- -- -- -- -- 2,273
-------- -------- -------- -------- -------- -------- --------
$235,955 $225,868 $308,293 $289,087 $259,091 $245,115 $223,085
======== ======== ======== ======== ======== ======== ========
Consolidated interest expense $158,977 $158,753 $213,583 $210,806 $206,809 $198,295 $170,522
Preferred stock dividends (1) -- -- -- -- -- -- 2,273
-------- -------- -------- -------- -------- -------- --------
$158,977 $158,753 $213,583 $210,806 $206,809 $198,295 $172,795
======== ======== ======== ======== ======== ======== ========
Consolidated coverage ratio 1.48 1.42 1.44 1.37 1.25 1.24 1.29
======== ======== ======== ======== ======== ======== ========
<FN>
(1)Dividends on redeemable Preferred stock (retired for
financial reporting purposes in 1990) are included because
the stock was subject to mandatory redemption requirements
for cash.
</TABLE>
<PAGE> 74
Exhibit 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors of The Rouse Company:
We consent to the use of our report incorporated herein by
reference and to the reference to our firm under the heading
"Experts" in the prospectus.
/s/ KPMG PEAT MARWICK LLP
KPMG PEAT MARWICK LLP
Baltimore, Maryland
November 13, 1995
<PAGE>75
Exhibit 23.2
CONSENT OF INDEPENDENT REAL ESTATE CONSULTANTS
The Board of Directors of The Rouse Company:
We consent to the incorporation by reference in the
Amendment No. 1 to the Registration Statement of The Rouse
Company (the "Company") and Rouse Capital on Form S-3
(Registration Nos. 33-63279 and 33-63279-01) of our report dated
February 21, 1995, on our concurrence with the Company's
estimates of the market value of its equity and other interests
in certain real property owned and/or managed by the Company and
its subsidiaries as of December 31, 1994 and 1993, which report
appears on page 19 of the 1994 Annual Report to Shareholders that
is incorporated by reference in the Annual Report on Form 10-K of
the Company for the year ended December 31, 1994, and to the
reference to our firm under the heading "Experts" in the
Prospectus that is a part of such Registration Statement.
/s/ Deborah A. Jackson
LANDAUER ASSOCIATES, INC.
New York, New York
November 13, 1995
<PAGE>76
Exhibit 24.1
THE ROUSE COMPANY
POWER OF ATTORNEY
KNOW ALL MEN AND WOMEN BY THESE PRESENTS, that, effective
September 28, 1995, each person whose signature appears below
constitutes and appoints MATHIAS J. DeVITO, ANTHONY W. DEERING,
JEFFREY H. DONAHUE and BRUCE I. ROTHSCHILD, and each of them,
such person's true and lawful agents and attorneys-in-fact, with
full power of substitution and resubstitution, for such
individual and in his or her name, place and stead, in any and
all capacities, to sign for the undersigned such Registration
Statement or Statements of The Rouse Company (the "Company") on
Form S-3, or any successor or alternative Form, as may be filed
from time to time, in connection with the issuance by the Company
of Junior Subordinated Debentures or other debt securities and a
guarantee and the issuance by Rouse Capital, a statutory business
trust to be formed under Delaware law, of Quarterly Income
Preferred Securities or other securities, and any registration
statement or statements relating to an offering contemplated by
such Registration Statement or Statements that are to be filed
with the Securities and Exchange Commission, Washington, D.C.,
under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, and the regulations promulgated
thereunder, including any and all amendments (including post-
effective amendments) to such Registration Statement or
Statements and any registration statement related to an offering
contemplated by such Registration Statement or Statements that
are to be effective upon filing pursuant to Rule 462(b) under the
Securities Act of 1933, and to file the same, with all exhibits
thereto, and all documents in connection therewith, with the
Securities and Exchange Commission and any State or other
regulatory authority, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to
be done in and about the premises as fully to all intents and
purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
/s/ Anthony W. Deering
(SEAL)
Anthony W. Deering
President and
Chief Executive Officer
/s/ Jeffrey H. Donahue
(SEAL)
Jeffrey H. Donahue
Senior Vice President and
Chief Financial Officer
/s/ George L. Yungmann
(SEAL)
George L. Yungmann
Senior Vice President
and Controller
<PAGE>77
Exhibit 24.2
THE ROUSE COMPANY
POWER OF ATTORNEY
KNOW ALL MEN AND WOMEN BY THESE PRESENTS, that, effective
September 28, 1995, each person whose signature appears below
constitutes and appoints MATHIAS J. DeVITO, ANTHONY W. DEERING,
JEFFREY H. DONAHUE AND BRUCE I. ROTHSCHILD, and each of them,
such person's true and lawful agents and attorneys-in-fact, with
full power of substitution and resubstitution, for such
individual and in his or her name, place and stead, in any and
all capacities, to sign for the undersigned such Registration
Statement or Statements of The Rouse Company (the "Company") on
Form S-3, or any successor or alternative Form, as may be filed
from time to time, in connection with the issuance by the Company
of Junior Subordinated Debentures or other debt securities and a
guarantee and the issuance by Rouse Capital, a statutory business
trust to be formed under Delaware law, of Quarterly Income
Preferred Securities or other securities, and any registration
statement or statements relating to an offering contemplated by
such Registration Statement or Statements that are to be filed
with the Securities and Exchange Commission, Washington, D.C.,
under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, and the regulations promulgated
thereunder, including any and all amendments (including post-
effective amendments) to such Registration Statement or
Statements and any registration statement related to an offering
contemplated by such Registration Statement or Statements that
are to be effective upon filing pursuant to Rule 462(b) under the
Securities Act of 1933, and to file the same, with all exhibits
thereto, and all documents in connection therewith, with the
Securities and Exchange Commission and any State or other
regulatory authority, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to
be done in and about the premises as fully to all intents and
purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
/s/ David H. Benson
(SEAL)
David H. Benson
Director
/s/ Jeremiah E. Casey
(SEAL)
Jeremiah E. Casey
Director
/s/ Rohit M. Desai
(SEAL)
Rohit M. Desai
Director
/s/ Juanita T. James
(SEAL)
Juanita T. James
Director
/s/ Thomas J. McHugh
(SEAL)
Thomas J. McHugh
Director
/s/ Hanne M. Merriman
(SEAL)
Hanne M. Merriman
Director
<PAGE>78
/s/ Roger W. Schipke
(SEAL)
Roger W. Schipke
Director
/s/ Alexander B. Trowbridge
(SEAL)
Alexander B. Trowbridge
Director
/s/ Mathias J. DeVito
(SEAL)
Mathias J. DeVito
Chairman of the Board
and Director
/s/ Anthony W. Deering
(SEAL)
Anthony W. Deering
Director
