AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 6, 1995
Registration Nos. 33- and 33-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
ROUSE CAPITAL THE ROUSE COMPANY
(Exact name of registrant (Exact name of registrant
as specified in its charter) as specified in its charter)
Delaware Maryland
(State or other jurisdiction (State or other jurisdiction
of incorporation or organization) of incorporation or organization)
Applied For 52-0735512
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification 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, including area and telephone number, including area
code, of registrant's principal code, of 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)
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Copies to:
Timothy E. Peterson Joseph C. Shenker
Fried, Frank, Harris, Shriver & Jacobson Sullivan & Cromwell
One New York Plaza 250 Park Avenue
New York, New York 10004 New York, New York 10177
(212) 859-8000 (212) 558-4000
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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. / /
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<PAGE>
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Maximum Maximum
Aggregate Aggregate Amount
Title of Securities Amount to be Price Per Offering of Regis-
to be Registered Registered(1) Security (2)(3) Price (2)(3) tration
Fee
4,600,000 $25.00 $115,000,000 $39,656
Rouse Capital % Preferred
Cumulative Quarterly Securities
Income Preferred
Securities
The Rouse Company Guarantee
with respect to Rouse Capital
% Cumulative Quarterly
Income Preferred Securities (4)
The Rouse Company % Junior
Subordinated Debentures due
2025 (5)
Total 4,600,000 $25.00 $115,000,000 $39,656
Preferred
Securities
(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) No separate consideration will be received for The Rouse Company
Guarantee.
(5) 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.
----------------------
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.
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<PAGE>
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 OCTOBER 6, 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. The holders of the
Preferred Securities will have a preference, under certain circumstances, with
respect to cash distributions and amounts payable on liquidation, redemption
or otherwise over the holders of the Common Securities issued by the Issuer.
See "Description of the Preferred Securities - Subordination of Common
Securities".
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 , 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. 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 in "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".
<PAGE>
The Junior Subordinated Debentures are subordinated and junior in right
of payment to all Senior Indebtedness (as defined in "Description of the
Junior Subordinated Debentures - Subordination") of Rouse. As of June 30,
1995, Rouse had approximately $534 million of principal amount of Senior
Indebtedness. 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 $1,968 million at June 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 Company will apply to list the Preferred Securities on the New York
Stock Exchange.
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".
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SEE "RISK FACTORS" BEGINNING ON PAGE 3 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 FEDERAL INCOME TAX CONSEQUENCES.
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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.
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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.
Initial Public Underwriting Proceeds to the
Offering Price Commission (1) Issuer (2 )(3)
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Per Preferred Security $ (2) $
Total (4) $ (2) $
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(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".
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<PAGE>
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.
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* Quips is a servicemark of Goldman, Sachs & Co.
GOLDMAN, SACHS & CO.
The date of this Prospectus is , 1995.
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<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE 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.
AVAILABLE INFORMATION
Rouse is subject to the information 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 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. (the "New York Stock Exchange"), 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
(the "Act"). 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 and unconditionally guaranteed to the extent set forth herein by Rouse.
Rouse has, through the Guarantee, the Trust Agreement (as defined in "Rouse
Captial"), the Junior Subordinated Debentures and the Expense Agreement (as
defined under "Relationship Among the Preferred Securities, the Junior
Subordinated Debentures and the Guarantee"), taken together, fully 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).
-------------------------------------------
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 Form10-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").
2
<PAGE>
4. Rouse's Amendment to the June 10-Q, filed September 21,1995.
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 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.
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
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
June 30, 1995, Rouse had approximately $534 million of Senior
Indebtedness outstanding. 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 the subsidiaries of Rouse effectively are subordinated to the
claims of the direct creditors of the subsidiaries of Rouse. At
June 30, 1995, Rouse's subsidiaries had $1,968 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.
3
Option to Extend Interest Payment Period; Tax Consequences
Rouse has the right under the Indenture (as defined in "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
<PAGE>
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
determine to exercise its extension right in the future, the market price of
the Preferred Securities may be adversely affected. 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, Preferred Security
holders 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 cash, and such holder will not receive the cash 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 Issuer 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 (as defined in "Description of Preferred Securities
- - Redemption"), 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. 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 power conferred upon the Guarantee Trustee under the Guarantee. If
the Guarantee Trustee fails to enforce the Guarantee, any holder of Preferred
Securities may, after a period of 30 days has elapsed from such holder's
written request to the Guarantee Trustee to enforce the Guarantee, 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
4
<PAGE>
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 (as defined under "Rouse Capital")
provides that each holder of Preferred Securities by acceptance thereof agrees
to the provisions of the Guarantee and the Indenture.
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".
Limited Voting Rights
Holders of Preferred Securities will have limited voting rights and,
except upon the occurrence of an Event of Default (as defined under
"Description of the Preferred Securities - Events of Default; Notice") 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
"Description of the Preferred Securities") 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. See "Description of the Preferred Securities
- - Voting Rights".
Trading Characteristics of the Preferred Securities
The Company will apply to list the Preferred Securities as an equity
security on the New York Stock Exchange. 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 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 in "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.
ROUSE CAPITAL
Rouse Capital (the "Issuer" or the "Trust") 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 (the
"Property Trustee") and Michael J. Majchrzak (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 to be 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 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
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<PAGE>
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 will be owned
by Rouse. 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 in "Description of the
Preferred Securities - Payment and Paying Agent") 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 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 Rouse Capital is located at 10275 Little Patuxent
Parkway, Columbia, Maryland 21044-3456 and its telephone number is (410) 992-
6000.
The office of the Delaware Trustee in the State of Delaware is 300 King
Street, Wilmington, Delaware 19801.
THE ROUSE COMPANY
The Rouse Company (the "Company" or "Rouse") is one 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 57 million square feet in almost 200 buildings, classified into two
business categories: (i) retail centers and (ii) office, mixed-use and other
properties.
6
<PAGE>
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 ("GLA"). 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 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.
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.
7
<PAGE>
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.
Almeda Mall, Houston, TX (a) 10/68 Foley's; JCPenney 802,000 294,000
The Shops at Arizona Center, 11/90 - 151,000 151,000
Phoenix, AZ (a)
Augusta Mall, Augusta, GA (b) 8/78 Rich's; R.H. Macy; 902,000 313,000
JCPenney; Sears
Bayside Marketplace, 4/87 - 223,000 223,000
Miami, FL (b)
Beachwood Place, (b) 8/78 Saks Fifth Avenue; 453,000 228,000
Cleveland, OH Dillard's
Burlington Center, 8/82 Strawbridge 567,000 246,000
Burlington, NJ (d); & Clothier; Sears
Cherry Hill, (a) 10/61 Strawbridge & 1,285,000 544,000
Cherry Hill, NJ Clothier; R.H. Macy;
JCPenney
The Citadel, Colorado Springs 8/80 Mervyn's; JCPenney; 1,097,000 460,000
, CO (d) Foley's; Dillard's
College Square, (d) 8/80 Von Maur; Younkers; 560,000 313,000
Cedar Falls, IA Wal-Mart
Collin Creek Mall, (b) 9/95 Dillard's; Foley's; 1,123,000 333,000
Plano, Texas 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, 9/70 Strawbridge & 1,065,000 481,000
Voorhees, NJ (a) 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, 8/90 The Broadway; 1,215,000 593,000
Newport Beach, CA (c) I. Magnin;
Robinson's-May;
Neiman Marcus
Franklin Park, 7/71 Hudson's; JCPenney; 1,082,000 313,000
Toledo, OH (b) 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
8
<PAGE>
Date of Retail Square Footage
Opening or Total Mall
Retail Centers in Operation Acquisition Department Stores Center Only
Governor's Square, 8/79 Burdine's; Sears; 1,031,000 340,000
Tallahassee, FL (b) JCPenney; Dillard's
The Grand Avenue, 8/82 Marshall Field; 842,000 242,000
Milwaukee, WI (a) The Boston Store
Greengate Mall, 8/65 Lazarus; 612,000 233,000
Greensburg, PA (a) Montgomery Ward
Harborplace, Baltimore, MD (a) 7/80 - 136,000 136,000
Harundale Mall, 10/58 Value City 309,000 232,000
Glen Burnie, MD (b)
Highland Mall, Austin, TX (b) 8/71 Dillard's; 1,099,000 367,000
JCPenney; Foley's
Hulen Mall, 8/77 Foley's; 924,000 327,000
Ft. Worth, TX (a) Montgomery Ward;
Dillard's
The Jacksonville Landing, 6/87 - 128,000 128,000
Jacksonville, FL (a)
Mall St. Matthews St., 3/62 JCPenney; 965,000 345,000
St. Matthews, KY (a) Bacon's; Dillard's
Marshall Town Center, 8/80 JCPenney; Younkers; 340,000 153,000
Marshalltown, IA (d) Menard's
Midtown Square, 10/59 Burlington 235,000 190,000
Charlotte, NC (a) Coat Factory
Mondawmin (a)/Metro 1/78; 12/82 - 496,000 496,000
Plaza (b), Baltimore, MD
Muscatine Mall, 8/80 JCPenney; 347,000 186,000
Muscatine, IA (d) Von Maur; Wal-Mart
The Shops at National Place, 5/84 - 125,000 125,000
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, 10/82 Sears; Dillard's; 960,000 362,000
Gretna, LA (a) Mervyn's; Maison Blanche
Outlet Square, Atlanta, GA (a) 7/83 Burlington 326,000 183,000
Coat Factory; Marshalls
Owings Mills, 7/86 R.H. Macy; Hecht's; 809,000 325,000
Baltimore 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, 2/66 Strawbridge & 784,000 442,000
Montgomery County, PA (a) Clothier; Hess
9
<PAGE>
Date of Retail Square Footage
Opening or Total Mall
Retail Centers in Operation Acquisition Department Stores Center Only
Randhurst, Mt. Prospect, IL (d) 7/81 Carson, Pirie, 1,324,000 591,000
Scott; JCPenney;
Montgomery Ward; Kohls
Ridgedale Center, 1/89 Carson, Pirie, 1,039,000 334,000
Minnetonka, MN (d) Scott; Dayton's;
JC Penney; Sears
Riverwalk, New Orleans, LA (a) 8/86 - 179,000 179,000
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, 12/78 Eaton's; The Bay 968,000 474,000
Toronto, 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 Center, 2/88 Sears; Marshalls; 645,000 467,000
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, 10/88 Nordstrom; Bon Marche 723,000 118,000
Seattle, WA (b)
Westland Mall, 8/80 JCPenney; Younkers 344,000 175,000
West Burlington, IA (d)
White Marsh, 8/81 R.H. Macy; 1,178,000 359,000
Baltimore 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;
Total Retail Centers in Operation 46,394,000 20,101,000
10
<PAGE>
Retail Centers Under Constru Retail Square Footage
ction or in Development Department Stores Total Center Mall Only
Beachwood Place Expansion, Nordstrom 459,000 90,000
Cleveland, OH
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 996,000 160,000
Construction or in Development
OFFICE PROJECTS IN OPERATION LOCATION SQUARE FEET
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
HOTEL PROJECTS IN OPERATION LOCATION ROOMS
Cross Keys Inn (a) Baltimore, MD 148
Stouffer Harborplace Hotel Baltimore, MD 622
Columbia Properties in Operation Type of Project Square Feet
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
11
<PAGE>
Harper's Choice Village Center (a) Community Retail 81,000
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
* 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 % 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.
12
<PAGE>
OFFICE PROJECTS OWNED BY . LOCATION SQUARE FEET
ROUSE-TEACHERS PROPERTIES, INC
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
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 Prince George's County, MD 316,000
I, II, III, IV & V
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
INDUSTRIAL PROJECTS OWNED BY ROUSE-TEACHERS
PROPERTIES, INC. LOCATION SQUARE FEET
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
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.
13
<PAGE>
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
overallotment option). Approximately $73 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. Some of the net proceeds also may be
used to fund development projects and property acquisitions. The 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 June 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.
June 30, 1995 (in thousands)
Actual Adjusted
Current portion of debt and
capital lease obligations $ 119,954 $ 111,493
Long-term debt $2,323,788 $2,258,809
Long-term portion of capital
lease obligations 58,247 58,247
Company-obligated mandatorily
redeemable preferred securities
of subsidiary Trust (1) ------------- 100,000
Shareholders' equity:
Preferred stock, par value $.01 per share;
50,000,000 shares authorized; 4,505,014
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; 47,827,071
shares issued and outstanding 478 478
Additional paid-in capital 307,867 307,867
Accumulated deficit (245,062) (245,062)
Total shareholders' equity 63,328 63,328
Total capitalization $2,445,363 $2,480,384
- ------------------
(1) As described herein, the assets of the Issuer include $100 million of
% Junior Subordinated Debentures of Rouse which will constitute approximately
97% of the total assets of the Issuer.
14
<PAGE>
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 six months ended June 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 June 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 June 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 six months ended June 30, 1995 and 1994 are unaudited. Results for
the six months ended June 30, 1995 are not necessarily indicative of results
for the year ending December 31, 1995.
<TABLE>
<CAPTION>
Six Months Ended
June 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:
Revenues from continuing
operations $326,151 $326,196 $671,171 $646,805 $597,105 $573,498 $529,570
Earnings (loss) from
continuing operations 770 (1,991) 6,606 (1,291) (15,849) 2,424 (1,165)
Earnings (loss) from continuing
operations available for common
shareholders per share of common
stock (.14) (.18) (.14) (.27) (.33) .05 (.07)
Earnings before depreciation and
deferred taxes from operations
(EBDT) 47,756 41,407 94,710 78,281 52,282 46,820 50,290
Net cash provided by (used in):
Operating activities 53,477 49,435 113,775 101,149 66,630 67,226 35,057
Investing activities (16,709) (128,914) (178,551) (154,446) (144,836) (96,210) (248,532)
Financing activities (46,182) 65,419 40,618 47,068 98,914 17,271 246,968
Ratio of earnings to combined
fixed charges and Preferred
stock dividend requirements
(1)(2)(3) -- -- -- -- -- -- --
Consolidated coverage retio(4) 1.45 1.40 1.44 1.37 1.25 1.24 1.29
Total assets-cost basis 2,830,815 2,912,685 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 2,501,989 2,560,360 2,532,920 2,473,596 2,498,983 2,374,527 2,344,095
Shareholders' equity (deficit):
Historical cost basis 63,328 87,915 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) 1.08 1.54 1.63 1.98 (.74) .36 .53
Current value basis (5)(6) -- -- 27.75 26.75 25.50 26.60 30.10
Cash dividends per share of
common stock for the period .40 .34 .68 .62 .60 .60 .60
Cash dividends per share of
convertible Preferred stock
for the period 1.62 1.62 3.25 2.83 -- -- --
Market price per share of
common stock at end of period(7) 19.69 18.75 19.25 17.75 18.00 18.25 14.50
Market price per share of
convertible Preferred stock at
end of period 51.00 51.00 48.50 53.75 -- -- --
Weighted average common shares
outstanding 47,734 47,563 47,565 47,411 47,994 48,157 48,019
Number of common shares
outstanding at end of period 47,827 47,563 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>
- ---------------------------------
(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 six months ended June 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.
15
<PAGE>
<FN>
(3) Total fixed charges and Preferred stock dividend requirements exceeded the Company's earnings available for fixed charges
by $9,211,000 and $11,052,000 for the six months ended June 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 Series A Convertible Preferred stock.
(7) The market price of common stock of the Company as of the close of business on September 29, 1995 was $21.94 per share.
</FN>
</TABLE>
16
<PAGE>
RESULTS OF OPERATIONS
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.
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.
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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.
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.
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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).
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.
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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 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.
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
Operating Properties. Revenues from retail centers increased $3,854,000
while total operating and interest expenses decreased $5,022,000 for the six
months ended June 30, 1995 as compared to the same period in 1994. The
increase in revenues is attributable to the operations of expansions opened in
August 1994 and March 1995, increased tenant lease cancellation payments, and
higher effective rents on re-leased space. This increase has been partially
offset by lower recoveries of operating expenses, as discussed below, and the
dispositions of properties in the first quarter of 1994 and second quarter of
1995. The decrease in expenses is attributable to these dispositions, lower
recoverable expenses as a result of operating expense reduction efforts and
milder winter conditions experienced in the Northeast and lower interest
expense due to debt restructurings and refinancings completed in 1994. This
decrease was
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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 increased $456,000
and total operating and interest expenses decreased $154,000 for the six
months ended June 30, 1995 as compared to the same period in 1994. The
increase in revenues is attributable primarily to higher occupancy at certain
hotel and office properties in Columbia and tenant lease cancellation
payments. This increase has been partially offset by increased vacancy at a
mixed-use project. The decrease in total operating and interest expenses is
attributable primarily to lower depreciation expense as the Company
discontinued depreciating an industrial building it intends to sell. This
decrease is 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 the 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 $4,473,000 and total
costs and expenses decreased $3,182,000 for the six months ended June 30, 1995
as compared to the same period in 1994.
The decrease in revenues relates to lower sales of land for
commercial/other uses in Columbia. The decrease in costs and expenses is
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 increased in 1995 when
compared to 1994 due to the Company's more aggressive pursuit of new
development and acquisition opportunities.
Corporate. Corporate operating expenses increased $629,000 for the six
months ended June 30, 1995 when compared to the same period in 1994. This
increase is due primarily to costs of increased executive management focus on
corporate matters.
Corporate interest costs were $7,204,000 and $6,568,000 for the six
months ended June 30, 1995 and 1994, respectively. Of such amounts,
$1,661,000 and $1,016,000 were capitalized during the six months ended June
30, 1995 and 1994, respectively, on funds invested in development projects.
The increase in corporate interest costs is attributable primarily to
additional debt used for corporate purposes.
Gain (Loss) on Dispositions of Assets and Other Provisions, Net. The
loss in 1995 relates primarily to provisions for losses on several retail
center properties the Company has decided to sell and is actively marketing
($10,420,000). 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 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 ($2,761,000).
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Earnings Before Depreciation and Deferred Taxes. EBDT was $47,756,000
for the six months ended June 30, 1995, an increase of 15% over $41,407,000 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 $52,677,000, an increase of 19% over
$44,443,000 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 at the Company's properties, lease termination payments from some
departing retailers and refinancings and restructures of debt, management and
ownership agreements.
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 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 of certain
provisions of the Trust Agreement 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 will be 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 Property Trustee 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 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 %. 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
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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 , 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
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 New York or Maryland 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 is closed for business. (Section 4.01(a)).
Rouse has the right under the Indenture pursuant to which it will issue
the Junior Subordinated Debentures (the "Indenture") to extend the interest
payment period from time to time on the Junior Subordinated Debentures to a
period not exceeding 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 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
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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. (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 quarterly interest
periods terminating on or prior to the date of redemption. 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".
"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 Preferred
Securities in connection with a Tax Event or a liquidation of the Issuer upon
the bankruptcy, dissolution or liquidation of Rouse or the occurrence of a Tax
Event, Junior Subordinated Debentures having a principal amount equal to the
aggregate Liquidation Amount of the Preferred Securities of the holder to whom
such Junior Subordinated Debentures are distributed.
"PIPS Issuance" means an issuance by Rouse Capital 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 (a) 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, or (b) 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 (c) 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,
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<PAGE>
clarification or change is made known, which amendment, clarification, or
change is effective or such pronouncement or decision is announced on or after
the date of issuance of the Preferred Securities, there is more than an
insubstantial risk that (i) the Issuer is, or will be, subject to United
States federal income tax with respect to interest received on the Junior
Subordinated Debentures, (ii) 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 (iii) the Issuer is, or will be,
subject to more than a de minimis amount of other taxes, duties or other
governmental charges other than franchise and other similar taxes.
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 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 funds
sufficient to pay the applicable Redemption Price and will give such 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)).
Payment of the Redemption Price on the Preferred Securities to holders of
Preferred Securities shall be made to the recordholders thereof as they appear
on the register for the Preferred Securities on the relevant record date,
which shall be one Business Day prior to the relevant Redemption Date,
provided, however, that in the event that the Preferred Securities do not
remain in book-entry-only form, the relevant record date shall be the date 15
days prior to the Redemption Date. (Section 4.02(f)).
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
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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 security registrar, 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(g)).
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, 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 Preferred
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 to the Junior
Subordinated Debentures to the holders of the Preferred 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
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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(s) of the Common
Securities will be entitled to receive distributions upon any such dissolution
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
The occurrence of an "Event of Default" as defined in Section 501 of the
Indenture (see "Description of the Junior Subordinated Debentures - Events of
Default") constitutes an "Event of Default" under the Trust Agreement with
respect to the Preferred Securities issued thereunder.
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 corporation into which either the Property Trustee, the Delaware
Trustee or any Administrative Trustee that is not a natural person may be
merged or with which it may be consolidated, or any corporation resulting from
any merger, conversion or consolidation to which any such Trustee shall be a
party, or any corporation 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 corporation 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)).
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
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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 held by the Issuer, 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 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. (Section 6.02).
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 Administrative Trustees
alone shall have the power to make such appointment. (Section 8.09).
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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 by check mailed to the address of the holder entitled thereto as such
address shall appear on the securities register. The paying agent (the
"Preferred Securities Paying Agent") shall initially be The First National
Bank of Chicago. The Paying Agent shall be permitted to resign as 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 Paying Agent, the Administrative Trustees
shall appoint a successor acceptable to the Property Trustee and Rouse to act
as Paying Agent (which shall be a bank or trust company). (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 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 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 Owners will be governed
by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
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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
ceases to provide securities depository services, (ii) the Administrative
Trustees (with the consent of Rouse) so determine 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 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 after they have been called for redemption.
(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 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
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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 or 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.
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 or timing 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 or (iii) 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 10.04).
Miscellaneous
Application will be made to list the Preferred Securities on the New York
Stock Exchange.
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,
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 the Administrative Trustees determine in their
discretion to be necessary or desirable 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 Preferred Securities will, upon issuance, be validly issued, fully
paid and non-assessable. Holders of the Issuer Securities have no preemptive
rights.
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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 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 will be 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 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 (without duplication of
amounts theretofore paid by the Issuer), 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 (without
duplication): (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.
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
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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 power
conferred upon the Guarantee Trustee under the Guarantee.
If the Guarantee Trustee fails to enforce the Guarantee, any holder of
Preferred Securities may, after a period of 30 days has elapsed from such
holder's written request to the Guarantee Trustee to enforce the Guarantee,
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".
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).
Governing Law
The Guarantee will be governed by and construed in accordance with the
laws of the State of New York.
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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 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. Whenever
particular provisions or defined terms in the Indenture are referred to
herein, such provisions 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 are unsecured, subordinated obligations of Rouse which
rank junior to all of Rouse's Senior Indebtedness
(as defined in "- Subordination").
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) distribute a
Like Amount of Junior Subordinated Debentures to each holder of a Preferred
Security.
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.
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.
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 ,
1995, to the person in whose name each Junior Subordinated Debenture is
registered, subject to certain exceptions, at
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the close of business on the Business Day next preceding such Interest Payment
Date. It is anticipated that the Junior Subordinated Debentures will be held
in the name of the Property Trustee in trust 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. 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. At the end
of any such Extension Period, Rouse must pay all interest then accrued and
unpaid (together with interest thereon at the rate specified for the Junior
Subordinated Debentures to the extent permitted by applicable law). 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. No interest shall be due and payable during an Extension
Period, except at the end thereof. So long as the Property Trustee shall be
the sole holder 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 one Business Day 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 one Business Day prior to such record date.
The Property 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 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 Rouse 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.
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
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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.
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. (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, or (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 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 June 30, 1995, the Senior Indebtedness of Rouse was approximately
$534 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
operating subsidiaries of Rouse effectively are subordinated to the claims of
direct creditors of the operating subsidiaries of Rouse. At June 30, 1995,
Rouse's subsidiaries had $1,968 million of indebtedness outstanding for money
borrowed and capitalized lease obligations.
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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 loan; 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, capitalized 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, 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.
(Section 1005). 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 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. (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:
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(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 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 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 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 (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.
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, an event Rouse and the Issuer currently consider to be remote, 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, (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 in
"- Optional Redemption" or (iv) the rollover of the Trust Property (as defined
in the Trust Agreement) into another entity with similar characteristics.
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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 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 Security 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 Security 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 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 Paying Agent for payments with respect to the
Junior Subordinated Debentures. Rouse may at any time designate additional
Paying Agents or rescind the designation of any 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
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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.
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, including, among other
things, 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. (Section 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 Guarantee and the Expense Agreement (as defined
under "Relationship Among the Preferred Securities, the Junior Subordinated
Debentures and the Guarantee"); (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
at the time of the transaction, no Event of Default, and no event which, after
notice 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, 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
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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
Rouse will have the right at all times to assign any of its rights or
obligations under the Indenture to a direct or indirect wholly-owned
subsidiary of Rouse, provided that, in the event of any such assignment, Rouse
will remain liable for all such obligations. Subject to the foregoing, the
Indenture will be binding upon and inure to the benefit of the parties thereto
and their respective successors and assigns. (Section 109).
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEE
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 (the "Expense 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.
Payments of distributions and other amounts due on the Preferred
Securities (to the extent the Issuer has funds sufficient for the payment of
such distributions) are guaranteed by Rouse as and to the extent set forth
under "Description of the Guarantee". 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.
If the Guarantee Trustee fails to enforce the Guarantee, a holder of a
Preferred Security may, after a period of 30 days has elapsed from the date of
such holder's written request to the Guarantee Trustee to enforce the
Guarantee, 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 benefits of the Issuer, a trust that exists for the sole purpose of
issuing its 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 the interest period) is entitled to receive,
interest on the principal amount of
41
<PAGE>
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.
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.
42
<PAGE>
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 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.
43
<PAGE>
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.
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 the 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.
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<PAGE>
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. is acting as a Representative, has
severally agreed to purchase from the Issuer the respective number of
Preferred Securities set forth opposite its name below:
Underwriters Number of
Preferred Securities
Goldman, Sachs & Co.
Total 4,000,000
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 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)
45
<PAGE>
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.
Prior to this offering, there has been no public market for the Preferred
Securities. The Company will apply to list the Preferred Securities on the
New York Stock Exchange (the "Exchange"). 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. Fried, Frank, Harris, Shriver & Jacobson and Sullivan &
Cromwell will rely upon the opinion of Richards, Layton & Finger as to certain
matters of Delaware law and upon the opinion of Bruce I. Rothschild, Esq.,
Vice President, General Counsel and Secretary of Rouse as to matters of
Maryland law. As of October 2, 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 own account under the Company's 401(k) Savings Plan.
46
<PAGE>
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
unlawful. Neither the delivery of this Prospectus nor any sale made hereunder
shall, under any circumstances, create any implication that there has been no
change in the affairs of the Issuer or Rouse since the date hereof or that the
information contained herein or therein is correct as of any time subsequent
to the date of such information.
_______________
TABLE OF CONTENTS
Page
Available Information
Incorporation of Certain Documents by
Reference
Risk Factors
Rouse Capital
The Rouse Company
Use of Proceeds
Capitalization
Selected Financial Data of Rouse
Results of Operations
Description of the Preferred Securities
Description of the Guarantee
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
4,000,000
PREFERRED SECURITIES
ROUSE CAPITAL
% CUMULATIVE
QUARTERLY INCOME PREFERRED SECURITIES
GUARANTEED TO THE EXTENT
SET FORTH HEREIN BY
THE ROUSE COMPANY
PROSPECTUS
GOLDMAN, SACHS & CO.
REPRESENTATIVE OF THE UNDERWRITERS
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
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
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.
Exhibit No. Description
+1.1 Form of Underwriting Agreement
*4.1 Certificate of Trust of Rouse Capital
+4.2 Form of Trust Agreement
+4.3 Form of Indenture between Rouse and The First National Bank of
Chicago, as Debenture Trustee
+4.4 Form of Preferred Securities (included in Exhibit 4.2)
+4.5 Form of Junior Subordinated Debenture (included in Exhibit 4.3)
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<PAGE>
+4.6 Form of Guarantee by Rouse and The First National Bank of
Chicago, as Guarantee Trustee
+4.7 Form of Agreement as to Expenses and Liabilities
+5.1 Opinion of Richards, Layton & Finger re validity of Preferred
Securities
+5.2 Opinion of Fried, Frank, Harris, Shriver & Jacobson re validity
of Guarantee and Junior Subordinated Debentures
+5.3 Opinion of Bruce I. Rothschild, Esq.
+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 Consolidated Coverage Ratio
*23.1 Consent of KPMG Peat Marwick LLP, independent auditors
*23.2 Consent of Landauer Associates, Inc., independent real estate
consultants
+23.3 Consent of Richards, Layton & Finger (included in Exhibit 5.1
above)
+23.4 Consent of Fried, Frank, Harris, Shriver & Jacobson (included
in Exhibit 5.2 above)
+23.5 Consent of Bruce I. Rothschild, Esq. (included in Exhibit 5.3
above)
+23.6 Consent of Fried, Frank, Harris, Shriver & Jacobson (included
in Exhibit 8.1 above)
24.1 Power of Attorney, dated March 16, 1993 (which is incorporated
by reference from the Exhibits to the Company's Form S-3 Registration
Statement (No. 33-57347))
24.2 Power of Attorney, dated September 24, 1992 (which is
incorporated by reference from the Exhibits to the Company's Form S-3
Registration Statement (No. 33-52458))
24.3 Power of Attorney, dated December 3, 1992 (which is incorporated
by reference from the Exhibits to the Company's Form S-3 Registration
Statement (No. 33-52458))
+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
+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
+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))
________________________
* Filed herewith.
+ To be filed by amendment.
II-2
<PAGE>
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
(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
II-3
<PAGE>
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 accordance with
the rules and regulations prescribed by the Commission under Section 305(b)(2)
of the Trust Indenture Act.
II-4
<PAGE>
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
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the County of Howard, State of Maryland, on the
6th day of October, 1995.
THE ROUSE COMPANY
By: /s/ Anthony W. Deering
Anthony W. Deering
President and Chief Executive Officer
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:
/s/ Anthony W. Deering President, Chief Executive
Anthony W. Deering Officer and Director October 6, 1995
Principal Financial Officer:
/s/ Jeffrey H. Donahue Senior Vice President October 6, 1995
Jeffrey H. Donahue and Chief Financial
Officer
Principal Accounting
Officer:
/s/ George L. Yungmann Senior Vice President October 6, 1995
George L. Yungmann and Controller
II-5
<PAGE>
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 B. Trowbridge.
/s/ Mathias J. DeVito For himself and as October 6, 1995
Mathias J. DeVito Attorney-in-Fact for the
above-named members of
the Board of Directors
II-6
<PAGE>
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 Registration
Statement to be signed on its behalf by the undersigned thereunto duly
authorized, in the County of Howard, State of Maryland, on the 6th day of
October, 1995.
ROUSE CAPITAL
By: THE ROUSE COMPANY, as Depositor
By: /s/ Jeffrey H. Donahue
Jeffrey H. Donahue
Senior Vice President and Chief
Financial Officer
II-7
<PAGE>
EXHIBITS
Exhibit No. Description
+1.1 Form of Underwriting Agreement
*4.1 Certificate of Trust of Rouse Capital
+4.2 Form of Trust Agreement
+4.3 Form of Indenture between Rouse and The First National Bank of
Chicago, as Debenture Trustee
+4.4 Form of Preferred Securities (included in Exhibit 4.2)
+4.5 Form of Junior Subordinated Debenture (included in Exhibit 4.3)
+4.6 Form of Guarantee by Rouse and The First National Bank of
Chicago, as Guarantee Trustee
+4.7 Form of Agreement as to Expenses and Liabilities
+5.1 Opinion of Richards, Layton & Finger re validity of Preferred
Securities
+5.2 Opinion of Fried, Frank, Harris, Shriver & Jacobson re validity
of Guarantee and Junior Subordinated Debentures
+5.3 Opinion of Bruce I. Rothschild, Esq.
+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 Consolidated Coverage Ratio
*23.1 Consent of KPMG Peat Marwick LLP, independent auditors
*23.2 Consent of Landauer Associates, Inc., independent real estate
consultants
+23.3 Consent of Richards, Layton & Finger (included in Exhibit 5.1
above)
+23.4 Consent of Fried, Frank, Harris, Shriver & Jacobson (included
in Exhibit 5.2 above)
+23.5 Consent of Bruce I. Rothschild, Esq. (included in Exhibit 5.3
above)
+23.6 Consent of Fried, Frank, Harris, Shriver & Jacobson (included
in Exhibit 8.1 above)
24.1 Power of Attorney, dated March 16, 1993 (which is incorporated
by reference from the Exhibits to the Company's Form S-3 Registration
Statement (No. 33-57347))
24.2 Power of Attorney, dated September 24, 1992 (which is
incorporated by reference from the Exhibits to the Company's Form S-3
Registration Statement (No. 33-52458))
24.3 Power of Attorney, dated December 3, 1992 (which is incorporated
by reference from the Exhibits to the Company's Form S-3 Registration
Statement (No. 33-52458))
<PAGE>
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
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
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))
________________________
* Filed herewith.
+ To be filed by amendment.
<PAGE>
EXHIBIT 4.1
CERTIFICATE OF TRUST
OF
ROUSE CAPITAL
THIS CERTIFICATE OF TRUST of Rouse Capital (the "Trust"), dated
September 29, 1995, is being duly executed and filed by the undersigned, as
trustees, to form a business trust under the Delaware Business Trust Act (12
Del. C. 3801, et seq.).
1. Name. The name of the business trust being formed hereby is Rouse
Capital.
2. Delaware Trustee. The name and business address of the trustee of
the Trust who is a resident of the State of Delaware is Michael J. Majchrzak,
c/o FCC National Bank, 300 King Street, Wilmington, DE 19801.
3. Effective Date. This Certificate of Trust shall be effective as
of its filing.
IN WITNESS WHEREOF, the undersigned, being the trustees of the Trust,
have executed this Certificate of Trust as of the date first above written.
/s/ Michael J. Majchrzak
Michael J. Majchrzak,
as Delaware Trustee
THE FIRST NATIONAL BANK OF CHICAGO,
as Property Trustee
By: /s/ George F. Kubin
Name: George F. Kubin
Title: Vice President
<PAGE>
Exhibit 12.1
THE ROUSE COMPANY AND SUBSIDIARIES
<TABLE>
Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividend Requirements
(dollars in thousands)
<CAPTION>
Six Months Ended
June 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
$ 2,673 $ (1,383) $ 13,336 $ 3,072 $(20,783) $ 5,245 $ 257
Fixed charges:
Interest costs 108,766 106,709 220,971 219,705 221,907 219,538 200,469
Capitalized interest (3,569) (2,487) (7,388) (8,899) (15,098) (21,243) (29,947)
Amortization of debt issuance
costs 1,259 1,021 2,146 2,801 3,571 3,173 2,833
Portion of rental expense
representative of interest
factor (1) 3,316 5,882 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 1,369 981 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) 1,882 1,835 3,670 3,605 3,474 3,145 2,683
Cost of land sales (3) 635 903 1,580 1,627 1,295 928 956
Earnings available for combined
fixed charges and Preferred
stock dividend requirements $116,331 $113,461 $246,773 $239,771 $211,157 $228,735 $193,273
Combined fixed charges and
Preferred stock dividend
requirements:
Interest costs $108,766 $106,709 $220,971 $219,705 $221,907 $219,538 $200,469
Amortization of debt expense 1,259 1,021 2,146 2,801 3,571 3,173 2,833
Portion of rental expense
representative of interest
factor (1) 3,316 5,882 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) 12,201 10,901 21,802 18,968 0 0 3,788
Total combined fixed charges
and Preferred stock dividend
requirements $125,542 $124,513 $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 $1,045,000 and $3,594,000 for the six months ended June 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 $9,211,000 and $11,052,000 for the six months ended June 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.
</FN>
</TABLE>
<PAGE>
Exhibit 12.2
<TABLE>
THE ROUSE COMPANY AND SUBSIDIARIES
Computation of Consolidated Coverage Ratio
(dollars in thousands)
<CAPTION>
Six Months Ended
June 30, Year Ended December 31,
1995 1994 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings (loss) before
depreciation and deferred
taxes from operations (EBDT) $ 47,756 $ 41,407 $ 94,710 $ 78,281 $ 52,282 $ 46,820 $ 50,290
Consolidated interest expense 105,197 104,222 213,583 210,806 206,809 198,295 170,522
Preferred stock dividends(1) -- -- -- -- -- -- 2,273
$152,953 $145,629 $308,293 $289,087 $259,091 $245,115 $223,085
Consolidated interest expense $105,197 $104,222 $213,583 $210,806 $206,809 $198,295 $170,522
Preferred stock dividends(1) -- -- -- -- -- -- 2,273
$105,197 $104,222 $213,583 $210,806 $206,809 $198,295 $172,795
Consolidated coverage ratio 1.45 1.40 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.
</FN>
</TABLE>
<PAGE>
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
October 6, 1995
<PAGE>
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 Registration
Statement of The Rouse Company (the "Company") and Rouse Capital on Form S-3
(Registration Nos. 33 -and 33- )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
October 6, 1995
