<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 30, 1998
---------------------
The Rouse Company
-----------------
(Exact name of registrant as specified in its charter)
Maryland 0-1743 52-0735512
-------------------- ----------- ------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
10275 Little Patuxent Parkway
Columbia, Maryland 21044-3456
- ------------------ ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (410) 992-6000
--------------
Not Applicable
--------------
(Former name or former address, if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets.
The Rouse Company (the "Company") previously reported in its Current Report on
Form 8-K filed with the Securities and Exchange Commission on December 14, 1998,
that on June 30, 1998, the Company entered into an agreement with Teachers
Properties, Inc. ("Teachers") to acquire all of the income-producing properties
and certain land parcels of Rouse-Teachers Properties, Inc. ("RTPI"), an entity
in which Teachers held a 95% ownership interest and the Company held a 5%
ownership interest.
On November 30, 1998, a wholly owned subsidiary of the Company acquired from
Teachers its interest in RTPI.
The acquired assets of RTPI (the "RTPI Properties") consist of 22 office
buildings in metropolitan Baltimore, Maryland containing approximately 1,034,000
square feet of leasable space, 26 industrial buildings in metropolitan Baltimore
containing approximately 1,675,000 square feet of leasable space, 8 office
buildings in Columbia, Maryland containing approximately 428,000 square feet of
leasable space, 10 office buildings in metropolitan Washington, D.C. containing
approximately 1,227,000 square feet of leasable space, an office building in
suburban Harrisburg, Pennsylvania containing approximately 231,000 square feet
of leasable space and approximately 107 salable acres of land in the Baltimore
and Washington metropolitan areas. The Company intends to continue operating
the acquired properties as office and industrial buildings except for three of
the acquired buildings in metropolitan Washington, D.C. that the Company sold on
December 1, 1998 for an aggregate price of approximately $91 million.
The aggregate purchase price for the properties, negotiated between the Company
and Teachers, was approximately $373 million, including approximately $112
million of debt secured by the properties and assumed by the Company. The
Company funded the net purchase price due at closing of approximately $261
million by issuing $100 million (3,525,782 shares) of common stock, a $50
million note secured by certain of the acquired properties, a $58 million
unsecured note and a payment of $53 million in cash to Teachers. The cash paid
at closing was funded by available cash balances and by borrowings under the
Company's revolving credit facility that was underwritten by The First National
Bank of Chicago and Bankers Trust Company.
The Company is filing this Current Report on Form 8-K/A to include financial
statements specified by Rule 3-14 of Regulation S-X of RTPI Properties and
related pro forma financial information of the Company.
<PAGE>
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits
The following financial statements and pro forma financial information are filed
as part of this report:
(a) Financial statements of real estate operations acquired specified by Rule 3-
14 of Regulation S-X. See Index to Financial Statements and Pro Forma
Financial Information (page F-1).
(b) Pro forma financial information required pursuant to Article 11 of
Regulation S-X. See Index to Financial Statements and Pro Forma Financial
Information (page F-1).
(c) Exhibits:
23.1 Consent of Deloitte & Touche LLP, Independent Auditors
<PAGE>
Signatures
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE ROUSE COMPANY
Date: February 12, 1999 By /s/ Jeffrey H. Donahue
----------------- -----------------------
Jeffrey H. Donahue
Executive Vice-President and
Chief Financial Officer
Date: February 12, 1999 By /s/ George L. Yungmann
----------------- -----------------------
George L. Yungmann
Senior Vice-President and
Controller
<PAGE>
INDEX TO FINANCIAL STATEMENTS AND
PRO FORMA FINANCIAL INFORMATION
The following historical financial statements and pro forma financial
information are presented in accordance with Rule 3-14 and Article 11,
respectively, of Regulation S-X of the Securities and Exchange Commission. The
historical financial statements have been audited only for the RTPI Properties'
most recent fiscal year as the transaction relating to RTPI Properties (as
described in the Company's Current Report on Form 8-K dated December 14, 1998),
is not with a related party and the Company, after reasonable inquiry, is not
aware of any material factors related to the RTPI Properties not otherwise
disclosed that would cause the reported financial information to not be
necessarily indicative of future operating results except as to interest expense
related to certain mortgage debt assumed and new debt issued by the Company to
finance the acquisition of RTPI Properties and as to related depreciation and
amortization. A discussion of material factors considered by the Company in
assessing RTPI Properties is included in the introductory language regarding the
pro forma financial statements on page F-6. In addition, since RTPI Properties
will be directly or indirectly owned by an entity that intends to elect to be
treated as a REIT for Federal income tax purposes, a presentation of estimated
taxable operating results is not applicable.
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
RTPI PROPERTIES
- ---------------
Report of Independent Auditors.............................................. F-2
Statement of Revenues and Certain Expenses for the
Nine Months Ended September 30, 1998 (Unaudited) and
for the Year Ended December 31, 1997....................................... F-3
Notes to Statement of Revenues and Certain Expenses......................... F-4
THE ROUSE COMPANY AND SUBSIDIARIES
- ----------------------------------
Introductory language regarding Unaudited Pro Forma
Condensed Consolidated Financial Statements................................ F-6
Pro Forma Condensed Consolidated Balance Sheet as of
September 30, 1998 (Unaudited)............................................. F-8
Pro Forma Condensed Consolidated Statement of Operations
for the Year Ended December 31, 1997 (Unaudited)........................... F-9
Pro Forma Condensed Consolidated Statement of Operations
for the Nine Months Ended September 30, 1998 (Unaudited)................... F-10
Notes to Pro Forma Condensed Consolidated Financial Statements (Unaudited).. F-11
</TABLE>
F-1
<PAGE>
Independent Auditors' Report
----------------------------
The Board of Directors
of The Rouse Company
We have audited the accompanying statement of revenues and certain expenses of
RTPI Properties for the year ended December 31, 1997. This financial statement
is the responsibility of RTPI Properties' management. Our responsibility is to
express an opinion on this statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of revenues and certain expenses is free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statement. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of
the financial statement. We believe that our audit provides a reasonable basis
for our opinion.
The accompanying statement was prepared for the purpose of complying with the
rules and regulations of the Securities and Exchange Commission Rule 3-14 of
Regulation S-X and is not intended to be a complete presentation of RTPI
Properties' revenues and expenses.
In our opinion, such financial statement presents fairly, in all material
respects, the revenues and certain expenses of RTPI Properties as described in
Note 1, for the year ended December 31, 1997, in conformity with generally
accepted accounting principles.
Deloitte & Touche LLP
Baltimore, Maryland
February 12, 1999
F-2
<PAGE>
RTPI PROPERTIES
Statement of Revenues and Certain Expenses
For the Nine Months Ended September 30, 1998 (Unaudited)
and For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
Nine Months
Ended September 30, Year Ended
1998 December 31,
(unaudited) 1997
-------------------- ----------------------
<S> <C> <C>
Revenues
Rents and related revenues $41,224,952 $53,359,583
----------- -----------
41,224,952 53,359,583
----------- -----------
Expenses
Property operations 15,369,558 20,401,511
Land operations 50,036 181,511
Interest 6,580,611 9,034,225
----------- -----------
22,000,205 29,627,247
----------- -----------
Revenues in excess of certain expenses 19,224,747 23,732,336
Taxes 38,826 52,595
----------- -----------
Net revenues in excess of certain expenses $19,185,921 $23,679,741
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements
F-3
<PAGE>
RTPI PROPERTIES
Notes to Statement of Revenues and Certain Expenses
For the Year Ended December 31, 1997 and the
Unaudited Nine Months Ended September 30, 1998
1. Organization
------------
The accompanying statement of revenues and certain expenses relates to the
operations of certain properties ("RTPI Properties") of Rouse Teachers
Properties, Inc. ("RTPI"), a corporation 95% indirectly owned by Teachers
Properties, Inc. ("TPI") and 5% indirectly owned by The Rouse Company
("TRC"). The RTPI Properties are 67 office and industrial buildings
located throughout Maryland and Pennsylvania and 107 saleable acres of
improved and unimproved land located in Maryland.
2. Summary of Accounting Policies
------------------------------
Basis of Presentation The statement of revenues and certain expenses has
been prepared for the purpose of complying with Rule 3-14 of Regulation S-X
of the Securities and Exchange Commission and, accordingly, is not
representative of the actual operations for the period presented as certain
expenses which may not be comparable to the expenses expected to be
incurred by The Rouse Company in the proposed future operations of the
properties have been excluded. Expenses excluded consist largely of
depreciation and amortization, write-off of land development costs and
certain income taxes. The interim statement of revenue and certain
expenses has been prepared on the same basis as the annual financial
statement and includes all adjustments management believes are necessary
for a fair presentation.
Revenue Recognition Revenues from real estate leasing activities are
reported on a straight line basis over the lease term.
Estimates Used The preparation of this statement in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
3. Interest Expense
----------------
Interest expense relates to mortgage debt collateralized by property with a
carrying value of $177,192,544 and $171,301,998 at December 31, 1997 and
September 30, 1998, respectively bearing interest at fixed and variable
rates varying between 7.2% and 12.875%, and 6.74% and 9.5%, respectively.
The weighted average interest rates for the year ended December 31, 1997,
and the nine months ended September 30, 1998 were 8.59% and 7.89%,
respectively.
F-4
<PAGE>
RTPI PROPERTIES
Notes to Statement of Revenues and Certain Expenses
For the Year Ended December 31, 1997 and the
Unaudited Nine Months Ended September 30, 1998
4. Related Party Transactions
--------------------------
TRC provides RTPI Properties with management services to operate and lease
rental properties and to develop and sell improved and unimproved land. For
the year ended December 31, 1997, the RTPI Properties paid $3,027,064 for
these services, of which $2,988,837 was charged to operations and the
remainder capitalized. For the nine months ended September 30, 1998, the
RTPI Properties paid $2,135,870 for these services, of which $2,115,437 was
charged to operations and the remainder capitalized.
An affiliate of TRC manages RTPI Properties' operations for a fee of 3.5%
of gross revenues as defined in the management agreement. These fees
totaled $1,838,057 for the year ended December 31, 1997 and $1,576,851 for
the nine months ended September 30, 1998.
5. Subsequent Event
----------------
On November 30, 1998, a wholly owned subsidiary of The Rouse Company
acquired from TPI it's interest in the RTPI Properties for approximately
$373,000,000, including approximately $112,000,000 of assumed debt.
6. Litigation
----------
RTPI Properties is party to a lawsuit which alleges damages of $8,000,000
relating to construction issues that arose prior to the Rouse Company
acquiring an interest in McCormick Properties, Inc., the predecessor to
RTPI Properties. RTPI Properties has been indemnified by Rouse-Teachers
Holding Company against any loss it may incur as the result of said lawsuit
and therefore management does not believe that the resolution of this
lawsuit will have a material adverse effect on the RTPI Properties'
financial position or result of operations.
RTPI Properties is a defendant in other litigation arising in the ordinary
course of business. In the opinion of management, the ultimate resolution
of these matters will not have a material effect on the RTPI Properties'
consolidated financial position or results of operations.
F-5
<PAGE>
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
On June 30, 1998 The Rouse Company (the "Company") entered into an agreement
with Teachers Properties, Inc. ("Teachers") to acquire all of the income-
producing properties and certain land parcels of Rouse-Teachers Properties, Inc.
("RTPI"), an entity in which Teachers held a 95% ownership interest and the
Company held a 5% ownership interest. On November 30, 1998, a wholly owned
subsidiary of the Company acquired from Teachers its interest in RTPI.
This Current Report on Form 8-K/A includes the financial statements of real
estate operations acquired specified by Rule 3-14 of Regulation S-X for RTPI and
related pro forma financial information of the Company required pursuant to
Article 11 of Regulation S-X.
The acquired assets of RTPI (the "RTPI Properties") consist of 22 office
buildings in metropolitan Baltimore, Maryland containing approximately 1,034,000
square feet of leasable space, 26 industrial buildings in metropolitan Baltimore
containing approximately 1,675,000 square feet of leasable space, 8 office
buildings in Columbia, Maryland containing approximately 428,000 square feet of
leasable space, 10 office buildings in metropolitan Washington, D.C. containing
approximately 1,227,000 square feet of leasable space, an office building in
suburban Harrisburg, Pennsylvania containing approximately 231,000 square feet
of leasable space and approximately 107 salable acres of land in the Baltimore
and Washington metropolitan areas. The Company sold three of the office
buildings in metropolitan Washington, D.C. shortly after acquisition. The
remaining buildings are generally in good condition and are 95% occupied. A
subsidiary of the Company has managed the buildings for approximately ten years.
After reasonable inquiry, the Company is not aware of any material factors that
would cause the reported information not to be necessarily indicative of future
operating results of the properties.
The following unaudited pro forma condensed consolidated financial statements
are based upon the consolidated financial statements of The Rouse Company and
the statements of revenues and certain expenses of RTPI Properties adjusted to
give effect to the purchase of RTPI Properties. The pro forma condensed
consolidated statements of operations do not include any revenues, operating and
interest expenses or depreciation and amortization relating to the three
buildings that the Company sold the day after closing. The pro forma condensed
consolidated balance sheet and statements of operations are provided to
illustrate the effects of the acquisition and have been prepared using the
purchase method of accounting and, accordingly, the cost to purchase RTPI
Properties is allocated among the assets acquired and liabilities assumed
according to their respective fair values. These statements reflect how the
balance sheet of The Rouse Company might have appeared at September 30, 1998 if
F-6
<PAGE>
the acquisition had been consummated at that date, and how the statements of
operations of The Rouse Company for the year ended December 31, 1997 and the
nine months ended September 30, 1998 might have appeared if the acquisition had
been consummated at the beginning of the respective periods. These unaudited
pro forma condensed consolidated financial statements are not necessarily
indicative of the results of operations or financial position of The Rouse
Company that would have occurred had the acquisition occurred at the beginning
of the periods presented or on the date indicated, nor are they necessarily
indicative of the future results of operation or financial position of The Rouse
Company.
These unaudited condensed consolidated financial statements should be read in
conjunction with the audited consolidated financial statements of The Rouse
Company and the audited statement of revenues and certain expenses of RTPI
Properties specified by Rule 3-14 included elsewhere in the report. The
unaudited pro forma adjustments are based upon certain assumptions included in
the notes to the unaudited pro forma condensed financial statements.
F-7
<PAGE>
THE ROUSE COMPANY AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
September 30, 1998
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
The Rouse
The Rouse Company and
Company and Allocated Pro Forma Subsidiaries
Subsidiaries Purchase Adjustments (Pro Forma
Assets (Historical) Price (Note 1) (Note 2) Combined)
------------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Property
Operating properties, net........................ $2,997,340 $ 289,121 $ - $3,286,461
Properties in development........................ 204,824 6,939 - 211,763
Properties held for sale......................... 149,552 91,100 - 240,652
---------- --------- ----------- ----------
Total property............................... 3,351,716 387,160 - 3,738,876
Investments in and advances to
unconsolidated real estate ventures............... 303,415 (13,578) - 289,837
Prepaid expenses, receivables under
finance leases and other assets................... 234,420 3,557 - 237,977
Accounts and notes receivable...................... 84,771 2,687 - 87,458
Investments in marketable securities............... 4,021 - - 4,021
Cash and cash equivalents.......................... 42,102 (55,768) 15,000 1,334
---------- --------- ----------- ----------
Total........................................ $4,020,445 $ 324,058 $15,000 $4,359,503
========== ========= =========== ==========
Liabilities and Shareholders' Equity
Debt............................................... $3,073,121 $ 220,160 $15,000 $3,308,281
Obligations under capital leases................... 8,246 - - 8,246
Accounts payable, accrued expenses
and other liabilities............................. 268,045 3,898 - 271,943
Company-obligated mandatorily redeemable
preferred securities of a trust holding
solely Parent Company subordinated
debt securities................................... 137,500 - - 137,500
Shareholders' equity............................... 533,533 100,000 - 633,533
---------- --------- ----------- ----------
Total........................................ $4,020,445 $ 324,058 $15,000 $4,359,503
========== ========= =========== ==========
</TABLE>
The accompanying notes are an integral part of these statements
F-8
<PAGE>
THE ROUSE COMPANY AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year ended December 31, 1997
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
The Rouse
Company and Pro Forma The Rouse Company
Subsidiaries Adjustments and Subsidiaries
(Historical) RTPI (Note 3) (Pro Forma Combined)
------------- -------- ---------------- --------------------
<S> <C> <C> <C> <C>
Revenues........................ $ 930,094 $53,360 $ (1,069) (a) $ 964,814
(1,838) (b)
Operating expenses, exclusive (13,478) (c)
of provision for bad debts, (2,255) (d)
depreciation and amortization.. 532,240 20,503 (1,838) (b) 545,531
(5,374) (c)
Interest expense................ 207,490 9,034 (683) (e) 224,176
7,357 (f)
978 (g)
Provision for bad debts......... 5,766 91 - 5,857
Depreciation and amortization... 86,009 - 9,654 (h) 94,795
(868) (a)
Equity in earnings of
unconsolidated
real estate ventures........... - - - -
Gain (loss) on dispositions of
assets and other provisions, (24,763) - - (24,763)
net........................... ---------- -------- --------- ----------
Earnings from continuing
operations
before income taxes............ 73,826 23,732 (27,866) 69,692
Income taxes.................... (116,066) 53 - (116,013)
---------- -------- --------- ----------
Earnings from continuing $ 189,892 $23,679 (27,866) $ 185,705
operations ========== ======== ========= ==========
Earnings from continuing
operations
per share of common stock after
provision for dividends on
Preferred stock :
Basic $ 2.70 $ 2.50
========== ==========
Diluted $ 2.59 $ 2.42
========== ==========
Weighted average number of
common shares outstanding:
Basic 66,201 69,726
========== ==========
Diluted 76,005 79,530
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements
F-9
<PAGE>
THE ROUSE COMPANY AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Nine Months ended September 30, 1998
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
The Rouse
The Rouse Company and
Company and Pro Forma Subsidiaries
Subsidiaries Adjustments (Pro Forma
(Historical) RTPI (Note 3) Combined)
------------- -------- ---------------- -------------
<S> <C> <C> <C> <C>
Revenues........................ $498,857 $41,225 $ (1,577) (b) $526,746
(10,068) (c)
Operating expenses, exclusive (1,691) (d)
of provision for bad debts,
depreciation and amortization.. 258,220 15,385 (1,577) (b) 267,836
(4,192) (c)
Interest expense................ 139,372 6,581 (512) (e) 151,692
5,518 (f)
733 (g)
Provision for bad debts......... 3,716 34 - 3,750
Depreciation and amortization... 56,713 - 7,241 (h) 63,954
Equity in earnings of
unconsolidated
real estate ventures........... 49,928 - (310) (a) 49,618
Gain (loss) on dispositions of
assets and other provisions,
net............................ (5,220) - - (5,220)
-------- -------- -------- --------
Earnings from continuing
operations before income
taxes.......................... 85,544 19,225 (20,857) 83,912
Income taxes.................... 236 39 - 275
-------- -------- -------- --------
Earnings from continuing $ 85,308 $19,186 (20,857) $ 83,637
operations..................... ======== ======== ======== ========
Earnings from continuing
operations
per share of common stock after
provision for dividends on
Preferred stock :
Basic ......................... $1.12 $1.04
======== ========
Diluted ....................... $1.11 $1.03
======== ========
Weighted average number of
common shares outstanding:
Basic ......................... 67,437 70,962
======== ========
Diluted ....................... 68,562 72,087
======== ========
</TABLE>
The accompanying notes are an integral part of these statements
F-10
<PAGE>
THE ROUSE COMPANY AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Unaudited)
1. Allocated Purchase Price
------------------------
The acquisition of RTPI Properties will be accounted for by the purchase
method of accounting. Accordingly, the Company's acquisition costs will be
allocated to the assets acquired and liabilities assumed according to their
respective fair values. Prior to the acquisition, the Company owned a 5%
ownership interest in RTPI Properties and accounted for its ownership
interest by the equity method. The allocated purchase price reflects the
consolidation of the Company's combined 100% ownership interest in RTPI
Properties. In connection with the acquisition, the Company decided to
sell three of the acquired buildings. The cost allocated to these
buildings is classified as property held for sale in the accompanying pro
forma balance sheet and represents the proceeds received by the Company
from the sale on December 1, 1998.
The unaudited pro forma condensed consolidated financial statements
indicate that the aggregate fair value of the assets acquired and
liabilities assumed and issued as part of the purchase price paid in the
purchase are approximately $380 million and $224 million, respectively.
The purchase allocation adjustments made in connection with the development
of the unaudited pro forma condensed combined financial statements are
based on the information available at this time. Subsequent adjustments
and refinements to the allocation may be made based on additional
information. Management believes that any subsequent adjustments will not
have a material effect on the consolidated financial position of RTPI
Properties.
2. Balance Sheet Pro Forma Adjustments
-----------------------------------
The accompanying unaudited pro forma condensed balance sheet reflects the
following adjustment to give effect to the acquisition of the ownership
interests in RTPI Properties. The Company used available cash balances and
borrowings under its unsecured revolving credit facility to pay
approximately $56 million, including closing costs of approximately $3
million, in cash at closing. The adjustment reflects reclassification of
$15 million of the resulting bank overdraft as borrowings under the
Company's credit facilities.
F-11
<PAGE>
THE ROUSE COMPANY AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Unaudited)
3. Statements of Operations Pro Forma Adjustments
----------------------------------------------
The accompanying unaudited pro forma condensed consolidated statements of
operations reflect certain adjustments which are explained below to give
effect to the acquisition of RTPI Properties and to include results of
operations for the indicated periods based on accounting policies of the
Company where such policies differ from those which were applied in
preparing the historical financial statements of RTPI Properties included
elsewhere herein.
(a) Eliminate revenues, depreciation expense and equity in earnings of
unconsolidated real estate ventures related to the Company's 5%
ownership interest in RTPI Properties. The historical consolidated
financial statements of The Rouse Company for the year ended December
31, 1997 include revenue and depreciation expense based on the
Company's equity in the earnings of RTPI Properties. The historical
consolidated financial statements of The Rouse Company for the nine
months ended September 30, 1998 include the Company's equity in the
earnings of RTPI Properties in equity in earnings of unconsolidated
real estate ventures.
(b) Prior to the acquisition of RTPI Properties, the Company managed RTPI
Properties for a fee. Accordingly, pro forma adjustments are to
eliminate revenues and operating expenses related to the management of
RTPI Properties included in the Company's historical consolidated
statements of operations for the year ended December 31, 1997 and for
the nine months ended September 30, 1998.
(c) The Company sold three of the acquired properties shortly after
closing. Accordingly, pro forma adjustments are to eliminate operating
results of the properties sold.
(d) Eliminate interest income earned at a rate of 5.5% on available cash of
$41 million paid at closing.
(e) Adjust interest expense to an effective rate of 6.74% on $112 million
of mortgage debt secured by the acquired properties and assumed by the
Company in the purchase.
F-12
<PAGE>
THE ROUSE COMPANY AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Unaudited)
3. Statements of Operations Pro Forma Adjustments, Continued
---------------------------------------------------------
(f) Record interest expense at an effective rate of 6.85% on a mortgage
note of $49.9 million and an unsecured note of $58 million issued to
pay a portion of the acquisition cost.
(g) Record interest expense at an effective rate of 6.52% on $15 million of
borrowings under the Company's unsecured revolving credit facility used
to fund the purchase price paid at closing.
(h) Record depreciation expense for the acquired properties in accordance
with the established accounting practices of the Company. The
estimated remaining useful life of the acquired properties is 30
years.
F-13
<PAGE>
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the registration statements of
The Rouse Company on Form S-3 (File Nos. 2-78898, 2-95596, 33-52458, 33-57707,
and 333-67137), Form S-8 (File Nos. 2-83612, 33-56231, 33-56233, 33-56235 and
333-32277) and Form S-4 (File No. 333-01693) of our report dated February 12,
1999, relating to the statement of revenues and certain expenses of RTPI
Properties for the year ended December 31, 1997, appearing in this filing of The
Rouse Company on Form 8-K/A.
DELOITTE & TOUCHE LLP
Baltimore Maryland
February 12, 1999
