<PAGE>
Form 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
-------------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to __________
Commission File Number 0-1743
---------------
The Rouse Company
------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C>
Maryland 52-0735512
- ------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
10275 Little Patuxent Parkway
Columbia, Maryland 21044-3456
- ---------------------------------------- -----------------
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code (410) 992-6000
----------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of the issuer's common stock as
of May 1, 2000:
Common Stock, $0.01 par value 70,230,505
- ----------------------------- ----------------
Title of Class Number of Shares
<PAGE>
Part I. Financial Information, continued
Item 1. Financial Statements, continued:
THE ROUSE COMPANY AND SUBSIDIARIES
Consolidated Statements of Operations and Comprehensive Income
Three Months Ended March 31, 2000 and 1999
(Unaudited, in thousands except per share amounts)
<TABLE>
<CAPTION>
Three months
ended March 31,
--------------------
<S> <C> <C>
2000 1999
-------- --------
Revenues $168,867 $175,959
Operating expenses, exclusive of
provision for bad debts,
depreciation and amortization 77,179 79,277
Interest expense 60,118 63,925
Provision for bad debts 2,235 1,312
Depreciation and amortization 20,695 27,372
Equity in earnings of
unconsolidated real estate
ventures 23,566 23,333
Current income taxes 82 74
-------- --------
Earnings before gain (loss) on
dispositions of operating property
assets, net 32,124 27,332
Gain (loss) on dispositions of
operating property assets, net (756) 594
-------- --------
Net earnings 31,368 27,926
Other items of comprehensive
income (loss) - minimum pension
liability adjustment (119) (334)
-------- --------
Comprehensive income $ 31,249 $ 27,592
======== ========
Net earnings applicable
to common shareholders $ 28,330 $ 24,888
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
2
<PAGE>
Part I. Financial Information, continued
Item 1. Financial Statements, continued:
THE ROUSE COMPANY AND SUBSIDIARIES
Consolidated Statements of Operations and Comprehensive Income, continued
Three Months Ended March 31, 2000 and 1999
(Unaudited, in thousands except per share amounts)
<TABLE>
<CAPTION>
Three months
ended March 31,
-----------------
2000 1999
------ ------
<S> <C> <C>
EARNINGS PER SHARE OF
COMMON STOCK:
Basic $.40 $.34
==== ====
Diluted $.40 $.34
==== ====
DIVIDENDS PER SHARE:
Common stock $.33 $.30
==== ====
Preferred stock $.75 $.75
==== ====
</TABLE>
3
<PAGE>
Part I. Financial Information, continued
Item 1. Financial Statements, continued:
THE ROUSE COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
March 31, 2000 and December 31, 1999
(Unaudited, in thousands except share data)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
(Unaudited)
----------- ------------
<S> <C> <C>
Assets:
Property:
Operating properties:
Property and deferred costs
of projects $3,418,614 $3,811,956
Less accumulated depreciation
and amortization 571,015 574,837
---------- ----------
2,847,599 3,237,119
Properties in development 300,919 288,058
Properties held for sale 445,224 10,984
---------- ----------
Total property 3,593,742 3,536,161
Investments in and advances to unconsolidated
real estate ventures 504,670 533,341
Prepaid expenses, receivables under finance
leases and other assets 237,448 247,279
Accounts and notes receivable 62,748 61,224
Investments in marketable securities 23,188 23,321
Cash and cash equivalents 25,500 25,890
---------- ----------
Total $4,447,296 $4,427,216
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
Part I. Financial Information, continued
Item 1. Financial Statements, continued:
THE ROUSE COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets, continued
March 31, 2000 and December 31, 1999
(Unaudited in thousands except share data)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
(Unaudited)
----------- ------------
<S> <C> <C>
Liabilities:
Debt:
Property debt not carrying a Parent
Company guarantee of repayment $2,606,334 $2,529,334
Parent Company debt and debt carrying a
Parent Company guarantee of repayment:
Property debt 101,829 161,585
Other debt 673,500 643,500
---------- ----------
775,329 805,085
---------- ----------
Total debt 3,381,663 3,334,419
---------- ----------
Accounts payable, accrued expenses
and other liabilities 293,880 317,252
Company-obligated mandatorily redeemable
preferred securities of a trust holding
solely Parent Company subordinated debt
securities 136,965 136,965
Shareholders' equity:
Series B Convertible Preferred stock
with a liquidation preference of
$202,500 41 41
Common stock of 1 cent par value per share;
250,000,000 shares authorized; 70,306,205
shares issued in 2000 and 70,693,789
shares issued in 1999 703 707
Additional paid-in capital 800,125 808,277
Accumulated deficit (165,491) (169,974)
Accumulated other comprehensive income (loss) (590) (471)
---------- ----------
Net shareholders' equity 634,788 638,580
---------- ----------
Total $4,447,296 $4,427,216
========== ==========
</TABLE>
5
<PAGE>
Part I. Financial Information, continued
Item 1. Financial Statements, continued:
THE ROUSE COMPANY AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Three Months Ended March 31, 2000 and 1999
(Unaudited, in thousands)
<TABLE>
2000 1999
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Rents and other revenues received $168,426 $159,654
Proceeds from land sales and notes receivable
from land sales --- 5,731
Interest received 1,784 2,186
Operating expenditures (80,552) (86,730)
Interest paid (57,155) (59,957)
Dividends, interest and other operating
distributions received from unconsolidated
majority financial interest ventures 13,802 12,000
-------- --------
Net cash provided by operating activities 46,305 32,884
-------- --------
Cash flows from investing activities:
Expenditures for properties in development
and improvements to existing properties
funded by debt (73,280) (61,290)
Expenditures for property acquisitions (8,634) ---
Expenditures for improvements to existing
properties funded by cash provided by
operating activities:
Tenant leasing and remerchandising --- (1,870)
Building and equipment (3,208) (4,693)
Payments received on loans (advances made) to
unconsolidated majority financial interest
ventures 44,564 (2,180)
Proceeds from sales of operating properties
and other investments --- 361
Other (1,304) (4,205)
-------- --------
Net cash used by investing activities (41,862) (73,877)
-------- --------
Cash flows from financing activities:
Proceeds from issuance of property debt 50,922 28,938
Repayments of property debt:
Scheduled principal payments (14,345) (11,659)
Other payments (19,267) ---
Proceeds from issuance of other debt 35,000 59,237
Repayments of other debt (5,000) (440)
Purchases of Company common stock (24,793) (13,152)
Dividends paid (26,885) (24,683)
Other (465) (6,364)
-------- --------
Net cash provided (used) by financing
activities (4,833) 31,877
-------- --------
Net decrease in cash and cash equivalents (390) (9,116)
Cash and cash equivalents at beginning of period 25,890 28,688
-------- --------
Cash and cash equivalents at end of period $ 25,500 $ 19,572
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE>
Part I. Financial Information, continued
Item 1. Financial Statements, continued:
THE ROUSE COMPANY AND SUBSIDIARIES
Consolidated Statements of Cash Flows, continued
Three Months Ended March 31, 2000 and 1999
(Unaudited, in thousands)
<TABLE>
<CAPTION>
2000 1999
------ ------
<S> <C> <C>
Reconciliation of net earnings to net cash
provided by operating activities:
Net earnings $ 31,368 $ 27,926
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Depreciation and amortization 20,695 27,372
Undistributed earnings of majority
financial interest ventures (18,647) (15,136)
Loss (gain) on dispositions of operating
property assets, net 756 (594)
Participation expense pursuant to
Contingent Stock Agreement 8,502 6,660
Provision for bad debts 2,235 1,312
Decrease (increase) in:
Accounts and notes receivable (3,661) (18,082)
Other assets 9,198 8,477
Decrease in accounts payable, accrued
expenses and other liabilities (8,108) (2,278)
Other, net 3,967 (2,773)
-------- --------
Net cash provided by operating activities $ 46,305 $ 32,884
======== ========
Schedule of Noncash Investing and Financing
Activities:
Common stock issued pursuant to Contingent
Stock Agreement $ 16,572 $ 16,207
Property and other assets contributed to an
unconsolidated real estate venture --- 701,105
Mortgage debt, other debt and other liabilities
related to property and other assets
contributed to an unconsolidated real
estate venture --- 432,525
Other debt repaid in the formation of an
unconsolidated real estate venture --- 271,233
Capital lease obligations incurred 842 1,278
======== ========
</TABLE>
7
<PAGE>
Part I. Financial Information, continued
Item 1. Financial Statements, continued:
THE ROUSE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
March 31, 2000
(1) Principles of statement presentation
------------------------------------
The unaudited consolidated financial statements include all adjustments which
are necessary, in the opinion of management, to fairly reflect
the Company's financial position and results of operations. All such
adjustments are of a normal recurring nature. The statements have been
prepared using the accounting policies described in the 1999 Annual Report
to Shareholders.
Certain amounts have been reclassified to conform to the current
presentation.
(2) Tax status
----------
The Company determined that it would elect to be taxed as a real estate
investment trust (REIT) effective January 1, 1998 pursuant to the Internal
Revenue Code of 1986, as amended. Management believes the Company met the
qualifications for REIT status as of March 31, 2000, and intends for it to
continue to meet the qualifications in the future. Management does not
expect that the Company will be liable for significant income taxes at the
Federal level or in most states in which it operates in 2000 and future
years.
In connection with its election to be taxed as a REIT, the Company also
elected to be subject to the "built-in gain" rules. In February 2000,
temporary and proposed regulations were issued providing guidance regarding
the application of the "built-in gain" rules to REITs and are effective
retroactive to June 10, 1987. The regulations require a REIT to refile its
election to be subject to the "built-in gain" rules. The Company intends
to refile its election with respect to assets owned by the Company on the
date of conversion to REIT status. Under these rules, taxes will be
payable at the time and to the extent that the net unrealized gains on the
Company's assets at the date of conversion to REIT status are recognized in
taxable dispositions of such assets in the ten-year period following
conversion. At March 31, 2000, net unrealized gains were approximately
$2,465,000,000. Management believes that the Company will not be required
to make significant payments of taxes on built-in gains throughout the ten-
year period due to the availability of its net operating loss carryforward
to offset certain
8
<PAGE>
Part I. Financial Information, continued
Item 1. Financial Statements, continued:
(2) Tax status, continued
---------------------
built-in gains which might be recognized and the potential for the Company
to make nontaxable dispositions, if necessary. At March 31, 2000, the
regular tax net operating loss carryforward is sufficient to offset built-
in gains on assets the Company has classified as held for sale and no net
deferred tax liability for built-in gains taxes has been recognized. It may
however, be necessary to recognize a liability for such taxes in the future
if management's plans and intentions with respect to asset dispositions, or
the related tax laws, change.
(3) Unconsolidated real estate ventures
-----------------------------------
Investments in and advances to unconsolidated real estate ventures are
summarized, based on the level of the Company's financial interest,
as follows (in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
--------- ------------
<S> <C> <C>
Majority financial interest ventures $324,081 $349,991
Minority interest ventures 180,589 183,350
-------- --------
Total $504,670 $533,341
======== ========
</TABLE>
The equity in earnings (loss) of unconsolidated real estate ventures is
summarized, based on the level of the Company's financial interest,
as follows (in thousands):
<TABLE>
<CAPTION>
Three months
ended March 31,
-------------------------
2000 1999
------- -------
<S> <C> <C>
Majority financial interest
ventures $23,950 $20,777
Minority interest ventures (384) 2,556
------- -------
Total $23,566 $23,333
======= =======
</TABLE>
9
<PAGE>
Part I. Financial Information, continued
Item 1. Financial Statements, continued:
THE ROUSE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited), continued
(3) Unconsolidated real estate ventures, continued
----------------------------------------------
The condensed, combined balance sheets of the ventures in which the
Company holds majority financial interests are summarized as follows (in
thousands):
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
--------- ------------
<S> <C> <C>
Assets:
Operating properties, net $387,271 $378,789
Properties in development 4,925 26,924
Properties held for sale 14,588 ---
Land held for development and sale 252,739 257,773
Investments in and advances to
unconsolidated real estate ventures 108,155 107,813
Prepaid expenses, receivables under
finance leases and other assets 86,022 95,090
Accounts and notes receivable 75,042 88,765
Cash and cash equivalents 65 8,194
-------- --------
Total $928,807 $963,348
======== ========
Liabilities and shareholders' deficit:
Loans and advances from the Company $470,228 $514,792
Mortgages payable and other long-term debt 347,217 350,646
Other liabilities 119,627 118,525
Redeemable Series A Preferred stock 50,000 50,000
Shareholders' deficit (58,265) (70,615)
-------- --------
Total $928,807 $963,348
======== ========
</TABLE>
10
<PAGE>
Part I. Financial Information, continued
Item 1. Financial Statements, continued:
THE ROUSE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited), continued
(3) Unconsolidated real estate ventures, continued
----------------------------------------------
The condensed combined statements of operations of the ventures in which
the Company holds a majority financial interest are summarized as follows
(in thousands):
<TABLE>
<CAPTION>
Three months
ended March 31,
-------------------
<S> <C> <C>
2000 1999
-------- --------
Revenues, excluding interest
on advances to the Company $ 87,199 $ 85,384
Interest income on loans to
the Company --- 2,577
Operating expenses (45,238) (48,512)
Interest expense, excluding
interest on borrowings from
the Company (3,431) (2,799)
Interest expense on borrowings
from the Company (13,690) (14,577)
Depreciation and amortization (4,229) (2,886)
Equity in earnings (loss) of
unconsolidated real estate
ventures (72) 186
Gain on dispositions of operating
property assets, net --- 707
Income taxes (8,189) (8,073)
-------- --------
Net earnings $ 12,350 $ 12,007
======== ========
</TABLE>
11
<PAGE>
Part I. Financial Information, continued
Item 1. Financial Statements, continued:
THE ROUSE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited), continued
(3) Unconsolidated real estate ventures, continued
----------------------------------------------
The Company's share of the earnings before extraordinary items of the
ventures is summarized as follows (in thousands):
<TABLE>
<CAPTION>
Three months
ended March 31,
-----------------------
2000 1999
-------- --------
<S> <C> <C>
Share of net earnings based
on ownership interest $12,227 $11,887
Participation by others in
the Company's share of
earnings (8,499) (6,359)
Interest on loans to and
advances from the ventures,
net 13,690 12,000
Eliminations and other, net 6,532 3,249
------- -------
$23,950 $20,777
======= =======
</TABLE>
(4) Debt
Debt is summarized as follows (in thousands):
<TABLE>
<CAPTION>
March 31, 2000 December 31, 1999
-------------------- --------------------
Due in Due in
Total one year Total one year
---------- -------- ---------- --------
<S> <C> <C> <C> <C>
Mortgages and bonds $2,589,673 $55,201 $2,572,496 $55,126
Medium-term notes 86,500 15,000 91,500 10,000
Credit line borrowings 209,000 --- 174,000 ---
Other loans 496,490 6,447 496,423 6,467
---------- ------- ---------- -------
Total $3,381,663 $76,648 $3,334,419 $71,593
========== ======= ========== =======
</TABLE>
The amounts due in one year reflect the terms of existing loan agree-
ments except where refinancing commitments from outside lenders have been
obtained. In these instances, maturities are determined based on the terms
of the refinancing commitments.
12
<PAGE>
Part I. Financial Information, continued
Item 1. Financial Statements, continued:
THE ROUSE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited), continued
(5) Segment information
-------------------
The Company has five reportable segments: retail centers, office and other
properties, land sales operations, development and corporate. The Company
has reclassified the segment operating results and assets of the retail
components of its five mixed-use projects to retail centers. In connection
therewith, the office, mixed-use and other properties segment has been
renamed office and other properties. Segment information for the prior
period has been restated to reflect this change. Segment operating results
are measured and assessed based on a performance measure referred to as
Funds From Operations (FFO) computed using the revised definition, which is
effective January 1, 2000, developed by the National Association of Real
Estate Investment Trusts (NAREIT) in 1999. NAREIT defines FFO as net
earnings (computed in accordance with generally accepted accounting
principles), excluding cumulative effects of changes in accounting
principles, extraordinary items and gain (loss) on dispositions of
operating property assets, plus depreciation and amortization.
Additionally, equity in earnings of unconsolidated real estate ventures and
minority interests have been adjusted to reflect FFO on the same basis. FFO
for the prior period has been restated to conform to the new definition.
The method used by the Company to compute FFO may differ from methods used
by other REITs. FFO is not a measure of operating results or cash flows
from operating activities as measured by generally accepted accounting
principles. It is not necessarily indicative of cash available to fund cash
needs and should not be considered an alternative to cash flows as a
measure of liquidity.
The accounting policies of the segments are the same as those of the Company,
except that real estate ventures in which the Company holds substantially
all (at least 98%) of the financial interest but does not own a majority
voting interest (majority financial interest ventures) are accounted for on
a consolidated basis, rather than using the equity method. Additionally,
the Company's share of FFO of unconsolidated real estate ventures in which
it holds a minority interest is included in revenues.
13
<PAGE>
THE ROUSE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited), continued
(5) Segment Information, continued
------------------------------
Funds From Operations for the segments are summarized as follows (in
thousands):
<TABLE>
<CAPTION>
Office Land
Retail and Other Sales
Centers Properties Operations Development Corporate Total
--------- ---------- ---------- ------------ --------- -----
Three months ended
March 31, 2000
- ------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues $146,531 $56,113 $58,793 $ -- $ 223 $261,660
Operating expenses* 67,840 23,183 37,482 699 5,937 135,141
Interest expense 41,873 20,319 799 -- 558 63,549
-------- ------- ------- -------- -------- --------
FFO $ 36,818 $12,611 $20,512 $ (699) (6,272) $ 62,970
======== ======= ======= ======== ======== ========
Three months ended
March 31, 1999
- ------------------
Revenues $151,399 $53,316 $60,581 $ -- $ 195 $265,491
Operating expenses* 69,031 21,535 40,717 1,473 7,590 140,346
Interest expense 46,527 20,584 926 -- (1,313) 66,724
-------- ------- ------- -------- -------- --------
FFO $ 35,841 $11,197 $18,938 $(1,473) $(6,082) $ 58,421
======== ======= ======= ======== ======== ========
</TABLE>
* Operating expenses in this table exclude depreciation and amortization.
14
<PAGE>
THE ROUSE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited), continued
(5) Segment Information, continued
------------------------------
Reconciliations of total revenues and expenses reported above to the related
amounts in the consolidated financial statements and of FFO reported above
to net earnings in the consolidated financial statements are summarized as
follows (in thousands):
<TABLE>
<CAPTION>
Three months
ended March 31,
----------------------
2000 1999
--------- ---------
<S> <C> <C>
Revenues:
Total reported above $ 261,660 $ 265,491
Revenues of majority financial interest
ventures excluding interest on advances
to the Company (87,199) (85,384)
Revenues representing the Company's share of
FFO of minority financial interest ventures (5,594) (4,148)
--------- ---------
Total in consolidated financial statements $ 168,867 $ 175,959
========= =========
Operating expenses, exclusive of depreciation
and amortization:
Total reported above $ 135,141 $ 140,346
Operating expenses of majority financial
interest ventures (45,238) (48,512)
Provision for bad debts (2,235) (1,312)
Participation by others in the Company's share of
earnings of majority financial interest ventures (8,499) (6,359)
Income taxes and other (1,990) (4,886)
--------- ---------
Total in consolidated financial statements $ 77,179 $ 79,277
========= =========
Interest expense:
Total reported above $ 63,549 $ 66,724
Interest expense of majority financial
interest ventures excluding interest on
borrowings from the Company (3,431) (2,799)
--------- ---------
Total in consolidated financial statements $ 60,118 $ 63,925
========= =========
Operating results:
FFO reported above $ 62,970 $ 58,421
Depreciation and amortization (20,695) (27,372)
Gain (loss) on dispositions of operating property
assets, net (756) 594
Share of depreciation and amortization,
and gain (loss)on disposition of operating property
assets of unconsolidated real estate ventures, net (10,151) (3,717)
--------- ---------
Net earnings in consolidated financial statements $ 31,368 $ 27,926
========= =========
</TABLE>
15
<PAGE>
Part I. Financial Information, continued
Item 1. Financial Statements, continued:
THE ROUSE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited), continued
(5) Segment Information, continued
------------------------------
The assets by segment are as follows (in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
---------- ----------
<S> <C> <C>
Retail centers $3,089,068 $3,079,018
Office and other properties 1,283,272 1,257,599
Land sales operations 395,125 434,195
Development 63,243 34,680
Corporate 99,706 105,605
---------- ----------
Total $4,930,414 $4,911,097
========== ==========
</TABLE>
Total segment assets exceeds total assets reported in the financial
statements primarily because of the consolidation of the majority financial
interest ventures for segment reporting purposes.
16
<PAGE>
Part I. Financial Information, continued
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations:
THE ROUSE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited), continued
(6) Earnings per share
------------------
Information relating to the calculations of earnings per share (EPS)
of common stock for the three months ended March 31, 2000 and 1999
is summarized as follows (in thousands):
<TABLE>
<CAPTION>
2000 1999
----------------- -----------------
Basic Diluted Basic Diluted
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net earnings $31,368 $31,368 $27,926 $27,926
Dividends on Preferred
stock (3,038) (3,038) (3,038) (3,038)
Dividends on unvested
common stock awards
and other (110) (101) (123) (606)
Interest on convertible
property debt --- 769 --- ---
------- ------- ------- -------
Adjusted net earnings
used in EPS computation $28,220 $28,998 $24,765 $24,282
======= ======= ======= =======
Weighted-average shares
outstanding 70,417 70,417 71,865 71,865
Dilutive securities:
Convertible property debt --- 1,930 --- ---
Options, warrants,
unvested common stock
awards and other --- 232 --- 478
------- ------- ------- -------
Adjusted weighted-average
shares used in EPS
computation 70,417 72,579 71,865 72,343
======= ======= ======= =======
</TABLE>
Effects of potentially dilutive securities are presented only in periods in
which they are dilutive.
17
<PAGE>
Part I. Financial Information, continued
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations:
THE ROUSE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited), continued
(7) Contingencies
-------------
The Company and certain of its subsidiaries are defendants in various
litigation matters arising in the ordinary course of business, some of
which involve claims for damages that are substantial in amount. Some of
these litigation matters are covered by insurance. In the opinion of
management, adequate provision has been made for losses with respect to all
litigation matters, where appropriate, and the ultimate resolution of all
such litigation matters is not likely to have a material effect on the
consolidated financial position of the Company. Due to the Company's
fluctuating net earnings (loss), it is not possible to predict whether the
resolution of these matters is likely to have a material effect on the
Company's consolidated net earnings (loss), and it is, therefore, possible
that resolution of these matters could have such an effect in any future
quarter or year.
(8) Property dispositions and related matters
-------------------------------------------------------
In September 1999, the Company announced that it was considering selling
interests in certain operating properties and land parcels and using the
proceeds to repay debt and repurchase (subject to certain price
restrictions) up to $250 million of the Company's common stock. In January
2000, management authorized specific disposition plans and began marketing
interests in the properties. Accordingly, the net book values of the
properties have been reclassified to properties held for sale.
(9) Shelf registration statement
----------------------------
At March 31, 2000, the Company had a shelf registration statement for
future sale of up to an aggregate of $1.9 billion (based on the public
offering price) of common stock, Preferred stock and debt securities.
18
<PAGE>
Part I. Financial Information, continued
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations:
THE ROUSE COMPANY AND SUBSIDIARIES
The following discussion and analysis covers any material changes in
financial condition since December 31, 1999 and any material changes in the
results of operations for the three months ended March 31, 2000 as compared to
the same period in 1999. This discussion and analysis should be read in
conjunction with Management's Discussion and Analysis of Financial Condition
and Results of Operations included in the 1999 Annual Report to Shareholders.
General:
- -------
Through its subsidiaries and affiliates, the Company acquires, develops and
manages a diversified portfolio of retail centers and office, industrial,
mixed-use and other properties (office and other properties) located throughout
the United States and develops and sells land for residential, commercial and
other uses, primarily in Columbia, Maryland and Summerlin, Nevada.
One of the Company's primary objectives is to own and operate premier shopping
centers, major mixed-use projects and geographically concentrated groups of
office and industrial buildings (principally complementing community
development activities) in major markets across the United States. In order to
achieve this objective, management is actively evaluating opportunities to
acquire properties owned by others that may have future prospects consistent
with the Company's long-term investment criteria and is continually evaluating
the future outlook for properties in the Company's portfolio. This includes
considering opportunities to expand and/or renovate the properties and
assessing whether particular properties are meeting or have the potential to
meet the Company's investment criteria. The Company plans to continue making
substantial investments to expand and/or renovate leasable mall space and/or
add new department stores and/or other anchor tenants to its existing
properties to meet its objective. The Company is also continually evaluating
opportunities for new operating properties and/or land development projects it
believes have future prospects consistent with its objectives. The Company has
sold a number of properties over the last several years and intends to continue
to dispose of properties that are not meeting and/or are not considered to have
the potential to continue to meet its investment criteria. In September 1999,
the Company announced that it would pursue developing a strategy to dispose of
interests in certain office and industrial properties and land parcels and use
the proceeds to repay debt and repurchase (subject to certain price
restrictions) up to $250 million of the Company's common stock. In January
2000, management authorized specific disposition plans and began marketing
interests in the properties.
19
<PAGE>
Part I. Financial Information, continued
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations:
General, continued:
- ------------------
The Company may also selectively dispose of properties for other reasons. These
disposition decisions may cause the Company to recognize gains or losses that
could have material effects on reported net earnings (loss) in future quarters
or fiscal years and taken together with the use of sales proceeds, may have a
material effect on the overall consolidated financial position of the Company.
Portfolio changes:
- -----------------
In February 1999, the Company contributed its ownership interests in four retail
centers (Bridgewater Commons, Fashion Place Mall, Park Meadows and Towson Town
Center) to a joint venture in which it retained a 35% ownership interest. In
June 1999, the Company sold Lucky's Center, an other property in Los Angeles,
California. In October 1999, the Company sold Santa Monica Place, a retail
center in Santa Monica, California.
In 2000 and 1999, the Company and its affiliates completed a number of
development projects to enhance the quality of its portfolio. This development
activity is summarized as follows:
<TABLE>
<CAPTION>
Retail Centers Date Opened
-------------- -----------
<S> <C>
Oakwood Center Expansion March 1999
The Mall in Columbia Expansion-Phase II September 1999
Exton Square Expansion November 1999
Moorestown Mall Expansion-Phase I November 1999
Moorestown Mall Expansion-Phase II March 2000
Pioneer Place Expansion March 2000
Office and Other Date Opened
---------------- -----------
Park Square, Columbia Office January 1999
Hughes Airport Center (4 buildings) May 1999
Summerlin Commercial (1 building) September 1999
Hughes Center (1 building) October 1999
</TABLE>
20
<PAGE>
Part I. Financial Information, continued
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations:
Operating results:
- -----------------
As indicated in the 1999 Annual Report to Shareholders, the discussion of
operating results covers each of the Company's business segments as management
believes that a segment analysis provides the most effective means of
understanding the business. Note 5 to the consolidated financial statements
included in this Form 10-Q should be referred to when reading this discussion
and analysis. As discussed in note 5, segment operating data are reported
using the accounting policies followed by the Company for internal reporting to
management. These policies are the same as those followed for external
reporting except that majority financial interest ventures (real estate
ventures in which the Company holds substantially all (at least 98%) of the
financial interests, but does not own a majority voting interest) are reported
on a consolidated basis rather than using the equity method and the Company's
share of FFO of unconsolidated real estate ventures in which it holds a
minority interest is included in revenues. These differences affect only the
reported revenues and operating and interest expenses of the segments and have
no effect on the reported net earnings or FFO of the Company. Revenues and
operating and interest expenses reported for the segments are reconciled to the
related amounts reported in the consolidated financial statements in note 5.
Operating Properties - Retail Centers:
- -------------------------------------
Operating results of retail centers are summarized as follows (in millions):
<TABLE>
<CAPTION>
Three
months ended
March 31,
------------------------
2000 1999
------ ------
<S> <C> <C>
Revenues $146.5 $151.4
Operating expenses, exclusive
of depreciation and
amortization 67.8 69.1
Interest expense 41.9 46.5
------ ------
36.8 35.8
Depreciation and amortization 19.3 22.7
------ ------
Operating income $ 17.5 $ 13.1
====== ======
</TABLE>
21
<PAGE>
Part I. Financial Information, continued
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations:
Operating Properties - Retail Centers, continued:
- ------------------------------------------------
Revenues decreased $4.9 million for the three months ended March 31, 2000,
compared to the same period in 1999. The decrease was attributable primarily
to effects of the aforementioned disposition and contribution of properties to
a joint venture (approximately $11.0 million) and lower average occupancy
levels at comparable properties (93.1% in 2000 compared to 94.1% in 1999).
These decreases were partially offset by the aforementioned project expansions
(approximately $1.3 million) and higher rents on released space.
Total operating and interest expenses decreased $5.9 million for the three
months ended March 31, 2000, compared to the same period in 1999. The decrease
was attributable primarily to the aforementioned disposition and contribution
of properties to a joint venture (approximately $10.1 million), partially
offset by project expansions (approximately $1.8 million). Depreciation and
amortization expense decreased $3.4 million for the three months ended March
31, 2000, compared to the same period in 1999. The decrease was attributable
primarily to the portfolio changes described above.
Operating Properties - Office and Other Properties:
- --------------------------------------------------
Operating results of office and other properties are summarized
as follows (in millions):
<TABLE>
<CAPTION>
Three
months ended
March 31,
--------------------
2000 1999
----- -----
<S> <C> <C>
Revenues $56.1 $53.3
Operating expenses, exclusive of
depreciation and amortization 23.2 21.5
Interest expense 20.3 20.6
----- -----
12.6 11.2
Depreciation and amortization 7.6 9.1
----- -----
Operating income $ 5.0 $ 2.1
===== =====
</TABLE>
Revenues increased $2.8 million for the three months ended March 31, 2000,
compared to the same period in 1999. The increase was attributable primarily to
the project openings in 1999 (approximately $1.2 million) and higher rents on
released space. These increases were partially offset by the aforementioned
disposition in 1999 (approximately $.5 million).
22
<PAGE>
Part I. Financial Information, continued
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations:
Operating Properties - Office and Other Properties, continued:
- -------------------------------------------------------------
Total operating and interest expenses increased $1.4 million for the three
months ended March 31, 2000, compared to the same period in 1999. The increase
in operating and interest expenses was attributable primarily to project
openings in 1999 (approximately $1.1 million). This increase was partially
offset by the aforementioned disposition (approximately $.2 million).
Depreciation and amortization expense decreased $1.5 million for the three
months ended March 31, 2000, compared to the same period in 1999. The decrease
was attributable primarily to cessation of depreciation of properties the
Company has classified as held for sale in the first quarter of 2000, partially
offset by project openings in 1999.
Land Sales Operations:
- ---------------------
Land sales operations relate primarily to the communities of Columbia, Maryland
and Summerlin, Nevada. 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.
23
<PAGE>
Part I. Financial Information, continued
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations:
Land Sales Operations, continued:
- --------------------------------
Operating results of land sales operations are summarized as follows (in
millions):
<TABLE>
<CAPTION>
Three months
ended March 31,
--------------------
2000 1999
----- -----
<S> <C> <C>
Nevada Land Operations:
Revenues:
Summerlin $31.9 $26.1
Other 5.5 4.2
Operating costs and expenses:
Summerlin 24.5 20.5
Other 4.3 3.6
Interest expense .1 ---
----- -----
Operating income $ 8.5 $ 6.2
===== =====
Columbia and Other:
Revenues $21.4 $30.3
Operating costs and expenses 8.7 16.6
Interest expense .7 1.0
----- -----
Operating income $12.0 $12.7
===== =====
Total:
Revenues $58.8 $60.6
Operating costs and expenses 37.5 40.7
Interest expense .8 1.0
----- -----
Operating income $20.5 $18.9
===== =====
</TABLE>
24
<PAGE>
Part I. Financial Information, continued
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations:
Land Sales Operations, continued:
- --------------------------------
Revenues from Summerlin land sales operations increased $5.8 million for the
three months ended March 31, 2000 while related costs and expenses increased
$4.0 million, compared to the same period in 1999. The increases in land sales
and related costs and expenses were due primarily to higher levels of sales for
commercial uses. Revenues from other Nevada land holdings increased $1.3
million while related costs and expenses increased $.7 million.
Revenues from Columbia and other land sales operations decreased $8.9 million
for the three months ended March 31, 2000, while related costs and expenses
decreased $8.2 million, compared to the same period in 1999. The decreases in
revenues and related costs and expenses were due primarily to lower levels of
sales for commercial uses.
Development:
- -----------
Development expenses consist primarily of preconstruction expenses and new
business costs. Preconstruction expenses relate to costs of projects which may
not go forward to completion. New business costs relate to the evaluation of
potential regional retail center sites, acquisition and disposition
opportunities and alternative revenue sources.
Corporate:
- ---------
Corporate expenses consist of certain interest and operating expenses reduced by
costs capitalized or allocated to other segments. Interest is capitalized on
corporate funds invested in projects under development, and interest on the
proceeds of corporate borrowings and distributions on the Company-obligated
mandatorily redeemable preferred securities which are used for other segments
are allocated to those segments.
Accordingly, corporate interest expense consists primarily of interest on the
convertible subordinated debentures which were retired in the second quarter
1999, the unsecured 8% notes issued in the second quarter 1999, the unsecured
8.5% notes, the medium-term notes, credit facility borrowings, and unallocated
proceeds from refinancings of certain properties, net of interest capitalized
on development projects or allocated to other segments. Corporate operating
expenses consist primarily of general and administrative costs, federal income
taxes and distributions on the redeemable preferred securities, net of
distributions allocated to other segments.
25
<PAGE>
Part I. Financial Information, continued
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations:
Gain (loss) on dispositions of operating property assets, net:
- --------------------------------------------------------------
Gain (loss) on dispositions of operating property assets, net, including the
Company's share of those recorded by unconsolidated real estate ventures, is
summarized as follows (in millions):
<TABLE>
<CAPTION>
Three months
ended March 31,
----------------------
<S> <C> <C>
2000 1999
-------- ------
Net gain (loss) on operating
properties $ (4.7) $ 1.3
</TABLE>
The net loss on operating properties for the three months ended March 31, 2000
primarily related to a provision for loss on an interest in a retail center
property that the Company and its venture partner decided to sell. The net gain
on operating properties in the three months ended March 31, 1999 primarily
related to the sale of a service station by a majority financial interest
venture.
Net earnings:
The increase in net earnings for the three months ending March 31, 2000
as compared to the same period in 1999 was attributable to the factors
discussed above in the analyses of the segments and in the analysis of gain
(loss) on dispositions of operating property assets, net.
26
<PAGE>
Part I. Financial Information, continued
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations:
Financial condition and liquidity:
- ---------------------------------
Shareholders' equity decreased by $3.8 million from December 31, 1999 to March
31, 2000. The decrease was primarily attributable to the payment of regular
quarterly dividends on the Company's common and Preferred stocks and purchases
of common stock partially offset by net earnings for the three months ended
March 31, 2000 and issuance of common stock pursuant to the Contingent Stock
Agreement.
The Company had cash and cash equivalents and investments in marketable
securities totaling $48.7 million at March 31, 2000, including $3.9 million of
investments held for restricted uses.
In 1998, the Company obtained a $450 million unsecured revolving credit facility
from a group of lenders. The facility is available until July 2001, and is
subject to a one-year renewal option. The group of lenders also provided a
bridge loan facility that was available for specific property acquisitions
completed in 1998. Related borrowings were repaid on or before July 30, 1999.
The revolving credit facility may be used for various purposes, including
project development costs, property acquisitions, liquidity and other corporate
needs. It may also be used to pay some portion of existing debt. Availability
under the facility was $241 million at March 31, 2000.
As of March 31, 2000, debt due in one year was $77 million, including balloon
payments due in the first three months of 2001 of $22 million. These balloon
payments are expected to be paid at or before the scheduled maturity dates of
the related loans from the proceeds of property refinancings, credit facility
borrowings, proceeds of the sales of property interests held for sale, proceeds
from the sales of other properties or other available corporate funds. The
Company is continually evaluating sources of capital, and management believes
there are satisfactory sources available for all requirements without
necessitating sales of operating properties. However, dispositions of operating
properties classified as held for sale are expected to provide capital
resources in 2000 and may also provide them in subsequent years.
The Company began marketing interests in certain office and industrial
properties in the first quarter of 2000. The Company expects that these
properties will be sold in 2000 and that any proceeds will be used to repay
debt, repurchase common stock and/or fund project development costs. The
Company may also sell interests in other operating properties. The Company and
its affiliates also consider certain investment and other land assets as
significant sources of cash flows and may decide to accelerate sales in order
to provide cash for other purposes, including the funding of development
activities.
27
<PAGE>
Part I. Financial Information, continued
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations:
Financial condition and liquidity, continued:
- --------------------------------------------
Also as discussed above, the Company has approval to repurchase, subject to
certain pricing restrictions, up to $250 million of common stock. As of March
31, 2000, the Company had repurchased approximately 2.1 million shares under
this program for approximately $44.7 million.
The Company has a shelf registration statement for the sale of up to an
aggregate of approximately $2.25 billion (based on the public offering price)
of common stock, Preferred stock and debt securities. At March 31, 2000, the
Company had issued approximately $358 million of common stock and debt
securities under the shelf registration statement, with a remaining
availability of approximately $1.9 billion. Also, under an effective
registration statement the Company may issue additional medium-term notes of up
to $29.7 million.
Net cash provided by operating activities was $46.3 million and $32.9 million
for the three months ended March 31, 2000 and 1999, respectively. The level of
cash flows provided by operating activities is affected by the timing of
receipts of rents and other revenues and payment of operating and interest
expenses. The increase in net cash provided of $13.4 million was due primarily
to higher rent receipts. The level of cash provided by operating distributions
from unconsolidated majority financial interest ventures is affected by the
timing of receipt of their land sales revenues, payment of operating and
interest expenses and other sources and uses of cash. Other changes in net
cash provided by operating activities were due to the factors discussed
previously under the operating results of the business segments.
Net cash used in investing activities was $41.9 million and $73.9 million for
the three months ended March 31, 2000 and 1999, respectively. The decrease in
net cash used of $32.0 million was due primarily to higher payments received on
loans to unconsolidated majority financial interest ventures partially offset
by an increase in expenditures for properties in development and property
acquisitions.
Net cash used in financing activities was $4.8 million for the three months
ended March 31, 2000, and net cash provided by financing activities was $31.9
million for the three months ended March 31, 1999. The increase in net cash
used of $36.7 million was due primarily to lower proceeds from the issuance of
other debt (primarily lower credit line draws) and to higher repurchases of
Company common stock due primarily to the aforementioned stock repurchase
program.
New accounting standards not yet adopted
- ----------------------------------------
In June 1999, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 137 (Statement 137), an amendment to
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (Statement 133), issued in June 1998.
Statement 137 defers the required adoption date of September 133 for the
Company to no later than January 1, 2001. The Company's use of derivative
instruments has consisted primarily of interest rate swap and cap agreements
related to specific debt financings. While the Company has not completed its
analysis of Statement 133 and has not made a decision regarding the timing of
adoption, it does not believe that adoption will have a material effect on its
financial position and results of operations based on its current use of
derivative instruments.
28
<PAGE>
Part I. Financial Information, continued
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations:
Information relating to forward looking statements:
- ---------------------------------------------------
This report on Form 10-Q of the Company includes forward-looking statements
which reflect the Company's current views with respect to future events and
financial performance. These forward-looking statements are subject to certain
risks and uncertainties, including those identified below, which could cause
actual results to differ materially from historical results or those
anticipated. The words believe, expect, anticipate and similar expressions
identify forward-looking statements. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of their
dates. The Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events, or otherwise. The following are among the factors that could cause
actual results to differ materially from historical results or those
anticipated: (1) real estate investment trust rules; (2) real estate
development and investment risks; (3) illiquidity of real estate investments;
(4) dependence on rental income from real property; (5) effect of uninsured
loss; (6) lack of geographical diversification; (7) possible environmental
liabilities; (8) difficulties of compliance with the Americans with
Disabilities Act; (9) competition; (10) changes in the economic climate; and
(11) changes in tax laws or regulations. For a more detailed discussion of
these factors, see Exhibit 99.2 of the Company's Form 10-K for the fiscal year
ended December 31, 1999.
29
<PAGE>
Part I. Financial Information, continued
Item 3. Quantitative and Qualitative Disclosures about Market Risk
information:
Market risk information:
- -----------------------
The market risk associated with financial instruments and derivative financial
and commodity instruments is the risk of loss from adverse changes in market
prices or rates. The Company's market risk arises primarily from interest rate
risk relating to variable rate borrowings used to maintain liquidity (e.g.,
credit facility advances) or finance project acquisition or development costs
(e.g., construction loan advances). The Company's interest rate risk management
objective is to limit the impact of interest rate changes on earnings and cash
flows. In order to achieve this objective, the Company relies primarily on
long-term, fixed rate, nonrecourse loans from institutional lenders to finance
its operating properties. In addition, long-term, fixed rate financing is
typically arranged concurrently with or shortly after a variable rate project
acquisition or construction loan is negotiated. The Company also makes limited
use of interest rate exchange agreements, including interest rate swaps and
caps, to mitigate its interest rate risk on variable rate debt. The Company
does not enter into interest rate exchange agreements for speculative purposes
and the fair value of these and other derivative financial instruments is
insignificant at March 31, 2000.
The Company's interest rate risk is monitored closely by management. The table
below presents the principal amounts due and weighted-average interest rates
applicable to principal amounts outstanding at the end of each year. This
information may be used to evaluate the expected cash flows of the Company
under debt and related agreements and its sensitivity to interest rate changes.
The information relating to debt maturities (in millions) is based on expected
maturity dates which consider anticipated refinancing or other transactions.
<TABLE>
<CAPTION>
Remaining
2000 2001 2002 2003 2004 Thereafter Total
----- ----- ----- ----- ----- ---------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Fixed rate debt $ 38 $ 160 $ 129 $ 337 $ 259 $1,824 $2,747
Average interest rate 7.8% 7.9% 7.9% 7.8% 7.9% 7.9% 7.8%
Variable rate LIBOR debt $ 13 $ 296 $ 191 $ 4 $ 4 $ 127 $ 635
Average interest rate 7.1% 7.2% 7.2% 7.2% 7.2% 7.2% 7.1%
</TABLE>
30
<PAGE>
Part I. Financial Information, continued
Item 3. Quantitative and Qualitative Disclosures about Market Risk
information:
Market risk information, continued:
- ----------------------------------
At March 31, 2000, approximately $152.8 million of the Company's variable rate
debt relates to borrowings under project construction loans. The borrowings
under project construction loans are expected to be repaid from proceeds of
long-term, fixed rate loans at dates from 2000 to 2001 when construction of the
related projects is scheduled to be completed.
At March 31, 2000, the Company had interest rate cap agreements which
effectively limit the average interest rate on $100 million of the variable
rate LIBOR debt maturing in 2002 to 9.1%, and the average rate on $6 million of
the variable rate LIBOR debt maturing in 2010 to 8.7%.
As the table incorporates only those exposures that exist as of March 31, 2000,
it does not consider exposures or positions which could arise after that date.
As a result, the Company's ultimate realized gain or loss with respect to
interest rate fluctuations will depend on the exposures that arise after March
31, 2000, the Company's hedging strategies during that period and interest
rates.
31
<PAGE>
Part II. Other Information.
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities and Use of Proceeds.
None
Item 3. Defaults Upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information.
None
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Reference is made to the Exhibit Index.
(b) Reports on Form 8-K
None
32
<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 thereunto duly authorized.
on behalf of
THE ROUSE COMPANY and as
Principal Financial Officer:
Date: May 15, 2000 By /s/ Jeffrey H. Donahue
------------ ----------------------
Jeffrey H. Donahue
Executive Vice President and
Chief Financial Officer
Principal Accounting Officer:
Date: May 15, 2000 By /s/ Melanie M. Lundquist
------------ ------------------------
Melanie M. Lundquist
Vice President and
Corporate Controller
33
<PAGE>
Exhibit Index
Exhibit Number Description
- -------------- -----------
27 Financial Data Schedule
34
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This financial data schedule is submitted in accordance with Regulation S-K item
601 (c)(2). This schedule contains summary financial information extracted from
Form 10-Q for the quarterly period ended March 31, 2000 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 25,500
<SECURITIES> 23,188
<RECEIVABLES> 88,661
<ALLOWANCES> 25,913
<INVENTORY> 0
<CURRENT-ASSETS> 118,981<F1>
<PP&E> 4,164,757
<DEPRECIATION> 571,015
<TOTAL-ASSETS> 4,447,296
<CURRENT-LIABILITIES> 370,528<F2>
<BONDS> 3,381,663
0
41
<COMMON> 703
<OTHER-SE> 634,044
<TOTAL-LIABILITY-AND-EQUITY> 4,447,296
<SALES> 168,867
<TOTAL-REVENUES> 168,867
<CGS> 0
<TOTAL-COSTS> 97,874
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,235
<INTEREST-EXPENSE> 60,118
<INCOME-PRETAX> 31,450
<INCOME-TAX> 82
<INCOME-CONTINUING> 31,450
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 31,368
<EPS-BASIC> 0.40
<EPS-DILUTED> 0.40
<FN>
<F1>Current assets include cash, unrestricted marketable securities, current
portion of accounts and notes receivable and prepaid expenses and deposits.
<F2>Current liabilities include the current portion of long-term debt and accounts
payable, accrued expenses and other liabilities.
</FN>
</TABLE>
