2004 ICSC Investor/Analyst Seminar May 24, 2004
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Transcript of 2004 ICSC Investor/Analyst Seminar May 24, 2004
2004 ICSC Investor/Analyst Seminar
May 24, 2004
Retail Centers
Occupancy
93%
Comp Tenant Sales
$439 psf
Retail Centers NOI Growth
2004 growth from comparable properties
2.5% - 3%
2004 growth from the total retail segment
8%
$280.0
$327.2
$365.3 $368.3 $375.7
$469.8
$545-$555
$508.9
$100
$600
1997 1998 1999 2000 2001 2002 2003 2004Est.
Retail Centers Net Operating Income
Millions
1 Excludes urban centers, projects with less than two anchors, and centers open less than two years2 Comparable tenants, excluding spaces >10,000 s.f.
2004 Sales per Square Foot 2
Center Ranking
A+ or A
B
C
RegionalCenters 1
2004 AverageOccupancy
% 2004 NetOperating Income
$ 489
$ 357
$ 286
94 %
94 %
91 %
73 %
24 %
3 %
Rouse Regional CentersKey Performance Measures
Retail Centers Base Rent Growth
New Rents in 2000:
New Rents in 2004, YTD:
$40.00 psf
$50.86 psf27% Growth
6% on compound basis
Shops at La Cantera
San Antonio
San Antonio, Texas
Shops at La Cantera
Nordstrom
Neiman Marcus
Dillard’sFoley’s
Future Expansion
Site
Retail Centers
Community Development
Summerlin
Community Development
Columbia
Community Development
The Woodlands
Bridgelands
$49.2 $48.0$51.6
$69.9
$78.0$86.2
$123.9
$0
$125
1997 1998 1999 2000 2001 2002 2003
Community Development NOI
Millions
Community Development Pricing Growth
Average price per acre in 1998:
Average price per acre in 2003:
$349,000
$739,000
112% Growth
16% on compound basis
Columbia, Maryland
Community Development Pricing Growth
Average price per acre in 1998:
Average price per acre in 2003:
$155,000
$484,000
212% Growth
26% on compound basis
Summerlin, Nevada
Community Development Pricing Growth
Average price per acre in 2002:
Average price per acre in 2003:
$294,000
$405,000
38% Growth
Fairwood, Maryland
The Woodlands
Bridgelands
2004 ICSC Investor/Analyst Seminar
May 24, 2004
Reconciliation of cash from operations available for reinvestment, net proceeds from capital transactions and net capital redeployments to Statement of Cash Flows
Millions
Net cash provided by operating activities Expenditures for the acquisition of Bridgelands included in land acquisition expenditures Expenditures for improvements to existing properties Dividends paid
Cash from operations available for reinvestment
Proceeds from capital transactions Proceeds from the disposition of properties to PREIT, Kravco and other properties
Proceeds from the disposition of interests in properties Expenditures for acquisition of Christiana netted with proceeds from dispositions Proceeds from the exercise of stock options Net proceeds from the issuance and repayment of debt, excluding construction loan draws Net other investing and other financing activities
Net proceeds from capital transactions
Capital redeployments Total expenditures for acquisitions of interests in properties and other assets
Expenditures for acquisitions of interests in properties and other assets Expenditures for acquisition of Christiana netted with proceeds from dispositions
Purchase of Parent Company-obligated mandatorily redeemable preferred securities Repurchases of common stock Expenditures for the acquisition of Bridgelands included in land acquisition expenditures Equity in development
Expenditures for properties in development Expenditures for investments in unconsolidated real estate ventures in development Proceeds from borrowings on construction loans
Net capital redeployments
Net change in cash
Year ended 12/31/2003
$ 376 22
(71) (162)
165
396
110 95 (4)
597
(437)
(57) (72) (22)(97)
(685)
$ 77
35640
(397) (40)
(168) (27) 98
Payout Ratio Affords Substantial Flexibility
Net cash provided by operating activities Acquisition of Bridgelands
(included in land acquisition expenditures) Improvements to existing properties Dividends paid
Common 150Preferred 12
Cash from operations available for reinvestment
$ 376
22
(71)
(162)
$ 165
Millions
For the year endedDecember 31, 2003
Cash from Operations Supplemented byCapital Raising/Recycling
Cash from operations available for reinvestment
Proceeds from the disposition of properties to PREIT, Kravco and other properties
Proceeds from exercise of stock options
Net borrowings (note 1)
Other, net
Net proceeds from capital transactions
Total capital transactions and cash from operations
$ 165
396
110
95
(4)
$ 597
$ 762
Millions
Note 1 Net proceeds from the issuance and repayment of debt, excluding construction loan draws.
For the year ended December 31, 2003
How Did We Spend It ?
Acquisitions of interests in properties and other assets
Acquisitions of Christiana/Staten Island/ Mizner Park / Other
Acquisition of interest in Woodlands
9.25% QUIPS (preferred securities) retired
Repurchase of shares --- Hughes participation
Bridgelands acquisition
Equity in development (note 1)
Millions
Note 1 Includes expenditures for properties in development and investments in joint ventures in development, net of construction loan draws.
Net capital redeployed
$ 437
57
72
22
97
$ 685
253
184
For the year ended December 31, 2003
Net capital redeployments
Cash from operations available for reinvestment
Net proceeds from capital transactions
Net capital redeployments
$ 165
$ 597
$ 762
$ 685
MillionsFor the year ended December 31, 2003
$77
Other Provisions, Impairment Losses & Net Gains on Dispositions / 2002, 2003 and 1st Q 2004
Pension curtailment & settlement losses
Organizational changes / early retirements
Losses (gains) on early extinguishment of debt
Impairment provisions
Total
$ 30
22
(8)
61
$ 105
Gains onDispositionsProvisions
$ 228
$ 228
Millions
January 2002 - March 2004
* $75 million included in earnings from continuing operations, primarily dispositions of interests in Christiana Mall and Franklin Park, and $153 million included in
discontinued operations.
*
*
Pension Curtailment /Settlement Losses
$30 million through March 31, 2004
$35 million estimate for the remainder of 2004
Acceleration of expense recognition that would otherwise be recognized under GAAP over the remaining average years of service of pension
beneficiaries.
No more pension plan, no more service years.Everything gets recognized currently,regardless of when cash was invested.
During 2004, quarterly expense recognition is tied to the pace at which people retire or leave -- but the impact to annual guidance remains at $0.35/share.
What do the charges represent ?
What does this mean for shareholders going forward?
Meaningful future cash savings without additional current investment.
$18
$4
$11
$32
$11
$0
$15
$0
$40
1999 2000 2001 2002 2003 YTD 04 5 Year Avg
Millions Contributed
Eliminates reporting complexity - cash and earnings diverge in pension accounting.
Organization Changes /Early Retirements
Provision for personnel changes
(Includes $11 M for retirementsof two Vice Chairmen & CFO)
$ 22
Millions
*Assumes 1/1/02 internal cost structure grows at CAGR of 4% and includes 2004 projected internal costs/savings.
$22*
January 1, 2002 –December 31, 2004
SAVINGS
January 1, 2002 - March 31, 2004
Impairment Provisions
Merchant Wired
Impairments - Operating propertiesEchelonWestdaleOther
Total
$ 12
3973
$ 61
Millions
Non-recourse financing protected shareholders
Relieved of mortgage debt exceeding market value
2002, 2003 and 1st Q 2004
Losses (Gains) on Early Extinguishment of Debt: $8 Million Net Benefit
Refinanced $240 million Fashion Show construction loan -
Saving 130 bp vs prior mortgage debt
Mortgage debt replaced with unsecured debt
Redeemed $137 million of 9.25% preferred –
Annualized savings of $12.9 million
Approximately $700,000 in expense savings in 2005
Echelon - Net gain on non-recourse debt relief
Property dispositions - PREIT, Inglewood, other
Other
Net gains
1
$ 4
(36)
19
4
$ (8)
Loss / (Gain)Millions
2002, 2003 and 1st Q 2004
Columbia Land Sales vs. 30 Year Fixed Rate Mortgage
$0
$50
$100
$150
0%
5%
10%
15%Columbia land sales30 yr. fixed rate mortgage
Col
umbi
a La
nd S
ales
(M
illio
ns)
30 Y
ear
Fix
ed R
ate
Mor
tgag
e
*Revenue figures include builder participation
Building Permits vs. 30 Year Fixed Rate Mortgage
0
200
400
600
800
1,000
1,200
1,400
1,600
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
U.S. 7.31% 30 YR. FMR National Unemployment Rate
Bui
ldin
g P
erm
its (
000’
s)
Inte
rest
Rat
e
Urbanization
Columbia Town Center
Urbanization
Woodlands Town Center
Urbanization
Columbia Town Center
Columbia Town Center
Columbia Town Center
Retention of parking fields
Utilization of shared parking
Strategic utilization of ground leases
Ongoing ownership of operating properties
Columbia Town Center
Summerlin
Summerlin
The Woodlands
Beachwood Place Woodbridge Center
Willowbrook Mall Oakbrook Center
Bridgewater Commons Staten Island Mall
Dillard’s
Robinsons - May
Anchor
Anchor
Anchor
Summerlin Town Centre
The Woodlands Town Center
2004 ICSC Investor/Analyst Seminar
May 24, 2004