-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Vuzk0i5v9WvAQKE8JycQRQjn82GqStnbmYZOZ81cJOcwmA2yxmhR475rsLOUhx3+ RKplQ9QES9TU1q66Pm7WxA== 0000928385-98-002325.txt : 19981118 0000928385-98-002325.hdr.sgml : 19981118 ACCESSION NUMBER: 0000928385-98-002325 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19981007 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19981116 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROUSE COMPANY CENTRAL INDEX KEY: 0000085388 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF NONRESIDENTIAL BUILDINGS [6512] IRS NUMBER: 520735512 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 001-11543 FILM NUMBER: 98751546 BUSINESS ADDRESS: STREET 1: 10275 LITTLE PATUXENT PKWY CITY: COLUMBIA STATE: MD ZIP: 21044-3456 BUSINESS PHONE: 4109926000 MAIL ADDRESS: STREET 1: 10275 LITTLE PATUXENT PARKWAY CITY: COLUMBIA STATE: MD ZIP: 21044 FORMER COMPANY: FORMER CONFORMED NAME: COMMUNITY RESEARCH & DEVELOPMENT INC DATE OF NAME CHANGE: 19660913 8-K/A 1 FORM 8-K/A 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) October 7, 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) 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 August 13, 1998, that on April 6, 1998, the Company and Westfield America, Inc. entered into an agreement to purchase a portfolio of interests in retail centers from TrizecHahn Centers Inc. ("TrizecHahn"). Under the terms of the agreement, as amended, the Company has agreed to purchase ownership interests in seven retail centers for approximately $1.1 billion in a series of transactions to be completed during the third and fourth quarters of 1998. The agreement is subject to the satisfaction of certain conditions and includes a provision for the substitution of, or increase or decrease by TrizecHahn, in the number of retail centers to be acquired. On July 31, 1998, a wholly owned subsidiary of the Company purchased from TrizecHahn retail property assets known as Park Meadows Mall. In a related transaction on the same date, another wholly owned subsidiary of the Company, in a joint venture with Westfield America, Inc. ("Westfield"), purchased from TrizecHahn retail property assets known as Valley Fair. These transactions are collectively referred to as the First Closing. As a result, Company subsidiaries now own Park Meadows Mall and a 50% joint venture ownership interest in Valley Fair. The Company is holding for sale the 50% joint venture ownership interest in Valley Fair. These purchases were previously reported in the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on August 13, 1998, and the financial statements required by Rule 3-14 of Regulation S-X and related pro forma financial information of the Company pursuant to Article 11 of Regulation S-X were previously reported in the Company's Current Report on Form 8-K/A dated October 9, 1998. The aggregate purchase price for the Company's interests in the properties in the First Closing was approximately $445,435,000, including approximately $252,817,000 paid at closing and approximately $192,618,000 of assumed debt secured by the properties. The purchase prices were determined by negotiation between the applicable parties. The Company used available cash to pay approximately $42,817,000 of the purchase price at closing. The balance of the purchase price paid at closing of $210,000,000 was provided by borrowings under the Company's unsecured revolving credit facility. On October 7, 1998, a wholly owned subsidiary of the Company purchased from TrizecHahn retail property assets known as Fashion Place. In related transactions on the same date, other wholly owned subsidiaries purchased from TrizecHahn a 25% interest in assets known as The Fashion Show (a retail center in which the Company indirectly owns the remaining 75% ownership interest) and a 58.1% partnership interest in H-N-W Associates, a limited partnership ("HNW"). HNW owns a 35.3% interest in Westdale Associates, a general partnership that owns retail property assets known as Westdale Mall. As a result, Company subsidiaries now own a 100% interest in Fashion Place and The Fashion Show, and through affiliates, a 20.5% interest in Westdale Mall. The Company is holding for sale the 20.5% interest in Westdale Mall. These transactions are collectively referred to as the Second Closing. The Company reported these transactions in its Current Report on Form 8-K filed with the Securities and Exchange Commission on October 21, 1998. On October 22, 1998, a wholly owned subsidiary of the Company purchased from TrizecHahn retail property assets known as Towson Town Center. As a result, the Company now has a 100% interest in Towson Town Center. This transaction is referred to as the Third Closing. The Company reported this transaction in its Current Report on Form 8-K filed with the Securities and Exchange Commission on November 5, 1998. Fashion Place is a regional shopping center in Salt Lake City, Utah and contains approximately 382,000 square feet of leasable mall space and three department stores encompassing 566,000 square feet of space. The Fashion Show is a regional shopping center on the "Strip" in downtown Las Vegas, Nevada and contains approximately 308,000 square feet of leasable mall space and five department stores encompassing 532,000 square feet of space. Westdale Mall is a regional shopping center in Cedar Rapids, Iowa and contains approximately 383,000 square feet of leasable mall space and four department stores encompassing 471,000 square feet of space. Towson Town Center is a regional shopping center in Towson, Maryland and contains approximately 536,000 square feet of leasable mall space and two department stores encompassing 419,000 square feet of space. Fashion Place, The Fashion Show, Westdale Mall, and Towson Town Center will continue to operate as regional shopping centers. The aggregate purchase price for the Company's interests in the properties in connection with the Second and Third Closings, negotiated between the Company and TrizecHahn, was approximately $442,713,000, including approximately $221,987,000 paid at the closings and approximately $220,726,000 of assumed mortgage debt secured by the properties. The Company used proceeds from additional mortgage debt secured by one of the properties to pay approximately $21,000,000 of the purchase price. The balance of the purchase price of $200,987,000 was funded by borrowings under the Company's unsecured revolving credit facility. Immediately after closing on Towson Town Center, the Company repaid $164,876,000 of mortgage debt secured by the property and assumed by a subsidiary of the Company. The Company used proceeds of $140,000,000 from new mortgage debt secured by the property, borrowings of $20,000,000 under the Company's bridge loan credit facility and borrowings of $4,876,000 under the Company's unsecured revolving credit facility to repay this mortgage debt. The First National Bank of Chicago and Bankers Trust Company are the lead underwriters for the bridge loan credit facility and the unsecured revolving credit facility. 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 Park Meadows Mall, Valley Fair, Fashion Place, The Fashion Show, Westdale Mall and Towson Town Center and related pro forma financial information of the Company. 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 PricewaterhouseCoopers LLP, Independent Accountants 23.2 Consent of KPMG Peat Marwick LLP, Independent Accountants 23.3 Consent of KPMG Peat Marwick LLP, Independent Accountants 23.4 Consent of KPMG Peat Marwick LLP, Independent Accountants 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: November 16, 1998 By /s/ Jeffrey H. Donahue ----------------- ------------------------- Jeffrey H. Donahue Senior Vice-President and Chief Financial Officer Date: November 16, 1998 By /s/ George L. Yungmann ----------------- ------------------------- George L. Yungmann Senior Vice-President and Controller 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 respective properties' most recent fiscal years as the transactions relating to Park Meadows Mall and the 50% joint venture ownership interest in Valley Fair (as described in the Company's Current Report on Form 8-K dated August 13, 1998), Fashion Place, the 25% interest in The Fashion Show, and the 20.5% interest in Westdale Mall, (as described in the Company's Current Report on Form 8-K dated October 7, 1998) and Towson Town Center (as described in the Company's Current Report on Form 8-K dated October 22, 1998) are not with related parties and the Company, after reasonable inquiry, is not aware of any material factors related to the 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 these interests in retail centers and as to related depreciation and amortization. A discussion of material factors considered by the Company in assessing the properties is included in the introductory language regarding the pro forma financial statements on page F-37. In addition, since the properties will be directly or indirectly owned by entities that intend to elect to be treated as REITs for Federal income tax purposes, a presentation of estimated taxable operating results is not applicable.
PAGE ---- PARK MEADOWS MALL PROPERTY - -------------------------- Report of Independent Accountants.................................... F-3 Statement of Revenues and Certain Expenses for the Year Ended December 31, 1997.............................. F-4 Notes to Statement of Revenues and Certain Expenses.................. F-5 VALLEY FAIR PROPERTY - -------------------- Report of Independent Accountants.................................... F-9 Statement of Revenues and Certain Expenses for the Year Ended December 31, 1997.............................. F-10 Notes to Statement of Revenues and Certain Expenses.................. F-11
F-1
PAGE ---- FASHION PLACE - ------------- Report of Independent Accountants.................................... F-15 Statement of Revenues and Certain Expenses for the Year Ended December 31, 1997.............................. F-16 Notes to Statement of Revenues and Certain Expenses.................. F-17 THE FASHION SHOW - ---------------- Independent Auditors' Report......................................... F-21 Statement of Revenues and Certain Expenses for the Year Ended December 31, 1997.............................. F-22 Notes to Statement of Revenues and Certain Expenses.................. F-23 WESTDALE MALL - ------------- Independent Auditors' Report......................................... F-26 Statement of Revenue and Certain Expenses for the Year Ended December 31, 1997.............................. F-27 Notes to Statement of Revenue and Certain Expenses................... F-28 TOWSON TOWN CENTER - ------------------ Independent Auditors' Report......................................... F-32 Statement of Revenue and Certain Expenses for the Year Ended December 31, 1997.............................. F-33 Notes to Statement of Revenue and Certain Expenses................... F-34 THE ROUSE COMPANY AND SUBSIDIARIES - ---------------------------------- Introductory language regarding Unaudited Pro Forma Condensed Consolidated Financial Statements....................... F-37 Pro Forma Condensed Consolidated Balance Sheet as of June 30, 1998 (unaudited)............................. F-39 Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December 31, 1997 (unaudited).... F-40 Pro Forma Condensed Consolidated Statement of Operations for the Six Months ended June 30, 1998 (unaudited).. F-41 Notes to Pro Forma Condensed Consolidated Financial Statements (unaudited)............................................ F-42
F-2 Report of Independent Accountants --------------------------------- The Board of Directors of The Rouse Company We have audited the accompanying statement of revenues and certain expenses for the year ended December 31, 1997 of the Park Meadows Mall Property, as defined in Note 1, which is intended to be acquired by The Rouse Company. This statement is the responsibility of the management of TrizecHahn Centers Inc. 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 is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the 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 statement. We believe that our audit provides a reasonable basis for our opinion. As described in Note 2, this statement excludes certain expenses that would not be comparable with those resulting from the operations of the Park Meadows Mall Property after acquisition by The Rouse Company. 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 the Park Meadows Mall Property's revenues and expenses. In our opinion, the statement referred to above presents fairly, in all material respects, the revenues and certain expenses described in Note 2, of the Park Meadows Mall Property for the year ended December 31, 1997, in conformity with generally accepted accounting principles. PricewaterhouseCoopers LLP Newport Beach, California June 15, 1998 F-3 PARK MEADOWS MALL PROPERTY STATEMENT OF REVENUES AND CERTAIN EXPENSES OF THE PARK MEADOWS MALL PROPERTY TO BE ACQUIRED BY THE ROUSE COMPANY For The Year Ended December 31, 1997
Revenues: Minimum rent $15,062,127 Overage rent 740,139 Carts and temporary tenant rents 1,029,382 Recoveries from tenants 9,409,368 Other income 322,079 Public improvement fee revenue 4,759,236 ----------- 31,322,331 ----------- Certain expenses: Operating expenses 5,586,128 Property taxes 3,707,665 Promotion 43,937 Professional services 72,743 Interest expense 1,731,195 Other expenses 279,981 ----------- 11,421,649 ----------- Revenues in excess of certain expenses $19,900,682 ===========
The accompanying notes are an integral part of this statement. F-4 PARK MEADOWS MALL PROPERTY NOTES TO STATEMENT OF REVENUES AND CERTAIN EXPENSES 1. Organization: The accompanying statement of revenues and certain expenses (the "Statement") of the Park Meadows Mall Property, as defined herein, relates to the operations of a regional shopping center, Park Meadows Mall, located in Douglas County, Colorado (the "Park Meadows Mall Property" or "Property"), which is owned by Park Meadows Mall, Ltd., a Colorado limited partnership (the "Partnership") and is managed by TrizecHahn Centers Management Inc. ("THCMI"), a wholly owned subsidiary of TrizecHahn Centers Inc. ("THCI"). The Property is intended to be sold to The Rouse Company ("Rouse") in a single transaction subject to, among other things, an executed Asset Purchase Agreement between THCI and Rouse. The Partnership was formed to develop and operate the Property which opened on August 30, 1996. The partnership agreement provides that the Partnership shall continue until November 2043, unless terminated earlier. The Partnership interests at December 31, 1997 are as follows: Hahn Park Meadows Mall, Inc. 75% Trizec Colorado, Inc. 25% Hahn Park Meadows Mall, Inc. and Trizec Colorado, Inc. are effectively wholly owned by THCI. 2. Summary of Significant Accounting Policies: The following are significant accounting policies followed in the preparation of the accompanying Statement. This Statement and notes are representations of THCI and THCMI, whose managements are responsible for their integrity and objectivity. Basis of Presentation: --------------------- The accompanying Statement is presented on the accrual basis of accounting in conformity with Rule 3-14 of Regulation S-X of the Securities and Exchange Commission. Accordingly, it is not representative of the actual operations for the period presented because certain expenses, which may not be comparable to those expected to be incurred by Rouse in the proposed future operations of the Property, have been excluded. Expenses excluded consist of depreciation and amortization, management and leasing fees and mortgage interest. F-5 PARK MEADOWS MALL PROPERTY NOTES TO STATEMENT OF REVENUES AND CERTAIN EXPENSES 2. Summary of Significant Accounting Policies, Continued: Rental Revenue: -------------- The Partnership recognizes scheduled minimum rent increases on a straight- line basis. Overage rents, which are based upon the level of sales achieved by the lessee, are recognized on an accrual basis. Recoveries from tenants for real estate taxes, insurance and certain other shopping center operating expenses are recognized as revenue in the period the applicable costs are incurred. Lease Fees: ---------- Payments received from tenants in connection with early termination of a tenant lease are recognized as income when received. Maintenance and Repairs: ----------------------- Maintenance and repairs are charged to operations as incurred. Use of Estimates: ---------------- The Partnership has made a number of estimates and assumptions relating to the reported amounts of revenue and expenses during the reporting period to prepare this Statement in conformity with generally accepted accounting principles. Actual results could differ from those estimates. 3. Public Improvement Fee Revenue: The Partnership issued bonds for the purpose of financing public infrastructure improvements. In connection with the bond issue, a trust fund was established to oversee the dispersal of bond proceeds and the repayment of the bond issue. The bond repayment is funded by a Public Improvement Fee ("PIF") assessed on the retail sales of each store in the shopping center and is remitted directly to the trustee, Norwest Bank. The Statement includes PIF revenue of $4,759,236, interest income earned on undisbursed bond proceeds of $109,586 and interest expense of $1,731,195. F-6 PARK MEADOWS MALL PROPERTY NOTES TO STATEMENT OF REVENUES AND CERTAIN EXPENSES 4. Commitments and Contingencies: Partnership as Lessor: --------------------- The Partnership leases space to tenants in the shopping center for which it charges minimum rents and receives reimbursement for real estate taxes, insurance and certain other shopping center operating expenses. The terms of the leases vary with the tenants, and the majority of the leases also provide for additional overage rents during any year in which a tenant's gross sales exceed a stated amount. Future minimum rents to be received under leases in effect at December 31, 1997 are as follows:
Years Ending December 31, - ------------------------- 1998 $ 14,129,880 1999 16,161,609 2000 16,183,400 2001 16,206,313 2002 15,794,393 thereafter 94,053,840 ------------ $172,529,435 ============
Legal: ----- The Partnership is, from time to time, involved in various claims and legal actions arising in the ordinary course of business. Although the final outcome of these legal matters cannot be determined, it is management's opinion, based in part upon advice from legal counsel, that the final resolution of these matters will not have a material adverse effect on the Partnership's results of operations. F-7 PARK MEADOWS MALL PROPERTY NOTES TO STATEMENT OF REVENUES AND CERTAIN EXPENSES 5. Related-Party Transactions: THCI and THCMI provide payroll, professional and various legal services to the Partnership. A summary of related-party costs and fees incurred for the year ended December 31, 1997 is as follows:
Payroll and related benefits $1,754,517 Development fees 101,155 Professional services 14,020 Legal fees 56,678 ---------- $1,926,370 ==========
F-8 Report of Independent Accountants --------------------------------- The Board of Directors of The Rouse Company We have audited the accompanying statement of revenues and certain expenses for the year ended December 31, 1997 of the Valley Fair Property, as defined in Note 1, which is intended to be acquired by The Rouse Company and Westfield America, Inc., in a joint venture. This statement is the responsibility of the management of TrizecHahn Centers Inc. 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 is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the 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 statement. We believe that our audit provides a reasonable basis for our opinion. As described in Note 2, this statement excludes certain expenses that would not be comparable with those resulting from the operations of the Valley Fair Property after acquisition by The Rouse Company and Westfield America, Inc. 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 the Valley Fair Property's revenues and expenses. In our opinion, the statement referred to above presents fairly, in all material respects, the revenues and certain expenses described in Note 2, of the Valley Fair Property for the year ended December 31, 1997, in conformity with generally accepted accounting principles. PricewaterhouseCoopers LLP Newport Beach, California June 15, 1998 F-9 VALLEY FAIR PROPERTY STATEMENT OF REVENUES AND CERTAIN EXPENSES OF THE VALLEY FAIR PROPERTY TO BE ACQUIRED BY THE ROUSE COMPANY AND WESTFIELD AMERICA, INC. For The Year Ended December 31, 1997
Revenues: Minimum rent $15,827,632 Overage rent 1,719,478 Carts and temporary tenant rents 848,286 Recoveries from tenants 6,243,693 Other income 417,482 ----------- 25,056,571 ----------- Certain expenses: Operating expenses 4,205,839 Property taxes 1,417,352 Office and management 180,690 Promotion 27,770 Professional services 63,926 Other expenses 14,748 ----------- 5,910,325 ----------- Revenues in excess of certain expenses $19,146,246 ===========
The accompanying notes are an integral part of this statement. F-10 VALLEY FAIR PROPERTY NOTES TO STATEMENT OF REVENUES AND CERTAIN EXPENSES 1. Organization: The accompanying statement of revenues and certain expenses (the "Statement") of the Valley Fair Property, as defined herein, relates to the operations of a regional shopping center, Valley Fair, located in San Jose, California (the "Valley Fair Property" or "Property"), which is owned by Stevens Creek Associates, a partnership (the "Partnership") and is managed by TrizecHahn Centers Management Inc. ("THCMI"), a wholly owned subsidiary of one of the partners, TrizecHahn Centers Inc. ("THCI"). The ownership interest of THCI in the Partnership is intended to be sold to The Rouse Company ("Rouse") and Westfield America, Inc. ("Westfield") in a single transaction subject to, among other things, an executed Asset Purchase Agreement between THCI, Rouse and Westfield. The Statement includes the accounts of the Partnership and its wholly owned subsidiary, Hahn Issuing Corporation. Hahn Issuing Corporation ("Subsidiary") is a Delaware corporation formed in 1986 solely for the purpose of issuing commercial paper to private investors under the Partnership's Credit Agreement with a commercial bank. All significant intercompany balances and transactions have been eliminated. The Partnership is a California general partnership formed for the purpose of improving, renovating and integrating two existing shopping centers, known as "Valley Fair Shopping Center," located in San Jose, California, and "Stevens Creek Plaza," located in the cities of San Jose and Santa Clara, California, into a regional shopping center known as "Valley Fair." The Partnership agreement provides that the Partnership is to continue until December 31, 2024 unless terminated earlier. The general partners and their respective interests are as follows: THCI 33.33% RT-H Corporation ("RT-H") 16.67% Valley Fair Associates, L.P. ("VFA") 50.00% RT-H is effectively wholly owned by THCI. F-11 VALLEY FAIR PROPERTY NOTES TO STATEMENT OF REVENUES AND CERTAIN EXPENSES 2. Summary of Significant Accounting Policies: The following are significant accounting policies followed in the preparation of the accompanying Statement. This Statement and notes are representations of THCI and THCMI, whose managements are responsible for their integrity and objectivity. Basis of Presentation: --------------------- The accompanying Statement is presented on the accrual basis of accounting in conformity with Rule 3-14 of Regulation S-X of the Securities and Exchange Commission. Accordingly, it is not representative of the actual operations for the period presented because certain expenses, which may not be comparable to those expected to be incurred by Rouse and Westfield in the proposed future operations of the Property, have been excluded. Expenses excluded consist of depreciation and amortization, management and leasing fees and mortgage interest. Rental Revenue: -------------- The Partnership recognizes scheduled minimum rent increases on a straight- line basis. Overage rents, which are based upon the level of sales achieved by the lessee, are recognized on an accrual basis. Recoveries from tenants for real estate taxes, insurance and certain other shopping center operating expenses are recognized as revenue in the period the applicable costs are incurred. Lease Fees: ---------- Payments received from tenants in connection with early termination of a tenant lease are recognized as income when received. Maintenance and Repairs: ----------------------- Maintenance and repairs are charged to operations as incurred. Use of Estimates: ---------------- The Partnership has made a number of estimates and assumptions relating to the reported amounts of revenue and expenses during the reporting period to prepare this Statement in conformity with generally accepted accounting principles. Actual results could differ from those estimates. F-12 VALLEY FAIR PROPERTY NOTES TO STATEMENT OF REVENUES AND CERTAIN EXPENSES 3. Commitments and Contingencies: Partnership as Lessor: --------------------- The Partnership leases space to tenants in the shopping center for which it charges minimum rents and receives reimbursement for real estate taxes, insurance and certain other shopping center operating expenses. The terms of the leases vary with the tenants, and the majority of the leases also provide for additional overage rents during any year in which a tenant's gross sales exceed a stated amount. Future minimum rents to be received under leases in effect at December 31, 1997 are as follows:
Years Ending December 31, - ------------------------- 1998 $ 16,071,655 1999 15,031,985 2000 13,861,335 2001 13,277,659 2002 11,975,001 thereafter 39,452,957 ------------ $109,670,592 ============
Legal: ----- The Partnership is, from time to time, involved in various claims and legal actions arising in the ordinary course of business. Although the final outcome of these legal matters cannot be determined, it is management's opinion, based in part upon advice from legal counsel, that the final resolution of these matters will not have a material adverse effect on the Partnership's results of operations. F-13 VALLEY FAIR PROPERTY NOTES TO STATEMENT OF REVENUES AND CERTAIN EXPENSES 4. Related-Party Transactions: THCI and THCMI provide payroll, professional and various legal services to the Partnership. A summary of related-party costs and fees incurred for the year ended December 31, 1997 is as follows:
Payroll and related benefits $1,573,626 Development fees 444,790 Professional services 522,633 Legal fees 129,655 ---------- $2,670,704 ==========
F-14 Report of Independent Accountants --------------------------------- The Board of Directors of The Rouse Company We have audited the accompanying statement of revenues and certain expenses for the year ended December 31, 1997 of the Fashion Place Property, as defined in Note 1, which is intended to be acquired by The Rouse Company. This statement is the responsibility of the management of TrizecHahn Centers Inc. 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 is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the 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 statement. We believe that our audit provides a reasonable basis for our opinion. As described in Note 2, this statement excludes certain expenses that would not be comparable with those resulting from the operations of the Fashion Place Property after acquisition by The Rouse Company. 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 the Fashion Place Property's revenues and expenses. In our opinion, the statement referred to above presents fairly, in all material respects, the revenues and certain expenses described in Note 2, of the Fashion Place Property for the year ended December 31, 1997, in conformity with generally accepted accounting principles. PricewaterhouseCoopers LLP Newport Beach, California June 19, 1998 F-15 FASHION PLACE PROPERTY STATEMENT OF REVENUES AND CERTAIN EXPENSES OF THE FASHION PLACE PROPERTY TO BE ACQUIRED BY THE ROUSE COMPANY For The Year Ended December 31, 1997
Revenues: Minimum rent $ 6,807,740 Overage rent 355,651 Carts and temporary tenant rents 832,117 Recoveries from tenants 3,443,955 Other income 147,793 ----------- 11,587,256 ----------- Certain expenses: Operating expenses 2,385,158 Property taxes 756,072 Promotion 27,756 Professional services 68,268 Ground rent 29,700 Other expenses 211,457 ----------- 3,478,411 ----------- Revenues in excess of certain expenses $ 8,108,845 ===========
The accompanying notes are an integral part of this statement. F-16 FASHION PLACE PROPERTY NOTES TO STATEMENT OF REVENUES AND CERTAIN EXPENSES 1. Organization: The accompanying statement of revenues and certain expenses (the "Statement") of the Fashion Place Property, as defined herein, relates to the operations of a regional shopping center, Fashion Place, located in Murray, Utah (the "Fashion Place Property" or "Property"), which is owned by Fashion Place Associates, a Utah limited partnership (the "Partnership"), and is managed by TrizecHahn Centers Management Inc. ("THCMI"), a wholly owned subsidiary of one of the partners, TrizecHahn Centers Inc. ("THCI"). The Property is intended to be sold to The Rouse Company ("Rouse") in a single transaction subject to, among other things, an executed Asset Purchase Agreement between THCI and Rouse. The Partnership was formed on May 8, 1969 to develop and operate the Property. The Partnership agreement provides that the Partnership shall continue for a term of 50 years, and from year to year until the partners elect to terminate the Partnership. Profits and losses are shared as follows: THCI 95% Roderick Enterprises ("Roderick") 5% 2. Summary of Significant Accounting Policies: The following are significant accounting policies followed in the preparation of the accompanying Statement. This Statement and notes are representations of THCI and THCMI, whose managements are responsible for their integrity and objectivity. Basis of Presentation: --------------------- The accompanying Statement is presented on the accrual basis of accounting in conformity with Rule 3-14 of Regulation S-X of the Securities and Exchange Commission. Accordingly, it is not representative of the actual operations for the period presented because certain expenses, which may not be comparable to those expected to be incurred by Rouse in the proposed future operations of the Property, have been excluded. Expenses excluded consist of depreciation and amortization, management and leasing fees and mortgage interest. F-17 FASHION PLACE PROPERTY NOTES TO STATEMENT OF REVENUES AND CERTAIN EXPENSES 2. Summary of Significant Accounting Policies, Continued: Rental Revenue: -------------- The Partnership recognizes scheduled minimum rent increases on a straight- line basis. Overage rents, which are based upon the level of sales achieved by the lessee, are recognized on an accrual basis. Recoveries from tenants for real estate taxes, insurance and certain other shopping center operating expenses are recognized as revenue in the period the applicable costs are incurred. Lease Fees: ---------- Payments received from tenants in connection with early termination of a tenant lease are recognized as income when received. Maintenance and Repairs: ----------------------- Maintenance and repairs are charged to operations as incurred. Use of Estimates: ---------------- The Partnership has made a number of estimates and assumptions relating to the reported amounts of revenue and expenses during the reporting period to prepare this Statement in conformity with generally accepted accounting principles. Actual results could differ from those estimates. 3. Commitments and Contingencies: Partnership as Lessor: --------------------- The Partnership leases space to tenants in the shopping center for which it charges minimum rents and receives reimbursement for real estate taxes, insurance, and certain other shopping center operating expenses. The terms of the leases vary with the tenants, but the majority of the leases also provide for additional overage rents during any year in which a tenant's gross sales exceed a stated amount. F-18 FASHION PLACE PROPERTY NOTES TO STATEMENT OF REVENUES AND CERTAIN EXPENSES 3. Commitments and Contingencies, Continued: Partnership as Lessor, Continued: -------------------------------- Future minimum rents to be received under leases in effect at December 31, 1997 are as follows:
Years Ending December 31, - ------------------------- 1998 $ 6,486,353 1999 5,618,964 2000 4,959,073 2001 4,765,479 2002 4,406,143 thereafter 9,280,945 ----------- $35,516,957 ===========
Partnership as Lessee: --------------------- The shopping center is situated on six parcels of land. The largest of these parcels is owned by the Partnership. The remaining parcels are leased under leases expiring at various dates from 2004 to 2059, plus options for renewal. Total annual rental expense under these leases is $29,700. The minimum annual rental payments under the lease are as follows:
Years Ending December 31, - ------------------------- 1998 $ 29,700 1999 29,700 2000 29,700 2001 29,700 2002 29,700 thereafter 915,800 ---------- $1,064,300 ==========
F-19 FASHION PLACE PROPERTY NOTES TO STATEMENT OF REVENUES AND CERTAIN EXPENSES 3. Commitments and Contingencies, Continued: Legal: ----- The Partnership is, from time to time, involved in various claims and legal actions arising in the ordinary course of business. Although the final outcome of these legal matters cannot be determined, it is management's opinion, based in part upon advice from legal counsel, that the final resolution of these matters will not have a material adverse effect on the Partnership's results of operations. 4. Related-Party Transactions: THCI and THCMI provide payroll, professional and various legal services to the Partnership. A summary of related-party costs and fees incurred for the year ended December 31, 1997 is as follows:
Payroll and related benefits $763,243 Professional services 14,270 Legal fees 27,075 -------- $804,588 ========
5. Subsequent Event: On June 19, 1998, Roderick assigned its 5% interest in the Partnership to Hahn Capital Corporation, a wholly owned subsidiary of THCI for approximately $6.2 million. F-20 Independent Auditors' Report ---------------------------- The Board of Directors The Rouse Company We have audited the accompanying statement of revenues and certain expenses of The Fashion Show for the year ended December 31, 1997. This statement is the responsibility of management. Our responsibility is to express an opinion on this financial 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 statement of revenues and certain expenses. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the statement of revenues and certain expenses. We believe that our audit provides a reasonable basis for our opinion. As described in note 2, this statement of revenues and certain expenses excludes certain expenses that would not be comparable with those resulting from the proposed future operations of The Fashion Show. The accompanying statement of revenues and certain expenses 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 The Fashion Show's revenues and expenses. In our opinion, the statement referred to above presents fairly, in all material respects, the revenues and certain expenses described in note 2, of The Fashion Show for the year ended December 31, 1997, in conformity with generally accepted accounting principles. KPMG Peat Marwick LLP Baltimore, Maryland September 15, 1998 F-21 THE FASHION SHOW Statement of Revenues and Certain Expenses Year ended December 31, 1997
Revenues: Minimum rents $12,537,954 Percentage rents 2,112,718 Temporary tenant rents 602,947 Charges for common facilities 3,956,405 Charges for heating, ventilating and air conditioning 525,354 Charges for real estate taxes 202,566 Charges for other recoverable expenses 428,719 Interest income 105,184 Other 140,229 ----------- 20,612,076 ----------- Certain expenses: Management costs: Management fee 524,212 Other 145,974 General and administrative expenses 435,720 Marketing expenses 62,598 Common facilities expenses 2,956,008 Heating, ventilating and air conditioning expenses 395,688 Real estate taxes 621,949 Other recoverable expenses 377,431 Building maintenance expenses 4,689 Interest 6,230,396 ----------- 11,754,665 ----------- Excess of revenues over certain expenses $ 8,857,411 ===========
The accompanying notes are an integral part of this statement. F-22 THE FASHION SHOW Notes to Statement of Revenues and Certain Expenses Year ended December 31, 1997 1. Organization: The accompanying statement of revenues and certain expenses of The Fashion Show relates to a retail center in Las Vegas, Nevada which is owned by H-S Las Vegas Associates (the "Partnership"), a Nevada general partnership. The partners, holding ownership interests of 75% and 25%, respectively, are Howard Hughes Properties, Limited Partnership ("HHPLP"), an affiliate of The Rouse Company and TrizecHahn Centers Inc. ("THCI"). The Rouse Company intends to acquire THCI's 25% interest in the partnership. Upon acquisition The Rouse Company will own a 100% indirect interest in the retail center. 2. Summary of Significant Accounting Policies and Other Matters: (a) Basis of Presentation: --------------------- The statement of revenues and certain expenses has been prepared for the purpose of complying with the rules and regulations 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 retail center have been excluded. Expenses excluded consist of depreciation and amortization. (b) Minimum Rents ------------- The straight-line basis is used to recognize minimum rent revenues under leases which provide for varying rents over the terms. (c) Percentage Rents ---------------- Percentage rent revenues are considered earned when a tenant's sales exceed the minimum annual sales volume required for percentage rent under the terms of the lease agreement. F-23 THE FASHION SHOW Notes to Statement of Revenues and Certain Expenses 2. Summary of Significant Accounting Policies, Continued: (d) Management Costs ---------------- Until February 1997, the Partnership had a management agreement with Hahn Property Management Corporation (HPMC), wholly owned by THCI. The agreement provided for an annual management fee to HPMC equal to the greater of $245,000 or 3-1/2% of "annual cash receipts," as defined, plus $10,000. The agreement also provided for payment of leasing commissions to HPMC and reimbursement of certain expenses incurred by HPMC in the operation of the retail center. Upon termination of the agreement with HPMC in February 1997, Rouse Fashion Show Management, Inc. (FSMI), wholly owned by The Rouse Company, assumed responsibility for management of the retail center. The terms of the management agreement with FSMI were not finalized until September 4, 1998; however, the management fee, leasing and expense reimbursement terms of the new agreement are substantially the same as those of the agreement with HPMC. Accordingly, such expenses and costs for the period from termination of the agreement with HPMC to December 31, 1997, were determined on the basis specified in the agreement with HPMC. (e) Use of Estimates ---------------- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and judgments that affect the revenues and expenses recognized during the reporting period. Actual results could differ from those estimates. 3. Long-term Debt -------------- Long-term debt is summarized as follows at December 31, 1997:
Deed of trust note payable $68,827,034 Equipment note payable 876,744 ----------- Total $69,703,778 ===========
The deed of trust note bears interest at 8.76% and is due in monthly installments of principal and interest of $566,939 to February 2005, at which time the remaining balance of $61,639,735 is due. The note is secured by a deed of trust on the retail center and a general assignment of rents under tenant leases. F-24 THE FASHION SHOW Notes to Statement of Revenues and Certain Expenses 3. Long-term Debt, Continued ------------------------- The equipment note bears interest at 9.22%, is due in monthly installments of $19,036 to maturity in July 2001 and is secured by certain equipment. 4. Leases ------ Space in the retail center is leased to approximately 140 tenants. In addition to minimum rents, the majority of the leases provide for percentage rents when the tenants' sales volumes exceed stated amounts as well as other rents which reimburse the Partnership for certain of its operating expenses. The Partnership leases the land underlying the five major department stores in the retail center to the store owners. The expiration dates of these leases range from 2036 to 2056, including all optional renewal periods. The leases provide for minimum and percentage rents and under terms of a reciprocal easement agreement, the store owners are also required to reimburse their allocable shares, as defined, of certain annual operating expenses of the Partnership. Minimum rents to be received from tenants under operating leases in effect at December 31, 1997 are as follows:
1998 $11,978,000 1999 11,338,000 2000 10,606,000 2001 9,997,000 2002 9,013,000 thereafter 31,665,000 ----------- $84,597,000 ===========
In connection with the Partnership's acquisition of the land underlying the retail center from HHPLP, HHPLP assigned to the Partnership the land leases with the five department store tenants discussed above and entered into an agreement with the Partnership to pay certain rent deficits. Under terms of the agreement, if "total rent," as defined, in any calendar year through 2001 is less than $2,520,000, HHPLP is required to pay the shortfall to the Partnership, provided that there is a cumulative shortfall in total rent from inception of the agreement. Payments by HHPLP under the agreement are subject to an aggregate limitation of $1,800,000. At December 31, 1997, no payments were due from HHPLP under the agreement. F-25 Independent Auditors' Report ---------------------------- The Board of Directors of The Rouse Company We have audited the accompanying statement of revenue and certain expenses of Westdale Mall for the year ended December 31, 1997. This statement is the responsibility of 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 revenue and certain expenses is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the 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 statement. We believe that our audit provides a reasonable basis for our opinion. The accompanying statement of revenue and certain expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission as described in Note 1 to the statement of revenue and certain expenses. It is not intended to be a complete presentation of Westdale Mall's revenue and expenses. In our opinion, the statement referred to above presents fairly, in all material respects, the revenue and certain expenses described in Note 1, of Westdale Mall for the year ended December 31, 1997, in conformity with generally accepted accounting principles. KPMG Peat Marwick LLP San Diego, California June 8, 1998 F-26 WESTDALE MALL Statement of Revenue and Certain Expenses Year ended December 31, 1997 (in thousands)
Revenue: Minimum rent (note 4) $4,952 Overage rent 281 Cart and temporary tenant rent 427 Recoveries from tenants 2,597 Other 165 ------ 8,422 ------ Certain expenses: Operating expenses 867 Interest 2,231 Payroll and related benefits related party 728 Ground rent related party 1,118 Property taxes 1,317 Management fees related party 293 Leasing commissions related party 39 Professional services 12 Professional services related party 14 Promotion 28 ------ 6,647 ------ Revenue in excess of certain expenses $1,775 ======
See the accompanying notes to the Statement of Revenue and Certain Expenses. F-27 WESTDALE MALL Notes to Statement of Revenue and Certain Expenses Year ended December 31, 1997 (Dollars in thousands) 1. Organization and Basis of Presentation: The accompanying statement of revenue and certain expenses relates to the operations of Westdale Mall (the "Property"), located in Cedar Rapids, Iowa. The Rouse Company (the "Company") intends to acquire TrizecHahn Centers Inc's. 58.1% partnership interest in H-N-W Associates, an Iowa limited partnership ("HNW"), which is a general partner in Westdale Associates, an Illinois general partnership (the "Partnership"), which owns Westdale Mall. Westdale Associates is an Illinois general partnership consisting of HNW and JMB Income Properties, Ltd. VII, an Illinois limited partnership, as co- general partners formed to develop and operate Westdale Mall, a regional shopping center. HNW consists of TrizecHahn Centers Inc., the general partner, and several limited partners. The partnership agreement provides that Westdale Associates is to continue until December 31, 2029 unless sooner terminated. Profits and losses are shared as follows: H-N-W Associates 35.3% JMB Income Properties, Ltd. VII 64.7% The accompanying statement of revenue and certain expenses has been prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission and accordingly, is not representative of the actual results of operations of the Property for the year ended December 31, 1997 due to the exclusion of the following items, which may not be comparable to the proposed future operations of the Property: . Depreciation and amortization . Federal and state income taxes . Other items not directly related to the proposed future operations of the Property. F-28 WESTDALE MALL Notes to Statement of Revenue and Certain Expenses (Dollars in thousands) 2. Summary of Significant Accounting Policies and Practices: (a) Revenue Recognition: ------------------- Minimum rent revenue is recognized on a straight-line basis over the terms of the individual leases. Overage rent, which is based upon the level of sales achieved by the lessee, and cart and temporary tenant rent are recognized on an accrual basis. Recoveries from tenants for real estate taxes, insurance and certain other shopping center operating expenses are recognized as revenue in the period the applicable costs are incurred. (b) Maintenance and Repairs: ----------------------- Maintenance and repairs are charged to operations as incurred. (c) Use of Estimates: ---------------- Management has made a number of estimates and assumptions relating to the reporting and disclosure of revenue and certain expenses during the reporting period to prepare the statement of revenue and certain expenses in conformity with generally accepted accounting principles. Actual results could differ from those estimates. 3. Mortgage Notes Payable: In 1980, the Partnership executed four loans totaling $29,950 secured by the Property and an assignment of leases and rents. The loans bear interest at fixed rates ranging from 8.75% to 10.375%, with monthly principal and interest payments aggregating $235, and are due on various dates from February 1, 2010 to July 1, 2015. The principal balances of the loans at December 31, 1997 totaled $24,565. 4. Commitments and Contingencies: (a) Partnership as Lessor: --------------------- The Partnership leases space to tenants in the shopping center for which it charges minimum rent and receives reimbursement for real estate taxes, insurance and certain other shopping center operating expenses. The terms F-29 WESTDALE MALL Notes to Statement of Revenue and Certain Expenses (Dollars in thousands) 4. Commitments and Contingencies, Continued: (a) Partnership as Lessor, Continued: -------------------------------- of the leases vary by tenant and range from one to 25 years, and the majority of the leases also provide for additional overage rents during any year in which a tenant's gross sales exceed a stated amount. Future minimum rent revenue to be received under leases in force at December 31, 1997 are as follows:
Years Ending December 31, - ------------------------- 1998 $ 4,919 1999 4,456 2000 3,524 2001 3,154 2002 2,757 thereafter 10,282 ------- $29,092 =======
(b) Legal: ----- The Partnership is, from time to time, involved in various claims and legal actions arising in the ordinary course of business. Although the final outcome of these legal matters cannot be determined, it is management's opinion, based in part on advice of legal counsel, that the final resolution of these matters will not have a material adverse effect on the Partnership's financial position, results of operations, or liquidity. F-30 WESTDALE MALL Notes to Statement of Revenue and Certain Expenses (Dollars in thousands) 5. Related Party Transactions: (a) Management: ---------- Affiliates of HNW have provided property management, leasing and various professional services to the Property. A summary of costs and fees incurred and expensed for the year ended December 31, 1997 follows:
Payroll and related benefits $728 Management fees 293 Leasing commissions 39 Professional services 14
(b) Ground Lease: ------------ The property was developed on land which is leased from HNW. The lease requires a minimum annual rent payment of $849 plus a participation percentage of 25% of rent collected which exceeds a specified rent base, as defined. The lease expires in 2035. The lease further provides that upon the sale of the Property, the Partnership may require HNW to convey a portion of the leased land to the purchaser as part of the sale. Rental expense amounted to $1,118 in 1997. The minimum annual rental payments under the lease are as follows:
Years Ending December 31, Amount ------------------------- ------- 1998 $ 849 1999 849 2000 849 2001 849 2002 849 thereafter 27,589 ------- $31,834 =======
F-31 Independent Auditors' Report ---------------------------- The Board of Directors of The Rouse Company We have audited the accompanying statement of revenue and certain expenses of Towson Town Center for the year ended December 31, 1997. This statement is the responsibility of 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 revenue and certain expenses is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the 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 statement. We believe that our audit provides a reasonable basis for our opinion. The accompanying statement of revenue and certain expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission as described in Note 1 to the statement of revenue and certain expenses. It is not intended to be a complete presentation of Towson Town Center's revenue and expenses. In our opinion, the statement referred to above presents fairly, in all material respects, the revenue and certain expenses as described in Note 1, of Towson Town Center for the year ended December 31, 1997, in conformity with generally accepted accounting principles. KPMG Peat Marwick LLP San Diego, California June 8, 1998 F-32 TOWSON TOWN CENTER Statement of Revenue and Certain Expenses Year ended December 31, 1997 (Dollars in thousands)
Revenue: Minimum rent (note 3) $15,240 Overage rent 277 Cart and temporary tenant rent 1,312 Recoveries from tenants 7,068 Other 496 ------- 24,393 ------- Certain expenses: Operating expenses 3,942 Payroll and related benefits related party 1,604 Property taxes 1,359 Management fees related party 698 Leasing commissions related party 131 Professional services 50 Professional services related party 31 Promotion 27 ------- 7,842 ------- Revenue in excess of certain expenses $16,551 =======
See the accompanying notes to this Statement of Revenue and Certain Expenses. F-33 TOWSON TOWN CENTER Notes to Statement of Revenue and Certain Expenses Year ended December 31, 1997 (Dollars in thousands) 1. Basis of Presentation: The accompanying statement of revenue and certain expenses relates to the operations of Towson Town Center (the "Property"), located near Baltimore, Maryland. The Rouse Company (the "Company") intends to acquire the Property from Towson Town Center Associates (the "Partnership"). The accompanying statement of revenue and certain expenses has been prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission and accordingly, is not representative of the actual results of operations of the Property for the year ended December 31, 1997 due to the exclusion of the following items, which may not be comparable to the proposed future operations of the Property: . Depreciation and amortization . Interest in mortgages which will not be assumed by the Company . Federal and state income taxes . Other items not directly related to the proposed future operations of the Property. 2. Summary of Significant Accounting Policies and Practices: (a)Revenue Recognition: ------------------- Minimum rent revenue is recognized on a straight-line basis over the terms of the individual leases. Overage rent, which is based upon the level of sales achieved by the lessee, and cart and temporary tenant rent are recognized on an accrual basis. Recoveries from tenants for real estate taxes, insurance and certain other shopping center operating expenses are recognized as revenue in the period the applicable costs are incurred. (b)Maintenance and Repairs: ----------------------- Maintenance and repairs are charged to operations as incurred. F-34 TOWSON TOWN CENTER Notes to Statement of Revenue and Certain Expenses (Dollars in thousands) 2. Summary of Significant Accounting Policies and Practices, Continued: (c)Use of Estimates: ---------------- Management has made a number of estimates and assumptions relating to the reporting and disclosure of revenue and certain expenses during the reporting period to prepare the statement of revenue and certain expenses in conformity with generally accepted accounting principles. Actual results could differ from those estimates. 3. Commitments and Contingencies: (a)Shopping Center Leases: ---------------------- Shopping center space is leased to tenants under various operating leases with terms ranging primarily from two to 20 years. The leases generally provide for minimum rent and reimbursement of real estate taxes, insurance and certain other operating expenses. The majority of the leases also provide for additional overage rent during any year in which a tenant's gross sales exceed a stated amount. Future minimum rent revenue to be received under leases in force at December 31, 1997 are as follows:
Years Ending December 31, - ------------------------- 1998 $15,738 1999 15,592 2000 15,332 2001 14,991 2002 9,976 thereafter 25,895 ------- $97,524 =======
F-35 TOWSON TOWN CENTER Notes to Statement of Revenue and Certain Expenses (Dollars in thousands) 3. Commitments and Contingencies, Continued: (b)Legal: ----- The Property is, from time to time, involved in various claims and legal actions arising in the ordinary course of business. Although the final outcome of these legal matters cannot be determined, it is management's opinion, based in part on advice of legal counsel, that the final resolution of these matters will not have a material adverse effect on the Property's results of operations. 4. Related Party Transactions: One of the previous owners and its wholly owned subsidiary have provided various professional services to the Property. A summary of costs and fees incurred and expensed for the year ended December 31, 1997 follows:
Payroll and related benefits $1,604 Management fees 698 Leasing commissions 131 Professional services 31
F-36 UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS On April 6, 1998, The Rouse Company and Westfield America, Inc. entered into an agreement to purchase a portfolio of interests in retail centers from TrizecHahn Centers, Inc. Under terms of the agreement, as amended, and subject to certain terms and conditions, The Rouse Company has agreed to purchase interests in seven retail centers for approximately $1.1 billion. On October 9, 1998, the Company filed a Current Report on Form 8-K/A that included financial statements of real estate operations acquired specified by Rule 3-14 of Regulation S-X ("Rule 3-14") for Park Meadows Mall and Valley Fair and related pro forma financial information required pursuant to Article 11 of Regulation S-X. This Current Report on Form 8-K/A dated November 16, 1998, includes the previously filed financial statements of Park Meadows Mall and Valley Fair specified by Rule 3-14 and the financial statements of acquired real estate operations specified by Rule 3-14 for Fashion Place, The Fashion Show, Westdale Mall and Towson Town Center. Fashion Place is a regional shopping center in Salt Lake City, Utah. The center was constructed in 1972 and was substantially renovated in 1988. The Company is currently analyzing a new expansion/renovation opportunity for the center. The center contains approximately 382,000 square feet of leasable mall space and three department stores (Dillard's, Nordstrom and Sears) totaling 566,000 square feet of space. The center is leased primarily to high profile, national retailers, produces sales of approximately $360 per square foot and is 96% occupied. The Fashion Show is a regional shopping center on the "Strip" in Las Vegas, Nevada. The center was constructed in 1981, was substantially renovated in 1995 and is in excellent condition. It contains approximately 308,000 square feet of leasable mall space and five department stores (Dillard's, Macy's, Neiman-Marcus, Robinson's-May and Saks Fifth Avenue) totaling 532,000 square feet. The center is leased primarily to high profile, national retailers, produces sales of approximately $500 per square foot and is 100% occupied. Towson Town Center is a regional shopping center in Towson, Maryland, just north of Baltimore. The center was initially constructed in 1959, was substantially renovated in 1992 and is in excellent condition. It contains approximately 536,000 square feet of leasable mall space and two department stores (Hecht's and Nordstrom) totaling 419,000 square feet of space. The center is leased primarily to high profile, national retailers, produces sales of approximately $374 per square foot and is 91% occupied. Substantially all of the tenant leases in each of the properties provide for the recovery of operating expenses and for contingent rentals based on tenant sales levels in addition to minimum rentals. Most of the leases also provide for increases in minimum rentals over their terms. Fashion Place, The Fashion Show and Towson Town are among the dominant centers in their respective markets. The Company intends to operate them so as to maintain their competitive positions and, after reasonable inquiry, 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. F-37 In connection with the purchase transactions, the Company decided to hold for sale its ownership interest in H-N-W Associates, a limited partnership (HNW) and its interest in Valley Fair. HNW owns a 35.3% interest in Westdale Associates, a general partnership that owns assets known as Westdale Mall. The Company believes it has the ability to sell its ownership interests within twelve months. Accordingly, the Company will exclude from its consolidated statement of operations any profit or loss resulting from the operation or sale of its ownership interests in these properties. Any profit or loss from operations or gain or loss on the ultimate dispositions will be treated as adjustments to the purchase price allocation. The remaining retail center acquisition is expected to close in the fourth quarter of 1998. 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 Park Meadows Mall, Fashion Place, The Fashion Show and Towson Town Center adjusted to give effect to the purchase of such properties. The pro forma condensed consolidated statements of operations do not include any revenues, operating and interest expenses or depreciation and amortization relating to Valley Fair and Westdale Mall due to the Company's decision to sell its interests in these properties. The pro forma condensed consolidated balance sheet and statements of operations are provided to illustrate the effects of the acquisitions on The Rouse Company and have been prepared using the purchase method of accounting and, accordingly, the cost to purchase the interests in the 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 June 30, 1998, if the acquisitions 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 six months ended June 30, 1998, might have appeared if the acquisitions 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 acquisitions occurred at the beginning of the periods presented or on the date indicated, nor are they necessarily indicative of the future results of operations or financial position of The Rouse Company. These unaudited pro forma condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements of The Rouse Company and the audited statements of revenues and certain expenses specified by Rule 3-14 included elsewhere in this report. The unaudited pro forma adjustments are based upon certain assumptions included in the notes to the unaudited pro forma condensed consolidated financial statements. F-38 THE ROUSE COMPANY AND SUBSIDIARIES PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET JUNE 30, 1998 (UNAUDITED) (IN THOUSANDS)
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) ------------- -------------- ------------ ------------- Property Operating properties, net........................ $2,740,081 $ 720,419 $ - $3,460,500 Properties in development........................ 170,696 - - 170,696 Properties held for sale......................... 1,000 146,991 - 147,991 ---------- ---------- ----------- ---------- Total property............................... 2,911,777 867,410 - 3,779,187 Investments in and advances to unconsolidated real estate ventures............... 286,431 13,664 - 300,095 Prepaid expenses, receivables under finance leases and other assets................... 225,797 6,656 - 232,453 Accounts and notes receivable...................... 95,920 711 - 96,631 Investments in marketable securities............... 3,866 - - 3,866 Cash and cash equivalents.......................... 39,647 (471,674) 435,155 3,128 ---------- ---------- ----------- ---------- Total........................................ $3,563,438 $ 416,767 $435,155 $4,415,360 ========== ========== =========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Debt............................................... $2,545,102 $ 415,121 $431,987 $3,392,210 Obligations under capital leases................... 54,866 - - 54,866 Accounts payable, accrued expenses and other liabilities............................. 322,295 1,646 3,168 327,109 Company-obligated mandatorily redeemable preferred securities of a trust holding solely Parent Company subordinated debt securities................................... 137,500 - - 137,500 Shareholders' equity............................... 503,675 - - 503,675 ---------- ---------- ----------- ---------- Total........................................ $3,563,438 $ 416,767 $435,155 $4,415,360 ========== ========== =========== ==========
F-39 THE ROUSE COMPANY AND SUBSIDIARIES PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1997 (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA)
First Closing ----------------------------------------------------- The Rouse Company The Rouse and Subsidiaries Company and Park Pro Forma (Pro Forma Combined as Subsidiaries Meadows Adjustments reported in Form 8-K/A (Historical) Mall Valley Fair (Note 3) filed October 9, 1998) ------------- ------------- --------------- --------------------- ----------------------- Revenues........................ $ 930,094 $ 31,322 $ 25,057 $ (2,355) (b) $ 959,061 (12,529) (h) Operating expenses, exclusive (12,528) (a) of provision for bad debts, depreciation and amortization.. 532,240 9,690 5,910 (2,955) (a) 542,890 (2,955) (h) 960 (c) Interest expense................ 207,490 1,731 - 14,613 (d) 225,445 9,057 (e) 2,564 (f) (10,010) (h) Provision for bad debts......... 5,766 - - - 5,766 Depreciation and amortization... 86,009 - - 4,460 (g) 90,469 Equity in earnings of unconsolidated real estate ventures....................... - - - - - Gain (loss) on dispositions of assets and other provisions, net............................ (24,763) - - - (24,763) ---------- ------------- --------------- ---------- ---------- Earnings from continuing operations before income taxes.......................... 73,826 19,901 19,147 (43,146) 69,728 Income taxes.................... (116,066) - - - (116,066) ---------- ------------- --------------- ---------- ---------- Earnings from continuing operations..................... $ 189,892 $ 19,901 $ 19,147 $ (43,146) $ 185,794 ========== ============= =============== ========== ========== Earnings from continuing operations per share of common stock after provision for dividends on Preferred stock : Basic......................... $ 2.70 $ 2.64 ========== ========== Diluted....................... $ 2.59 $ 2.54 ========== ========== Weighted average number of common shares outstanding: Basic......................... 66,201 66,201 ========== ========== Diluted....................... 76,005 76,005 ========== ========== Second and Third Closings -------------------------------------------------------- The Rouse Company and The Towson Pro Forma Subsidiaries Fashion Fashion Westdale Town Adjustments (Pro Forma Place Show Mall Center (Note 3) Combined) -------- -------- -------- -------- ---------------- ------------- Revenues........................ $11,587 $20,612 $8,422 $24,393 $ (8,422) (a) $ 995,041 (20,612) (b) Operating expenses, exclusive of provision for bad debts, depreciation and amortization.. 3,478 5,524 4,416 7,842 (4,416) (a) 552,224 (5,524) (b) (2,368) (b) 382 (c) Interest expense................ - 6,230 2,231 - (2,231) (a) 254,461 (6,230) (b) 15,170 (d) 5,264 (e) 9,450 (f) (868) (h) Provision for bad debts......... - - - - - 5,766 Depreciation and amortization... 6,722 (g) 97,191 Equity in earnings of unconsolidated real estate ventures....................... - - - - 686 (a) - (686) (h) Gain (loss) on dispositions of assets and other provisions, net............................ - - - - - (24,763) -------- -------- -------- -------- --------- ---------- Earnings from continuing operations before income taxes.......................... 8,109 8,858 1,775 16,551 (44,385) 60,636 Income taxes.................... - - - - - (116,066) -------- -------- -------- -------- --------- ---------- Earnings from continuing operations..................... $ 8,109 $ 8,858 $1,775 $16,551 $ (44,385) $ 176,702 ======== ======== ======== ======== ========= ========== Earnings from continuing operations per share of common stock after provision for dividends on Preferred stock : Basic......................... $ 2.50 ========== Diluted....................... $ 2.42 ========== Weighted average number of common shares outstanding: Basic......................... 66,201 ========== Diluted....................... 76,005 ==========
F-40 THE ROUSE COMPANY AND SUBSIDIARIES PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA)
First Closing ----------------------------------------------------- The Rouse Company The Rouse and Subsidiaries Company and Park Pro Forma (Pro Forma Combined as Subsidiaries Meadows Adjustments reported in Form 8-K/A (Historical) Mall Valley Fair (Note 3) filed October 9, 1998 ------------- ------------- -------------- ------------------ ---------------------- Revenues........................ $335,243 $ 14,970 $ 13,164 $ (1,177) (b) $349,036 (6,582) (h) Operating expenses, exclusive (6,582) (a) of provision for bad debts, depreciation and amortization.. 181,429 4,207 3,650 (1,825) (a) 186,042 406 (c) (1,825) (h) Interest expense................ 90,659 845 - 7,306 (d) 99,588 4,501 (e) 1,282 (f) (5,005) (h) Provision for bad debts......... 1,790 - - - 1,790 Depreciation and amortization... 36,199 - - 2,230 (g) 38,429 Equity in earnings of unconsolidated real estate ventures....................... 36,660 - - - 36,660 Gain (loss) on dispositions of assets and other provisions, net............................ 2,169 - - - 2,169 -------- ------------- -------------- ----------------- -------- Earnings from continuing operations before income taxes.......................... 63,995 9,918 9,514 (21,411) 62,016 Income taxes.................... 199 - - - 199 -------- ------------- -------------- ------------------- -------- Earnings from continuing operations..................... $ 63,796 $ 9,918 $ 9,514 $ (21,411) $ 61,817 ======== ============= ============== =================== ======== Earnings from continuing operations per share of common stock after provision for dividends on Preferred stock : Basic......................... $ .86 $ .83 ======== ======== Diluted....................... $ .84 $ .81 ======== ======== Weighted average number of common shares outstanding: Basic......................... 66,978 66,978 ======== ======== Diluted....................... 72,720 72,720 ======== ======== Second and Third Closings ----------------------------------------------- The Rouse Company and The Towson Pro Forma Subsidiaries Fashion Fashion Westdale Town Adjustments (Pro Forma Place Show Mall Center (Note 3) Combined) ------- ------- -------- -------- ----------- ------------ Revenues........................ $ 5,737 $ 9,522 $ 3,773 $ 11,908 $ (3,773) (a) $366,681 (9,522) (b) Operating expenses, exclusive of provision for bad debts, depreciation and amortization.. 1,796 2,516 1,882 3,653 (1,882) (a) 190,583 (1,097) (b) (2,516) (b) 189 (c) Interest expense................ - 3,087 1,086 - (1,086) (a) 114,096 (3,087) (b) 7,585 (d) 2,632 (e) 4,725 (f) (434) (h) Provision for bad debts......... - - - - - 1,790 Depreciation and amortization... - - - - 3,361 (g) 41,790 Equity in earnings of unconsolidated real estate ventures....................... - - - - 298 (a) 36,660 (298) (h) Gain (loss) on dispositions of assets and other provisions, net............................ - - - - - 2,169 ------- ------- -------- -------- --------- -------- Earnings from continuing operations before income taxes.......................... 3,941 3,919 805 8,255 (21,496) 57,251 Income taxes.................... - - - - - 199 ------- ------- -------- -------- --------- -------- Earnings from continuing operations..................... $ 3,941 $ 3,919 $ 805 $ 8,255 $ (16,772) $ 57,052 ======= ======= ======== ======== ========= ======== Earnings from continuing operations per share of common stock after provision for dividends on Preferred stock : Basic......................... $.76 ======== Diluted....................... $.75 ======== Weighted average number of common shares outstanding: Basic......................... 66,978 ======== Diluted....................... 72,720 ========
F-41 THE ROUSE COMPANY AND SUBSIDIARIES NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. Allocated Purchase Price ------------------------ The acquisition will be accounted for by the purchase method of accounting. Accordingly, the Company's cost to acquire 100% ownership of Park Meadows Mall, Towson Town Center and Fashion Place, a 50% ownership interest in Valley Fair, a 25% interest in The Fashion Show and a 58.1% interest in H- N-W Associates (HNW) (which owns a 35.3% interest in Westdale Mall) will be allocated to the assets acquired and liabilities assumed according to their respective fair values. In connection with the acquisitions, the Company decided to sell the Company's ownership interests in Valley Fair and HNW. The cost allocated to its interest in Valley Fair is classified as property held for sale in the accompanying pro forma balance sheet. The unaudited pro forma condensed consolidated financial statements indicate that the aggregate fair value of the assets acquired and liabilities assumed in the purchase are $891,569,000 and $416,767,000, 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. 2. Balance Sheet Pro Forma Adjustments ----------------------------------- The accompanying unaudited pro forma condensed consolidated balance sheet reflects the following adjustment to give effect to the acquisition of the ownership interests in the retail properties. The Company used available cash to pay approximately $42,817,000 and proceeds from additional mortgage debt secured by one of the properties to pay approximately $21,000,000 of the purchase price. The balance of the net purchase price of $410,987,000 was provided by borrowings under the Company's unsecured revolving credit and bridge loan facilities. The accompanying unaudited pro forma condensed consolidated balance sheet as of June 30, 1998 reflects an adjustment of $3,168,000 to reclassify the bank overdraft attributable to the payment of cash at acquisition to other liabilities. F-42 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 the interests in retail properties and to include results of operations for the indicated periods of the acquired properties based on accounting policies of the Company where such policies differ from those which were applied in preparing the historical financial statements of the acquired properties included elsewhere herein. FIRST CLOSING ------------- (a) Adjust revenues and certain operating expenses to reflect the Company's 50% ownership interest in Valley Fair. (b) Eliminate income earned on available cash of $42,817,000 paid at closing. The pro forma reduction of interest revenue was calculated using an average interest rate of 5.5%. (c) Adjust operating expenses for Park Meadows Mall to reflect management and leasing costs consistent with costs incurred by the Company at similar retail properties. (d) Record interest expense incurred on borrowings of $210 million under a line of credit facility used to fund a portion of the net purchase price. The pro forma interest expense on these borrowings was calculated using an effective interest rate of 6.96%. (e) Record interest expense at an effective rate of 6.66% for mortgage note secured by Park Meadows Mall assumed by a subsidiary of the Company in connection with the acquisition. (f) Record interest expense at an effective rate of 6.41% for mortgage note secured by Valley Fair assumed by a subsidiary of the Company in connection with the acquisition. (g) Record depreciation and amortization expense for Park Meadows Mall in accordance with the established accounting policies of the Company. F-43 THE ROUSE COMPANY AND SUBSIDIARIES NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 3. Statements of Operations Pro Forma Adjustments, Continued --------------------------------------------------------- FIRST CLOSING, CONTINUED ------------------------ (h) In connection with the purchase of its 50% ownership interest in Valley Fair the Company made a decision to market its ownership interest for sale. Accordingly, pro forma adjustments are to eliminate the Company's share of operations of Valley Fair from the pro forma condensed consolidated statements of operations. SECOND AND THIRD CLOSINGS ------------------------- (a) Eliminate revenues and certain operating expenses and record equity in earnings of unconsolidated real estate ventures related to the Company's 58.1% partnership interest in HNW. HNW owns a 35.3% interest in Westdale Associates, a general partnership that owns assets known as Westdale Mall. (b) Eliminate revenues, certain operating expenses, interest expense and minority interest participation to reflect the Company's acquisition of the remaining 25% interest in The Fashion Show. The historical consolidated financial statements of The Rouse Company for the year ended December 31, 1997 and the six months ended June 30, 1998 include 100% of the revenues and certain operating expenses and minority interest participation expense of $2,368,000 and $1,097,000 respectively, representing TrizecHahn's 25% interest. (c) Adjust operating expenses for Fashion Place to include management and leasing costs consistent with costs incurred by the Company at similar operating properties. (d) Record interest expense incurred on borrowings of $225,863,000 under the bridge loan and unsecured revolving credit facilities used to fund a portion of the net purchase price and to repay a portion of assumed mortgage debt. The pro forma interest expense on these borrowings was calculated using an effective interest rate of 6.72%. (e) Record interest expense at an effective rate of 6.74% for mortgage note (including additional borrowings at closing of the purchase of $21,000,000) secured by Fashion Place assumed by subsidiaries of the Company in connection with the acquisition. F-44 THE ROUSE COMPANY AND SUBSIDIARIES NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 3. Statement of Operations Pro Forma Adjustments, Continued -------------------------------------------------------- SECOND AND THIRD CLOSINGS, CONTINUED ------------------------------------ (f) Record interest expense at an effective rate of 6.75% for a new mortgage note secured by Towson Town Center, the proceeds of which were used to repay a portion of a mortgage note assumed by a subsidiary of the Company in connection with the acquisition. (g) Record or adjust depreciation and amortization expense for Fashion Place, The Fashion Show and Towson Town Center in accordance with the established accounting policies of the Company. (h) In connection with the purchase of its ownership interest in HNW the Company made a decision to market its ownership interest for sale. Accordingly, pro forma adjustments are to eliminate the Company's equity in earnings of Westdale Mall and allocated interest from the pro forma condensed consolidated statements of operations. F-45 EX-23.1 2 EXHIBIT 23.1 Exhibit 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS 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, 33-57347, 33-57707 and 333-20781), Form S-8 (File Nos. 2-83612, 33-56231, 33-56233, 33-56235 and 333-32277) and Form S-4 (File No. 333-1693) of our report dated June 19, 1998, on our audit of the statement of revenues and certain expenses of the Fashion Place Property for the year ended December 31, 1997, our report dated June 15, 1998, on our audit of statement of revenues and certain expenses of the Valley Fair Property for the year ended December 31, 1997 and of our report dated June 15, 1998, on our audit of the statement of revenues and certain expenses of the Park Meadows Mall Property for the year ended December 31, 1997, which reports are included in this filing on Form 8-K/A. PRICEWATERHOUSECOOPERS LLP Newport Beach, California November 13, 1998 EX-23.2 3 EXHIBIT 23.2 Exhibit 23.2 CONSENT OF INDEPENDENT ACCOUNTANTS 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, 33-57347, 33-57707 and 333-20781), Form S-8 (File Nos. 2-83612, 33-56231, 33-56233, 33-56235 and 333-32277) and Form S-4 (File No. 333-1693) of our report dated September 15, 1998, on our audit of the statement of revenues and certain expenses of The Fashion Show for the year ended December 31, 1997, which report is included in this filing on Form 8-K/A. Our report contains a paragraph that states that the statement of revenues and certain expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission as described in note 2 and is not intended to be a complete presentation of The Fashion Show's revenues and expenses. KPMG Peat Marwick LLP Baltimore, Maryland November 13, 1998 EX-23.3 4 EXHIBIT 23.3 Exhibit 23.3 CONSENT OF INDEPENDENT AUDITORS The Board of Directors of The Rouse Company: We consent to the incorporation by reference in the registration statements on Form S-3 (File Nos. 2-78898, 2-95596, 33-52458, 33-57347, 33-57707 and 333- 20781), Form S-8 (File Nos. 2-83612, 33-56231, 33-56233, 33-56235 and 333-32277) and Form S-4 (File No. 333-1693) of The Rouse Company of our report dated June 8, 1998, with respect to the statement of revenue and certain expenses of Westdale Mall for the year ended December 31, 1997, which report appears in the Form 8-K/A of The Rouse Company, dated November 16, 1998 (date of earliest event reported October 7, 1998). Such report contains a paragraph that states that the statement of revenue and certain expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission as described in Note 1. It is not intended to be a complete presentation of Westdale Mall's revenue and expenses. KPMG Peat Marwick LLP San Diego, California November 16, 1998 EX-23.4 5 EXHIBIT 23.4 Exhibit 23.4 CONSENT OF INDEPENDENT AUDITORS The Board of Directors of The Rouse Company: We consent to the incorporation by reference in the registration statements on Form S-3 (File Nos. 2-78898, 2-95596, 33-52458, 33-57347, 33-57707 and 333- 20781), Form S-8 (File Nos. 2-83612, 33-56231, 33-56233, 33-56235 and 333-32277) and Form S-4 (File No. 333-1693) of The Rouse Company of our report dated June 8, 1998, with respect to the statement of revenue and certain expenses of Towson Town Center for the year ended December 31, 1997, which report appears in the Form 8-K/A of The Rouse Company, dated November 16, 1998 (date of earliest event reported October 7, 1998). Such report contains a paragraph that states that the statement of revenue and certain expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission as described in Note 1. It is not intended to be a complete presentation of Towson Town Center's revenue and expenses. KPMG Peat Marwick LLP San Diego, California November 16, 1998 -----END PRIVACY-ENHANCED MESSAGE-----