NEW YORK CITY-One day after announcing it had refinanced one of its holdings, the Lakeland Square Mall, Rouse Properties Inc. held its fourth quarter earnings call. Considering that the firm was on its own for the first time in 2012—after General Growth Properties sold it off at the end of 2011—the firm did quite well.

“Even though we're still in the early stages of executing our long-term plan, we achieved tremendous progress in 2012 across our entire organization and in the operating metrics in our portfolio,” said Andrew Silberfein, president and CEO, on the call. “We executed 438 leases, totaling 2.1 million square feet. This production was more than double the previous year. At the end of 2012, our portfolio was 90% leased, up 230 basis points from prior year. Including anchor tenants, we closed the year at 92.6% leased.”

Additionally, Silberfein stated in a press release announcing Rouse's year-end results, “We continue to make meaningful progress across each of our strategic objectives: enhancing our malls through strategic and cosmetic improvements, improving our balance sheet, and executing on our targeted acquisition program in select markets throughout the country.”

He underscored how much leasing activity the company saw last year, and how much it expects to do in 2013, on the call. “Leasing momentum continued through the fourth quarter into 2013,” he said. “We leased 655,000 square feet in Q4, a 175% over the same period in 2011.”

The activity wasn't limited to a particular part of the county either, Silberfein noted. “We are seeing solid demand across our portfolio geographically. New leases were up 37.5%. Renewals were up .9%.” Financing was another source of strength for Rouse, he said. “During the year we completed $183 million of refinancing, generating net proceeds over $32 million.”

On the upgrade front, Rouse has been aggressive and plans to continue making improvements, Silberfein said. “In just our first year we have either completed, commenced or will soon commence capital improvement plans at over 30 percent of our malls. We recently have begun two capital improvement projects, including Lakeland, with a projected cost of $18 million,.”

During 2013, he continued, “We expect to commence another three or four capital projects, with the cost expected to be $25 to $30 million. Additionally, our malls will undergo cosmetic renovations of $15 million to $20 million. We expect all of this renovation to be completed within the next 12 to 18 months.

The company didn't reveal specific acquisition plans for 2013 but made clear that it will pick up properties. “We expect to be active in 2013,” said Silberfein. “We continue to see a good amount of deal flow, from private sellers, special servicers and public REITs, and we're seeing cap rates of 7% to 8%.”

Rouse is providing initial guidance for 2013 Core FFO in the range of $1.49 to $1.55 per diluted share. Those numbers don't include any refinancings or acquisitions, noted CFO John Wain, because “we are implementing our asset by asset strategy and until we make our improvements, it may not be the opportune time to refinance.”

Instant Insights /

Rouse Proves It Can Stand On Its Own

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