**Exhibit12.1**

 

The Rouse Company and Subsidiaries

 

Computation of Ratio of Earnings to FixedCharges

(dollars in thousands)

 
|                                                                                                                                                                                                                                                        |   | **Year ended December 31,** |    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------|---------|
|                                                                                                                                                                                                                                                        |   | **2003**                         |    | **2002** |   | **2001** |   | **2000** |   | **1999** |   |
|                                                                                                                                                                                                                                                        |   |                             |    |   |   |   |   |   |   |   |   |
| Earnings (loss) before income taxes, equity  in earnings of unconsolidated real estate ventures, net gains (losses) on  dispositions of interests in operating properties, discontinued operations  and cumulative effect of change in accounting principle |   | $                                | 123,970 |   | $ | 82,102 |   | $ | 94,547 |   | $ | 944 |   | $ | (17,463 | ) |
| Equity in earnings of unconsolidated real  estate ventures                                                                                                                                                                                                  |   | 31,421                           |    | 33,259 |   | 32,561 |   | 128,207 |   | 99,036 |   |
| Net gains (losses) on dispositions of  interests in operating properties                                                                                                                                                                                    |   | 26,632                           |    | 48,946 |   | (58 | ) | 42,601 |   | 69,315 |   |
|                                                                                                                                                                                                                                                        |   |                             |    |   |   |   |   |   |   |   |   |
| Fixed charges:                                                                                                                                                                                                                                              |   |                             |    |   |   |   |   |   |   |   |   |
| Interest costs                                                                                                                                                                                                                                              |   | 260,640                          |    | 248,106 |   | 217,550 |   | 202,855 |   | 203,720 |   |
| Distributions on preferred securities                                                                                                                                                                                                                       |   | 12,664                           |    | 14,303 |   | 12,719 |   | 12,719 |   | 12,719 |   |
| Portion of rental expense representative of  interest factor (1)                                                                                                                                                                                            |   | 4,997                            |    | 5,716 |   | 6,843 |   | 7,972 |   | 4,796 |   |
|                                                                                                                                                                                                                                                        |   |                             |    |   |   |   |   |   |   |   |   |
| Adjustments to earnings:                                                                                                                                                                                                                                    |   |                             |    |   |   |   |   |   |   |   |   |
| Minority interest in earnings of  majority-owned subsidiaries having fixed charges                                                                                                                                                                          |   | 2,711                            |    | 1,937 |   | 641 |   | 288 |   | 244 |   |
| Decrease (increase) in undistributed  earnings of unconsolidated real estate ventures (2)                                                                                                                                                                   |   | 5,246                            |    | 5,763 |   | (4,151 | ) | (36,457 | ) | (44,480 | ) |
| Capitalized interest                                                                                                                                                                                                                                        |   | (37,874                          | )       | (38,113 | ) | (35,652 | ) | (13,485 | ) | (13,579 | ) |
| Previously capitalized interest amortized  into earnings:                                                                                                                                                                                                   |   |                             |    |   |   |   |   |   |   |   |   |
| Depreciation of operating properties and  other investments (3)                                                                                                                                                                                             |   | 6,068                            |    | 5,658 |   | 5,287 |   | 4,929 |   | 4,554 |   |
| Cost of land sales (4)                                                                                                                                                                                                                                      |   | 5,413                            |    | 4,942 |   | 5,431 |   | — |   | — |   |
| Earnings available for fixed charges                                                                                                                                                                                                                        |   | $                                | 441,888 |   | $ | 412,619 |   | $ | 335,718 |   | $ | 350,573 |   | $ | 318,862 |   |
|                                                                                                                                                                                                                                                        |   |                             |    |   |   |   |   |   |   |   |   |
| Fixed charges:                                                                                                                                                                                                                                              |   |                             |    |   |   |   |   |   |   |   |   |
| Interest costs                                                                                                                                                                                                                                              |   | $                                | 260,640 |   | $ | 248,106 |   | $ | 217,550 |   | $ | 202,855 |   | $ | 203,720 |   |
| Distributions on preferred securities                                                                                                                                                                                                                       |   | 12,664                           |    | 14,303 |   | 12,719 |   | 12,719 |   | 12,719 |   |
| Portion of rental expense representative of  interest factor (1)                                                                                                                                                                                            |   | 4,997                            |    | 5,716 |   | 6,843 |   | 7,972 |   | 4,796 |   |
| Total fixed charges                                                                                                                                                                                                                                         |   | $                                | 278,301 |   | $ | 268,125 |   | $ | 237,112 |   | $ | 223,546 |   | $ | 221,235 |   |
|                                                                                                                                                                                                                                                        |   |                             |    |   |   |   |   |   |   |   |   |
| Ratio of earnings to fixed charges (5)                                                                                                                                                                                                                      |   | 1.59                             |    | 1.54 |   | 1.42 |   | 1.57 |   | 1.44 |   |

 

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(1)          Includes(a) 80% of minimum rentals, the portion of such rentals considered to be areasonable estimate of the interest factor, and (b) 100% of contingent rentalsof $1.3 million, $1.6 million, $1.8 million, $3.2 million and $4.0 millionfor the years ended December 31, 2003, 2002, 2001, 2000 and 1999,respectively.

 

(2)          Includesundistributed earnings of certain unconsolidated real estate ventures, formedDecember 31, 1997, in which we held substantially all (at least 98%) ofthe financial interest but did not own a majority voting interest.  In January 2001, we acquired all of theshares of voting stock (91%) of these ventures that we did not own, and fromthe date of acquisition, these ventures are included in our consolidatedfinancial statements.  Our share ofundistributed earnings of these ventures was $31.7 million in 2000 and $32.5million in 1999.

 

(3)          Representsan estimate of depreciation of capitalized interest costs based on ourestablished depreciation policy and an analysis of interest costs capitalizedsince 1971.

 

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Exhibit 12.1, continued

 

The Rouse Company andSubsidiaries

 

Computation of Ratio of Earnings to FixedCharges

 

(4)          Represents10% of the cost of Columbia land sales and 5% of the cost of Summerlin landsales, the portions of such costs considered to be reasonable estimates of theinterest factor.  On December 31,1997, certain wholly owned subsidiaries, including those that conductedsubstantially all of our land sales and community development activities,issued 91% of their voting common stock to a trust, of which certain employeesare beneficiaries.  These sales weremade at fair value and as part of our plan to meet the qualifications for REITstatus.  We retained the remainingvoting stock of the ventures and held shares of nonvoting common and/orpreferred stock which, taken together, comprised substantially all (at least98%) of the financial interest in them. As a result of our disposition of the majority voting interests in theventures, we began accounting for our investment in them using the equitymethod effective December 31, 1997. In January 2001, we acquired all of the shares of voting stock(91%) in these ventures that we did not own, and from the date of acquisition,these ventures are included in our consolidated financial statements.  As a result of these transactions, noadjustment for the interest portion of the cost of land sales has been includedfor 2000 and 1999.

 

(5)          Amountsused in the computation and the resulting ratio exclude the effect ofdiscontinued operations.

 

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