Taubman Centers Announces Solid 2013 Results And Introduces 2014 Guidance - Net Operating Income (NOI) Excluding Lease Cancellation Income Up 3.4%

- Leased Space, Ending Occupancy, and Average Rent All Up

- Mall Tenant Sales Exceed $700 Per Square Foot Milestone

BLOOMFIELD HILLS, Mich., Feb. 12, 2014 /PRNewswire/ -- Taubman Centers, Inc. (NYSE:  TCO) today reported financial results for the quarter and full year periods ended December 31, 2013.

(Logo: http://photos.prnewswire.com/prnh/20080428/CLM116LOGO )

"In the fourth quarter we delivered solid results, concluding a strong year for our company," said Robert S. Taubman, chairman, president and chief executive officer of Taubman Centers. "This quarter we benefited from increased rents, reduced interest expense, and the late 2012 acquisitions of additional interests in International Plaza (Tampa, Fla.) and Waterside Shops (Naples, Fla.).

"For the year, we achieved an increase of 9.3 percent over 2012 Adjusted FFO per share.  Our core properties produced good results, and we made significant progress on the execution of our development pipeline."


December 31,
2013

Three Months
Ended

December 31,
2012

Three Months
Ended

December 31,
2013

Year Ended

December 31,
2012

Year Ended

Net income allocable to common
shareholders (EPS) per diluted share 

 

$0.62

 

$0.44

 

$1.71

 

$1.37

Funds from Operations (FFO) per diluted
share

Growth rate

 

$1.11

18.1%

$0.94

 

 

$3.65

13.7%

$3.21

 

Adjusted Funds from Operations (Adjusted
FFO) per diluted share

Growth rate

 

$1.11

11.0%

 

$1.00 (1)

 

 

$3.65

9.3%

 

$3.34 (1)(2)

 

(1)     Excludes a charge related to the early extinguishment of debt at The Mall at Millenia (Orlando, Fla.) and PRC taxes on sale of Taubman TCBL assets.

(2)     Excludes charges related to the redemption of the Series G and H Preferred Stock.

 

NOI, Leased Space, Occupancy, and Rent Up

NOI excluding lease cancellation income was up 3.4 percent for the year and 1.9 percent over fourth quarter 2012. "Our portfolio of high quality assets continues to produce consistent, steady growth," added Mr. Taubman.

Leased space in comparable centers for Taubman's portfolio was 93.6 percent on December 31, 2013, up 0.3 percent from 93.3 percent on December 31, 2012. Ending occupancy in comparable centers was 92.1 percent on December 31, 2013, up 0.3 percent from 91.8 percent on December 31, 2012. Including tenants with leases of one year or less (temporary in-line tenants), ending occupancy was 96.3 percent.

Average rent per square foot for the fourth quarter of 2013 was $48.90, up 3.7 percent from $47.14 in the fourth quarter of 2012. For the year, average rent per square foot was $48.52, up 4.5 percent from average rent per square foot of $46.42 in 2012.

Record Tenant Sales Per Square Foot of $721

Comparable mall tenant sales per square foot were $721 for 2013, excluding the company's interest in Arizona Mills (Tempe, Ariz.), which was sold in January 2014. "We're pleased that sales in our centers have now surpassed $700 per square foot," said Mr. Taubman. "This is another record for our company and for the U.S. publicly held regional mall industry."

Sales per square foot increased 1.8 percent from 2012. For the fourth quarter of 2013, mall tenant sales per square foot were up 1.4 percent.

Renovations, Expansions, and Redevelopments Planned

The company is making progress on a number of renovations, expansions, and redevelopments and expects to receive a weighted average return of 7.5 to 8 percent on its $265 million share of investment in the following centers.

  • At The Mall at Green Hills (Nashville, Tenn.), a relocation of the current Dillard's store and the addition of 170,000 square feet of mall tenant area is set to begin. The project is expected to be completed in 2018. 
  • At Cherry Creek Shopping Center (Denver, Colo.) a 53,000 square foot Restoration Hardware will occupy the former Saks Fifth Avenue site. Demolition of the existing building is set to begin soon and Restoration is expected to open in November 2015. The project will also include 38,000 square feet of new mall tenant area. This expansion follows a substantial renovation of the center that will be completed in 2014.
  • Dolphin Mall (Miami, Fla.) will be expanded to include nearly 32,000 square feet of new restaurant space. A vacant parcel on the property will be utilized for the expansion. The new restaurants are targeted to open by the third quarter of 2015. 
  • A renovation project is under way on the 8th level of Beverly Center (Los Angeles, Calif.). The project will accommodate the flagship store of a mini-anchor new to the center and a new, contemporary dining court. The mini-anchor will open by late 2014 and the new dining court will open in 2015.
  • At Sunvalley (Concord, Calif.) a new food court is being created by converting existing space. Construction is expected to begin in June and will be completed by mid-2015.

Mall at Miami Worldcenter Announced

In December, the company announced its involvement in The Mall at Miami Worldcenter (Miami, Fla.).  This will be the company's third partnership with The Forbes Company, following the very successful joint ventures, Mall at Millenia (Orlando, Fla) and Waterside Shops (Naples, Fla.). The Forbes Company will oversee the development and management of the shopping center which will contain approximately 750,000 square feet being built as part of the first phase of the Miami Worldcenter's mixed-use project. The center will feature Macy's and Bloomingdale's and current plans call for the retail center to open late 2016. Spanning more than 25 acres at the northern end of the city's Central Business District, directly across from the American Airlines Arena, Miami Worldcenter is one of the largest and most exciting urban developments in the United States – offering a diverse mix of retail, residential, office, hospitality, and entertainment components. See Forbes and Taubman Announce the Signing of Macy's and Bloomingdale's at the Mall at Miami WorldcenterDecember 5, 2013.

Dispositions and Financing Activity

In January 2014, the company announced the sale of a 49.9 percent interest in International Plaza (Tampa, Fla.). The $499 million purchase price consisted of $337 million of cash and approximately $162 million of beneficial interest in debt. Proceeds were used to pay off Taubman's loan on Stony Point Fashion Park (Richmond, Va.) and for general corporate purposes. See Taubman, TIAA-CREF And APG Announce Sale Of Interest In International PlazaJanuary 30, 2014.

Last month, the company also announced the completion of the sale of land in Syosset, New York, and the company's interest in Arizona Mills to Simon Property Group (NYSE:  SPG). The consideration consisted of $60 million of cash and 555,150 partnership units in Simon Property Group Limited Partnership. As part of the sale, the company was relieved of its $84 million share of the $167 million mortgage loan on Arizona Mills, bringing the transaction's total value to $230 million. See Taubman Centers Sells Long Island Land And Interest In Arizona Mills To Simon Property GroupJanuary 31, 2014.

In November 2013, the company completed the previously announced $150 million, 5-year, non-recourse financing on The Mall at Green Hills (Nashville, Tenn.). The loan, which is interest only until maturity, bears interest at an all-in floating rate of 1 month LIBOR plus 1.75 percent. Proceeds were used to extinguish the existing $105 million loan and to reduce outstanding borrowings under the company's lines of credit.

The company also closed on a new $475 million unsecured term loan in the last quarter of 2013. Proceeds were used to pay off the $305 million loan on Beverly Center and to pay down the company's lines of credit. The loan, which matures in February 2019, includes an accordion feature that would increase the borrowing capacity to as much as $600 million, subject to specified conditions. Separately, the company entered into a swap that effectively fixes the current interest rate at 3 percent. See Taubman Announces The Closing Of $475 Million Unsecured Term LoanNovember 13, 2013.

"These transactions demonstrate our commitment to maintaining a strong balance sheet," said Lisa A. Payne, vice chairman and chief financial officer. "It has been our strategy to recycle capital for growth. We will be redeploying the capital we raised by reinvesting in our assets, funding our development pipeline, and repurchasing stock under our share repurchase program."

Share Repurchase Program

During the quarter ended December 31, the company purchased 473,763 shares of its common stock at an average price of $65.65 per share. Since the program's inception in August 2013, the company has purchased 786,805 shares of its common stock at an average price of $66.45 per share. At December 31, 2013 the company had $148 million available under its share repurchase authorization.  

2014 Guidance

The company is introducing guidance for 2014. For the full year 2014, the company expects FFO per diluted share to be in the range of $3.72 to $3.82. This includes the negative impact of about $0.12 per share due to the recent sale of the company's 50 percent interest in Arizona Mills and the sale of a 49.9 percent interest in International Plaza.

Net income allocable to common shareholders (EPS) for the year is expected to be in the range of $1.81 to $1.96. As a result of a reduction in depreciation expense, the loss of operations from the disposed interests will not significantly impact EPS. The EPS range provided excludes estimates for gains on the sale of Arizona Mills; land in Syosset, New York; and interests totaling a 49.9 percent ownership in International Plaza. As a result of these transactions, the company expects to recognize gains in excess of $450 million in the first quarter of 2014, or approximately $5.00 per diluted share.

Supplemental Investor Information Available

The company provides supplemental investor information along with its earnings announcements, available online at www.taubman.com under "Investor Relations."  This includes the following:

  • Company Information
  • Income Statements
  • Earnings Reconciliations
  • Changes in Funds from Operations and Earnings Per Share
  • Components of Other Income, Other Operating Expense, and Nonoperating Income (Expense)
  • Recoveries Ratio Analysis
  • Balance Sheets
  • Debt Summary
  • Other Debt, Equity and Certain Balance Sheet Information
  • Construction and Redevelopment
  • Acquisitions/Dispositions
  • Capital Spending
  • Operational Statistics
  • Owned Centers
  • Major Tenants in Owned Portfolio
  • Anchors in Owned Portfolio
  • Operating Statistics Glossary

Investor Conference Call

The company will host a conference call at 11:00 AM Eastern Standard Time on Thursday, February 13 to discuss these results, business conditions and the company's outlook for 2014. The conference call will be simulcast at www.taubman.com.  An online replay will follow shortly after the call and continue for approximately 90 days.

Taubman Centers is an S&P MidCap 400 Real Estate Investment Trust engaged in the ownership, management and/or leasing of 27 regional, super-regional and outlet shopping centers in the U.S. and Asia. Taubman's U.S.-owned properties are the most productive in the publicly held U.S. regional mall industry. Taubman is currently developing The Mall at University Town Center in Sarasota, Fla.; The Mall of San Juan in San Juan, Puerto Rico; International Market Place in Waikiki, Honolulu, Hawaii and shopping malls in Xi'an and Zhengzhou, China and Hanam, South Korea.  Taubman Centers is headquartered in Bloomfield Hills, Mich. and Taubman Asia, the platform for Taubman Centers' expansion into China and South Korea, is headquartered in Hong Kong.  Founded in 1950, Taubman has more than 60 years of experience in the shopping center industry.  For more information about Taubman, visit www.taubman.com.

For ease of use, references in this press release to "Taubman Centers," "company," "Taubman" or an operating platform mean Taubman Centers, Inc. and/or one or more of a number of separate, affiliated entities. Business is actually conducted by an affiliated entity rather than Taubman Centers, Inc. itself or the named operating platform.

This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements reflect management's current views with respect to future events and financial performance. The forward-looking statements included in this release are made as of the date hereof. Except as required by law, we assume no obligation to update these forward-looking statements, even if new information becomes available in the future. Actual results may differ materially from those expected because of various risks and uncertainties. You should review the company's filings with the Securities and Exchange Commission, including "Risk Factors" in its most recent Annual Report on Form 10-K and subsequent quarterly reports, for a discussion of such risks and uncertainties.

 

 

TAUBMAN CENTERS, INC.








Table 1 - Summary of Results








For the Periods Ended December 31, 2013 and 2012








(in thousands of dollars, except as indicated)

















Three Months Ended 


Year Ended


2013


2012


2013


2012









Net income

66,166


49,131


189,368


157,817

Noncontrolling share of income of consolidated joint ventures

(3,592)


(5,142)


(10,344)


(11,930)

Noncontrolling share of income of TRG 

(16,519)


(12,608)


(46,434)


(39,713)

Preferred stock dividends (1)

(5,785)


(3,071)


(20,933)


(21,051)

Distributions to participating securities of TRG

(436)


(403)


(1,749)


(1,612)

Net income attributable to Taubman Centers, Inc. common shareowners

39,834


27,907


109,908


83,511

Net income per common share - basic 

0.63


0.45


1.73


1.39

Net income per common share - diluted

0.62


0.44


1.71


1.37

Beneficial interest in EBITDA - Combined (2)

145,512


133,108


516,942


475,214

Funds from Operations(2)

100,614


85,531


330,836


284,680

Funds from Operations attributable to TCO (2)

71,970


59,995


236,662


197,671

Funds from Operations per common share - basic(2)

1.14


0.97


3.72


3.30

Funds from Operations per common share - diluted (2)

1.11


0.94


3.65


3.21

Adjusted Funds from Operations (2)(3)

100,614


90,275


330,836


295,836

Adjusted Funds from Operations attributable to TCO (2)(3)

71,970


63,322


236,662


205,430

Adjusted Funds from Operations per common share- basic(2)(3)

1.14


1.02


3.72


3.43

Adjusted Funds from Operations per common share- diluted (2)(3)

1.11


1.00


3.65


3.34

Weighted average number of common shares outstanding - basic

63,408,637


61,899,628


63,591,523


59,884,455

Weighted average number of common shares outstanding - diluted

65,066,977


63,341,516


64,575,412


61,376,444

Common shares outstanding at end of period

63,101,614


63,310,148





Weighted average units - Operating Partnership - basic

88,584,937


88,245,612


88,823,006


86,306,256

Weighted average units - Operating Partnership - diluted

90,243,277


90,558,761


90,678,157


88,669,507

Units outstanding at end of period - Operating Partnership

88,271,133


88,656,297





Ownership percentage of the Operating Partnership at end of period

71.5%


71.4%





Number of owned shopping centers at end of period

25


24


25


24









Operating Statistics:








Net Operating Income excluding lease cancellation income - growth % (2)(4)

1.9%




3.4%



Mall tenant sales - all centers (5)

1,913,865


1,879,341


6,180,095


6,008,265

Mall tenant sales - comparable (5)(6)

1,810,157


1,789,244


5,837,965


5,726,743

Ending occupancy - all centers

91.7%


91.8%


91.7%


91.8%

Ending occupancy - comparable(4)

92.1%


91.8%


92.1%


91.8%

Average occupancy - all centers 

91.6%


91.4%


90.9%


90.3%

Average occupancy - comparable (4)

92.0%


91.4%


91.1%


90.4%

Leased space - all centers

93.1%


93.4%


93.1%


93.4%

Leased space - comparable(4)

93.6%


93.3%


93.6%


93.3%

All centers:








Mall tenant occupancy costs as a percentage of tenant sales - Consolidated Businesses (5)

11.6%


11.6%


13.2%


12.8%

Mall tenant occupancy costs as a percentage of tenant sales - Unconsolidated Joint Ventures (5)

11.4%


11.0%


12.6%


12.2%

Mall tenant occupancy costs as a percentage of tenant sales - Combined (5)

11.6%


11.4%


13.0%


12.7%

Comparable centers:








Mall tenant occupancy costs as a percentage of tenant sales - Consolidated Businesses (4)(5)

11.5%


11.4%


13.2%


12.8%

Mall tenant occupancy costs as a percentage of tenant sales - Unconsolidated Joint Ventures (5)(6)

11.3%


11.0%


12.5%


12.2%

Mall tenant occupancy costs as a percentage of tenant sales - Combined (5)(6)

11.5%


11.3%


13.0%


12.6%

Average rent per square foot - Consolidated Businesses (4)

48.39


47.53


48.45


46.86

Average rent per square foot - Unconsolidated Joint Ventures

50.08


46.25


48.69


45.44

Average rent per square foot - Combined (4)

48.90


47.14


48.52


46.42

(1)

Preferred dividends for the year ended December 31, 2012 include charges of $3.3 million and $3.1 million incurred in connection with the $100 million redemption of the Series G Preferred Stock and the $87 million redemption of the Series H Preferred Stock, respectively.



(2)

Beneficial Interest in EBITDA represents the Operating Partnership's share of the earnings before interest, income taxes, and depreciation and amortization of its consolidated and unconsolidated businesses. The Company believes Beneficial Interest in EBITDA provides a useful indicator of operating performance, as it is customary in the real estate and shopping center business to evaluate the performance of properties on a basis unaffected by capital structure.




The Company uses Net Operating Income (NOI) as an alternative measure to evaluate the operating performance of centers, both on individual and stabilized portfolio bases. The Company defines NOI as property-level operating revenues (includes rental income excluding straight-line adjustments of minimum rent) less maintenance, taxes, utilities, promotion, ground rent (including straight-line adjustments), and other property operating expenses. Since NOI excludes general and administrative expenses, pre-development charges, interest income and expense, depreciation and amortization, impairment charges, restructuring charges, and gains from peripheral land and property dispositions, it provides a performance measure that, when compared period over period, reflects the revenues and expenses most directly associated with owning and operating rental properties, as well as the impact on their operations from trends in tenant sales, occupancy and rental rates, and operating costs. The Company also uses NOI excluding lease cancellation income as an alternative measure because this income may vary significantly from period to period, which can affect comparability and trend analysis. The Company generally provides separate projections for expected comparable center NOI growth and lease cancellation income. Comparable centers are generally defined as centers that were owned and open for the entire current and preceding period presented.




The National Association of Real Estate Investment Trusts (NAREIT) defines Funds from Operations (FFO) as net income (computed in accordance with Generally Accepted Accounting Principles (GAAP)), excluding gains (or losses) from extraordinary items and sales of properties and impairment write-downs of depreciable real estate, plus real estate related depreciation and after adjustments for unconsolidated partnerships and joint ventures. The Company believes that FFO is a useful supplemental measure of operating performance for REITs. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, the Company and most industry investors and analysts have considered presentations of operating results that exclude historical cost depreciation to be useful in evaluating the operating performance of REITs. The Company primarily uses FFO in measuring performance and in formulating corporate goals and compensation. 




The Company may also present adjusted versions of NOI, Beneficial Interest in EBITDA, and FFO when used by management to evaluate operating performance when certain significant items have impacted results that affect comparability with prior or future periods due to the nature or amounts of these items. The Company believes the disclosure of the adjusted items is similarly useful to investors and others to understand management's view on comparability of such measures between periods. 




These non-GAAP measures as presented by the Company are not necessarily comparable to similarly titled measures used by other REITs due to the fact that not all REITs use the same definitions. These measures should not be considered alternatives to net income or as an indicator of the Company's operating performance. Additionally, these measures do not represent cash flows from operating, investing or financing activities as defined by GAAP.





(3)

FFO for the three month period and year ended December 31, 2012 includes, and Adjusted FFO excludes, a charge related to the early extinguishment of debt at The Mall at Millenia and PRC taxes on sale of Taubman TCBL assets. In addition, FFO for the year ended December 31, 2012 includes, and Adjusted FFO excludes, charges related to the redemption of the Series G and H Preferred Stock.  



(4)

Statistics exclude non-comparable centers. In 2013 and 2012, non-comparable centers are Taubman Prestige Outlets Chesterfield and City Creek Center. The 2012 statistics, other than sales per square foot growth, have been restated to include comparable centers to 2013.  





(5)

Based on reports of sales furnished by mall tenants. 





(6)

Statistics exclude non-comparable centers and Arizona Mills. The 2012 statistics, other than sales per square foot growth, have been restated to include comparable centers to 2013.  

 

 TAUBMAN CENTERS, INC. 








 Table 2 - Income Statement 








 For the Three Months Ended December 31, 2013 and 2012 








 (in thousands of dollars) 





















2013


2012




CONSOLIDATED BUSINESSES


 UNCONSOLIDATED JOINT

VENTURES (1) 


CONSOLIDATED BUSINESSES


 UNCONSOLIDATED JOINT

VENTURES (1) 











REVENUES:









Minimum rents

108,686


47,626


106,058


42,611


Percentage rents

14,780


4,517


15,259


4,897


Expense recoveries

74,945


30,242


72,927


29,945


Management, leasing, and development services

2,188




4,370




Other

11,173


3,151


11,092


2,167



Total revenues

211,772


85,536


209,706


79,620











EXPENSES:









Maintenance, taxes, utilities, and promotion

61,131


20,973


57,698


20,802


Other operating

17,285


3,798


20,843


3,429


Management, leasing, and development services

1,149




5,743




General and administrative

13,338




11,638




Interest expense(2)

30,434


16,972


33,470


20,653


Depreciation and amortization 

39,510


10,010


40,434


11,643



Total expenses

162,847


51,753


169,826


56,527











Nonoperating income (expense)

(483)


(5)


26


(1)




48,442


33,778


39,906


23,092

Income tax expense(3)

(694)




(3,526)



Equity in income of Unconsolidated Joint Ventures

18,418




12,751













Net income 

66,166




49,131



Net income attributable to noncontrolling interests:









Noncontrolling share of income of consolidated joint ventures 

(3,592)




(5,142)




Noncontrolling share of income of TRG

(16,519)




(12,608)



Distributions to participating securities of TRG

(436)




(403)



Preferred stock dividends 

(5,785)




(3,071)



Net income attributable to Taubman Centers, Inc. common shareowners 

39,834




27,907























SUPPLEMENTAL INFORMATION:









EBITDA - 100% 

118,386


60,760


113,810


55,388


EBITDA - outside partners' share 

(7,036)


(26,598)


(11,133)


(24,957)


Beneficial interest in EBITDA

111,350


34,162


102,677


30,431


Beneficial interest expense(2)

(28,304)


(9,362)


(29,519)


(10,778)


Beneficial income tax expense - TRG and TCO

(694)




(3,526)




Beneficial income tax expense - TCO

49








Non-real estate depreciation

(802)




(683)




Preferred dividends and distributions 

(5,785)




(3,071)




Funds from Operations contribution 

75,814


24,800


65,878


19,653











STRAIGHTLINE AND PURCHASE ACCOUNTING ADJUSTMENTS:









Net straight-line adjustments to rental revenue, recoveries,










and ground rent expense at TRG % 

1,118


845


1,312


201


Green Hills purchase accounting adjustments - minimum rents increase

197




212




Green Hills, El Paseo Village, and Gardens on El Paseo purchase accounting 










adjustments - interest expense reduction

607




858




Waterside Shops purchase accounting adjustments - interest expense reduction



263















(1)

With the exception of the Supplemental Information, amounts include 100% of the Unconsolidated Joint Ventures. Amounts are net of intercompany transactions. The Unconsolidated Joint Ventures are presented at 100% in order to allow for measurement of their performance as a whole, without regard to the Company's ownership interest. In its consolidated financial statements, the Company accounts for its investments in the Unconsolidated Joint Ventures under the equity method. 



(2)

Includes a charge related to the early extinguishment of debt at The Mall of Millenia in October 2012 of $3.2 million, of which TRG's share is $1.6 million.

(3)

Income tax expense for the three months ended December 31, 2012 include PRC taxes of $3.2 million on the sale of Taubman TCBL assets.

 

 TAUBMAN CENTERS, INC. 








 Table 3 - Income Statement 








 For the Year Ended December 31, 2013 and 2012 








 (in thousands of dollars) 





















2013


2012




CONSOLIDATED BUSINESSES


 UNCONSOLIDATED JOINT

VENTURES (1) 


CONSOLIDATED BUSINESSES


 UNCONSOLIDATED JOINT

VENTURES (1) 











REVENUES:









Minimum rents

417,729


172,305


398,306


161,824


Percentage rents

28,512


10,280


28,026


10,694


Expense recoveries

272,494


104,164


258,252


102,506


Management, leasing, and development services

16,142




31,811




Other

32,277


7,971


31,579


7,112



Total revenues

767,154


294,720


747,974


282,136











EXPENSES:









Maintenance, taxes, utilities, and promotion

215,825


74,966


201,552


73,004


Other operating

71,235


15,441


73,203


14,890


Management, leasing, and development services

5,321




27,417




General and administrative

50,014




39,659




Interest expense(2)

130,023


67,948


142,616


68,760


Depreciation and amortization 

155,772


39,336


149,517


38,333



Total expenses

628,190


197,691


633,964


194,987











Nonoperating income (expense)

1,348


(6)


277


18




140,312


97,023


114,287


87,167

Income tax expense(3)

(3,409)




(4,964)



Equity in income of Unconsolidated Joint Ventures 

52,465




48,494













Net income

189,368




157,817



Net income attributable to noncontrolling interests:









Noncontrolling share of income of consolidated joint ventures 

(10,344)




(11,930)




Noncontrolling share of income of TRG

(46,434)




(39,713)



Distributions to participating securities of TRG

(1,749)




(1,612)



Preferred stock dividends (4)

(20,933)




(21,051)



Net income attributable to Taubman Centers, Inc. common shareowners

109,908




83,511























SUPPLEMENTAL INFORMATION:









EBITDA - 100% 

426,107


204,307


406,420


194,260


EBITDA - outside partners' share 

(24,104)


(89,368)


(38,250)


(87,216)


Beneficial interest in EBITDA

402,003


114,939


368,170


107,044


Beneficial interest expense (2)

(121,353)


(37,554)


(126,031)


(35,862)


Beneficial income tax expense - TRG and TCO

(3,409)




(4,919)




Beneficial income tax expense - TCO

181








Non-real estate depreciation

(3,038)




(2,671)




Preferred dividends and distributions

(20,933)




(21,051)




Funds from Operations contribution

253,451


77,385


213,498


71,182











STRAIGHTLINE AND PURCHASE ACCOUNTING ADJUSTMENTS:









Net straight-line adjustments to rental revenue, recoveries,










and ground rent expense at TRG % 

3,999


1,296


4,323


561


Green Hills purchase accounting adjustments - minimum rents increase

787




822




Green Hills, El Paseo Village, and Gardens on El Paseo purchase accounting 










adjustments - interest expense reduction

3,180




3,431




Waterside Shops purchase accounting adjustments - interest expense reduction



1,051















(1)

With the exception of the Supplemental Information, amounts include 100% of the Unconsolidated Joint Ventures. Amounts are net of intercompany transactions. The Unconsolidated Joint Ventures are presented at 100% in order to allow for measurement of their performance as a whole, without regard to the Company's ownership interest. In its consolidated financial statements, the Company accounts for its investments in the Unconsolidated Joint Ventures under the equity method. 



(2)

Includes a charge related to the early extinguishment of debt at The Mall of Millenia in October 2012 of $3.2 million, of which TRG's share is $1.6 million.

(3)

Income tax expense for the year ended December 31, 2012 include PRC taxes of $3.2 million on the sale of Taubman TCBL assets.

(4)

Preferred dividends for the year ended December 31, 2012 include charges of $3.3 million and $3.1 million incurred in connection with the $100 million redemption of the Series G Preferred Stock and the $87 million redemption of the Series H Preferred Stock, respectively.




























TAUBMAN CENTERS, INC.













Table 4 - Reconciliation of Net Income Attributable to Taubman Centers, Inc. Common Shareowners to Funds from Operations





   and Adjusted Funds from Operations













For the Three Months Ended December 31, 2013 and 2012













(in thousands of dollars except as noted; may not add or recalculate due to rounding)












































2013






2012








Shares 


Per Share




Shares 


Per Share 




Dollars


/Units


/Unit


Dollars


/Units


/Unit















Net income attributable to TCO common shareowners - Basic


39,834


63,408,637


0.63


27,907


61,899,628


0.45















Add distributions of participating securities


436


871,262









Add impact of share-based compensation


182


787,078




202


1,441,888

















Net income attributable to TCO common shareowners - Diluted


40,452


65,066,977


0.62


28,109


63,341,516


0.44















Add depreciation of TCO's additional basis


1,720




0.03


1,717




0.03

Add TCO's additional income tax expense


49




0.00





















Net income attributable to TCO common shareowners,














excluding step-up depreciation and additional income tax expense

42,221


65,066,977


0.65


29,826


63,341,516


0.47















Add:














Noncontrolling share of income of TRG 


16,519


25,176,300




12,608


26,345,983




Distributions to participating securities of TRG








403


871,262

















Net income attributable to partnership unitholders 














and participating securities


58,740


90,243,277


0.65


42,837


90,558,761


0.47















Add (less) depreciation and amortization:














Consolidated businesses at 100%


39,510




0.44


40,434




0.45


Depreciation of TCO's additional basis


(1,720)




(0.02)


(1,717)




(0.02)


Noncontrolling partners in consolidated joint ventures


(1,314)




(0.01)


(2,040)




(0.02)


Share of Unconsolidated Joint Ventures


6,382




0.07


6,902




0.08


Non-real estate depreciation


(802)




(0.01)


(683)




(0.01)















Less impact of share-based compensation


(182)




(0.00)


(202)




(0.00)















Funds from Operations


100,614


90,243,277


1.11


85,531


90,558,761


0.94















TCO's average ownership percentage of TRG


71.6%






70.1%



















Funds from Operations attributable to TCO,














excluding additional income tax expense


72,019




1.11


59,995




0.94















Less TCO's additional income tax expense


(49)




(0.00)





















Funds from Operations attributable to TCO 


71,970




1.11


59,995




0.94















Funds from Operations


100,614


90,243,277


1.11


85,531


90,558,761


0.94















Early extinguishment of debt on The Mall at Millenia








1,586




0.02

PRC taxes on sale of Taubman TCBL assets








3,158




0.03





























Adjusted Funds from Operations


100,614


90,243,277


1.11


90,275


90,558,761


1.00















TCO's average ownership percentage of TRG


71.6%






70.1%



















Adjusted Funds from Operations attributable to TCO,














excluding additional income tax expense


72,019




1.11


63,322




1.00















Less TCO's additional income tax expense


(49)




(0.00)





















Adjusted Funds from Operations attributable to TCO 


71,970




1.11


63,322




1.00

 

 

TAUBMAN CENTERS, INC.













Table 5 - Reconciliation of Net Income Attributable to Taubman Centers, Inc. Common Shareowners to Funds from Operations





   and Adjusted Funds from Operations













For the Year Ended December 31, 2013 and 2012













(in thousands of dollars except as noted; may not add or recalculate due to rounding)












































2013






2012








Shares 


Per Share




Shares 


Per Share 




Dollars


/Units


/Unit


Dollars


/Units 


/Unit















Net income attributable to TCO common shareowners - Basic


109,908


63,591,523


1.73


83,511


59,884,455


1.39















Add impact of share-based compensation


497


983,889




672


1,491,989

















Net income attributable to TCO common shareowners - Diluted


110,405


64,575,412


1.71


84,183


61,376,444


1.37















Add depreciation of TCO's additional basis


6,880




0.11


6,876




0.11

Add TCO's additional income tax expense


181




0.00





















Net income attributable to TCO common shareowners,














excluding step-up depreciation and additional income tax expense

117,466


64,575,412


1.82


91,059


61,376,444


1.48















Add:














Noncontrolling share of income of TRG 


46,434


25,231,483




39,713


26,421,801




Distributions to participating securities of TRG


1,749


871,262




1,612


871,262

















Net income attributable to partnership unitholders 














and participating securities


165,649


90,678,157


1.83


132,384


88,669,507


1.49















Add (less) depreciation and amortization:














Consolidated businesses at 100% 


155,772




1.72


149,517




1.69


Depreciation of TCO's additional basis


(6,880)




(0.08)


(6,876)




(0.08)


Noncontrolling partners in consolidated joint ventures


(5,090)




(0.06)


(9,690)




(0.11)


Share of Unconsolidated Joint Ventures


24,920




0.27


22,688




0.26


Non-real estate depreciation


(3,038)




(0.03)


(2,671)




(0.03)















Less impact of share-based compensation


(497)




(0.01)


(672)




(0.01)















Funds from Operations


330,836


90,678,157


3.65


284,680


88,669,507


3.21















TCO's average ownership percentage of TRG


71.6%






69.4%



















Funds from Operations attributable to TCO,














excluding additional income tax expense


236,843




3.65


197,671




3.21















Less TCO's additional income tax expense


(181)




(0.00)





















Funds from Operations attributable to TCO


236,662




3.65


197,671




3.21















Funds from Operations


330,836


90,678,157


3.65


284,680


88,669,507


3.21















Series G and H Preferred Stock redemption charges








6,412




0.07

Early extinguishment on debt on The Mall at Millenia








1,586




0.02

PRC taxes on sale of Taubman TCBL assets








3,158




0.04















Adjusted Funds from Operations


330,836


90,678,157


3.65


295,836


88,669,507


3.34















TCO's average ownership percentage of TRG


71.6%






69.4%



















Adjusted Funds from Operations attributable to TCO,














excluding additional income tax expense


236,843




3.65


205,430




3.34















Less TCO's additional income tax expense


(181)




(0.00)





















Adjusted Funds from Operations attributable to TCO


236,662




3.65


205,430




3.34



















TAUBMAN CENTERS, INC.









Table 6 - Reconciliation of Net Income to Beneficial Interest in EBITDA







For the Periods Ended December 31, 2013 and 2012









(in thousands of dollars; amounts attributable to TCO may not recalculate due to rounding)



















Three Months Ended


Year Ended





2013


2012


2013


2012












Net income


66,166


49,131


189,368


157,817












Add (less) depreciation and amortization:










Consolidated businesses at 100%


39,510


40,434


155,772


149,517


Noncontrolling partners in consolidated joint ventures


(1,314)


(2,040)


(5,090)


(9,690)


Share of Unconsolidated Joint Ventures


6,382


6,902


24,920


22,688












Add (less) interest expense and income tax expense:










Interest expense:











Consolidated businesses at 100% 


30,434


33,470


130,023


142,616



Noncontrolling partners in consolidated joint ventures


(2,130)


(3,951)


(8,670)


(16,585)



Share of Unconsolidated Joint Ventures


9,362


10,778


37,554


35,862


Share of income tax expense


694


3,526


3,409


4,919












Less noncontrolling share of income of consolidated joint ventures


(3,592)


(5,142)


(10,344)


(11,930)












Beneficial Interest in EBITDA


145,512


133,108


516,942


475,214












TCO's average ownership percentage of TRG


71.6%


70.1%


71.6%


69.4%












Beneficial Interest in EBITDA attributable to TCO


104,157


93,368


370,094


329,884

 

 

TAUBMAN CENTERS, INC.


















Table 7 - Reconciliation of Net Income to Net Operating Income (NOI)


















For the Periods Ended December 31, 2013, 2012, and 2011


















(in thousands of dollars)









































Three Months Ended


Three Months Ended


Year Ended


Year Ended






2013


2012


2012


2011


2013


2012


2012


2011























Net income

66,166


49,131


49,131


220,796


189,368


157,817


157,817


287,398























Add (less) depreciation and amortization:



















Consolidated businesses at 100% - continuing operations

39,510


40,434


40,434


33,204


155,772


149,517


149,517


132,707




Consolidated businesses at 100% - discontinued operations







1,279








10,309




Noncontrolling partners in consolidated joint ventures

(1,314)


(2,040)


(2,040)


(3,041)


(5,090)


(9,690)


(9,690)


(11,152)




Share of Unconsolidated Joint Ventures

6,382


6,902


6,902


6,752


24,920


22,688


22,688


23,102























Add (less) interest expense and income tax expense:



















Interest expense:




















Consolidated businesses at 100% - continuing operations

30,434


33,470


33,470


32,748


130,023


142,616


142,616


122,277





Consolidated businesses at 100% - discontinued operations







4,053








21,427





Noncontrolling partners in consolidated joint ventures

(2,130)


(3,951)


(3,951)


(3,744)


(8,670)


(16,585)


(16,585)


(12,153)





Share of Unconsolidated Joint Ventures

9,362


10,778


10,778


8,201


37,554


35,862


35,862


31,607




Share of income tax expense 

694


3,526


3,526


197


3,409


4,919


4,919


610























Less noncontrolling share of income of consolidated joint ventures

(3,592)


(5,142)


(5,142)


(3,855)


(10,344)


(11,930)


(11,930)


(14,352)























Add EBITDA attributable to outside partners:



















EBITDA attributable to noncontrolling partners in consolidated joint ventures

7,036


11,133


11,133


10,640


24,104


38,250


38,250


37,657




EBITDA attributable to outside partners in Unconsolidated Joint Ventures

26,598


24,957


24,957


24,041


89,368


87,216


87,216


83,565























EBITDA at 100%

179,146


169,198


169,198


331,271


630,414


600,680


600,680


713,002























Add (less) items excluded from shopping center NOI:



















General and administrative expenses

13,338


11,638


11,638


8,600


50,014


39,659


39,659


31,598




Management, leasing, and development services, net

(1,039)


1,373


1,373


(5,665)


(10,821)


(4,394)


(4,394)


(13,596)




Gains on extinguishment of debt







(174,171)








(174,171)




Gains on sales of peripheral land









(863)






(519)




Acquisition costs







3,614








5,295




Nonoperating expense









1,019










Gain on sale of marketable securities









(1,323)










Interest income

(31)


(25)


(25)


(436)


(175)


(295)


(295)


(960)




Straight-line of rents

(3,015)


(1,981)


(1,981)


(1,152)


(7,335)


(6,516)


(6,516)


(2,531)




Non-center specific operating expenses and other

6,449


9,640


9,640


11,026


24,700


31,413


31,413


33,069























NOI - all centers at 100%

194,848


189,843


189,843


173,087


685,630


660,547


660,547


591,187























Less - NOI of non-comparable centers

(2,900)

(1)

(2,198)

(2)

(9,475)

(3)

(2,209)

(4)

(10,195)

(1)

(8,010)

(2)

(29,705)

(3)

(4,120)

(4)






















NOI at 100% - comparable centers

191,948


187,645


180,368


170,878


675,435


652,537


630,842


587,067























NOI - growth % 

2.3%




5.6%




3.5%




7.5%













































NOI at 100% - comparable centers 

191,948


187,645


180,368


170,878


675,435


652,537


630,842


587,067























Lease cancellation income

(2,760)


(1,913)


(1,913)


(244)


(5,767)


(4,928)


(4,928)


(3,230)























NOI at 100% - comparable centers excluding lease cancellation income

189,188


185,732


178,455


170,634


669,668


647,609


625,914


583,837























NOI at 100% excluding lease cancellation income - growth %

1.9%




4.6%




3.4%




7.2%













































(1)

Includes City Creek Center and Taubman Prestige Outlets Chesterfield.








(2)

Includes City Creek Center.

(3)

Includes City Creek Center, The Mall at Green Hills, The Gardens on El Paseo and El Paseo Village.









(4)

Includes The Pier Shops, Regency Square, The Mall at Green Hills, The Gardens on El Paseo and El Paseo Village.






























TAUBMAN CENTERS, INC.



Table 8 - Balance Sheets



As of December 31, 2013 and December 31, 2012



 (in thousands of dollars) 








As of






December 31, 2013


December 31, 2012

Consolidated Balance Sheet of Taubman Centers, Inc. :













Assets:







Properties


4,485,090


4,246,000


Accumulated depreciation and amortization


(1,516,982)


(1,395,876)






2,968,108


2,850,124


Investment in Unconsolidated Joint Ventures


327,692


214,152


Cash and cash equivalents


40,993


32,057


Restricted cash 


5,046


6,138


Accounts and notes receivable, net


73,193


69,033


Accounts receivable from related parties


1,804


2,009


Deferred charges and other assets


89,386


94,982






3,506,222


3,268,495









Liabilities:






Notes payable


3,058,053


2,952,030


Accounts payable and accrued liabilities


292,280


278,098


Distributions in excess of investments in and net income of







Unconsolidated Joint Ventures


371,549


383,293






3,721,882


3,613,421









Equity:







Taubman Centers, Inc. Shareowners' Equity:







Series B Non-Participating Convertible Preferred Stock


25


25



Series J Cumulative Redeemable Preferred Stock







Series K Cumulative Redeemable Preferred Stock







Common stock


631


633



Additional paid-in capital


796,787


657,071



Accumulated other comprehensive income (loss)


(8,914)


(22,064)



Dividends in excess of net income


(908,656)


(891,283)






(120,127)


(255,618)


Noncontrolling interests:







Noncontrolling interests in consolidated joint ventures


(37,191)


(45,066)



Noncontrolling interests in partnership equity of TRG 


(58,342)


(44,242)






(95,533)


(89,308)






(215,660)


(344,926)






3,506,222


3,268,495

























Combined Balance Sheet of Unconsolidated Joint Ventures (1):













Assets:







Properties


1,305,658


1,129,647


Accumulated depreciation and amortization


(478,820)


(473,101)






826,838


656,546


Cash and cash equivalents


28,782


30,070


Accounts and notes receivable, net


33,626


26,032


Deferred charges and other assets  


28,095


31,282






917,341


743,930









Liabilities:






Mortgage notes payable


1,551,161


1,490,857


Accounts payable and other liabilities


70,226


68,282






1,621,387


1,559,139









Accumulated Deficiency in Assets:






Accumulated deficiency in assets - TRG


(406,266)


(459,390)


Accumulated deficiency in assets - Joint Venture Partners


(285,904)


(333,752)


Accumulated other comprehensive income (loss) - TRG


(5,938)


(11,021)


Accumulated other comprehensive income (loss) - Joint Venture Partners


(5,938)


(11,046)






(704,046)


(815,209)






917,341


743,930









(1)

Unconsolidated Joint Venture amounts exclude the balances of entities that own interests in Asia projects that are currently under development.


 


TAUBMAN CENTERS, INC.





Table 9 -  Annual Guidance





(all dollar amounts per common share on a diluted basis; amounts may not add due to rounding)














Range for Year Ended




December 31, 2014







Funds from Operations per common share


3.72


3.82







Real estate depreciation - TRG


(1.77)


(1.72)







Distributions on participating securities of TRG


(0.02)


(0.02)







Depreciation of TCO's additional basis in TRG


(0.11)


(0.11)







Net income attributable to common shareowners, per common share (EPS) (1)


1.81


1.96

(1)

The range provided excludes estimates for the gains on the sale of Arizona Mills; land in Syosset, New York; and interests totaling a 49.9% ownership in International Plaza. As a result of these transactions, the company expects to recognize gains in excess of $450 million, or approximately $5.00 per diluted share, in the first quarter of 2014.



 

SOURCE Taubman Centers, Inc.



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