Taubman Centers Announces Strong 2012 Results And Introduces 2013 Guidance

-- Net Operating Income (NOI) Excluding Lease Cancellation Income Up 7.2%

-- Record Tenant Sales Per Square Foot of $688, Up 7.3%

-- Leased Space, Ending Occupancy, Average Rent Up

-- Third Taubman Asia Development Announced

13 Feb, 2013, 17:00 ET from Taubman Centers, Inc.

BLOOMFIELD HILLS, Mich., Feb. 13, 2013 /PRNewswire/ -- Taubman Centers, Inc. (NYSE: TCO) today reported financial results for the quarter and full year periods ended December 31, 2012.

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

"2012 was a very productive and successful year for our company," said Robert S. Taubman, chairman, president and chief executive officer of Taubman Centers. "The core produced tremendous results, and we established a development pipeline that will fuel growth for years to come."

December 31,

2012

Three Months

Ended

December 31,

2011

Three Months

Ended

December 31,

2012

Year Ended

December 31,

2011

Year Ended

Net income allocable to common

shareholders (EPS) per diluted share 

 

$0.44

 

$2.50

 

$1.37

 

$3.03

Funds from Operations (FFO) per diluted share

Growth rate

 

$0.94

(68.1)%

 

$2.95

 

$3.21

(34.0)%

 

$4.86

Adjusted Funds from Operations (Adjusted FFO) per diluted share

Growth rate

 

$1.00 (1)

7.5%

 

$0.93 (3)

 

 

$3.34 (1)(2)

17.6%

 

$2.84 (3)

 

Adjusted FFO per diluted share (excluding The Pier Shops and Regency Square) 

Growth rate

 

$1.00 (1)

4.2%

 

$0.96 (3)

 

 

$3.34 (1)(2)

9.5%

 

$3.05 (3)

 

(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.

(3)     Excludes gain on extinguishment of debt related to the dispositions of Regency Square (Richmond, Va.) and

          The Pier Shops (Atlantic City, N.J.) and a gain on the redemption of the Company's Series F Preferred Equity.

          Also excludes certain acquisition costs.

See notes to Table I of this press release for further information.

Sales, Leased Space, Occupancy, Rent, and NOI Up

During 2012 the company's properties achieved average tenant sales per square foot of $688, another record for the company and the publicly held U.S. regional mall industry. This is an increase of 7.3 percent from the comparable portfolio in 2011. For the fourth quarter of 2012, mall tenant sales per square foot were up 3.5 percent.

Leased space in comparable centers for Taubman's portfolio was 93.2 percent on December 31, 2012, up 0.9 percent from 92.3 percent on December 31, 2011. Ending occupancy in comparable centers was 91.6 percent on December 31, 2012, up a solid 1 percent from 90.6 percent on December 31, 2011. Including tenants with leases of one year or less (temporary in-line tenants), ending occupancy was 96.6 percent.

Average rent per square foot for the fourth quarter of 2012 was $47.30, up 5.2 percent from $44.96 in the fourth quarter of 2011. For the year, average rent per square foot was $46.69, up 3.3 percent from average rent per square foot of $45.22 in 2011.

"NOI excluding lease cancellation income was up 7.2 percent in 2012. This is the highest growth rate we've had in 10 years," added Mr. Taubman. "We've really capitalized on our remarkable tenant sales performance over the last several years. This result also reflects the aggressive management of our costs."

Development and Acquisitions

The company continues to build on its successful history of growth with acquisitions and progress on developments both in the U.S. and in Asia. During 2012 the company:

Last week, the company confirmed its third Taubman Asia investment and its second joint venture with Wangfujing in China. The joint venture will own a majority interest in and manage an approximately one million square foot multi-level shopping center to be located in Zhengzhou. The center is scheduled to open in 2015. See Taubman Asia and Beijing Wangfujing Department Store (Group) Co., Ltd Announce Second Joint Venture to Co-Own and Manage an Over One Million Square Foot Shopping Center in Zhengzhou, China February 7, 2013.

Financing Activity

"This year we issued over $400 million in attractively priced common and preferred stock and completed a number of refinancings with very favorable terms," said Lisa A. Payne, vice chairman and chief financial officer. "These transactions enabled us to reduce our average interest rate and further strengthen our balance sheet." In 2012, the company:

  • Completed a $320 million, 10-year, non-recourse financing bearing interest at an all-in fixed rate of 4.53 percent on its 79 percent owned Westfarms mall (West Hartford, Conn.) – June 11, 2012.
  • Issued 2,875,000 common shares, including the exercise of the underwriter's option, in an underwritten public offering; net proceeds totaled $209 million August 6, 2012.
  • Issued $192.5 million of perpetual 6.5% Series J Cumulative Redeemable Preferred Stock (NYSE: TCO PR J) at a price of $25.00 per share August 14, 2012.
  • Completed a $190 million, 10-year, non-recourse financing bearing interest at an all-in fixed rate of 4.47% on the company's 50 percent owned Sunvalley (Concord, Calif.) shopping center August 31, 2012.
  • Redeemed the company's $100 million 8% Series G Cumulative Redeemable Preferred Stock (NYSE: TCO PR G) and its $87 million 7.625% Series H Cumulative Redeemable Preferred Stock (NYSE: TCO PR H) September 4, 2012.
  • Completed a $350 million, 12-year, non-recourse financing bearing interest at an all-in fixed rate of 4.05% on the company's 50 percent owned Mall at Millenia October 2, 2012.

On January 11, 2013, the company completed a $225 million, 10-year, non-recourse financing on Great Lakes Crossing Outlets (Auburn Hills, Mich.). The loan bears interest at an all-in fixed rate of 3.63%. The company received approximately $100 million of excess proceeds after the repayment of the previously outstanding $126 million, 5.25% fixed rate loan. Excess proceeds were used to reduce outstanding borrowings under the company's revolving lines of credit.

Stock Performance

During 2012, the company enjoyed a 29.7 percent total shareholder return. This compares to the MSCI US REIT Index of 17.7 percent and the S&P 500 Index of 15.9 percent. Over the 10 years ended December 31, 2012, the company's compounded annual shareholder return was 21.8 percent. The company's 10 year total return was the highest in the publicly held U.S. regional mall industry and placed the company fourth of the 85 U.S. REIT's that have operated during this period. This compares very favorably to the 10 year total returns of the MSCI US REIT Index and the S&P 500 Index which were 11.6 percent and 7.1 percent, respectively.

2013 Guidance

The company is introducing guidance for 2013. The company expects FFO per diluted share to be in the range of $3.57 to $3.70 in 2013. Net income allocable to common shareholders for the year is expected to be in the range of $1.67 to $1.85.

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:

  • Income Statements
  • Earnings Reconciliations
  • Changes in Funds from Operations and Earnings Per Share
  • Components of Other Income, Other Operating Expense, and Nonoperating Income
  • Recoveries Ratio Analysis
  • Balance Sheets
  • Debt Summary
  • Other Debt, Equity and Certain Balance Sheet Information
  • Construction
  • Acquisitions
  • 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 14 to discuss these results, business conditions and the company's outlook for 2013. The conference call will be simulcast at www.taubman.com under "Investor Relations" as well as www.earnings.com and www.streetevents.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 Taubman Prestige Outlets Chesterfield in Chesterfield, Mo.; The Mall at University Town Center in Sarasota, Fla.; The Mall of San Juan in San Juan, Puerto Rico; 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, 2012 and 2011

(in thousands of dollars, except as indicated)

Three Months Ended 

Year Ended

2012

2011

2012

2011

Income from continuing operations

49,131

50,422

157,817

141,399

Income from discontinued operations

170,374

145,999

Net income

49,131

220,796

157,817

287,398

Noncontrolling share of income of consolidated joint ventures

(5,142)

(3,855)

(11,930)

(14,352)

Noncontrolling share of income of TRG - continuing operations

(12,608)

(14,125)

(39,713)

(36,238)

Noncontrolling share of income of TRG - discontinued operations

(51,802)

(44,309)

TRG series F preferred distributions (1)

2,217

372

Preferred stock dividends (2)

(3,071)

(3,659)

(21,051)

(14,634)

Distributions to participating securities of TRG

(403)

(392)

(1,612)

(1,536)

Net income attributable to Taubman Centers, Inc. common shareowners

27,907

149,180

83,511

176,701

Net income per common share - basic 

0.45

2.58

1.39

3.11

Net income per common share - diluted

0.44

2.50

1.37

3.03

Beneficial interest in EBITDA - Combined (3)

133,108

296,590

475,214

591,780

Adjusted Beneficial interest in EBITDA - Combined (3)

133,108

126,033

475,214

422,904

Funds from Operations (3)

85,531

253,047

284,680

411,128

Funds from Operations attributable to TCO (3)

59,995

176,108

197,671

285,400

Funds from Operations per common share - basic (3)

0.97

3.04

3.30

5.00

Funds from Operations per common share - diluted (3)

0.94

2.95

3.21

4.86

Adjusted Funds from Operations (3)

90,275

80,273

295,836

240,035

Adjusted Funds from Operations attributable to TCO (3)

63,322

55,866

205,430

166,909

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

1.02

0.96

3.43

2.92

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

1.00

0.93

3.34

2.84

Weighted average number of common shares outstanding - basic

61,899,628

57,925,789

59,884,455

56,899,966

Weighted average number of common shares outstanding - diluted

63,341,516

60,564,901

61,376,444

58,529,089

Common shares outstanding at end of period

63,310,148

58,022,475

Weighted average units - Operating Partnership - basic

88,245,612

83,232,879

86,306,256

82,159,601

Weighted average units - Operating Partnership - diluted

90,558,761

85,871,990

88,669,507

84,659,994

Units outstanding at end of period - Operating Partnership

88,656,297

84,502,883

Ownership percentage of the Operating Partnership at end of period

71.4%

68.7%

Number of owned shopping centers at end of period

24

23

24

23

Operating Statistics (4):

Net Operating Income excluding lease cancellation income - growth % (5)

4.6%

7.2%

Mall tenant sales - all centers (6)

1,879,341

1,670,378

6,008,265

5,164,916

Mall tenant sales - comparable (5)(6)

1,741,660

1,670,378

5,587,505

5,164,916

Ending occupancy - all centers

91.8%

90.7%

91.8%

90.7%

Ending occupancy - comparable (5)

91.6%

90.6%

91.6%

90.6%

Average occupancy - all centers 

91.4%

90.1%

90.3%

88.8%

Average occupancy - comparable (5)

91.3%

90.0%

90.3%

88.8%

Leased space - all centers

93.4%

92.4%

93.4%

92.4%

Leased space - comparable (5)

93.2%

92.3%

93.2%

92.3%

All centers:

     Mall tenant occupancy costs as a percentage of tenant sales - Consolidated Businesses (6)

11.6%

11.7%

12.8%

13.4%

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

11.0%

10.7%

12.2%

12.2%

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

11.3%

11.4%

12.7%

13.0%

Comparable centers:

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

11.6%

11.7%

13.1%

13.4%

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

11.0%

10.7%

12.2%

12.2%

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

11.3%

11.4%

12.8%

13.0%

Average rent per square foot - Consolidated Businesses (5)

47.80

45.60

47.28

45.53

Average rent per square foot - Unconsolidated Joint Ventures 

46.25

43.68

45.44

44.58

Average rent per square foot - Combined (5)

47.30

44.96

46.69

45.22

 

(1)

In October 2011, the Company redeemed the Operating Partnership's 8.2% Series F Preferred Equity for $27 million, which represented a $2.2 million discount from the book value.

(2)

In September 2012, the Company redeemed the Series G and H Preferred Stock with the proceeds from the issuance of the Series J Preferred Stock.  The Company redeemed the 8.0% Series G Preferred Stock for $100 million and the 7.625% Series H Preferred Stock for $87 million, which represented a $3.3 million and $3.1 million premium, respectively, above the book value.

(3)

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 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.  For the three month period and year ended December 31, 2012, FFO was adjusted for 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, for the year ended December 31, 2012, FFO was also adjusted for charges related to the redemption of the Series G and H Preferred Stock.  For the three month period and year ended December 31, 2011, FFO was adjusted for the gains on extinguishment of debt related to the dispositions of Regency Square and The Pier Shops, acquisition costs related to The Mall at Green Hills, The Gardens on El Paseo and El Paseo Village, and Taubman TCBL, and the redemption of the Company's Series F Preferred Equity.  In the reconciliations in Tables 4 and 5 of this Press Release, the Company has separately presented the prior year impacts of The Pier Shops and Regency Square, as the titles for these centers were transferred to the lenders and operations of these centers have been reclassified to discontinued operations.  For the three month period and year ended December 31, 2011, EBITDA was adjusted for the gains on extinguishment of debt related to the dispositions of Regency Square and The Pier Shops and acquisition costs related to The Mall at Green Hills, The Gardens on El Paseo and El Paseo Village, and Taubman TCBL.    

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.

(4)

Statistics exclude The Pier Shops and Regency Square.

(5)

Statistics exclude non-comparable centers.

(6)

Based on reports of sales furnished by mall tenants. 

 

 TAUBMAN CENTERS, INC. 

 Table 2 - Income Statement 

 For the Three Months Ended December 31, 2012 and 2011 

 (in thousands of dollars) 

2012

2011

CONSOLIDATED BUSINESSES

 UNCONSOLIDATED

JOINT VENTURES (1) 

CONSOLIDATED BUSINESSES

 UNCONSOLIDATED

JOINT VENTURES (1) 

REVENUES:

Minimum rents

106,058

42,611

91,043

40,145

Percentage rents

15,259

4,897

10,767

4,893

Expense recoveries

72,927

29,945

66,377

28,318

Management, leasing, and development services

4,370

10,128

Other

11,092

2,167

9,007

1,936

Total revenues

209,706

79,620

187,322

75,292

EXPENSES:

Maintenance, taxes, utilities, and promotion

57,698

20,802

49,380

18,993

Other operating

20,843

3,429

19,163

3,272

Management, leasing, and development services

5,743

4,463

General and administrative

11,638

8,600

Acquisition costs

3,614

Interest expense(2)

33,470

20,653

32,748

15,870

Depreciation and amortization 

40,434

11,643

33,204

11,406

Total expenses

169,826

56,527

151,172

49,541

Nonoperating income

26

(1)

395

41

39,906

23,092

36,545

25,792

Income tax expense (3)

(3,526)

(197)

Equity in income of Unconsolidated Joint Ventures

12,751

14,074

Income from continuing operations

49,131

50,422

Discontinued operations (4):

Gains on extinguishment of debt

174,171

EBITDA

1,535

Interest expense

(4,053)

Depreciation and amortization

(1,279)

Income from discontinued operations

170,374

Net income 

49,131

220,796

Net income attributable to noncontrolling interests:

Noncontrolling share of income of consolidated joint ventures 

(5,142)

(3,855)

TRG series F preferred distributions (5)

2,217

Noncontrolling share of income of TRG - continuing operations

(12,608)

(14,125)

Noncontrolling share of income of TRG - discontinued operations

(51,802)

Distributions to participating securities of TRG

(403)

(392)

Preferred stock dividends

(3,071)

(3,659)

Net income attributable to Taubman Centers, Inc. common shareowners

27,907

149,180

SUPPLEMENTAL INFORMATION:

EBITDA - 100% 

113,810

55,388

278,203

53,068

EBITDA - outside partners' share 

(11,133)

(24,957)

(10,640)

(24,041)

Beneficial interest in EBITDA

102,677

30,431

267,563

29,027

Beneficial interest expense (2)

(29,519)

(10,778)

(33,081)

(8,201)

Beneficial income tax expense

(3,526)

(173)

Non-real estate depreciation

(683)

(646)

Preferred dividends and distributions 

(3,071)

(1,442)

Funds from Operations contribution

65,878

19,653

232,221

20,826

Net straight-line adjustments to rental revenue, recoveries,

  and ground rent expense at TRG % 

983

201

822

7

Purchase accounting adjustments - minimum rents

212

Purchase accounting adjustments - interest expense reduction

(858)

(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)

Includes PRC taxes of $3.2 million on the sale of Taubman TCBL assets.

(4)

Includes the operations of Regency Square and The Pier Shops.

(5)

In October 2011, the Company redeemed the Operating Partnership's 8.2% Series F Preferred Equity for $27 million, which represented a $2.2 million discount from the book value.

 

 TAUBMAN CENTERS, INC. 

 Table 3 - Income Statement 

 For the Year Ended December 31, 2012 and 2011 

 (in thousands of dollars) 

2012

2011

CONSOLIDATED BUSINESSES

 UNCONSOLIDATED

JOINT VENTURES (1) 

CONSOLIDATED BUSINESSES

 UNCONSOLIDATED

JOINT VENTURES (1) 

REVENUES:

Minimum rents

398,306

161,824

342,612

155,711

Percentage rents

28,026

10,694

20,358

9,001

Expense recoveries

258,252

102,506

229,313

95,901

Management, leasing, and development services

31,811

25,551

Other

31,579

7,112

27,084

5,842

Total revenues

747,974

282,136

644,918

266,455

EXPENSES:

Maintenance, taxes, utilities, and promotion

201,552

73,004

179,092

67,914

Other operating

73,203

14,890

67,301

14,365

Management, leasing, and development services

27,417

11,955

General and administrative

39,659

31,598

Acquisition costs

5,295

Interest expense(2)

142,616

68,760

122,277

61,034

Depreciation and amortization 

149,517

38,333

132,707

39,265

Total expenses

633,964

194,987

550,225

182,578

Nonoperating Income

277

18

1,252

162

114,287

87,167

95,945

84,039

Income tax expense (3)

(4,964)

(610)

Equity in income of Unconsolidated Joint Ventures 

48,494

46,064

Income from continuing operations

157,817

141,399

Discontinued operations (4):

Gains on extinguishment of debt

174,171

EBITDA

3,564

Interest expense

(21,427)

Depreciation and amortization

(10,309)

Income from discontinued operations

145,999

Net income

157,817

287,398

Net income attributable to noncontrolling interests:

Noncontrolling share of income of consolidated joint ventures 

(11,930)

(14,352)

TRG series F preferred distributions (5)

372

Noncontrolling share of income of TRG - continuing operations

(39,713)

(36,238)

Noncontrolling share of income of TRG - discontinued operations

(44,309)

Distributions to participating securities of TRG

(1,612)

(1,536)

Preferred stock dividends(6)

(21,051)

(14,634)

Net income attributable to Taubman Centers, Inc. common shareowners

83,511

176,701

SUPPLEMENTAL INFORMATION:

EBITDA - 100% 

406,420

194,260

528,664

184,338

EBITDA - outside partners' share 

(38,250)

(87,216)

(37,657)

(83,565)

Beneficial interest in EBITDA

368,170

107,044

491,007

100,773

Beneficial interest expense (2)

(126,031)

(35,862)

(131,575)

(31,607)

Beneficial income tax expense

(4,919)

(586)

Non-real estate depreciation

(2,671)

(2,622)

Preferred dividends and distributions

(21,051)

(14,262)

Funds from Operations contribution

213,498

71,182

341,962

69,166

Net straight-line adjustments to rental revenue, recoveries,

  and ground rent expense at TRG % 

3,527

561

994

149

Purchase accounting adjustments - minimum rents

822

Purchase accounting adjustments - interest expense reduction

(3,431)

(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)

Includes PRC taxes of $3.2 million on the sale of Taubman TCBL assets.

(4)

Includes the operations of Regency Square and The Pier Shops.

(5)

In October 2011, the Company redeemed the Operating Partnership's 8.2% Series F Preferred Equity for $27 million, which represented a $2.2 million discount from the book value.

(6)

In September 2012, the Company redeemed the Series G and H Preferred Stock with the proceeds from the issuance of the 6.5% Series J Preferred Stock (par value $192.5 million).  The Company redeemed the 8.0% Series G Preferred Stock for $100 million and the 7.625% Series H Preferred Stock for $87 million, which represented a $3.3 million and $3.1 million premium, respectively, above the book value.

 

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, 2012 and 2011 

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

2012

2011

Shares 

Per Share

Shares 

Per Share 

Dollars

/Units

/Unit

Dollars

/Units

/Unit

Net income attributable to TCO common shareowners - Basic

27,907

61,899,628

0.45

149,180

57,925,789

2.58

Distributions of participating securities

392

871,262

Add impact of share-based compensation

202

1,441,888

1,911

1,767,850

Net income attributable to TCO common shareowners - Diluted

28,109

63,341,516

0.44

151,483

60,564,901

2.50

Add depreciation of TCO's additional basis

1,717

0.03

1,720

0.03

Net income attributable to TCO common shareowners,

excluding step-up depreciation

29,826

63,341,516

0.47

153,203

60,564,901

2.53

Add:

Noncontrolling share of income of TRG - continuing operations

12,608

26,345,983

14,125

25,307,089

Noncontrolling share of income of TRG - discontinued operations

51,802

Distributions to participating securities of TRG

403

871,262

Net income attributable to partnership unitholders 

and participating securities

42,837

90,558,761

0.47

219,130

85,871,990

2.55

Add (less) depreciation and amortization:

Consolidated businesses at 100% - continuing operations

40,434

0.45

33,204

0.39

Consolidated businesses at 100% - discontinued operations

1,279

0.01

Depreciation of TCO's additional basis

(1,717)

(0.02)

(1,720)

(0.02)

Noncontrolling partners in consolidated joint ventures

(2,040)

(0.02)

(3,041)

(0.04)

Share of Unconsolidated Joint Ventures

6,902

0.08

6,752

0.08

Non-real estate depreciation

(683)

(0.01)

(646)

(0.01)

Less impact of share-based compensation

(202)

(0.00)

(1,911)

(0.02)

Funds from Operations

85,531

90,558,761

0.94

253,047

85,871,990

2.95

TCO's average ownership percentage of TRG

70.1%

69.6%

Funds from Operations attributable to TCO

59,995

0.94

176,108

2.95

Funds from Operations

85,531

90,558,761

0.94

253,047

85,871,990

2.95

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

Acquisition costs

3,614

0.04

Series F Preferred Equity redemption

(2,217)

(0.03)

Gains on extinguishment of debt

(174,171)

(2.03)

Adjusted Funds from Operations

90,275

90,558,761

1.00

80,273

85,871,990

0.93

TCO's average ownership percentage of TRG

70.1%

69.6%

Adjusted Funds from Operations attributable to TCO

63,322

1.00

55,866

0.93

Adjusted Funds from Operations

80,273

85,871,990

0.93

The Pier Shops' and Regency Square's negative FFO

2,518

0.03

Adjusted Funds from Operations,

excluding The Pier Shops and Regency Square

82,791

85,871,990

0.96

TCO's average ownership percentage of TRG

69.6%

Adjusted Funds from Operations attributable to TCO,

excluding The Pier Shops and Regency Square

57,618

0.96

 

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, 2012 and 2011 

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

2012

2011

Shares 

Per Share

Shares 

Per Share 

Dollars

/Units

/Unit

Dollars

/Units 

/Unit

Net income attributable to TCO common shareowners - Basic

83,511

59,884,455

1.39

176,701

56,899,966

3.11

Add impact of share-based compensation

672

1,491,989

921

1,629,123

Net income attributable to TCO common shareowners - Diluted

84,183

61,376,444

1.37

177,622

58,529,089

3.03

Add depreciation of TCO's additional basis

6,876

0.11

6,880

0.12

Net income attributable to TCO common shareowners,

excluding step-up depreciation

91,059

61,376,444

1.48

184,502

58,529,089

3.15

Add:

Noncontrolling share of income of TRG - continuing operations

39,713

26,421,801

36,238

25,259,643

Noncontrolling share of income of TRG - discontinued operations

44,309

Distributions to participating securities of TRG

1,612

871,262

1,536

871,262

Net income attributable to partnership unitholders 

and participating securities

132,384

88,669,507

1.49

266,585

84,659,994

3.15

Add (less) depreciation and amortization:

Consolidated businesses at 100% - continuing operations

149,517

1.69

132,707

1.57

Consolidated businesses at 100% - discontinued operations

10,309

0.12

Depreciation of TCO's additional basis

(6,876)

(0.08)

(6,880)

(0.08)

Noncontrolling partners in consolidated joint ventures

(9,690)

(0.11)

(11,152)

(0.13)

Share of Unconsolidated Joint Ventures

22,688

0.26

23,102

0.27

Non-real estate depreciation

(2,671)

(0.03)

(2,622)

(0.03)

Less impact of share-based compensation

(672)

(0.01)

(921)

(0.01)

Funds from Operations

284,680

88,669,507

3.21

411,128

84,659,994

4.86

TCO's average ownership percentage of TRG

69.4%

69.3%

Funds from Operations attributable to TCO

197,671

3.21

285,400

4.86

Funds from Operations

284,680

88,669,507

3.21

411,128

84,659,994

4.86

Series G and H Preferred Stock redemption charges

6,412

0.07

Early extinguishment of debt on The Mall at Millenia

1,586

0.02

PRC taxes on sale of Taubman TCBL assets

3,158

0.04

Acquisition costs

5,295

0.06

Series F Preferred Equity redemption

(2,217)

(0.03)

Gains on extinguishment of debt

(174,171)

(2.06)

Adjusted Funds from Operations

295,836

88,669,507

3.34

240,035

84,659,994

2.84

TCO's average ownership percentage of TRG

69.4%

69.3%

Adjusted Funds from Operations attributable to TCO

205,430

3.34

166,909

2.84

Adjusted Funds from Operations

240,035

84,659,994

2.84

The Pier Shops' and Regency Square's negative FFO