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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

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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








17,863




0.21

















Adjusted Funds from Operations,















excluding The Pier Shops and Regency Square








257,898


84,659,994


3.05

















TCO's average ownership percentage of TRG








69.3%





















Adjusted Funds from Operations attributable to TCO,















excluding The Pier Shops and Regency Square








178,608




3.05


 

TAUBMAN CENTERS, INC.






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

   and Adjusted Beneficial Interest in EBITDA



For the Periods Ended December 31, 2012 and 2011

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
















Three Months Ended


Year Ended





2012


2011


2012


2011












Net income


49,131


220,796


157,817


287,398












Add (less) depreciation and amortization:










Consolidated businesses at 100% - continuing operations


40,434


33,204


149,517


132,707


Consolidated businesses at 100% - discontinued operations




1,279




10,309


Noncontrolling partners in consolidated joint ventures


(2,040)


(3,041)


(9,690)


(11,152)


Share of Unconsolidated Joint Ventures


6,902


6,752


22,688


23,102












Add (less) interest expense and income tax expense:










Interest expense:











Consolidated businesses at 100% - continuing operations


33,470


32,748


142,616


122,277



Consolidated businesses at 100% - discontinued operations




4,053




21,427



Noncontrolling partners in consolidated joint ventures


(3,951)


(3,744)


(16,585)


(12,153)



Share of Unconsolidated Joint Ventures


10,778


8,201


35,862


31,607


Share of income tax expense


3,526


197


4,919


610












Less noncontrolling share of income of consolidated joint ventures


(5,142)


(3,855)


(11,930)


(14,352)












Beneficial Interest in EBITDA


133,108


296,590


475,214


591,780












TCO's average ownership percentage of TRG


70.1%


69.6%


69.4%


69.3%












Beneficial Interest in EBITDA attributable to TCO


93,368


206,411


329,884


410,493


































Beneficial Interest in EBITDA 


133,108


296,590


475,214


591,780













Acquisition costs




3,614




5,295


Gains on extinguishment of debt




(174,171)




(174,171)












Adjusted Beneficial Interest in EBITDA


133,108


126,033


475,214


422,904












TCO's average ownership percentage of TRG


70.1%


69.6%


69.4%


69.3%












Adjusted Beneficial Interest in EBITDA attributable to TCO


93,368


87,712


329,884


292,966

 

TAUBMAN CENTERS, INC.















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










For the Periods Ended December 31, 2012, 2011, and 2010











(in thousands of dollars)







































Three Months Ended


Three Months Ended


Year Ended


Year Ended






2012


2011


2011


2010


2012


2011


2011


2010