Taubman Centers Announces Strong Third Quarter Results

- Net Operating Income (NOI) Excluding Lease Cancellation Income Up 7.4%

- Three New U.S. Shopping Centers Under Construction

- First Asia Projects Underway

- 2012 Guidance Increased on Strong NOI and Operating Results

24 Oct, 2012, 17:00 ET from Taubman Centers, Inc.

BLOOMFIELD HILLS, Mich., Oct. 24, 2012 /PRNewswire/ -- Taubman Centers, Inc. (NYSE:  TCO) today reported financial results for the third quarter of 2012.

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

"We attribute our strong performance to increased rents, recoveries, and occupancy in our centers," said Robert S. Taubman, chairman, president and chief executive officer of Taubman Centers. "Core growth is outstanding. In addition, this quarter we benefitted from a third party leasing success fee and continued solid performance from our newest center, City Creek Center (Salt Lake City, Utah). We're delivering tremendous results."


September 30, 2012

Three Months Ended

September 30, 2011

Three Months Ended

September 30, 2012

Nine Months Ended

September 30, 2011

Nine Months Ended

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

 

$0.35

 

$0.14

 

$0.92

 

$0.48

Funds from Operations (FFO) per diluted share

Growth rate

 

$0.79

25.4%

$0.63

 

 

$2.26

20.2%

$1.88

 

Adjusted Funds from Operations (Adjusted FFO) per diluted share(1)

Growth rate

 

$0.86

32.3%

 

$0.65

 

 

$2.33

22.6%

 

$1.90

 

Adjusted FFO per diluted share (excluding The Pier Shops and Regency Square)(1) 

Growth rate

 

$0.86

17.8%

 

$0.73

 

 

$2.33

12.0%

 

$2.08

 

(1)   Adjusted FFO for the three and nine months ended September 30, 2012 excludes charges related to the redemption of the Series G and H Preferred Stock.  Adjusted FFO for the three and nine months ended September 30, 2011 excludes costs related to the acquisitions of The Mall at Green Hills (Nashville, Tenn.), The Gardens on El Paseo/El Paseo Village (Palm Desert, Calif.), and Taubman TCBL (Beijing, China).

 

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

The company's 12-month trailing mall tenant sales per square foot reached $681, another record for the company and up 10.7 percent from September 30, 2011. Mall tenant sales per square foot increased 6.2 percent for the three months ended September 30, 2012 and 9.3 percent for the nine months ended September 30, 2012.

Leased space in comparable centers for Taubman's portfolio was 92.4 percent on September 30, 2012, up 1 percent from 91.4 percent on September 30, 2011. Ending occupancy in comparable centers was 90.4 percent on September 30, 2012, up 1.9 percent from 88.5 percent on September 30, 2011.

Average rent per square foot for the third quarter of 2012 was $46.85, up 3.5 percent from $45.28 in the third quarter of 2011. For the nine months ended September 30, 2012, average rent per square foot was $46.57, up from $45.29 for the nine months ended September 30, 2011.

NOI excluding lease cancellation income was up 7.4 percent for the three months ended September 30, 2012, bringing 2012 year-to-date growth to 8.3 percent.

External Growth Update

The company continues to make significant progress on its multi-pronged growth strategy, including the following:

  • Outlet Center Development

    In July, Taubman held an official groundbreaking on Taubman Prestige Outlets Chesterfield (Chesterfield, Mo.). The company announced in September that construction is being accelerated to meet Missouri's 2013 tax-free back-to-school holiday weekend by opening on Friday, August 2, 2013. Site improvements began in April and building walls have been raised throughout the site. Leasing continues to make good progress.

 

  • Asia Development

    In August, the company concluded due diligence and made an additional investment in a joint venture with Shinsegae Group, South Korea's largest retailer. The joint venture will build, lease, and manage a western-style 1.7 million square foot shopping mall in Hanam, Gyeonggi Province, South Korea, an eastern suburb of Seoul. This world class project will be the largest center in Korea. Taubman's total investment including capitalized interest is expected to be about $330 million, representing a 30% interest in the center, which is expected to cost about $1 billion. The center will be anchored by a 525,000 square foot Shinsegae department store and will feature a luxury wing and in-line stores that will be dominated by international flagships, many of which will be the largest in Korea. Hanam Union Square is expected to open in 2015.

    Also in August, Taubman Asia announced its first retail development in China, a joint venture with Beijing Wangfujing Department Store (Group) Co., Ltd (Wangfujing). The joint venture will own a controlling interest in and will lease and manage a shopping center to be located at Xi'an Saigao City Plaza, a large-scale mixed-use development in Xi'an, China. The remaining ownership of the shopping center will be held by Shaanxi Fuli Real Estate Development Co. Ltd, that is constructing the broader project. Anchored by a Wangfujing department store, the seven-level Xi'an shopping center will be part of a 5.9 million square feet (gross building area) mixed-use project and is expected to feature a cinema, restaurants, and approximately 300 international and local specialty stores. The center is scheduled to open in the third quarter of 2015.

 

  • U.S. Traditional Center Development

    In September, the company broke ground on The Mall of San Juan (San Juan, Puerto Rico). Taubman will develop, lease and manage the 650,000 square-foot two-level upscale shopping center that will feature the first Saks Fifth Avenue and Nordstrom in the Caribbean and approximately 100 stores and restaurants. The Mall of San Juan is anticipated to open in late 2014.

    On October 15, Taubman held an official groundbreaking on The Mall at University Town Center (Sarasota, Fla.) and announced the center will open on October 16, 2014. The shopping center will be a state-of-the-art, two-level, enclosed mall, anchored by Saks Fifth Avenue, Dillard's, and Macy's, and will include more than 100 specialty stores and restaurants.

Balance Sheet Strengthened

In August, Taubman Centers issued 2,875,000 common shares, including the exercise of the underwriter's option, in an underwritten public offering. The net proceeds of $209 million were used to reduce outstanding borrowings under the company's $715 million revolving lines of credit. This was just the third secondary common equity raise for the company since its initial public offering in November 1992.

In August, the company 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. Proceeds were used to redeem 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). Upon redemption, the company recognized a $6.4 million charge representing the difference between the face value and the book value of the preferred stock redeemed.

Also in August, the company completed a $190 million, 10-year, non-recourse financing on its 50 percent owned Sunvalley (Concord, Calif.) shopping center. The loan bears interest at an all-in fixed rate of 4.47%. The new loan replaces an amortizing loan with a rate of 5.67% and a balance of $115 million at the time of refinancing.

As a result of these transactions, on September 30, 2012, the company's ratio of debt to total market capitalization was 30.5%, an all-time low for the company.

In early October, the refinancing of The Mall at Millenia (Orlando, Fla.) was completed.  The new $350 million, 12-year, non-recourse financing bears interest at an all-in fixed rate of 4.05%. This replaces an amortizing loan with a rate of 5.46% and a balance of $197 million at the time of refinancing.

2012 Guidance Increased on Strong NOI

The company is increasing its guidance on 2012 FFO per diluted share to $3.18 to $3.23 and 2012 Adjusted FFO per diluted share to the range of $3.27 to $3.32. 2012 Adjusted FFO guidance excludes charges related to the redemption of preferred stock and the charge relating to the early refinancing of the loan on The Mall at Millenia. The company is also increasing its guidance on 2012 EPS to $1.30 to $1.37 per diluted share. This guidance now assumes comparable center NOI growth, excluding lease cancellation income, of about 6 percent for the year, up from a range of 5 to 6 percent previously. 

The company's previous guidance on 2012 FFO per diluted share was a range of $3.13 to $3.18, its previous guidance on 2012 Adjusted FFO per diluted share was a range of $3.22 to $3.27, and its previous guidance on 2012 EPS was a range of $1.20 to $1.30 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:

  • 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 10:00 AM Eastern Daylight Time on Thursday, October 25 to discuss these results, business conditions and the company's outlook for the remainder of 2012. 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 28 regional, super regional and outlet shopping centers in the U.S. and Asia.  Taubman is currently developing Taubman Prestige Outlets Chesterfield in Chesterfield, Missouri; The Mall at University Town Center in Sarasota, Florida; The Mall of San Juan in San Juan, Puerto Rico; and shopping malls in Xi'an, China and Hanam, South Korea.  Taubman Centers is headquartered in Bloomfield Hills, Michigan and its Taubman Asia subsidiary is headquartered in Hong Kong.  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, including, but not limited to the global credit environment and the continuing impacts of the recent U.S. recession, other changes in general economic and real estate conditions, changes in the interest rate environment and the availability of financing, fluctuations of foreign currency, adverse changes in the retail industry, general development risks, and integration and other acquisition risks. Other risks and uncertainties are discussed in the company's filings with the Securities and Exchange Commission including its most recent Annual Report on Form 10-K.

TAUBMAN CENTERS, INC.

Table 1 - Summary of Results

For the Periods Ended September 30, 2012 and 2011

(in thousands of dollars, except as indicated)

Three Months Ended 

Year to Date

2012

2011

2012

2011

Income from continuing operations

45,061

33,549

108,686

90,977

Income (loss) from discontinued operations

(11,681)

(24,375)

Net income

45,061

21,868

108,686

66,602

Noncontrolling share of income of consolidated joint ventures

(2,079)

(4,327)

(6,788)

(10,497)

Noncontrolling share of income of TRG - continuing operations

(10,216)

(7,964)

(27,105)

(22,113)

Noncontrolling share of loss of TRG - discontinued operations

3,539

7,493

TRG series F preferred distributions 

(615)

(1,845)

Preferred stock dividends

(10,663)

(3,658)

(17,980)

(10,975)

Distributions to participating securities of TRG

(403)

(382)

(1,209)

(1,144)

Net income attributable to Taubman Centers, Inc. common shareowners

21,700

8,461

55,604

27,521

Net income per common share - basic 

0.36

0.15

0.94

0.49

Net income per common share - diluted

0.35

0.14

0.92

0.48

Beneficial interest in EBITDA - Combined (1)

121,969

100,979

342,106

295,190

Adjusted Beneficial interest in EBITDA- Combined (1)

121,969

102,660

342,106

296,871

Funds from Operations(1)

70,477

54,126

199,149

158,081

Funds from Operations attributable to TCO (1)

49,071

37,729

137,676

109,292

Funds from Operations per common share - basic(1)

0.81

0.65

2.33

1.93

Funds from Operations per common share - diluted (1)

0.79

0.63

2.26

1.88

Adjusted Funds from Operations (1)

76,889

55,807

205,561

159,762

Adjusted Funds from Operations attributable to TCO (1)

53,535

38,901

142,108

110,464

Adjusted Funds from Operations per common share - basic(1)

0.88

0.67

2.40

1.95

Adjusted Funds from Operations per common share - diluted (1)

0.86

0.65

2.33

1.90

Weighted average number of common shares outstanding - basic

60,571,612

57,890,006

59,207,828

56,554,268

Weighted average number of common shares outstanding - diluted

62,025,322

59,635,557

60,716,518

58,137,149

Common shares outstanding at end of period

61,698,618

57,891,337

Weighted average units - Operating Partnership - basic

86,994,524

83,048,892

85,655,085

81,797,910

Weighted average units - Operating Partnership - diluted

89,319,495

85,665,704

88,035,037

84,252,063

Units outstanding at end of period - Operating Partnership

88,120,226

83,050,223

Ownership percentage of the Operating Partnership at end of period

70.0%

69.7%

Number of owned shopping centers at end of period

24

23

24

23

Operating Statistics (2):

Net Operating Income excluding lease cancellation income - growth % (3)

7.4%

8.3%

Mall tenant sales - all centers (4)

1,378,384

1,197,351

4,128,642

3,494,538

Mall tenant sales - comparable (3)(4)

1,289,569

1,197,351

3,845,903

3,494,538

Ending occupancy - all centers

90.4%

88.5%

90.4%

88.5%

Ending occupancy - comparable(3)

90.4%

88.5%

90.4%

88.5%

Average occupancy - all centers 

90.1%

88.6%

89.9%

88.4%

Average occupancy - comparable (3)

90.2%

88.6%

89.9%

88.4%

Leased space - all centers

92.6%

91.4%

92.6%

91.4%

Leased space - comparable(3)

92.4%

91.4%

92.4%

91.4%

All centers:

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

14.0%

14.1%

13.4%

14.2%

Mall tenant occupancy costs as a percentage of tenant sales - Unconsolidated Joint Ventures (4)

13.5%

13.0%

12.8%

12.9%

Mall tenant occupancy costs as a percentage of tenant sales - Combined (4)

13.9%

13.7%

13.2%

13.8%

Comparable centers:

Mall tenant occupancy costs as a percentage of tenant sales - Consolidated Businesses (3)(4)

14.1%

14.1%

13.7%

14.2%

Mall tenant occupancy costs as a percentage of tenant sales - Unconsolidated Joint Ventures (4)

13.5%

13.0%

12.8%

12.9%

Mall tenant occupancy costs as a percentage of tenant sales - Combined (3)(4)

13.9%

13.7%

13.4%

13.8%

Average rent per square foot - Consolidated Businesses (3)

47.43

45.72

47.18

45.48

Average rent per square foot - Unconsolidated Joint Ventures 

45.61

44.36

45.27

44.91

Average rent per square foot - Combined (3)

46.85

45.28

46.57

45.29

 

(1)

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 operating 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 and nine month period ended September 30, 2012, FFO was adjusted for charges related to the redemption of Series G and H Preferred Stock.  For the three and nine month period ended September 30, 2011, EBITDA and FFO were adjusted for costs related to the acquisitions of The Mall at Green Hills, The Gardens on El Paseo and El Paseo Village, and Taubman TCBL.  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. 

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.

(2)

Statistics exclude The Pier Shops and Regency Square.

(3)

Statistics exclude non-comparable centers.

(4)

Based on reports of sales furnished by mall tenants. 

 

 TAUBMAN CENTERS, INC. 

 Table 2 - Income Statement 

 For the Three Months Ended September 30, 2012 and 2011 

 (in thousands of dollars) 

2012

2011

CONSOLIDATED BUSINESSES

 UNCONSOLIDATED JOINT

VENTURES (1) 

CONSOLIDATED BUSINESSES

 UNCONSOLIDATED JOINT

VENTURES (1) 

REVENUES:

Minimum rents

99,564

40,016

84,929

38,211

Percentage rents

6,315

2,366

4,737

1,815

Expense recoveries

66,633

26,224

57,231

23,387

Management, leasing, and development services

10,234

5,083

Other

6,793

1,829

6,575

1,473

Total revenues

189,539

70,435

158,555

64,886

EXPENSES:

Maintenance, taxes, utilities, and promotion

53,253

18,588

45,200

16,448

Other operating

16,128

3,581

15,255

3,697

Management, leasing, and development services

6,165

2,889

General and administrative

9,571

7,709

Acquisition costs

1,681

Interest expense

34,943

16,617

30,064

15,619

Depreciation and amortization 

36,414

9,095

33,054

9,281

Total expenses

156,474

47,881

135,852

45,045

Nonoperating income

56

18

96

111

33,121

22,572

22,799

19,952

Income tax expense

(732)

(208)

Equity in income of Unconsolidated Joint Ventures

12,672

10,958

Income from continuing operations

45,061

33,549

Discontinued operations (2):

EBITDA

34

Interest expense

(6,354)

Depreciation and amortization

(5,361)

Income (loss) from discontinued operations

(11,681)

Net income 

45,061

21,868

Net income attributable to noncontrolling interests:

Noncontrolling share of income of consolidated joint ventures 

(2,079)

(4,327)

TRG series F preferred distributions

(615)

Noncontrolling share of income of TRG - continuing operations

(10,216)

(7,964)

Noncontrolling share of loss of TRG - discontinued operations

3,539

Distributions to participating securities of TRG

(403)

(382)

Preferred stock dividends (3)

(10,663)

(3,658)

Net income attributable to Taubman Centers, Inc. common shareowners

21,700

8,461

SUPPLEMENTAL INFORMATION:

EBITDA - 100% 

104,478

48,284

85,951

44,852

EBITDA - outside partners' share 

(9,257)

(21,536)

(9,498)

(20,326)

Beneficial interest in EBITDA

95,221

26,748

76,453

24,526

Beneficial interest expense

(30,718)

(8,765)

(33,651)

(8,082)

Beneficial income tax expense

(667)

(208)

Non-real estate depreciation

(679)

(639)

Preferred dividends and distributions 

(10,663)

(4,273)

Funds from Operations contribution

52,494

17,983

37,682

16,444

Net straight-line adjustments to rental revenue, recoveries,

  and ground rent expense at TRG % 

1,194

187

329

86

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 the operations of Regency Square and The Pier Shops.

(3)

Preferred dividends for the three months ended September 30, 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 3 - Income Statement 

 For the Nine Months Ended September 30, 2012 and 2011 

 (in thousands of dollars) 

2012

2011

CONSOLIDATED BUSINESSES

 UNCONSOLIDATED JOINT

VENTURES (1) 

CONSOLIDATED BUSINESSES

 UNCONSOLIDATED JOINT

VENTURES (1) 

REVENUES:

Minimum rents

292,248

119,213

251,569

115,566

Percentage rents

12,767

5,797

9,591

4,108

Expense recoveries

185,325

72,561

162,936

67,583

Management, leasing, and development services

27,441

15,423

Other

20,487

4,945

18,077

3,906

Total revenues

538,268

202,516

457,596

191,163

EXPENSES:

Maintenance, taxes, utilities, and promotion

143,854

52,202

129,712

48,921

Other operating

52,360

11,461

48,138

11,093

Management, leasing, and development services

21,674

7,492

General and administrative

28,021

22,998

Acquisition costs

1,681

Interest expense 

109,146

48,107

89,529

45,164

Depreciation and amortization 

109,083

26,690

99,503

27,859

Total expenses

464,138

138,460

399,053

133,037

Nonoperating Income

251

19

857

121

74,381

64,075

59,400

58,247

Income tax expense

(1,438)

(413)

Equity in income of Unconsolidated Joint Ventures 

35,743

31,990

Income from continuing operations

108,686

90,977

Discontinued operations (2):

EBITDA

2,029

Interest expense

(17,374)

Depreciation and amortization

(9,030)

Income (loss) from discontinued operations

(24,375)

Net income

108,686

66,602

Net income attributable to noncontrolling interests:

Noncontrolling share of income of consolidated joint ventures 

(6,788)

(10,497)

TRG series F preferred distributions

(1,845)

Noncontrolling share of income of TRG - continuing operations

(27,105)

(22,113)

Noncontrolling share of income of TRG - discontinued operations

7,493

Distributions to participating securities of TRG

(1,209)

(1,144)

Preferred stock dividends(3)

(17,980)

(10,975)

Net income attributable to Taubman Centers, Inc. common shareowners

55,604

27,521

SUPPLEMENTAL INFORMATION:

EBITDA - 100% 

292,610

138,872

250,461

131,270

EBITDA - outside partners' share 

(27,117)

(62,259)

(27,017)

(59,524)

Beneficial interest in EBITDA

265,493

76,613

223,444

71,746

Beneficial interest expense

(96,512)

(25,084)

(98,494)

(23,406)

Beneficial income tax expense

(1,393)

(413)

Non-real estate depreciation

(1,988)

(1,976)

Preferred dividends and distributions

(17,980)

(12,820)

Funds from Operations contribution

147,620

51,529

109,741

48,340

Net straight-line adjustments to rental revenue, recoveries,

  and ground rent expense at TRG % 

2,544

360

173

142

Purchase accounting adjustments - minimum rents

610

Purchase accounting adjustments - interest expense reduction

(2,573)

(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 the operations of Regency Square and The Pier Shops.

(3)

Preferred dividends for the nine months ended September 30, 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 September 30, 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

21,700

60,571,612

0.36

8,461

57,890,006

0.15

Add impact of share-based compensation

168

1,453,710

91

1,745,551

Net income attributable to TCO common shareowners - Diluted

21,868

62,025,322

0.35

8,552

59,635,557

0.14

Add depreciation of TCO's additional basis

1,720

0.03

1,720

0.03

Net income attributable to TCO common shareowners,

excluding step-up depreciation

23,588

62,025,322

0.38

10,272

59,635,557

0.17

Add:

Noncontrolling share of income of TRG - continuing operations

10,216

26,422,911

7,964

25,158,885

Noncontrolling share of loss of TRG - discontinued operations

(3,539)

Distributions to participating securities

403

871,262

382

871,262

Net income attributable to partnership unitholders 

and participating securities

34,207

89,319,495

0.38

15,079

85,665,704

0.18

Add (less) depreciation and amortization:

Consolidated businesses at 100% - continuing operations

36,414

0.41

33,054

0.39

Consolidated businesses at 100% - discontinued operations

5,361

0.06

Depreciation of TCO's additional basis

(1,720)

(0.02)

(1,720)

(0.02)

Noncontrolling partners in consolidated joint ventures

(2,888)

(0.03)

(2,404)

(0.03)

Share of Unconsolidated Joint Ventures

5,311

0.06

5,486

0.06

Non-real estate depreciation

(679)

(0.01)

(639)

(0.01)

Less impact of share-based compensation

(168)

(0.00)

(91)

(0.00)

Funds from Operations

70,477

89,319,495

0.79

54,126

85,665,704

0.63

TCO's average ownership percentage of TRG

69.6%

69.7%

Funds from Operations attributable to TCO

49,071

0.79

37,729

0.63

Funds from Operations

70,477

89,319,495

0.79

54,126

85,665,704

0.63

Charge upon redemption of Series G and H Preferred Stock

6,412

0.07

Acquisition costs

1,681

0.02

Adjusted Funds from Operations

76,889

89,319,495

0.86

55,807

85,665,704

0.65

TCO's average ownership percentage of TRG

69.6%

69.7%

Adjusted Funds from Operations attributable to TCO

53,535

0.86

38,901

0.65

Adjusted Funds from Operations

55,807

85,665,704

0.65

The Pier Shops' and Regency Square's negative FFO

6,316

0.07

Adjusted Funds from Operations,

excluding The Pier Shops and Regency Square

62,123

85,665,704

0.73

TCO's average ownership percentage of TRG

69.7%

Adjusted Funds from Operations attributable to TCO,

excluding The Pier Shops and Regency Square

43,303

0.73

 

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 Nine Months Ended September 30, 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

55,604

59,207,828

0.94

27,521

56,554,268

0.49

Add impact of share-based compensation

470

1,508,690

275

1,582,881

Net income attributable to TCO common shareowners - Diluted

56,074

60,716,518

0.92

27,796

58,137,149

0.48

Add depreciation of TCO's additional basis

5,159

0.08

5,160

0.09

Net income attributable to TCO common shareowners,

excluding step-up depreciation

61,233

60,716,518

1.01

32,956

58,137,149

0.57

Add:

Noncontrolling share of income of TRG - continuing operations

27,105

26,447,257

22,113

25,243,652

Noncontrolling share of income of TRG - discontinued operations

(7,493)

Distributions to participating securities

1,209

871,262

1,144

871,262

Net income attributable to partnership unit holders 

and participating securities

89,547

88,035,037

1.02

48,720

84,252,063

0.58

Add (less) depreciation and amortization:

Consolidated businesses at 100% - continuing operations

109,083

1.24

99,503

1.18

Consolidated businesses at 100% - discontinued operations

9,030

0.11

Depreciation of TCO's additional basis

(5,159)

(0.06)

(5,160)

(0.06)

Noncontrolling partners in consolidated joint ventures

(7,650)

(0.09)

(8,111)

(0.10)

Share of Unconsolidated Joint Ventures

15,786

0.18

16,350

0.19

Non-real estate depreciation

(1,988)

(0.02)

(1,976)

(0.02)

Less impact of share-based compensation

(470)

(0.01)

(275)

(0.00)

Funds from Operations

199,149

88,035,037

2.26

158,081

84,252,063

1.88

TCO's average ownership percentage of TRG

69.1%

69.1%

Funds from Operations attributable to TCO

137,676

2.26

109,292

1.88

Funds from Operations

199,149

88,035,037

2.26

158,081

84,252,063

1.88

Charge upon redemption of Series G and H Preferred Stock

6,412

0.07

Acquisition costs

1,681

0.02

Adjusted Funds from Operations

205,561

88,035,037

2.33

159,762

84,252,063

1.90

TCO's average ownership percentage of TRG

69.1%

69.1%

Adjusted Funds from Operations attributable to TCO

142,108

2.33

110,464

1.90

Adjusted Funds from Operations

159,762

84,252,063

1.90

The Pier Shops' and Regency Square's negative FFO

15,340

0.18

Adjusted Funds from Operations,

excluding The Pier Shops and Regency Square

175,102

84,252,063

2.08

TCO's average ownership percentage of TRG

69.1%

Adjusted Funds from Operations attributable to TCO,

excluding The Pier Shops and Regency Square

121,064

2.08

 

TAUBMAN CENTERS, INC.

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

   and Adjusted Beneficial Interest in EBITDA

For the Periods Ended September 30, 2012 and 2011

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

Three Months Ended

Year to Date

2012

2011

2012

2011

Net income

45,061

21,868

108,686

66,602