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

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












Add (less) depreciation and amortization:










Consolidated businesses at 100% - continuing operations


36,414


33,054


109,083


99,503


Consolidated businesses at 100% - discontinued operations




5,361




9,030


Noncontrolling partners in consolidated joint ventures


(2,888)


(2,404)


(7,650)


(8,111)


Share of Unconsolidated Joint Ventures


5,311


5,486


15,786


16,350












Add (less) interest expense and income tax expense:










Interest expense:











Consolidated businesses at 100% - continuing operations


34,943


30,064


109,146


89,529



Consolidated businesses at 100% - discontinued operations




6,354




17,374



Noncontrolling partners in consolidated joint ventures


(4,225)


(2,767)


(12,634)


(8,409)



Share of Unconsolidated Joint Ventures


8,765


8,082


25,084


23,406


Share of income tax expense


667


208


1,393


413












Less noncontrolling share of income of consolidated joint ventures


(2,079)


(4,327)


(6,788)


(10,497)












Beneficial Interest in EBITDA


121,969


100,979


342,106


295,190












TCO's average ownership percentage of TRG


69.6%


69.7%


69.1%


69.1%












Beneficial Interest in EBITDA attributable to TCO


84,923


70,388


236,516


204,082


































Beneficial Interest in EBITDA 


121,969


100,979


342,106


295,190













Acquisition costs




1,681




1,681












Adjusted Beneficial Interest in EBITDA


121,969


102,660


342,106


296,871












TCO's average ownership percentage of TRG


69.6%


69.7%


69.1%


69.1%












Adjusted Beneficial Interest in EBITDA attributable to TCO


84,923


71,560


236,516


205,254

 

TAUBMAN CENTERS, INC.


















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


















For the Periods Ended September 30, 2012 and 2011


















(in thousands of dollars)










































Three Months Ended


Three Months Ended


Year to Date


Year to Date






2012


2011


2011


2010


2012


2011


2011


2010






















Net income



45,061


21,868


21,868


8,458


108,686


66,602


66,602


43,755






















Add (less) depreciation and amortization:



















Consolidated businesses at 100% - continuing operations


36,414


33,054


33,054


41,585


109,083


99,503


99,503


110,629



Consolidated businesses at 100% - discontinued operations




5,361


5,361


2,915




9,030


9,030


6,873



Noncontrolling partners in consolidated joint ventures


(2,888)


(2,404)


(2,404)


(2,501)


(7,650)


(8,111)


(8,111)


(7,519)



Share of Unconsolidated Joint Ventures


5,311


5,486


5,486


5,731