Taubman Centers' CEO Discusses Q4 2011 Results - Earnings Call Transcript
Taubman Centers, Inc. (
)
Q4 2011 Earnings Call
February 9, 2012, 12:00 p.m. ET
Executives
Barbara Baker – VP, Investor Relations
Robert Taubman – Chairman, President, CEO
Lisa Payne – Vice Chairman, CFO
Analysts
Christy McElroy – UBS
Jay Habermann – Goldman Sachs
Quentin Zilli - Citi
Craig Schmidt – Bank of America
Alex Goldfarb – Sandler O’Neill
Todd Thomas – KeyBanc Capital Markets
Ross Nussbaum – UBS
Paul Morgan – Morgan Stanley
Michael Mueller – JPMorgan
Ben Yang – Keefe, Bruyette & Woods
Presentation
Operator
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Taubman Centers Q2 2010 Earnings Call Transcript
Thank you for holding and welcome to the Taubman Centers’ Fourth Quarter Earnings conference call. The call will begin with prepared remarks and then we will open the line to questions.
On the call today will be Robert Taubman, Taubman Centers’ Chairman, President and Chief Executive Officer; Lisa Payne, Vice Chairman and Chief Financial Officer; and Barbara Baker, Vice President of Investor Relations.
Now, I will turn the call over to Barbara for opening remarks.
Barbara Baker
Thank you, Operator, and welcome to our year-end conference call and also thank you for staying with us through all the calls this morning. Yesterday we released our year-end results and our supplemental information package. Both are available on our website,
.
As you know, during this conference call we’ll be making forward-looking statements within the meanings of the federal securities laws. These statements reflect our current views with respect to future events and financial performance, although actual results may differ materially. Please see our SEC filings, including our latest 10-K and subsequent reports for a discussion of various risks and uncertainties underlying our forward-looking statements.
During this call, we’ll also discuss non-GAAP financial measures as defined by SEC Regulation G. Reconciliations of these non-GAAP financial measures to the comparable GAAP financial measures are included in our earnings release and in our supplemental information. In addition, a replay of the call is provided through a link on the Investor Relations section of our website.
When we get to questions, we ask that you limit them to two. And then if you have more, queue up again. That way everyone has an opportunity to ask a question. And now, let me turn the call over to Bobby.
Robert Taubman
Thanks, Barbara, and again, welcome everyone to our call. This was another excellent quarter and the combination of a really terrific week for Taubman Centers. The fundamentals of our business are outstanding, and the company is firing on all cylinders.
Sales for square foot for the year were $641, up 13.7%. This comes on top of a 12.4% increase in 2010. It is now an unprecedented 8 quarters in a row of double-digit sales increases. NOI was up a strong 4.9% for the year. We completed strategic acquisitions in the U.S. and in Asia. City Creek Center in Salt Lake, is opening in March, and we made excellent progress on our development pipeline.
With our high quality portfolio and external growth opportunities, we’re confident we’ll continue to create strong net asset value for shareholders. Based on Green Street’s NAV calculations, our net asset value growth has been the highest of all reeds covered over the last ten years.
Tenant sales grew across the board. Geographically and nearly all merchandized categories. In fact, nearly two thirds of our 23 sales categories were up double-digits in 2011. And for those of you curious about Apple, they had a great November and December, and did improve our fourth quarter and our year.
However, even if we exclude Apple, we were up double-digits for every quarter of the year, and for the entire year, we were up well over double-digits excluding Apple. Geographically, our Florida centers boosted by strong tourism were the largest contributors to sales growth.
As I said in our last call, we recognized trees don’t grow to the sky, and that eventually sales growth will begin to moderate, but in the meantime, we continue to enjoy it. As sales have accelerated, total occupancy cost as a percentage of sales have fallen. As expected, occupancy cost for the year were 13%. This indicates built in ramp growth opportunities for the future.
We’re signing leases at attractive rates and at a faster pace. In 2011, we signed more leases than we have since 2005. At this point, we have commitments for about 85% of the leases required to meet our budget for 2012. This is higher than what is typical at this time of year.
Occupancy for all centers at year-end was 90.7%, up 60 basis points from last year. Temporary tenants comprised of addition 4.8 at year-end. This brings the total to 95.5%. This is the highest combined occupancy number we’ve ever had.
Moving to average rent per square foot, we ended the year up 3.6%, consistent with our last guidance. Our opening rents continue to be strong, up 13% from opening rents in 2010. Not surprising, the most significant increases were at centers that have shown the best sales growth over the past several years, our luxury and value centers.
NOI excluding lease cancelation fees was up 9. – excuse me, 4.9% for the year. We started the year with a NOI guidance of 1 to 2%. Throughout the year we saw significant improvements in rents, percentage rents, and recoveries, all driven by strong sales growth.
Consistent with this, only 30 basis points of our leases went in to bankruptcy in the quarter, and only 1.5% for the year. In fact, since year end, we’ve had vitally no unscheduled closings, a rare phenomenon for the first month of the year.
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