NEW YORK ( TheStreet) -- Taubman Centers ( TCO - Get Report) is getting its financial house in order as it refinances its deals to better terms, and CEO Richard Taubman is encouraged by the reception the company's refinancings have gotten from the capital markets so far. The Bloomfield Hills, Mich., real estate investment trust and mall development company refinanced its Detroit property The Mall at Partridge Creek in June and it has two more lined up for new financing in the third quarter. In the near term, Taubman's retail clients are focused on shoppers. Consumers tightened up on spending in May and June, bringing back talk of a double-dip recession. However, luxury retailers fared better than others. "We believe that a rebound in luxury spending aided by an improving economy bodes well for TCO, whose properties cater to affluent consumers," wrote Standard & Poor's analyst Robert McMillan in a recent research note. McMillan has a hold rating on Taubman shares but his 12-month price target of $46 represents a premium of more than 15% to current prices. Wall Street is on the fence about the company. Of the 12 analysts covering the stock, eight have hold ratings. One outstanding issue is its The Pier Shops property in Atlantic City. It is the only loan Taubman has defaulted on and the property owner Atlantic Piers Association went into foreclosure in April. The company wrote down the property after the cash generation became too low to cover the debt. Chairman and CEO Robert Taubman spoke with TheStreet recently about the health of the consumer and other topics. TheStreet: How is the consumer doing? What are you seeing with the retailers in your malls? Taubman: Well we actually think they're doing pretty well in our centers and we see that for the consumers and those that have jobs it is a long recovery and clearly unemployment is going to be very difficult for a while, technical unemployment. But those that have jobs, a year, a year and a half ago, they thought they might lose them and they pulled back. Now they don't feel that way, they feel very confident in their jobs and therefore they are spending money and so we see that in our centers and our centers over the last couple of quarters have performed very well.
Are there any retailers that you're seeing that are demanding more space or some that are maybe pulling back on space? Sure the electronics retailers, Apple ( AAPL), Microsoft's ( MSFT) rollout, there's a lot of demand for space there. We find that juniors merchants people like Forever 21, American Eagle ( AEO), H&M are looking for space in our shopping centers, doing very well. We have big categories that are doing very well and retailers are much more optimistic about the forward quarters as they look ahead over the next couple of years and they want to take space in our shopping centers. That's interesting because when we got the June sales out, it seems like May/June, the consumer was starting to kind of close their purse a little bit and starting to have exhausted all those needs that they had at the beginning of the year. So are you seeing that that's going to continue or it sounds like you feel like they're going to start to spend again? I think there's always a mix of results. In our centers, our centers have actually shown very strong, positive movement throughout this year. So we're very pleased with where the consumer is in our properties. Alright let's talk about the financing. There was a lot of concern that there was going to be a commercial real estate bust if you will, similar to what we saw with the residential market. And we haven't quite seen that yet so you were saying there's a lot of debt that's going to be coming due. How is that situation playing out? Depending on who's counting it, there's somewhere between a trillion and two trillion dollars in the commercial real estate sector that is coming due over the next couple to three years. There has been this movement to really amend, extend and pretend about what's going to happen. we think that other foot may in fact drop at some point. But from our perspective good sponsors and good assets are seeing movement - new movement in the capital markets that's very positive especially in the last 30 to 60 to 90 days. We have just refinanced two assets, we have a third asset that we're in the process of refinancing at much better spreads, at much longer time frames, and at much higher funding levels than we anticipated even three, four months ago. So we are seeing movement in the capital markets that are positive. Whether or not that extends itself to the broader commercial real estate markets that are coming due with this large portion of debt is not clear yet. How do you feel the banks are dealing with this? Because it would seem that the banks would be more willing to negotiate with a big developer. That they might have a long-term relationship as opposed to maybe a residential mortgage that's much smaller. I think that's generally true and I think you have to look at each property type and look at the specifics and the specifics both of that type as well as the market that it's in. Clearly there's still an overabundance of supply in the residential market as an example, and that's where small banks tend to have as much as two-thirds of their assets -- in those kinds of loans. But I do think that bigger sponsors are getting better response from the banks because the banks feel more comfortable with them and they've been able to manage their way through this crisis. Whether they've sold equity, whether they've sold assets, whether they've cut their dividends, they've been able to deal with the crisis in a multi-faceted way as opposed to the smaller owner of assets. In our case, we were very fortunate we had a strong balance sheet, we didn't have to do any of those things. We didn't cut our dividend, we didn't issue equity, we didn't sell assets.
So, if things are so good over at Taubman, do you think you may be making any acquisitions. Well, we're looking at things as they come up, it's very hard. They're very unique assets, there aren't that many of them, we're a very concentrated industry, the mall sector that we focus on. We're also a developer and that really is where we've seen the primary focus of our growth over the years and we do expect development to pick up once again and we're looking at a number of things that could move forward in the next year or two. Now you've mentioned that the dividend has been pretty stable, any idea if it might increase? Obviously it's something that our board considers year to year and we're very pleased that our dividend has remained solid. Again our balance sheet is in excellent condition and I'm sure as time goes on, we'll look at our dividend again. Looking forward, do you see recovery towards the end of this year or do you think it's going to be more towards to 2011 before we get a real substantial grip on the economy? I think the risk of double dip is very low at this point. I do think we're in this long recovery, when you look at jobs as sort of the key fundamental of the marketplace and of how people feel about the economy, I don't think you're going to see technical unemployment really get time to sort of benchmark five and a half to six percent for many years. It could be four or five years before that happens. But I do think the people that have jobs feel good about their prospects and they are spending money and I think that will encourage the economy as the capital markets continue to open up some more, I do think that the economy will continue to grow slowly, but very progressively forward. You mentioned jobs. Your company had a restructuring about a year ago, so when do you think you might start hiring? We're actually beginning to hire back some right now in very specific areas. Do you feel that the luxury retailers maybe will lead the pack as opposed to the teen retailers? It sounded like when we did get those sales numbers that the luxuries were starting to look okay. I do think the luxury retail in our centers has performed very, very well and part of our outperformance to our peer group. We've really been leading in the fourth quarter comparison of last year, the first quarter of this year. Hopefully as we look forward, we're going to see that our portfolio is outperforming our peers and we think a very important reason for that is the performance of our luxury retailers that we tend to have more of in our centers than others. We do have the highest productivity of any of them - all portfolios by some distance and again we think that has to do with a lot of luxury presence.
And your occupancy rates, how have they been? They've been pretty stable. We're in the low 90% kind of range which is where we've been for a number of years. And rents? Rents have been down very modestly. You know I think about 1% on an average portfolio basis. But you know we're looking for our NOI comp to turn up in 2011, we've been saying that to the investment community for some time and we certainly are hopeful as we look at sales increases that have been over the last couple of quarters. Edited for length and clarity. -- Written by Debra Borchardt in New York.