Taubman Centers, Inc. (NYSE: TCO) today reported financial results for the second quarter of 2015.
                     
       

June 30, 2015 Three Months Ended
 

June 30, 2014Three MonthsEnded
 

June 30, 2015 Six Months Ended
 

June 30, 2014Six MonthsEnded
  Net income attributable to common shareholders (EPS) per diluted common share  

$0.37 (1)
 

$0.33
 

$0.84 (1)
 

$6.08 (2)
Funds from Operations (FFO) per diluted common share  

$0.76 (1)
  $0.80  

$1.57 (1)
  $1.70
 

Growth rate
 

(5.0)%
      (7.6)%    
Adjusted Funds from Operations (Adjusted FFO) per diluted common share

$0.76 (1)

$0.86 (3)

$1.57 (1)

$1.76 (3)
 

Growth rate
  (11.6)%       (10.8)%    

(1)

Excludes the operations of the seven centers sold to Starwood Capital Group in October 2014 and Arizona Mills (Tempe, Ariz.), which was sold in January 2014. Includes the operations of The Mall at University Town Center (Sarasota, Fla.), which opened in October 2014, and The Mall of San Juan (San Juan, Puerto Rico), which opened in March 2015.
 

(2)

Includes a net gain of $477 million ($5.30 per share) on the sale of a 49.9 percent interest in the entity that owns International Plaza (Tampa, Fla.), as well as investments in Arizona Mills and land in Syosset, New York (Oyster Bay).
 

(3)

Adjusted FFO for the three and six months ended June 30, 2014 excludes charges related to the sale of seven centers to Starwood.
 

"We delivered another solid quarter," said Robert S. Taubman, chairman, president and chief executive officer of Taubman Centers. "Our performance was driven by increased rents and net recoveries, as well as the excellent performance of The Mall at University Town Center in Sarasota, Florida."

The October 2014 sale of seven centers to Starwood reduced FFO by 14.5 cents during the second quarter in comparison to the prior period.

Operating Statistics

Comparable center NOI, excluding lease cancellation income, was up 2.5 percent for the quarter, bringing year-to-date growth to 3.1 percent.

Comparable center mall tenant sales per square foot rose 2.8 percent from the second quarter of 2014. This brings the company's 12-month trailing mall tenant sales per square foot to $818, an increase of 1.4 percent from the 12-months ended June 30, 2014. Year-to-date, sales were up 2.5 percent.

"The positive sales trend during the quarter was very encouraging," said Mr. Taubman. "We saw solid growth in May and sales growth accelerated through June."

Average rent per square foot for the quarter was $60.35, up 1.4 percent from $59.50 in the comparable period last year. Year-to-date, average rent per square foot was up 2.8 percent.

Trailing 12-month releasing spreads per square foot for the period ended June 30, 2015 were a robust 29.2 percent.

Ending occupancy in comparable centers was 93 percent on June 30, 2015, up 0.2 percent from 92.8 percent on June 30, 2014. Leased space in comparable centers was 96.9 percent on June 30, 2015, up 1 percent from 95.9 percent on June 30, 2014.

"Nearly all our key metrics are up," added Mr. Taubman. "The fundamentals of our business continue to be strong."

Financing Activity

In July, the construction loan financing for Hanam Union Square (Hanam, Gyeonggi Province, South Korea) closed. The company owns a 34.3 percent interest in the joint venture. The financing consists of a 5-year Korean Won denominated loan of approximately $445 million U.S. dollars at current exchange rates and a 5-year U.S. dollar loan of approximately $50 million. The Korean Won denominated portion of the loan bears interest at the KDB Bank Five-Year Bond Yield plus 1.06 percent and is fixed upon each draw. At current bond yields, the rate would be approximately 3.2 percent. The U.S. dollar denominated floating rate loan bears interest at 3 month LIBOR plus 1.6 percent.

Share Repurchase Program

During the quarter ended June 30, 2015, the company purchased 1,650,191 shares of its common stock at an average price of $74.23 per share. Since the program's inception in August 2013, the company has purchased 3,590,492 shares of its common stock at an average price of $72.35 per share. At June 30, 2015, the company had approximately $190 million available under its share repurchase authorization.

2015 Guidance

The company is increasing its guidance for 2015 FFO per diluted common share to $3.28 to $3.36, up from the previous range of $3.20 to $3.28. The new guidance includes the impact of share repurchases through June 30, 2015, but excludes assumptions for future repurchases. This improved guidance also assumes a better than anticipated contribution from The Mall of San Juan. Comparable center NOI growth, excluding lease cancellation income, of 2.5 to 3 percent for the year, remains unchanged from the last quarter.

The company is also increasing its guidance for 2015 EPS to $1.65 to $1.78, up from $1.59 to $1.72.

Supplemental Investor Information Available

The company provides supplemental investor information along with its earnings announcements, available online at www.taubman.com under "Investors." This includes the following:
  • Company Information
  • Income Statements
  • Earnings Reconciliations
  • Changes in Funds from Operations and Earnings Per Common Share
  • Components of Other Income, Other Operating Expense, and Nonoperating Income (Expense)
  • Recoveries Ratio Analysis
  • Balance Sheets
  • Debt Summary
  • Other Debt, Equity and Certain Balance Sheet Information
  • Construction and Redevelopment
  • Capital Spending
  • Operational Statistics
  • Summary of Key Guidance Measures
  • 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 a.m. EDT on Friday, July 31 to discuss its results, business conditions and the company's outlook for the remainder of 2015. The conference call will be simulcast at www.taubman.com. An online replay will be available shortly after the call and will 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 22 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 four properties in the U.S. and Asia totaling 4.1 million square feet. Taubman, with more than 60 years of experience in the shopping center industry, is headquartered in Bloomfield Hills, Mich., and Taubman Asia is headquartered in Hong Kong. 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 June 30, 2015 and 2014                
(in thousands of dollars, except as indicated)
 
Three Months Ended Year to Date
2015 2014 2015 2014
 
Net income (1) 42,333 39,054 93,333 565,211
Noncontrolling share of income of consolidated joint ventures (2,672 ) (2,252 ) (5,263 ) (5,370 )
Noncontrolling share of income of TRG (10,153 ) (9,203 ) (22,664 ) (156,865 )
Distributions to participating securities of TRG (493 ) (470 ) (985 ) (938 )
Preferred stock dividends (5,785 ) (5,785 ) (11,569 ) (11,569 )
Net income attributable to Taubman Centers, Inc. common shareowners (1) 23,230 21,344 52,852 390,469
Net income per common share - basic (1) 0.38 0.34 0.85 6.18
Net income per common share - diluted (1) 0.37 0.33 0.84 6.08
Beneficial interest in EBITDA - Combined (2) 99,134 112,054 202,640 721,043
Adjusted Beneficial interest in EBITDA - Combined (2) 99,134 117,890 202,640 240,259
Funds from Operations attributable to partnership unitholders and participating securities of TRG (1)(2) 67,596 71,864 140,512 153,087
Funds from Operations attributable to TCO's common shareowners (1)(2) 47,939 51,337 99,909 109,373
Funds from Operations per common share - basic (1)(2) 0.78 0.81 1.60 1.73
Funds from Operations per common share - diluted (1)(2) 0.76 0.80 1.57 1.70

Adjusted Funds from Operations attributable to partnership unitholders and participating securities of TRG (1)(2)
67,596 77,700 140,512 158,923
Adjusted Funds from Operations attributable to TCO's common shareowners (1)(2) 47,939 55,513 99,909 113,549
Adjusted Funds from Operations per common share - basic (1)(2) 0.78 0.88 1.60 1.80
Adjusted Funds from Operations per common share - diluted (1)(2) 0.76 0.86 1.57 1.76
Weighted average number of common shares outstanding - basic 61,606,563 63,263,237 62,319,211 63,214,694
Weighted average number of common shares outstanding - diluted 62,386,042 63,974,613 63,156,702 64,834,009
Common shares outstanding at end of period 60,886,865 63,263,470
Weighted average units - Operating Partnership - basic 86,669,952 88,408,808 87,402,848 88,361,090
Weighted average units - Operating Partnership - diluted 88,320,693 89,991,446 89,111,601 89,980,405
Units outstanding at end of period - Operating Partnership 85,950,254 88,408,920
Ownership percentage of the Operating Partnership at end of period 70.8 % 71.6 %
Number of owned shopping centers at end of period 19 24
 
Operating Statistics:
Net Operating Income excluding lease cancellation income - growth % (2)(3) 2.5 % 4.6 % 3.1 % 3.2 %
Net Operating Income including lease cancellation income - growth % (2)(3) -0.4 % 7.6 % 2.4 % 4.7 %
Mall tenant sales - all centers (4) 1,203,516 1,129,184 2,379,273 2,246,681
Mall tenant sales - comparable (3)(4) 1,142,136 1,129,184 2,265,974 2,246,681
Ending occupancy - all centers 90.6 % 92.6 % 90.6 % 92.6 %
Ending occupancy - comparable (3) 93.0 % 92.8 % 93.0 % 92.8 %
Leased space - all centers 95.7 % 95.3 % 95.7 % 95.3 %
Leased space - comparable (3) 96.9 % 95.9 % 96.9 % 95.9 %
Average rent per square foot - Consolidated Businesses (3) 61.52 60.54 61.12 59.71
Average rent per square foot - Unconsolidated Joint Ventures (3) 58.70 58.06 58.95 56.99
Average rent per square foot - Combined (3) 60.35 59.50 60.22 58.60
 
Twelve Months Trailing
2015 2014
 
Operating Statistics:
Mall tenant sales - all centers (4) 5,102,054 4,939,615
Mall tenant sales - comparable (3)(4) 4,883,247 4,903,359
Sales per square foot (3)(4) 818 807
All centers (4):
Mall tenant occupancy costs as a percentage of tenant sales - Consolidated Businesses 14.1 % 13.6 %
Mall tenant occupancy costs as a percentage of tenant sales - Unconsolidated Joint Ventures 13.2 % 13.1 %
Mall tenant occupancy costs as a percentage of tenant sales - Combined 13.7 % 13.4 %
Comparable centers (3)(4):
Mall tenant occupancy costs as a percentage of tenant sales - Consolidated Businesses 14.2 % 13.7 %
Mall tenant occupancy costs as a percentage of tenant sales - Unconsolidated Joint Ventures 13.3 % 13.1 %
Mall tenant occupancy costs as a percentage of tenant sales - Combined 13.8 % 13.5 %
 
(1) Earnings no longer reflect the results of the centers sold to the Starwood Capital Group (Starwood) for periods after the October 2014 disposition date. During the six month period ended June 30, 2014, the Company recognized a gain (net of tax) of $476.9 million from dispositions of interests in International Plaza, Arizona Mills, and land in Syosset, New York related to the former Oyster Bay project. The effect of the gain on dispositions from the International Plaza, Arizona Mills, and Oyster Bay dispositions on diluted earnings per common share (EPS) was $5.30 per share.
 
(2) 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 peripheral 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 and six month periods ended June 30, 2014, FFO and EBITDA were adjusted for expenses related to the sale of centers to Starwood. Specifically, these measures were adjusted for a charge related to the discontinuation of hedge accounting on the interest rate swap previously designated to hedge the MacArthur Center (MacArthur) note payable as well as disposition costs incurred related to the sale. In addition, for the six months ended June 30, 2014, EBITDA was adjusted for the gain on dispositions of interests in International Plaza, Arizona Mills, and land in Syosset, New York related to the former Oyster Bay project.
 
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.
 
(3) Statistics exclude non-comparable centers for all periods presented. The June 30, 2014 statistics have been restated to include comparable centers to 2015. Sales per square foot exclude spaces greater than or equal to 10,000 square feet. In addition, Taubman Prestige Outlets Chesterfield has also been excluded from comparable trailing 12 month statistics reported for 2015 and 2014 as the center was not open for the entire 12 months ended June 30, 2014.
 
(4) Based on reports of sales furnished by mall tenants. The 2014 sales statistics have been adjusted to exclude the portfolio of seven centers included in the sale to Starwood in October 2014.
       
TAUBMAN CENTERS, INC.
Table 2 - Income Statement
For the Three Months Ended June 30, 2015 and 2014                
(in thousands of dollars)
   
2015 2014
CONSOLIDATED BUSINESSES   UNCONSOLIDATED JOINT VENTURES (1) CONSOLIDATED BUSINESSES (1)   UNCONSOLIDATED JOINT VENTURES (1)
 
REVENUES:
Minimum rents 76,869 52,865 96,532 48,364
Percentage rents 1,077 1,203 1,094 1,103
Expense recoveries 46,020 31,694 61,203 27,591
Management, leasing, and development services 3,341 2,965
Other 4,666   2,112   8,191   3,236  
Total revenues 131,973 87,874 169,985 80,294
 
EXPENSES:
Maintenance, taxes, utilities, and promotion 35,107 22,772 48,830 19,989
Other operating 14,680 4,647 16,050 4,497
Management, leasing, and development services 1,411 1,696
General and administrative 12,055 11,587
Interest expense 14,781 21,056 25,434 18,137
Depreciation and amortization 26,378   14,370   36,850   11,092  
Total expenses 104,412 62,845 140,447 53,715
 
Nonoperating income (expense) (2) 1,456   (3 ) (5,321 ) (5 )
29,017 25,026   24,217 26,574  
Income tax expense (688 ) (311 )
Equity in income of Unconsolidated Joint Ventures 14,004   14,675  
42,333 38,581
Gain on dispositions, net of tax (3)   473  
Net income 42,333 39,054
Net income attributable to noncontrolling interests:
Noncontrolling share of income of consolidated joint ventures (2,672 ) (2,252 )
Noncontrolling share of income of TRG (10,153 ) (9,203 )
Distributions to participating securities of TRG (493 ) (470 )
Preferred stock dividends (5,785 ) (5,785 )
Net income attributable to Taubman Centers, Inc. common shareowners 23,230   21,344  
 
 
SUPPLEMENTAL INFORMATION:
EBITDA - 100% 70,176 60,452 86,501 55,803
EBITDA - outside partners' share (4,953 ) (26,541 ) (5,931 ) (24,319 )
Beneficial interest in EBITDA 65,223 33,911 80,570 31,484
Beneficial interest expense (13,047 ) (11,405 ) (23,348 ) (9,955 )
Beneficial income tax expense - TRG and TCO (688 ) (311 )
Beneficial income tax expense - TCO 109 87
Non-real estate depreciation (722 ) (878 )
Preferred dividends and distributions (5,785 )   (5,785 )  
Funds from Operations attributable to partnership unitholders and participating securities of TRG 45,090   22,506   50,335   21,529  
 
STRAIGHTLINE AND PURCHASE ACCOUNTING ADJUSTMENTS:
Net straight-line adjustments to rental revenue, recoveries,
and ground rent expense at TRG % (116 ) 496 398 398
The Mall at Green Hills purchase accounting adjustments - minimum rents increase 87 199
El Paseo Village and The Gardens on El Paseo purchase accounting
adjustments - interest expense reduction 305 305
Waterside Shops purchase accounting adjustments - interest expense reduction 262 263
U.S. headquarters purchase accounting adjustment - interest expense reduction 181
 
(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. International Plaza's operations were consolidated through the January 2014 disposition date. Subsequent to the disposition, the Company's remaining 50.1% interest is accounted for under the equity method within Unconsolidated Joint Ventures. In addition, Arizona Mills' operations were accounted for under the equity method through the disposition in January 2014. The results of the centers sold to Starwood were consolidated through the October 2014 disposition.
 
(2) Nonoperating expense for the three months ended June 30, 2014 includes $5.7 million in connection with the discontinuation of hedge accounting related to the MacArthur interest rate swap and $0.4 million of disposition costs related to the sale of centers to Starwood.
 
(3) During the three months ended June 30, 2014, a reduction of $0.5 million to the tax on the gain on the disposition of interests in International Plaza was recognized.
       
TAUBMAN CENTERS, INC.
Table 3 - Income Statement
For the Six Months Ended June 30, 2015 and 2014                
(in thousands of dollars)
   
2015 2014
CONSOLIDATED BUSINESSES   UNCONSOLIDATED JOINT VENTURES (1) CONSOLIDATED BUSINESSES (1)   UNCONSOLIDATED JOINT VENTURES (1)
 
REVENUES:
Minimum rents 151,436 105,574 194,422 94,872
Percentage rents 4,007 3,450 5,756 3,157
Expense recoveries 89,932 63,251 123,912 54,627
Management, leasing, and development services 6,298 5,470
Other 9,289   7,513   15,203   4,863  
Total revenues 260,962 179,788 344,763 157,519
 
EXPENSES:
Maintenance, taxes, utilities, and promotion 66,740 44,271 96,771 39,992
Other operating 27,898 10,077 31,546 9,424
Management, leasing, and development services 2,541 2,981
General and administrative 23,980 23,124
Interest expense 28,306 42,022 51,564 36,029
Depreciation and amortization 50,419   27,869   71,968   22,792  
Total expenses 199,884 124,239 277,954 108,237
 
Nonoperating income (expense) (2) 2,702   5   (4,218 ) (3 )
63,780 55,554   62,591 49,279  
Income tax expense (1,526 ) (1,010 )
Equity in income of Unconsolidated Joint Ventures 31,079   26,743  
93,333 88,324
Gain on dispositions, net of tax (3)   476,887  
Net income 93,333 565,211
Net income attributable to noncontrolling interests:
Noncontrolling share of income of consolidated joint ventures (5,263 ) (5,370 )
Noncontrolling share of income of TRG (22,664 ) (156,865 )
Distributions to participating securities of TRG (985 ) (938 )
Preferred stock dividends (11,569 ) (11,569 )
Net income attributable to Taubman Centers, Inc. common shareowners 52,852   390,469  
 
 
SUPPLEMENTAL INFORMATION:
EBITDA - 100% (4) 142,505 125,445 672,743 108,100
EBITDA - outside partners' share (10,282 ) (55,028 ) (12,274 ) (47,526 )
Beneficial interest in EBITDA 132,223 70,417 660,469 60,574
Gain on dispositions (486,620 )
Beneficial interest expense (24,918 ) (22,768 ) (47,414 ) (19,799 )
Beneficial income tax expense - TRG and TCO (1,526 ) (1,010 )
Beneficial income tax expense - TCO 288 146
Non-real estate depreciation (1,635 ) (1,690 )
Preferred dividends and distributions (11,569 )   (11,569 )  
Funds from Operations attributable to partnership unitholders and participating securities of TRG 92,863   47,649   112,312   40,775  
 
STRAIGHTLINE AND PURCHASE ACCOUNTING ADJUSTMENTS:
Net straight-line adjustments to rental revenue, recoveries,
and ground rent expense at TRG % (373 ) 889 807 556
The Mall at Green Hills purchase accounting adjustments - minimum rents increase 180 391
El Paseo Village and The Gardens on El Paseo purchase accounting
adjustments - interest expense reduction 611 611
Waterside Shops purchase accounting adjustments - interest expense reduction 525 525
U.S. headquarters purchase accounting adjustment - interest expense reduction 182 242
 
(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. International Plaza's operations were consolidated through the January 2014 disposition date. Subsequent to the disposition, the Company's remaining 50.1% interest is accounted for under the equity method within Unconsolidated Joint Ventures. In addition, Arizona Mills' operations were accounted for under the equity method through the disposition in January 2014. The results of the centers sold to Starwood were consolidated through the October 2014 disposition.
 
(2) Nonoperating expense for the six months ended June 30, 2014 includes $5.7 million in connection with the discontinuation of hedge accounting related to the MacArthur interest rate swap and $0.4 million of disposition costs related to the sale of centers to Starwood.
 
(3) During the six months ended June 30, 2014, the gain on dispositions of interests in International Plaza, Arizona Mills, and land in Syosset, New York related to the former Oyster Bay project is net of income tax expense of $9.7 million.
 
(4) For the six months ended June 30, 2014, EBITDA includes the Company's $486.6 million (before tax) gain from the dispositions of interests in International Plaza, Arizona Mills, and land in Syosset, New York related to the former Oyster Bay project.
 
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 June 30, 2015 and 2014
(in thousands of dollars except as noted; may not add or recalculate due to rounding)
             
 
2015 2014
Shares Per Share Shares Per Share
Dollars /Units /Unit Dollars /Units /Unit
 
Net income attributable to TCO common shareowners - Basic 23,230 61,606,563 0.38 21,344 63,263,237 0.34
 
Add impact of share-based compensation 91   779,479   74   711,376  
 
Net income attributable to TCO common shareowners - Diluted 23,321 62,386,042 0.37 21,418 63,974,613 0.33
 
Add depreciation of TCO's additional basis 1,617 0.03 1,720 0.03
Add TCO's additional income tax expense 109     0.00   87     0.00  
 
Net income attributable to TCO common shareowners,
excluding step-up depreciation and additional income tax expense 25,047 62,386,042 0.40 23,225 63,974,613 0.36
 
Add noncontrolling share of income of TRG 10,153 25,063,389 9,203 25,145,571
Add distributions to participating securities of TRG 493   871,262   470   871,262  
 
Net income attributable to partnership unitholders
and participating securities 35,693 88,320,693 0.40 32,898 89,991,446 0.37
 
Add (less) depreciation and amortization:
Consolidated businesses at 100% 26,378 0.30 36,850 0.41
Depreciation of TCO's additional basis (1,617 ) (0.02 ) (1,720 ) (0.02 )
Noncontrolling partners in consolidated joint ventures (547 ) (0.01 ) (1,593 ) (0.02 )
Share of Unconsolidated Joint Ventures 8,502 0.10 6,854 0.08
Non-real estate depreciation (722 ) (0.01 ) (878 ) (0.01 )
 
Less gain on dispositions, net of tax (473 ) (0.01 )
Less impact of share-based compensation (91 )   (0.00 ) (74 )   (0.00 )
 
Funds from Operations attributable to partnership unitholders
and participating securities of TRG 67,596 88,320,693 0.77 71,864 89,991,446 0.80
 
TCO's average ownership percentage of TRG 71.1 % 71.6 %
 
Funds from Operations attributable to TCO's common shareowners,
excluding additional income tax expense 48,048 0.77 51,424 0.80
 
Less TCO's additional income tax expense (109 ) (0.00 ) (87 ) (0.00 )
 
Funds from Operations attributable to TCO's common shareowners 47,939   0.76   51,337   0.80  
 
Funds from Operations attributable to partnership unitholders
and participating securities of TRG 67,596 88,320,693 0.77 71,864 89,991,446 0.80
 
Beneficial share of disposition costs related to the Starwood sale

 
441 0.00
Beneficial share of discontinuation of hedge accounting - MacArthur       5,395     0.06  
 
Adjusted Funds from Operations attributable to partnership unitholders
and participating securities of TRG 67,596 88,320,693 0.77 77,700 89,991,446 0.86
 
TCO's average ownership percentage of TRG 71.1 % 71.6 %
 
Adjusted Funds from Operations attributable to TCO's common shareowners,
excluding additional income tax expense 48,048 0.77 55,600 0.86
 
Less TCO's additional income tax expense (109 ) (0.00 ) (87 ) (0.00 )
 
Adjusted Funds from Operations attributable to TCO's common shareowners 47,939   0.76   55,513   0.86  
 
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 Six Months Ended June 30, 2015 and 2014
(in thousands of dollars except as noted; may not add or recalculate due to rounding)
             
 
2015 2014
Shares Per Share Shares Per Share
Dollars /Units /Unit Dollars /Units /Unit
 
Net income attributable to TCO common shareowners - Basic 52,852 62,319,211 0.85 390,469 63,214,694 6.18
 
Add distributions to participating securities of TRG 938 871,262
Add impact of share-based compensation 196   837,491   2,618   748,053  
 
Net income attributable to TCO common shareowners - Diluted 53,048 63,156,702 0.84 394,025 64,834,009 6.08
 
Add depreciation of TCO's additional basis 3,234 0.05 3,440 0.05
Add TCO's additional income tax expense 288     0.00   146     0.00  
 
Net income attributable to TCO common shareowners,
excluding step-up depreciation and additional income tax expense 56,570 63,156,702 0.90 397,611 64,834,009 6.13
 
Add noncontrolling share of income of TRG 22,664 25,083,637 156,865 25,146,396
Add distributions to participating securities of TRG 985   871,262        
 
Net income attributable to partnership unitholders
and participating securities 80,219 89,111,601 0.90 554,476 89,980,405 6.16
 
Add (less) depreciation and amortization:
Consolidated businesses at 100% 50,419 0.57 71,968 0.80
Depreciation of TCO's additional basis (3,234 ) (0.04 ) (3,440 ) (0.04 )
Noncontrolling partners in consolidated joint ventures (1,631 ) (0.02 ) (2,754 ) (0.03 )
Share of Unconsolidated Joint Ventures 16,570 0.19 14,032 0.16
Non-real estate depreciation (1,635 ) (0.02 ) (1,690 ) (0.02 )
 
Less gain on dispositions, net of tax (476,887 ) (5.30 )
Less impact of share-based compensation (196 )   (0.00 ) (2,618 )   (0.03 )
 
Funds from Operations attributable to partnership unitholders
and participating securities of TRG 140,512 89,111,601 1.58 153,087 89,980,405 1.70
 
TCO's average ownership percentage of TRG 71.3 % 71.5 %
 
Funds from Operations attributable to TCO's common shareowners,
excluding additional income tax expense 100,197 1.58 109,519 1.70
 
Less TCO's additional income tax expense (288 ) (0.00 ) (146 ) (0.00 )
 
Funds from Operations attributable to TCO's common shareowners 99,909   1.57   109,373   1.70  
 
Funds from Operations attributable to partnership unitholders
and participating securities of TRG 140,512 89,111,601 1.58 153,087 89,980,405 1.70
 
Beneficial share of disposition costs related to the Starwood sale 441 0.00
Beneficial share of discontinuation of hedge accounting - MacArthur       5,395     0.06  
 
Adjusted Funds from Operations attributable to partnership unitholders
and participating securities of TRG 140,512 89,111,601 1.58 158,923 89,980,405 1.77
 
TCO's average ownership percentage of TRG 71.3 % 71.5 %
 
Adjusted Funds from Operations attributable to TCO's common shareowners,
excluding additional income tax expense 100,197 1.58 113,695 1.77
 
Less TCO's additional income tax expense (288 ) (0.00 ) (146 ) (0.00 )
 
Adjusted Funds from Operations attributable to TCO's common shareowners 99,909   1.57   113,549   1.76  
 
TAUBMAN CENTERS, INC.
Table 6 - Reconciliation of Net Income to Beneficial Interest in EBITDA and Adjusted Beneficial Interest in EBITDA
For the Periods Ended June 30, 2015 and 2014
(in thousands of dollars; amounts attributable to TCO may not recalculate due to rounding)
         
Three Months Ended Year to Date
2015 2014 2015 2014
 
Net income 42,333 39,054 93,333 565,211
 
Add (less) depreciation and amortization:
Consolidated businesses at 100% 26,378 36,850 50,419 71,968
Noncontrolling partners in consolidated joint ventures (547 ) (1,593 ) (1,631 ) (2,754 )
Share of Unconsolidated Joint Ventures 8,502 6,854 16,570 14,032
 
Add (less) interest expense and income tax expense:
Interest expense:
Consolidated businesses at 100% 14,781 25,434 28,306 51,564
Noncontrolling partners in consolidated joint ventures (1,734 ) (2,086 ) (3,388 ) (4,150 )
Share of Unconsolidated Joint Ventures 11,405 9,955 22,768 19,799
Income tax expense:
Income tax expense on dispositions of International Plaza, Arizona Mills, and Oyster Bay (473 ) 9,733
Other income tax expense 688 311 1,526 1,010
 
Less noncontrolling share of income of consolidated joint ventures (2,672 ) (2,252 ) (5,263 ) (5,370 )
 
Beneficial interest in EBITDA 99,134 112,054 202,640 721,043
 
TCO's average ownership percentage of TRG 71.1 % 71.6 % 71.3 % 71.5 %
 
Beneficial interest in EBITDA attributable to TCO 70,466   80,183   144,493   515,761  
 
 
Beneficial interest in EBITDA 99,134 112,054 202,640 721,043
 
Add (less):
Gain on dispositions (486,620 )
Beneficial share of disposition costs related to the Starwood sale 441 441
Beneficial share of discontinuation of hedge accounting - MacArthur   5,395     5,395  
 
Adjusted Beneficial interest in EBITDA 99,134 117,890 202,640 240,259
 
TCO's average ownership percentage of TRG 71.1 % 71.6 % 71.3 % 71.5 %
 
Adjusted Beneficial interest in EBITDA attributable to TCO 70,466   84,359   144,493   171,883  
 
TAUBMAN CENTERS, INC.
Table 7 - Reconciliation of Net Income to Net Operating Income (NOI)
For the Periods Ended June 30, 2015, 2014, and 2013
(in thousands of dollars)
     
Three Months Ended Three Months Ended Year to Date Year to Date
2015 2014 2014 2013 2015 2014 2014 2013
 
Net income 42,333 39,054 39,054 33,603 93,333 565,211 565,211 79,959
 
Add (less) depreciation and amortization:
Consolidated businesses at 100% 26,378 36,850 36,850 38,258 50,419 71,968 71,968 75,280
Noncontrolling partners in consolidated joint ventures (547 ) (1,593 ) (1,593 ) (1,368 ) (1,631 ) (2,754 ) (2,754 ) (2,484 )
Share of Unconsolidated Joint Ventures 8,502 6,854 6,854 5,864 16,570 14,032 14,032 12,173
 
Add (less) interest expense and income tax expense:
Interest expense:
Consolidated businesses at 100% 14,781 25,434 25,434 32,622 28,306 51,564 51,564 67,074
Noncontrolling partners in consolidated joint ventures (1,734 ) (2,086 ) (2,086 ) (2,214 ) (3,388 ) (4,150 ) (4,150 ) (4,377 )
Share of Unconsolidated Joint Ventures 11,405 9,955 9,955 9,401 22,768 19,799 19,799 18,777
Income tax expense:
Income tax expense on dispositions of International Plaza, Arizona Mills, and Oyster Bay (473 ) (473 ) 9,733 9,733
Other income tax expense 688 311 311 234 1,526 1,010 1,010 1,262
 
Less noncontrolling share of income of consolidated joint ventures (2,672 ) (2,252 ) (2,252 ) (1,773 ) (5,263 ) (5,370 ) (5,370 ) (4,554 )
 
Add EBITDA attributable to outside partners:
EBITDA attributable to noncontrolling partners in consolidated joint ventures 4,953 5,931 5,931 5,355 10,282 12,274 12,274 11,415
EBITDA attributable to outside partners in Unconsolidated Joint Ventures 26,541   24,319   24,319   20,877   55,028   47,526   47,526   41,091  
 
EBITDA at 100% 130,628 142,304 142,304 140,859 267,950 780,843 780,843 295,616
 
Add (less) items excluded from shopping center NOI:
General and administrative expenses 12,055 11,587 11,587 12,628 23,980 23,124 23,124 24,864
Management, leasing, and development services, net (1,930 ) (1,269 ) (1,269 ) (700 ) (3,757 ) (2,489 ) (2,489 ) (2,056 )
Straight-line of rents (1,378 ) (1,243 ) (1,243 ) (1,158 ) (2,098 ) (2,287 ) (2,287 ) (2,614 )
Gain on dispositions (486,620 ) (486,620 )
Disposition costs related to the Starwood sale 441 441 441 441
Discontinuation of hedge accounting - MacArthur 5,678 5,678 5,678 5,678
Gain on sale of peripheral land (863 )
Gain on sale of marketable securities (1,323 )
Dividend income (885 ) (612 ) (612 ) (1,711 ) (836 ) (836 )
Interest income (553 ) (181 ) (181 ) (42 ) (1,219 ) (308 ) (308 ) (101 )
Other nonoperating (income) expense (15 ) 223 (754 ) (754 )
Non-center specific operating expenses and other 5,961   5,211   5,211   6,924   10,309   8,959   8,959   10,516  
 
NOI - all centers at 100% 143,883 161,916 161,916 158,511 293,677 325,751 325,751 324,039
 
Less - NOI of non-comparable centers (5,997 ) (1) (23,505 ) (2) (22,015 ) (3) (28,449 ) (4) (11,152 ) (1) (49,976 ) (5) (46,981 ) (6) (57,782 ) (4)
 
NOI at 100% - comparable centers 137,886   138,411   139,901   130,062   282,525   275,775   278,770   266,257  
 
NOI - growth % -0.4 % 7.6 % 2.4 % 4.7 %
 
NOI at 100% - comparable centers 137,886 138,411 139,901 130,062 282,525 275,775 278,770 266,257
 
Lease cancellation income (321 ) (4,146 ) (4,146 ) (309 ) (4,403 ) (5,999 ) (5,999 ) (2,000 )
 
NOI at 100% - comparable centers excluding lease cancellation income 137,565   134,265   135,755   129,753   278,122   269,776   272,771   264,257  
 
NOI at 100% excluding lease cancellation income - growth % 2.5 % 4.6 % 3.1 % 3.2 %
 
(1) Includes The Mall of San Juan and The Mall at University Town Center.
(2) Includes the portfolio of centers sold to Starwood and an adjustment to reflect the allocation of costs to Starwood centers that are now being allocated to the remainder of the portfolio.
(3) Includes the portfolio of centers sold to Starwood and Taubman Prestige Outlets Chesterfield.
(4) Includes the portfolio of centers sold to Starwood and Arizona Mills.
(5) Includes the portfolio of centers sold to Starwood and Arizona Mills for the approximately one-month period prior to its disposition. Includes an adjustment to reflect the allocation of costs to Starwood centers that are now being allocated to the remainder of the portfolio.
(6) Includes the portfolio of centers sold to Starwood, Taubman Prestige Outlets Chesterfield, and Arizona Mills for the approximately one-month period prior to its disposition.
 
TAUBMAN CENTERS, INC.
Table 8 - Balance Sheets
As of June 30, 2015 and December 31, 2014
(in thousands of dollars)
      As of
June 30, 2015   December 31, 2014
Consolidated Balance Sheet of Taubman Centers, Inc.:
 
Assets:
Properties 3,467,620 3,262,505
Accumulated depreciation and amortization (1,010,571 ) (970,045 )
2,457,049 2,292,460
Investment in Unconsolidated Joint Ventures 412,377 370,004
Cash and cash equivalents 42,328 276,423
Restricted cash 16,917 37,502
Accounts and notes receivable, net 41,190 49,245
Accounts receivable from related parties 2,754 832
Deferred charges and other assets 206,662   188,435  
3,179,277   3,214,901  
 
Liabilities:
Notes payable 2,212,461 2,025,505
Accounts payable and accrued liabilities 303,878 292,802
Distributions in excess of investments in and net income of
Unconsolidated Joint Ventures 474,449   476,651  
2,990,788 2,794,958
Equity:
Taubman Centers, Inc. Shareowners' Equity:
Series B Non-Participating Convertible Preferred Stock 25 25
Series J Cumulative Redeemable Preferred Stock
Series K Cumulative Redeemable Preferred Stock
Common Stock 609 633
Additional paid-in capital 678,883 815,961
Accumulated other comprehensive income (loss) (19,284 ) (15,068 )
Dividends in excess of net income (500,344 ) (483,188 )
159,889 318,363
Noncontrolling interests:
Noncontrolling interests in consolidated joint ventures (22,912 ) (14,796 )
Noncontrolling interests in partnership equity of TRG 51,512   116,376  
28,600   101,580  
188,489   419,943  
3,179,277   3,214,901  
 
 
Combined Balance Sheet of Unconsolidated Joint Ventures (1):
 
Assets:
Properties 1,601,636 1,580,926
Accumulated depreciation and amortization (568,755 ) (548,646 )
1,032,881 1,032,280
Cash and cash equivalents 29,252 49,765
Accounts and notes receivable, net 35,695 38,788
Deferred charges and other assets 41,079   33,200  
1,138,907   1,154,033  
 
Liabilities:
Notes payable 2,006,424 1,989,546
Accounts payable and other liabilities 68,735   103,161  
2,075,159 2,092,707
 
Accumulated Deficiency in Assets:
Accumulated deficiency in assets - TRG (518,775 ) (520,714 )
Accumulated deficiency in assets - Joint Venture Partners (407,553 ) (407,870 )
Accumulated other comprehensive loss - TRG (4,962 ) (5,045 )
Accumulated other comprehensive loss - Joint Venture Partners (4,962 ) (5,045 )
(936,252 ) (938,674 )
1,138,907   1,154,033  
 
(1) Unconsolidated Joint Venture amounts exclude the balances of entities that own interests in projects that are currently under development.
 
TAUBMAN CENTERS, INC.
Table 9 - Annual Guidance
(all dollar amounts per common share on a diluted basis; amounts may not add due to rounding)
     
     
Range for Year Ended
December 31, 2015
 
Funds from Operations per common share 3.28 3.36
 
Real estate depreciation - TRG (1.50 ) (1.45 )
 
Distributions to participating securities of TRG (0.02 ) (0.02 )
 
Depreciation of TCO's additional basis in TRG (0.10 ) (0.10 )
 
Net income attributable to common shareowners, per common share (EPS) 1.65   1.78  
 

View source version on businesswire.com: http://www.businesswire.com/news/home/20150730006620/en/

Copyright Business Wire 2010