TAUBMAN CENTERS, INC. BLOOMFIELD HILLS, Mich., July 30, 2014 /PRNewswire/ -- Taubman Centers, Inc. (NYSE: TCO) today reported financial results for the second quarter of 2014.
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June 30, 2014 June 30, 2013 June 30, 2014 June 30, 2013
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
----- ----- ----- -----
Net income allocable to common shareholders (EPS) per diluted share $0.33 $0.28 $6.08 $0.71
------------------------------------------------------------------- ----- ----- ----- -----
Funds from Operations (FFO) per diluted $0.80 $0.75 $1.70 $1.65
share
Growth rate 6.7% 3.0%
----------- --- ---
Adjusted Funds from Operations (Adjusted FFO) per diluted share(1) $0.86 $0.75 $1.76 $1.65
Growth rate 14.7% 6.7%
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(1) Adjusted FFO for the three and six months ended June 30, 2014 excludes charges related to the expected sale of seven centers to Starwood Capital Group.
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"We're pleased to announce strong results for the quarter. FFO increased 6.7 percent, and 14.7 percent on an adjusted basis. Our results benefited from increased rents and recoveries, and reduced interest and operating expenses. Lease cancellation income was also higher," said Robert S. Taubman, chairman, president and chief executive officer of Taubman Centers.
"During the quarter we announced an agreement to sell a portfolio of seven malls. The sale is part of our ongoing strategy to recycle capital. It's a transformative opportunity that will significantly enhance NOI growth and create net asset value for our investors over time."
Operating Statistics
Comparable center NOI excluding lease cancellation income was up 4.5 percent in the quarter, bringing year-to-date growth to 3.2 percent. Excluding the company's assets that are currently held for sale, comparable center NOI excluding lease cancellation income was up 4.6 percent in the quarter.
Average rent per square foot for the second quarter of 2014 was $51.46, up 3.7 percent from $49.61 in the comparable period last year. Excluding the company's assets that are currently held for sale, average rent per square foot for the quarter was $60.88, up 5.3 percent.
Trailing twelve month releasing spreads per square foot for the period ended June 30, 2014 were 15.4 percent. Excluding the company's assets that are currently held for sale, spreads were 23.1 percent.
Ending occupancy - excluding temporary tenants - in comparable centers was 90.1 percent on June 30, 2014, down 0.5 percent from 90.6 percent on June 30, 2013. Excluding the company's assets that are currently held for sale, ending occupancy in comparable centers was 91.6 percent, down 1 percent.
Mall tenant sales per square foot were down 0.8 percent from the second quarter of 2013. This brings the company's 12-month trailing mall tenant sales per square foot to $707, a 0.9 percent decline from the 12-months ended June 30, 2013. Excluding the company's assets that are currently held for sale, mall tenant sales per square foot were down 1.2 percent from the second quarter of 2013, bringing the 12-month trailing mall tenant sales per square foot to $806, a 0.7 percent decline from the 2013 comparable period.
"A number of categories, like home furnishings, jewelry, and food, continue to be strong," said Mr. Taubman. "Electronics continue to struggle; excluding them, growth in the quarter and for the last twelve months would have been positive."
Sale of Seven Malls Announced
In June, the company announced the sale of seven malls to Starwood Capital Group. The transaction is expected to close in the fourth quarter of 2014. The malls held for sale are:
-- MacArthur Center (Norfolk, Va.)
-- Stony Point Fashion Park (Richmond, Va.)
-- Northlake Mall (Charlotte, N.C.)
-- The Mall at Wellington Green (Wellington, Fla.)
-- The Shops at Willow Bend (Plano, Tex.)
-- The Mall at Partridge Creek (Clinton Township, Mich.)
-- Fairlane Town Center (Dearborn, Mich.)
Total consideration, before transaction costs, will be $1.405 billion. See Taubman To Sell Seven Malls To Starwood Capital Group - June 18, 2014.
The Mall at University Town Center to Open October 16, 2014
The grand opening of The Mall at University Town Center (Sarasota, Fla.) is scheduled for 10:00 a.m. on Thursday, October 16, 2014. The center, with its unique-to-market merchandising, will feature more than 100 specialty stores, a premier collection of restaurants and will be anchored by Saks Fifth Avenue, Dillard's, and Macy's. The center will be over 90 percent leased at opening. "University Town Center will be the leading shopping and dining destination in the significantly underserved Sarasota market," said Mr. Taubman.
2014 Guidance (including the full year operations of assets currently held for sale)
The company's Adjusted FFO and EPS guidance excludes the impact of the company's sale of seven assets, which is expected to close in the fourth quarter. The company expects its 2014 Adjusted FFO to be in the range of $3.72 to $3.82 per diluted share, unchanged from the company's previous FFO guidance.
2014 EPS is expected to be in the range of $7.33 to $7.48. 2014 EPS includes $5.30 per share gains from the first quarter 2014 sales of the company's 50 percent interest in Arizona Mills, land in Syosset, New York, and a 49.9 percent interest in International Plaza. 2014 EPS also includes a charge recognized in the second quarter for the discontinuation of hedge accounting on an interest rate swap related to a center now held for sale.
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 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 and Redevelopment
-- Dispositions
-- Capital Spending
-- Operational Statistics
-- Operational Statistics - Proforma Statistics Excluding Centers Expected
to be Sold to Starwood Capital Group
-- 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 Thursday, July 31 to discuss these results, business conditions and the company's outlook for the remainder of 2014. The conference call will be simulcast at www.taubman.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 27 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 six properties in the U.S. and Asia totaling 5.6 million square feet. Taubman Centers is headquartered in Bloomfield Hills, Mich. and Taubman Asia is headquartered in Hong Kong. Founded in 1950, Taubman has more than 60 years of experience in the shopping center industry. 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 that the conditions to one or more transaction closings may not be satisfied, the occurrence of any event, change or other circumstances that could give rise to the termination of the sale agreements with respect to any or all of the seven centers, and general economic conditions. 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, 2014 and 2013
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(in thousands of dollars, except as indicated)
Three Months Ended Year to Date
------------------ ------------
2014 2013 2014 2013
---- ---- ---- ----
Net income 39,054 33,603 565,211 79,959
Noncontrolling share of income of consolidated joint ventures (2,252) (1,773) (5,370) (4,554)
Noncontrolling share of income of TRG (9,203) (7,788) (156,865) (19,577)
Preferred stock dividends (5,785) (5,764) (11,569) (9,364)
Distributions to participating securities of TRG (470) (436) (938) (878)
Net income attributable to Taubman Centers, Inc. common shareowners 21,344 17,842 390,469 45,586
Net income per common share - basic 0.34 0.28 6.18 0.72
Net income per common share - diluted 0.33 0.28 6.08 0.71
Beneficial interest in EBITDA - Combined (1) 112,054 114,627 721,043 243,110
Adjusted Beneficial interest in EBITDA- Combined (1) 117,890 114,627 240,259 243,110
Funds from Operations(1) 71,864 68,209 153,087 149,722
Funds from Operations attributable to TCO (1) 51,337 48,750 109,373 106,954
Funds from Operations per common share - basic(1) 0.81 0.76 1.73 1.68
Funds from Operations per common share - diluted (1) 0.80 0.75 1.70 1.65
Adjusted Funds from Operations (1) 77,700 68,209 158,923 149,722
Adjusted Funds from Operations attributable to TCO (1) 55,513 48,750 113,549 106,954
Adjusted Funds from Operations per common share- basic(1) 0.88 0.76 1.80 1.68
Adjusted Funds from Operations per common share- diluted (1) 0.86 0.75 1.76 1.65
Weighted average number of common shares outstanding - basic 63,263,237 63,786,083 63,214,694 63,602,025
Weighted average number of common shares outstanding - diluted 63,974,613 64,842,511 64,834,009 64,707,684
Common shares outstanding at end of period 63,263,470 63,816,192
Weighted average units - Operating Partnership - basic 88,408,808 89,013,712 88,361,090 88,887,990
Weighted average units - Operating Partnership - diluted 89,991,446 90,941,402 89,980,405 90,864,911
Units outstanding at end of period - Operating Partnership 88,408,920 89,013,714
Ownership percentage of the Operating Partnership at end of period 71.6% 71.7%
Number of owned shopping centers at end of period 24 24 24 24
Operating Statistics:
Net Operating Income excluding lease cancellation income - growth % (1)(2) 4.5% 3.9% 3.2% 4.5%
Mall tenant sales - all centers (3) 1,358,891 1,406,196 2,694,185 2,860,984
Mall tenant sales - comparable (2)(3) 1,350,526 1,366,953 2,679,976 2,779,351
Ending occupancy - all centers 89.4% 90.7% 89.4% 90.7%
Ending occupancy - comparable(2) 90.1% 90.6% 90.1% 90.6%
Average occupancy - all centers 89.6% 90.7% 89.9% 90.6%
Average occupancy - comparable (2) 90.2% 90.5% 90.5% 90.5%
Leased space - all centers 91.9% 92.6% 91.9% 92.6%
Leased space - comparable(2) 92.3% 92.3% 92.3% 92.3%
All centers:
Mall tenant occupancy costs as a percentage of tenant sales - Consolidated Businesses (3) 14.2% 13.7% 14.6% 13.7%
Mall tenant occupancy costs as a percentage of tenant sales - Unconsolidated Joint Ventures (3) 14.2% 13.6% 13.9% 12.7%
Mall tenant occupancy costs as a percentage of tenant sales - Combined (3) 14.2% 13.6% 14.3% 13.4%
Comparable centers:
Mall tenant occupancy costs as a percentage of tenant sales - Consolidated Businesses (2)(3) 14.3% 13.7% 14.6% 13.7%
Mall tenant occupancy costs as a percentage of tenant sales - Unconsolidated Joint Ventures (2)(3) 14.2% 13.4% 13.9% 12.6%
Mall tenant occupancy costs as a percentage of tenant sales - Combined (2)(3) 14.2% 13.6% 14.4% 13.4%
Average rent per square foot - Consolidated Businesses (2) 48.53 48.43 48.21 48.03
Average rent per square foot - Unconsolidated Joint Ventures (2) 58.06 53.08 56.99 51.93
Average rent per square foot - Combined (2) 51.46 49.61 50.84 49.01
Proforma Operating Statistics Excluding Centers Expected to be Sold to Starwood Capital Group (4):
Net Operating Income excluding lease cancellation income - growth % (1)(4) 4.6% 3.2%
Mall tenant occupancy costs as a percentage of tenant sales - Combined (3)(4) 14.3% 13.5% 14.4% 13.3%
Ending occupancy - comparable(4) 91.6% 92.6% 91.6% 92.6%
Average rent per square foot - Combined (4) 60.88 57.79 60.00 57.03
(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 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 expected sale of seven centers to Starwood Capital Group announced in June 2014. 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 expected sale
of centers. In addition, for the six month period 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.
(2) Statistics exclude non-comparable centers. In 2014 and 2013, non-comparable centers are Taubman Prestige Outlets
Chesterfield and Arizona Mills.
(3) Based on reports of sales furnished by mall tenants.
(4) Statistics exclude non-comparable centers. The June 30, 2013 statistics have been restated to include comparable centers
to 2014. In addition, the statistics have been further adjusted to exclude the portfolio of seven centers expected to be
sold in the fourth quarter of 2014.
TAUBMAN CENTERS, INC.
Table 2 - Income Statement
For the Three Months Ended June 30, 2014 and 2013
-------------------------------------------------
(in thousands of dollars)
2014 2013
---- ----
CONSOLIDATED BUSINESSES UNCONSOLIDATED JOINT CONSOLIDATED BUSINESSES UNCONSOLIDATED JOINT
VENTURES (1) VENTURES (1)
----------- -----------
REVENUES:
Minimum rents 96,532 48,364 103,233 42,076
Percentage rents 1,094 1,103 1,083 1,429
Expense recoveries 61,203 27,591 65,569 24,600
Management, leasing, and development services 2,965 1,819
Other 8,191 3,236 6,483 1,669
-----
Total revenues 169,985 80,294 178,187 69,774
EXPENSES:
Maintenance, taxes, utilities, and promotion 48,830 19,989 52,762 17,975
Other operating 16,050 4,497 18,492 4,168
Management, leasing, and development services 1,696 1,119
General and administrative 11,587 12,628
Interest expense 25,434 18,137 32,622 16,994
Depreciation and amortization 36,850 11,092 38,258 9,187
Total expenses 140,447 53,715 155,881 48,324
Nonoperating income (expense)(2) (5,321) (5) 50 (8)
------ --- --- ---
24,217 26,574 22,356 21,442
====== ======
Income tax expense (311) (234)
Equity in income of Unconsolidated Joint Ventures 14,675 11,481
------
38,581 33,603
Gain on dispositions, net of tax (3) 473
Net income 39,054 33,603
Net income attributable to noncontrolling interests:
Noncontrolling share of income of consolidated joint ventures (2,252) (1,773)
Noncontrolling share of income of TRG (9,203) (7,788)
Distributions to participating securities of TRG (470) (436)
Preferred stock dividends (5,785) (5,764)
Net income attributable to Taubman Centers, Inc. common shareowners 21,344 17,842
====== ======
SUPPLEMENTAL INFORMATION:
EBITDA - 100% 86,501 55,803 93,236 47,623
EBITDA - outside partners' share (5,931) (24,319) (5,355) (20,877)
----------------
Beneficial interest in EBITDA 80,570 31,484 87,881 26,746
Beneficial interest expense (23,348) (9,955) (30,408) (9,401)
Beneficial income tax expense - TRG and TCO (311) (234)
Beneficial income tax expense - TCO 87 128
Non-real estate depreciation (878) (739)
Preferred dividends and distributions (5,785) (5,764)
Funds from Operations contribution 50,335 21,529 50,864 17,345
================
STRAIGHTLINE AND PURCHASE ACCOUNTING ADJUSTMENTS:
Net straight-line adjustments to rental revenue, recoveries,
and ground rent expense at TRG % 403 393 777 122
Green Hills purchase accounting adjustments -minimum rents
increase 199 200
Green Hills, El Paseo Village, and Gardens on El Paseo purchase
accounting
adjustments - interest expense reduction 305 858
Waterside Shops purchase accounting adjustments -interest expense
reduction 263 263
Taubman BHO 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 disposition date. Subsequent to the disposition, the Company's remaining 50.1% interest is
accounted for under the equity method of accounting within Unconsolidated Joint Ventures. In addition, Arizona Mills' operations were accounted for under equity
method accounting through the disposition in January 2014.
(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 in connection with the pending sale and $0.4 million of disposition costs related to the expected sale of centers to Starwood
Capital Group.
(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, 2014 and 2013
-----------------------------------------------
(in thousands of dollars)
2014 2013
---- ----
CONSOLIDATED BUSINESSES UNCONSOLIDATED CONSOLIDATED BUSINESSES UNCONSOLIDATED
JOINT VENTURES (1) JOINT VENTURES (1)
----------------- -----------------
REVENUES:
Minimum rents 194,422 94,872 205,542 82,147
Percentage rents 5,756 3,157 6,711 3,626
Expense recoveries 123,912 54,627 129,606 48,184
Management, leasing, and development services 5,470 5,201
Other 15,203 4,863 14,384 3,368
-----
Total revenues 344,763 157,519 361,444 137,325
EXPENSES:
Maintenance, taxes, utilities, and promotion 96,771 39,992 99,319 35,186
Other operating 31,546 9,424 34,655 8,271
Management, leasing, and development services 2,981 3,145
General and administrative 23,124 24,864
Interest expense 51,564 36,029 67,074 33,928
Depreciation and amortization 71,968 22,792 75,280 19,258
----------------
Total expenses 277,954 108,237 304,337 96,643
Nonoperating income (expense) (2) (4,218) (3) 2,287
------ --- -----
62,591 49,279 59,394 40,682
====== ======
Income tax expense (1,010) (1,262)
Equity in income of Unconsolidated Joint Ventures 26,743 21,827
------ ------
88,324 79,959
Gain on dispositions, net of tax (3) 476,887
-------
Net income attributable to noncontrolling interests: 565,211 79,959
Noncontrolling share of income of consolidated joint
ventures (5,370) (4,554)
Noncontrolling share of income of TRG (156,865) (19,577)
Distributions to participating securities of TRG (938) (878)
Preferred stock dividends (11,569) (9,364)
------- ------
Net income attributable to Taubman Centers, Inc. common shareowners 390,469 45,586
======= ======
SUPPLEMENTAL INFORMATION:
EBITDA - 100% (4) 672,743 108,100 201,748 93,868
EBITDA - outside partners' share (12,274) (47,526) (11,415) (41,091)
----------------
Beneficial interest in EBITDA 660,469 60,574 190,333 52,777
Gain on dispositions (486,620)
Beneficial interest expense (47,414) (19,799) (62,697) (18,777)
Beneficial income tax expense - TRG and TCO (1,010) (1,262)
Beneficial income tax expense - TCO 146 161
Non-real estate depreciation (1,690) (1,449)
Preferred dividends and distributions (11,569) (9,364)
----------------
Funds from Operations contribution 112,312 40,775 115,722 34,000
================
STRAIGHTLINE AND PURCHASE ACCOUNTING ADJUSTMENTS:
Net straight-line adjustments to rental revenue,
recoveries,
and ground rent expense at TRG % 824 539 1,800 225
Green Hills purchase accounting adjustments -minimum
rents increase 391 404
Green Hills, El Paseo Village, and Gardens on El
Paseo purchase accounting
adjustments - interest expense reduction 611 1,715
Waterside Shops purchase accounting adjustments -
interest expense reduction 525 525
Taubman BHO headquarters purchase accounting
adjustment -
interest expense reduction 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
disposition date. Subsequent to the disposition, the Company's remaining 50.0% interest is accounted for under the equity method of
accounting within Unconsolidated Joint Ventures. In addition, Arizona Mills' operations were accounted for under equity method accounting
through the disposition in January 2014.
(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 in connection with the pending sale and $0.4 million of disposition costs related
to the expected sale of centers to Starwood Capital Group.
(3) During the six months ended June 30, 2013, the gain on dispositions of interest 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 interest 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, 2014 and 2013
-------------------------------------------------
(in thousands of dollars except as noted; may not add or recalculate due to rounding)
2014 2013
---- ----
Shares Per Share Shares Per Share
Dollars /Units /Unit Dollars /Units /Unit
------- ------ ----- ------- ------ -----
Net income attributable to TCO common shareowners - Basic 21,344 63,263,237 0.34 17,842 63,786,083 0.28
Add impact of share-based compensation 74 711,376 92 1,056,428
--- ------- --- ---------
Net income attributable to TCO common shareowners - Diluted 21,418 63,974,613 0.33 17,934 64,842,511 0.28
Add depreciation of TCO's additional basis 1,720 0.03 1,720 0.03
Add TCO's additional income tax expense 87 0.00 128 0.00
--- ---- --- ----
Net income attributable to TCO common shareowners,
excluding step-up depreciation and additional income tax
expense 23,225 63,974,613 0.36 19,782 64,842,511 0.31
Add:
Noncontrolling share of income of TRG 9,203 25,145,571 7,788 25,227,629
Distributions to participating securities of TRG 470 871,262 436 871,262
Net income attributable to partnership unitholders
and participating securities 32,898 89,991,446 0.37 28,006 90,941,402 0.31
Add (less) depreciation and amortization:
Consolidated businesses at 100% 36,850 0.41 38,258 0.42
Depreciation of TCO's additional basis (1,720) (0.02) (1,720) (0.02)
Noncontrolling partners in consolidated joint ventures (1,593) (0.02) (1,368) (0.02)
Share of Unconsolidated Joint Ventures 6,854 0.08 5,864 0.06
Non-real estate depreciation (878) (0.01) (739) (0.01)
Less gain on dispositions, net of tax (473) (0.01)
Less impact of share-based compensation (74) (0.00) (92) (0.00)
--- ----- --- -----
Funds from Operations 71,864 89,991,446 0.80 68,209 90,941,402 0.75
TCO's average ownership percentage of TRG 71.6% 71.7%
---- ----
Funds from Operations attributable to TCO,
excluding additional income tax expense 51,424 0.80 48,878 0.75
Less TCO's additional income tax expense (87) (0.00) (128) (0.00)
--- ----- ---- -----
Funds from Operations attributable to TCO 51,337 0.80 48,750 0.75
====== ==== ====== ====
Funds from Operations 71,864 89,991,446 0.80 68,209 90,941,402 0.75
Disposition costs related to the pending Starwood sale 441 0.00
Discontinuation of hedge accounting - MacArthur 5,395 0.06
----- ----
Adjusted Funds from Operations 77,700 89,991,446 0.86 68,209 90,941,402 0.75
TCO's average ownership percentage of TRG 71.6% 71.7%
---- ----
Adjusted Funds from Operations attributable to TCO,
excluding additional income tax expense 55,600 0.86 48,878 0.75
Less TCO's additional income tax expense (87) (0.00) (128) (0.00)
--- ----- ---- -----
Adjusted Funds from Operations attributable to TCO 55,513 0.86 48,750 0.75
====== ==== ====== ====
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, 2014 and 2013
-----------------------------------------------
(in thousands of dollars except as noted; may not add or recalculate due to rounding)
2014 2013
---- ----
Shares Per Share Shares Per Share
Dollars /Units /Unit Dollars /Units /Unit
------- ------ ----- ------- ------ -----
Net income attributable to TCO common shareowners - Basic 390,469 63,214,694 6.18 45,586 63,602,025 0.72
Add distributions to participating securities of TRG 938 871,262
Add impact of share-based compensation 2,618 748,053 245 1,105,659
----- ------- --- ---------
Net income attributable to TCO common shareowners - Diluted 394,025 64,834,009 6.08 45,831 64,707,684 0.71
Add depreciation of TCO's additional basis 3,440 0.05 3,440 0.05
Add TCO's additional income tax expense 146 0.00 161 0.00
--- ---- --- ----
Net income attributable to TCO common shareowners,
excluding step-up depreciation and additional income tax
expense 397,611 64,834,009 6.13 49,432 64,707,684 0.76
Add:
Noncontrolling share of income of TRG 156,865 25,146,396 19,577 25,285,965
Distributions to participating securities of TRG 878 871,262
Net income attributable to partnership unitholders
and participating securities 554,476 89,980,405 6.16 69,887 90,864,911 0.77
Add (less) depreciation and amortization:
Consolidated businesses at 100% 71,968 0.80 75,280 0.83
Depreciation of TCO's additional basis (3,440) (0.04) (3,440) (0.04)
Noncontrolling partners in consolidated joint ventures (2,754) (0.03) (2,484) (0.03)
Share of Unconsolidated Joint Ventures 14,032 0.16 12,173 0.13
Non-real estate depreciation (1,690) (0.02) (1,449) (0.02)
Less gain on dispositions, net of tax (476,887) (5.30)
Less impact of share-based compensation (2,618) (0.03) (245) (0.00)
------ ----- ---- -----
Funds from Operations 153,087 89,980,405 1.70 149,722 90,864,911 1.65
TCO's average ownership percentage of TRG 71.5% 71.6%
---- ----
Funds from Operations attributable to TCO,
excluding additional income tax expense 109,519 1.70 107,115 1.65
Less TCO's additional income tax expense (146) (0.00) (161) (0.00)
---- ----- ---- -----
Funds from Operations attributable to TCO 109,373 1.70 106,954 1.65
======= ==== ======= ====
Funds from Operations 153,087 89,980,405 1.70 149,722 90,864,911 1.65
Disposition costs related to the pending Starwood sale 441 0.00
Discontinuation of hedge accounting - MacArthur 5,395 0.06
----- ----
Adjusted Funds from Operations 158,923 89,980,405 1.77 149,722 90,864,911 1.65
TCO's average ownership percentage of TRG 71.5% 71.6%
---- ----
Adjusted Funds from Operations attributable to TCO,
excluding additional income tax expense 113,695 1.77 107,115 1.65
Less TCO's additional income tax expense (146) (0.01) (161) (0.00)
---- ----- ---- -----
Adjusted Funds from Operations attributable to TCO 113,549 1.76 106,954 1.65
======= ==== ======= ====
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, 2014 and 2013
--------------------------------------------
(in thousands of dollars; amounts attributable to TCO may not recalculate due to rounding)
Three Months Ended Year to Date
------------------ ------------
2014 2013 2014 2013
---- ---- ---- ----
Net income 39,054 33,603 565,211 79,959
Add (less) depreciation and amortization:
Consolidated businesses at 100% 36,850 38,258 71,968 75,280
Noncontrolling partners in consolidated joint
ventures (1,593) (1,368) (2,754) (2,484)
Share of Unconsolidated Joint Ventures 6,854 5,864 14,032 12,173
Add (less) interest expense and income tax expense:
Interest expense:
Consolidated businesses at 100% 25,434 32,622 51,564 67,074
Noncontrolling partners in consolidated joint ventures (2,086) (2,214) (4,150) (4,377)
Share of Unconsolidated Joint Ventures 9,955 9,401 19,799 18,777
Income tax expense:
Income tax expense on dispositions (473) 9,733
Other income tax expense 311 234 1,010 1,262
Less noncontrolling share of income of consolidated joint ventures (2,252) (1,773) (5,370) (4,554)
------ ------ ------ ------
Beneficial Interest in EBITDA 112,054 114,627 721,043 243,110
TCO's average ownership percentage of TRG 71.6% 71.7% 71.5% 71.6%
---- ---- ---- ----
Beneficial Interest in EBITDA attributable to TCO 80,183 82,140 515,761 173,936
====== ====== ======= =======
Beneficial Interest in EBITDA 112,054 114,627 721,043 243,110
Disposition costs related to the pending Starwood
sale 441 441
Discontinuation of hedge accounting - MacArthur 5,395 5,395
Gain on dispositions (486,620)
Adjusted Beneficial Interest in EBITDA 117,890 114,627 240,259 243,110
TCO's average ownership percentage of TRG 71.6% 71.7% 71.5% 71.6%
---- ---- ---- ----
Adjusted Beneficial Interest in EBITDA attributable to TCO 84,359 82,140 171,883 173,936
====== ====== ======= =======
TAUBMAN CENTERS, INC.
Table 7 - Reconciliation of Net Income to Net Operating Income (NOI)
For the Periods Ended June 30, 2014, 2013, and 2012
---------------------------------------------------
(in thousands of dollars)
Three Months Ended Three Months Ended Year to Date Year to Date
------------------ ------------------ ------------ ------------
2014 2013 2013 2012 2014 2013 2013 2012
---- ---- ---- ---- ---- ---- ---- ----
Net income 39,054 33,603 33,603 31,448 565,211 79,959 79,959 63,625
Add (less) depreciation and amortization:
Consolidated businesses at 100% 36,850 38,258 38,258 36,235 71,968 75,280 75,280 72,669
Noncontrolling partners in consolidated joint ventures (1,593) (1,368) (1,368) (2,338) (2,754) (2,484) (2,484) (4,762)
Share of Unconsolidated Joint Ventures 6,854 5,864 5,864 5,364 14,032 12,173 12,173 10,475
Add (less) interest expense and income tax expense:
Interest expense:
Consolidated businesses at 100% 25,434 32,622 32,622 36,676 51,564 67,074 67,074 74,203
Noncontrolling partners in consolidated joint ventures (2,086) (2,214) (2,214) (4,203) (4,150) (4,377) (4,377) (8,409)
Share of Unconsolidated Joint Ventures 9,955 9,401 9,401 8,225 19,799 18,777 18,777 16,319
Share of income tax expense:
Income tax expense on dispositions (473) 9,733
Other income tax expense 311 234 234 515 1,010 1,262 1,262 726
Less noncontrolling share of income of consolidated joint ventures (2,252) (1,773) (1,773) (2,875) (5,370) (4,554) (4,554) (4,709)
Add EBITDA attributable to outside partners:
EBITDA attributable to noncontrolling partners in consolidated joint
ventures 5,931 5,355 5,355 9,393 12,274 11,415 11,415 17,860
EBITDA attributable to outside partners in Unconsolidated Joint
Ventures 24,319 20,877 20,877 20,242 47,526 41,091 41,091 40,723
-----------
EBITDA at 100% 142,304 140,859 140,859 138,682 780,843 295,616 295,616 278,720
Add (less) items excluded from shopping center NOI:
General and administrative expenses 11,587 12,628 12,628 10,043 23,124 24,864 24,864 18,450
Management, leasing, and development services, net (1,269) (700) (700) (1,572) (2,489) (2,056) (2,056) (1,698)
Straight-line of rents (1,243) (1,158) (1,158) (1,831) (2,287) (2,614) (2,614) (2,480)
Gain on dispositions (486,620)
Disposition costs related to the pending Starwood sale 441 441
Discontinuation of hedge accounting - MacArthur 5,678 5,678
Gain on sale of peripheral land (863) (863)
Gain on sale of marketable securities (1,323) (1,323)
Dividend income (612) (836)
Interest income (181) (42) (42) (64) (308) (101) (101) (196)
Other nonoperating income (754)
Non-center specific operating expenses and other 5,211 6,924 6,935 8,520 8,959 10,516 10,786 15,416
NOI - all centers at 100% 161,916 158,511 158,522 153,778 325,751 324,039 324,309 308,212
Less - NOI of non-comparable centers 560 (1) (6,700) (2) (2,399) (3) (3,006) (3) (872) (4) (13,032) (2) (5,525) (3) (3,355) (3)
--- --- ------ --- ------ --- ------ --- ---- --- ------- --- ------ --- ------ ---
NOI at 100% - comparable centers 162,476 151,811 156,123 150,772 324,879 311,007 318,784 304,857
======= ======= ======= ======= ======= ======= ======= =======
NOI - growth % 7.0% 3.5% 4.5% 4.6%
NOI at 100% - comparable centers 162,476 151,811 156,123 150,772 324,879 311,007 318,784 304,857
Lease cancellation income (4,291) (430) (430) (950) (6,249) (2,266) (2,266) (1,939)
------ ---- ---- ---- ------ ------ ------ ------
NOI at 100% - comparable centers excluding lease cancellation income 158,185 151,381 155,693 149,822 318,630 308,741 316,518 302,918
======= ======= ======= ======= ======= ======= ======= =======
NOI at 100% excluding lease cancellation income - growth % 4.5% 3.9% 3.2% 4.5%
NOI at 100% excluding lease cancellation income - post-sale portfolio growth % (5) 4.6% 3.2%
(1) Includes Taubman Prestige Outlets Chesterfield.
(2) Includes Arizona Mills.
(3) Includes City Creek Center.
(4) Includes Taubman Prestige Outlets Chesterfield and Arizona Mills for the approximately one-month period prior to its disposition.
(5) In addition to non-comparable centers excluded above, excludes NOI of Fairlane Town Center, MacArthur Center, Northlake Mall, The Mall at Partridge Creek, Stony Point Fashion Park, The Mall at Wellington
Green, and The Shops at Willow Bend.
TAUBMAN CENTERS, INC.
Table 8 - Balance Sheets
As of June 30, 2014 and December 31, 2013
-----------------------------------------
(in thousands of dollars)
As of
-----
June 30, 2014 December 31, 2013
------------- -----------------
Consolidated Balance Sheet of Taubman Centers, Inc. (1):
Assets:
Properties 3,024,045 4,485,090
Accumulated depreciation and amortization (934,657) (1,516,982)
2,089,388 2,968,108
Investment in Unconsolidated Joint Ventures 343,189 327,692
Cash and cash equivalents 132,404 40,993
Restricted cash 45,490 5,046
Accounts and notes receivable, net 36,076 73,193
Accounts receivable from related parties 2,948 1,804
Deferred charges and other assets 153,248 89,386
Assets of centers held for sale (2) 778,340
3,581,083 3,506,222
========= =========
Liabilities:
Notes payable 1,997,971 3,058,053
Accounts payable and accrued liabilities 261,601 292,280
Distributions in excess of investments in and net income of
Unconsolidated Joint Ventures 408,019 371,549
Liabilities of centers held for sale (2) 651,496
3,319,087 3,721,882
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 633 631
Additional paid-in capital 802,986 796,787
Accumulated other comprehensive income (loss) (9,908) (8,914)
Dividends in excess of net income (586,780) (908,656)
206,956 (120,127)
Noncontrolling interests:
Noncontrolling interests in consolidated joint ventures (15,982) (37,191)
Noncontrolling interests in partnership equity of TRG 71,022 (58,342)
------ -------
55,040 (95,533)
------ -------
261,996 (215,660)
------- --------
3,581,083 3,506,222
========= =========
Combined Balance Sheet of Unconsolidated Joint Ventures (1)(3):
Assets:
Properties 1,476,040 1,305,658
Accumulated depreciation and amortization (532,027) (478,820)
944,013 826,838
Cash and cash equivalents 29,337 28,782
Accounts and notes receivable, net 28,260 33,626
Deferred charges and other assets 32,993 28,095
1,034,603 917,341
========= =======
Liabilities:
Notes payable 1,761,458 1,551,161
Accounts payable and other liabilities 69,494 70,226
1,830,952 1,621,387
Accumulated Deficiency in Assets:
Accumulated deficiency in assets - TRG (450,250) (406,266)
Accumulated deficiency in assets - Joint Venture Partners (333,707) (285,904)
Accumulated other comprehensive income (loss) - TRG (6,196) (5,938)
Accumulated other comprehensive income (loss) -Joint Venture
Partners (6,196) (5,938)
(796,349) (704,046)
-------- --------
1,034,603 917,341
========= =======
(1) International Plaza was consolidated in the Company's balance sheet as of December 31, 2013 but is an
Unconsolidated Joint Venture as of June 30, 2014 as a result of the January 2014 disposition of
interests.
(2) Includes the assets and liabilities of the shopping centers expected to be sold to Starwood Capital
Group in the fourth quarter of 2014.
(3) Unconsolidated Joint Venture amounts exclude the balances of entities that own interests in Asia
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, 2014
-----------------
Adjusted Funds from Operations per common share (1) 3.72 3.82
Discontinuation of hedge accounting - MacArthur and disposition costs
related to the pending Starwood Sale (2) (0.06) (0.06)
Funds from Operations per common share (1) 3.66 3.76
Gain on dispositions, net of tax (3) 5.30 5.30
Real estate depreciation - TRG (4) (1.50) (1.45)
Distributions to participating securities of TRG (0.02) (0.02)
Depreciation of TCO's additional basis in TRG (0.11) (0.11)
----- -----
Net income attributable to common shareowners, per common share (EPS) (1) 7.33 7.48
==== ====
(1) The range excludes the expected impact of the planned sale of centers to Starwood
Capital Group, including (but not limited to) the loss of operations of the centers,
debt extinguishment costs, and disposition and other transaction costs as well as the
impact from the use of sale proceeds.
(2) Costs only include amounts incurred in the second quarter of 2014.
(3) During the six months 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. Excludes gain
expected to be recognized upon closing of the sale of centers to Starwood.
(4) As a result of the expected sale of centers in the fourth quarter of 2014 to Starwood
Capital Group, the Company is no longer recognizing depreciation on the property
balances that are classified as held for sale. This resulted in a reduction of
approximately $0.25 of real estate depreciation per share expected to be recognized in
2014.
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SOURCE Taubman Centers, Inc.
