BLOOMFIELD HILLS, Mich., Oct. 22 /PRNewswire-FirstCall/ -- Taubman Centers, Inc. today reported strong financial results for the quarter and year-to-date periods ended September 30, 2007.
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Net income allocable to common shareholders per diluted common share (EPS) for the quarter ended September 30, 2007 was $0.15, up from $0.03 during the third quarter of 2006. EPS for the nine month period ended September 30, 2007 was $0.50, up from $0.08 for the nine month period ended September 30, 2006.
For the quarter ended September 30, 2007, Funds from Operations (FFO) per diluted share was $0.68, up 19.3 percent from $0.57 per share for the quarter ended September 30, 2006. FFO per diluted share was up 15.3 percent from Adjusted FFO per share of $0.59 for the quarter ended September 30, 2006, which excludes a financing-related charge incurred in the 2006 quarter. There have been no financing-related charges to date in 2007.
For the nine months ended September 30, 2007, FFO per diluted share was $2.01, up 16.9 percent from $1.72 per share for the nine months ended September 30, 2006. FFO per diluted share was up 10.4 percent from Adjusted FFO per share of $1.82 for the nine months ended September 30, 2006.
"These strong results were driven by organic core growth from our centers," said Robert S. Taubman, chairman, president and chief executive officer of Taubman Centers. "Rents and recoveries were up while operating expenses declined."
During the third quarter, the company repurchased 987,180 shares of its common stock at an average price of $50.65 per share. Year to date, the company has purchased 1,910,544 shares at an average price of $52.34 and a total cost of $100 million. The company currently has $50 million available under its share repurchase authorization.
Healthy Occupancy and Sales Increases
Comparable center occupancy for the portfolio was 90.0 percent at September 30, 2007, up 0.7 percent from 89.3 percent on September 30, 2006. Comparable center leased space at September 30, 2007 was 93.3 percent, up 1.0 percent from 92.3 percent on September 30, 2006.
Mall tenant sales per square foot increased 6.0 percent for the quarter and 6.1 percent for the nine months ended September 30. "Robust sales have continued across the country," said Mr. Taubman. "The consumer continues to spend in dominant regional malls, making these properties the most coveted locations for retailers."
Openings
"With the successful opening of a new property in Michigan and renovations or expansions of four centers across the country, we are keeping our portfolio fresh for our shoppers," said Mr. Taubman. These projects, all of which opened or will open in the second half of 2007, include:
-- The Mall at Partridge Creek (Clinton Township, Mich.) opened on October 18. The $155 million open-air regional mall is expected to achieve a 10 percent return upon stabilization in 2009. -- The new Nordstrom store and 97,000 square feet of new tenant space at Twelve Oaks Mall (Novi, Mich.) opened strongly on September 28. -- Bass Pro opened at Dolphin Mall (Miami, Fla.) on October 4; its only store in Dade County, broadening the trade area and customer appeal for the center. -- The new Nordstrom store at Cherry Creek Shopping Center (Denver, Col.) opened on October 19. This addition makes a great center even better. -- The stores and restaurants in the new lifestyle wing and food court at Stamford Town Center (Stamford, Conn.) will begin to open in early November. This new wing creates greater visibility to the city and improved pedestrian access to the mall. Guidance Increased
The company is raising its guidance for 2007 FFO per share to the range of $2.83 to $2.87. Net income (loss) allocable to common shareholders for the year is expected to be in the range of $0.78 to $0.92 per share.
Supplemental Investor Information Available
The company provides supplemental investor information along with its earnings announcements. It is available online at http://www.taubman.com/ under "Investor Relations." This packet includes the following information:
-- Income Statements -- Earnings Reconciliations -- Changes in Funds from Operations and Earnings Per Share -- Components of Other Operating Income, Other Operating Expense and Gains on Land Sales, Interest Income and Other -- Recoveries Ratio Analysis -- Balance Sheets -- Debt Summary -- Other Debt, Equity, and Certain Balance Sheet Information -- Construction -- Capital Spending -- Acquisitions -- Operational Statistics -- Owned Centers -- Major Tenants in Owned Portfolio -- Anchors in Owned Portfolio Investor Conference Call
The company will provide an online Web simulcast and rebroadcast of its 2007 third quarter earnings release conference call in which the company will review the results for the quarter, progress on its developments, its financing plans and update its guidance. The live broadcast of the conference call will be available online at http://www.taubman.com/ under "Investor Relations," http://www.earnings.com/ and http://www.streetevents.com/ on October 23 beginning at 11:00 a.m. Eastern Time. The online replay will follow shortly after the call and continue for 90 days. In addition, the conference call will be available as a podcast at http://www.reitcafe.com/.
Taubman Centers, Inc. , a real estate investment trust, currently owns and/or manages 24 urban and suburban regional and super regional shopping centers in 11 states with an industry-leading sales productivity averaging well over $500 per square foot. Taubman Centers is headquartered in Bloomfield Hills, Mich.
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. Actual results may differ materially from those expected because of various risks and uncertainties, including, but not limited to changes in general economic and real estate conditions, changes in the interest rate environment and the availability of financing, and adverse changes in the retail industry. Other risks and uncertainties are discussed in the company's filings with the Securities and Exchange Commission including its most recent Annual Report on Form 10-K.
TAUBMAN CENTERS, INC. Table 1 - Summary of Results For the Three and Nine Months Ended September 30, 2007 and 2006 (in thousands of dollars, except as indicated) Three Months Ended Nine Months Ended 2007 2006 2007 2006 Income before minority and preferred interests (1) 25,461 17,561 78,013 59,941 Minority share of consolidated joint ventures (2) (1,044) (1,376) (3,578) (3,815) Distributions in excess of minority share of income of consolidated joint ventures (1,806) (1,667) (2,847) (3,360) Minority share of income of TRG (2) (6,849) (4,158) (21,777) (12,655) Distributions in excess of minority share of income of TRG (3,640) (4,721) (9,910) (14,017) TRG preferred distributions (615) (615) (1,845) (1,845) Net income 11,507 5,024 38,056 24,249 Preferred dividends (3) (3,658) (3,658) (10,975) (20,064) Net income allocable to common shareowners 7,849 1,366 27,081 4,185 Net income per common share - basic 0.15 0.03 0.51 0.08 Net income per common share - diluted 0.15 0.03 0.50 0.08 Beneficial interest in EBITDA - consolidated businesses (4) 72,640 67,487 218,650 212,116 Beneficial interest in EBITDA - unconsolidated joint ventures (4) 25,543 21,449 70,963 65,206 Funds from Operations (4) 54,973 47,287 164,846 141,817 Funds from Operations allocable to TCO (4) 36,205 30,799 108,700 91,944 Funds from Operations per common share - basic (4) 0.69 0.58 2.05 1.75 Funds from Operations per common share - diluted (4) 0.68 0.57 2.01 1.72 Weighted average number of common shares outstanding-basic 52,456,144 52,808,698 53,093,894 52,575,448 Weighted average number of common shares outstanding -diluted 53,073,989 53,128,557 53,731,959 52,845,429 Common shares outstanding at end of period 52,308,307 52,836,421 52,308,307 52,836,421 Weighted average units - Operating Partnership - basic 79,648,017 81,078,521 80,518,440 81,077,246 Weighted average units - Operating Partnership - diluted 81,137,124 82,269,642 82,027,766 82,218,489 Units outstanding at end of period - Operating Partnership 79,169,604 81,078,527 79,169,604 81,078,527 Ownership percentage of the Operating Partnership at end of period 66.1% 65.2% 66.1% 65.2% Number of owned shopping centers at end of period 22 22 22 22 Operating Statistics: Mall tenant sales (5) 1,075,051 985,224 3,185,867 2,901,638 Ending occupancy 89.9% 89.5% 89.9% 89.5% Ending occupancy - comparable (6) 90.0% 89.3% 90.0% 89.3% Average occupancy 89.8% 89.2% 89.7% 88.8% Average occupancy - comparable (6) 89.9% 89.0% 89.9% 88.6% Leased space at end of period 93.3% 92.4% 93.3% 92.4% Leased space at end of period - comparable (6) 93.3% 92.3% 93.3% 92.3% Mall tenant occupancy costs as a percentage of tenant sales-consolidated businesses (5) 14.8% 15.1% 15.2% 15.5% Mall tenant occupancy costs as a percentage of tenant sales- unconsolidated joint ventures (5) 14.2% 13.6% 13.5% 13.6% Rent per square foot - consolidated businesses (6) 43.08 42.44 43.52 42.71 Rent per square foot - unconsolidated joint ventures (6) 42.92 40.88 41.92 41.23 (1) Income before minority and preferred interests for the three and nine months ended September 30, 2006 includes charges of $1.0 million and $3.1 million, respectively, in connection with the write-off of financing costs related to the refinancing of the loan on Dolphin Mall and pay-off of the loans on The Shops at Willow Bend prior to their maturity dates. No similar charges were incurred in 2007. (2) Because the net equity balances of the Operating Partnership and the outside partners in certain consolidated joint ventures are less than zero, the income allocated to the minority and outside partners during the three and nine months ended September 30, 2007 and 2006 is equal to their share of distributions. The net equity of these minority partners is less than zero due to accumulated distributions in excess of net income and not as a result of operating losses. (3) Preferred dividends for the nine months ended September 30, 2006 include charges of $4.0 million and $0.6 million incurred in connection with the redemption of the remaining $113 million of the Series A Preferred Stock and the redemption of the Series I Preferred Stock, respectively. (4) Beneficial Interest in EBITDA represents the Operating Partnership's share of the earnings before interest 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 National Association of Real Estate Investment Trusts (NAREIT) defines Funds from Operations (FFO) as net income (loss) (computed in accordance with Generally Accepted Accounting Principles (GAAP)), excluding gains (or losses) from extraordinary items and sales of properties, 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. FFO is primarily used by the Company in measuring performance and in formulating corporate goals and compensation. 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 common definitions. None of these non-GAAP measures should be considered alternatives to net income as an indicator of the Company's operating performance, and they do not represent cash flows from operating, investing, or financing activities as defined by GAAP. (5) Based on reports of sales furnished by mall tenants. The 2007 information for Arizona Mills is based on estimates. (6) Statistics exclude Waterside Shops at Pelican Bay and The Pier Shops at Caesars. The 2006 statistics have been restated to include comparable centers to 2007. TAUBMAN CENTERS, INC. Table 2 - Income Statement For the Three Months Ended September 30, 2007 and 2006 (in thousands of dollars) 2007 2006 CONSOL- UNCONSOL- CONSOL- UNCONSOL- IDATED IDATED IDATED IDATED BUSINESSES JOINT BUSINESSES JOINT VENTURES(1) VENTURES(1) REVENUES: Minimum rents 81,273 37,480 76,404 37,621 Percentage rents 3,208 1,299 2,653 1,588 Expense recoveries 53,624 23,911 49,105 22,436 Management, leasing and development services 3,881 2,586 Other 8,667 1,675 8,165 1,786 Total revenues 150,653 64,365 138,913 63,431 EXPENSES: Maintenance, taxes and utilities 44,158 15,580 37,966 17,420 Other operating 16,574 3,048 18,086 7,399 Management, leasing and development services 2,074 1,188 General and administrative 7,414 7,122 Interest expense (2) 33,628 15,980 32,314 13,940 Depreciation and amortization 33,757 9,518 32,910 12,139 Total expenses 137,605 44,126 129,586 50,898 Gains on land sales, interest income, and other 1,138 375 1,152 341 14,186 20,614 10,479 12,874 Equity in income of Unconsolidated Joint Ventures 11,275 7,082 Income before minority and preferred interests 25,461 17,561 Minority and preferred interests: TRG preferred distributions (615) (615) Minority share of consolidated joint ventures (1,044) (1,376) Distributions in excess of minority share of income of consolidated joint ventures (1,806) (1,667) Minority share of income of TRG (6,849) (4,158) Distributions in excess of minority share of income of TRG (3,640) (4,721) Net income 11,507 5,024 Preferred dividends (3,658) (3,658) Net income allocable to common shareowners 7,849 1,366 SUPPLEMENTAL INFORMATION: EBITDA - 100% 81,571 46,112 75,703 38,953 EBITDA - outside partners' share (8,931) (20,569) (8,216) (17,504) Beneficial interest in EBITDA 72,640 25,543 67,487 21,449 Beneficial interest expense (29,892) (8,369) (29,029) (7,679) Non-real estate depreciation (676) (668) Preferred dividends and distributions (4,273) (4,273) Funds from Operations contribution 37,799 17,174 33,517 13,770 (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. The Company accounts for its investments in the Unconsolidated Joint Ventures under the equity method. The 2006 results of operations for the Unconsolidated Joint Ventures include results from The Pier Shops at Caesars, which were previously excluded. (2) Interest expense for the three months ended September 30, 2006 includes a charge of $1.0 million in connection with the write-off of financing costs related to the refinancing of the loan on Dolphin Mall, prior to maturity. TAUBMAN CENTERS, INC. Table 3- Income Statement For the Year to Date Periods Ended September 30, 2007 and 2006 (in thousands of dollars) 2007 2006 CONSOL- UNCONSOL- CONSOL- UNCONSOL- IDATED IDATED IDATED IDATED BUSINESSES JOINT BUSINESSES JOINT VENTURES(1) VENTURES(1) REVENUES: Minimum rents 239,435 113,051 228,986 108,051 Percentage rents 6,513 3,930 6,252 3,302 Expense recoveries 162,170 69,320 146,150 60,935 Management, leasing and development services 12,403 8,669 Other 27,432 5,758 26,153 7,751 Total revenues 447,953 192,059 416,210 180,039 EXPENSES: Maintenance, taxes and utilities 127,664 49,278 113,249 45,039 Other operating 49,448 14,227 51,157 18,560 Management, leasing and development services 6,660 4,233 General and administrative 21,750 21,592 Interest expense (2) 95,512 50,401 98,468 40,535 Depreciation and amortization 99,858 29,473 99,614 32,563 Total expenses 400,892 143,379 388,313 136,697 Gains on land sales, interest income, and other 2,252 1,189 9,079 863 49,313 49,869 36,976 44,205 Equity in income of Unconsolidated Joint Ventures 28,700 22,965 Income before minority and preferred interests 78,013 59,941 Minority and preferred interests: TRG preferred distributions (1,845) (1,845) Minority share of consolidated joint ventures (3,578) (3,815) Distributions in excess of minority share of income of consolidated joint ventures (2,847) (3,360) Minority share of income of TRG (21,777) (12,655) Distributions in excess of minority share of income of TRG (9,910) (14,017) Net income 38,056 24,249 Preferred dividends (3) (10,975) (20,064) Net income allocable to common shareowners 27,081 4,185 SUPPLEMENTAL INFORMATION: EBITDA - 100% 244,683 129,743 235,058 117,303 EBITDA - outside partners' share (26,033) (58,780) (22,942) (52,097) Beneficial interest in EBITDA 218,650 70,963 212,116 65,206 Beneficial interest expense (84,938) (24,996) (88,893) (22,852) Non-real estate depreciation (2,013) (1,851) Preferred dividends and distributions (12,820) (21,909) Funds from Operations contribution 118,879 45,967 99,463 42,354 (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. The 2006 results of operations for the Unconsolidated Joint Ventures include results from The Pier Shops at Caesars, which were previously excluded. (2) Interest expense for the nine months ended September 30, 2006 includes charges of $1.0 million and $2.1 million in connection with the write-off of financing costs related to the refinancing and pay -off of the loans on Dolphin Mall and The Shops at Willow Bend, respectively, prior to their maturity. (3) Preferred dividends for the nine months ended September 30, 2006 include charges of $4.0 million and $0.6 million incurred in connection with the redemption of the remaining $113 million of the Series A Preferred Stock and the redemption of the Series I Preferred Stock, respectively. TAUBMAN CENTERS, INC. Table 4- Reconciliation of Net Income (Loss) Allocable to Common Shareowners to Funds from Operations and Adjusted Funds from Operations For the Periods Ended September 30, 2007 and 2006 (in thousands of dollars; amounts allocable to TCO may not recalculate due to rounding) Three Months Ended Year to Date 2007 2006 2007 2006 Net income allocable to common shareowners 7,849 1,366 27,081 4,185 Add (less) depreciation and amortization: Consolidated businesses at 100% 33,757 32,910 99,858 99,614 Minority partners in consolidated joint ventures (4,151) (3,555) (11,881) (9,552) Share of unconsolidated joint ventures 5,899 6,688 17,267 19,389 Non-real estate depreciation (676) (668) (2,013) (1,851) Add minority interests: Minority share of income of TRG 6,849 4,158 21,777 12,655 Distributions in excess of minority share of income of TRG 3,640 4,721 9,910 14,017 Distributions in excess of minority share of income of consolidated joint ventures 1,806 1,667 2,847 3,360 Funds from Operations 54,973 47,287 164,846 141,817 TCO's average ownership percentage of TRG 65.9% 65.1% 65.9% 64.8% Funds from Operations allocable to TCO 36,205 30,799 108,700 91,944 Funds from Operations 54,973 47,287 164,846 141,817 Charge upon redemption of Series A Preferred Stock 4,045 Charge upon redemption of Series I Preferred Stock 607 Write-off of financing costs 992 3,057 Adjusted Funds from Operations (1) 54,973 48,279 164,846 149,526 TCO's average ownership percentage of TRG 65.9% 65.1% 65.9% 64.8% Adjusted Funds from Operations allocable to TCO (1) 36,205 31,445 108,700 96,945 (1) Adjusted FFO excludes the following unusual and/or nonrecurring items: charges of $1.0 million ($0.01 per share) during the third quarter of 2006 in connection with the write-off of financing costs related to the refinancing of the loan on Dolphin Mall prior to maturity, charges of $4.0 million ($0.050 per share) and $0.6 million ($0.005 per share) incurred during the second quarter of 2006 in connection with the redemption of the remaining $113 million of the Series A Preferred Stock and the redemption of the Series I Preferred Stock, respectively, and a $2.1 million ($0.025 per share) charge during the first quarter of 2006 in connection with the write-off of financing costs related to the pay-off of the loans on The Shops at Willow Bend prior to their maturity date. The Company discloses this Adjusted FFO due to the significance and infrequent nature of the charges. Given the significance of the charges, the Company believes it is essential to a reader's understanding of the Company's results of operations to emphasize the impact on the Company's earnings measures. The adjusted measures are not and should not be considered alternatives to net income or cash flows from operating, investing, or financing activities as defined by GAAP. TAUBMAN CENTERS, INC. Table 5- Reconciliation of Net Income to Beneficial Interest in EBITDA For the Periods Ended September 30, 2007 and 2006 (in thousands of dollars; amounts allocable to TCO may not recalculate due to rounding) Three Months Ended Year to Date 2007 2006 2007 2006 Net income 11,507 5,024 38,056 24,249 Add (less) depreciation and amortization: Consolidated businesses at 100% 33,757 32,910 99,858 99,614 Minority partners in consolidated joint ventures (4,151) (3,555) (11,881) (9,552) Share of unconsolidated joint ventures 5,899 6,688 17,267 19,389 Add (less) preferred interests and interest expense: Preferred distributions 615 615 1,845 1,845 Interest expense: Consolidated businesses at 100% 33,628 32,314 95,512 98,468 Minority partners in consolidated joint ventures (3,736) (3,285) (10,574) (9,575) Share of unconsolidated joint ventures 8,369 7,679 24,996 22,852 Add minority interests: Minority share of income of TRG 6,849 4,158 21,777 12,655 Distributions in excess of minority share of income of TRG 3,640 4,721 9,910 14,017 Distributions in excess of minority share of income of consolidated joint ventures 1,806 1,667 2,847 3,360 Beneficial Interest in EBITDA 98,183 88,936 289,613 277,322 TCO's average ownership percentage of TRG 65.9% 65.1% 65.9% 64.8% Beneficial Interest in EBITDA allocable to TCO 64,663 57,926 190,971 179,801 TAUBMAN CENTERS, INC. Table 6- Balance Sheets As of September 30, 2007 and December 31, 2006 (in thousands of dollars) As of September 30, December 31, 2007 2006 Consolidated Balance Sheet of Taubman Centers, Inc.: Assets: Properties 3,725,897 3,398,122 Accumulated depreciation and amortization (901,253) (821,384) 2,824,644 2,576,738 Investment in Unconsolidated Joint Ventures 87,472 86,493 Cash and cash equivalents 32,669 26,282 Accounts and notes receivable, net 39,885 36,650 Accounts and notes receivable from related parties 2,279 2,444 Deferred charges and other assets 100,027 98,015 3,086,976 2,826,622 Liabilities: Notes payable 2,669,715 2,319,538 Accounts payable and accrued liabilities 260,860 239,621 Dividends and distributions payable 19,615 19,849 Distributions in excess of investments in and net income of Unconsolidated Joint Ventures 103,892 101,944 3,054,082 2,680,952 Preferred Equity of TRG 29,217 29,217 Minority interests in TRG and consolidated joint ventures 19,692 7,811 Shareowners' Equity: Series B Non-Participating Convertible Preferred Stock 27 28 Series G Cumulative Redeemable Preferred Stock Series H Cumulative Redeemable Preferred Stock Common Stock 523 529 Additional paid-in capital 541,021 635,304 Accumulated other comprehensive income (loss) (7,043) (9,560) Dividends in excess of net income (550,543) (517,659) (16,015) 108,642 3,086,976 2,826,622 Combined Balance Sheet of Unconsolidated Joint Ventures: Assets: Properties 1,022,090 1,157,872 Accumulated depreciation and amortization (337,791) (320,256) 684,299 837,616 Cash and cash equivalents 28,011 35,504 Accounts and notes receivable 20,193 26,769 Deferred charges and other assets 17,024 23,417 749,527 923,306 Liabilities: Notes payable 1,005,429 1,097,347 Accounts payable and other liabilities 34,746 84,177 1,040,175 1,181,524 Accumulated Deficiency in Assets: Accumulated deficiency in assets - TRG (158,926) (161,666) Accumulated deficiency in assets - Joint Venture Partners (129,252) (93,843) Accumulated other comprehensive income (loss) - TRG (1,889) (2,112) Accumulated other comprehensive income (loss) - Joint Venture Partners (581) (597) (290,648) (258,218) 749,527 923,306 TAUBMAN CENTERS, INC. Table 7 - 2007 Annual Outlook (all dollar amounts per common share on a diluted basis; amounts may not add due to rounding) Range for Year Ended December 31, 2007 Funds from Operations per common share 2.83 2.87 Real estate depreciation - TRG (1.72) (1.67) Depreciation of TCO's additional basis in TRG (0.13) (0.13) Distributions in excess of earnings allocable to minority interest (0.20) (0.16) Net income allocable to common shareowners, per common share 0.78 0.92
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