BLOOMFIELD HILLS, Mich., April 22 /PRNewswire-FirstCall/ -- Taubman Centers, Inc. today reported its financial results for the first quarter of 2008.
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Net Income allocable to common shareholders per diluted common share (EPS) for the quarter ended March 31, 2008 was $0.09, versus $0.19 per diluted common share for the same period last year.
For the quarter ended March 31, 2008, Funds From Operations (FFO) per diluted share was $0.68, an increase of 4.6 percent from $0.65 for the quarter ended March 31, 2007.
"Our results were driven by strong rents across the portfolio and the performance of The Mall at Partridge Creek, which opened last October in Clinton Township, Michigan," said Robert S. Taubman, chairman, president and chief executive officer of Taubman Centers. "This FFO increase was achieved despite a reduction from the prior year in lease cancellation revenue and third party service fees."
Strong Operating Statistics
Taubman's comparable shopping centers were 93.0 percent leased on March 31, 2008, up 0.9 percent from 92.1 percent on March 31, 2007. Comparable center occupancy was 90.0 percent on March 31, 2008, up 0.3 percent from 89.7 percent on March 31, 2007. "As these strong occupancy numbers indicate, retailers continue to open stores in our centers. In fact, openings totaled 442,000 square feet in the quarter, exceeding last year's square footage by 38 percent," said Mr. Taubman.
For the quarter, average rents in the consolidated properties were $44.56, up 1.5 percent from the first quarter of 2007. In the unconsolidated properties, average rents were $44.24, up 5.9 percent from the first quarter of 2007.
Tenant sales per square foot was up 3.0 percent from the first quarter of 2007. "While the general economic environment is challenging, our centers continue to perform," said Mr. Taubman.
Nordstrom Opens at Partridge Creek
On April 18, a new Nordstrom store joined Parisian and MJR Theatres at The Mall at Partridge Creek. Coincident with Nordstrom's opening, several stores including Chico's, Bare Escentuals and Pizza Rustica also opened, bringing occupancy to over 90 percent. In addition, Tin Fish restaurant is under construction to open this summer. The Mall at Partridge Creek continues to delight shoppers with its relaxed, open-air, pedestrian-friendly environment. The new center is on target to reach its 10 percent stabilized return.
Solid Balance Sheet
In a period of challenged financial markets, Taubman's balance sheet is one of the strongest in the real estate industry. Early in the first quarter, the company refinanced International Plaza (Tampa, Fla.) with a $325 million, non-recourse, 5.375 percent all-in fixed rate loan, repaying a $175 million mortgage. Taubman's debt to total market capitalization at the end of the quarter was 41 percent, with 88 percent of the company's share of debt either fixed or swapped at an average interest rate of 5.7 percent. At quarter end, more than $300 million was available under the company's existing lines of credit.
In addition, at the beginning of April, the company completed a $250 million refinancing of Fair Oaks (Fairfax, VA.). This non-recourse loan has a three-year maturity with two one-year extension options and has been swapped for the first three years to an all-in fixed rate of 4.56 percent. Proceeds were used to pay down the $140 million 6.6 percent existing debt on the property. Excess funds were distributed to the joint venture partners, and Taubman's 50 percent share was used to pay down its revolving credit facilities. With the successful completion of this refinancing, the company has no significant debt maturities until 2010.
Guidance Ranges Maintained
The company is maintaining its guidance on 2008 FFO per diluted share in a range of $3.05 to $3.12. The company anticipates its 2008 Net Income allocable to common shareholders (EPS) will be in the range of $0.60 to $0.83 per common share.
Updated assumptions are as follows: -- Full year Core Net Operating Income (NOI) growth of 4.5 to 5.0 percent -- excluding the impact of lease cancellation income; -- Modest occupancy growth in 2008; -- Rent per square foot growth of about 3 percent; -- Modest improvement in the operations of The Pier Shops at Caesars (Atlantic City, NJ) versus 2007 levels; -- Lease cancellation revenue in the range of $7 to $8 million; -- Management, leasing and development revenue net of expenses and taxes in the range of $6 to $7 million; -- Land sale gains in the range of $3 to $4 million; and -- Total expenses for U.S. and Asia predevelopment activities of about $13 million. Supplemental Investor Information Available
The company provides supplemental investor information along with its earnings announcements, available online at http://www.taubman.com/ under "Investor Relations." This includes the following:
-- Income Statement -- Earnings Reconciliations -- Changes in Funds from Operations and Earnings Per Share -- Components of Other Income, Other Operating Expense, and Gains on Land Sales and Other Nonoperating Income -- Recoveries Ratio Analysis -- Balance Sheets -- Debt Summary -- Other Debt, Equity and Certain Balance Sheet Information -- Construction -- Capital Spending -- Operational Statistics -- Owned Centers -- Major Tenants in Owned Portfolio -- Anchors in Owned Portfolio Investor Conference Call
The company will host a conference call at 11:00 a.m. (EDT) on April 23 to discuss these results, its future developments, and the company's outlook for 2008. The conference call will be simulcast at http://www.taubman.com/ under "Investor Relations" as well as http://www.earnings.com/ and http://www.streetevents.com/. An 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, owns, develops, acquires and operates regional shopping centers nationally. Taubman Centers 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 over $550 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 Months Ended March 31, 2008 and 2007 (in thousands of dollars, except as indicated) Three Months Ended 2008 2007 Income before minority and preferred interests 23,516 26,550 Minority share of consolidated joint ventures (1) (1,176) (1,913) Distributions in excess of minority share of income of consolidated joint ventures (2,137) 608 Minority share of income of TRG (1) (5,916) (7,741) Distributions in excess of minority share of income of TRG (5,467) (2,833) TRG preferred distributions (615) (615) Net income 8,205 14,056 Preferred dividends (3,658) (3,658) Net income allocable to common shareowners 4,547 10,398 Net income per common share - basic and diluted 0.09 0.19 Beneficial interest in EBITDA - consolidated businesses (2) 77,217 71,763 Beneficial interest in EBITDA - unconsolidated joint ventures (2) 23,114 21,884 Funds from Operations (2) 54,756 53,919 Funds from Operations allocable to TCO (2) 36,403 35,527 Funds from Operations per common share - basic (2) 0.69 0.67 Funds from Operations per common share - diluted (2) 0.68 0.65 Weighted average number of common shares outstanding - basic 52,675,207 53,423,628 Weighted average number of common shares outstanding - diluted 53,264,489 54,076,259 Common shares outstanding at end of period 52,808,293 53,602,344 Weighted average units - Operating Partnership - basic 79,232,651 81,079,570 Weighted average units - Operating Partnership - diluted 80,693,195 82,603,463 Units outstanding at end of period - Operating Partnership 79,365,737 81,079,641 Ownership percentage of the Operating Partnership at end of period 66.5% 66.1% Number of owned shopping centers at end of period 23 22 Operating Statistics: Mall tenant sales (3) 1,083,608 1,042,697 Ending occupancy 89.8% 89.7% Ending occupancy - comparable (4) 90.0% 89.7% Average occupancy 89.9% 89.8% Average occupancy - comparable (4) 90.2% 89.8% Leased space at end of period 93.0% 92.1% Leased space at end of period - comparable (4) 93.0% 92.1% Mall tenant occupancy costs as a percentage of tenant sales - consolidated businesses (3) 15.8% 15.4% Mall tenant occupancy costs as a percentage of tenant sales - unconsolidated joint ventures (3) 13.8% 13.0% Rent per square foot - consolidated businesses (4) 44.56 43.88 Rent per square foot - unconsolidated joint ventures (4) 44.24 41.76 (1) 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 months ended March 31, 2008 and 2007 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. (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 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. (3) Based on reports of sales furnished by mall tenants. (4) Statistics exclude The Mall at Partridge Creek and The Pier Shops at Caesars. The 2007 statistics have been restated to include comparable centers to 2008. TAUBMAN CENTERS, INC. Table 2 - Income Statement For the Three Months Ended Ended March 31, 2008 and 2007 (in thousands of dollars) 2008 2007 Unconsoli- Unconsoli- Consoli- dated Consoli- dated dated Joint dated Joint Businesses Ventures(1) Businesses Ventures(1) REVENUES: Minimum rents 86,570 38,411 78,655 38,436 Percentage rents 2,575 1,461 2,308 1,039 Expense recoveries 57,464 22,414 50,623 22,591 Management, leasing and development services 3,694 4,890 Other 7,114 1,788 8,550 1,762 Total revenues 157,417 64,074 145,026 63,828 EXPENSES: Maintenance, taxes and utilities 43,540 15,348 37,919 17,745 Other operating 18,301 6,547 16,796 6,401 Management, leasing and development services 2,257 2,790 General and administrative 8,333 7,321 Interest expense 36,982 15,875 29,694 17,804 Depreciation and amortization 35,335 9,623 32,533 10,166 Total expenses 144,748 47,393 127,053 52,116 Gains on land sales and other nonoperating income 1,803 319 391 447 14,472 17,000 18,364 12,159 Income tax expense (190) Equity in income of Unconsolidated Joint Ventures 9,234 8,186 Income before minority and preferred interests 23,516 26,550 Minority and preferred interests: TRG preferred distributions (615) (615) Minority share of consolidated joint ventures (1,176) (1,913) Distributions less than (in excess of) minority share of income of consolidated joint ventures (2,137) 608 Minority share of income of TRG (5,916) (7,741) Distributions in excess of minority share of income of TRG (5,467) (2,833) Net income 8,205 14,056 Preferred dividends (3,658) (3,658) Net income allocable to common shareowners 4,547 10,398 SUPPLEMENTAL INFORMATION: EBITDA - 100% 86,789 42,498 80,591 40,129 EBITDA - outside partners' share (9,572) (19,384) (8,828) (18,245) Beneficial interest in EBITDA 77,217 23,114 71,763 21,884 Beneficial interest expense (32,154) (8,262) (26,492) (8,302) Beneficial income tax expense (190) Non-real estate depreciation (696) (661) Preferred dividends and distributions (4,273) (4,273) Funds from Operations contribution 39,904 14,852 40,337 13,582 Net straightline adjustments to rental revenue, recoveries, and ground rent expense at TRG % 593 61 371 104 (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. TAUBMAN CENTERS, INC. Table 3- Reconciliation of Net Income Allocable to Common Shareowners to Funds from Operations For the Periods Ended March 31, 2008 and 2007 (in thousands of dollars; amounts allocable to TCO may not recalculate due to rounding) Three Months Ended 2008 2007 Net income allocable to common shareowners 4,547 10,398 Add (less) depreciation and amortization: Consolidated businesses at 100% 35,335 32,533 Minority partners in consolidated joint ventures (3,568) (3,713) Share of unconsolidated joint ventures 5,618 5,396 Non-real estate depreciation (696) (661) Add minority interests: Minority share of income of TRG 5,916 7,741 Distributions in excess of minority share of income of TRG 5,467 2,833 Distributions (less than) in excess of minority share of income of consolidated joint ventures 2,137 (608) Funds from Operations 54,756 53,919 TCO's average ownership percentage of TRG 66.5% 65.9% Funds from Operations allocable to TCO 36,403 35,527 TAUBMAN CENTERS, INC. Table 4- Reconciliation of Net Income to Beneficial Interest in EBITDA For the Periods Ended March 31, 2008 and 2007 (in thousands of dollars; amounts allocable to TCO may not recalculate due to rounding) Three Months Ended 2008 2007 Net income 8,205 14,056 Add (less) depreciation and amortization: Consolidated businesses at 100% 35,335 32,533 Minority partners in consolidated joint ventures (3,568) (3,713) Share of unconsolidated joint ventures 5,618 5,396 Add (less) preferred interests, interest expense and income tax expense: Preferred distributions 615 615 Interest expense: Consolidated businesses at 100% 36,982 29,694 Minority partners in consolidated joint ventures (4,828) (3,202) Share of unconsolidated joint ventures 8,262 8,302 Income tax expense 190 Add minority interests: Minority share of income of TRG 5,916 7,741 Distributions in excess of minority share of income of TRG 5,467 2,833 Distributions (less than) in excess of minority share of income of consolidated joint ventures 2,137 (608) Beneficial Interest in EBITDA 100,331 93,647 TCO's average ownership percentage of TRG 66.5% 65.9% Beneficial Interest in EBITDA allocable to TCO 66,702 61,704 TAUBMAN CENTERS, INC. Table 5- Balance Sheets As of March 31, 2008 and December 31, 2007 (in thousands of dollars) As of March 31, December 31, 2008 2007 Consolidated Balance Sheet of Taubman Centers, Inc.: Assets: Properties 3,778,947 3,781,136 Accumulated depreciation and amortization (957,526) (933,275) 2,821,421 2,847,861 Investment in Unconsolidated Joint Ventures 90,014 92,117 Cash and cash equivalents 40,768 47,166 Accounts and notes receivable, net 48,995 52,161 Accounts and notes receivable from related parties 1,956 2,283 Deferred charges and other assets 215,575 109,719 3,218,729 3,151,307 Liabilities: Notes payable 2,840,951 2,700,980 Accounts payable and accrued liabilities 248,982 296,385 Dividends and distributions payable 21,915 21,839 Distributions in excess of investments in and net income of Unconsolidated Joint Ventures 101,313 100,234 3,213,161 3,119,438 Preferred Equity of TRG 29,217 29,217 Minority interests in TRG and consolidated joint ventures 17,351 18,494 Shareowners' Equity: Series B Non-Participating Convertible Preferred Stock 27 27 Series G Cumulative Redeemable Preferred Stock Series H Cumulative Redeemable Preferred Stock Common Stock 528 526 Additional paid-in capital 546,788 543,333 Accumulated other comprehensive income (loss) (19,806) (8,639) Dividends in excess of net income (568,537) (551,089) (41,000) (15,842) 3,218,729 3,151,307 Combined Balance Sheet of Unconsolidated Joint Ventures: Assets: Properties 1,056,816 1,056,380 Accumulated depreciation and amortization (343,641) (347,459) 713,175 708,921 Cash and cash equivalents 24,232 40,097 Accounts and notes receivable 22,802 26,271 Deferred charges and other assets 17,238 18,229 777,447 793,518 Liabilities: Notes payable 1,001,483 1,003,463 Accounts payable and other liabilities 45,237 55,242 1,046,720 1,058,705 Accumulated Deficiency in Assets: Accumulated deficiency in assets - TRG (150,228) (149,009) Accumulated deficiency in assets - Joint Venture Partners (113,147) (112,709) Accumulated other comprehensive income (loss) - TRG (3,534) (2,354) Accumulated other comprehensive income (loss) - Joint Venture Partners (2,364) (1,115) (269,273) (265,187) 777,447 793,518 TAUBMAN CENTERS, INC. Table 6 - 2008 Annual Outlook (all dollar amounts per common share on a diluted basis; amounts may not add due to rounding) Range for Year Ended March 31, 2008 Funds from Operations per common share 3.05 3.12 Real estate depreciation - TRG (2.00) (1.92) Depreciation of TCO's additional basis in TRG (0.13) (0.13) Distributions in excess of earnings allocable to minority interest (0.31) (0.24) Net income allocable to common shareowners, per common share 0.60 0.83
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