BLOOMFIELD HILLS, Mich., April 22 /PRNewswire-FirstCall/ -- Taubman Centers, Inc. today announced its financial results for the first quarter of 2010.
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Net income allocable to common shareholders per diluted common share (EPS) for the quarter ended March 31, 2010 was $0.11 versus $0.22 per diluted common share for the quarter ended March 31, 2009.
For the quarter ended March 31, 2010, Funds from Operations (FFO) per diluted share was $0.60 versus $0.70 for the quarter ended March 31, 2009. The company's first quarter 2010 FFO includes a non-cash $(0.03) cent impact from the ownership of The Pier Shops at Caesars (Atlantic City, N.J.) versus an impact of $(0.01) during the first quarter of 2009.
"These results are in line with our expectations for the quarter and our guidance range for the year," said Robert S. Taubman, chairman, president and chief executive officer of Taubman Centers. Rents were lower and lease cancellation income was higher than the comparable period last year. In addition, pre-development expense was up in large part due to nonrecurring consultant fees in 2010 and recoveries in the prior year.
Sales Surge
Mall tenant sales per square foot surged in the quarter, up 10.8 percent from the first quarter of 2009. This brings the company's 12-month trailing sales per square foot to $509. Sales growth was particularly robust in Michigan and in Florida, two states that were severely impacted by the downturn. "We are very pleased with these strong tenant sales results. Tenant sales are the best predictor of the leasing environment ahead," said Mr. Taubman. "Retailers' expectations have improved markedly and they are becoming more aggressive about their expansion plans."
Operating Statistics on Track
Leased space for the portfolio was 91.2 percent on March 31, 2010, up 0.5 percent from 90.7 percent on March 31, 2009. Average rent per square foot for the first quarter of 2010 was $43.20 versus $44.48 in the first quarter of 2009. "These operating statistics are meeting our expectations," said Mr. Taubman. "As the recovery gains momentum the improvement in tenant sales will be reflected in our leasing metrics and operating results."
The Pier Shops at Caesars Update
In April 2010, the mortgage lender for The Pier Shops at Caesars filed a lawsuit exercising its right to order the property to be sold at a public auction. This is part of the process since the mortgage obligation on the property is in default. The company anticipates that this will result in a foreclosure sale of the property in the late second or early third quarter of 2010, at which time the ownership will be transferred in satisfaction of the obligations under the debt. Until the ownership is transferred, The Pier Shops continues to have about a $(0.01) FFO per share and $(0.015) EPS non-cash impact per month.
Guidance Increased
The company's FFO per diluted share guidance range continues to be $2.55 to $2.75 for the full year 2010. The company anticipates its 2010 EPS will be in the range of $0.64 to $0.89 per diluted common share.
These guidance ranges now include a $(0.06) impact for FFO per share and $(0.09) impact for EPS for The Pier Shops only through the second quarter of 2010, at which point it is assumed ownership of the property will be transferred. The company has effectively increased the guidance range by these amounts because this impact had been excluded from previously issued guidance. In addition, a non-cash accounting gain is expected to be recognized when the loan obligation is extinguished upon transfer of title of The Pier Shops. This gain has been excluded from FFO per share and EPS estimates.
Supplemental Investor Information Available
The company provides supplemental investor information along with its earnings announcements, available online at http://www.taubman.com/ under "Investing." This includes the following:
-- 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 -- 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, business conditions and the company's outlook for 2010. The conference call will be simulcast at http://www.taubman.com/ under "Investing" as well as http://www.earnings.com/ and http://www.streetevents.com/ . An online replay will follow shortly after the call and continue for approximately 90 days.
Taubman Centers is a real estate investment trust engaged in the development, leasing and management of regional and super regional shopping centers. Taubman's 26 U.S. owned, leased and/or managed properties, the most productive in the industry, serve major markets from coast to coast. Taubman Centers is headquartered in Bloomfield Hills, Michigan and its Taubman Asia subsidiary is headquartered in Hong Kong. Founded in 1950, Taubman celebrates its 60th anniversary in 2010. For more information about Taubman, visit http://www.taubman.com/.
For ease of use, references in this press release to "Taubman Centers", "company" or "Taubman" mean Taubman Centers, Inc. 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.
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 the continuing impacts of the U.S. recession and global credit environment, other 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 Periods Ended March 31, 2010 and 2009 (in thousands of dollars, except as indicated) Three Months Ended ------------------ 2010 2009 ---- ---- Net income 16,813 24,526 Noncontrolling share of income of consolidated joint ventures (2,013) (1,693) Noncontrolling share of income of TRG (3,882) (6,586) TRG series F preferred distributions (615) (615) Preferred stock dividends (3,658) (3,658) Distributions to participating securities of TRG (362) (475) Net income attributable to Taubman Centers, Inc. common shareowners 6,283 11,499 Net income per common share - basic 0.12 0.22 Net income per common share - diluted 0.11 0.22 Beneficial interest in EBITDA - Consolidated Businesses (1) 72,027 77,689 Beneficial interest in EBITDA - Unconsolidated Joint Ventures (1) 23,415 23,948 Funds from Operations (1) 49,731 56,570 Funds from Operations attributable to TCO (1) 33,487 37,758 Funds from Operations per common share - basic (1) 0.62 0.71 Funds from Operations per common share - diluted (1) 0.60 0.70 Adjusted Funds from Operations (1) 49,731 59,031 Adjusted Funds from Operations attributable to TCO (1) 33,487 39,401 Adjusted Funds from Operations per common share -basic (1) 0.62 0.74 Adjusted Funds from Operations per common share -diluted (1) 0.60 0.73 Weighted average number of common shares outstanding -basic 54,357,122 53,066,910 Weighted average number of common shares outstanding -diluted 55,368,907 53,265,959 Common shares outstanding at end of period 54,440,569 53,120,036 Weighted average units -Operating Partnership -basic 80,723,827 79,507,119 Weighted average units -Operating Partnership -diluted 82,606,874 80,577,430 Units outstanding at end of period - Operating Partnership 80,787,345 79,557,721 Ownership percentage of the Operating Partnership at end of period 67.4% 66.8% Number of owned shopping centers at end of period 23 23 Operating Statistics (2): Mall tenant sales (3) 1,005,181 921,158 Ending occupancy 88.2% 88.8% Average occupancy 88.4% 89.0% Leased space at end of period 91.2% 90.7% Mall tenant occupancy costs as a percentage of tenant sales -Consolidated Businesses (3) 15.9% 18.5% Mall tenant occupancy costs as a percentage of tenant sales - Unconsolidated Joint Ventures (3) 14.5% 16.1% Mall tenant occupancy costs as a percentage of tenant sales -Combined (3) 15.4% 17.7% Rent per square foot -Consolidated Businesses 42.92 44.20 Rent per square foot -Unconsolidated Joint Ventures 43.80 45.08 Rent per square foot - Combined 43.20 44.48 (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 straightline adjustments of minimum rent) less maintenance, taxes, utilities, ground rent, 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 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 NOI growth and lease cancellation income. 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 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. 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. For the three months ended March 31, 2009, FFO was adjusted for a restructuring charge. (2) Statistics exclude The Pier Shops. (3) Based on reports of sales furnished by mall tenants. TAUBMAN CENTERS, INC. Table 2 - Income Statement For the Three Months Ended March 31, 2010 and 2009 (in thousands of dollars) 2010 2009 ---- ---- CONSOLIDATED UN- CONSOLIDATED UN- BUSINESSES CONSOL- BUSINESSES CONSOL- IDATED IDATED JOINT JOINT VENTURES(1) VENTURES(1) ------------- --------------- ------------- --------------- REVENUES: Minimum rents 83,354 37,944 87,436 38,967 Percentage rents 2,074 992 2,160 1,108 Expense recoveries 52,921 22,339 56,758 23,826 Management, leasing, and development services 3,056 3,556 Other 10,084 2,065 7,780 2,189 ------ ----- ----- ----- Total revenues 151,489 63,340 157,690 66,090 EXPENSES: Maintenance, taxes, and utilities 43,076 15,847 44,541 16,037 Other operating 17,805 4,608 14,965 6,388 Restructuring charge 2,461 Management, leasing, and development services 1,593 1,906 General and administrative 7,389 6,888 Interest expense 37,417 15,818 36,233 15,950 Depreciation and amortization 37,084 9,524 36,293 9,437 ------ ----- ------ ----- Total expenses 144,364 45,797 143,287 47,812 Nonoperating income 149 12 235 54 --- --- --- --- 7,274 17,555 14,638 18,332 ====== ====== Income tax expense (196) (270) Equity in income of Unconsolidated Joint Ventures 9,735 10,158 ----- ------ Net income 16,813 24,526 Net income attributable to noncontrolling interests: Noncontrolling share of income of consolidated joint ventures (2,013) (1,693) TRG series F preferred distributions (615) (615) Noncontrolling share of income of TRG (3,882) (6,586) Distributions to participating securities of TRG (362) (475) Preferred stock dividends (3,658) (3,658) ------ ------ Net income attributable to Taubman Centers, Inc. common shareowners 6,283 11,499 ===== ====== SUPPLEMENTAL INFORMATION: EBITDA - 100% 81,775 42,897 87,164 43,719 EBITDA - outside partners' share (9,748) (19,482) (9,475) (19,771) ------ ------- ------ ------- Beneficial interest in EBITDA 72,027 23,415 77,689 23,948 Beneficial interest expense (32,197) (8,202) (31,360) (8,284) Beneficial income tax expense (196) (270) Non-real estate depreciation (843) (880) Preferred dividends and distributions (4,273) (4,273) ------ ------ Fund from Operations contribution 34,518 15,213 40,906 15,664 ====== ====== ====== ====== Net straightline adjustments to rental revenue, recoveries, and ground rent expense at TRG % (237) (141) 80 55 ==== ==== === === (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. TAUBMAN CENTERS, INC. Table 3 -Reconciliation of Net Income Attributable to Taubman Centers, Inc. Common Shareowners to Funds from Operations and Adjusted Funds from Operations For the Periods Ended March 31, 2010 and 2009 (in thousands of dollars except as noted; may not add or recalculate due to rounding) Three Months Ended ------------------ 2010 2009 ---- ---- Per Per Shares Share Shares Share Dollars /Units /Unit Dollars /Units /Unit ------- ------ ----- ------- ------ ----- Net income attributable to TCO common shareowners 6,283 55,368,907 0.11 11,499 53,265,959 0.22 Add depreciation of TCO's additional basis 1,720 0.03 1,720 0.03 ----- ---- ----- ---- Net income attributable to TCO common shareowners, excluding step-up depreciation 8,003 55,368,907 0.14 13,219 53,265,959 0.25 Add: Noncontrolling share of income of TRG 3,882 26,366,705 6,586 26,440,209 Distributions to participating securities 362 871,262 475 871,262 --- ------- --- ------- Net income attributable to partnership unit holders and participating securities 12,247 82,606,874 0.15 20,280 80,577,430 0.25 Add (less) depreciation and amortization: Consolidated businesses at 100% 37,084 0.45 36,293 0.45 Depreciation of TCO's additional basis (1,720) (0.02) (1,720) (0.02) Noncontrolling partners in consolidated joint ventures (2,515) (0.03) (2,909) (0.04) Share of Unconsolidated Joint Ventures 5,478 0.07 5,506 0.07 Non-real estate depreciation (843) (0.01) (880) (0.01) ---- ----- ---- ----- Funds from Operations 49,731 82,606,874 0.60 56,570 80,577,430 0.70 TCO's average ownership percentage of TRG 67.3% 66.7% ---- ---- Funds from Operations attributable to TCO 33,487 0.60 37,758 0.70 ====== ==== ====== ==== Funds from Operations 49,731 82,606,874 0.60 56,570 80,577,430 0.70 Restructuring charge 2,461 0.03 ----- ---- Adjusted Funds from Operations 49,731 82,606,874 0.60 59,031 80,577,430 0.73 TCO's average ownership percentage of TRG 67.3% 66.7% ---- ---- Adjusted Funds from Operations attributable to TCO 33,487 0.60 39,401 0.73 ====== ==== ====== ==== TAUBMAN CENTERS, INC. --------------------- Table 4 -Reconciliation of Net Income to Beneficial Interest in EBITDA ------------------------------------------------------------ For the Periods Ended March 31, 2010 and 2009 --------------------------------------------- (in thousands of dollars; amounts attributable to TCO may not recalculate due to rounding) Three Months Ended ------------- 2010 2009 ---- ---- Net income 16,813 24,526 Add (less) depreciation and amortization: Consolidated businesses at 100% 37,084 36,293 Noncontrolling partners in consolidated joint ventures (2,515) (2,909) Share of Unconsolidated Joint Ventures 5,478 5,506 Add (less) interest expense and income tax expense: Interest expense: Consolidated businesses at 100% 37,417 36,233 Noncontrolling partners in consolidated joint ventures (5,220) (4,873) Share of Unconsolidated Joint Ventures 8,202 8,284 Income tax expense 196 270 Less noncontrolling share of income of consolidated joint ventures (2,013) (1,693) ------ ------ Beneficial Interest in EBITDA 95,442 101,637 TCO's average ownership percentage of TRG 67.3% 66.7% ---- ---- Beneficial Interest in EBITDA attributable to TCO 64,232 67,792 ====== ====== TAUBMAN CENTERS, INC. Table 5 - Balance Sheets As of March 31, 2010 and December 31, 2009 (in thousands of dollars) As of ----- March 31, December 31, 2010 2009 ---------- ------------- Consolidated Balance Sheet of Taubman Centers, Inc. (1): Assets: Properties 3,486,633 3,496,853 Accumulated depreciation and amortization (1,118,665) (1,100,610) ---------- ---------- 2,367,968 2,396,243 Investment in Unconsolidated Joint Ventures 87,111 89,804 Cash and cash equivalents 13,746 16,176 Accounts and notes receivable, net 41,676 44,503 Accounts receivable from related parties 2,087 1,558 Deferred charges and other assets 59,677 58,569 ------ ------ 2,572,265 2,606,853 ========= ========= Liabilities: Notes payable 2,692,896 2,691,019 Accounts payable and accrued liabilities 215,786 230,276 Distributions in excess of investments in and net income of Unconsolidated Joint Ventures 158,430 160,305 ------- ------- 3,067,112 3,081,600 Equity: Taubman Centers, Inc. Shareowners' Equity: Series B Non-Participating Convertible Preferred Stock 26 26 Series G Cumulative Redeemable Preferred Stock Series H Cumulative Redeemable Preferred Stock Common Stock 544 543 Additional paid-in capital 580,503 579,983 Accumulated other comprehensive income (loss) (23,246) (24,443) Dividends in excess of net income (901,043) (884,666) -------- -------- (343,216) (328,557) Noncontrolling interests: Noncontrolling interests in consolidated joint ventures (99,804) (100,014) Noncontrolling interests in partnership equity of TRG (81,044) (75,393) Preferred Equity of TRG 29,217 29,217 ------ ------ (151,631) (146,190) -------- -------- (494,847) (474,747) -------- -------- 2,572,265 2,606,853 ========= ========= Combined Balance Sheet of Unconsolidated Joint Ventures (1): Assets: Properties 1,094,086 1,094,963 Accumulated depreciation and amortization (402,713) (396,518) -------- -------- 691,373 698,445 Cash and cash equivalents 11,524 18,544 Accounts and notes receivable 22,717 26,982 Deferred charges and other assets 21,508 22,310 747,122 766,281 ======= ======= Liabilities: Notes payable 1,089,844 1,092,806 Accounts payable and other liabilities, net 37,613 50,615 ------ ------ 1,127,457 1,143,421 Accumulated Deficiency in Assets: Accumulated deficiency in assets -TRG (200,284) (200,169) Accumulated deficiency in assets -Joint Venture Partners (170,547) (166,866) Accumulated other comprehensive income (loss) - TRG (5,062) (5,397) Accumulated other comprehensive income (loss) - Joint Venture Partners (4,442) (4,708) ------ ------ (380,335) (377,140) -------- -------- 747,122 766,281 ======= ======= (1) Certain 2009 amounts have been reclassified to conform to 2010 classifications. TAUBMAN CENTERS, INC. --------------------- Table 6 - 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, 2010 --------------- Funds from Operations per common share (1) 2.55 2.75 Real estate depreciation - TRG (1.77) (1.72) Distributions on participating securities of TRG (0.02) (0.02) Depreciation of TCO's additional basis in TRG (0.12) (0.12) ----- ----- Net income attributable to common shareowners, per common share (EPS) (1) 0.64 0.89 ===== ===== (1) Guidance on Funds from Operations and EPS includes The Pier Shops' operations through June 2010. The loan on the center is in default and accrues interest at 10.01%. The foreclosure process is not in the Company's control, but the Company anticipates that the foreclosure will be completed in the late second or early third quarter of 2010, at which time the ownership of The Pier Shops will be transferred in satisfaction of the obligation under the debt. The Company expects a non-cash incremental impact on FFO per share of ($0.010) for each month the Company continues to own the center. Including the impact of depreciation and amortization, the impact on EPS is expected to be ($0.015) per month. A non- cash accounting gain is expected to be recognized when the loan obligation is extinguished upon transfer of title of The Pier Shops. This gain has been excluded from EPS and FFO per share estimates.
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Taubman Centers, Inc.
CONTACT: Barbara Baker, Taubman, Vice President, Investor Relations,
+1-248-258-7367, bbaker@taubman.com
Web Site: http://www.taubman.com/
