BLOOMFIELD HILLS, Mich., Feb. 10, 2011 /PRNewswire/ --
-- Record Mall Tenant Sales of $564 Per Square Foot, Up 12.4% -- Leased Space, Ending Occupancy, Opening Rents Up -- Net Income, FFO and NOI Up for the Year -- Company Partners with Experienced Team on Outlet Initiative
Taubman Centers, Inc. today reported financial results for the quarter and full year periods ended December 31, 2010.
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Net income (loss) allocable to common shareholders per diluted common share (EPS) for the quarter ended December 31, 2010 was $0.60, up from $0.07 for the quarter ended December 31, 2009. EPS for the year ended December 31, 2010 was $0.86 up from a $(1.31) loss for the year ended December 31, 2009.
For the quarter ended December 31, 2010, Funds from Operations (FFO) per diluted share was $1.06, up 14.0 percent from $0.93 Adjusted FFO per diluted share for the quarter ended December 31, 2009. There were no adjustments in 2010. Adjusted FFO in 2009 excludes the impact of $0.37 per diluted share of litigation charges. FFO was $0.56 per diluted share for the quarter ended December 31, 2009.
For the year ended December 31, 2010, FFO per diluted share was $2.86 versus Adjusted FFO per diluted share of $3.06 for the year ended December 31, 2009. Adjusted FFO for the year ended December 31, 2009 excludes the impact of $2.38 per diluted share of litigation, restructuring and impairment charges. FFO was $0.68 per diluted share for the year ended December 31, 2009.
"These results are very positive," said Robert S. Taubman, chairman, president and chief executive officer of Taubman Centers. "We have actively managed our portfolio through a very difficult environment, and our NOI has begun to grow again. The regional mall model - especially given the quality of our assets - gives us great confidence in our future."
Core Strength
Mall tenant sales per square foot at Taubman properties was up 12.9 percent during the quarter and 12.4 percent for the year ended December 31, 2010. The resulting sales per square foot of $564 for 2010 is a record for the company and for the publicly held U.S. regional mall industry. Sales per square foot increased at all centers with the company's Florida and Michigan properties leading the way. Sales per square foot increases were strong across many categories including sporting goods, women's specialty, food specialty, family and women's shoes, home furnishings and unisex apparel categories, which were all up double digit percentages. In addition, electronics had an exceptionally strong year.
"We're delighted with these strong tenant sales results. We had double digit increases every quarter of 2010," said Mr. Taubman.
Leased space at December 31, 2010 was 92.0 percent, up 0.4 percent from December 31, 2009. Ending occupancy at December 31, 2010 was 90.1 percent, up 0.3 percent from December 31, 2009. Opening rents per square foot for the year were $49.69, up 3.9 percent from opening rents per square foot in 2009.
Net Operating Income (NOI) excluding lease termination income grew 4.8 percent for the quarter and 0.5 percent for the year ended December 31, 2010. The quarter's strong NOI results were driven by minimum rents, percentage rent, sponsorship income, specialty leasing income and center-related operating expense reductions.
External Growth
The company has a multi-pronged strategy for external growth encompassing a diversity of markets and product types to create long-term value for shareholders. Progress in 2010 includes the following:
-- Outlet Center Development ---------------------------- The company is announcing today it has been working with a company headed by Bruce Zalaznick, a former executive vice president of Prime Outlets and Chelsea Property Group. He has a 20-year proven track record of successful outlet development. Taubman has formed a joint venture with his company - to seek development sites for outlet-style shopping centers. Taubman will hold a 90 percent ownership interest in the joint venture for any projects that move forward. -- Asia Development ------------------- In October, the company appointed seasoned real estate executive, Rene Tremblay as president, Taubman Asia. Mr. Tremblay is leading the company's expansion initiatives in China and South Korea. During 2010, Taubman Asia was selected to lease and manage IFC Mall in Yeouido, Seoul, South Korea. -- Traditional Center Development --------------------------------- The company is on track for the March 22, 2012 opening of City Creek Center (Salt Lake City, Utah). Part of one of the nation's largest mixed use, downtown redevelopment projects, the center will feature Nordstrom, Macy's and a full complement of unique point-of-difference stores and restaurants. Dividend and Stock Performance
In December 2010, in recognition of improved market conditions, the company increased its regular quarterly dividend by 5.4 percent. Since its public offering in 1992 Taubman Centers' dividend has been increased 13 times, achieving a 3.9 percent compounded annual growth rate. The company has never decreased its dividend or paid a dividend in stock.
During 2010, the company enjoyed a 46.8 percent total shareholder return. This compares to the MSCI US REIT Index of 28.5 percent, the FTSE NAREIT Equity Retail Index of 33.4 percent and the S&P 500 Index of 15.1 percent. Over the 10 years ending December 31, 2010, the company's compounded annual shareholder return has been 22.2 percent. This compares to the MSCI US REIT Index of 10.6 percent, the FTSE NAREIT Equity Retail Index of 13.2 percent and the S&P 500 Index of 1.4 percent.
2011 Guidance
The company is introducing guidance for 2011. The company expects FFO per diluted share excluding The Pier Shops (Atlantic City, N.J.) and Regency Square (Richmond, Va.) to be in the range of $2.86 to $2.98 in 2011. EPS excluding The Pier Shops and Regency Square for the year is expected to be in the range of $1.09 to $1.23.
The company is working with the respective special servicers to transfer title to The Pier Shops and Regency Square as soon as possible; however, the holding periods for both properties remain uncertain and could be extended periods. The noncash impact of owning these centers (including anticipated default interest) is expected to result in an incremental FFO charge of approximately $(0.20) per diluted share for The Pier Shops and $(0.04) per diluted share for Regency Square in 2011. Including the impact of depreciation and amortization, the impact on EPS for the two centers is expected to be a charge of $(0.34). Significant noncash accounting gains will be recognized when the respective loan obligations are extinguished upon transfer of title to the properties. These gains have been excluded from EPS and FFO per diluted share estimates. Assuming holding periods through the end of 2011 for both properties, the company estimates 2011 FFO per diluted share to be in the range of $2.62 to $2.74 and EPS to be in the range of $0.75 to $0.89.
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 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 -- Operating Statistics Glossary Investor Conference Call
The company will host a conference call at 11:00 AM Eastern Standard Time on Friday, February 11 to discuss these results, business conditions and the company's outlook for 2011. 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 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 celebrated 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 December 31, 2010 and 2009 (in thousands of dollars, except as indicated) Three Months Ended ------------------ 2010 2009 ---- ---- Net income (loss) (1) 58,572 14,235 Noncontrolling share of income of consolidated joint ventures (3,879) (2,845) Noncontrolling share of (income) loss of TRG (16,737) (2,794) TRG series F preferred distributions (615) (615) Preferred stock dividends (3,659) (3,659) Distributions to participating securities of TRG (541) (362) Net income (loss) attributable to Taubman Centers, Inc. common shareowners 33,141 3,960 Net income (loss) per common share - basic 0.61 0.07 Net income (loss) per common share - diluted 0.60 0.07 Beneficial interest in EBITDA - Consolidated Businesses (1),(2) 105,154 95,860 Beneficial interest in EBITDA - Unconsolidated Joint Ventures (2) 30,127 (3,082) Funds from Operations (1),(2) 88,246 46,389 Funds from Operations attributable to TCO (1),(2) 59,624 31,092 Funds from Operations per common share - basic (1),(2) 1.09 0.58 Funds from Operations per common share - diluted (1),(2) 1.06 0.56 Adjusted Funds from Operations (1),(2) 88,246 76,663 Adjusted Funds from Operations attributable to TCO (1),(2) 59,624 51,383 Adjusted Funds from Operations per common share -basic (1),(2) 1.09 0.96 Adjusted Funds from Operations per common share -diluted (1),(2) 1.06 0.93 Weighted average number of common shares outstanding -basic 54,685,686 53,616,534 Weighted average number of common shares outstanding -diluted 56,008,080 55,013,454 Common shares outstanding at end of period 54,696,054 54,321,586 Weighted average units -Operating Partnership -basic 80,937,262 79,996,610 Weighted average units -Operating Partnership -diluted 83,130,919 82,264,792 Units outstanding at end of period - Operating Partnership 80,947,630 80,699,271 Ownership percentage of the Operating Partnership at end of period 67.6% 67.3% Number of owned shopping centers at end of period 23 23 Operating Statistics (3): Mall tenant sales (4) 1,487,634 1,337,449 Ending occupancy 90.1% 89.8% Average occupancy 89.9% 89.8% Leased space at end of period 92.0% 91.6% Mall tenant occupancy costs as a percentage of tenant sales - Consolidated Businesses (4) 13.1% 14.4% Mall tenant occupancy costs as a percentage of tenant sales - Unconsolidated Joint Ventures (4) 11.8% 13.1% Mall tenant occupancy costs as a percentage of tenant sales -Combined (4) 12.7% 13.9% Average rent per square foot - Consolidated Businesses 43.64 42.92 Average rent per square foot - Unconsolidated Joint Ventures 43.76 44.20 Average rent per square foot - Combined 43.68 43.36 Year Ended ---------- 2010 2009 ---- ---- Net income (loss) (1) 102,327 (79,161) Noncontrolling share of income of consolidated joint ventures (9,780) (3,115) Noncontrolling share of (income) loss of TRG (26,219) 31,224 TRG series F preferred distributions (2,460) (2,460) Preferred stock dividends (14,634) (14,634) Distributions to participating securities of TRG (1,635) (1,560) Net income (loss) attributable to Taubman Centers, Inc. common shareowners 47,599 (69,706) Net income (loss) per common share - basic 0.87 (1.31) Net income (loss) per common share - diluted 0.86 (1.31) Beneficial interest in EBITDA - Consolidated Businesses (1),(2) 322,703 168,651 Beneficial interest in EBITDA - Unconsolidated Joint Ventures (2) 100,682 67,815 Funds from Operations (1),(2) 237,275 55,026 Funds from Operations attributable to TCO (1),(2) 160,138 36,799 Funds from Operations per common share - basic (1),(2) 2.93 0.69 Funds from Operations per common share - diluted (1),(2) 2.86 0.68 Adjusted Funds from Operations (1),(2) 237,275 248,732 Adjusted Funds from Operations attributable to TCO (1),(2) 160,138 166,267 Adjusted Funds from Operations per common share -basic (1),(2) 2.93 3.12 Adjusted Funds from Operations per common share -diluted (1),(2) 2.86 3.06 Weighted average number of common shares outstanding -basic 54,569,618 53,239,279 Weighted average number of common shares outstanding -diluted 55,702,813 53,239,279 Common shares outstanding at end of period Weighted average units -Operating Partnership -basic 80,870,969 79,656,353 Weighted average units -Operating Partnership -diluted 82,875,424 81,269,311 Units outstanding at end of period - Operating Partnership Ownership percentage of the Operating Partnership at end of period Number of owned shopping centers at end of period 23 23 Operating Statistics (3): Mall tenant sales (4) 4,619,896 4,185,996 Ending occupancy 90.1% 89.8% Average occupancy 88.8% 89.4% Leased space at end of period 92.0% 91.6% Mall tenant occupancy costs as a percentage of tenant sales - Consolidated Businesses (4) 14.5% 16.2% Mall tenant occupancy costs as a percentage of tenant sales - Unconsolidated Joint Ventures (4) 13.5% 14.9% Mall tenant occupancy costs as a percentage of tenant sales -Combined (4) 14.1% 15.8% Average rent per square foot - Consolidated Businesses 43.63 43.69 Average rent per square foot - Unconsolidated Joint Ventures 43.73 44.49 Average rent per square foot - Combined 43.66 43.95 The three month period and the year ended December 31, 2009 include litigation charges related to Westfarms. Also, the year ended December 31, 2009 includes a restructuring charge, which primarily represents the costs of termination of personnel, and impairment charges related to the write down of The Pier Shops and Regency Square to their fair values. No similar charges were incurred in the (1) three month period and year ended December 31, 2010. 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 (2) 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 month period and the year ended December 31, 2009, FFO was adjusted for litigation charges. Also, FFO for the year ended December 31, 2009 was adjusted for restructuring and impairment charges. In Tables 4, 5 and 9 of this Press Release, the Company has separately presented the impacts of The Pier Shops and Regency Square, as the timing of transfer of ownership of these centers is uncertain. 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) Statistics exclude The Pier Shops and Regency Square. (4) Based on reports of sales furnished by mall tenants. TAUBMAN CENTERS, INC. Table 2 - Income Statement For the Three Months Ended December 31, 2010 and 2009 (in thousands of dollars) 2010 ---- UNCONSOLIDATED CONSOLIDATED JOINT BUSINESSES VENTURES (1) ---------- ------------ REVENUES: Minimum rents 89,775 40,644 Percentage rents 6,606 3,696 Expense recoveries 71,478 30,346 Management, leasing, and development services 4,687 Other 21,178 2,868 ------ ----- Total revenues 193,724 77,554 EXPENSES: Maintenance, taxes, and utilities 45,756 18,123 Other operating 20,968 5,151 Restructuring charge Management, leasing, and development services 2,276 General and administrative 8,641 Litigation charges (2) Interest expense 38,462 15,960 Depreciation and amortization 36,374 9,743 ------ ----- Total expenses 152,477 48,977 Nonoperating income 1,312 (1) ----- --- 42,559 28,576 ====== Income tax expense (186) Equity in income (loss) of Unconsolidated Joint Ventures 16,199 ------ Net income 58,572 Net income attributable to noncontrolling interests: Noncontrolling share of income of consolidated joint ventures (3,879) TRG series F preferred distributions (615) Noncontrolling share of income of TRG (16,737) Distributions to participating securities of TRG (541) Preferred stock dividends (3,659) ------ Net income attributable to Taubman Centers, Inc. common shareowners 33,141 ====== SUPPLEMENTAL INFORMATION: EBITDA - 100% (2) 117,395 54,279 EBITDA - outside partners' share (12,241) (24,152) ------- ------- Beneficial interest in EBITDA (2) 105,154 30,127 Beneficial interest expense (33,107) (8,266) Beneficial income tax expense (186) Non-real estate depreciation (1,202) Preferred dividends and distributions (4,274) ------ Fund from Operations contribution (2) 66,385 21,861 ====== ====== Net straightline adjustments to rental revenue, recoveries, and ground rent expense at TRG % 413 160 === === 2009 ---- UNCONSOLIDATED CONSOLIDATED JOINT BUSINESSES VENTURES (1) ---------- ------------ REVENUES: Minimum rents 87,059 40,505 Percentage rents 5,476 2,862 Expense recoveries 74,374 29,632 Management, leasing, and development services 10,990 Other 8,376 2,506 ----- ----- Total revenues 186,275 75,505 EXPENSES: Maintenance, taxes, and utilities 51,288 18,959 Other operating 19,359 6,156 Restructuring charge (118) Management, leasing, and development services 1,886 General and administrative 6,968 Litigation charges (2) 38,500 Interest expense 36,557 16,118 Depreciation and amortization 37,239 10,435 ------ ------ Total expenses 153,179 90,168 Nonoperating income 31 (1) --- --- 33,127 (14,664) ======= Income tax expense (1,400) Equity in income (loss) of Unconsolidated Joint Ventures (17,492) ------- Net income 14,235 Net income attributable to noncontrolling interests: Noncontrolling share of income of consolidated joint ventures (2,845) TRG series F preferred distributions (615) Noncontrolling share of income of TRG (2,794) Distributions to participating securities of TRG (362) Preferred stock dividends (3,659) ------ Net income attributable to Taubman Centers, Inc. common shareowners 3,960 ===== SUPPLEMENTAL INFORMATION: EBITDA - 100% (2) 106,923 11,889 EBITDA - outside partners' share (11,063) (14,971) ------- ------- Beneficial interest in EBITDA (2) 95,860 (3,082) Beneficial interest expense (31,505) (8,358) Beneficial income tax expense (1,400) Non-real estate depreciation (852) Preferred dividends and distributions (4,274) ------ Fund from Operations contribution (2) 57,829 (11,440) ====== ======= Net straightline adjustments to rental revenue, recoveries, and ground rent expense at TRG % (410) (53) ==== === (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. (2) In 2009, the Company recognized litigation charges related to Westfarms. TRG's share of the charges was $30.4 million. TAUBMAN CENTERS, INC. Table 3 - Income Statement For the Years Ended December 31, 2010 and 2009 (in thousands of dollars) 2010 ---- UNCONSOLIDATED CONSOLIDATED JOINT BUSINESSES VENTURES (1) ---------- ------------ REVENUES: Minimum rents 341,727 155,382 Percentage rents 13,167 6,567 Expense recoveries 237,415 100,635 Management, leasing, and development services 16,109 Other 46,140 7,807 ------ ----- Total revenues 654,558 270,391 EXPENSES: Maintenance, taxes, and utilities 179,234 68,270 Other operating 75,401 19,387 Restructuring charge (2) Management, leasing, and development services 8,258 General and administrative 30,234 Litigation charges (3) Impairment charges (4) Interest expense 152,708 63,835 Depreciation and amortization 153,876 38,179 ------- ------ Total expenses 599,711 189,671 Nonoperating Income 2,802 2 Impairment loss on marketable securities 57,649 80,722 ====== Income tax expense (734) Equity in income of Unconsolidated Joint Ventures 45,412 ------ Net income (loss) 102,327 Net (income) loss attributable to noncontrolling interests: Noncontrolling share of income of consolidated joint ventures (9,780) TRG series F preferred distributions (2,460) Noncontrolling share of (income) loss of TRG (26,219) Distributions to participating securities of TRG (1,635) Preferred stock dividends (14,634) ------- Net income (loss) attributable to Taubman Centers, Inc. common shareowners 47,599 ====== SUPPLEMENTAL INFORMATION: EBITDA - 100% (2), (3), (4) 364,233 182,736 EBITDA - outside partners' share (41,530) (82,054) ------- ------- Beneficial interest in EBITDA (2), (3), (4) 322,703 100,682 Beneficial interest expense (131,484) (33,076) Beneficial income tax expense (734) Non-real estate depreciation (3,722) Preferred dividends and distributions (17,094) ------- Funds from Operations contribution (2), (3), (4) 169,669 67,606 ======= ====== Net straightline adjustments to rental revenue, recoveries, and ground rent expense at TRG % 627 162 === === 2009 ---- UNCONSOLIDATED CONSOLIDATED JOINT BUSINESSES VENTURES (1) ---------- ------------ REVENUES: Minimum rents 341,914 157,099 Percentage rents 10,818 5,039 Expense recoveries 246,377 101,692 Management, leasing, and development services 21,179 Other 45,816 8,705 ------ ----- Total revenues 666,104 272,535 EXPENSES: Maintenance, taxes, and utilities 189,061 68,094 Other operating 67,182 24,024 Restructuring charge (2) 2,512 Management, leasing, and development services 7,862 General and administrative 27,858 Litigation charges (3) 38,500 Impairment charges (4) 166,680 Interest expense 145,670 64,407 Depreciation and amortization 147,316 39,274 ------- ------ Total expenses 754,141 234,299 Nonoperating Income 711 87 Impairment loss on marketable securities (1,666) ------ (88,992) 38,323 ====== Income tax expense (1,657) Equity in income of Unconsolidated Joint Ventures 11,488 ------ Net income (loss) (79,161) Net (income) loss attributable to noncontrolling interests: Noncontrolling share of income of consolidated joint ventures (3,115) TRG series F preferred distributions (2,460) Noncontrolling share of (income) loss of TRG 31,224 Distributions to participating securities of TRG (1,560) Preferred stock dividends (14,634) ------- Net income (loss) attributable to Taubman Centers, Inc. common shareowners (69,706) ======= SUPPLEMENTAL INFORMATION: EBITDA - 100% (2), (3), (4) 203,994 142,004 EBITDA - outside partners' share (35,343) (74,189) ------- ------- Beneficial interest in EBITDA (2), (3), (4) 168,651 67,815 Beneficial interest expense (125,823) (33,427) Beneficial income tax expense (1,657) Non-real estate depreciation (3,439) Preferred dividends and distributions (17,094) ------- Funds from Operations contribution (2), (3), (4) 20,638 34,388 ====== ====== Net straightline adjustments to rental revenue, recoveries, and ground rent expense at TRG % 83 263 === === (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. (2) In 2009, the Company recognized a restructuring charge, which primarily represents the costs of termination of personnel. (3) In 2009, the Company recognized litigation charges related to Westfarms. TRG's share of the charges was $30.4 million. (4) In 2009, the Company wrote down the book values of The Pier Shops and Regency Square to their fair values. The impairment charges were $160.8 million at TRG's share. 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 December 31, 2010 and 2009 (in thousands of dollars except as noted; may not add or recalculate due to rounding) 2010 ---- Per Shares Share Dollars /Units /Unit ------- ------ ----- Net income attributable to TCO common shareowners 33,141 56,008,080 0.59 Add depreciation of TCO's additional basis 1,720 0.03 ----- ---- Net income attributable to TCO common shareowners, excluding step-up depreciation 34,861 56,008,080 0.62 Add: Noncontrolling share of income of TRG 16,737 26,251,577 Distributions to participating securities 541 871,262 --- ------- Net income attributable to partnership unitholders and participating securities 52,139 83,130,919 0.63 Add (less) depreciation and amortization: Consolidated businesses at 100% 36,374 0.44 Depreciation of TCO's additional basis (1,720) (0.02) Noncontrolling partners in consolidated joint ventures (3,007) (0.04) Share of Unconsolidated Joint Ventures 5,662 0.07 Non-real estate depreciation (1,202) (0.01) ------ ----- Funds from Operations 88,246 83,130,919 1.06 TCO's average ownership percentage of TRG 67.6% ---- Funds from Operations attributable to TCO 59,624 1.06 ====== ==== Funds from Operations 88,246 83,130,919 1.06 TRG's share of litigation charges Restructuring charge Adjusted Funds from Operations 88,246 83,130,919 1.06 TCO's average ownership percentage of TRG 67.6% ---- Adjusted Funds from Operations attributable to TCO 59,624 1.06 ====== ==== Adjusted Funds from Operations 88,246 83,130,919 1.06 The Pier Shops FFO 2,671 0.03 Regency Square FFO (211) (0.00) ---- ----- Adjusted Funds from Operations, excluding The Pier Shops and Regency Square 90,706 83,130,919 1.09 TCO's average ownership percentage of TRG 67.6% ---- Adjusted Funds from Operations attributable to TCO, excluding The Pier Shops and Regency Square 61,286 1.09 ====== ==== 2009 ---- Per Shares Share Dollars /Units /Unit ------- ------ ----- Net income attributable to TCO common shareowners 3,960 55,013,454 0.07 Add depreciation of TCO's additional basis 1,720 0.03 ----- ---- Net income attributable to TCO common shareowners, excluding step-up depreciation 5,680 55,013,454 0.10 Add: Noncontrolling share of income of TRG 2,794 26,380,076 Distributions to participating securities 362 871,262 --- ------- Net income attributable to partnership unitholders and participating securities 8,836 82,264,792 0.11 Add (less) depreciation and amortization: Consolidated businesses at 100% 37,239 0.45 Depreciation of TCO's additional basis (1,720) (0.02) Noncontrolling partners in consolidated joint ventures (3,166) (0.04) Share of Unconsolidated Joint Ventures 6,052 0.07 Non-real estate depreciation (852) (0.01) ---- ----- Funds from Operations 46,389 82,264,792 0.56 TCO's average ownership percentage of TRG 67.0% ---- Funds from Operations attributable to TCO 31,092 0.56 ====== ==== Funds from Operations 46,389 82,264,792 0.56 TRG's share of litigation charges 30,392 0.37 Restructuring charge (118) (0.00) ---- ----- Adjusted Funds from Operations 76,663 82,264,792 0.93 TCO's average ownership percentage of TRG 67.0% ---- Adjusted Funds from Operations attributable to TCO 51,383 0.93 ====== ==== Adjusted Funds from Operations 76,663 82,264,792 0.93 The Pier Shops FFO 3,041 0.04 Regency Square FFO 120 0.00 --- ---- Adjusted Funds from Operations, excluding The Pier Shops and Regency Square 79,824 82,264,792 0.97 TCO's average ownership percentage of TRG 67.0% ---- Adjusted Funds from Operations attributable to TCO, excluding The Pier Shops and Regency Square 53,482 0.97 ====== ==== TAUBMAN CENTERS, INC. Table 5 -Reconciliation of Net Income (Loss) Attributable to Taubman Centers, Inc. Common Shareowners to Funds from Operations and Adjusted Funds from Operations For the Years Ended December 31, 2010 and 2009 (in thousands of dollars except as noted; may not add or recalculate due to rounding) 2010 ---- Per Shares Share Dollars /Units /Unit ------- ------ ----- Net income (loss) attributable to TCO common shareowners 47,599 55,702,813 0.86 Add depreciation of TCO's additional basis 6,880 0.12 ----- ---- Net income (loss) attributable to TCO common shareowners, excluding step-up depreciation 54,479 55,702,813 0.98 Add: Noncontrolling share of income (loss) of TRG 26,219 26,301,349 Distributions to participating securities 1,635 871,262 ----- ------- Net income (loss) attributable to partnership unit holders and participating securities 82,333 82,875,424 0.99 Add (less) depreciation and amortization: Consolidated businesses at 100% 153,876 1.86 Depreciation of TCO's additional basis (6,880) (0.08) Noncontrolling partners in consolidated joint ventures (10,526) (0.13) Share of Unconsolidated Joint Ventures 22,194 0.27 Non-real estate depreciation (3,722) (0.04) ------ ----- Funds from Operations 237,275 82,875,424 2.86 TCO's average ownership percentage of TRG 67.5% ---- Funds from Operations attributable to TCO 160,138 2.86 ======= ==== Funds from Operations 237,275 82,875,424 2.86 TRG's share of impairment charges TRG's share of litigation charges Restructuring charge Adjusted Funds from Operations 237,275 82,875,424 2.86 TCO's average ownership percentage of TRG 67.5% ---- Adjusted Funds from Operations attributable to TCO 160,138 2.86 ======= ==== Adjusted Funds from Operations 237,275 82,875,424 2.86 The Pier Shops FFO 10,739 0.13 Regency Square FFO 933 0.01 --- ---- Adjusted Funds from Operations, excluding The Pier Shops and Regency Square 248,947 82,875,424 3.00 TCO's average ownership percentage of TRG 67.5% ---- Adjusted Funds from Operations attributable to TCO, excluding The Pier Shops and Regency Square 167,983 3.00 ======= ==== 2009 ---- Per Shares Share /Units Dollars (1) /Unit ------- ------- ----- Net income (loss) attributable to TCO common shareowners (69,706) 53,239,279 (1.31) Add depreciation of TCO's additional basis 6,880 0.13 ----- ---- Net income (loss) attributable to TCO common shareowners, excluding step-up depreciation (62,826) 53,239,279 (1.18) Add: Noncontrolling share of income (loss) of TRG (31,224) 26,417,074 Distributions to participating securities 1,560 ----- Net income (loss) attributable to partnership unit holders and participating securities (92,490) 79,656,353 (1.16) Add (less) depreciation and amortization: Consolidated businesses at 100% 147,316 1.85 Depreciation of TCO's additional basis (6,880) (0.09) Noncontrolling partners in consolidated joint ventures (12,381) (0.16) Share of Unconsolidated Joint Ventures 22,900 0.29 Non-real estate depreciation (3,439) (0.04) ------ ----- Funds from Operations 55,026 81,269,311 0.68 TCO's average ownership percentage of TRG 66.8% ---- Funds from Operations attributable to TCO 36,799 0.68 ====== ==== Funds from Operations 55,026 81,269,311 0.68 TRG's share of impairment charges 160,802 1.98 TRG's share of litigation charges 30,392 0.37 Restructuring charge 2,512 0.03 ----- ---- Adjusted Funds from Operations 248,732 81,269,311 3.06 TCO's average ownership percentage of TRG 66.8% ---- Adjusted Funds from Operations attributable to TCO 166,267 3.06 ======= ==== Adjusted Funds from Operations 248,732 81,269,311 3.06 The Pier Shops FFO 5,210 0.07 Regency Square FFO 296 0.00 --- ---- Adjusted Funds from Operations, excluding The Pier Shops and Regency Square 254,238 81,269,311 3.13 TCO's average ownership percentage of TRG 66.8% ---- Adjusted Funds from Operations attributable to TCO, excluding The Pier Shops and Regency Square 169,923 3.13 ======= ==== (1) Per share amounts for Funds from Operations and Adjusted Funds from Operations are calculated using weighted average diluted shares, which include the dilutive effect of potential common stock. Per share amounts for net loss attributable to common shareholders and net loss attributable to partnership unitholders and participating securities are calculated using weighted average outstanding shares, which exclude the dilutive effect of potential common stock because the impact is anti-dilutive. TAUBMAN CENTERS, INC. Table 6 -Reconciliation of Net Income (Loss) to Beneficial Interest in EBITDA For the Periods Ended December 31, 2010 and 2009 (in thousands of dollars; amounts attributable to TCO may not recalculate due to rounding) Three Months Ended Year Ended ------------ ---------- 2010 2009 2010 2009 ---- ---- ---- ---- Net income (loss) 58,572 14,235 102,327 (79,161) Add (less) depreciation and amortization: Consolidated businesses at 100% 36,374 37,239 153,876 147,316 Noncontrolling partners in consolidated joint ventures (3,007) (3,166) (10,526) (12,381) Share of Unconsolidated Joint Ventures 5,662 6,052 22,194 22,900 Add (less) interest expense and income tax expense: Interest expense: Consolidated businesses at 100% 38,462 36,557 152,708 145,670 Noncontrolling partners in consolidated joint ventures (5,355) (5,052) (21,224) (19,847) Share of Unconsolidated Joint Ventures 8,266 8,358 33,076 33,427 Income tax expense 186 1,400 734 1,657 Less noncontrolling share of income of consolidated joint ventures (3,879) (2,845) (9,780) (3,115) ------ ------ ------ ------ Beneficial Interest in EBITDA 135,281 92,778 423,385 236,466 TCO's average ownership percentage of TRG 67.6% 67.0% 67.5% 66.8% ---- ---- ---- ---- Beneficial Interest in EBITDA attributable to TCO 91,403 62,183 285,685 158,063 ====== ====== ======= ======= TAUBMAN CENTERS, INC. Table 7 -Reconciliation of Net Income (Loss) to Net Operating Income (NOI) For the Periods Ended December 31, 2010 and 2009 (in thousands of dollars) Three Months Ended ------------ 2010 2009 ---- ---- Net income (loss) 58,572 14,235 Add (less) depreciation and amortization: Consolidated businesses at 100% 36,374 37,239 Noncontrolling partners in consolidated joint ventures (3,007) (3,166) Share of Unconsolidated Joint Ventures 5,662 6,052 Add (less) interest expense and income tax expense: Interest expense: Consolidated businesses at 100% 38,462 36,557 Noncontrolling partners in consolidated joint ventures (5,355) (5,052) Share of Unconsolidated Joint Ventures 8,266 8,358 Income tax expense 186 1,400 Less noncontrolling share of income of consolidated joint ventures (3,879) (2,845) Add EBITDA attributable to outside partners: EBITDA attributable to noncontrolling partners in consolidated joint ventures 12,241 11,063 EBITDA attributable to outside partners in Unconsolidated Joint Ventures 24,152 14,971 ------ ------ EBITDA at 100% 171,674 118,812 Add (less) items excluded from shopping center NOI: General and administrative expenses 8,641 6,968 Management, leasing, and development services, net (2,411) (9,104) Restructuring charge (118) Litigation charges 38,500 Impairment charges Gain on sale of peripheral land (1,178) Interest income (133) (30) Impairment loss on marketable securities Straight-line of rents (1,131) 384 The Pier Shops NOI (1,218) 684 Regency Square NOI (1,517) (1,276) Non-center specific operating expenses and other 7,726 6,108 ----- ----- NOI at 100% 180,453 160,928 ======= ======= NOI - growth % 12.1% NOI at 100% 180,453 160,928 Lease cancellation income (1) (13,335) (1,463) ------- ------ NOI at 100% excluding lease cancellation income 167,118 159,465 ======= ======= NOI excluding lease cancellation income - growth % 4.8% Year Ended ---------- 2010 2009 ---- ---- Net income (loss) 102,327 (79,161) Add (less) depreciation and amortization: Consolidated businesses at 100% 153,876 147,316 Noncontrolling partners in consolidated joint ventures (10,526) (12,381) Share of Unconsolidated Joint Ventures 22,194 22,900 Add (less) interest expense and income tax expense: Interest expense: Consolidated businesses at 100% 152,708 145,670 Noncontrolling partners in consolidated joint ventures (21,224) (19,847) Share of Unconsolidated Joint Ventures 33,076 33,427 Income tax expense 734 1,657 Less noncontrolling share of income of consolidated joint ventures (9,780) (3,115) Add EBITDA attributable to outside partners: EBITDA attributable to noncontrolling partners in consolidated joint ventures 41,530 35,343 EBITDA attributable to outside partners in Unconsolidated Joint Ventures 82,054 74,189 ------ ------ EBITDA at 100% 546,969 345,998 Add (less) items excluded from shopping center NOI: General and administrative expenses 30,234 27,858 Management, leasing, and development services, net (7,851) (13,317) Restructuring charge 2,512 Litigation charges 38,500 Impairment charges 166,680 Gain on sale of peripheral land (2,218) Interest income (586) (798) Impairment loss on marketable securities 1,666 Straight-line of rents (2,701) (2,569) The Pier Shops NOI (4,097) (2,620) Regency Square NOI (4,299) (5,159) Non-center specific operating expenses and other 24,337 18,781 ------ ------ NOI at 100% 579,788 577,532 ======= ======= NOI - growth % 0.4% NOI at 100% 579,788 577,532 Lease cancellation income (1) (23,464) (24,204) ------- ------- NOI at 100% excluding lease cancellation income 556,324 553,328 ======= ======= NOI excluding lease cancellation income - growth % 0.5% (1) Excludes The Pier Shops and Regency Square. TAUBMAN CENTERS, INC. Table 8 - Balance Sheets As of December 31, 2010 and December 31, 2009 (in thousands of dollars) As of ----- December 31, December 31, 2010 2009 ------------- ------------- Consolidated Balance Sheet of Taubman Centers, Inc. (1): Assets: Properties 3,528,297 3,496,853 Accumulated depreciation and amortization (1,199,247) (1,100,610) ---------- ---------- 2,329,050 2,396,243 Investment in Unconsolidated Joint Ventures 77,122 89,804 Cash and cash equivalents 19,291 16,176 Accounts and notes receivable, net 49,906 44,503 Accounts receivable from related parties 1,414 1,558 Deferred charges and other assets 70,090 58,569 ------ ------ 2,546,873 2,606,853 ========= ========= Liabilities: Notes payable 2,656,560 2,691,019 Accounts payable and accrued liabilities 247,895 230,276 Distributions in excess of investments in and net income of Unconsolidated Joint Ventures 170,329 160,305 ------- ------- 3,074,784 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 547 543 Additional paid-in capital 589,881 579,983 Accumulated other comprehensive income (loss) (14,925) (24,443) Dividends in excess of net income (939,290) (884,666) -------- -------- (363,761) (328,557) Noncontrolling interests: Noncontrolling interests in consolidated joint ventures (100,355) (100,014) Noncontrolling interests in partnership equity of TRG (93,012) (75,393) Preferred Equity of TRG 29,217 29,217 ------ ------ (164,150) (146,190) -------- -------- (527,911) (474,747) -------- -------- 2,546,873 2,606,853 ========= ========= Combined Balance Sheet of Unconsolidated Joint Ventures (1): Assets: Properties 1,092,916 1,094,963 Accumulated depreciation and amortization (417,712) (396,518) -------- -------- 675,204 698,445 Cash and cash equivalents 21,339 18,544 Accounts and notes receivable 26,288 26,982 Deferred charges and other assets 18,891 22,310 ------ ------ 741,722 766,281 ======= ======= Liabilities: Notes payable 1,125,618 1,092,806 Accounts payable and other liabilities, net 37,292 50,615 ------ ------ 1,162,910 1,143,421 Accumulated Deficiency in Assets: Accumulated deficiency in assets - TRG (222,109) (200,169) Accumulated deficiency in assets - Joint Venture Partners (194,438) (166,866) Accumulated other comprehensive income (loss) -TRG (2,527) (5,397) Accumulated other comprehensive income (loss) -Joint Venture Partners (2,114) (4,708) ------ ------ (421,188) (377,140) -------- -------- 741,722 766,281 ======= ======= (1) Certain 2009 amounts have been reclassified to conform to 2010 classifications. TAUBMAN CENTERS, INC. Table 9 - Annual Guidance -------------------------- (all dollar amounts per common share on a diluted basis; amounts may not add due to rounding) Year Ended December 31, 2010 (Excluding (Including The The Pier Shops & Pier Shops & Regency Regency Square) Square) ------- ------- Funds from Operations per common share (1) 3.00 2.86 Real estate depreciation - TRG (1.77) (1.87) 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) 1.10 0.86 ==== ==== Guidance for 2011 ----------------- Range for Year Ended December 31, 2011 (Excluding The Pier Shops & Regency Square) --------------- Funds from Operations per common share (1) 2.86 2.98 Real estate depreciation - TRG (1.64) (1.62) 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) 1.09 1.23 ==== ==== Guidance for 2011 ----------------- Range for Year Ended December 31, 2011 (Including The Pier Shops & Regency Square) --------------- Funds from Operations per common share (1) 2.62 2.74 Real estate depreciation - TRG (1.74) (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) 0.75 0.89 ==== ==== (1) The noncash impact of owning The Pier Shops and Regency Square (including anticipated default interest) is expected to result in an incremental FFO charge of approximately $(0.20) per diluted share for The Pier Shops and $(0.04) per diluted share for Regency Square in 2011. Including the impact of depreciation and amortization, the impact on EPS for the two centers is expected to be a charge of $(0.34) in 2011. Significant noncash accounting gains will be recognized when the respective loan obligations are extinguished upon transfer of title to the properties. These gains have been excluded from EPS and FFO per diluted share estimates.
Taubman Centers, Inc.
CONTACT: Barbara Baker, Taubman, Vice President, Investor Relations,
+1-248-258-7367, bbaker@taubman.com
Web Site: http://www.taubman.com/
