Taubman Centers Issues Strong First Quarter Results - Funds from Operations (FFO) Up 20% - Net Operating Income (NOI) Excluding Lease Cancellation Income Up 5% - Mall Tenant Sales Per Square Foot Up 5.6% - Net Income, Average Rent Per Square Foot, Occupancy, and Leased Space Up PR Newswire BLOOMFIELD HILLS, Mich., April 25, 2013 BLOOMFIELD HILLS, Mich., April 25, 2013 /PRNewswire/ --Taubman Centers, Inc. (NYSE: TCO) today reported financial results for the first quarter of 2013. March 31, 2013 March 31, 2012 Three Months Three Months Ended Ended Net income allocable to common shareholders per $0.43 $0.30 diluted share (EPS) Funds from Operations (FFO) per diluted share $0.90 $0.75 Growth rate 20.0% (Logo: http://photos.prnewswire.com/prnh/20080428/CLM116LOGO ) "We're pleased to kick off 2013 with this strong performance," said Robert S. Taubman, chairman, president and chief executive officer of Taubman Centers. "Our results were propelled by increased rents and recoveries. We also received significant contributions from our newest center, City Creek Center (Salt Lake City, Utah), and our recent acquisitions of additional interests in International Plaza (Tampa, Fla.) and Waterside Shops (Naples, Fla.)." NOI, Sales Per Square Foot, Rents, Occupancy, and Leased Space Up For the quarter, NOI excluding lease cancellation income was up 5 percent. "Our core properties continue to post outstanding results through increased sales, rents, and occupancy," said Mr. Taubman. Mall tenant sales per square foot were up 5.6 percent from the first quarter of 2012. This brings the company's 12-month trailing mall tenant sales per square foot to $698, an increase of 5.9 percent from the 12-months ended March 31, 2012. Average rent per square foot for the quarter was $47.83, up 4.2 percent from $45.90 in the comparable period last year. Ending occupancy in all centers was 90.3 percent on March 31, 2013, up 0.8 percent from 89.5 percent on March 31, 2012. Leased space in all centers was 92.4 percent on March 31, 2013, up 0.5 percent from 91.9 percent on March 31, 2012. Development The company continues to progress on its development pipeline in the U.S. and Asia. oTaubman Prestige Outlets Chesterfield (Chesterfield, Mo.) – opening August 2, 2013 oThe Mall at University Town Center (Sarasota, Fla.) – opening October 16, 2014 oThe Mall of San Juan (San Juan, Puerto Rico) – opening March 26, 2015 oSaigao City Plaza – retail component (Xi'an, China) – opening 2015 oZhengzhou Vancouver Times Square (Zhengzhou, China) – opening 2015 oHanam Union Square (Hanam, Gyeonggi Province, South Korea) – opening 2016 Financing Activity In March, the company announced a new primary unsecured revolving line of credit. The new line increases the company's borrowing capacity from $650 million to $1.1 billion and includes an accordion feature that would increase the borrowing capacity to as much as $1.5 billion, if fully exercised. See Taubman Centers Announces The Closing Of $1.1 Billion Line Of Credit – March 1, 2013. Also in March, the company issued $170 million, including the exercise of the underwriter's option, of perpetual 6.25% Series K Cumulative Preferred Stock (NYSE: TCO PR K) at a price of $25.00 per share. Proceeds were used to reduce outstanding borrowings under the company's revolving lines of credit. In January, the company completed the previously announced $225 million, 10-year, non-recourse financing on Great Lakes Crossing Outlets (Auburn Hills, Mich.). The loan bears interest at an all-in fixed rate of 3.63%. The company received approximately $100 million of excess proceeds after the repayment of the previously outstanding $126 million, 5.25% fixed rate loan, which were used to reduce outstanding borrowings under the company's revolving lines of credit. Dividend Increased In March, the company declared a regular quarterly dividend of $0.50 per share of common stock, an increase of 8.1 percent. Since the company went public in 1992 it has never reduced its common dividend and has increased its dividend 16 times, achieving a 4.2 percent compounded annual growth rate. See Taubman Centers Increases Quarterly Common Dividend 8.1 Percent To $0.50 Per Share – March 8, 2013. 2013 Guidance The company is adjusting its guidance for 2013 FFO per diluted share to the range of $3.57 to $3.67 from the previous range of $3.57 to $3.70. The change includes the negative 6.5 cent impact of the company's March 2013 Series K Preferred Stock offering. This guidance assumes comparable center NOI growth, excluding lease cancellation income, of at least 3 percent for the year. 2013 EPS is expected to be in the range of $1.67 to $1.82. Supplemental Investor Information Available The company provides supplemental investor information along with its earnings announcements, available online at www.taubman.com under "Investing." This includes the following: oIncome Statements oEarnings Reconciliations oChanges in Funds from Operations and Earnings Per Share oComponents of Other Income, Other Operating Expense, and Nonoperating Income oRecoveries Ratio Analysis oBalance Sheets oDebt Summary oOther Debt, Equity and Certain Balance Sheet Information oConstruction oAcquisitions oCapital Spending oOperational Statistics oOwned Centers oMajor Tenants in Owned Portfolio oAnchors in Owned Portfolio oOperating Statistics Glossary Investor Conference Call The company will host a conference call at 11:00 AM Eastern Daylight Time on Friday, April 26 to discuss these results, business conditions and the company's outlook for the remainder of 2013. The conference call will be simulcast at www.taubman.com under "Investing" as well as www.earnings.com and www.streetevents.com. An online replay will follow shortly after the call and continue for approximately 90 days. Taubman Centers is an S&P MidCap 400 Real Estate Investment Trust engaged in the ownership, management and/or leasing of 27 regional, super-regional and outlet shopping centers in the U.S. and Asia. Taubman's U.S.-owned properties are the most productive in the publicly held U.S. regional mall industry. Taubman is currently developing Taubman Prestige Outlets Chesterfield in Chesterfield, Mo.; The Mall at University Town Center in Sarasota, Fla.; The Mall of San Juan in San Juan, Puerto Rico; and shopping malls in Xi'an and Zhengzhou, China and Hanam, South Korea. Taubman Centers is headquartered in Bloomfield Hills, Mich.and Taubman Asia, the platform for Taubman Centers' expansion into China and South Korea, is headquartered in Hong Kong. Founded in 1950, Taubman has more than 60 years of experience in the shopping center industry. For more information about Taubman, visit www.taubman.com. For ease of use, references in this press release to "Taubman Centers," "company," "Taubman" or an operating platform mean Taubman Centers, Inc. and/or one or more of a number of separate, affiliated entities. Business is actually conducted by an affiliated entity rather than Taubman Centers, Inc. itself or the named operating platform. This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements reflect management's current views with respect to future events and financial performance. The forward-looking statements included in this release are made as of the date hereof. Except as required by law, we assume no obligation to update these forward-looking statements, even if new information becomes available in the future. Actual results may differ materially from those expected because of various risks and uncertainties. You should review the company's filings with the Securities and Exchange Commission, including "Risk Factors" in its most recent Annual Report on Form 10-K and subsequent quarterly reports, for a discussion of such risks and uncertainties. TAUBMAN CENTERS, INC. Table 1 - Summary of Results For the Periods Ended March 31, 2013 and 2012 (in thousands of dollars, except as indicated) Three Months Ended 2013 2012 Net income 46,356 32,177 Noncontrolling share of income of consolidated joint (2,781) (1,834) ventures Noncontrolling share of income of TRG (11,789) (8,751) Preferred stock dividends (3,600) (3,658) Distributions to participating securities of TRG (442) (403) Net income attributable to Taubman Centers, Inc. common 27,744 17,531 shareowners Net income per common share - basic 0.44 0.30 Net income per common share - diluted 0.43 0.30 Beneficial interest in EBITDA - Combined (1) 128,483 111,090 Funds from Operations (1) 81,513 65,152 Funds from Operations attributable to TCO (1) 58,205 44,790 Funds from Operations per common share - basic (1) 0.92 0.77 Funds from Operations per common share - diluted (1) 0.90 0.75 Weighted average number of common shares outstanding - 63,415,922 58,247,148 basic Weighted average number of common shares outstanding - 64,570,812 59,907,860 diluted Common shares outstanding at end of period 63,677,971 58,727,927 Weighted average units - Operating Partnership - basic 88,760,871 84,726,888 Weighted average units - Operating Partnership - 90,787,023 87,258,862 diluted Units outstanding at end of period - Operating 89,013,319 85,206,435 Partnership Ownership percentage of the Operating Partnership at 71.5% 68.9% end of period Number of owned shopping centers at end of period 24 24 Operating Statistics: Net Operating Income excluding lease cancellation 5.0% income - growth % (2) Mall tenant sales - all centers (3) 1,454,788 1,354,100 Mall tenant sales - comparable (2)(3) 1,421,045 1,347,913 Ending occupancy - all centers 90.3% 89.5% Ending occupancy - comparable (2) 90.2% 89.7% Average occupancy - all centers 90.4% 89.7% Average occupancy - comparable (2) 90.4% 89.8% Leased space - all centers 92.4% 91.9% Leased space - comparable (2) 92.3% 92.2% All centers: Mall tenant occupancy costs as a percentage of tenant 13.7% 13.2% sales - Consolidated Businesses (3) Mall tenant occupancy costs as a percentage of tenant 12.0% 12.0% sales - Unconsolidated Joint Ventures (3) Mall tenant occupancy costs as a percentage of tenant 13.2% 12.9% sales - Combined (3) Comparable centers: Mall tenant occupancy costs as a percentage of tenant 13.7% 13.3% sales - Consolidated Businesses (2)(3) Mall tenant occupancy costs as a percentage of tenant 12.0% 12.0% sales - Unconsolidated Joint Ventures (3) Mall tenant occupancy costs as a percentage of tenant 13.1% 12.9% sales - Combined (2)(3) Average rent per square foot - Consolidated Businesses 48.13 46.56 (2) Average rent per square foot - Unconsolidated Joint 47.11 44.41 Ventures Average rent per square foot - Combined (2) 47.83 45.90 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 (1) of operating performance, as it is customary in the real estate and shopping center business to evaluate the performance of properties on a basis unaffected by capital structure. The Company uses Net Operating Income (NOI) as an alternative measure to evaluate the operating performance of centers, both on individual and stabilized portfolio bases. The Company defines NOI as property-level operating revenues (includes rental income excluding straight-line adjustments of minimum rent) less maintenance, taxes, utilities, promotion, ground rent (including straight-line adjustments), and other property operating expenses. Since NOI excludes general and administrative expenses, pre-development charges, interest income and expense, depreciation and amortization, impairment charges, restructuring charges, and gains from peripheral land and property dispositions, it provides a performance measure that, when compared period over period, reflects the revenues and expenses most directly associated with owning and operating rental properties, as well as the impact on their operations from trends in tenant sales, occupancy and rental rates, and operating costs. The Company also uses NOI excluding lease cancellation income as an alternative measure because this income may vary significantly from period to period, which can affect comparability and trend analysis. The Company generally provides separate projections for expected comparable center NOI growth and lease cancellation income. Comparable centers are generally defined as centers that were owned and open for the entire current and preceding period presented. The National Association of Real Estate Investment Trusts (NAREIT) defines Funds from Operations (FFO) as net income (computed in accordance with Generally Accepted Accounting Principles (GAAP)), excluding gains (or losses) from extraordinary items and sales of properties and impairment write-downs of depreciable real estate, plus real estate related depreciation and after adjustments for unconsolidated partnerships and joint ventures. The Company believes that FFO is a useful supplemental measure of operating performance for REITs. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, the Company and most industry investors and analysts have considered presentations of operating results that exclude historical cost depreciation to be useful in evaluating the operating performance of REITs. The Company primarily uses FFO in measuring performance and in formulating corporate goals and compensation. The Company may also present adjusted versions of NOI, Beneficial Interest in EBITDA, and FFO when used by management to evaluate operating performance when certain significant items have impacted results that affect comparability with prior or future periods due to the nature or amounts of these items. The Company believes the disclosure of the adjusted items is similarly useful to investors and others to understand management's view on comparability of such measures between periods. These non-GAAP measures as presented by the Company are not necessarily comparable to similarly titled measures used by other REITs due to the fact that not all REITs use the same definitions. These measures should not be considered alternatives to net income or as an indicator of the Company's operating performance. Additionally, these measures do not represent cash flows from operating, investing or financing activities as defined by GAAP. Statistics exclude non-comparable centers. The 2012 statistics, other (2) than sales per square foot growth, have been restated to include comparable centers to 2013. (3) Based on reports of sales furnished by mall tenants. TAUBMAN CENTERS, INC. Table 2 - Income Statement For the Three Months Ended March 31, 2013 and 2012 (in thousands of dollars) 2013 2012 CONSOLIDATED UNCONSOLIDATED CONSOLIDATED UNCONSOLIDATED BUSINESSES JOINT VENTURES BUSINESSES JOINT VENTURES (1) (1) REVENUES: Minimum rents 102,309 40,071 93,744 38,627 Percentage 5,628 2,197 4,403 2,203 rents Expense 64,037 23,584 56,477 22,764 recoveries Management, leasing, and 3,382 8,648 development services Other 7,901 1,699 5,992 1,716 Total 183,257 67,551 169,264 65,310 revenues EXPENSES: Maintenance, taxes, 46,557 17,211 41,698 16,109 utilities, and promotion Other 16,163 4,103 16,310 3,622 operating Management, leasing, and 2,026 8,522 development services General and 12,236 8,407 administrative Interest 34,452 16,934 37,527 15,667 expense Depreciation and 37,022 10,071 36,434 8,576 amortization Total 148,456 48,319 148,898 43,974 expenses Nonoperating 2,237 8 124 8 income 37,038 19,240 20,490 21,344 Income tax expense (1,028) (214) Equity in income of Unconsolidated 10,346 11,901 Joint Ventures Net income 46,356 32,177 Net income attributable to noncontrolling interests: Noncontrolling share of income of (2,781) (1,834) consolidated joint ventures Noncontrolling share of (11,789) (8,751) income of TRG Distributions to participating (442) (403) securities of TRG Preferred stock (3,600) (3,658) dividends Net income attributable to Taubman Centers, 27,744 17,531 Inc. common shareowners SUPPLEMENTAL INFORMATION: EBITDA - 100% 108,512 46,245 94,451 45,587 EBITDA - outside (6,060) (20,214) (8,467) (20,481) partners' share Beneficial interest in 102,452 26,031 85,984 25,106 EBITDA Beneficial interest (32,289) (9,376) (33,321) (8,094) expense Beneficial income tax (1,028) (211) expense - TRG and TCO Beneficial income tax 33 expense - TCO Non-real estate (710) (654) depreciation Preferred dividends and (3,600) (3,658) distributions Funds from Operations 64,858 16,655 48,140 17,012 contribution Net straight-line adjustments to rental revenue, recoveries, and ground rent expense 1,023 103 572 58 at TRG % Green Hills purchase accounting 204 213 adjustments - minimum rents increase Green Hills, El Paseo Village, and Gardens on El Paseo purchase accounting adjustments - interest 858 858 expense reduction Waterside Shops purchase accounting adjustments - 263 interest expense reduction 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 (1) 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 For the Three Months Ended March 31, 2013 and 2012 (in thousands of dollars except as noted; may not add or recalculate due to rounding) 2013 2012 Shares Per Shares Per Share Share Dollars /Units /Unit Dollars /Units /Unit Net income attributable to TCO 27,744 63,415,922 0.44 17,531 58,247,148 0.30 common shareowners - Basic Add impact of share-based 152 1,154,890 168 1,660,712 compensation Net income attributable to TCO 27,896 64,570,812 0.43 17,699 59,907,860 0.30 common shareowners - Diluted Add depreciation of TCO's additional 1,720 0.03 1,719 0.03 basis Add TCO's additional 33 0.00 income tax expense Net income attributable to TCO common shareowners, excluding step-up depreciation and 29,649 64,570,812 0.46 19,418 59,907,860 0.32 additional income tax expense Add: Noncontrolling share of income of 11,789 25,344,949 8,751 26,479,740 TRG Distributions to participating 442 871,262 403 871,262 securities of TRG Net income attributable to partnership unitholders and participating 41,880 90,787,023 0.46 28,572 87,258,862 0.33 securities Add (less) depreciation and amortization: Consolidated 37,022 0.41 36,434 0.42 businesses at 100% Depreciation of TCO's additional (1,720) (0.02) (1,719) (0.02) basis Noncontrolling partners in (1,116) (0.01) (2,424) (0.03) consolidated joint ventures Share of Unconsolidated 6,309 0.07 5,111 0.06 Joint Ventures Non-real estate (710) (0.01) (654) (0.01) depreciation Less impact of share-based (152) (0.00) (168) (0.00) compensation Funds from 81,513 90,787,023 0.90 65,152 87,258,862 0.75 Operations TCO's average ownership percentage 71.4% 68.7% of TRG Funds from Operations attributable to TCO excluding additional income 58,238 0.90 44,790 0.75 tax expense Less TCO's additional income (33) (0.00) tax expense Funds from Operations 58,205 0.90 44,790 0.75 attributable to TCO TAUBMAN CENTERS, INC. Table 4 - Reconciliation of Net Income to Beneficial Interest in EBITDA For the Periods Ended March 31, 2013 and 2012 (in thousands of dollars; amounts attributable to TCO may not recalculate due to rounding) Three Months Ended 2013 2012 Net income 46,356 32,177 Add (less) depreciation and amortization: Consolidated businesses at 100% 37,022 36,434 Noncontrolling partners in consolidated joint (1,116) (2,424) ventures Share of Unconsolidated Joint Ventures 6,309 5,111 Add (less) interest expense and income tax expense: Interest expense: Consolidated businesses at 100% 34,452 37,527 Noncontrolling partners in consolidated joint (2,163) (4,206) ventures Share of Unconsolidated Joint Ventures 9,376 8,094 Share of income tax expense 1,028 211 Less noncontrolling share of income of consolidated joint (2,781) (1,834) ventures Beneficial Interest in EBITDA 128,483 111,090 TCO's average ownership percentage of TRG 71.4% 68.7% Beneficial Interest in EBITDA attributable to TCO 91,796 76,371 TAUBMAN CENTERS, INC. Table 5 - Reconciliation of Net Income to Net Operating Income (NOI) For the Three Months Ended March 31, 2013 and 2012 (in thousands of dollars) Three Months Ended 2013 2012 Net income 46,356 32,177 Add (less) depreciation and amortization: Consolidated businesses at 100% 37,022 36,434 Noncontrolling partners in consolidated joint ventures (1,116) (2,424) Share of Unconsolidated Joint Ventures 6,309 5,111 Add (less) interest expense and income tax expense: Interest expense: Consolidated businesses at 100% 34,452 37,527 Noncontrolling partners in consolidated joint (2,163) (4,206) ventures Share of Unconsolidated Joint Ventures 9,376 8,094 Share of income tax expense 1,028 211 Less noncontrolling share of income of consolidated joint (2,781) (1,834) ventures Add EBITDA attributable to outside partners: EBITDA attributable to noncontrolling partners in 6,060 8,467 consolidated joint ventures EBITDA attributable to outside partners in Unconsolidated 20,214 20,481 Joint Ventures EBITDA at 100% 154,757 140,038 Add (less) items excluded from shopping center NOI: General and administrative expenses 12,236 8,407 Management, leasing, and development services, net (1,356) (126) Gain on sale of peripheral land (863) Interest income (59) (132) Gain on sale of marketable securities (1,323) Straight-line of rents (1,456) (649) Non-center specific operating expenses and other 3,851 6,896 NOI - all centers at 100% 165,787 154,434 Less - NOI of non-comparable center (1) (3,126) (349) NOI at 100% - comparable centers 162,661 154,085 NOI - growth % 5.6% NOI at 100% - comparable centers 162,661 154,085 Lease cancellation income (1,836) (989) NOI at 100% - comparable centers excluding lease 160,825 153,096 cancellation income NOI excluding lease cancellation income - growth % 5.0% (1) Includes City Creek Center. TAUBMAN CENTERS, INC. Table 6 - Balance Sheets As of March 31, 2013 and December 31, 2012 (in thousands of dollars) As of March 31, 2013 December 31, 2012 Consolidated Balance Sheet of Taubman Centers, Inc. : Assets: Properties 4,282,213 4,246,000 Accumulated depreciation and amortization (1,422,799) (1,395,876) 2,859,414 2,850,124 Investment in Unconsolidated Joint Ventures 212,875 214,152 Cash and cash equivalents 73,730 32,057 Restricted cash 5,185 6,138 Accounts and notes receivable, net 62,130 69,033 Accounts receivable from related parties 1,850 2,009 Deferred charges and other assets 87,328 94,982 3,302,512 3,268,495 Liabilities: Notes payable 2,832,385 2,952,030 Accounts payable and accrued liabilities 270,350 278,098 Distributions in excess of investments in and net income of Unconsolidated Joint Ventures 384,223 383,293 3,486,958 3,613,421 Equity: Taubman Centers, Inc. Shareowners' Equity: Series B Non-Participating Convertible 25 25 Preferred Stock Series J Cumulative Redeemable Preferred Stock Series K Cumulative Redeemable Preferred Stock Common stock 637 633 Additional paid-in capital 822,088 657,071 Accumulated other comprehensive income (23,572) (22,064) (loss) Dividends in excess of net income (895,446) (891,283) (96,268) (255,618) Noncontrolling interests: Noncontrolling interests in consolidated (42,308) (45,066) joint ventures Noncontrolling interests in partnership (45,870) (44,242) equity of TRG (88,178) (89,308) (184,446) (344,926) 3,302,512 3,268,495 Combined Balance Sheet of Unconsolidated Joint Ventures (1): Assets: Properties 1,126,845 1,129,647 Accumulated depreciation and amortization (475,936) (473,101) 650,909 656,546 Cash and cash equivalents 20,597 30,070 Accounts and notes receivable, net 24,702 26,032 Deferred charges and other assets 32,715 31,282 728,923 743,930 Liabilities: Mortgage notes payable 1,488,062 1,490,857 Accounts payable and other liabilities, net 58,227 68,282 1,546,289 1,559,139 Accumulated Deficiency in Assets: Accumulated deficiency in assets - TRG (460,851) (459,390) Accumulated deficiency in assets - Joint (335,752) (333,752) Venture Partners Accumulated other comprehensive income (10,369) (11,021) (loss) - TRG Accumulated other comprehensive income (10,394) (11,046) (loss) - Joint Venture Partners (817,366) (815,209) 728,923 743,930 (1) Unconsolidated Joint Venture amounts exclude the balances of entities that own interests in projects that are currently under development. TAUBMAN CENTERS, INC. Table 7 - Annual Guidance (all dollar amounts per common share on a diluted basis; amounts may not add due to rounding) Range for Year Ended December 31, 2013 Funds from Operations per common share 3.57 3.67 Real estate depreciation - TRG (1.78) (1.73) Distributions on participating securities of TRG (0.02) (0.02) Depreciation of TCO's additional basis in TRG (0.11) (0.11) Net income attributable to common shareowners, per 1.67 1.82 common share (EPS) SOURCE Taubman Centers, Inc. Website: http://www.taubman.com Contact: Barbara Baker, Taubman, Vice President, Corporate Affairs & Investor Relations, 248-258-7367, firstname.lastname@example.org
Taubman Centers Issues Strong First Quarter Results
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