Taubman Centers Issues Fourth Quarter And Full Year 2014 Results And Introduces 2015 Guidance

-Comparable Center Net Operating Income (NOI) Including Lease Cancellation Income Up 4 Percent for the Year

-Average Rent Per Square Foot Up 5.7 Percent for the Year

-Portfolio Releasing Spreads 32 Percent for the Year

News provided by

Taubman Centers, Inc.

Feb 12, 2015, 04:05 ET

BLOOMFIELD HILLS, Mich., Feb. 12, 2015 /PRNewswire/ -- Taubman Centers, Inc. (NYSE:  TCO) today reported financial results for the quarter and full year periods ended December 31, 2014.

December 31, 2014

Three Months Ended

December 31, 2013

Three Months Ended

December 31, 2014

Year Ended

December 31, 2013

Year Ended

Net income attributable to common shareholders (EPS) per diluted share

$6.86

$0.62

$13.47

$1.71

Funds from Operations (FFO) per diluted share

$0.54

$1.11

$3.11

$3.65

Growth rate

(51.4)%

(14.8)%

Adjusted Funds from Operations (Adjusted FFO) per diluted share(1)

$1.00

$1.11

$3.67

$3.65

 Growth rate

(9.9)%

0.5%

(1)   Adjusted FFO for the three months and year ended December 31, 2014 excludes charges related to the October 2014 sale of seven centers to Starwood.

"2014 was a very productive year for our company," said Robert S. Taubman, chairman, president and chief executive officer of Taubman Centers. "We enjoyed the extremely successful opening of The Mall at University Town Center in Sarasota, Florida, we made significant progress on developments both in the U.S. and Asia, and we completed a series of strategic transactions that position the company for increased future growth.

"Our centers delivered solid growth," added Mr. Taubman. Adjusted FFO per share grew despite the loss of two-and-a-half months of results from the seven centers that were sold to Starwood Capital Group in October, which reduced 2014 adjusted FFO by about approximately 14 cents.

Operating Statistics

Including lease cancellation income, comparable center NOI growth was 4 percent and 3.7 percent for the year and the quarter, respectively. Comparable center NOI excluding lease cancellation income was up 2.7 percent for the year and 1.9 percent over fourth quarter 2013. "Our results this quarter and for the full year benefited from increased minimum rent and recoveries," said Mr. Taubman.

For the year, average rent per square foot in comparable centers was $60.58, up 5.7 percent from average rent per square foot of $57.33 in 2013. For the fourth quarter, average rent per square foot in comparable centers was $61.19, up 5.6 percent from $57.94 in the comparable period last year.

Trailing 12-month releasing spreads per square foot for the period ended December 31, 2014 were 32.1 percent.

Comparable mall tenant sales per square foot were $809 for 2014, a 1.2 percent decline from 2013. For the fourth quarter of 2014, mall tenant sales per square foot were up 0.7 percent. "The electronics category, while modestly positive to the quarter, negatively impacted our year-over-year growth rate by about 1 percent. We were also impacted by softness in South American tourism in both the quarter and the year."  

Leased space in comparable centers for Taubman's portfolio was 96.7 percent on December 31, 2014, down 0.8 percent. Ending occupancy in comparable centers was 95.4 percent on December 31, 2014, down 0.9 percent. Leased space and ending occupancy include temporary tenants. 

Portfolio Activity

During 2014, the company:

Financing Activity

During 2014 the company completed a number of transactions that further strengthened its balance sheet. The company:

  • In April, closed on a $320 million, interest only construction loan financing for The Mall of San Juan (San Juan, Puerto Rico) that bears interest at LIBOR plus 2 percent through its maturity, including extension options, in April 2019.
  • In November, completed an amendment to its $1.1 billion primary line of credit, extending the maturity two years to February 2019, with a one-year extension option, and reducing the credit spread range. The company's current pricing is LIBOR plus 1.15 percent.
  • In December, completed an additional $175 million, non-recourse financing on International Plaza. The additional financing matures in December 2021 and was swapped to an all-in fixed rate of 3.78%. The company's 50.1 percent share of the proceeds will be used for general corporate purposes.

"We remain committed to preserving our strong balance sheet," said Lisa A. Payne, vice chairman and chief financial officer. "These transactions allowed us to lower our average borrowing rate to below 4 percent, while also improving our fixed charges and interest coverage ratios."

Stock Performance

During 2014, the company enjoyed a 30.7 percent total shareholder return. This compares to the MSCI US REIT Index return of 30.4 percent and the S&P 500 Index return of 13.7 percent. Over the 10 years ended December 31, 2014, the company's compounded annual shareholder return was 14.4 percent. This compares very favorably to the 10 year total returns of the MSCI US REIT Index and the S&P 500 Index, which were 8.3 percent and 7.7 percent, respectively. The company's 10 year total return was eleventh highest of the 98 U.S. REITs that have operated during this period.

2015 Guidance

The company is introducing guidance for 2015. The company expects FFO per diluted share to be in the range of $3.18 to $3.28. This includes the year-over-year negative impact of the company's October 2014 sale of seven centers to Starwood. In 2014, during the company's 9.5 months of ownership, the seven centers contributed $0.46 to adjusted FFO per share.

This guidance assumes comparable center NOI growth, excluding lease cancellation income, of about 3 percent for the year. 

Net income attributable to common shareholders (EPS) for the year is expected to be in the range of $1.59 to $1.74.

Supplemental Investor Information Available

The company provides supplemental investor information along with its earnings announcements, available online at www.taubman.com under "Investors." This includes the following:

  • Company Information
  • Income Statements
  • Earnings Reconciliations
  • Changes in Funds from Operations and Earnings Per Share
  • Components of Other Income, Other Operating Expense, and Nonoperating Income (Expense)
  • Recoveries Ratio Analysis
  • Balance Sheets
  • 2014 Pro Forma Income Statement – Adjusted for Starwood and Related Transactions
  • Debt Summary
  • Other Debt, Equity and Certain Balance Sheet Information
  • Construction and Redevelopment
  • Dispositions
  • Capital Spending
  • Operational Statistics
  • Operational Statistics – Quarterly Center Statistics – Comparable Centers Only
  • 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 a.m. EST on Friday, February 13 to discuss these results, business conditions and the company's outlook for 2015. The conference call will be simulcast at www.taubman.com. An online replay will follow shortly after the call and continue for approximately 90 days.

About Taubman

Taubman Centers, Inc. is an S&P MidCap 400 Real Estate Investment Trust engaged in the ownership, management and/or leasing of 21 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 five properties in the U.S. and Asia totaling 4.7 million square feet. Taubman, with more than 60 years of experience in the shopping center industry, is headquartered in Bloomfield Hills, Mich., and Taubman Asia is headquartered in Hong Kong. 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 December 31, 2014 and 2013






(in thousands of dollars, except as indicated)















Three Months Ended 

Year Ended

2014

2013

2014

2013








Net income

656,274

66,166

1,278,122

189,368

Noncontrolling share of income of consolidated joint ventures

(26,226)

(3,592)

(34,239)

(10,344)

Noncontrolling share of income of TRG 

(179,948)

(16,519)

(350,870)

(46,434)

Distributions to participating securities of TRG

(4,609)

(436)

(6,018)

(1,749)

Preferred stock dividends 

(5,785)

(5,785)

(23,138)

(20,933)

Net income attributable to Taubman Centers, Inc. common shareowners

439,706

39,834

863,857

109,908

Net income per common share - basic 

6.94

0.63

13.65

1.73

Net income per common share - diluted

6.86

0.62

13.47

1.71

Beneficial interest in EBITDA - Combined (1)

686,998

145,512

1,525,013

516,942

Adjusted Beneficial interest in EBITDA- Combined (1)

121,879

145,512

482,492

516,942

Funds from Operations(1)

48,967

100,614

280,504

330,836

Funds from Operations attributable to TCO (1)

34,938

71,970

200,356

236,662

Funds from Operations per common share - basic(1)

0.55

1.14

3.17

3.72

Funds from Operations per common share - diluted (1)

0.54

1.11

3.11

3.65

Adjusted Funds from Operations (1)

90,087

100,614

330,842

330,836

Adjusted Funds from Operations attributable to TCO (1)

64,374

71,970

236,389

236,662

Adjusted Funds from Operations per common share - basic(1)

1.02

1.14

3.74

3.72

Adjusted Funds from Operations per common share - diluted (1)

1.00

1.11

3.67

3.65

Weighted average number of common shares outstanding - basic

63,322,399

63,408,637

63,267,800

63,591,523

Weighted average number of common shares outstanding - diluted

65,055,502

65,066,977

64,921,064

64,575,412

Common shares outstanding at end of period

63,324,409

63,101,614



Weighted average units - Operating Partnership - basic

88,457,849

88,584,937

88,408,842

88,823,006

Weighted average units - Operating Partnership - diluted

90,190,952

90,243,277

90,062,106

90,678,157

Units outstanding at end of period - Operating Partnership

88,459,859

88,271,133



Ownership percentage of the Operating Partnership at end of period

71.6%

71.5%



Number of owned shopping centers at end of period

18

25











Operating Statistics:






Net Operating Income excluding lease cancellation income - growth % (1)(2)

1.9%

1.9%

2.7%

3.4%

Net Operating Income including lease cancellation income - growth % (1)(2)

3.7%

2.3%

4.0%

3.5%

Mall tenant sales - all centers (3)

1,601,162

1,913,865

4,969,462

6,180,095

Mall tenant sales - comparable (2)(3)

1,527,103

1,543,894

4,871,423

4,991,010

Ending occupancy - all centers

94.1%

95.8%



Ending occupancy - comparable(2)

95.4%

96.3%



Leased space - all centers

96.0%

96.7%



Leased space - comparable(2)

96.7%

97.5%



All centers (3):






    Mall tenant occupancy costs as a percentage of tenant sales - Consolidated Businesses

11.4%

11.6%

13.8%

13.2%

    Mall tenant occupancy costs as a percentage of tenant sales - Unconsolidated Joint Ventures

12.3%

11.4%

13.3%

12.6%

    Mall tenant occupancy costs as a percentage of tenant sales - Combined

11.7%

11.6%

13.6%

13.0%

Comparable centers (2)(3):






    Mall tenant occupancy costs as a percentage of tenant sales - Consolidated Businesses

12.3%

11.7%

14.1%

13.3%

    Mall tenant occupancy costs as a percentage of tenant sales - Unconsolidated Joint Ventures

11.6%

11.3%

13.3%

12.5%

    Mall tenant occupancy costs as a percentage of tenant sales - Combined

12.0%

11.6%

13.7%

13.0%

Average rent per square foot - Consolidated Businesses (2)

63.05

60.02

61.96

59.88

Average rent per square foot - Unconsolidated Joint Ventures (2)

58.69

54.19

58.65

52.68

Average rent per square foot - Combined (2)

61.19

57.94

60.58

57.33

(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 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. For the three months and year ended December 31, 2014, FFO and EBITDA were adjusted for expenses related to the sale of seven centers to an affiliate of Starwood Capital Group (Starwood) completed in October 2014. Specifically, these measures were adjusted for charges related to the loss on extinguishment of debt at MacArthur Center (MacArthur), Northlake Mall, The Mall at Partridge Creek, and The Mall at Wellington Green; charges related to the discontinuation of hedge accounting on the interest rate swap previously designated to hedge the MacArthur note payable; and a restructuring charge and disposition costs incurred related to the sale. In addition, for the three months and year ended December 31, 2014, EBITDA was adjusted for the gain on the sale of centers to Starwood while for the year ended December 31, 2014, EBITDA was also adjusted for the gains on dispositions of interests in International Plaza, Arizona Mills, and land in Syosset, New York related to the former Oyster Bay project.



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.




(2)

Statistics exclude non-comparable centers. In 2014 and 2013, non-comparable centers are Taubman Prestige Outlets Chesterfield, The Mall at University Town Center, Arizona Mills, and the portfolio of centers sold to Starwood. 




(3)

Based on reports of sales furnished by mall tenants.  The 2014 sales statistics have been adjusted to exclude the porfolio of seven centers included in the sale to Starwood Capital Group in October 2014.  "All centers" statistics as of December 31, 2013 include sales for the Starwood sale portfolio.

 TAUBMAN CENTERS, INC. 






 Table 2 - Income Statement 






 For the Three Months Ended December 31, 2014 and 2013 


 (in thousands of dollars) 



















2014

2013



CONSOLIDATED BUSINESSES

 UNCONSOLIDATED JOINT VENTURES (1) 

CONSOLIDATED BUSINESSES

 UNCONSOLIDATED JOINT VENTURES (1) 










REVENUES:







Minimum rents

80,341

54,860

108,686

47,626

Percentage rents

11,910

5,571

14,780

4,517

Expense recoveries

52,343

34,961

74,945

30,242

Management, leasing, and development services

3,744


2,188


Other

9,984

4,435

11,173

3,151


Total revenues

158,322

99,827

211,772

85,536










EXPENSES:







Maintenance, taxes, utilities, and promotion

41,164

23,577

61,131

20,973

Other operating

15,560

6,048

17,285

3,798

Management, leasing, and development services

1,700


1,149


General and administrative

13,799


13,338


Restructuring charge

675






Interest expense

15,857

19,465

30,434

16,972

Depreciation and amortization 

23,686

15,119

39,510

10,010


Total expenses

112,441

64,209

162,847

51,753










Nonoperating income (expense) (2)

(39,480)

3

(483)

(5)



6,401

35,621

48,442

33,778

Income tax expense 

(574)


(694)

Equity in income of Unconsolidated Joint Ventures

20,780


18,418




26,607


66,166

Gain on dispositions (3)

629,667





Net income 

656,274


66,166

Net income attributable to noncontrolling interests:







Noncontrolling share of income of consolidated joint ventures 

(26,226)


(3,592)


Noncontrolling share of income of TRG

(179,948)


(16,519)

Distributions to participating securities of TRG(4)

(4,609)


(436)

Preferred stock dividends 

(5,785)


(5,785)

Net income attributable to Taubman Centers, Inc. common shareowners 

439,706


39,834





















SUPPLEMENTAL INFORMATION:







EBITDA - 100% (5)

675,611

70,205

118,386

60,760

EBITDA - outside partners' share 

(28,929)

(29,889)

(7,036)

(26,598)

Beneficial interest in EBITDA (5)

646,682

40,316

111,350

34,162

Beneficial share of gain on dispositions

(606,239)






Beneficial interest expense

(14,015)

(10,611)

(28,304)

(9,362)

Beneficial income tax expense - TRG and TCO

(574)


(694)


Beneficial income tax expense - TCO

115


49


Non-real estate depreciation

(922)


(802)


Preferred dividends and distributions 

(5,785)


(5,785)


Funds from Operations contribution 

19,262

29,705

75,814

24,800










STRAIGHTLINE AND PURCHASE ACCOUNTING ADJUSTMENTS:







Net straight-line adjustments to rental revenue, recoveries,








and ground rent expense at TRG % 

556

575

1,118

845

Green Hills purchase accounting adjustments - minimum rents increase

105


197


Green Hills, El Paseo Village, and Gardens on El Paseo purchase accounting 








adjustments - interest expense reduction

306


607


Waterside Shops purchase accounting adjustments - interest expense reduction

263


263

Taubman BHO headquarters purchase accounting adjustment - 








interest expense reduction

183















(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. International Plaza's operations were consolidated through the disposition date. Subsequent to the disposition, the Company's remaining 50.1% interest is accounted for under the equity method of accounting within Unconsolidated Joint Ventures. In addition, Arizona Mills' operations were accounted for under equity method accounting through the disposition in January 2014.

(2)

Nonoperating expense for the three months ended December 31, 2014 includes $36.4 million for the loss on the early extinguishment of debt, $2.3 million of disposition costs related to the sale of centers to Starwood, and $2.3 million in connection with the discontinuation of hedge accounting related to the MacArthur interest rate swap.

(3)

Amount represents the gain on dispositions related to the sale of centers to Starwood.

(4)

During the three months ended December 31, 2014, the distributions to participating securities of TRG include the special dividend of $4.75 per deferred unit.

(5)

For the three months ended December 31, 2014, EBITDA includes $629.7 million, $606.2 million at beneficial share, related to the gain from the sale of centers to Starwood. 

 TAUBMAN CENTERS, INC. 






 Table 3 - Income Statement 






 For the Year Ended December 31, 2014 and 2013 




 (in thousands of dollars) 



















2014

2013



CONSOLIDATED BUSINESSES

 UNCONSOLIDATED
JOINT VENTURES (1) 

CONSOLIDATED BUSINESSES

 UNCONSOLIDATED
JOINT VENTURES (1) 










REVENUES:







Minimum rents

371,454

197,958

417,729

172,305

Percentage rents

22,929

10,998

28,512

10,280

Expense recoveries

239,782

118,105

272,494

104,164

Management, leasing, and development services

12,349


16,142


Other

32,615

10,956

32,277

7,971


Total revenues

679,129

338,017

767,154

294,720










EXPENSES:







Maintenance, taxes, utilities, and promotion

190,119

84,026

215,825

74,966

Other operating

65,142

19,083

71,235

15,441

Management, leasing, and development services

6,220


5,321


General and administrative

48,292


50,014


Restructuring charge 

3,706






Interest expense 

90,803

73,749

130,023

67,948

Depreciation and amortization 

120,207

49,850

155,772

39,336


Total expenses

524,489

226,708

628,190

197,691










Nonoperating income (expense) (2)

(42,807)

(22)

1,348

(6)



111,833

111,287

140,312

97,023

Income tax expense 

(2,267)


(3,409)

Equity in income of Unconsolidated Joint Ventures 

62,002


52,465




171,568


189,368

Gain on dispositions, net of tax  (3)

1,106,554





Net income

1,278,122


189,368

Net income attributable to noncontrolling interests:







Noncontrolling share of income of consolidated joint ventures 

(34,239)


(10,344)


Noncontrolling share of income of TRG

(350,870)


(46,434)

Distributions to participating securities of TRG (4)

(6,018)


(1,749)

Preferred stock dividends 

(23,138)


(20,933)

Net income attributable to Taubman Centers, Inc. common shareowners  

863,857


109,908





















SUPPLEMENTAL INFORMATION:







EBITDA - 100% (5)

1,439,130

234,886

426,107

204,307

EBITDA - outside partners' share 

(46,769)

(102,234)

(24,104)

(89,368)

Beneficial interest in EBITDA (5)

1,392,361

132,652

402,003

114,939

Beneficial share of the gain on dispositions

(1,092,859)






Beneficial interest expense 

(82,702)

(40,416)

(121,353)

(37,554)

Beneficial income tax expense - TRG and TCO

(2,267)


(3,409)


Beneficial income tax expense - TCO

373


181


Non-real estate depreciation

(3,500)


(3,038)


Preferred dividends and distributions

(23,138)


(20,933)


Funds from Operations contribution  

188,268

92,236

253,451

77,385










STRAIGHTLINE AND PURCHASE ACCOUNTING ADJUSTMENTS:







Net straight-line adjustments to rental revenue, recoveries,








and ground rent expense at TRG % 

1,785

1,418

3,999

1,296

Green Hills purchase accounting adjustments - minimum rents increase

725


787


Green Hills, El Paseo Village, and Gardens on El Paseo purchase accounting 








adjustments - interest expense reduction

1,223


3,180


Waterside Shops purchase accounting adjustments - interest expense reduction

1,051


1,051

Taubman BHO headquarters purchase accounting adjustment - 








interest expense reduction

607















(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.  International Plaza's operations were consolidated through the disposition date. Subsequent to the disposition, the Company's remaining 50.1% interest is accounted for under the equity method of accounting within Unconsolidated Joint Ventures. In addition, Arizona Mills' operations were accounted for under equity method accounting through the disposition in January 2014.

(2)

Nonoperating expense for the year ended December 31, 2014 includes $36.4 million for the loss on the early extinguishment of debt, $3.3 million of disposition costs related to the sale of centers to Starwood, and $7.8 million in connection with the discontinuation of hedge accounting related to the MacArthur interest rate swap.

(3)

Amount represents the gain on dispositions of interests in International Plaza, Arizona Mills, land in Syosset, New York related to the former Oyster Bay project, and the sale of centers to Starwood. The gain reported is net of income tax expense of $9.7 million.

(4)

During the year ended December 31, 2014, the distributions to participating securities of TRG include the special dividend of $4.75 per deferred unit.

(5)

For the year ended December 31, 2014, EBITDA includes the Company's $486.6 million (before tax) gain from the dispositions of interests in International Plaza, Arizona Mills, and land in Syosset, New York related to the former Oyster Bay project and $629.7 million, $606.2 million at beneficial share, related to the gain from the sale of centers to Starwood.

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, 2014 and 2013







(in thousands of dollars except as noted; may not add or recalculate due to rounding)






































2014




2013






Shares 

Per Share


Shares 

Per Share 



Dollars

/Units

/Unit

Dollars

/Units

/Unit














Net income attributable to TCO common shareowners - Basic

439,706

63,322,399

6.94

39,834

63,408,637

0.63














Add distributions to participating securities of TRG

4,609

871,262


436

871,262

Add impact of share-based compensation

2,173

861,841


182

787,078















Net income attributable to TCO common shareowners - Diluted

446,488

65,055,502

6.86

40,452

65,066,977

0.62














Add depreciation of TCO's additional basis

1,617


0.02

1,720


0.03

Add TCO's additional basis in assets disposed

11,895


0.18





Add TCO's additional income tax expense

115


0.00

49


0.00














Net income attributable to TCO common shareowners,












excluding TCO additional basis items and income tax expense

460,115

65,055,502

7.07

42,221

65,066,977

0.65














Add:












Noncontrolling share of income of TRG 

179,948

25,135,450


16,519

25,176,300















Net income attributable to partnership unitholders 












and participating securities

640,063

90,190,952

7.10

58,740

90,243,277

0.65














Add (less) depreciation and amortization:












Consolidated businesses at 100%

23,686


0.26

39,510


0.44

Depreciation of TCO's additional basis

(1,617)


(0.02)

(1,720)


(0.02)

Noncontrolling partners in consolidated joint ventures

(861)


(0.01)

(1,314)


(0.01)

Share of Unconsolidated Joint Ventures

8,925


0.10

6,382


0.07

Non-real estate depreciation

(922)


(0.01)

(802)


(0.01)














Less TCO's additional basis in assets disposed

(11,895)


(0.13)





Less beneficial share of gain on dispositions

(606,239)


(6.72)





Less impact of share-based compensation

(2,173)


(0.02)

(182)


(0.00)














Funds from Operations

48,967

90,190,952

0.54

100,614

90,243,277

1.11














TCO's average ownership percentage of TRG

71.6%




71.6%

















Funds from Operations attributable to TCO,












excluding additional income tax expense

35,053


0.54

72,019


1.11














Less TCO's additional income tax expense

(115)


(0.00)

(49)


(0.00)














Funds from Operations attributable to TCO 

34,938


0.54

71,970


1.11














Funds from Operations

48,967

90,190,952

0.54

100,614

90,243,277

1.11














Beneficial share of early extinguishment of debt charge

35,993


0.40





Beneficial share of disposition costs related to the Starwood sale

2,309


0.03





Beneficial share of discontinuation of hedge accounting - MacArthur

2,143


0.02





Restructuring charge

675


0.01



















Adjusted Funds from Operations

90,087

90,190,952

1.00

100,614

90,243,277

1.11














TCO's average ownership percentage of TRG

71.6%




71.6%

















Adjusted Funds from Operations attributable to TCO,












excluding additional income tax expense

64,489


1.00

72,019


1.11














Less TCO's additional income tax expense

(115)


(0.00)

(49)


(0.00)














Adjusted Funds from Operations attributable to TCO 

64,374


1.00

71,970


1.11

TAUBMAN CENTERS, INC.











Table 5 - Reconciliation of Net Income Attributable to Taubman Centers, Inc. Common Shareowners to Funds from Operations

   and Adjusted Funds from Operations











For the Year Ended December 31, 2014 and 2013











(in thousands of dollars except as noted; may not add or recalculate due to rounding)








































2014




2013






Shares 

Per Share


Shares 

Per Share 



Dollars

/Units

/Unit

Dollars

/Units 

/Unit














Net income attributable to TCO common shareowners - Basic

863,857

63,267,800

13.65

109,908

63,591,523

1.73














Add distributions to participating securities of TRG

6,018

871,262







Add impact of share-based compensation

4,915

782,002


497

983,889















Net income attributable to TCO common shareowners - Diluted

874,790

64,921,064

13.47

110,405

64,575,412

1.71














Add depreciation of TCO's additional basis

6,674


0.10

6,880


0.11

Add TCO's additional basis in assets disposed

11,895


0.18





Add TCO's additional income tax expense 

373


0.01

181


0.00














Net income attributable to TCO common shareowners,












excluding TCO additional basis items and income tax expense

893,732

64,921,064

13.77

117,466

64,575,412

1.82














Add:












Noncontrolling share of income of TRG 

350,870

25,141,042


46,434

25,231,483


Distributions to participating securities of TRG






1,749

871,262















Net income attributable to partnership unitholders 












and participating securities

1,244,602

90,062,106

13.82

165,649

90,678,157

1.83














Add (less) depreciation and amortization:












Consolidated businesses at 100% 

120,207


1.33

155,772


1.72

Depreciation of TCO's additional basis

(6,674)


(0.07)

(6,880)


(0.08)

Noncontrolling partners in consolidated joint ventures

(4,429)


(0.05)

(5,090)


(0.06)

Share of Unconsolidated Joint Ventures

30,234


0.34

24,920


0.27

Non-real estate depreciation

(3,500)


(0.04)

(3,038)


(0.03)














Less TCO's additional basis in assets disposed

(11,895)


(0.13)





Less beneficial share of gain on dispositions

(1,083,126)


(12.03)





Less impact of share-based compensation

(4,915)


(0.05)

(497)


(0.01)














Funds from Operations

280,504

90,062,106

3.11

330,836

90,678,157

3.65














TCO's average ownership percentage of TRG

71.6%




71.6%

















Funds from Operations attributable to TCO,












excluding additional income tax expense

200,729


3.11

236,843


3.65














Less TCO's additional income tax expense

(373)


(0.00)

(181)


(0.00)














Funds from Operations attributable to TCO

200,356


3.11

236,662


3.65














Funds from Operations

280,504

90,062,106

3.11

330,836

90,678,157

3.65














Beneficial share of early extinguishment of debt charge

35,993


0.40





Beneficial share of disposition costs related to the Starwood sale

3,263


0.04





Beneficial share of discontinuation of hedge accounting - MacArthur

7,376


0.08





Restructuring charge

3,706


0.04



















Adjusted Funds from Operations

330,842

90,062,106

3.67

330,836

90,678,157

3.65














TCO's average ownership percentage of TRG

71.6%




71.6%

















Adjusted Funds from Operations attributable to TCO,












excluding additional income tax expense

236,762


3.67

236,843


3.65














Less TCO's additional income tax expense

(373)


(0.00)

(181)


(0.00)














Adjusted Funds from Operations attributable to TCO

236,389


3.67

236,662


3.65

TAUBMAN CENTERS, INC.







Table 6 - Reconciliation of Net Income to Beneficial Interest in EBITDA and Adjusted Beneficial Interest in EBITDA

For the Periods Ended December 31, 2014 and 2013



(in thousands of dollars; amounts attributable to TCO may not recalculate due to rounding)















Three Months Ended

Year Ended




2014

2013

2014

2013











Net income

656,274

66,166

1,278,122

189,368











Add (less) depreciation and amortization:








Consolidated businesses at 100%

23,686

39,510

120,207

155,772

Noncontrolling partners in consolidated joint ventures

(861)

(1,314)

(4,429)

(5,090)

Share of Unconsolidated Joint Ventures

8,925

6,382

30,234

24,920






















Add (less) interest expense and income tax expense:








Interest expense:









Consolidated businesses at 100% 

15,857

30,434

90,803

130,023


Noncontrolling partners in consolidated joint ventures

(1,842)

(2,130)

(8,101)

(8,670)


Share of Unconsolidated Joint Ventures

10,611

9,362

40,416

37,554

Income tax expense:









Income tax expense on dispositions of International Plaza, Arizona Mills, and Oyster Bay




9,733



Other income tax expense

574

694

2,267

3,409











Less noncontrolling share of income of consolidated joint ventures

(26,226)

(3,592)

(34,239)

(10,344)











Beneficial Interest in EBITDA

686,998

145,512

1,525,013

516,942











Add TCO's additional basis in assets disposed

11,895


11,895












Beneficial Interest in EBITDA, before additional basis in assets disposed

698,893

145,512

1,536,908

516,942











TCO's average ownership percentage of TRG

71.6%

71.6%

71.6%

71.6%











Beneficial Interest in EBITDA attributable to TCO, before additional basis in assets disposed

500,301

104,157

1,099,794

370,094











Less TCO's additional basis in assets disposed

(11,895)


(11,895)












Beneficial Interest in EBITDA attributable to TCO

488,406

104,157

1,087,899

370,094

































Beneficial Interest in EBITDA 

686,998

145,512

1,525,013

516,942












Beneficial share of the gain on dispositions

(606,239)


(1,092,859)


Beneficial share of early extinguishment of debt charge

35,993


35,993


Beneficial share of disposition costs related to the Starwood sale

2,309


3,263


Beneficial share of discontinuation of hedge accounting - MacArthur

2,143


7,376


Restructuring charge

675


3,706












Adjusted Beneficial Interest in EBITDA

121,879

145,512

482,492

516,942











TCO's average ownership percentage of TRG

71.6%

71.6%

71.6%

71.6%











Adjusted Beneficial Interest in EBITDA attributable to TCO

87,247

104,157

345,283

370,094

TAUBMAN CENTERS, INC.















Table 7 - Reconciliation of Net Income to Net Operating Income (NOI)










For the Periods Ended December 31, 2014, 2013, and 2012










(in thousands of dollars)





































Three Months Ended

Three Months Ended

Year Ended

Year Ended



2014

2013

2013

2012

2014

2013

2013

2012



















Net income

656,274

66,166

66,166

49,131

1,278,122

189,368

189,368

157,817



















Add (less) depreciation and amortization:
















Consolidated businesses at 100%

23,686

39,510

39,510

40,434

120,207

155,772

155,772

149,517

Noncontrolling partners in consolidated joint ventures

(861)

(1,314)

(1,314)

(2,040)

(4,429)

(5,090)

(5,090)

(9,690)

Share of Unconsolidated Joint Ventures

8,925

6,382

6,382

6,902

30,234

24,920

24,920

22,688



















Add (less) interest expense and income tax expense:
















Interest expense:

















Consolidated businesses at 100%

15,857

30,434

30,434

33,470

90,803

130,023

130,023

142,616


Noncontrolling partners in consolidated joint ventures

(1,842)

(2,130)

(2,130)

(3,951)

(8,101)

(8,670)

(8,670)

(16,585)


Share of Unconsolidated Joint Ventures

10,611

9,362

9,362

10,778

40,416

37,554

37,554

35,862

Share of income tax expense:

















Income tax expense on dispositions of International Plaza, Arizona Mills, and Oyster Bay







9,733








Other income tax expense

574

694

694

3,526

2,267

3,409

3,409

4,919



















Less noncontrolling share of income of consolidated joint ventures

(26,226)

(3,592)

(3,592)

(5,142)

(34,239)

(10,344)

(10,344)

(11,930)



















Add EBITDA attributable to outside partners:
















EBITDA attributable to noncontrolling partners in consolidated joint ventures

28,929

7,036

7,036

11,133

46,769

24,104

24,104

38,250

EBITDA attributable to outside partners in Unconsolidated Joint Ventures

29,889

26,598

26,598

24,957

102,234

89,368

89,368

87,216



















EBITDA at 100%

745,816

179,146

179,146

169,198

1,674,016

630,414

630,414

600,680



















Add (less) items excluded from shopping center NOI:
















General and administrative expenses

13,799

13,338

13,338

11,638

48,292

50,014

50,014

39,659

Management, leasing, and development services, net

(2,044)

(1,039)

(1,039)

1,373

(6,129)

(10,821)

(10,821)

(4,394)

Straight-line of rents

(1,937)

(3,015)

(3,015)

(1,981)

(5,419)

(7,335)

(7,335)

(6,516)

Gain on dispositions

(629,667)






(1,116,287)







Early extinguishment of debt charge

36,372






36,372







Discontinuation of hedge accounting - MacArthur

2,256






7,763







Restructuring charge

675






3,706







Disposition costs related to the Starwood sale

2,309






3,269







Gain on sale of peripheral land











(863)

(863)



Gain on sale of marketable securities









(1,323)

(1,323)



Dividend income

(767)






(2,364)







Interest income

(636)

(31)

(31)

(25)

(1,400)

(175)

(175)

(295)

Other nonoperating expense (income)

(57)






(811)

1,019

1,019



Non-center specific operating expenses and other

5,346

6,374

6,449

9,640

19,933

24,358

24,700

31,413



















NOI - all centers at 100%

171,465

194,773

194,848

189,843

660,941

685,288

685,630

660,547



















Less - NOI of non-comparable centers

(4,731)

(1)

(33,940)

(2)

(2,900)

(3)

(2,198)

(4)

(72,320)

(5)

(119,293)

(2)

(10,195)

(3)

(8,010)

(4)



















NOI at 100% - comparable centers

166,734

160,833

191,948

187,645

588,621

565,995

675,435

652,537



















NOI - growth %

3.7%


2.3%

4.0%


3.5%





















NOI at 100% - comparable centers

166,734

160,833

191,948

187,645

588,621

565,995

675,435

652,537



















Lease cancellation income

(5,514)

(2,640)

(2,760)

(1,913)

(12,569)

(5,344)

(5,767)

(4,928)



















NOI at 100% - comparable centers excluding lease cancellation income

161,220

158,193

189,188

185,732

576,052

560,651

669,668

647,609



















NOI at 100% excluding lease cancellation income - growth %

1.9%


1.9%


2.7%


3.4%





















(1)

Includes Taubman Prestige Outlets Chesterfield, The Mall at University Town Center, and the portfolio of centers sold to Starwood.

(2)

Includes Arizona Mills, Taubman Prestige Outlets Chesterfield and the portfolio of centers sold to Starwood.

(3)

Includes City Creek Center and Taubman Prestige Outlets Chesterfield.

(4)

Includes City Creek Center.

(5)

Includes Taubman Prestige Outlets Chesterfield, Arizona Mills, The Mall at University Town Center, and the portfolio of centers sold to Starwood.

TAUBMAN CENTERS, INC.



Table 8 - Balance Sheets



As of December 31, 2014 and December 31, 2013



 (in thousands of dollars) 








As of





December 31, 2014

December 31, 2013

Consolidated Balance Sheet of Taubman Centers, Inc. (1):











Assets:





Properties

3,262,505

4,485,090

Accumulated depreciation and amortization

(970,045)

(1,516,982)





2,292,460

2,968,108

Investment in Unconsolidated Joint Ventures

370,004

327,692

Cash and cash equivalents

276,423

40,993

Restricted cash 

37,502

5,046

Accounts and notes receivable, net

49,245

73,193

Accounts receivable from related parties

832

1,804

Deferred charges and other assets

188,435

89,386





3,214,901

3,506,222








Liabilities:




Notes payable

2,025,505

3,058,053

Accounts payable and accrued liabilities

292,802

292,280

Distributions in excess of investments in and net income of





Unconsolidated Joint Ventures

476,651

371,549





2,794,958

3,721,882

Equity:





Taubman Centers, Inc. Shareowners' Equity:





Series B Non-Participating Convertible Preferred Stock

25

25


Series J Cumulative Redeemable Preferred Stock





Series K Cumulative Redeemable Preferred Stock





Common Stock

633

631


Additional paid-in capital

815,961

796,787


Accumulated other comprehensive income (loss)

(15,068)

(8,914)


Dividends in excess of net income

(483,188)

(908,656)





318,363

(120,127)

Noncontrolling interests:





Noncontrolling interests in consolidated joint ventures

(14,796)

(37,191)


Noncontrolling interests in partnership equity of TRG 

116,376

(58,342)





101,580

(95,533)





419,943

(215,660)





3,214,901

3,506,222
















Combined Balance Sheet of Unconsolidated Joint Ventures (1)(2):











Assets:





Properties

1,580,926

1,305,658

Accumulated depreciation and amortization

(548,646)

(478,820)





1,032,280

826,838

Cash and cash equivalents

49,765

28,782

Accounts and notes receivable, net

38,788

33,626

Deferred charges and other assets  

33,200

28,095





1,154,033

917,341








Liabilities:




Notes payable

1,989,546

1,551,161

Accounts payable and other liabilities

103,161

70,226





2,092,707

1,621,387








Accumulated Deficiency in Assets:




Accumulated deficiency in assets - TRG

(520,714)

(406,266)

Accumulated deficiency in assets - Joint Venture Partners

(407,870)

(285,904)

Accumulated other comprehensive loss - TRG

(5,045)

(5,938)

Accumulated other comprehensive loss - Joint Venture Partners

(5,045)

(5,938)





(938,674)

(704,046)





1,154,033

917,341








(1)

International Plaza was consolidated in the Company's balance sheet as of December 31, 2013 but is an Unconsolidated Joint Venture as of December 31, 2014 as a result of the January 2014 disposition of interests.

(2)

Unconsolidated Joint Venture amounts exclude the balances of entities that own interests in projects that are currently under development.

TAUBMAN CENTERS, INC.



Table 9 -  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, 2015






Funds from Operations per common share

3.18

3.28






Real estate depreciation - TRG

(1.46)

(1.41)






Distributions to participating securities of TRG

(0.02)

(0.02)






Depreciation of TCO's additional basis in TRG

(0.10)

(0.10)






Net income attributable



  to common shareholders, per common share (EPS)

1.59

1.74

Logo - http://photos.prnewswire.com/prnh/20080428/CLM116LOGO

SOURCE Taubman Centers, Inc.

Related Links

http://www.taubman.com

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