Taubman Centers, Inc. News
Taubman Centers Announces Strong 2007 Results
BLOOMFIELD HILLS, Mich.,
Net Income allocable to common shareholders per diluted common share (EPS) for the year ended
For the year ended
"The fundamentals of our business continue to be solid," said Robert S. Taubman, chairman, president and chief executive officer of Taubman Centers. "In the fourth quarter our results benefited from the opening of The Mall at Partridge Creek (Clinton Township, Mich.), and the expansions of Twelve Oaks Mall (Novi, Mich.) and Stamford Town Center (Stamford, Conn.)"
Taubman: #1 U.S. REIT for the Last Ten Years
Taubman Centers' stock performance, while flat for 2007, was significantly better than any other mall REIT and in the top 15 percent of the more than 120 U.S. REITs. The Morgan Stanley REIT Index (RMS) was down 16.7 percent for the year. Taubman Centers' common stock has now provided a nearly 21 percent compound annual return over the past 10 years, the best return of any U.S. REIT.
Taubman Achieves Record Tenant Sales Productivity, Occupancy Up
During 2007 the company's properties achieved record average tenant sales per square foot of
softened considerably as it entered December. Nonetheless, we believe our performance will be at the top of the range for the industry."
Occupancy in comparable centers reached 91.4 percent at
2007 Year in Review: Development, Expansions and Acquisition Activity
The company continues to build on its successful history of growth with expansions of existing centers and progress on developments both in the U.S. and in Asia. During 2007 the company:
— Announced its involvement in Macao Studio City, a major mixed-use project on the Cotai Strip in Macao, China, the first phase of which will be nearly 4 million square feet and has already begun construction. In early 2008, the company announced it would be a 25 percent investor in the retail portion of the project and entered into long-term agreements to perform development, management and leasing services for the more than 600,000 square foot shopping center; — Signed management, leasing and development agreements for Songdo Shopping Center, a 1.2 million square foot retail and entertainment complex in Songdo International Business District (IBD), Incheon South Korea, 35 miles southwest of Seoul; — Assumed management and leasing responsibilities and increased its ownership in The Pier Shops at Caesars (Atlantic City, N.J.) to a 77.5 percent controlling interest; — Opened a new Nordstrom store and 97,000 square feet of new tenant space at Twelve Oaks Mall; — Opened a new Bass Pro store at Dolphin Mall (Miami, Fla.), the only Bass Pro store in Dade County; — Welcomed a new Nordstrom store to Cherry Creek Shopping Center (Denver, Col.); — Celebrated the grand opening of The Mall at Partridge Creek, an open- air shopping center anchored by Parisian, MJR Theatres and Nordstrom (opening April 2008). The center is on track to achieve a 10 percent return upon stabilization; and — Opened a new restaurant and lifestyle wing at Stamford Town Center with a food court to follow in early 2008.
2007 Year in Review: Financing Activity
"Our conservative financial strategies have served us well during the recent turmoil in the capital markets," said Lisa A. Payne, vice chairman and chief financial officer. "We clearly have one of the strongest balance sheets in the industry and exceptional access to capital. This was demonstrated by the recent non-recourse refinancing of International Plaza, a
In 2007, the company: — Completed a $135 million, 10-year non-recourse, interest only financing with an all-in rate of 6.1 percent on The Pier Shops at Caesars; — Increased its lines of credit by $200 million to a total available amount of $550 million, while extending the maturity two years to 2011 with a one year extension option maintaining the same pricing at LIBOR plus 0.70 percent; — Repurchased 1.9 million common shares at an average price of $52.34 and a total cost of $100 million during the second and third quarters. (The company currently has $50 million available under its share repurchase authorization); and — Increased its common dividend by 11 percent, its twelfth consecutive annual increase.
Financial Outlook
Taubman Centers is increasing its 2008 guidance for FFO per diluted share to be in the range of
Supplemental Investor Information Available
The company provides supplemental investor information coincident with its earnings announcements. It is available online at www.taubman.com under "Investor Relations." This packet includes the following information:
— Income Statements — Reconciliations of Earnings Measures to Net Income — Changes in Funds from Operations and Earnings Per Share — Components of Other Income, Other Operating Expense and Gains on Land Sales, Interest Income, and Other — Recoveries Ratio Analysis — Balance Sheets — Debt Summary — Other Debt and Equity Information — Construction — Capital Spending — Acquisitions — Operational Statistics — Owned Centers — Major Tenants in Owned Portfolio — Anchors in Owned Portfolio
Investor Conference Call
The company will provide an online Web simulcast and rebroadcast of its 2007 fourth quarter earnings release conference call in which the company will review the results for the quarter and year, progress on its development and financing plans. The live broadcast of the conference call will be available online at www.taubman.com under "Investor Relations," www.earnings.com and www.streetevents.com on
Taubman Centers, Inc., a real estate investment trust, owns, develops, acquires and operates regional shopping centers nationally. Taubman Centers currently owns and/or manages 24 urban and suburban regional and super regional shopping centers in 11 states with an industry-leading sales productivity averaging over
This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements reflect management's current views with respect to future events and financial performance. Actual results may differ materially from those expected because of various risks and uncertainties, including, but not limited to changes in general economic and real estate conditions, changes in the interest rate environment and the availability of financing, and adverse changes in the retail industry. Other risks and uncertainties are discussed in the company's filings with the Securities and Exchange Commission including its most recent Annual Report on Form 10-K.
TAUBMAN CENTERS, INC. Table 1 - Summary of Results For the Three Months and Year Ended December 31, 2007 and 2006 (in thousands of dollars, except as indicated) Three Months Ended Year Ended 2007 2006 2007 2006 Income before minority and preferred interests (1) 38,223 35,199 116,236 95,140 Minority share of consolidated joint ventures (2) (1,453) (1,974) (5,031) (5,789) Distributions in excess of minority share of income of consolidated joint ventures (160) (1,544) (3,007) (4,904) Minority share of income of TRG (2) (11,433) (10,161) (33,210) (22,816) Distributions less than (in excess of) minority share of income of TRG 506 (37) (9,404) (14,054) TRG preferred distributions (615) (615) (2,460) (2,460) Net income 25,068 20,868 63,124 45,117 Preferred dividends (3) (3,659) (3,659) (14,634) (23,723) Net income allocable to common shareowners 21,409 17,209 48,490 21,394 Net income per common share - basic 0.41 0.33 0.92 0.41 Net income per common share - diluted 0.40 0.32 0.90 0.40 Beneficial interest in EBITDA - consolidated businesses (4) 90,099 82,837 308,749 294,953 Beneficial interest in EBITDA - unconsolidated joint ventures (4) 25,881 26,353 96,844 91,599 Funds from Operations (4) 70,262 68,632 235,108 210,449 Funds from Operations allocable to TCO (4) 46,676 44,792 155,376 136,736 Funds from Operations per common share - basic (4) 0.89 0.85 2.93 2.60 Funds from Operations per common share - diluted (4) 0.87 0.83 2.88 2.56 Weighted average number of common shares outstanding - basic 52,598,655 52,914,961 52,969,067 52,661,024 Weighted average number of common shares outstanding - diluted 53,296,262 53,378,733 53,662,017 52,979,453 Common shares outstanding at end of period 52,624,013 52,931,594 Weighted average units - Operating Partnership - basic 79,177,671 81,078,697 80,180,493 81,077,612 Weighted average units - Operating Partnership - diluted 80,746,540 82,413,731 81,704,705 82,267,303 Units outstanding at end of period - Operating Partnership 79,181,457 81,078,700 Ownership percentage of the Operating Partnership at end of period 66.5% 65.3% Number of owned shopping centers at end of period 23 22 23 22 Operating Statistics: Mall tenant sales (5) 1,555,011 1,442,927 4,734,940 4,344,565 Ending occupancy 91.1% 91.3% 91.1% 91.3% Ending occupancy - comparable (6) 91.4% 91.3% 91.4% 91.3% Average occupancy 90.7% 90.6% 90.0% 89.2% Average occupancy - comparable (6) 91.0% 90.5% 90.2% 89.1% Leased space at end of period 93.8% 92.5% 93.8% 92.5% Leased space at end of period - comparable (6) 93.7% 92.4% 93.7% 92.4% Mall tenant occupancy costs as a percentage of tenant sales - consolidated businesses (5) 12.0% 12.1% 14.2% 14.4% Mall tenant occupancy costs as a percentage of tenant sales - unconsolidated joint ventures (5) 10.4% 10.5% 12.6% 12.6% Rent per square foot - consolidated businesses (6) 43.56 42.92 43.54 42.77 Rent per square foot - unconsolidated joint ventures (6) 39.84 40.48 41.42 41.03 (1) Income before minority and preferred interests for the year ended December 31, 2006 includes charges of $1.0 million and $2.1 million, in connection with the write-off of financing costs related to the refinancing and pay-off, prior to maturity, of the loans on Dolphin Mall and The Shops at Willow Bend, respectively. No similar charges were incurred in 2007. (2) Because the net equity balances of the Operating Partnership and the outside partners in certain consolidated joint ventures are less than zero, the income allocated to the minority and outside partners during the three months and year ended December 31, 2007 and 2006 is equal to their share of distributions. The net equity of these minority partners is less than zero due to accumulated distributions in excess of net income and not as a result of operating losses. (3) Preferred dividends for the year ended December 31, 2006 include charges of $4.0 million and $0.6 million incurred in connection with the redemption of the remaining $113 million of the Series A Preferred Stock and the redemption of the Series I Preferred Stock, respectively. (4) Beneficial Interest in EBITDA represents the Operating Partnership's share of the earnings before interest and depreciation and amortization of its consolidated and unconsolidated businesses. The Company believes Beneficial Interest in EBITDA provides a useful indicator of operating performance, as it is customary in the real estate and shopping center business to evaluate the performance of properties on a basis unaffected by capital structure. The National Association of Real Estate Investment Trusts (NAREIT) defines Funds from Operations (FFO) as net income (loss) (computed in accordance with Generally Accepted Accounting Principles (GAAP)), excluding gains (or losses) from extraordinary items and sales of properties, plus real estate related depreciation and after adjustments for unconsolidated partnerships and joint ventures. The Company believes that FFO is a useful supplemental measure of operating performance for REITs. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, the Company and most industry investors and analysts have considered presentations of operating results that exclude historical cost depreciation to be useful in evaluating the operating performance of REITs. FFO is primarily used by the Company in measuring performance and in formulating corporate goals and compensation. These non-GAAP measures as presented by the Company are not necessarily comparable to similarly titled measures used by other REITs due to the fact that not all REITs use common definitions. None of these non-GAAP measures should be considered alternatives to net income as an indicator of the Company's operating performance, and they do not represent cash flows from operating, investing, or financing activities as defined by GAAP. (5) Based on reports of sales furnished by mall tenants. (6) Statistics exclude The Mall at Partridge Creek, The Pier Shops at Caesars and Waterside Shops at Pelican Bay. The 2006 statistics have been restated to include comparable centers to 2007. TAUBMAN CENTERS, INC. Table 2 - Income Statement For the Quarters Ended December 31, 2007 and 2006 (in thousands of dollars) 2007 2006 UNCON- UNCON- SOLI- SOLI- CONSOLI- DATED CONSOLI- DATED DATED JOINT DATED JOINT BUSINESSES VENTURES BUSINESSES VENTURES (1) (1) REVENUES: Minimum rents 89,985 37,835 82,201 40,795 Percentage rents 8,304 4,513 8,448 4,735 Expense recoveries 66,248 25,562 60,040 24,707 Management, leasing and development services 4,111 3,108 Other 10,221 2,618 9,277 1,921 Total revenues 178,869 70,528 163,074 72,158 EXPENSES: Maintenance, taxes and utilities 48,284 17,353 39,636 19,274 Other operating 20,190 6,502 20,486 7,695 Management, leasing and development services 2,420 1,497 General and administrative 8,653 8,698 Interest expense 36,188 15,832 30,175 17,028 Depreciation and amortization 38,052 9,919 38,343 13,237 Total expenses 153,787 49,606 138,835 57,234 Gains on land sales, interest income, and other 1,343 398 381 426 26,425 21,320 24,620 15,350 Equity in income of Unconsolidated Joint Ventures 11,798 10,579 Income before minority and preferred interests 38,223 35,199 Minority and preferred interests: TRG preferred distributions (615) (615) Minority share of consolidated joint ventures (1,453) (1,974) Distributions in excess of minority share of income of consolidated joint ventures (160) (1,544) Minority share of income of TRG (11,433) (10,161) Distributions less than (in excess of) minority share of income of TRG 506 (37) Net income 25,068 20,868 Preferred dividends (3,659) (3,659) Net income allocable to common shareowners 21,409 17,209 SUPPLEMENTAL INFORMATION: EBITDA - 100% 100,665 47,071 93,138 45,615 EBITDA - outside partners' share (10,566) (21,190) (10,301) (19,262) Beneficial interest in EBITDA 90,099 25,881 82,837 26,353 Beneficial interest expense (32,447) (8,315) (26,897) (8,299) Non-real estate depreciation (682) (1,088) Preferred dividends and distributions (4,274) (4,274) Funds from Operations contribution 52,696 17,566 50,578 18,054 (1) With the exception of the Supplemental Information, amounts include 100% of the Unconsolidated Joint Ventures. Amounts are net of intercompany transactions. The Unconsolidated Joint Ventures are presented at 100% in order to allow for measurement of their performance as a whole, without regard to the Company's ownership interest. The Company accounts for its investments in the Unconsolidated Joint Ventures under the equity method. TAUBMAN CENTERS, INC. Table 3- Income Statement For the Years Ended December 31, 2007 and 2006 (in thousands of dollars) 2007 2006 UNCON- UNCON- SOLI- SOLI- CONSOLI- DATED CONSOLI- DATED DATED JOINT DATED JOINT BUSINESSES VENTURES BUSINESSES VENTURES (1) (1) REVENUES: Minimum rents 329,420 150,886 311,187 148,846 Percentage rents 14,817 8,443 14,700 8,037 Expense recoveries 228,418 94,882 206,190 85,642 Management, leasing and development services 16,514 11,777 Other 37,653 8,376 35,430 9,672 Total revenues 626,822 262,587 579,284 252,197 EXPENSES: Maintenance, taxes and utilities 175,948 66,631 152,885 64,313 Other operating 69,638 20,729 71,643 26,255 Management, leasing and development services 9,080 5,730 General and administrative 30,403 30,290 Interest expense (2) 131,700 66,233 128,643 57,563 Depreciation and amortization 137,910 39,392 137,957 45,800 Total expenses 554,679 192,985 527,148 193,931 Gains on land sales, interest income, and other 3,595 1,587 9,460 1,289 75,738 71,189 61,596 59,555 Equity in income of Unconsolidated Joint Ventures 40,498 33,544 Income before minority and preferred interests 116,236 95,140 Minority and preferred interests: TRG preferred distributions (2,460) (2,460) Minority share of consolidated joint ventures (5,031) (5,789) Distributions in excess of minority share of income of consolidated joint ventures (3,007) (4,904) Minority share of income of TRG (33,210) (22,816) Distributions in excess of minority share of income of TRG (9,404) (14,054) Net income 63,124 45,117 Preferred dividends (3) (14,634) (23,723) Net income allocable to common shareowners 48,490 21,394 SUPPLEMENTAL INFORMATION: EBITDA - 100% 345,348 176,814 328,196 162,918 EBITDA - outside partners' share (36,599) (79,970) (33,243) (71,359) Beneficial interest in EBITDA 308,749 96,844 294,953 91,559 Beneficial interest expense (117,385) (33,311) (115,790) (31,151) Non-real estate depreciation (2,695) (2,939) Preferred dividends and distributions (17,094) (26,183) Funds from Operations contribution 171,575 63,533 150,041 60,408 (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) Interest expense for the year ended December 31, 2006 includes charges of $1.0 million and $2.1 million in connection with the write-off of financing costs related to the refinancing and pay-off of the loans on Dolphin Mall and The Shops at Willow Bend, respectively, prior to their maturity. (3) Preferred dividends for the year ended December 31, 2006 include charges of $4.0 million and $0.6 million in connection with the redemption of the remaining $113 million of the Series A Preferred Stock and the redemption of the Series I Preferred Stock, respectively. TAUBMAN CENTERS, INC. Table 4- Reconciliation of Net Income Allocable to Common Shareowners to Funds from Operations and Adjusted Funds from Operations For the Periods Ended December 31, 2007 and 2006 (in thousands of dollars; amounts allocable to TCO may not recalculate due to rounding) Three Months Ended Year Ended 2007 2006 2007 2006 Net income allocable to common shareowners 21,409 17,209 48,490 21,394 Add (less) depreciation and amortization: Consolidated businesses at 100% 38,052 38,343 137,910 137,957 Minority partners in consolidated joint ventures (5,372) (5,049) (17,253) (14,601) Share of unconsolidated joint ventures 5,768 7,475 23,035 26,864 Non-real estate depreciation (682) (1,088) (2,695) (2,939) Add minority interests: Minority share of income of TRG 11,433 10,161 33,210 22,816 Distributions (less than) in excess of minority share of income of TRG (506) 37 9,404 14,054 Distributions in excess of minority share of income of consolidated joint ventures 160 1,544 3,007 4,904 Funds from Operations 70,262 68,632 235,108 210,449 TCO's average ownership percentage of TRG 66.4% 65.3% 66.1% 65.0% Funds from Operations allocable to TCO 46,676 44,792 155,376 136,736 Funds from Operations 70,262 68,632 235,108 210,449 Charge upon redemption of Series A Preferred Stock 4,045 Charge upon redemption of Series I Preferred Stock 607 Write-off of financing costs 3,057 Adjusted Funds from Operations (1) 70,262 68,632 235,108 218,158 TCO's average ownership percentage of TRG 66.4% 65.3% 66.1% 65.0% Adjusted Funds from Operations allocable to TCO (1) 46,676 44,792 155,376 141,737 (1) Adjusted FFO in 2006 excludes the following unusual and/or nonrecurring items: charges of $1.0 million ($0.01 per share) in connection with the write-off of financing costs related to the refinancing of the loan on Dolphin Mall prior to maturity, charges of $4.0 million ($0.050 per share) and $0.6 million ($0.005 per share) in connection with the redemption of the remaining $113 million of the Series A Preferred Stock and the redemption of the Series I Preferred Stock, respectively, and a $2.1 million ($0.025 per share) charge in connection with the write-off of financing costs related to the pay-off of the loans on The Shops at Willow Bend prior to their maturity date. The Company discloses this Adjusted FFO due to the significance and infrequent nature of the charges. Given the significance of the charges, the Company believes it is essential to a reader's understanding of the Company's results of operations to emphasize the impact on the Company's earnings measures. The adjusted measures are not and should not be considered alternatives to net income or cash flows from operating, investing, or financing activities as defined by GAAP. TAUBMAN CENTERS, INC. Table 5- Reconciliation of Net Income to Beneficial Interest in EBITDA For the Periods Ended December 31, 2007 and 2006 (in thousands of dollars; amounts allocable to TCO may not recalculate due to rounding) Three Months Ended Year Ended 2007 2006 2007 2006 Net income 25,068 20,868 63,124 45,117 Add (less) depreciation and amortization: Consolidated businesses at 100% 38,052 38,343 137,910 137,957 Minority partners in consolidated joint ventures (5,372) (5,049) (17,253) (14,601) Share of unconsolidated joint ventures 5,768 7,475 23,035 26,864 Add (less) preferred interests and interest expense: Preferred distributions 615 615 2,460 2,460 Interest expense: Consolidated businesses at 100% 36,188 30,175 131,700 128,643 Minority partners in consolidated joint ventures (3,741) (3,278) (14,315) (12,853) Share of unconsolidated joint ventures 8,315 8,299 33,311 31,151 Add minority interests: Minority share of income of TRG 11,433 10,161 33,210 22,816 Distributions (less than) in excess of minority share of income of TRG (506) 37 9,404 14,054 Distributions in excess of minority share of income of consolidated joint ventures 160 1,544 3,007 4,904 Beneficial Interest in EBITDA 115,980 109,190 405,593 386,512 TCO's average ownership percentage of TRG 66.4% 65.3% 66.1% 65.0% Beneficial Interest in EBITDA allocable to TCO 77,047 71,261 268,018 251,062 TAUBMAN CENTERS, INC. Table 6- Balance Sheets As of December 31, 2007 and December 31, 2006 (in thousands of dollars) As of December 31, 2007 December 31, 2006 Consolidated Balance Sheet of Taubman Centers, Inc.: Assets: Properties 3,781,136 3,398,122 Accumulated depreciation and amortization (933,275) (821,384) 2,847,861 2,576,738 Investment in Unconsolidated Joint Ventures 92,117 86,493 Cash and cash equivalents 47,166 26,282 Accounts and notes receivable, net 52,161 36,650 Accounts and notes receivable from related parties 2,283 2,444 Deferred charges and other assets 109,719 98,015 3,151,307 2,826,622 Liabilities: Notes payable 2,700,980 2,319,538 Accounts payable and accrued liabilities 296,385 239,621 Dividends and distributions payable 21,839 19,849 Distributions in excess of investments in and net income of Unconsolidated Joint Ventures 100,234 101,944 3,119,438 2,680,952 Preferred Equity of TRG 29,217 29,217 Minority interests in TRG and consolidated joint ventures 18,494 7,811 Shareowners' Equity: Series B Non-Participating Convertible Preferred Stock 27 28 Series G Cumulative Redeemable Preferred Stock Series H Cumulative Redeemable Preferred Stock Common Stock 526 529 Additional paid-in capital 543,333 635,304 Accumulated other comprehensive income (loss) (8,639) (9,560) Dividends in excess of net income (551,089) (517,659) (15,842) 108,642 3,151,307 2,826,622 Combined Balance Sheet of Unconsolidated Joint Ventures: Assets: Properties 1,056,380 1,157,872 Accumulated depreciation and amortization (347,459) (320,256) 708,921 837,616 Cash and cash equivalents 40,097 35,504 Accounts and notes receivable 26,271 26,769 Deferred charges and other assets 18,229 23,417 793,518 923,306 Liabilities: Notes payable 1,003,463 1,097,347 Accounts payable and other liabilities 55,242 84,177 1,058,705 1,181,524 Accumulated Deficiency in Assets: Accumulated deficiency in assets - TRG (149,009) (161,666) Accumulated deficiency in assets - Joint Venture Partners (112,709) (93,843) Accumulated other comprehensive income (loss) - TRG (2,354) (2,112) Accumulated other comprehensive income (loss) - Joint Venture Partners (1,115) (597) (265,187) (258,218) 793,518 923,306 TAUBMAN CENTERS, INC. Table 7 - 2008 Annual Outlook (all dollar amounts per common share on a diluted basis; amounts may not add due to rounding) Range for Year Ended December 31, 2008 Funds from Operations per common share 3.05 3.12 Real estate depreciation - TRG (2.00) (1.92) Depreciation of TCO's additional basis in TRG (0.13) (0.13) Distributions in excess of earnings allocable to minority interest (0.31) (0.24) Net income allocable to common shareowners, per common share 0.60 0.83
SOURCE Taubman Centers, Inc.
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