Where is Taubman Centers’ stock listed and how do I invest?
Taubman Centers is a REIT that is publicly traded on the New York Stock Exchange. Investments in shares of stock can be made through a registered broker or through our transfer agent, Computershare Shareowner Services or 1.888.877.2889.
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What are the symbols and CUSIP numbers for Taubman Centers’ common and cumulative preferred stocks?
The symbols and CUSIP numbers are as follows:
Taubman Centers, Inc. common stock (TCO): 876664103
Taubman Centers, Inc. Series J Cumulative Preferred Shares (TCO Pr J): 876664608
Taubman Centers, Inc. Series K Cumulative Preferred Shares (TCO Pr K): 876664707
Note: the conventions for looking up preferred stocks vary on different websites and may not conform to the symbols above.
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Is there a minimum investment in Taubman Centers?
There is no minimum investment in Taubman Centers. An investor may make a purchase of as little as one share of common stock through the direct share purchase program administered by Computershare Shareowner Services. More information about this plan is available at 1.888.877.2889 or on the Computershare Shareowner Services
website. Any minimum purchase in a brokerage account is subject to applicable minimums in effect at the particular broker. In both cases – directly through Computershare or indirectly through a registered broker – fees and/or commissions may apply.
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Is there a maximum investment in Taubman Centers?
Taubman Centers’ ownership limitations and other provisions of its articles of incorporation and bylaws generally prohibit the acquisition of more than 8.23% of the value of our capital stock and may otherwise hinder any attempt to acquire us.
Under the company’s Restated Articles of Incorporation, in general, no shareowner may own more than 8.23% (the “General Ownership Limit”) in value of its "Capital Stock" (which term refers to the common stock, preferred stock and Excess Stock, as defined below). Taubman’s Board of Directors has the authority to allow a “look through entity” to own up to 9.9% in value of the Capital Stock (“Look Through Entity Limit”), provided that after application of certain constructive ownership rules under the Internal Revenue Code and rules regarding beneficial ownership under the Michigan Business Corporation Act, no individual would constructively or beneficially own more than the General Ownership Limit. A look through entity is an entity (other than a qualified trust under Section 401(a) of the Internal Revenue Code, certain other tax-exempt entities described in the Articles, or an entity that owns 10% or more of the equity of any tenant from which the company or its operating partnership, TRG, receives or accrues rent from real property) whose beneficial owners, rather than the entity, would be treated as owning the capital stock owned by such entity.
The Articles provide that if the transfer of any shares of Capital Stock or a change in Taubman’s capital structure would cause any person (“Purported Transferee”) to own Capital Stock in excess of the General Ownership Limit or the Look Through Entity Limit, then the transfer is to be treated as invalid from the outset, and the shares in excess of the applicable ownership limit automatically acquire the status of “Excess Stock.” A Purported Transferee of Excess Stock acquires no rights to shares of Excess Stock. Rather, all rights associated with the ownership of those shares (with the exception of the right to be reimbursed for the original purchase price of those shares) immediately vest in one or more charitable organizations designated from time to time by our Board of Directors (each, a “Designated Charity”). An agent designated from time to time by the Board (each, a “Designated Agent”) will act as attorney-in-fact for the Designated Charity to vote the shares of Excess Stock, take delivery of the certificates evidencing the shares that have become Excess Stock, and receive any distributions paid to the Purported Transferee with respect to those shares. The Designated Agent will sell the Excess Stock, and any increase in value of the Excess Stock between the date it became Excess Stock and the date of sale will inure to the benefit of the Designated Charity. A Purported Transferee must notify the company of any transfer resulting in shares converting into Excess Stock, as well as such other information regarding such person’s ownership of the capital stock as requested.
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Does Taubman Centers have a dividend reinvestment plan? Can I reinvest preferred shares through this plan?
Yes. There is a dividend reinvestment plan administered by Computershare Shareowner Services for common shareowners who hold their shares directly (as opposed to in a brokerage account). This service is only available for Taubman’s common stock; not its preferred stock. More information about the dividend reinvestment plan is available at 1.888.877.2889 or on the Computershare Shareowner Services
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How can I find out about the status of my Taubman Centers shares or dividend?
Representatives in Taubman’s investor relations area do not have access to an individual shareowner’s account information. To find out more about your holdings please contact your broker (if your shares are held in a brokerage account) or Computershare Shareowner Services (if your shares are held directly). For existing participants, Computershare can be reached at 1.888.877.2889.
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Can you help me understand the Series B preferred shares?
What are the Series B preferred shares?
The Series B preferred shares of Taubman Centers, Inc. (“TCO”) are a separate class of voting shares that vote with TCO’s common stock (the “common stock”). They are not listed on any exchange and are not publicly traded. They are related to the “UPREIT” structure of TCO, further explained below, in which all of the real estate assets are owned by The Taubman Realty Group Limited Partnership (the “operating partnership”), which TCO manages and in which TCO owns approximately 71%. The Series B preferred shares ensure that the Series B holders’ economic interests in the operating partnership are aligned with their voting interests in TCO. The Series B preferred shares are held by partners (other than TCO) in the operating partnership. The Series B preferred shares give these partners a voting interest in TCO commensurate with their economic interest in the operating partnership and ensure “one share, one unit, one vote.” At December 31, 2016, 96% of the Series B preferred shares were owned by various members of the Taubman family.
What is the UPREIT structure?
TCO is a publicly-traded real estate investment trust whose sole asset is an approximate 71% (as of December 31, 2016) interest in the operating partnership. TCO is the sole managing partner of the operating partnership. The remaining 29% of the interests in the operating partnership (or units) are owned by others, including members of the Taubman family. The operating partnership-TCO structure is commonly known as an umbrella partnership real estate investment trust or an “UPREIT.” In an UPREIT structure, the assets and business are held by the operating partnership, and the partnership interests are held by the public REIT and by private investors. TCO’s Series B preferred shares give the operating partnership unit holders (other than TCO) voting interests in TCO and thus in the overall UPREIT business that is proportionate to their economic ownership of the operating partnership.
What are the features of the Series B preferred shares?
The operating partnership’s unit holders may purchase one share of Series B preferred stock for each operating partnership unit owned, and ownership of the Series B preferred shares is limited to the greater of (i) the number of operating partnership units owned and (ii) 5% of the outstanding Series B preferred shares. If an operating partnership unit holder has the right to convert and does convert its operating partnership units to TCO common stock, the operating partnership unit holder is required to tender an equal number of Series B preferred shares. In other words, the preferred shares do not trade separately from the operating partnership units but are “stapled” to the operating partnership units. This ensures that the operating partnership unit holders can only own preferred stock commensurate with their economic ownership of the operating partnership.
The holders of Series B preferred stock are not entitled to dividends or earnings. The Series B preferred shares have a liquidation preference of $0.001 per share. The Series B preferred shares are convertible at the holders’ option into shares of common stock at a ratio of 14,000 shares of Series B preferred stock to one share of common stock.
The holders of the Series B preferred shares are entitled to nominate up to four persons for election as directors of the TCO board. The number of persons that the Series B holders may nominate in any given year is reduced by the Series B nominees who currently sit as directors and whose terms will not expired in that year. Like all director nominees, the Series B nominees are elected by shareholder vote at the annual TCO shareholders’ meeting, at which the Series B holders vote alongside the common holders.
When and why were the Series B preferred shares created?
The Series B preferred shares were created in 1998 as a result of a restructuring of the operating partnership (the “1998 restructuring”). The Series B preferred shares were issued to create a democratic voting and governance structure that aligns ownership and voting interests. They were issued to allow the operating partnership’s unit holders voting interests commensurate with their economic interest in the operating partnership in exchange for the governance rights they were giving up in the operating partnership as part of the 1998 restructuring described below.
What governance structure was in place prior to the 1998 restructuring of the operating partnership?
TCO was the first UPREIT at the time of its initial public offering in 1992, and it was a minority partner in the operating partnership. Prior to the 1998 restructuring of the operating partnership, the operating partnership had a unique governance structure with three groups — GM Pension Trusts (“GMPT”), TCO, and the other unit holders (including members of the Taubman family) – controlling the operating partnership through a Partnership Committee. This meant that TCO, with a minority position on the Partnership Committee, did not independently manage the operating partnership. The 13-member Partnership Committee consisted of five designated members from TCO, four members from GMPT, and four members from other unit holders (including members of the Taubman family). As a result of the 1998 restructuring, TCO became the majority partner in the operating partnership and the sole managing general partner. In exchange for giving up their voting position on the Partnership Committee, the unit holders were given, after receipt of NYSE approval, the opportunity to purchase the Series B preferred shares for nominal consideration of $0.001 per share.
In the 1998 restructuring, GMPT exchanged its 37.2% partnership interest in the operating partnership for ten mall properties. Before this restructuring, the operating partnership was 39.4% owned by TCO, 37.2% owned by GMPT, and 23.4% owned by the other unit holders (including members of the Taubman family). After the exchange by GMPT, the economic interests in the operating partnership of all the remaining investors increased pro rata, as in any share repurchase. Consequently, TCO’s interest in the operating partnership increased from 39.4% to 62.7%, and the unit holders' interest in the operating partnership increased from 23.4% to 37.3%. Also as part of the 1998 restructuring, TCO simplified its corporate governance to be consistent with its publicly-traded peers. The Partnership Committee was dissolved, and governance moved from the Partnership Committee to the board of directors of TCO. The five independent Partnership Committee members representing TCO and the four Partnership Committee members representing the operating partnership’s unit holders became members of TCO’s board of directors.
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What is a REIT?
A Real Estate Investment Trust or REIT is a company that mainly owns, and in most cases, operates income-producing real estate such as apartments, shopping centers, offices, hotels and warehouses. Some REITs also engage in financing real estate. The shares of many REITs are traded on major stock exchanges.
To qualify as a REIT, a company must have most of its assets and income tied to real estate investment and must distribute at least 90 percent of its taxable income to its shareowners annually. A company that qualifies as a REIT is permitted to deduct dividends paid to its shareowners from its corporate taxable income. (This definition is provided by the National Association of Real Estate Investment Trusts [NAREIT]. For more information, visit NAREIT’s website, www.reit.com .)
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What is an UPREIT?
Taubman Centers is structured as an Umbrella partnership REIT or UPREIT. Its Operating Partnership is The Taubman Realty Group (“TRG”).
In a typical UPREIT, the partners of the existing partnerships and a REIT become partners in a new partnership termed the Operating Partnership. For their respective interests in the Operating Partnership (“Units”), the partners contribute the properties from the existing partnership and the REIT contributes the cash proceeds from its public offering. The REIT typically is the general partner and the majority owner of the Operating Partnership.
After a period of time (often one year), the partners may enjoy the same liquidity of the REIT shareowners by tendering their Units for REIT shares. This conversion may result in the partners incurring the tax deferred at the UPREIT’s formation. (Definition provided by the National Association of Real Estate Investment Trusts [NAREIT]. For more information, visit NAREIT’s website, www.reit.com .
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What is “Funds from Operations” or “FFO?”
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. We believe 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, we 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. We primarily use FFO in measuring performance and in formulating corporate goals and compensation.
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