Taubman Centers, Inc. Issues Fourth Quarter and Full Year 2019 Results

02/10/2020

- Full Year 2019 Net Income and Earnings Per Diluted Common Share (EPS) Up Primarily Due to Gains on Sales of Interests in Starfield Hanam and CityOn.Zhengzhou
- Pro Rata Total Portfolio NOI, Excluding Lease Cancellation Income, Up 4.6 Percent for the Quarter and 3.9 Percent for the Year
-
Industry-leading Sales Per Square Foot $876, Up 3.1 Percent for the Quarter and 9.8 Percent for the Year
- U.S. Comp Center Sales Per Square Foot $972, Up 11 Percent for the Year
- Average Rent Per Square Foot Up 1.6 Percent for the Year

BLOOMFIELD HILLS, Mich.--(BUSINESS WIRE)-- Taubman Centers, Inc. (NYSE: TCO) today reported financial results for the quarter and full year periods ended December 31, 2019.

 

December 31, 2019

December 31, 2018

December 31, 2019

December 31, 2018

Three Months Ended

Three Months Ended

Year Ended

Year Ended

Net income attributable to common shareowners, diluted (in thousands)

($32,792)

$3,087

$206,753

$58,037

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

($0.54)(1)

$0.05

$3.32(2)

$0.95

Funds from Operations (FFO) per diluted common share

Growth rate

$0.91

5.8%

$0.86

$3.50

(5.7%)

$3.71

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

Growth rate

$0.97(3)

6.6%

$0.91(4)

$3.71(3)

(3.1%)

$3.83(4)

  1. EPS for the three-month period ended December 31, 2019 includes two impairment charges related to Taubman Prestige Outlets Chesterfield and Stamford Town Center totaling $1.09 per diluted common share, partially offset by gains related to the sale of 50 percent of our interest in CityOn.Zhengzhou, of $0.37 per diluted common share.
  2. EPS for the year ended December 31, 2019 was higher primarily due to the sales of 50 percent of our interests in Starfield Hanam and CityOn.Zhengzhou and a litigation settlement related to The Mall of San Juan, resulting in the recognition of gains totaling $3.73 per diluted common share, partially offset by impairment charges of $1.08 per diluted common share.
  3. Adjusted FFO for the three months and year ended December 31, 2019 excludes restructuring charges, deferred income tax expense and other costs incurred related to the Blackstone transactions, costs associated with the Taubman Asia President transition, costs associated with shareholder activism, a charge recognized in connection with the write-off of deferred financings costs and the fluctuation in the fair value of equity securities. Adjusted FFO for the year ended December 31, 2019 also excludes a promote fee (net of tax) related to Starfield Hanam.
  4. Adjusted FFO for the three months and year ended December 31, 2018 excludes restructuring charges, costs associated with shareholder activism, and the fluctuation in the fair value of equity securities). Adjusted FFO for the year ended December 31, 2018 also excludes a charge recognized in connection with the write-off of deferred financing costs.

“We produced solid results in the fourth quarter concluding what was a very productive year for the company,” said Robert S. Taubman, chairman, president and chief executive officer of Taubman Centers.

“In 2019 we enhanced our portfolio through our partnership with Blackstone in Asia, the acquisition of The Gardens Mall in Palm Beach and by executing on our vision for The Mall at Green Hills in Nashville, all while navigating a challenging retail environment.”

Operating Statistics

Total portfolio NOI growth at our beneficial interest, excluding lease cancellation income, was up 3.9 percent for the year and up 4.6 percent for the fourth quarter.

For the year, comparable center NOI, excluding lease cancellation income was up 0.2 percent, and was up 1.4 percent at our share. Fourth quarter, comparable center NOI, excluding lease cancellation income was down 0.1 percent, and was up 1.7 percent at our share.

“We were pleased with our NOI growth in a year where we experienced elevated tenant bankruptcies and unfavorable foreign currency exchange rates,” said Mr. Taubman. “Our high-quality portfolio of assets continues to grow, notwithstanding a volatile retail environment.”

Tenant sales per square foot in U.S. comparable centers reached a record high of $972 for 2019, an increase of 11 percent. U.S. comparable center tenant sales per square foot were up 2.7 percent in the fourth quarter.

Including Asia, comparable center tenant sales per square foot were $876 for 2019, up 9.8 percent over 2018. Fourth quarter comparable center tenant sales per square foot were up 3.1 percent.

“Sales growth was well-distributed across centers and categories,” said Mr. Taubman. “Apparel, shoes, electronics, food and jewelry all posted increases, building upon strong growth last year.”

For the year, average rent per square foot in comparable centers was $56.12, up 1.6 percent from last year. For the fourth quarter, average rent per square foot was $55.98, up 0.8 percent.

Average rent per square foot in U.S. comparable centers increased to $62.11 in 2019. In the fourth quarter average rent per square foot in U.S. comparable centers was $61.79, essentially flat compared to last year.

The trailing 12-month releasing spread per square foot for the period ended December 31, 2019 was negative 1.1 percent. This spread remains impacted by a small number of deals, concentrated within a few centers, which have an average lease term of less than two years. Without these leases, the releasing spread was 3.2 percent.

Ending occupancy in comparable centers was 94.3 percent at year-end, down 0.6 percent from December 31, 2018. Leased space in comparable centers was 95.7 percent at year-end, down 0.7 percent from December 31, 2018. Both occupancy and leased space were impacted by Stamford Town Center, which is currently being marketed for sale, as well as the Forever 21 store at The Mall at Short Hills (Short Hills, NJ) which closed in late December.

“Although tenant turnover remains elevated, demand for space in our portfolio remains high,” said Mr. Taubman.

Blackstone Transactions

In December, the company completed the sale of 50 percent of Taubman Asia’s interest in CityOn.Zhengzhou (Zhengzhou, China) to real estate funds managed by the Blackstone Group, Inc. (Blackstone) for $89 million, retaining a 24.5 percent ownership interest in the center. The company received net proceeds of $47.5 million, following the allocation of property-level debt, taxes and transaction costs, which were used to pay down debt. The company recognized a gain on disposition of $14.3 million and a gain on remeasurement of $17.8 million related to the sale.

The company expects to complete the sale of Taubman Asia’s 50 percent interest in CityOn.Xi’an (Xi’an, China) to Blackstone in the first quarter of 2020. The sale price is $91 million and net proceeds are expected to be about $50 million, following the allocation of property-level debt, taxes and transaction costs. This represents the third and final asset sale associated with the Blackstone transactions announced last year.

The sales are consistent with Taubman’s announcement to sell 50 percent of its three Asia-based shopping centers to Blackstone. See Taubman to Sell 50 Percent of its Interests in its Three Asia Shopping Centers to BlackstoneFebruary 14, 2019.

Portfolio Activity

In May 2018, the operations, buildings, and improvements of Taubman Prestige Outlets Chesterfield (Chesterfield, Mo.) were transferred to The Staenberg Group (TSG), as part of a redevelopment agreement. See Taubman Centers, Inc. Issues Strong First Quarter Results- April 26, 2018. TSG has made significant progress on their redevelopment plans and the commencement of construction is probable within the year, leading to a sale of the property in 2020. Accordingly, the center was classified as held for sale as of December 31, 2019 and an impairment charge of $72.2 million was recognized in the fourth quarter. The company has no future capital obligation related to the redevelopment and remains entitled to ground lease payments and a share of the property’s future revenues above a specified level.

The company also recognized an impairment charge of $18.0 million related to its equity investment in its 50 percent owned Stamford Town Center (Stamford, Conn.). The shopping center is currently being marketed for sale.

2019 Milestones, Events and Financings

During 2019, the company:

Simon Property Group to Acquire Taubman

On February 10, the company announced a definitive agreement for Simon Property Group, Inc. (NYSE: SPG) (Simon) to acquire an 80% ownership interest in The Taubman Realty Group Limited Partnership (TRG). Simon, through its operating partnership, Simon Property Group, L.P., will acquire all of Taubman’s common stock for $52.50 per share in cash and the Taubman family will sell approximately one-third of its ownership interest at the transaction price and remain a 20% partner in TRG. See the press release issued separately today by Simon Property Group, Inc. and Taubman Centers, Inc.

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:

  • Earnings Press Release
  • Company Overview
  • Operational Statistics
  • Summary of Key Guidance Measures
  • Income Statements
  • Changes in Funds from Operations and Earnings Per Common Share
  • Balance Sheets
  • Debt Summary
  • Capital Spending & Certain Balance Sheet Information
  • Owned Centers
  • New Development, Acquisition and Partial Dispositions of Ownership Interests
  • Anchors & Major Tenants in Owned Portfolio
  • Components of Rental Revenues
  • Components of Other Income, Other Operating Expense, and Nonoperating Income, Net
  • Earnings Reconciliations
  • Glossary

Investor Conference Call

The company, along with Simon, will conduct a live conference call and webcast to discuss Simon’s agreement to acquire Taubman today, February 10, 2020 at 8:30 a.m. EST. The live webcast will be available in listen-only mode at investors.simon.com. Within the United States, listeners can also access the call by dialing 1-888-528-4228. Callers outside the U.S. can dial 704-935-3408. The conference ID for the call is "9456226."

An audio replay will be available from approximately 11:30 a.m. EST on February 10, 2020 until 11:00 a.m. Eastern Time on February 17, 2020. The replay can be accessed within the U.S. by dialing 1-855-859-2056. Callers outside the U.S. can access the replay at 404-537-3406. The replay passcode is "9456226." The call will also be archived on investors.simon.com for approximately 90 days.

The company is cancelling its conference call that was scheduled for 10:00 a.m. EST on Thursday, February 13.

About Taubman

Taubman Centers is an S&P MidCap 400 Real Estate Investment Trust engaged in the ownership, management and/or leasing of 26 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. Founded in 1950, Taubman is headquartered in Bloomfield Hills, Mich. Taubman Asia, founded in 2005, is headquartered in Hong Kong. www.taubman.com.

For ease of use, references in this press release to “Taubman Centers,”, “we”, “us”, “our”, “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 contains certain “forward-looking” statements as that term is defined by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements that are predictive in nature, that depend on or relate to future events or conditions, or that include words such as “believes”, “anticipates”, “expects”, “may”, “will”, “would,” “should”, “estimates”, “could”, “intends”, “plans” or other similar expressions are forward-looking statements. Forward-looking statements involve significant known and unknown risks and uncertainties that may cause actual results in future periods to differ materially from those projected or contemplated in the forward-looking statements as a result of, but not limited to, the following factors: the failure to receive, on a timely basis or otherwise, the required approvals by Taubman’s shareholders; the risk that a condition to closing of the transaction may not be satisfied; Simon’s and Taubman’s ability to consummate the transaction; the possibility that the anticipated benefits from the transaction will not be fully realized; the ability of Taubman to retain key personnel and maintain relationships with business partners pending the consummation of the transaction; and the impact of legislative, regulatory and competitive changes and other risk factors relating to the industries in which Simon and Taubman operate, as detailed from time to time in each of Simon’s and Taubman’s reports filed with the SEC. There can be no assurance that the transaction will in fact be consummated.

Additional information about these factors and about the material factors or assumptions underlying such forward-looking statements may be found under Item 1.A in Taubman’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018. Taubman cautions that the foregoing list of important factors that may affect future results is not exhaustive. When relying on forward-looking statements to make decisions with respect to the proposed transaction, shareholders and others should carefully consider the foregoing factors and other uncertainties and potential events. All subsequent written and oral forward-looking statements concerning the proposed transaction or other matters attributable to Taubman or any other person acting on their behalf are expressly qualified in their entirety by the cautionary statements referenced above. The forward-looking statements contained herein speak only as of the date of this communication. Taubman does not undertake any obligation to update or revise any forward-looking statements for any reason, even if new information becomes available or other events occur in the future, except as may be required by law.

Additional Information and Where to Find It

This communication is being made in respect of the proposed transaction involving Taubman and Simon. In connection with the proposed transaction, Taubman intends to file relevant materials with the Securities and Exchange Commission (the “SEC”), including a preliminary proxy statement on Schedule 14A. Promptly after filing its definitive proxy statement with the SEC, Taubman will mail the definitive proxy statement and a proxy card to each shareholder of Taubman entitled to vote at the special meeting relating to the proposed transaction. This communication is not a substitute for the proxy statement or any other document that Taubman may file with the SEC or send to its shareholders in connection with the proposed transaction. BEFORE MAKING ANY VOTING DECISION, SHAREHOLDERS OF TAUBMAN ARE URGED TO READ THESE MATERIALS (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS IN CONNECTION WITH THE PROPOSED TRANSACTION THAT TAUBMAN WILL FILE WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT TAUBMAN AND THE PROPOSED TRANSACTION. The definitive proxy statement, the preliminary proxy statement and other relevant materials in connection with the proposed transaction (when they become available), and any other documents filed by TAUBMAN with the SEC, may be obtained free of charge at the SEC’s website (http://www.sec.gov) or at Taubman’s website (www.taubman.com).

Participants in the Solicitation

Taubman and certain of its directors, executive officers and employees may be considered participants in the solicitation of proxies in connection with the proposed transaction. Information regarding the persons who may, under the rules of the SEC, be deemed participants in the solicitation of the shareholders of Taubman in connection with the transaction, including a description of their respective direct or indirect interests, by security holdings or otherwise, is included in the Proxy Statement described above filed with the SEC. Additional information regarding Taubman’s directors and executive officers is also included in the Taubman’s proxy statement on Schedule 14A for its 2019 Annual Meeting of Shareholders, which was filed with the SEC on April 30, 2019, or its Annual Report on Form 10-K for the year ended December 31, 2018, which was filed with the SEC on February 28, 2019. These documents are available free of charge as described above.

TAUBMAN CENTERS, INC.

 

 

 

 

 

 

 

 

Table 1 - Income Statement

 

 

 

 

 

 

 

 

For the Three Months Ended December 31, 2019 and 2018

 

 

 

 

 

 

 

 

(in thousands of dollars)

 

 

 

 

 

 

 

 

 

 

2019

 

2018

 

 

CONSOLIDATED

 

UNCONSOLIDATED

 

CONSOLIDATED

 

UNCONSOLIDATED

 

 

BUSINESSES

 

JOINT VENTURES (1)

 

BUSINESSES

 

JOINT VENTURES (1)

REVENUES:

 

 

 

 

 

 

 

 

Rental revenues (2)

 

149,247

 

 

146,397

 

 

 

 

 

Minimum rents (2)

 

 

 

 

 

91,515

 

 

90,185

 

Overage rents

 

10,491

 

 

10,955

 

 

9,217

 

 

10,088

 

Expense recoveries (2)

 

 

 

 

 

51,337

 

 

44,179

 

Management, leasing, and development services

 

811

 

 

 

 

791

 

 

 

Other (2)

 

16,187

 

 

12,216

 

 

14,629

 

 

10,212

 

Total revenues

 

176,736

 

 

169,568

 

 

167,489

 

 

154,664

 

 

 

 

 

 

 

 

 

 

EXPENSES:

 

 

 

 

 

 

 

 

Maintenance, taxes, utilities, and promotion

 

45,032

 

 

56,285

 

 

44,086

 

 

45,678

 

Other operating (2)

 

22,278

 

 

7,124

 

 

23,155

 

 

6,708

 

Management, leasing, and development services

 

665

 

 

 

 

284

 

 

 

General and administrative

 

13,804

 

 

 

 

11,629

 

 

 

Impairment charges

 

72,232

 

 

20,600

 

 

 

 

 

Restructuring charges

 

1,958

 

 

 

 

1,019

 

 

 

Costs associated with shareholder activism

 

630

 

 

 

 

2,500

 

 

 

Interest expense

 

35,817

 

 

34,597

 

 

35,955

 

 

33,353

 

Depreciation and amortization

 

51,343

 

 

35,430

 

 

54,950

 

 

33,910

 

Total expenses

 

243,759

 

 

154,036

 

 

173,578

 

 

119,649

 

 

 

 

 

 

 

 

 

 

Nonoperating income, net

 

981

 

 

710

 

 

856

 

 

432

 

 

 

(66,042

)

 

16,242

 

 

(5,233

)

 

35,447

 

Income tax expense

 

(1,408

)

 

(4,102

)

 

(553

)

 

(1,450

)

 

 

 

 

 

 

 

 

 

Equity in income of UJVs

 

(580

)

 

 

 

18,724

 

 

 

Gains on partial dispositions of ownership interests in UJVs, net of tax

 

15,770

 

 

 

 

 

 

 

Gains on remeasurements of ownership interests in UJVs

 

19,629

 

 

 

 

 

 

 

Net income

 

(32,631

)

 

12,140

 

 

12,938

 

 

33,997

 

Net income attributable to noncontrolling interests:

 

 

 

 

 

 

 

 

Noncontrolling share of income of consolidated joint ventures

 

(1,795

)

 

 

 

(1,880

)

 

 

Noncontrolling share of income of TRG

 

8,015

 

 

 

 

(1,595

)

 

 

Distributions to participating securities of TRG

 

(596

)

 

 

 

(599

)

 

 

Preferred stock dividends

 

(5,785

)

 

 

 

(5,785

)

 

 

Net income attributable to Taubman Centers, Inc. common shareholders

 

(32,792

)

 

 

 

3,079

 

 

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL INFORMATION:

 

 

 

 

 

 

 

 

EBITDA - 100%

 

58,926

 

 

86,269

 

 

85,672

 

 

102,710

 

EBITDA - outside partners' share

 

(6,589

)

 

(50,976

)

 

(7,066

)

 

(48,711

)

Beneficial interest in EBITDA

 

52,337

 

 

35,293

 

 

78,606

 

 

53,999

 

Gains on partial dispositions of ownership interests in UJVs

 

(18,179

)

 

 

 

 

 

 

Gains on remeasurements of ownership interests in UJVs

 

(19,629

)

 

 

 

 

 

 

Beneficial share of impairment charges

 

72,232

 

 

17,951

 

 

 

 

 

Beneficial interest expense

 

(33,002

)

 

(17,170

)

 

(32,947

)

 

(17,118

)

Beneficial income tax expense - TRG and TCO

 

(1,408

)

 

(928

)

 

(495

)

 

(513

)

Non-real estate depreciation

 

(1,155

)

 

 

 

(1,188

)

 

 

Preferred dividends and distributions

 

(5,785

)

 

 

 

(5,785

)

 

 

Funds from Operations attributable to partnership unitholders and participating securities of
TRG

 

45,411

 

 

35,146

 

 

38,191

 

 

36,368

 

 

 

 

 

 

 

 

 

 

STRAIGHTLINE AND PURCHASE ACCOUNTING ADJUSTMENTS:

 

 

 

 

 

 

 

Net straight-line adjustments to rental revenues, recoveries, and ground rent expense at TRG%

 

1,245

 

 

295

 

 

997

 

 

476

 

Country Club Plaza purchase accounting adjustments - rental revenues at TRG%

 

 

 

118

 

 

 

 

113

 

The Mall at Green Hills purchase accounting adjustments - rental revenues

 

16

 

 

 

 

24

 

 

 

The Gardens Mall purchase accounting adjustments - rental revenues at TRG%

 

 

 

(170

)

 

 

 

 

The Gardens Mall purchase accounting adjustments - interest expense at TRG%

 

 

 

(528

)

 

 

 

 

 

 

 

(1) With the exception of the Supplemental Information, amounts include 100% of the UJVs. Amounts are net of intercompany transactions. The UJVs are presented at 100% in order to allow for measurement of their performance as a whole, without regard to our ownership interest.

 

(2) Upon adoption of ASC Topic 842, minimum rents and expense recoveries are now presented within a single revenue line item, Rental Revenues; the presentation of lease cancellation income has changed from Other income to Rental Revenues; the presentation of uncollectible tenant revenues has changed from Other Operating expense to Rental Revenues as a contra-revenue; and Other Operating expense includes certain indirect leasing costs, which were capitalizable under the previous lease accounting standard. As a result of the accounting change, an additional $1.0 million of leasing costs were expensed during the three months ended December 31, 2019. Comparative periods presented were not adjusted to reflect the change in accounting.

TAUBMAN CENTERS, INC.

 

 

 

 

 

 

 

 

Table 2 - Income Statement

 

 

 

 

 

 

 

 

For the Year Ended December 31, 2019 and 2018

 

 

 

 

 

 

 

 

(in thousands of dollars)

 

 

 

 

 

 

 

 

 

 

2019

 

2018

 

 

CONSOLIDATED

 

UNCONSOLIDATED

 

CONSOLIDATED

 

UNCONSOLIDATED

 

 

BUSINESSES

 

JOINT VENTURES (1)

 

BUSINESSES

 

JOINT VENTURES (1)

REVENUES:

 

 

 

 

 

 

 

 

Rental revenues (2)

 

581,755

 

 

557,010

 

 

 

 

 

Minimum rents (2)

 

 

 

 

 

353,226

 

 

357,465

 

Overage rents

 

19,210

 

 

29,234

 

 

16,670

 

 

28,844

 

Expense recoveries (2)

 

 

 

 

 

205,514

 

 

178,162

 

Management, leasing, and development services

 

4,846

 

 

 

 

3,271

 

 

 

Other (2)

 

55,243

 

 

32,995

 

 

62,189

 

 

36,246

 

Total revenues

 

661,054

 

 

619,239

 

 

640,870

 

 

600,717

 

 

 

 

 

 

 

 

 

 

EXPENSES:

 

 

 

 

 

 

 

 

Maintenance, taxes, utilities, and promotion

 

163,538

 

 

188,698

 

 

157,957

 

 

171,188

 

Other operating (2)

 

82,488

 

 

25,910

 

 

87,308

 

 

27,327

 

Management, leasing, and development services

 

3,582

 

 

 

 

1,470

 

 

 

General and administrative

 

40,566

 

 

 

 

37,174

 

 

 

Impairment charges

 

72,232

 

 

20,600

 

 

 

 

 

Restructuring charges

 

3,543

 

 

 

 

596

 

 

 

Costs associated with shareholder activism

 

17,305

 

 

 

 

12,500

 

 

 

Interest expense

 

148,407

 

 

138,178

 

 

133,197

 

 

132,669

 

Depreciation and amortization

 

188,407

 

 

138,607

 

 

179,275

 

 

134,872

 

Total expenses

 

720,068

 

 

511,993

 

 

609,477

 

 

466,056

 

 

 

 

 

 

 

 

 

 

Nonoperating income, net

 

27,449

 

 

7,691

 

 

14,714

 

 

1,923

 

 

 

(31,565

)

 

114,937

 

 

46,107

 

 

136,584

 

Income tax (expense) benefit

 

(6,332

)

 

(10,737

)

 

231

 

 

(6,924

)

 

 

 

 

 

 

 

 

 

Equity in income of UJVs

 

49,166

 

 

 

 

69,404

 

 

 

Gains on partial dispositions of ownership interests in UJVs, net of tax

 

154,466

 

 

 

 

 

 

 

Gains on remeasurements of ownership interests in UJVs

 

164,639

 

 

 

 

 

 

 

Net income

 

330,374

 

 

104,200

 

 

115,742

 

 

129,660

 

Net income attributable to noncontrolling interests:

 

 

 

 

 

 

 

 

Noncontrolling share of income of consolidated joint ventures

 

(5,014

)

 

 

 

(6,268

)

 

 

Noncontrolling share of income of TRG

 

(95,884

)

 

 

 

(25,988

)

 

 

Distributions to participating securities of TRG

 

(2,413

)

 

 

 

(2,396

)

 

 

Preferred stock dividends

 

(23,138

)

 

 

 

(23,138

)

 

 

Net income attributable to Taubman Centers, Inc. common shareholders

 

203,925

 

 

 

 

57,952

 

 

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL INFORMATION:

 

 

 

 

 

 

 

 

EBITDA - 100%

 

626,763

 

 

391,722

 

 

358,579

 

 

404,125

 

EBITDA - outside partners' share

 

(25,064

)

 

(197,616

)

 

(26,091

)

 

(194,382

)

Beneficial interest in EBITDA

 

601,699

 

 

194,106

 

 

332,488

 

 

209,743

 

Gain on insurance recoveries - The Mall of San Juan

 

(1,418

)

 

 

 

 

 

 

Gain on Saks settlement - The Mall of San Juan

 

(10,095

)

 

 

 

 

 

 

Gains on partial dispositions of ownership interests in UJVs

 

(156,875

)

 

 

 

 

 

 

Gains on remeasurements of ownership interests in UJVs

 

(164,639

)

 

 

 

 

 

 

Beneficial share of impairment charges

 

72,232

 

 

17,951

 

 

 

 

 

Beneficial interest expense

 

(136,694

)

 

(69,749

)

 

(121,166

)

 

(68,225

)

Beneficial income tax expense - TRG and TCO

 

(6,143

)

 

(3,608

)

 

423

 

 

(2,900

)

Beneficial income tax benefit - TCO

 

 

 

 

 

(110

)

 

 

Non-real estate depreciation

 

(4,602

)

 

 

 

(4,590

)

 

 

Preferred dividends and distributions

 

(23,138

)

 

 

 

(23,138

)

 

 

Funds from Operations attributable to partnership unitholders and participating securities of
TRG

 

170,327

 

 

138,700

 

 

183,907

 

 

138,618

 

 

 

 

 

 

 

 

 

 

STRAIGHTLINE AND PURCHASE ACCOUNTING ADJUSTMENTS:

 

 

 

 

 

 

 

Net straight-line adjustments to rental revenues, recoveries, and ground rent expense at TRG%

 

5,672

 

 

476

 

 

3,079

 

 

2,073

 

Country Club Plaza purchase accounting adjustments - rental revenues at TRG%

 

 

 

375

 

 

 

 

1,522

 

The Mall at Green Hills purchase accounting adjustments - rental revenues

 

77

 

 

 

 

112

 

 

 

The Gardens Mall purchase accounting adjustments - rental revenues at TRG%

 

 

 

(986

)

 

 

 

 

The Gardens Mall purchase accounting adjustments - interest expense at TRG%

 

 

 

(1,584

)

 

 

 

 

 

 

 

(1) With the exception of the Supplemental Information, amounts include 100% of the UJVs. Amounts are net of intercompany transactions. The UJVs are presented at 100% in order to allow for measurement of their performance as a whole, without regard to our ownership interest.

 

(2) Upon adoption of ASC Topic 842, minimum rents and expense recoveries are now presented within a single revenue line item, Rental Revenues; the presentation of lease cancellation income has changed from Other income to Rental Revenues; the presentation of uncollectible tenant revenues has changed from Other Operating expense to Rental Revenues as a contra-revenue; and Other Operating expense includes certain indirect leasing costs, which were capitalizable under the previous lease accounting standard. As a result of the accounting change, an additional $4.4 million of leasing costs were expensed during the year ended December 31, 2019. Comparative periods presented were not adjusted to reflect the change in accounting.

 

TAUBMAN CENTERS, INC.

Use of Non-GAAP Financial Measures

In this press release, the terms "we", "us", and "our" refer to Taubman Centers, Inc. (TCO), The Taubman Realty Group Limited Partnership (TRG), and/or TRG's subsidiaries as the context may require.

We use certain non-GAAP operating measures, including EBITDA, beneficial interest in EBITDA, Net Operating Income (NOI), beneficial interest in NOI, and Funds from Operations (FFO). These measures are reconciled to the most comparable GAAP measures. Additional information as to the use of these measures are as follows.

EBITDA represents earnings before interest, income taxes, and depreciation and amortization of our consolidated and unconsolidated businesses. Beneficial interest in EBITDA represents our share of the earnings before interest, income taxes, and depreciation and amortization of our consolidated and unconsolidated businesses. We believe EBITDA and beneficial interest in EBITDA provide useful indicators 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.

We use Net Operating Income as an alternative measure to evaluate the operating performance of centers, both on individual and stabilized portfolio bases, and in formulating corporate goals and compensation. We define NOI as property-level operating revenues (includes rental income excluding straight-line adjustments of minimum rent) less maintenance, property taxes, utilities, promotion, ground rent (including straight-line adjustments), and other property operating expenses. Beneficial interest in NOI represents our share of NOI (as previously defined) of our consolidated and unconsolidated businesses. 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. We also use 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. We generally provide 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, excluding centers impacted by significant redevelopment activity. In addition, The Mall of San Juan has been excluded from comparable center statistics as a result of Hurricane Maria given that the center's performance has been and is expected to continue to be materially impacted for the foreseeable future. We also use NOI excluding lease cancellation income using constant currency exchange rates as an alternative measure because exchange rates may vary significantly from period to period, which can affect comparability and trend analysis.

The National Association of Real Estate Investment Trusts (NAREIT) defines FFO as net income (calculated in accordance with Generally Accepted Accounting Principles (GAAP)), excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control, and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. 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.

We 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. We believe 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. The following table summarizes adjustments to FFO and EBITDA for the three months and years ended December 31, 2019 and 2018:

 

FFO

 

EBITDA

 

Three Months
Ended

 

Year Ended

 

Three Months
Ended

 

Year Ended

 

2019

 

2018

 

2019

 

2018

 

2019

 

2018

 

2019

 

2018

Costs associated with shareholder activism

 

 

 

 

 

 

 

Restructuring charges

 

 

 

 

 

 

 

Costs related to Blackstone transactions

 

 

 

 

 

 

 

 

 

 

 

 

Taubman Asia President transition costs

 

 

 

 

 

 

 

 

 

 

 

Write-off of deferred financing costs

 

 

 

 

 

 

 

 

 

 

 

Promote fee - Starfield Hanam

 

 

 

 

 

 

 

 

 

 

 

 

 

Fluctuation in fair value of equity securities

 

 

 

 

 

 

 

Gains on partial dispositions of ownership interests in UJVs

 

 

 

 

 

 

 

 

 

 

 

 

 

Gains on remeasurements of ownership interests in UJVs

 

 

 

 

 

 

 

 

 

 

 

 

 

Beneficial share of impairment charges

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on Saks settlement - The Mall of San Juan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on insurance recoveries - The Mall of San Juan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

These non-GAAP measures as presented by us 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 our operating performance. Additionally, these measures do not represent cash flows from operating, investing, or financing activities as defined by GAAP.

We also provide our beneficial interest in certain financial information of our UJVs. This beneficial information is derived as our ownership interest in the investee multiplied by the specific financial statement item being presented. Investors are cautioned that deriving our beneficial interest in this manner may not accurately depict the legal and economic implications of holding a noncontrolling interest in the investee.

TAUBMAN CENTERS, INC.

 

 

 

 

 

 

 

 

 

 

 

Table 3 - Reconciliation of Net Income Attributable to Taubman Centers, Inc. Common Shareholders to Funds From Operations and Adjusted Funds From Operations

For the Three Months Ended December 31, 2019 and 2018

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

 

 

 

 

 

 

 

 

 

 

 

 

2019

 

2018

 

 

 

Shares

 

Per Share

 

 

 

Shares

 

Per Share

 

Dollars

 

/Units

 

/Unit

 

Dollars

 

/Units

 

/Unit

Net income attributable to TCO common shareholders - basic

(32,792

)

 

61,219,679

 

 

(0.54

)

 

3,079

 

 

61,065,282

 

 

0.05

 

Add impact of share-based compensation

 

 

 

 

 

 

8

 

 

308,898

 

 

 

Net income attributable to TCO common shareholders - diluted

(32,792

)

 

61,219,679

 

 

(0.54

)

 

3,087

 

 

61,374,180

 

 

0.05

 

Add depreciation of TCO's additional basis

1,617

 

 

 

 

0.03

 

 

1,617

 

 

 

 

0.03

 

Add impairment of TCO's additional basis

12,606

 

 

 

 

0.21

 

 

 

 

 

 

 

Net income attributable to TCO common shareholders,
excluding step-up depreciation and impairment of additional basis

(18,569

)

 

61,219,679

 

 

(0.30

)

 

4,704

 

 

61,374,180

 

 

0.08

 

Add (less) noncontrolling share of income of TRG

(8,015

)

 

26,424,964

 

 

 

 

1,915

 

 

24,881,563

 

 

 

Add distributions to participating securities of TRG

596

 

 

871,262

 

 

 

 

599

 

 

871,262

 

 

 

Net income attributable to partnership unitholders and
participating securities of TRG

(25,988

)

 

88,515,905

 

 

(0.29

)

 

7,218

 

 

87,127,005

 

 

0.08

 

Add (less) depreciation and amortization:

 

 

 

 

 

 

 

 

 

 

 

Consolidated businesses at 100%

51,343

 

 

 

 

0.58

 

 

54,950

 

 

 

 

0.63

 

Depreciation of TCO's additional basis

(1,617

)

 

 

 

(0.02

)

 

(1,617

)

 

 

 

(0.02

)

Noncontrolling partners in consolidated joint ventures

(1,979

)

 

 

 

(0.02

)

 

(2,120

)

 

 

 

(0.02

)

Share of UJVs

17,775

 

 

 

 

0.20

 

 

17,324

 

 

 

 

0.20

 

Non-real estate depreciation

(1,155

)

 

 

 

(0.01

)

 

(1,188

)

 

 

 

(0.01

)

Less gains on partial dispositions of ownership interests in UJVs, net of tax

(15,770

)

 

 

 

(0.18

)

 

 

 

 

 

 

Less gains on remeasurements of ownership interests in UJVs

(19,629

)

 

 

 

(0.22

)

 

 

 

 

 

 

Add beneficial share of impairment charges

90,183

 

 

 

 

1.02

 

 

 

 

 

 

 

Less impairment of TCO's additional basis

(12,606

)

 

 

 

(0.14

)

 

 

 

 

 

 

Add (less) impact of share-based compensation

 

 

164,912

 

 

 

 

(8

)

 

 

 

(0.00

)

Funds from Operations attributable to partnership unitholders
and participating securities of TRG

80,557

 

 

88,680,817

 

 

0.91

 

 

74,559

 

 

87,127,005

 

 

0.86

 

TCO's average ownership percentage of TRG - basic (1)

69.8

%

 

 

 

 

 

71.1

%

 

 

 

 

Funds from Operations attributable to TCO's common shareholders (1)

56,269

 

 

 

 

0.91

 

 

52,974

 

 

 

 

0.86

 

 

 

 

 

 

 

 

 

 

 

 

 

Funds from Operations attributable to partnership unitholders
and participating securities of TRG

80,557

 

 

88,680,817

 

 

0.91

 

 

74,559

 

 

87,127,005

 

 

0.86

 

Costs associated with shareholder activism

630

 

 

 

 

0.01

 

 

2,500

 

 

 

 

0.03

 

Restructuring charges

1,958

 

 

 

 

0.02

 

 

1,019

 

 

 

 

0.01

 

Costs related to Blackstone transactions (2)

1,160

 

 

 

 

0.01

 

 

 

 

 

 

 

Taubman Asia President transition costs

1,211

 

 

 

 

0.01

 

 

 

 

 

 

 

Write-off of deferred financing costs

259

 

 

 

 

0.00

 

 

 

 

 

 

 

Fluctuation in fair value of equity securities

(146

)

 

 

 

(0.00

)

 

1,272

 

 

 

 

0.01

 

Adjusted Funds from Operations attributable to partnership unitholders
and participating securities of TRG

85,629

 

 

88,680,817

 

 

0.97

 

 

79,350

 

 

87,127,005

 

 

0.91

 

TCO's average ownership percentage of TRG - basic (3)

69.8

%

 

 

 

 

 

71.1

%

 

 

 

 

Adjusted Funds from Operations attributable to TCO's common shareholders (3)

59,812

 

 

 

 

0.97

 

 

56,378

 

 

 

 

0.91

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) For the three months ended December 31, 2019, Funds from Operations attributable to TCO's common shareholders was $55,612 using TCO's diluted average ownership percentage of TRG of 69.0%. For the three months ended December 31, 2018, Funds from Operations attributable to TCO's common shareholders was $52,257 using TCO's diluted average ownership percentage of TRG of 70.1%.

 

(2) Includes $1.2 million of deferred income tax expense related to the Blackstone transactions, which has been recorded within Income Tax Expense in our Statement of Operations and Comprehensive Income (Loss).

 

(3) For the three months ended December 31, 2019, Adjusted Funds from Operations attributable to TCO's common shareholders was $59,113 using TCO's diluted average ownership percentage of TRG of 69.0%. For the three months ended December 31, 2018, Adjusted Funds from Operations attributable to TCO's common shareholders was $55,615 using TCO's diluted average ownership percentage of TRG of 70.1%.

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 Year Ended December 31, 2019 and 2018

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

2019

 

2018

 

 

 

Shares

 

Per Share

 

 

 

Shares

 

Per Share

 

Dollars

 

/Units

 

/Unit

 

Dollars

 

/Units

 

/Unit

Net income attributable to TCO common shareholders - basic

203,925

 

 

61,181,983

 

 

3.33

 

 

57,952

 

 

60,994,444

 

 

0.95

 

Add distributions to participating securities of TRG

2,413

 

 

871,262

 

 

 

 

 

 

 

 

 

Add impact of share-based compensation

415

 

 

185,194

 

 

 

 

85

 

 

283,271

 

 

 

Net income attributable to TCO common shareholders - diluted

206,753

 

 

62,238,439

 

 

3.32

 

 

58,037

 

 

61,277,715

 

 

0.95

 

Add depreciation of TCO's additional basis

6,468

 

 

 

 

0.10

 

 

6,468

 

 

 

 

0.11

 

Add impairment of TCO's additional basis

12,606

 

 

 

 

0.20

 

 

 

 

 

 

 

Less TCO's additional income tax benefit

 

 

 

 

 

 

(110

)

 

 

 

(0.00

)

Net income attributable to TCO common shareholders, excluding step-up
depreciation, impairment of additional basis, and additional income tax benefit

225,827

 

 

62,238,439

 

 

3.63

 

 

64,395

 

 

61,277,715

 

 

1.05

 

Add noncontrolling share of income of TRG

95,884

 

 

26,053,498

 

 

 

 

26,308

 

 

24,932,870

 

 

 

Add distributions to participating securities of TRG

 

 

 

 

 

 

2,396

 

 

871,262

 

 

 

Net income attributable to partnership unitholders and
participating securities of TRG

321,711

 

 

88,291,937

 

 

3.64

 

 

93,099

 

 

87,081,847

 

 

1.07

 

Add (less) depreciation and amortization:

 

 

 

 

 

 

 

 

 

 

 

Consolidated businesses at 100%

188,407

 

 

 

 

2.13

 

 

179,275

 

 

 

 

2.06

 

Depreciation of TCO's additional basis

(6,468

)

 

 

 

(0.07

)

 

(6,468

)

 

 

 

(0.07

)

Noncontrolling partners in consolidated joint ventures

(8,148

)

 

 

 

(0.09

)

 

(7,600

)

 

 

 

(0.09

)

Share of UJVs

71,583

 

 

 

 

0.81

 

 

68,894

 

 

 

 

0.79

 

Non-real estate depreciation

(4,602

)

 

 

 

(0.05

)

 

(4,590

)

 

 

 

(0.05

)

Less gain on insurance recoveries - The Mall of San Juan

(1,418

)

 

 

 

(0.02

)

 

 

 

 

 

 

Less gain on Saks settlement - The Mall of San Juan

(10,095

)

 

 

 

(0.11

)

 

 

 

 

 

 

Less gains on partial dispositions of ownership interests in UJVs, net of tax

(154,466

)

 

 

 

(1.75

)

 

 

 

 

 

 

Less gains on remeasurements of ownership interests in UJVs

(164,639

)

 

 

 

(1.86

)

 

 

 

 

 

 

Add beneficial share of impairment charges

90,183

 

 

 

 

1.02

 

 

 

 

 

 

 

Less impairment of TCO's additional basis

(12,606

)

 

 

 

(0.14

)

 

 

 

 

 

 

Less impact of share-based compensation

(415

)

 

 

 

(0.00

)

 

(85

)

 

 

 

(0.00

)

Funds from Operations attributable to partnership unitholders
and participating securities of TRG

309,027

 

 

88,291,937

 

 

3.50

 

 

322,525

 

 

87,081,847

 

 

3.70

 

TCO's average ownership percentage of TRG - basic (1)

70.1

%

 

 

 

 

 

71.0

%

 

 

 

 

Funds from Operations attributable to TCO's common shareholders,
excluding additional income tax benefit (1)

216,813

 

 

 

 

3.50

 

 

228,936

 

 

 

 

3.70

 

Add TCO's additional income tax benefit

 

 

 

 

 

 

110

 

 

 

 

0.00

 

Funds from Operations attributable to TCO's common shareholders (1)

216,813

 

 

 

 

3.50

 

 

229,046

 

 

 

 

3.71

 

 

 

 

 

 

 

 

 

 

 

 

 

Funds from Operations attributable to partnership unitholders
and participating securities of TRG

309,027

 

 

88,291,937

 

 

3.50

 

 

322,525

 

 

87,081,847

 

 

3.70

 

Costs associated with shareholder activism

17,305

 

 

 

 

0.20

 

 

12,500

 

 

 

 

0.14

 

Restructuring charges

3,543

 

 

 

 

0.04

 

 

596

 

 

 

 

0.01

 

Costs related to Blackstone transactions (2)

3,226

 

 

 

 

0.04

 

 

 

 

 

 

 

Taubman Asia President transition costs

1,211

 

 

 

 

0.01

 

 

 

 

 

 

 

Write-off of deferred financing costs

259

 

 

 

 

0.00

 

 

382

 

 

 

 

0.00

 

Promote fee, net of tax - Starfield Hanam (3)

(3,961

)

 

 

 

(0.04

)

 

 

 

 

 

 

Fluctuation in fair value of equity securities

(3,492

)

 

 

 

(0.04

)

 

(2,801

)

 

 

 

(0.03

)

Adjusted Funds from Operations attributable to partnership unitholders
and participating securities of TRG

327,118

 

 

88,291,937

 

 

3.70

 

 

333,202

 

 

87,081,847

 

 

3.83

 

TCO's average ownership percentage of TRG - basic (4)

70.1

%

 

 

 

 

 

71.0

%

 

 

 

 

Adjusted Funds from Operations attributable to TCO's common shareholders (4)

229,460

 

 

 

 

3.71

 

 

236,513

 

 

 

 

3.83

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) For the year ended December 31, 2019, Funds from Operations attributable to TCO's common shareholders was $214,195 using TCO's diluted average ownership percentage of TRG of 69.3%. For the year ended December 31, 2018, Funds from Operations attributable to TCO's common shareholders was $226,013 using TCO's diluted average ownership percentage of TRG of 70.0%.

 

(2) Includes $0.5 million of disposition costs incurred prior to the completion of the sales of our ownership interests and $2.7 million of income tax expense related to the pending Blackstone transactions, which have been recorded within Nonoperating Income, Net and Income Tax Expense, respectively, in our Statement of Operations and Comprehensive Income (Loss).

 

(3) Includes $4.8 million of promote fee income related to Starfield Hanam less $0.9 million of income tax expense, which have been recorded within Equity in Income of UJVs and Income Tax Expense, respectively, in our Statement of Operations and Comprehensive Income (Loss).

 

(4) For the year ended December 31, 2019, Adjusted Funds from Operations attributable to TCO's common shareholders was $226,691 using TCO's diluted average ownership percentage of TRG of 69.3%. For the year ended December 31, 2018, Adjusted Funds from Operations attributable to TCO's common shareholders was $233,376 using TCO's diluted average ownership percentage of TRG of 70.0%.

TAUBMAN CENTERS, INC.

 

 

 

 

 

 

 

Table 5 - Reconciliation of Net Income to Beneficial Interest in EBITDA and Adjusted Beneficial Interest in EBITDA

For the Periods Ended December 31, 2019 and 2018

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

2019

 

2018

 

2019

 

2018

Net income

(32,631

)

 

12,938

 

 

330,374

 

 

115,742

 

 

 

 

 

 

 

 

 

Add (less) depreciation and amortization:

 

 

 

 

 

 

 

Consolidated businesses at 100%

51,343

 

 

54,950

 

 

188,407

 

 

179,275

 

Noncontrolling partners in consolidated joint ventures

(1,979

)

 

(2,120

)

 

(8,148

)

 

(7,600

)

Share of UJVs

17,775

 

 

17,324

 

 

71,583

 

 

68,894

 

 

 

 

 

 

 

 

 

Add (less) interest expense and income tax expense (benefit):

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

Consolidated businesses at 100%

35,817

 

 

35,955

 

 

148,407

 

 

133,197

 

Noncontrolling partners in consolidated joint ventures

(2,815

)

 

(3,008

)

 

(11,713

)

 

(12,031

)

Share of UJVs

17,170

 

 

17,118

 

 

69,749

 

 

68,225

 

Income tax expense (benefit):

 

 

 

 

 

 

 

Consolidated businesses at 100%

1,408

 

 

553

 

 

6,332

 

 

(231

)

Noncontrolling partners in consolidated joint ventures

 

 

(58

)

 

(189

)

 

(192

)

Share of UJVs

928

 

 

833

 

 

3,608

 

 

3,220

 

Share of income tax expense on dispositions of ownership interests

2,409

 

 

 

 

2,409

 

 

 

 

 

 

 

 

 

 

 

Less noncontrolling share of income of consolidated joint ventures

(1,795

)

 

(1,880

)

 

(5,014

)

 

(6,268

)

 

 

 

 

 

 

 

 

Beneficial interest in EBITDA

87,630

 

 

132,605

 

 

795,805

 

 

542,231

 

 

 

 

 

 

 

 

 

Add impairment of TCO's additional basis

12,606

 

 

 

 

12,606

 

 

 

 

 

 

 

 

 

 

 

Beneficial interest in EBITDA, before impairment of TCO's additional
basis

100,236

 

 

 

 

808,411

 

 

 

 

 

 

 

 

 

 

 

TCO's average ownership percentage of TRG - basic

69.8

%

 

71.1

%

 

70.1

%

 

71.0

%

 

 

 

 

 

 

 

 

Beneficial interest in EBITDA attributable to TCO, before impairment
of TCO's additional basis

70,015

 

 

 

 

566,298

 

 

 

 

 

 

 

 

 

 

 

Less impairment of TCO's additional basis

(12,606

)

 

 

 

(12,606

)

 

 

 

 

 

 

 

 

 

 

Beneficial interest in EBITDA attributable to TCO

57,409

 

 

94,216

 

 

553,692

 

 

384,895

 

 

 

 

 

 

 

 

 

Beneficial interest in EBITDA

87,630

 

 

132,605

 

 

795,805

 

 

542,231

 

 

 

 

 

 

 

 

 

Add (less):

 

 

 

 

 

 

 

Costs associated with shareowner activism

630

 

 

2,500

 

 

17,305

 

 

12,500

 

Restructuring charges

1,958

 

 

1,019

 

 

3,543

 

 

596

 

Disposition costs related to Blackstone transactions

 

 

 

 

487

 

 

 

Taubman Asia President transition costs

1,211

 

 

 

 

1,211

 

 

 

Promote fee - Starfield Hanam

 

 

 

 

(4,820

)

 

 

Fluctuation in fair value of equity securities

(146

)

 

1,272

 

 

(3,492

)

 

(2,801

)

Gains on partial dispositions of ownership interests in UJVs

(18,179

)

 

 

 

(156,875

)

 

 

Gains on remeasurments of ownership interests in UJVs

(19,629

)

 

 

 

(164,639

)

 

 

Beneficial share of impairment charges

90,183

 

 

 

 

90,183

 

 

 

Gain on Saks settlement - The Mall of San Juan

 

 

 

 

(10,095

)

 

 

Gain on insurance recoveries - The Mall of San Juan

 

 

 

 

(1,418

)

 

 

 

 

 

 

 

 

 

 

Adjusted Beneficial interest in EBITDA

143,658

 

 

137,396

 

 

567,195

 

 

552,526

 

 

 

 

 

 

 

 

 

TCO's average ownership percentage of TRG - basic

69.8

%

 

71.1

%

 

70.1

%

 

71.0

%

 

 

 

 

 

 

 

 

Adjusted Beneficial interest in EBITDA attributable to TCO

100,345

 

 

97,620

 

 

397,841

 

 

392,200

 

TAUBMAN CENTERS, INC.

 

 

 

 

 

 

 

 

Table 6 - Reconciliation of Net Income to Net Operating Income (NOI)

 

For the Three Months Ended December 31, 2019, 2018, and 2017

 

(in thousands of dollars)

 

 

 

 

 

 

 

 

Three Months Ended

 

Three Months Ended

 

2019

 

2018

 

2018

 

2017

 

Net income

(32,631

)

 

12,938

 

 

12,938

 

 

38,084

 

 

Add (less) depreciation and amortization:

 

 

 

 

 

 

 

 

Consolidated businesses at 100%

51,343

 

 

54,950

 

 

54,950

 

 

44,848

 

 

Noncontrolling partners in consolidated joint ventures

(1,979

)

 

(2,120

)

 

(2,120

)

 

(1,888

)

 

Share of UJVs

17,775

 

 

17,324

 

 

17,324

 

 

17,114

 

 

Add (less) interest expense and income tax expense (benefit):

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

Consolidated businesses at 100%

35,817

 

 

35,955

 

 

35,955

 

 

28,498

 

 

Noncontrolling partners in consolidated joint ventures

(2,815

)

 

(3,008

)

 

(3,008

)

 

(3,004

)

 

Share of UJVs

17,170

 

 

17,118

 

 

17,118

 

 

17,079

 

 

Income tax expense (benefit):

 

 

 

 

 

 

 

 

Consolidated businesses at 100%

1,408

 

 

553

 

 

553

 

 

(270

)

 

Noncontrolling partners in consolidated joint ventures

 

 

(58

)

 

(58

)

 

(47

)

 

Share of UJVs

928

 

 

833

 

 

833

 

 

554

 

 

Share of income tax expense on disposition

2,409

 

 

 

 

 

 

 

 

Less noncontrolling share of income of consolidated joint ventures

(1,795

)

 

(1,880

)

 

(1,880

)

 

(2,496

)

 

Add EBITDA attributable to outside partners:

 

 

 

 

 

 

 

 

EBITDA attributable to noncontrolling partners in consolidated joint ventures

6,589

 

 

7,066

 

 

7,066

 

 

7,435

 

 

EBITDA attributable to outside partners in UJVs

50,976

 

 

48,711

 

 

48,711

 

 

49,274

 

 

EBITDA at 100%

145,195

 

 

188,382

 

 

188,382

 

 

195,181

 

 

Add (less) items excluded from shopping center NOI:

 

 

 

 

 

 

 

 

General and administrative expenses

13,804

 

 

11,629

 

 

11,629

 

 

9,369

 

 

Management, leasing, and development services, net

(146

)

 

(507

)

 

(507

)

 

(485

)

 

Restructuring charges

1,958

 

 

1,019

 

 

1,019

 

 

9,785

 

 

Costs associated with shareholder activism

630

 

 

2,500

 

 

2,500

 

 

2,500

 

 

Straight-line of rents

(2,461

)

 

(2,722

)

 

(2,722

)

 

(3,600

)

 

Nonoperating income, net

(1,691

)

 

(1,288

)

 

(1,288

)

 

(15,940

)

 

Impairment charges

92,832

 

 

 

 

 

 

 

 

Gains on partial dispositions of ownership interests in UJVs

(18,179

)

 

 

 

 

 

 

 

Gains on remeasurements of ownership interests in UJVs

(19,629

)

 

 

 

 

 

 

 

Unallocated operating expenses and other (1)

7,636

 

 

8,809

 

 

8,809

 

 

12,443

 

 

NOI at 100% - total portfolio

219,949

 

 

207,822

 

 

207,822

 

 

209,253

 

 

Less NOI of non-comparable centers

(19,955

)

(2

)

(9,302

)

(2

)

(13,523

)

(3

)

(9,777

)

(3)

NOI at 100% - comparable centers

199,994

 

 

198,520

 

 

194,299

 

 

199,476

 

 

NOI at 100% - comparable centers growth %

0.7

%

 

 

 

(2.6

)%

 

 

 

 

 

 

 

 

 

 

 

NOI at 100% - comparable centers

199,994

 

 

198,520

 

 

194,299

 

 

199,476

 

 

Less lease cancellation income - comparable centers

(1,973

)

 

(337

)

 

(337

)

 

(2,890

)

 

NOI at 100% - comparable centers excluding lease cancellation income

198,021

 

 

198,183

 

 

193,962

 

 

196,586

 

 

NOI at 100% - comparable centers excluding lease cancellation income growth %

(0.1

)%

 

 

 

(1.3

)%

 

 

 

NOI at 100% - comparable centers excluding lease cancellation income

198,021

 

 

198,183

 

 

193,962

 

 

196,586

 

 

Foreign currency exchange rate fluctuation adjustment

684

 

 

 

 

306

 

 

 

 

NOI at 100% - comparable centers excluding lease cancellation income using constant
currency exchange rates

198,705

 

 

198,183

 

 

194,268

 

 

196,586

 

 

NOI at 100% - comparable centers excluding lease cancellation income using constant
currency exchange rates growth %

0.3

%

 

 

 

(1.2

)%

 

 

 

NOI at 100% - total portfolio

219,949

 

 

207,822

 

 

207,822

 

 

209,253

 

 

Less lease cancellation income - total portfolio

(2,454

)

 

(399

)

 

(399

)

 

(3,768

)

 

Less NOI attributable to noncontrolling partners in consolidated joint ventures and outside
partners in UJVs excluding lease cancellation income - total portfolio

(60,160

)

 

(57,044

)

 

(57,044

)

 

(57,164

)

 

Beneficial interest in NOI - total portfolio excluding lease cancellation income

157,335

 

 

150,379

 

 

150,379

 

 

148,321

 

 

Beneficial interest in NOI - total portfolio excluding lease cancellation income growth %

4.6

%

 

 

 

1.4

%

 

 

 

 

 

 

 

 

 

 

 

Beneficial interest in NOI - total portfolio excluding lease cancellation income

157,335

 

 

150,379

 

 

 

 

 

 

Less beneficial interest in NOI of non-comparable centers

(15,719

)

 

(11,193

)

 

 

 

 

 

Beneficial interest in NOI - comparable centers excluding lease cancellation income

141,616

 

 

139,186

 

 

 

 

 

 

Beneficial interest in NOI - comparable centers excluding lease cancellation income growth %

1.7

%

 

 

 

 

 

 

 

 

(1)

Upon adoption of ASC Topic 842, Other Operating expense includes certain indirect leasing costs, which were capitalizable under the previous lease accounting standard. As a result of the accounting change, an additional $1.0 million of leasing costs were expensed during the three months ended December 31, 2019. Comparative periods presented were not adjusted to reflect the change in accounting.

(2)

Includes Beverly Center, The Gardens Mall, The Mall of San Juan, and Taubman Prestige Outlets Chesterfield.

(3)

Includes Beverly Center, CityOn.Zhengzhou, The Mall of San Juan, and Taubman Prestige Outlets Chesterfield.

TAUBMAN CENTERS, INC.

 

 

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

 

For the Year Ended December 31, 2019, 2018, and 2017

 

(in thousands of dollars)

 

 

 

 

 

 

 

 

Year Ended

 

Year Ended

 

2019

 

2018

 

2018

 

2017

 

Net income

330,374

 

 

115,742

 

 

115,742

 

 

112,757

 

 

Add (less) depreciation and amortization:

 

 

 

 

 

 

 

 

Consolidated businesses at 100%

188,407

 

 

179,275

 

 

179,275

 

 

167,806

 

 

Noncontrolling partners in consolidated joint ventures

(8,148

)

 

(7,600

)

 

(7,600

)

 

(7,464

)

 

Share of UJVs

71,583

 

 

68,894

 

 

68,894

 

 

66,933

 

 

Add (less) interest expense and income tax expense (benefit):

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

Consolidated businesses at 100%

148,407

 

 

133,197

 

 

133,197

 

 

108,572

 

 

Noncontrolling partners in consolidated joint ventures

(11,713

)

 

(12,031

)

 

(12,031

)

 

(11,942

)

 

Share of UJVs

69,749

 

 

68,225

 

 

68,225

 

 

67,283

 

 

Income tax expense (benefit):

 

 

 

 

 

 

 

 

Consolidated businesses at 100%

6,332

 

 

(231

)

 

(231

)

 

105

 

 

Noncontrolling partners in consolidated joint ventures

(189

)

 

(192

)

 

(192

)

 

(134

)

 

Share of UJVs

3,608

 

 

3,220

 

 

3,220

 

 

2,825

 

 

Share of income tax expense on disposition

2,409

 

 

 

 

 

 

731

 

 

Less noncontrolling share of income of consolidated joint ventures

(5,014

)

 

(6,268

)

 

(6,268

)

 

(6,775

)

 

Add EBITDA attributable to outside partners:

 

 

 

 

 

 

 

 

EBITDA attributable to noncontrolling partners in consolidated joint ventures

25,064

 

 

26,091

 

 

26,091

 

 

26,315

 

 

EBITDA attributable to outside partners in UJVs

197,616

 

 

194,382

 

 

194,382

 

 

184,539

 

 

EBITDA at 100%

1,018,485

 

 

762,704

 

 

762,704

 

 

711,551

 

 

Add (less) items excluded from shopping center NOI:

 

 

 

 

 

 

 

 

General and administrative expenses

40,566

 

 

37,174

 

 

37,174

 

 

39,018

 

 

Management, leasing, and development services, net

(1,264

)

 

(1,801

)

 

(1,801

)

 

(2,226

)

 

Restructuring charges

3,543

 

 

596

 

 

596

 

 

13,848

 

 

Costs associated with shareholder activism

17,305

 

 

12,500

 

 

12,500

 

 

14,500

 

 

Straight-line of rents

(8,454

)

 

(12,428

)

 

(12,428

)

 

(10,718

)

 

Nonoperating income, net

(35,140

)

 

(16,637

)

 

(16,637

)

 

(26,838

)

 

Impairment charges

92,832

 

 

 

 

 

 

 

 

Gains on partial dispositions of ownership interests in UJVs

(156,875

)

 

 

 

 

 

 

 

Gains on remeasurements of ownership interests in UJVs

(164,639

)

 

 

 

 

 

 

 

Gain on disposition

 

 

 

 

 

 

(4,445

)

 

Unallocated operating expenses and other (1)

30,507

 

 

33,463

 

 

33,463

 

 

39,256

 

 

NOI at 100% - total portfolio

836,866

 

 

815,571

 

 

815,571

 

 

773,946

 

 

Less NOI of non-comparable centers

(68,617

)

(2

)

(41,316

)

(2

)

(57,786

)

(3

)

(47,878

)

(3

)

NOI at 100% - comparable centers

768,249

 

 

774,255

 

 

757,785

 

 

726,068

 

 

NOI at 100% - comparable centers growth %

(0.8

)%

 

 

 

4.4

%

 

 

 

 

 

 

 

 

 

 

 

NOI at 100% - comparable centers

768,249

 

 

774,255

 

 

757,785

 

 

726,068

 

 

Less lease cancellation income - comparable centers

(9,453

)

 

(17,122

)

 

(17,122

)

 

(12,838

)

 

NOI at 100% - comparable centers excluding lease cancellation income

758,796

 

 

757,133

 

 

740,663

 

 

713,230

 

 

NOI at 100% - comparable centers excluding lease cancellation income growth %

0.2

%

 

 

 

3.8

%

 

 

 

 

 

 

 

 

 

 

 

NOI at 100% - comparable centers excluding lease cancellation income

758,796

 

 

757,133

 

 

740,663

 

 

713,230

 

 

Foreign currency exchange rate fluctuation adjustment

5,256

 

 

 

 

(2,666

)

 

 

 

NOI at 100% - comparable centers excluding lease cancellation income using constant currency exchange rates

764,052

 

 

757,133

 

 

737,997

 

 

713,230

 

 

NOI at 100% - comparable centers excluding lease cancellation income using constant currency exchange rates growth %

0.9

%

 

 

 

3.5

%

 

 

 

 

 

 

 

 

 

 

 

NOI at 100% - total portfolio

836,866

 

 

815,571

 

 

815,571

 

 

773,946

 

 

Less lease cancellation income - total portfolio

(12,861

)

 

(20,066

)

 

(20,066

)

 

(15,601

)

 

Less NOI attributable to noncontrolling partners in consolidated joint ventures and outside partners in UJVs excluding lease cancellation income - total portfolio

(225,467

)

 

(219,228

)

 

(219,228

)

 

(207,968

)

 

Beneficial interest in NOI - total portfolio excluding lease cancellation income

598,538

 

 

576,277

 

 

576,277

 

 

550,377

 

 

Beneficial interest in NOI - total portfolio excluding lease cancellation income growth %

3.9

%

 

 

 

4.7

%

 

 

 

 

 

 

 

 

 

 

 

Beneficial interest in NOI - total portfolio excluding lease cancellation income

598,538

 

 

576,277

 

 

 

 

 

 

Less beneficial interest in NOI of non-comparable centers

(61,100

)

 

(46,436

)

 

 

 

 

 

Beneficial interest in NOI - comparable centers excluding lease cancellation income

537,438

 

 

529,841

 

 

 

 

 

 

Beneficial interest in NOI - comparable centers excluding lease cancellation income growth %

1.4

%

 

 

 

 

 

 

 

 

(1)

 

Upon adoption of ASC Topic 842, Other Operating expense includes certain indirect leasing costs, which were capitalizable under the previous lease accounting standard.

As a result of the accounting change, an additional $4.4 million of leasing costs were expensed during the year ended December 31, 2019. Comparative periods presented

were not adjusted to reflect the change in accounting.

 

(2)

Includes Beverly Center, The Gardens Mall, The Mall of San Juan, and Taubman Prestige Outlets Chesterfield.

 

 

(3)

Includes Beverly Center, CityOn.Zhengzhou, The Mall of San Juan, and Taubman Prestige Outlets Chesterfield.

 

Erik Wright, Taubman, Manager, Investor Relations, 248-258-7390
ewright@taubman.com

Maria Mainville, Taubman, Director, Strategic Communications, 248-258-7469
mmainville@taubman.com

Source: Taubman Centers, Inc.

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TCO 35.19
Change+1.16(+3.41%) Volume: 786,952 October 22, 2020