- Net Income and Earnings Per Diluted Common Share (EPS)
Down
- Adjusted Funds from Operations (AFFO) Up 8 Percent
- Pro Rata Total Portfolio NOI, Excluding Lease Cancellation
Income, Up 4.6 Percent for the Quarter, Up 5.1 Percent
Year-to-Date
- Comparable Center NOI, Excluding Lease Cancellation Income and
FX impact, Up 1.4 Percent for the Quarter and 2.2 Percent
Year-to-Date
- Trailing 12-Month Tenant Sales Per Square Foot $848, Up 10.8
Percent
- Sales Per Square Foot Up 8.8 Percent, 12th Consecutive Quarter
of Positive Growth
- Apparel Sales Up for 7th Consecutive Quarter
Taubman Centers, Inc. (NYSE: TCO) today reported financial
results for the second quarter of 2019.
June 30, 2019
June 30, 2018
June 30, 2019
June 30, 2018
Three Months
Three Months
Six Months
Six Months
Ended
Ended
Ended
Ended
Net income attributable to common
shareowners, diluted (in thousands)
$6,266
$15,324
$21,384
$33,943
Growth rate
(59.1)%
(37.0)%
Net income attributable to common
shareowners (EPS) per diluted common share
$0.10
$0.25
$0.35
$0.55
Growth rate
(60.0)%
(36.4)%
Funds from Operations (FFO) per diluted
common share
$0.78
$0.92
$1.71
$1.80
Growth rate
(15.2)%
(5.0)%
Adjusted Funds from Operations
(Adjusted FFO) per diluted common share
$0.94(1)
$0.87(2)
$1.88(1)
$1.91(2)
Growth rate
8.0%
(1.6)%
(1)
Adjusted FFO for the three and
six month periods ended June 30, 2019 excludes a restructuring
charge, costs incurred related to the pending Blackstone
transactions and costs associated with shareholder activism.
Adjusted FFO for the six month period ended June 30, 2019 also
excludes the fluctuation in the fair value of equity
securities.
(2)
Adjusted FFO for the three and
six month periods ended June 30, 2018 excludes a reduction of a
previously expensed restructuring charge, costs associated with
shareholder activism and the fluctuation in the fair value of
equity securities. Adjusted FFO for the six month period ended June
30, 2018 also excludes a charge recognized in connection with the
write-off of deferred financing costs related to the early payoff
of the company’s $475 million unsecured term loan.
“We again delivered solid results, with AFFO up eight percent
this quarter,” said Robert S. Taubman, chairman, president and
chief executive officer of Taubman Centers. “Higher rents,
recoveries and lease cancellation income, combined with additional
business interruption proceeds related to The Mall of San Juan,
drove our results.”
Operating Statistics
For the quarter, comparable center NOI growth, excluding lease
cancellation income, was 1.4 percent and 2.2 percent year-to-date
using constant currency exchange rates. Comparable center NOI,
excluding lease cancellation income, was up 0.3 percent, bringing
year-to-date growth to 1.3 percent. “Despite the unfavorable impact
of foreign exchange rates, NOI growth this quarter was in line with
our expectations,” said Simon J. Leopold, executive vice president,
chief financial officer of Taubman Centers.
Total portfolio NOI growth at our beneficial interest, excluding
lease cancellation income, was up 4.6 percent for the quarter,
bringing year-to-date growth to 5.1 percent.
Tenant sales per square foot in U.S. comparable centers were up
10.6 percent in the quarter, bringing 12-month trailing U.S. sales
per square foot to $940, an increase of 12.2 percent over the
12-months ended June 30, 2018. Year-to-date, U.S. sales per square
foot were up 16.2 percent.
Including Asia, comparable tenant sales per square foot
increased 8.8 percent from the second quarter of 2018. This brings
the company’s 12-month trailing sales per square foot to $848, up
10.8 percent over the 12-months ended June 30, 2018. Year-to-date,
tenant sales per square foot were up 13.7 percent.
“Our tenants produced steady sales growth this quarter. Tesla
once again impacted the results very favorably,” said Mr. Taubman.
“Our key categories of merchandise were also up nicely in the
quarter, including apparel sales that were up for the seventh
consecutive quarter.”
Average rent per square foot for the quarter was $56.79, up 2.1
percent from $55.64 in the comparable period last year.
Year-to-date, average rent per square foot was up 1.5 percent.
Trailing 12-month releasing spread per square foot for the
period ended June 30, 2019 was 3.3 percent. The spread was impacted
by a small number of deals that have an average lease term of less
than one-and-a-half years. These represent three percent of all
openings in the trailing twelve months. Without these leases, the
spread was 8.3 percent.
Ending occupancy in comparable centers was 92.2 percent on June
30, 2019, down 0.4 percent from June 30, 2018.
Leased space in comparable centers was 95.1 percent on June 30,
2019, unchanged from June 30, 2018.
“As the transition in retail continues, our portfolio is
maintaining healthy occupancy levels and generating solid NOI
growth,” said Mr. Taubman.
The Mall of San Juan Insurance Proceeds
In June, the company received a final payment for claims related
to extensive damage and business interruption at The Mall of San
Juan resulting from Hurricane Maria in September 2017. The payment
included $4.5 million of business interruption proceeds and $0.2
million for reimbursement of operating expenses, both of which were
included in FFO. The $4.5 million of business interruption proceeds
included $1.2 million for rental revenues recognized in prior
periods that were credited back to tenants in the current period.
This results in a net FFO contribution of $3.5 million in the
quarter, including the $0.2 million reimbursement.
This final payment was in addition to the $4 million of business
interruption insurance proceeds received in the first quarter of
2019. Year-to-date, insurance proceeds of $7.5 million was included
in FFO.
2019 Guidance
Taubman is updating certain guidance measures for 2019.
EPS is now expected to be in the range of $0.60 to $0.80 per
diluted share, revised from the previous range of $0.68 to $0.92,
primarily due to costs associated with shareholder activism
recognized in the second quarter.
Adjusted FFO, which excludes $0.17 per diluted common share of
year-to-date adjustments, is now expected to be in the range of
$3.64 to $3.74 per diluted common share, revised from the previous
range of $3.62 to $3.74.
FFO is now expected to be in the range of $3.47 to $3.57 per
diluted common share, revised from the previous range of $3.60 to
$3.72.
All other guidance measures remain unchanged, including expected
comparable center NOI growth of about 2 percent for the year.
This guidance does not include the impact of the agreement to
sell 50 percent of Taubman Asia’s interests in three Asia shopping
centers to Blackstone. We continue to anticipate these transactions
to close throughout the second half of 2019. The guidance also does
not include an assumption for future costs associated with
shareholder activism.
Supplemental Investor Information Available
Taubman 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 and Certain Balance Sheet Information
- Owned Centers
- New Development & Acquisition
- 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
Taubman will host a conference call at 11:00 a.m. EDT on Friday
July 26, 2019 to discuss these results, business conditions and the
outlook for the remainder of 2019. The conference call will be
simulcast at www.taubman.com. An online replay will follow shortly
after the call and continue for approximately 90 days.
About Taubman
Taubman Centers 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 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. Forward-looking
statements can be identified by words such as “will”, “may”,
“could”, “expect”, “anticipate”, “believes”, “intends”, “should”,
“plans”, “estimates”, “approximate”, “guidance” and similar
expressions in this press release that predict or indicate future
events and trends and that do not report historical matters. The
forward-looking statements included in this release are made as of
the date hereof. Except as required by law, the company assumes no
obligation to update these forward-looking statements, even if new
information becomes available in the future. Actual results may
differ materially from those expected because of various risks and
uncertainties, including that the conditions to one or more
transaction closings may not be satisfied, the potential impact on
the company due to the announcement of the disposition of ownership
interests, the occurrence of any event, change or other
circumstances that could give rise to the delay or termination of
the transactions, general economic conditions, and other factors.
Such factors include, but are not limited to: changes in market
rental rates; unscheduled closings or bankruptcies of tenants;
relationships with anchor tenants; trends in the retail industry;
challenges with department stores; changes in consumer shopping
behavior; the liquidity of real estate investments; the company’s
ability to comply with debt covenants; the availability and terms
of financings; changes in market rates of interest and foreign
exchange rates for foreign currencies; changes in value of
investments in foreign entities; the ability to hedge interest rate
and currency risk; risks related to acquiring, developing,
expanding, leasing and managing properties; competitors gaining
economies of scale through M&A and consolidation activity;
changes in value of investments in foreign entities; risks related
to joint venture properties; insurance costs and coverage; security
breaches that could impact the company’s information technology,
infrastructure or personal data; costs associated with response to
technology breaches; the loss of key management personnel;
shareholder activism costs and related diversion of management
time; terrorist activities; maintaining the company’s status as a
real estate investment trust; changes in the laws of states,
localities, and foreign jurisdictions that may increase taxes on
the company’s operations; and changes in global, national, regional
and/or local economic and geopolitical climates.
You should review the company's filings with the Securities and
Exchange Commission, including “Risk Factors” in its most recent
Annual Report on Form 10-K and subsequent quarterly reports, for a
discussion of such risks and uncertainties.
TAUBMAN CENTERS, INC.
Table 1 - Income Statement
For the Three Months Ended June 30,
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)
147,006
142,097
Minimum rents (2)
87,580
87,734
Overage rents
1,713
5,164
1,565
5,789
Expense recoveries (2)
50,553
43,526
Management, leasing, and development
services
892
826
Other (2)
11,993
6,660
12,245
6,742
Total revenues
161,604
153,921
152,769
143,791
EXPENSES:
Maintenance, taxes, utilities, and
promotion
39,182
46,179
38,085
43,757
Other operating (2)
21,232
6,853
21,034
5,125
Management, leasing, and development
services
491
408
General and administrative
8,554
8,522
Restructuring charge
84
(77
)
Costs associated with shareholder
activism
12,000
5,000
Interest expense
38,010
35,685
33,023
33,650
Depreciation and amortization
44,259
35,622
42,996
33,949
Total expenses
163,812
124,339
148,991
116,481
Nonoperating income, net
6,627
923
12,301
581
4,419
30,505
16,079
27,891
Income tax expense
(2,364
)
(2,461
)
(28
)
(1,527
)
28,044
26,364
Equity in income of Unconsolidated Joint
Ventures
14,822
14,042
Net income
16,877
30,093
Net income attributable to noncontrolling
interests:
Noncontrolling share of income of
consolidated joint ventures
(832
)
(1,480
)
Noncontrolling share of income of TRG
(3,408
)
(6,922
)
Distributions to participating securities
of TRG
(593
)
(599
)
Preferred stock dividends
(5,785
)
(5,785
)
Net income attributable to Taubman
Centers, Inc. common shareholders
6,259
15,307
SUPPLEMENTAL INFORMATION:
EBITDA - 100%
86,688
101,812
92,098
95,490
EBITDA - outside partners' share
(6,113
)
(49,119
)
(6,258
)
(46,206
)
Beneficial interest in EBITDA
80,575
52,693
85,840
49,284
Gain on insurance recoveries - The Mall of
San Juan
(1,418
)
Beneficial interest expense
(34,981
)
(18,005
)
(29,995
)
(17,263
)
Beneficial income tax expense - TRG and
TCO
(2,225
)
(912
)
5
(654
)
Beneficial income tax expense - TCO
—
Non-real estate depreciation
(1,152
)
(1,128
)
Preferred dividends and distributions
(5,785
)
(5,785
)
Funds from Operations attributable to
partnership unitholders and participating securities of TRG
35,014
33,776
48,937
31,367
STRAIGHTLINE AND PURCHASE ACCOUNTING
ADJUSTMENTS:
Net straight-line adjustments to rental
revenues, recoveries, and ground rent expense at TRG%
917
437
699
441
Country Club Plaza purchase accounting
adjustments - rental revenues at TRG%
84
(100
)
The Mall at Green Hills purchase
accounting adjustments - rental revenues
13
27
The Gardens Mall purchase accounting
adjustments - rental revenues at TRG%
(177
)
The Gardens Mall purchase accounting
adjustments - interest expense at TRG%
(528
)
(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 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 $1.5 million of leasing costs were expensed during the
three months ended June 30, 2019. Comparative periods presented
were not adjusted to reflect the change in accounting.
TAUBMAN CENTERS, INC.
Table 2 - Income Statement
For the Six Months Ended June 30, 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)
291,295
271,653
Minimum rents (2)
174,405
179,775
Overage rents
4,854
11,543
4,190
11,670
Expense recoveries (2)
102,081
89,396
Management, leasing, and development
services
2,108
1,620
Other (2)
23,555
13,366
31,965
18,238
Total revenues
321,812
296,562
314,261
299,079
EXPENSES:
Maintenance, taxes, utilities, and
promotion
77,720
87,139
75,722
84,135
Other operating (2)
40,457
12,374
44,900
15,111
Management, leasing, and development
services
1,022
710
General and administrative
17,130
17,015
Restructuring charge
709
(423
)
Costs associated with shareholder
activism
16,000
8,500
Interest expense
74,895
68,183
63,846
66,117
Depreciation and amortization
89,215
69,312
78,018
67,418
Total expenses
317,148
237,008
288,288
232,781
Nonoperating income, net
15,360
1,324
5,158
928
20,024
60,878
31,131
67,226
Income tax expense
(2,903
)
(4,369
)
(212
)
(3,264
)
56,509
63,962
Equity in income of Unconsolidated Joint
Ventures
29,494
33,770
Net income
46,615
64,689
Net income attributable to noncontrolling
interests:
Noncontrolling share of income of
consolidated joint ventures
(2,261
)
(2,824
)
Noncontrolling share of income of TRG
(10,209
)
(15,201
)
Distributions to participating securities
of TRG
(1,220
)
(1,198
)
Preferred stock dividends
(11,569
)
(11,569
)
Net income attributable to Taubman
Centers, Inc. common shareholders
21,356
33,897
SUPPLEMENTAL INFORMATION:
EBITDA - 100%
184,134
198,373
172,995
200,761
EBITDA - outside partners' share
(12,852
)
(96,263
)
(12,515
)
(97,233
)
Beneficial interest in EBITDA
171,282
102,110
160,480
103,528
Gain on insurance recoveries - The Mall of
San Juan
(1,418
)
Beneficial interest expense
(68,841
)
(34,781
)
(57,807
)
(34,014
)
Beneficial income tax expense - TRG and
TCO
(2,714
)
(1,689
)
(129
)
(1,364
)
Beneficial income tax expense - TCO
3
Non-real estate depreciation
(2,297
)
(2,264
)
Preferred dividends and distributions
(11,569
)
(11,569
)
Funds from Operations attributable to
partnership unitholders and participating securities of TRG
84,443
65,640
88,714
68,150
STRAIGHTLINE AND PURCHASE ACCOUNTING
ADJUSTMENTS:
Net straight-line adjustments to rental
revenues, recoveries, and ground rent expense at TRG%
2,715
603
1,355
1,152
Country Club Plaza purchase accounting
adjustments - rental revenues at TRG%
196
1,387
The Mall at Green Hills purchase
accounting adjustments - rental revenues
48
58
The Gardens Mall purchase accounting
adjustments - rental revenues at TRG%
(177
)
The Gardens Mall purchase accounting
adjustments - interest expense at TRG%
(528
)
(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 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 $2.9 million of leasing costs were expensed during the
six months ended June 30, 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, and Funds from
Operations. 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 (NOI) 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 Funds from Operations (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. For the three and six months ended June 30, 2019
FFO and EBITDA were adjusted to exclude a restructuring charge,
costs incurred related to the pending Blackstone transactions, and
costs incurred associated with shareholder activism. For the three
and six months ended June 30, 2019, EBITDA was also adjusted to
exclude a gain on insurance recoveries for The Mall of San Juan. In
addition, for the six months ended June 30, 2019, FFO and EBITDA
were adjusted to exclude the fluctuation in the fair value of
equity securities. For the three and six months ended June 30,
2018, FFO and EBITDA were adjusted to exclude a reduction of a
previously expensed restructuring charge, costs incurred associated
with shareholder activism, and the fluctuation in the fair value of
equity securities. For the six months ended June 30, 2018, FFO was
also adjusted for a charge recognized in connection with the
write-off of deferred financing costs related to the early payoff
of our $475 million unsecured term loan.
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 Unconsolidated Joint Ventures. 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 June 30,
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
6,259
61,171,614
0.10
15,307
60,992,200
0.25
Add impact of share-based compensation
7
168,311
17
240,333
Net income attributable to TCO common
shareholders - diluted
6,266
61,339,925
0.10
15,324
61,232,533
0.25
Add depreciation of TCO's additional
basis
1,617
0.03
1,617
0.03
Net income attributable to TCO common
shareholders, excluding step-up depreciation
7,883
61,339,925
0.13
16,941
61,232,533
0.28
Add noncontrolling share of income of
TRG
3,408
26,461,580
6,922
24,951,981
Add distributions to participating
securities of TRG
593
871,262
599
871,262
Net income attributable to partnership
unitholders
and participating securities of
TRG
11,884
88,672,767
0.13
24,462
87,055,776
0.28
Add (less) depreciation and
amortization:
Consolidated businesses at 100%
44,259
0.50
42,996
0.49
Depreciation of TCO's additional basis
(1,617
)
(0.02
)
(1,617
)
(0.02
)
Noncontrolling partners in consolidated
joint ventures
(2,113
)
(0.02
)
(1,717
)
(0.02
)
Share of Unconsolidated Joint Ventures
18,954
0.21
17,325
0.20
Non-real estate depreciation
(1,152
)
(0.01
)
(1,128
)
(0.01
)
Less gain on insurance recoveries - The
Mall of San Juan
(1,418
)
(0.02
)
Less impact of share-based
compensation
(7
)
(0.00
)
(17
)
(0.00
)
Funds from Operations attributable to
partnership unitholders
and participating securities of
TRG
68,790
88,672,767
0.78
80,304
87,055,776
0.92
TCO's average ownership percentage of TRG
- basic (1)
69.8
%
71.0
%
Funds from Operations attributable to
TCO's common shareholders (1)
48,018
0.78
56,990
0.92
Funds from Operations attributable to
partnership unitholders
and participating securities of TRG
68,790
88,672,767
0.78
80,304
87,055,776
0.92
Restructuring charge
84
—
(77
)
(0.00
)
Costs related to pending Blackstone
transactions (2)
2,066
0.02
Costs associated with shareholder
activism
12,000
0.14
5,000
0.06
Fluctuation in fair value of equity
securities
(9,348
)
(0.11
)
Adjusted Funds from Operations
attributable to partnership unitholders
and participating securities of
TRG
82,940
88,672,767
0.94
75,879
87,055,776
0.87
TCO's average ownership percentage of TRG
- basic (3)
69.8
%
71.0
%
Adjusted Funds from Operations
attributable to TCO's common shareholders (3)
57,896
0.94
53,849
0.87
(1) For the three months ended June 30,
2019, Funds from Operations attributable to TCO's common
shareholders was $47,455 using TCO's diluted average ownership
percentage of TRG of 69.0%. For the three months ended June 30,
2018, Funds from Operations attributable to TCO's common
shareholders was $56,262 using TCO's diluted average ownership
percentage of TRG of 70.1%.
(2) Includes $0.5 million of disposition
costs and $1.6 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) For the three months ended June 30,
2019, Adjusted Funds from Operations attributable to TCO's common
shareholders was $57,217 using TCO's diluted average ownership
percentage of TRG of 69.0%. For the three months ended June 30,
2018, Adjusted Funds from Operations attributable to TCO's common
shareholders was $53,162 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 Six Months Ended June 30, 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
shareowners - basic
21,356
61,147,947
0.35
33,897
60,954,924
0.56
Add impact of share-based compensation
28
206,481
46
264,738
Net income attributable to TCO common
shareowners - diluted
21,384
61,354,428
0.35
33,943
61,219,662
0.55
Add depreciation of TCO's additional
basis
3,234
0.05
3,234
0.05
Add TCO's additional income tax
expense
3
0.00
Net income attributable to TCO common
shareholders, excluding step-up depreciation and additional income
tax expense
24,618
61,354,428
0.40
37,180
61,219,662
0.60
Add noncontrolling share of income of
TRG
10,209
25,672,953
15,201
24,953,313
Add distributions to participating
securities of TRG
1,220
871,262
1,198
871,262
Net income attributable to partnership
unitholders
and participating securities of
TRG
36,047
87,898,643
0.41
53,579
87,044,237
0.60
Add (less) depreciation and
amortization:
Consolidated businesses at 100%
89,215
1.01
78,018
0.90
Depreciation of TCO's additional basis
(3,234
)
(0.04
)
(3,234
)
(0.04
)
Noncontrolling partners in consolidated
joint ventures
(4,348
)
(0.05
)
(3,569
)
(0.04
)
Share of Unconsolidated Joint Ventures
36,146
0.41
34,380
0.39
Non-real estate depreciation
(2,297
)
(0.03
)
(2,264
)
(0.03
)
Less gain on insurance recoveries - The
Mall of San Juan
(1,418
)
(0.02
)
Less impact of share-based
compensation
(28
)
(0.00
)
(46
)
(0.00
)
Funds from Operations attributable to
partnership unitholders
and participating securities of
TRG
150,083
87,898,643
1.71
156,864
87,044,237
1.80
TCO's average ownership percentage of TRG
- basic (1)
70.4
%
71.0
%
Funds from Operations attributable to
TCO's common shareholders, excluding additional income tax expense
(1)
105,797
1.71
111,301
1.80
Less TCO's additional income tax
expense
(3
)
(0.00
)
Funds from Operations attributable to
TCO's common shareowners (1)
105,797
1.71
111,298
1.80
Funds from Operations attributable to
partnership unitholders
and participating securities of TRG
150,083
87,898,643
1.71
156,864
87,044,237
1.80
Restructuring charge
709
0.01
(423
)
(0.00
)
Costs related to pending Blackstone
transactions (2)
2,066
0.02
Costs associated with shareholder
activism
16,000
0.18
8,500
0.10
Fluctuation in fair value of equity
securities
(3,346
)
(0.04
)
914
0.01
Partial write-off of deferred financing
costs
382
0.00
Adjusted Funds from Operations
attributable to partnership unitholders
and participating securities of
TRG
165,512
87,898,643
1.88
166,237
87,044,237
1.91
TCO's average ownership percentage of TRG
- basic (3)
70.4
%
71.0
%
Adjusted Funds from Operations
attributable to TCO's common shareowners (3)
116,584
1.88
117,949
1.91
(1) For the six months ended June 30,
2019, Funds from Operations attributable to TCO's common
shareholders was $104,474 using TCO's diluted average ownership
percentage of TRG of 69.6%. For the six months ended June 30, 2018,
Funds from Operations attributable to TCO's common shareholders was
$109,847 using TCO's diluted average ownership percentage of TRG of
70.0%.
(2) Includes $0.5 million of disposition
costs and $1.6 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) For the six months ended June 30,
2019, Adjusted Funds from Operations attributable to TCO's common
shareholders was $115,133 using TCO's diluted average ownership
percentage of TRG of 69.6%. For the six months ended June 30, 2018,
Adjusted Funds from Operations attributable to TCO's common
shareholders was $116,407 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 June 30, 2019 and
2018
(in thousands of dollars; amounts
attributable to TCO may not recalculate due to rounding)
Three Months Ended
Year to Date
2019
2018
2019
2018
Net income
16,877
30,093
46,615
64,689
Add (less) depreciation and
amortization:
Consolidated businesses at 100%
44,259
42,996
89,215
78,018
Noncontrolling partners in consolidated
joint ventures
(2,113
)
(1,717
)
(4,348
)
(3,569
)
Share of Unconsolidated Joint Ventures
18,954
17,325
36,146
34,380
Add (less) interest expense and income tax
expense:
Interest expense:
Consolidated businesses at 100%
38,010
33,023
74,895
63,846
Noncontrolling partners in consolidated
joint ventures
(3,029
)
(3,028
)
(6,054
)
(6,039
)
Share of Unconsolidated Joint Ventures
18,005
17,263
34,781
34,014
Income tax expense:
Consolidated businesses at 100%
2,364
28
2,903
212
Noncontrolling partners in consolidated
joint ventures
(139
)
(33
)
(189
)
(83
)
Share of Unconsolidated Joint Ventures
912
654
1,689
1,364
Less noncontrolling share of income of
consolidated joint ventures
(832
)
(1,480
)
(2,261
)
(2,824
)
Beneficial interest in EBITDA
133,268
135,124
273,392
264,008
TCO's average ownership percentage of TRG
- basic
69.8
%
71.0
%
70.4
%
71.0
%
Beneficial interest in EBITDA
attributable to TCO
93,027
95,894
192,620
187,324
Beneficial interest in EBITDA
133,268
135,124
273,392
264,008
Add (less):
Restructuring charge
84
(77
)
709
(423
)
Disposition costs related to pending
Blackstone transactions
487
487
Costs associated with shareholder
activism
12,000
5,000
16,000
8,500
Gain on insurance recoveries - The Mall of
San Juan
(1,418
)
(1,418
)
Fluctuation in fair value of equity
securities
(9,348
)
(3,346
)
914
Adjusted Beneficial interest in
EBITDA
144,421
130,699
285,824
272,999
TCO's average ownership percentage of TRG
- basic
69.8
%
71.0
%
70.4
%
71.0
%
Adjusted Beneficial interest in EBITDA
attributable to TCO
100,812
92,753
201,314
193,700
TAUBMAN CENTERS, INC.
Table 6 - Reconciliation of Net Income
to Net Operating Income (NOI)
For the Three Months Ended June 30,
2019, 2018, and 2017
(in thousands of dollars)
Three Months Ended
Three Months Ended
2019
2018
2018
2017
Net income
16,877
30,093
30,093
27,663
Add (less) depreciation and
amortization:
Consolidated businesses at 100%
44,259
42,996
42,996
39,442
Noncontrolling partners in consolidated
joint ventures
(2,113
)
(1,717
)
(1,717
)
(1,811
)
Share of Unconsolidated Joint Ventures
18,954
17,325
17,325
17,521
Add (less) interest expense and income tax
expense:
Interest expense:
Consolidated businesses at 100%
38,010
33,023
33,023
26,746
Noncontrolling partners in consolidated
joint ventures
(3,029
)
(3,028
)
(3,028
)
(2,997
)
Share of Unconsolidated Joint Ventures
18,005
17,263
17,263
17,849
Income tax expense:
Consolidated businesses at 100%
2,364
28
28
113
Noncontrolling partners in consolidated
joint ventures
(139
)
(33
)
(33
)
(43
)
Share of Unconsolidated Joint Ventures
912
654
654
518
Less noncontrolling share of income of
consolidated joint ventures
(832
)
(1,480
)
(1,480
)
(1,605
)
Add EBITDA attributable to outside
partners:
EBITDA attributable to noncontrolling
partners in consolidated joint ventures
6,113
6,258
6,258
6,456
EBITDA attributable to outside partners in
Unconsolidated Joint Ventures
49,119
46,206
46,206
45,041
EBITDA at 100%
188,500
187,588
187,588
174,893
Add (less) items excluded from shopping
center NOI:
General and administrative expenses
8,554
8,522
8,522
9,416
Management, leasing, and development
services, net
(401
)
(418
)
(418
)
(780
)
Restructuring charge
84
(77
)
(77
)
416
Costs associated with shareholder
activism
12,000
5,000
5,000
5,000
Straight-line of rents
(2,277
)
(1,927
)
(1,927
)
(2,869
)
Nonoperating income, net
(7,550
)
(12,882
)
(12,882
)
(3,434
)
Unallocated operating expenses and other
(1)
8,382
8,402
8,402
9,054
NOI at 100% - total portfolio
207,292
194,208
194,208
191,696
Less NOI of non-comparable centers
(18,193
)
(2)
(9,567
)
(3)
(13,799
)
(4)
(14,315
)
(4)
NOI at 100% - comparable
centers
189,099
184,641
180,409
177,381
NOI at 100% - comparable centers growth
%
2.4
%
1.7
%
NOI at 100% - comparable centers
189,099
184,641
180,409
177,381
Less lease cancellation income -
comparable centers
(5,946
)
(2,060
)
(2,060
)
(5,139
)
NOI at 100% - comparable centers
excluding lease cancellation income
183,153
182,581
178,349
172,242
NOI at 100% - comparable centers
excluding lease cancellation income growth %
0.3
%
3.5
%
NOI at 100% - comparable centers excluding
lease cancellation income
183,153
182,581
Foreign currency exchange rate fluctuation
adjustment
2,017
NOI at 100% - comparable centers
excluding lease cancellation income using constant currency
exchange rates
185,170
182,581
NOI at 100% - comparable centers
excluding lease cancellation income using constant currency
exchange rates growth %
1.4
%
NOI at 100% - total portfolio
207,292
194,208
194,208
191,696
Less lease cancellation income - total
portfolio
(7,431
)
(2,060
)
(2,060
)
(6,893
)
Less NOI attributable to noncontrolling
partners in consolidated joint ventures and outside partners in
Unconsolidated Joint Ventures excluding lease cancellation income -
total portfolio
(54,341
)
(52,962
)
(52,962
)
(50,575
)
Beneficial interest in NOI - total
portfolio excluding lease cancellation income
145,520
139,186
139,186
134,228
Beneficial interest in NOI - total
portfolio excluding lease cancellation income growth %
4.6
%
3.7
%
(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 $1.5
million of leasing costs were expensed during the three months
ended June 30, 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, The Mall
of San Juan, and Taubman Prestige Outlets Chesterfield.
(4)
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 Six Months Ended June 30, 2019,
2018, and 2017
(in thousands of dollars)
Year to Date
Year to Date
2019
2018
2018
2017
Net income
46,615
64,689
64,689
60,422
Add (less) depreciation and
amortization:
Consolidated businesses at 100%
89,215
78,018
78,018
77,153
Noncontrolling partners in consolidated
joint ventures
(4,348
)
(3,569
)
(3,569
)
(3,607
)
Share of Unconsolidated Joint Ventures
36,146
34,380
34,380
33,173
Add (less) interest expense and income tax
expense:
Interest expense:
Consolidated businesses at 100%
74,895
63,846
63,846
52,292
Noncontrolling partners in consolidated
joint ventures
(6,054
)
(6,039
)
(6,039
)
(5,972
)
Share of Unconsolidated Joint Ventures
34,781
34,014
34,014
33,630
Income tax expense:
Consolidated businesses at 100%
2,903
212
212
321
Noncontrolling partners in consolidated
joint ventures
(189
)
(83
)
(83
)
(74
)
Share of Unconsolidated Joint Ventures
1,689
1,364
1,364
2,151
Share of income tax expense on
disposition
731
Less noncontrolling share of income of
consolidated joint ventures
(2,261
)
(2,824
)
(2,824
)
(3,049
)
Add EBITDA attributable to outside
partners:
EBITDA attributable to noncontrolling
partners in consolidated joint ventures
12,852
12,515
12,515
12,702
EBITDA attributable to outside partners in
Unconsolidated Joint Ventures
96,263
97,233
97,233
92,904
EBITDA at 100%
382,507
373,756
373,756
352,777
Add (less) items excluded from shopping
center NOI:
General and administrative expenses
17,130
17,015
17,015
20,167
Management, leasing, and development
services, net
(1,086
)
(910
)
(910
)
(1,118
)
Restructuring charge
709
(423
)
(423
)
2,312
Costs associated with shareholder
activism
16,000
8,500
8,500
8,500
Straight-line of rents
(5,184
)
(7,414
)
(7,414
)
(4,725
)
Nonoperating income, net
(16,684
)
(6,086
)
(6,086
)
(8,064
)
Gain on disposition
(4,445
)
Unallocated operating expenses and other
(1)
16,122
16,523
16,523
16,376
NOI at 100% - total portfolio
409,514
400,961
400,961
381,780
Less NOI of non-comparable centers
(29,931
)
(2)
(18,828
)
(3)
(26,602
)
(4)
(26,725
)
(4)
NOI at 100% - comparable
centers
379,583
382,133
374,359
355,055
NOI at 100% - comparable centers growth
%
-0.7
%
5.4
%
NOI at 100% - comparable centers
379,583
382,133
374,359
355,055
Less lease cancellation income -
comparable centers
(6,435
)
(13,744
)
(13,744
)
(8,746
)
NOI at 100% - comparable centers
excluding lease cancellation income
373,148
368,389
360,615
346,309
NOI at 100% - comparable centers
excluding lease cancellation income growth %
1.3
%
4.1
%
NOI at 100% - comparable centers excluding
lease cancellation income
373,148
368,389
Foreign currency exchange rate fluctuation
adjustment
3,370
NOI at 100% - comparable centers
excluding lease cancellation income using constant currency
exchange rates
376,518
368,389
NOI at 100% - comparable centers
excluding lease cancellation income using constant currency
exchange rates growth %
2.2
%
NOI at 100% - total portfolio
409,514
400,961
400,961
381,780
Less lease cancellation income - total
portfolio
(8,000
)
(15,845
)
(15,845
)
(10,599
)
Less NOI attributable to noncontrolling
partners in consolidated joint ventures and outside partners in
Unconsolidated Joint Ventures excluding lease cancellation income -
total portfolio
(108,914
)
(106,839
)
(106,839
)
(101,805
)
Beneficial interest in NOI - total
portfolio excluding lease cancellation income
292,600
278,277
278,277
269,376
Beneficial interest in NOI - total
portfolio excluding lease cancellation income growth %
5.1
%
3.3
%
(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 $2.9
million of leasing costs were expensed during the six months ended
June 30, 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, The Mall
of San Juan, and Taubman Prestige Outlets Chesterfield.
(4)
Includes Beverly Center,
CityOn.Zhengzhou, The Mall of San Juan, and Taubman Prestige
Outlets Chesterfield.
TAUBMAN CENTERS, INC.
Table 8 - 2019 Annual Guidance
(all dollar amounts per common share on
a diluted basis; amounts may not add due to rounding)
Range for the Year
Ended
December 31, 2019 (1)
Adjusted Funds from Operations per
common share
3.64
3.74
Restructuring charge
(0.010
)
(0.010
)
Costs related to pending Blackstone
transactions (2)
(0.025
)
(0.025
)
Costs associated with shareholder
activism
(0.180
)
(0.180
)
Fluctuation in fair value of equity
securities
0.040
0.040
Funds from Operations per common
share
$
3.47
$
3.57
Gain on insurance recoveries - The Mall of
San Juan
0.02
0.02
Real estate depreciation - TRG
(2.75
)
(2.65
)
Distributions to participating securities
of TRG
(0.03
)
(0.03
)
Depreciation of TCO's additional basis in
TRG
(0.11
)
(0.11
)
Net income attributable to common
shareholders, per common share (EPS)
$
0.60
$
0.80
(1) Guidance is current as of July 25,
2019, see "Taubman Centers, Inc. Issues Solid Second Quarter
Results." On February 14, 2019, we announced agreements to sell 50
percent of our ownership interests in Starfield Hanam,
CityOn.Xi’an, and CityOn.Zhengzhou to funds managed by The
Blackstone Group L.P.(Blackstone). The transactions are subject to
customary closing conditions and are expected to close throughout
2019. The 2019 annual guidance and related guidance assumptions
exclude the impact of the Blackstone transactions. The adjustments
for the restructuring charge, costs incurred associated with
shareholder activism, costs related to pending Blackstone
transactions, and the fluctuation in fair value of equity
securities represent actual amounts recognized through the second
quarter of 2019, but does not include future assumptions of amounts
to be incurred during the remainder of 2019.
(2) Includes $0.5 million of disposition
costs and $1.6 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) during
the six months ended June 30, 2019.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190725005804/en/
Erik Wright, Taubman, Manager, Investor Relations, 248-258-7390
ewright@taubman.com Maria Mainville, Taubman, Director, Strategic
Communications, 248-258-7469 mmainville@taubman.com
Taubman Centers (NYSE:TCO)
Historical Stock Chart
From Aug 2024 to Sep 2024
Taubman Centers (NYSE:TCO)
Historical Stock Chart
From Sep 2023 to Sep 2024