Form 8-K TAUBMAN CENTERS INC For: Oct 30

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October 30, 2014 4:10 PM EDT

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
�
�
�
FORM 8-K
�
�
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
�
�
�
Date of report (date of earliest event reported):�����������������������October 30, 2014
�
TAUBMAN CENTERS, INC.
(Exact Name of Registrant as Specified in its Charter)
�
�
Michigan
(State of Other Jurisdiction of Incorporation)
�
�
�
1-11530
38-2033632
�
(Commission File Number)
(I.R.S. Employer Identification No.)
�
�
�
�
200 East Long Lake Road, Suite 300,
Bloomfield Hills, Michigan

48304-2324
�
(Address of Principal Executive Office)
(Zip Code)
�
�
�
Registrants Telephone Number, Including Area Code: (248) 258-6800
�
�
�
None
�
(Former Name or Former Address, if Changed Since Last Report)
�
�
�����Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (See General Instruction A.2. below):
�
�
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
�
�
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
�
�
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
�
�
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))



Item 2.02.����RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

The information under this caption is furnished by Taubman Centers, Inc. (the "Company") in accordance with Securities and Exchange Commission Release No. 33-8216. This information shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

On October 30, 2014, the Company issued a press release announcing its results of operations for the quarter ended September 30, 2014. A copy of the press release is attached as Exhibit 99 to this report.

Item 9.01.����FINANCIAL STATEMENTS AND EXHIBITS.

(d)����Exhibits


Exhibit
Description
�
�
99
Press Release, dated October 30, 2014, entitled Taubman Centers Issues Solid Third Quarter Results.




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


Date: October 30, 2014
TAUBMAN CENTERS, INC.
�
�
�
�
By:
/s/ Lisa A. Payne
�
�
Lisa A. Payne
�
�
Vice Chairman and Chief Financial Officer



EXHIBIT INDEX

Exhibit
Description
�
�
99
Press Release, dated October 30, 2014, entitled Taubman Centers Issues Solid Third Quarter Results.








Taubman Centers, Inc.
T 248.258.6800
�
�
200 East Long Lake Road
www.taubman.com
�
�
Suite 300
�
�
�
Bloomfield Hills, Michigan
�
�
�
48304-2324
�
�
�
�����������������������
�
TAUBMAN CENTERS ISSUES SOLID THIRD QUARTER RESULTS

"
Adjusted FFO, Net Operating Income (NOI), Average Rent Per Square Foot, and Mall Tenant Sales Per Square Foot Up
"
The Mall at University Town Center Opens Over 90 percent Leased
"
Sale of Seven Malls to Starwood Capital Group Complete
"
Post-Sale Portfolio Releasing Spreads 30 percent

BLOOMFIELD HILLS, Mich., Oct. 30, 2014 - - Taubman Centers, Inc. (NYSE: TCO) today reported financial results for the third quarter of 2014.

�
September 30, 2014
Three Months Ended
September 30, 2013
Three Months Ended
September 30, 2014
Nine Months Ended
September 30, 2013
Nine Months Ended
Net income allocable to common shareholders (EPS) per diluted share
$0.53
$0.38
$6.60
$1.09
Funds from Operations (FFO) per diluted share
Growth rate

$0.87
(2.2)%
$0.89

$2.57
1.6%
$2.53
Adjusted Funds from Operations (Adjusted FFO) per diluted share(1)�
Growth rate

$0.91
2.2%
$0.89

$2.67
5.5%
$2.53
(1) Adjusted FFO for the three and nine months ended September 30, 2014 excludes charges related to the sale of seven centers to Starwood.

It was a productive quarter with solid results, said Robert S. Taubman, chairman, president and chief executive officer of Taubman Centers. Then in October, we were delighted with the very successful opening of University Town Center in Sarasota, Florida. We were also pleased to complete the Starwood transaction, which is transformational for the company.

With increased rents and recoveries and lower predevelopment expenses, our adjusted FFO grew by two cents in the quarter despite a tough comparison with last year, added Mr. Taubman. Last year the company received the final incentive fee for leasing IFC Mall in Seoul, South Korea. This year the company is also experiencing dilution from the January 2014 sales of Arizona Mills (Tempe, Ariz.) and a 49.9 percent interest in International Plaza (Tampa, Fla.). These items combined for nearly 10 cents of FFO during the third quarter of last year.

Operating Statistics

Comparable center NOI excluding lease cancellation income was up 2.5 percent in the quarter, bringing year-to-date growth to 3 percent. Excluding the companys assets that were sold to Starwood, comparable center NOI excluding lease cancellation income was up 2.8 percent in the quarter, and up 3.1 percent year-to-date.


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Taubman Centers/2

Average rent per square foot for the quarter was $51.54, up 4.5 percent from $49.31 in the comparable period last year. Excluding the companys assets that were sold to Starwood, average rent per square foot for the quarter was $61.12, up 6.3 percent.

Trailing 12-month releasing spreads per square foot for the period ended September 30, 2014 were 22.3 percent. Excluding the companys assets that were sold to Starwood, spreads were 29.9 percent.

Excluding the companys assets that were sold to Starwood, mall tenant sales per square foot were up 0.2 percent from the third quarter of 2013. This brings the company's 12-month trailing mall tenant sales per square foot to $807, a 1 percent decline from the 12-months ended September 30, 2013.

Our releasing spreads were outstanding and although mall tenant sales per square foot were only modestly positive, we were encouraged by an acceleration throughout the quarter, said Mr. Taubman.

Excluding the companys assets that were sold to Starwood, ending occupancy in comparable centers was 94.1 percent, down 1.5 percent. This includes temporary tenants of 2.7 percent.

Sale of Seven Malls to Starwood Complete

In October, the company completed the previously announced sales of seven malls to Starwood. The sales are part of the companys ongoing strategy to recycle capital, maximize its NOI growth rate and create net asset value for investors over time. Total consideration, excluding transaction costs, was $1.403 billion. See Taubman Completes Sale of Seven Malls to Starwood Capital Group - Oct. 17, 2014.

The Mall at University Town Center Successfully Opened October 16, 2014

On October 16, 2014, the company held the grand opening of The Mall at University Town Center (UTC) (Sarasota, Fla.), the only newly built enclosed regional shopping center to open in the United States this year. The Mall at UTC, which is anchored by Saks Fifth Avenue, Macys and Dillards, opened over 90 percent leased. Well over half of the centers more than 100 retailers and restaurants are unique to the Sarasota-Manatee market.

The Mall at UTC is the focal point of the larger University Town Center Development that features additional retail, dining and hotels, with a world-class rowing competition facility located immediately adjacent to the mall. We have filled the tremendous void for upscale retail in the broader Sarasota market, said Mr. Taubman. See Shoppers Welcome Sarasotas Premier Shopping Destination - Oct. 16, 2014.






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Taubman Centers/3

Ownership in Hanam Union Square Increased

In August, the company announced it increased its ownership in the Hanam Union Square project. Taubman Asia partnered with a major institution in Asia to acquire an additional 19 percent stake from Shinsegae Group. The new institutional partner owns 14.7 percent of the project, increasing Taubman Asias effective ownership from 30 percent to 34.3 percent. Collectively, the partnership has a 49 percent ownership interest. See Taubman Asia Announces Additional Partner and Ownership Increase in Hanam Union Square, South Korea - Aug. 26, 2014.

2014 Guidance

The company is changing its guidance for 2014 Adjusted FFO per diluted share to the range of $3.58 to $3.68 from the previous range of $3.72 to $3.82. This guidance now includes the impact of the companys sale of seven centers to Starwood, which the company estimates will reduce adjusted FFO by 14 cents. The companys Adjusted FFO guidance excludes charges related to the discontinuation of hedge accounting on the interest rate swap previously designated to hedge the MacArthur note payable, a restructuring charge, and disposition and debt extinguishment costs incurred related to the sale of centers to Starwood.

The companys 2014 FFO per diluted share guidance is $3.07 to $3.17 per share.

2014 EPS is expected to be in the range of $13.40 to $13.54. 2014 EPS includes $5.30 per share gains from the first quarter 2014 sales of the company's 50 percent interest in Arizona Mills, land in Syosset, New York, and a 49.9 percent interest in International Plaza. The range also includes the impact of the companys sale of seven centers to Starwood. The impact includes an estimated gain of approximately $600 million, or $6.65 per share, to be recognized in the fourth quarter of 2014.

Supplemental Investor Information Available

The company provides supplemental investor information along with its earnings announcements, available online at www.taubman.com under Investors. This includes the following:
"
Company Information
"
Income Statements
"
Earnings Reconciliations
"
Changes in Funds from Operations and Earnings Per Share
"
Components of Other Income, Other Operating Expense, and Nonoperating Income
"
Recoveries Ratio Analysis
"
Balance Sheets
"
Debt Summary
"
Other Debt, Equity and Certain Balance Sheet Information
"
Construction and Redevelopment
"
Dispositions
"
Capital Spending

-more-







Taubman Centers/4

"
Operational Statistics
"
Operational Statistics - Excluding Centers Sold to Starwood Capital Group in October 2014
"
Owned Centers
"
Major Tenants in Owned Portfolio - Excluding Centers Sold to Starwood Capital Group in October 2014
"
Anchors in Owned Portfolio - Excluding Centers Sold to Starwood Capital Group in October 2014
"
Operating Statistics Glossary

Investor Conference Call

The company will host a conference call at 11:00 a.m. EDT on Friday, October 31 to discuss these results, business conditions and the companys outlook for the remainder of 2014. The conference call will be simulcast at www.taubman.com. An online replay will follow shortly after the call and continue for approximately 90 days.

About Taubman

Taubman Centers, Inc. is an S&P MidCap 400 Real Estate Investment Trust engaged in the ownership, management and/or leasing of 21 regional, super-regional and outlet shopping centers in the U.S. and Asia. Taubmans U.S.-owned properties are the most productive in the publicly held U.S. regional mall industry. Taubman is currently developing five properties in the U.S. and Asia totaling 4.7 million square feet. Taubman, with more than 60 years of experience in the shopping center industry, is headquartered in Bloomfield Hills, Mich.,�and Taubman Asia is headquartered in Hong Kong. www.taubman.com.

For ease of use, references in this press release to Taubman Centers, company, Taubman or an operating platform mean Taubman Centers, Inc. and/or one or more of a number of separate, affiliated entities. Business is actually conducted by an affiliated entity rather than Taubman Centers, Inc. itself or the named operating platform.

This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements reflect management's current views with respect to future events and financial performance. The forward-looking statements included in this release are made as of the date hereof. Except as required by law, we assume no obligation to update these forward-looking statements, even if new information becomes available in the future. Actual results may differ materially from those expected because of various risks and uncertainties.� You should review the company's filings with the Securities and Exchange Commission, including Risk Factors in its most recent Annual Report on Form 10-K and subsequent quarterly reports, for a discussion of such risks and uncertainties.

CONTACTS:����
Barbara Baker, Taubman, Vice President, Corporate Affairs & Investor Relations, 248-258-7367

Maria Mainville, Taubman, Director, Strategic Communications, 248-258-7469

# # #



Taubman Centers/5

TAUBMAN CENTERS, INC.
�
�
�
�
�
�
�
Table 1 - Summary of Results
�
�
�
�
�
�
�
For the Periods Ended September 30, 2014 and 2013
�
�
�
�
(in thousands of dollars, except as indicated)
�
�
�
�
�
�
�
Three Months Ended
�
Year to Date
�
2014
�
2013
�
2014
�
2013
Net income
56,637

�
43,243

�
621,848

�
123,202

Noncontrolling share of income of consolidated joint ventures
(2,643)

�
(2,198)

�
(8,013)

�
(6,752)

Noncontrolling share of income of TRG
(14,057)

�
(10,338)

�
(170,922)

�
(29,915)

Preferred stock dividends
(5,784)

�
(5,784)

�
(17,353)

�
(15,148)

Distributions to participating securities of TRG
(471)

�
(435)

�
(1,409)

�
(1,313)

Net income attributable to Taubman Centers, Inc. common shareowners
33,682

�
24,488

�
424,151

�
70,074

Net income per common share - basic
0.53

�
0.38

�
6.71

�
1.10

Net income per common share - diluted
0.53

�
0.38

�
6.60

�
1.09

Beneficial interest in EBITDA - Combined (1)
116,972

�
128,320

�
838,015

�
371,430

Adjusted Beneficial interest in EBITDA - Combined (1)
120,354


128,320

�
360,613

�
371,430

Funds from Operations (1)
78,450

�
80,500

�
231,537

�
230,222

Funds from Operations attributable to TCO (1)
56,045

�
57,737

�
165,418

�
164,692

Funds from Operations per common share - basic (1)
0.89

�
0.91

�
2.62

�
2.59

Funds from Operations per common share - diluted (1)
0.87

�
0.89

�
2.57

�
2.53

Adjusted Funds from Operations (1)
81,832

�
80,500

�
240,755

�
230,222

Adjusted Funds from Operations attributable to TCO (1)
58,466

�
57,737

�
172,015

�
164,692

Adjusted Funds from Operations per common share- basic (1)
0.92

�
0.91

�
2.72

�
2.59

Adjusted Funds from Operations per common share- diluted (1)
0.91

�
0.89

�
2.67

�
2.53

Weighted average number of common shares outstanding - basic
63,317,680

�
63,753,748

�
63,249,400

�
63,653,155

Weighted average number of common shares outstanding - diluted
64,087,742

�
64,690,909

�
64,876,051

�
64,702,648

Common shares outstanding at end of period
63,319,539

�
63,524,788

�


�


Weighted average units - Operating Partnership - basic
88,453,782

�
88,933,226

�
88,392,327

�
88,903,234

Weighted average units - Operating Partnership - diluted
90,095,106

�
90,741,649

�
90,018,978

�
90,823,989

Units outstanding at end of period - Operating Partnership
88,454,989

�
88,702,310

�


�


Ownership percentage of the Operating Partnership at end of period
71.6
%
�
71.6
%
�


�


Number of owned shopping centers at end of period (2)
24

�
25

�
24

�
25




�


�


�


Operating Statistics:


�


�


�


Net Operating Income excluding lease cancellation income - growth % (1)(3)
2.5
%
�
3.2
%
�
3
%
�
4.0
%
Ending occupancy - all centers
89.0
%
�
90.9
%
�
89.0
%
�
90.9
%
Ending occupancy - comparable (3)
89.6
%
�
91.0
%
�
89.6
%
�
91.0
%
Average occupancy - all centers
89.2
%
�
90.8
%
�
89.7
%
�
90.7
%
Average occupancy - comparable (3)
89.7
%
�
90.8
%
�
90.3
%
�
90.6
%
Leased space - all centers
91.2
%
�
92.6
%
�
91.2
%
�
92.6
%
Leased space - comparable (3)
91.6
%
�
92.8
%
�
91.6
%
�
92.8
%
Average rent per square foot - Consolidated Businesses (3)
48.58

�
48.13

�
48.11

�
48.04

Average rent per square foot - Unconsolidated Joint Ventures (3)
58.20

�
52.79

�
58.02

�
52.19

Average rent per square foot - Combined (3)
51.54

�
49.31

�
51.07

�
49.09

�
�
�
�
�
�
�
�
Operating Statistics Excluding Centers Sold to Starwood Capital Group in October 2014(5):
�


�


�


Net Operating Income excluding lease cancellation income - growth % (1)
2.8
%
�


�
3.1
%
�


Ending occupancy - comparable (3)
91.4
%
�
92.9
%
�
91.4
%
�
92.9
%
Ending occupancy - comparable with TILs (3)
94.1
%
�
95.6
%
�
94.1
%
�
95.6
%
Leased space - comparable (3)
93.4
%
�
94.7
%
�
93.4
%
�
94.7
%
Average rent per square foot - Combined (3)
61.12

�
57.50

�
60.37

�
57.15

All centers (4):


�


�


�


Mall tenant occupancy costs as a percentage of tenant sales - Consolidated Businesses
15.0
%
�
14.4
%
�
14.8
%
�
13.9
%
Mall tenant occupancy costs as a percentage of tenant sales - Unconsolidated Joint Ventures
14.5
%
�
14.1
%
�
14.1
%
�
13.2
%
Mall tenant occupancy costs as a percentage of tenant sales - Combined
14.8
%
�
14.3
%
�
14.5
%
�
13.7
%
Comparable centers (3)(4):


�


�


�


Mall tenant occupancy costs as a percentage of tenant sales - Consolidated Businesses
15.1
%
�
14.5
%
�
14.9
%
�
14.0
%
Mall tenant occupancy costs as a percentage of tenant sales - Unconsolidated Joint Ventures
14.5
%
�
13.9
%
�
14.1
%
�
13.0
%
Mall tenant occupancy costs as a percentage of tenant sales - Combined
14.9
%
�
14.3
%
�
14.5
%
�
13.6
%
Mall tenant sales - all centers (4)
1,121,619

�
1,177,657

�
3,368,300

�
3,578,702

Mall tenant sales - comparable (3)(4)
1,111,848

�
1,126,993

�
3,344,320

�
3,447,116





Taubman Centers/6

(1)
Beneficial Interest in EBITDA represents the Operating Partnerships share of the earnings before interest, income taxes, and depreciation and amortization of its consolidated and unconsolidated businesses. The Company believes Beneficial Interest in EBITDA provides a useful indicator of operating performance, as it is customary in the real estate and shopping center business to evaluate the performance of properties on a basis unaffected by capital structure.
�
The Company uses Net Operating Income (NOI) as an alternative measure to evaluate the operating performance of centers, both on individual and stabilized portfolio bases. The Company defines NOI as property-level operating revenues (includes rental income excluding straight-line adjustments of minimum rent) less maintenance, taxes, utilities, promotion, ground rent (including straight-line adjustments), and other property operating expenses. Since NOI excludes general and administrative expenses, pre-development charges, interest income and expense, depreciation and amortization, impairment charges, restructuring charges, and gains from peripheral land and property dispositions, it provides a performance measure that, when compared period over period, reflects the revenues and expenses most directly associated with owning and operating rental properties, as well as the impact on their operations from trends in tenant sales, occupancy and rental rates, and operating costs. The Company also uses NOI excluding lease cancellation income as an alternative measure because this income may vary significantly from period to period, which can affect comparability and trend analysis. The Company generally provides separate projections for expected comparable center NOI growth and lease cancellation income. Comparable centers are generally defined as centers that were owned and open for the entire current and preceding period presented.
�
The National Association of Real Estate Investment Trusts (NAREIT) defines Funds from Operations (FFO) as net income (computed in accordance with Generally Accepted Accounting Principles (GAAP)), excluding gains (or losses) from extraordinary items and sales of properties and impairment write-downs of depreciable real estate, plus real estate related depreciation and after adjustments for unconsolidated partnerships and joint ventures. The Company believes that FFO is a useful supplemental measure of operating performance for REITs. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, the Company and most industry investors and analysts have considered presentations of operating results that exclude historical cost depreciation to be useful in evaluating the operating performance of REITs. The Company primarily uses FFO in measuring performance and in formulating corporate goals and compensation.
�
The Company may also present adjusted versions of NOI, Beneficial Interest in EBITDA, and FFO when used by management to evaluate operating performance when certain significant items have impacted results that affect comparability with prior or future periods due to the nature or amounts of these items. The Company believes the disclosure of the adjusted items is similarly useful to investors and others to understand management's view on comparability of such measures between periods. For the three and nine month periods ended September 30, 2014, FFO and EBITDA were adjusted for expenses related to the sale of seven centers to an affiliate of Starwood Capital Group (Starwood) completed in October 2014. Specifically, these measures were adjusted for charges related to the discontinuation of hedge accounting on the interest rate swap previously designated to hedge the MacArthur Center (MacArthur) note payable, a restructuring charge and disposition costs incurred related to the sale. In addition, for the nine month period ended September 30, 2014, EBITDA was adjusted for the gain on dispositions of interests in International Plaza, Arizona Mills, and land in Syosset, New York related to the former Oyster Bay project.
�
These non-GAAP measures as presented by the Company are not necessarily comparable to similarly titled measures used by other REITs due to the fact that not all REITs use the same definitions. These measures should not be considered alternatives to net income or as an indicator of the Company's operating performance. Additionally, these measures do not represent cash flows from operating, investing, or financing activities as defined by GAAP.
�
�
�
�
(2)
In October 2014, the Company completed the sale of seven centers to affiliates of Starwood Capital Group.
�
�
�
�
(3)
Statistics exclude non-comparable centers. In 2014 and 2013, non-comparable centers are Taubman Prestige Outlets Chesterfield and Arizona Mills.
�
�
�
�
(4)
Based on reports of sales furnished by mall tenants.
�
�
�
�
(5)
Statistics have been adjusted to exclude the portfolio of seven centers included in the sale to Starwood Capital Group in October 2014.

















Taubman Centers/7

�TAUBMAN CENTERS, INC.
�
�
�
�
�
�
�Table 2 - Income Statement
�
�
�
�
�
�
�For the Three Months Ended September 30, 2014 and 2013
�
�
�
�
�
�
�(in thousands of dollars)
�
�
�
�
�
�
�
�
�
2014
�
2013
�
�
�
CONSOLIDATED BUSINESSES
�
�UNCONSOLIDATED JOINT VENTURES (1)
�
CONSOLIDATED BUSINESSES
�
�UNCONSOLIDATED JOINT VENTURES (1)
REVENUES:
�
�
�
�
�
�
�
�
Minimum rents
96,691

�
48,226

�
103,501

�
42,532

�
Percentage rents
5,263

�
2,270

�
7,021

�
2,137

�
Expense recoveries
63,527

�
28,517

�
67,943

�
25,738

�
Management, leasing, and development services
3,135

�
�
�
8,753

�
�
�
Other
7,428

�
1,658

�
6,720

�
1,452

�
�
Total revenues
176,044

�
80,671

�
193,938

�
71,859

�
�
�
�
�
�
�
�
�
�
EXPENSES:
�
�
�
�
�
�
�
�
Maintenance, taxes, utilities, and promotion
52,184

�
20,457

�
55,375

�
18,807

�
Other operating
18,036

�
3,611

�
19,295

�
3,372

�
Management, leasing, and development services
1,539

�
�
�
1,027

�
�
�
General and administrative
11,369

�
�
�
11,812

�
�
�
Restructuring charge
3,031

�
�
�


�
�
�
Interest expense
23,382

�
18,255

�
32,515

�
17,048

�
Depreciation and amortization
24,553

�
11,939

�
40,982

�
10,068

�
�
Total expenses
134,094

�
54,262

�
161,006

�
49,295

�
�
�
�
�
�
�
�
�
�
Nonoperating income (expense)
891

�
(22
)
�
(456
)
�
(1
)
�
�
�
42,841

�
26,387

�
32,476

�
22,563

Income tax expense
(683
)
�
�
�
(1,453
)
�
�
Equity in income of Unconsolidated Joint Ventures
14,479

�
�
�
12,220

�
�
Net income
56,637

�
�
�
43,243

�
�
Net income attributable to noncontrolling interests:
�
�
�
�
�
�
�
�
Noncontrolling share of income of consolidated joint ventures
(2,643
)
�
�
�
(2,198
)
�
�
�
Noncontrolling share of income of TRG
(14,057
)
�
�
�
(10,338
)
�
�
Distributions to participating securities of TRG
(471
)
�
�
�
(435
)
�
�
Preferred stock dividends
(5,784
)
�
�
�
(5,784
)
�
�
Net income attributable to Taubman Centers, Inc. common shareowners
33,682

�
�
�
24,488

�
�
�
�
�
�
�
�
�
�
�
�
SUPPLEMENTAL INFORMATION:
�
�
�
�
�
�
�
�
EBITDA - 100%
90,776

�
56,581

�
105,973

�
49,679

�
EBITDA - outside partners' share
(5,566
)
�
(24,819
)
�
(5,653
)
�
(21,679
)
�
Beneficial interest in EBITDA
85,210

�
31,762

�
100,320

�
28,000

�
Beneficial interest expense
(21,273
)
�
(10,006
)
�
(30,352
)
�
(9,415
)
�
Beneficial income tax expense - TRG and TCO
(683
)
�
�
�
(1,453
)
�
�
�
Beneficial income tax expense - TCO
112

�
�
�
(29
)
�
�
�
Non-real estate depreciation
(888
)
�
�
�
(787
)
�
�
�
Preferred dividends and distributions
(5,784
)
�
�
�
(5,784
)
�
�
�
Funds from Operations contribution
56,694

�
21,756

�
61,915

�
18,585

�
�
�
�
�
�
�
�
�
�
STRAIGHTLINE AND PURCHASE ACCOUNTING ADJUSTMENTS:
�
�
�
�
�
�
�
�
Net straight-line adjustments to rental revenue, recoveries,
�
�
�
�
�
�
�
�
�
and ground rent expense at TRG %
405

�
304

�
1,081

�
226

�
Green Hills purchase accounting adjustments - minimum rents increase
229

�
�
�
186

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

�
�
�
�
�
�
�
�
adjustments - interest expense reduction
306

�
�
�
858

�
�
�
Waterside Shops purchase accounting adjustments - interest expense reduction
�
�
263

�
�
�
263

�
Taubman BHO headquarters purchase accounting adjustment -







�

interest expense reduction
183







�
�
�
�
�
�
�
�
�
�
(1
)
With the exception of the Supplemental Information, amounts include 100% of the Unconsolidated Joint Ventures. Amounts are net of intercompany transactions. The Unconsolidated Joint Ventures are presented at 100% in order to allow for measurement of their performance as a whole, without regard to the Company's ownership interest. In its consolidated financial statements, the Company accounts for its investments in the Unconsolidated Joint Ventures under the equity method. International Plaza's operations were consolidated through the disposition date. Subsequent to the disposition, the Company's remaining 50.1% interest is accounted for under the equity method of accounting within Unconsolidated Joint Ventures. In addition, Arizona Mills' operations were accounted for under equity method accounting through the disposition in January 2014.








Taubman Centers/8

�TAUBMAN CENTERS, INC.
�
�
�
�
�
�
�
�Table 3 - Income Statement
�
�
�
�
�
�
�
�For the Nine Months Ended September 30, 2014 and 2013
�
�
�
�
�
�
�
�(in thousands of dollars)
�
�
�
�
�
�
�
�
�
2014
�
2013
�
�
�
CONSOLIDATED BUSINESSES
�
�UNCONSOLIDATED JOINT VENTURES (1)
�
CONSOLIDATED BUSINESSES
�
�UNCONSOLIDATED JOINT VENTURES (1)
REVENUES:
�
�
�
�
�
�
�
�
Minimum rents
291,113

�
143,098

�
309,043

�
124,679

�
Percentage rents
11,019

�
5,427

�
13,732

�
5,763

�
Expense recoveries
187,439

�
83,144

�
197,549

�
73,922

�
Management, leasing, and development services
8,605

�
�
�
13,954

�
�
�
Other
22,631

�
6,521

�
21,104

�
4,820

�
�
Total revenues
520,807

�
238,190

�
555,382

�
209,184

�
�
�
�
�
�
�
�
�
�
EXPENSES:
�
�
�
�
�
�
�
�
Maintenance, taxes, utilities, and promotion
148,955

�
60,449

�
154,694

�
53,993

�
Other operating
49,582

�
13,035

�
53,950

�
11,643

�
Management, leasing, and development services
4,520

�
�
�
4,172

�
�
�
General and administrative
34,493

�
�
�
36,676

�
�
�
Restructuring charge
3,031

�
�
�
�
�
�
�
Interest expense
74,946

�
54,284

�
99,589

�
50,976

�
Depreciation and amortization
96,521

�
34,731

�
116,262

�
29,326

�
�
Total expenses
412,048

�
162,499

�
465,343

�
145,938

�
�
�
�
�
�
�
�
�
�
Nonoperating income (expense) (2)
(3,327
)
�
(25
)
�
1,831

�
(1
)
�
�
�
105,432

�
75,666

�
91,870

�
63,245

Income tax expense
(1,693
)
�
�
�
(2,715
)
�
�
Equity in income of Unconsolidated Joint Ventures
41,222

�
�
�
34,047

�
�
�
�
�
144,961

�
�
�
123,202

�
�
Gain on dispositions of International Plaza, Arizona Mills, and Oyster Bay, net of tax (3)
476,887

�
�
�
�
�
�
Net income
621,848

�
�
�
123,202

�
�
Net income attributable to noncontrolling interests:
�
�
�
�
�
�
�
�
Noncontrolling share of income of consolidated joint ventures
(8,013
)
�
�
�
(6,752
)
�
�
�
Noncontrolling share of income of TRG
(170,922
)
�
�
�
(29,915
)
�
�
Distributions to participating securities of TRG
(1,409
)
�
�
�
(1,313
)
�
�
Preferred stock dividends
(17,353
)
�
�
�
(15,148
)
�
�
Net income attributable to Taubman Centers, Inc. common shareowners
424,151

�
�
�
70,074

�
�
�
�
�
�
�
�
�
�
SUPPLEMENTAL INFORMATION:
�
�
�
�
�
�
�
�
EBITDA - 100% (4)
763,519

�
164,681

�
307,721

�
143,547

�
EBITDA - outside partners' share
(17,840
)
�
(72,345
)
�
(17,068
)
�
(62,770
)
�
Beneficial interest in EBITDA
745,679

�
92,336

�
290,653

�
80,777

�
Gain on dispositions of International Plaza, Arizona Mills, and Oyster Bay
(486,620
)
�
�
�
�
�
�
�
Beneficial interest expense
(68,687
)
�
(29,805
)
�
(93,049
)
�
(28,192
)
�
Beneficial income tax expense - TRG and TCO
(1,693
)
�
�
�
(2,715
)
�
�
�
Beneficial income tax expense - TCO
258

�
�
�
132

�
�
�
Non-real estate depreciation
(2,578
)
�
�
�
(2,236
)
�
�
�
Preferred dividends and distributions
(17,353
)
�
�
�
(15,148
)
�
�
�
Funds from Operations contribution
169,006

�
62,531

�
177,637

�
52,585

�
�
�
�
�
�
�
�
�
�
STRAIGHTLINE AND PURCHASE ACCOUNTING ADJUSTMENTS:
�
�
�
�
�
�
�
�
Net straight-line adjustments to rental revenue, recoveries,
�
�
�
�
�
�
�
�
�
and ground rent expense at TRG %
1,229

�
843

�
2,881

�
451

�
Green Hills purchase accounting adjustments - minimum rents increase
620

�
�
�
590

�
�
�
Green Hills, El Paseo Village, and Gardens on El Paseo purchase accounting
�
�
�
�
�
�
�
�
�
adjustments - interest expense reduction
917

�
�
�
2,573

�
�
�
Waterside Shops purchase accounting adjustments - interest expense reduction
�
�
788

�
�
�
788

�
Taubman BHO headquarters purchase accounting adjustment
�
�
�
�
�
�
�
�
�
interest expense reduction
425

�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
(1
)
With the exception of the Supplemental Information, amounts include 100% of the Unconsolidated Joint Ventures. Amounts are net of intercompany transactions. The Unconsolidated Joint Ventures are presented at 100% in order to allow for measurement of their performance as a whole, without regard to the Company's ownership interest. In its consolidated financial statements, the Company accounts for its investments in the Unconsolidated Joint Ventures under the equity method. International Plaza's operations were consolidated through the disposition date. Subsequent to the disposition, the Company's remaining 50.1% interest is accounted for under the equity method of accounting within Unconsolidated Joint Ventures. In addition, Arizona Mills' operations were accounted for under equity method accounting through the disposition in January 2014.
(2
)
Nonoperating expense for the nine months ended September 30, 2014 includes $5.5 million in connection with the discontinuation of hedge accounting related to the MacArthur interest rate swap in connection with the Starwood transaction and $1million of disposition costs related to the sale of seven centers to Starwood Capital Group.
(3
)
During the nine months ended September 30, 2014, the gain on dispositions of interests in International Plaza, Arizona Mills and land in Syosset, New York related to the former Oyster Bay project is net of income tax expense of $9.7 million.
(4
)
For the nine months ended September 30, 2014, EBITDA includes the Company's $486.6 million (before tax) gain from the dispositions of interests in International Plaza, Arizona Mills, and Land in Syosset, New York related to the former Oyster Bay project.


Taubman Centers/9

TAUBMAN CENTERS, INC.
�
�
�
�
�
�
�
�
�
�
�
Table 4 - Reconciliation of Net Income Attributable to Taubman Centers, Inc. Common Shareowners to Funds from Operations
���and Adjusted Funds from Operations
For the Three Months Ended September 30, 2014 and 2013
�
�
�
�
�
�
�
�
�
(in thousands of dollars except as noted; may not add or recalculate due to rounding)
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
2014
�
2013
�
�
�
�
Shares
�
Per Share
�
�
�
Shares
�
Per Share
�
�
Dollars
�
/Units
�
/Unit
�
Dollars
�
/Units
�
/Unit
Net income attributable to TCO common shareowners - Basic
33,682

�
63,317,680

�
0.53

�
24,488

�
63,753,748

�
0.38

�
�
�
�
�
�
�
�
�
�
�
�
Add impact of share-based compensation
121

�
770,062

�
�
�
107

�
937,161

�
�
�
�
�
�
�
�
�
�
�
�
�
�
Net income attributable to TCO common shareowners - Diluted
33,803

�
64,087,742

�
0.53

�
24,595

�
64,690,909

�
0.38

�
�
�
�
�
�
�
�
�
�
�
�
�
Add depreciation of TCO's additional basis
1,617

�
�
�
0.03

�
1,720

�
�
�
0.03

Add (less) TCO's additional income tax expense
112

�
�
�
0.00

�
(29
)
�
�
�
(0.00
)
�
�
�
�
�
�
�
�
�
�
�
�
�
Net income attributable to TCO common shareowners,
�
�
�
�
�
�
�
�
�
�
�
�
excluding step-up depreciation and additional income tax expense (benefit)
35,532

�
64,087,742

�
0.55

�
26,286

�
64,690,909

�
0.41

�
�
�
�
�
�
�
�
�
�
�
�
�
Add:
�
�
�
�
�
�
�
�
�
�
�
�
Noncontrolling share of income of TRG
14,057

�
25,136,102

�
�
�
10,338

�
25,179,478

�
�
�
Distributions to participating securities of TRG
471

�
871,262

�
�
�
435

�
871,262

�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
Net income attributable to partnership unitholders
�
�
�
�
�
�
�
�
�
�
�
�
and participating securities
50,060

�
90,095,106

�
0.56

�
37,059

�
90,741,649

�
0.41

�
�
�
�
�
�
�
�
�
�
�
�
�
Add (less) depreciation and amortization:
�
�
�
�
�
�
�
�
�
�
�
�
Consolidated businesses at 100%
24,553

�
�
�
0.27

�
40,982

�
�
�
0.45

�
Depreciation of TCO's additional basis
(1,617
)
�
�
�
(0.02
)
�
(1,720
)
�
�
�
(0.02
)
�
Noncontrolling partners in consolidated joint ventures
(814
)
�
�
�
(0.01
)
�
(1,292
)
�
�
�
(0.01
)
�
Share of Unconsolidated Joint Ventures
7,277

�
�
�
0.08

�
6,365

�
�
�
0.07

�
Non-real estate depreciation
(888
)
�
�
�
(0.01
)
�
(787
)
�
�
�
(0.01
)
Less impact of share-based compensation
(121
)
�
�
�
(0.00)

�
(107
)
�
�
�
(0.00)

�
�
�
�
�
�
�
�
�
�
�
�
�
Funds from Operations
78,450

�
90,095,106

�
0.87

�
80,500

�
90,741,649

�
0.89

�
�
�
�
�
�


�
�
�
�
�
�
TCO's average ownership percentage of TRG
71.6
%
�
�
�
�
�
71.7
%
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
Funds from Operations attributable to TCO,
�
�
�
�
�
�
�
�
�
�
�
�
excluding additional income tax expense (benefit)
56,157

�
�
�
0.87

�
57,708

�
�
�
0.89

�
�
�
�
�
�
�
�
�
�
�
�
�
Add (less) TCO's additional income tax benefit (expense)
(112
)
�
�
�
(0.00
)
�
29

�
�
�
0.00

�
�
�
�
�
�
�
�
�
�
�
�
�
Funds from Operations attributable to TCO
56,045

�
�
�
0.87

�
57,737

�
�
�
0.89

�
�
�
�
�
�
�
�
�
�
�
�
�
Funds from Operations
78,450

�
90,095,106

�
0.87

�
80,500

�
90,741,649

�
0.89

�
�
�
�
�
�
�
�
�
�
�
�
�
Disposition costs related to the Starwood sale
513

�
�
�
0.01

�
�
�
�
�
�
Restructuring charge
3,031

�
�
�
0.03

�
�
�
�
�
�
Discontinuation of hedge accounting - MacArthur
(162
)
�
�
�
(0.00)

�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
Adjusted Funds from Operations
81,832

�
90,095,106

�
0.91

�
80,500

�
90,741,649

�
0.89

�
�
�
�
�
�
�
�
�
�
�
�
�
TCO's average ownership percentage of TRG
71.6
%
�
�
�
�
�
71.7
%
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
Adjusted Funds from Operations attributable to TCO,
�
�
�
�
�
�
�
�
�
�
�
�
excluding additional income tax benefit (expense)
58,578

�
�
�
0.91

�
57,708

�
�
�
0.89

�
�
�
�
�
�
�
�
�
�
�
�
�
Add (less) TCO's additional income tax benefit (expense)
(112
)
�
�
�
(0.00
)
�
29

�
�
�
0.00

�
�
�
�
�
�
�
�
�
�
�
�
�
Adjusted Funds from Operations attributable to TCO
58,466

�
�
�
0.91

�
57,737

�
�
�
0.89



Taubman Centers/10

TAUBMAN CENTERS, INC.
�
�
�
�
�
�
�
�
�
�
�
Table 5 - Reconciliation of Net Income Attributable to Taubman Centers, Inc. Common Shareowners to Funds from Operations
���and Adjusted Funds from Operations
For the Nine Months Ended September 30, 2014 and 2013
�
�
�
�
�
�
�
�
�
(in thousands of dollars except as noted; may not add or recalculate due to rounding)
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
2014
�
2013
�
�
�
�
Shares
�
Per Share
�
�
�
Shares
�
Per Share
�
�
Dollars
�
/Units
�
/Unit
�
Dollars
�
/Units
�
/Unit
Net income attributable to TCO common shareowners - Basic
424,151

�
63,249,400

�
6.71

�
70,074

�
63,653,155

�
1.10

�
�
�
�
�
�
�
�
�
�
�
�
�
Add distributions to participating securities of TRG
1,409

�
871,262

�
�
�
�
�
�
�
�
Add impact of share-based compensation
2,742

�
755,389

�
�
�
352

�
1,049,493

�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
Net income attributable to TCO common shareowners - Diluted
428,302

�
64,876,051

�
6.60

�
70,426

�
64,702,648

�
1.09

�
�
�
�
�
�
�
�
�
�
�
�
�
Add depreciation of TCO's additional basis
5,057

�
�
�
0.08

�
5,160

�
�
�
0.08

Add TCO's additional income tax expense
258

�
�
�
0.00

�
132

�
�
�
0.00

�
�
�
�
�
�
�
�
�
�
�
�
�
Net income attributable to TCO common shareowners,
�
�
�
�
�
�
�
�
�
�
�
�
excluding step-up depreciation and additional income tax expense
433,617

�
64,876,051

�
6.68

�
75,718

�
64,702,648

�
1.17

�
�
�
�
�
�
�
�
�
�
�
�
�
Add:
�
�
�
�
�
�
�
�
�
�
�
�
Noncontrolling share of income of TRG
170,922

�
25,142,927

�
�
�
29,915

�
25,250,079

�
�
�
Distributions to participating securities of TRG


�


�
�
�
1,313

�
871,262

�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
Net income attributable to partnership unitholders
�
�
�
�
�
�
�
�
�
�
�
�
and participating securities
604,539

�
90,018,978

�
6.72

�
106,946

�
90,823,989

�
1.18

�
�
�
�
�
�
�
�
�
�
�
�
�
Add (less) depreciation and amortization:
�
�
�
�
�
�
�
�
�
�
�
�
Consolidated businesses at 100%
96,521

�
�
�
1.07

�
116,262

�
�
�
1.28

�
Depreciation of TCO's additional basis
(5,057
)
�
�
�
(0.06
)
�
(5,160
)
�
�
�
(0.06
)
�
Noncontrolling partners in consolidated joint ventures
(3,568
)
�
�
�
(0.04
)
�
(3,776
)
�
�
�
(0.04
)
�
Share of Unconsolidated Joint Ventures
21,309

�
�
�
0.24

�
18,538

�
�
�
0.20

�
Non-real estate depreciation
(2,578
)
�
�
�
(0.03
)
�
(2,236
)
�
�
�
(0.02
)
Less gain on dispositions, net of tax
(476,887
)
�
�
�
(5.30)

�
�
�
�
�
�
Less impact of share-based compensation
(2,742
)
�
�
�
(0.03
)
�
(352
)
�
�
�
(0.00)

�
�
�
�
�
�
�
�
�
�
�
�
�
Funds from Operations
231,537

�
90,018,978

�
2.57

�
230,222

�
90,823,989

�
2.53

�
�
�
�
�
�
�
�
�
�
�
�
�
TCO's average ownership percentage of TRG
71.6
%
�
�
�
�
�
71.6
%
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
Funds from Operations attributable to TCO,
�
�
�
�
�
�
�
�
�
�
�
�
excluding additional income tax expense
165,676

�
�
�
2.57

�
164,824

�
�
�
2.53

�
�
�
�
�
�
�
�
�
�
�
�
�
Less TCO's additional income tax expense
(258
)
�
�
�
(0.00)

�
(132
)
�
�
�
(0.00)

�
�
�
�
�
�
�
�
�
�
�
�
�
Funds from Operations attributable to TCO
165,418

�
�
�
2.57

�
164,692

�
�
�
2.53

�
�
�
�
�
�
�
�
�
�
�
�
�
Funds from Operations
231,537

�
90,018,978

�
2.57

�
230,222

�
90,823,989

�
2.53

�
�
�
�
�
�
�
�
�
�
�
�
�
Disposition costs related to the Starwood sale
954

�
�
�
0.01

�


�
�
�


Restructuring charge
3,031

�
�
�
0.03

�
�
�
�
�
�
Discontinuation of hedge accounting - MacArthur
5,233

�
�
�
0.06

�


�
�
�


�
�
�
�
�
�
�
�
�
�
�
�
�
Adjusted Funds from Operations
240,755

�
90,018,978

�
2.67

�
230,222

�
90,823,989

�
2.53

�
�
�
�
�
�
�
�
�
�
�
�
�
TCO's average ownership percentage of TRG
71.6
%
�
�
�
�
�
71.6
%
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
Adjusted Funds from Operations attributable to TCO,
�
�
�
�
�
�
�
�
�
�
�
�
excluding additional income tax expense
172,273

�
�
�
2.67

�
164,824

�
�
�
2.53

�
�
�
�
�
�
�
�
�
�
�
�
�
Less TCO's additional income tax expense
(258
)
�
�
�
(0.00)

�
(161
)
�
�
�
(0.00)

�
�
�
�
�
�
�
�
�
�
�
�
�
Adjusted Funds from Operations attributable to TCO
172,015

�
�
�
2.67

�
164,692

�
�
�
2.53




Taubman Centers/11



TAUBMAN CENTERS, INC.
�
Table 6 - Reconciliation of Net Income to Beneficial Interest in EBITDA and Adjusted Beneficial Interest in EBITDA
�
For the Periods Ended September 30, 2014 and 2013
�
(in thousands of dollars; amounts attributable to TCO may not recalculate due to rounding)
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
Three Months Ended
�
Year to Date
�
�
�
�
�
2014
�
2013
�
2014
�
2013
�
�
�
�
�
�
�
�
�
�
�
�
�
Net income
�
56,637

�
43,243

�
621,848

�
123,202

�
�
�
�
�
�
�
�
�
�
�
�
�
Add (less) depreciation and amortization:
�
�
�
�
�
�
�
�
�
�
Consolidated businesses at 100%
�
24,553

�
40,982

�
96,521

�
116,262

�
�
Noncontrolling partners in consolidated joint ventures
�
(814
)
�
(1,292
)
�
(3,568
)
�
(3,776
)
�
�
Share of Unconsolidated Joint Ventures
�
7,277

�
6,365

�
21,309

�
18,538

�
�
�
�
�
�
�
�
�
�
�
�
�
Add (less) interest expense and income tax expense:
�
�
�
�
�
�
�
�
�
�
Interest expense:
�
�
�
�
�
�
�
�
�
�
�
Consolidated businesses at 100%
�
23,382

�
32,515

�
74,946

�
99,589

�
�
�
Noncontrolling partners in consolidated joint ventures
�
(2,109
)
�
(2,163
)
�
(6,259
)
�
(6,540
)
�
�
�
Share of Unconsolidated Joint Ventures
�
10,006

�
9,415

�
29,805

�
28,192

�
�
Share of income tax expense:
�
�
�
�
�
�
�
�
�
�
�
Income tax expense on dispositions of International Plaza, Arizona Mills, and Oyster Bay
�

�
�
�
9,733

�
�
�
�
�
Other income tax expense
�
683

�
1,453

�
1,693

�
2,715

�
�
�
�
�
�
�
�
�
�
�
�
�
Less noncontrolling share of income of consolidated joint ventures
�
(2,643
)
�
(2,198
)
�
(8,013
)
�
(6,752
)
�
�
�
�
�
�
�
�
�
�
�
�
�
Beneficial Interest in EBITDA
�
116,972

�
128,320

�
838,015

�
371,430

�
�
�
�
�
�
�
�
�
�
�
�
�
TCO's average ownership percentage of TRG
�
71.6
%
�
71.7
%
�
71.6
%
�
71.6
%
�
�
�
�
�
�
�
�
�
�
�
�
�
Beneficial Interest in EBITDA attributable to TCO
�
83,732

�
91,989

�
599,493

�
265,925

�
�
�
�
�
�
�
�
�
�
�
�
�
Beneficial Interest in EBITDA
�
116,972

�
128,320

�
838,015

�
371,430

�
�
�
�
�
�
�
�
�
�
�
�
�
�
Disposition costs related to the Starwood sale
�
513

�
�
�
954

�
�
�
�
Restructuring charge
�
3,031

�
�
�
3,031

�
�
�
�
Discontinuation of hedge accounting - MacArthur
�
(162
)
�
�
�
5,233

�
�
�
�
Gain on dispositions of International Plaza, Arizona Mills, and Oyster Bay
�
�
�
�
�
(486,620
)
�

�
�
�
�
�
�
�
�
�
�
�
�
�
Adjusted Beneficial Interest in EBITDA
�
120,354

�
128,320

�
360,613

�
371,430

�
�
�
�
�
�
�
�
�
�
�
�
�
TCO's average ownership percentage of TRG
�
71.6
%
�
71.7
%
�
71.6
%
�
71.6
%
�
�
�
�
�
�
�
�
�
�
�
�
�
Adjusted Beneficial Interest in EBITDA attributable to TCO
�
86,153

�
91,989

�
258,036

�
265,925

�


Taubman Centers/12

TAUBMAN CENTERS, INC.
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
Table 7 - Reconciliation of Net Income to Net Operating Income (NOI)
�
�
�
�
�
�
�
�
�
�
�
�
�
For the Periods Ended September 30, 2014, 2013, and 2012
�
�
�
�
�
�
�
�
�
�
�
�
�
(in thousands of dollars)
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
Three Months Ended
�
Three Months Ended
�
Year to Date
�
Year to Date
�
�
�
�
2014
�
2013
�
2013
�
2012
�
2014
�
2013
�
2013
�
2012
�
Net income
56,637

�
43,243

�
43,243

�
45,061

�
621,848

�
123,202

�
123,202

�
108,686

�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
Add (less) depreciation and amortization:
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
Consolidated businesses at 100%
24,553

�
40,982

�
40,982

�
36,414

�
96,521

�
116,262

�
116,262

�
109,083

�
�
Noncontrolling partners in consolidated joint ventures
(814
)
�
(1,292
)
�
(1,292
)
�
(2,888
)
�
(3,568
)
�
(3,776
)
�
(3,776
)
�
(7,650
)
�
�
Share of Unconsolidated Joint Ventures
7,277

�
6,365

�
6,365

�
5,311

�
21,309

�
18,538

�
18,538

�
15,786

�
Add (less) interest expense and income tax expense:
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
Interest expense:
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
Consolidated businesses at 100%
23,382

�
32,515

�
32,515

�
34,943

�
74,946

�
99,589

�
99,589

�
109,146

�
�
�
Noncontrolling partners in consolidated joint ventures
(2,109
)
�
(2,163
)
�
(2,163
)
�
(4,225
)
�
(6,259
)
�
(6,540
)
�
(6,540
)
�
(12,634
)
�
�
�
Share of Unconsolidated Joint Ventures
10,006

�
9,415

�
9,415

�
8,765

�
29,805

�
28,192

�
28,192

�
25,084

�
�
Share of income tax expense:
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
Income tax expense on dispositions of International Plaza, Arizona Mills, and Oyster Bay


�
�
�
�
�
�
�
9,733

�
�
�
�
�
�
�
�
�
Other income tax expense
683

�
1,453

�
1,453

�
667

�
1,693

�
2,715

�
2,715

�
1,393

�
Less noncontrolling share of income of consolidated joint ventures
(2,643
)
�
(2,198
)
�
(2,198
)
�
(2,079
)
�
(8,013
)
�
(6,752
)
�
(6,752
)
�
(6,788
)
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
Add EBITDA attributable to outside partners:
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
EBITDA attributable to noncontrolling partners in consolidated joint ventures
5,566

�
5,653

�
5,653

�
9,257

�
17,840

�
17,068

�
17,068

�
27,117

�
�
EBITDA attributable to outside partners in Unconsolidated Joint Ventures
24,819

�
21,679

�
21,679

�
21,536

�
72,345

�
62,770

�
62,770

�
62,259

�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
EBITDA at 100%
147,357

�
155,652

�
155,652

�
152,762

�
928,200

�
451,268

�
451,268

�
431,482

�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
Add (less) items excluded from shopping center NOI:
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
General and administrative expenses
11,369

�
11,812

�
11,812

�
9,571

�
34,493

�
36,676

�
36,676

�
28,021

�
�
Management, leasing, and development services, net
(1,596
)
�
(7,726
)
�
(7,726
)
�
(4,069
)
�
(4,085
)
�
(9,782
)
�
(9,782
)
�
(5,767
)
�
�
Straight-line of rents
(1,195
)
�
(1,706
)
�
(1,706
)
�
(2,055
)
�
(3,482
)
�
(4,320
)
�
(4,320
)
�
(4,535
)
�
�
Gain on dispositions of International Plaza, Arizona Mills, and Oyster Bay
�
�
�
�
�
�
�
�
(486,620
)
�
�
�
�
�
�
�
�
Disposition costs related to the Starwood sale
519

�
�
�
�
�
�
�
960

�
�
�
�
�
�
�
�
Restructuring charge
3,031

�
�
�
�
�
�
�
3,031

�
�
�
�
�
�
�
�
Discontinuation of hedge accounting - MacArthur
(171
)
�
�
�
�
�
�
�
5,507

�

�

�
�
�
�
Gain on sale of peripheral land
�
�
�
�
�
�
�
�
�
�
(863
)
�
(863
)
�
�
�
�
Gain on sale of marketable securities


�
�
�
�
�
�
�

�
(1,323
)
�
(1,323
)
�
�
�
�
Dividend income
(761
)
�


�


�


�
(1,597
)
�

�

�

�
�
Interest income
(456
)
�
(43
)
�
(43
)
�
(74
)
�
(764
)
�
(144
)
�
(144
)
�
(270
)
�
�
Other nonoperating expense (income)


�
500

�
500

�


�
(754
)
�
500

�
500

�


�
�
Non-center specific operating expenses and other
5,628


7,987


7,995


6,357



14,587


18,503


18,781


21,773

�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
NOI - all centers at 100%
163,725

�
166,476

�
166,484

�
162,492

�
489,476

�
490,515

�
490,793

�
470,704


�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
Less - NOI of non-comparable centers
698

(1)
(6,360
)
(2)
(1,781
)
(3)
(2,487
)
(4
)
(174
)
(5
)
(19,392
)
(2)
(7,306
)
(3)
(5,842
)
(4)
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
NOI at 100% - comparable centers
164,423

�
160,116

�
164,703

�
160,005

�
489,302

�
471,123

�
483,487

�
464,862

�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
NOI - growth %
2.7
%
�
�
�
2.9
%
�
�
�
3.9
%
�
�
�
4.0
%
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
NOI at 100% - comparable centers
164,423

�
160,116

�
164,703

�
160,005

�
489,302

�
471,123

�
483,487

�
464,862

�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
Lease cancellation income
(1,126
)
�
(761
)
�
(741
)
�
(1,076
)
�
(7,375
)
�
(3,027
)
�
(3,007
)
�
(3,015
)
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
NOI at 100% - comparable centers excluding lease cancellation income
163,297

�
159,355

�
163,962

�
158,929

�
481,927

�
468,096

�
480,480

�
461,847

�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
NOI excluding lease cancellation income - growth %
2.5
%
�
�
�
3.2
%
�
�
�
3.0
%
�
�
�
4.0
%
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
NOI at 100% excluding lease cancellation income - post-sale portfolio growth % (6)
2.8
%
�
�
�
�
�
�
�
3.1
%
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
(1
)
Includes Taubman Prestige Outlets Chesterfield.
�
�
�
�
�
�
�
�
�
�
�
�
�
(2
)
Includes Arizona Mills and Taubman Prestige Outlets Chesterfield
�
�
�
�
�
�
�
�
�
�
�
�
�
(3
)
Includes City Creek Center and Taubman Prestige Outlets Chesterfield.
�
�
�
�
�
�
(4
)
Includes City Creek Center.
�
�
�
�
�
�
�
�
�
�
�
�
�
(5
)
Includes Taubman Prestige Outlets Chesterfield and Arizona Mills for the approximately one-month period prior to its disposition.
�
�
�
�
�
�
�
�
�
�
�
�
�
(6
)
In addition to non-comparable centers excluded above, excludes NOI of Fairlane Town Center, MacArthur Center, Northlake Mall, The Mall at Partridge Creek, Stony Point Fashion Park, The Mall at Wellington Green, and The Shops at Willow Bend.
�


Taubman Centers/13

TAUBMAN CENTERS, INC.
�
�
Table 8 - Balance Sheets
�
As of September 30, 2014 and December 31, 2013
�(in thousands of dollars)
�
�
�
�
�
�
�
As of
�
�
�
�
�
September�30, 2014
�
December�31, 2013

Consolidated Balance Sheet of Taubman Centers, Inc. (1) :
�
�
�
�
�
�
�
�
�
�
�
�
Assets:
�
�
�
�
�
Properties
�
3,143,649

�
4,485,090

�
Accumulated depreciation and amortization
�
(951,736
)
�
(1,516,982
)
�
�
�
�
�
2,191,913

�
2,968,108

�
Investment in Unconsolidated Joint Ventures
�
361,729

�
327,692

�
Cash and cash equivalents
�
45,725

�
40,993

�
Restricted cash
�
43,258

�
5,046

�
Accounts and notes receivable, net
�
38,187

�
73,193

�
Accounts receivable from related parties
�
2,258

�
1,804

�
Deferred charges and other assets
�
149,042

�
89,386

�
Assets of centers held for sale (2)
�
780,063

�
�
�
�
�
�
�
3,612,175

�
3,506,222

Liabilities:
�
�
�
�
�
Notes payable
�
2,015,999

�
3,058,053

�
Accounts payable and accrued liabilities
�
275,211

�
292,280

�
Distributions in excess of investments in and net income of
�
�
�
�
�
Unconsolidated Joint Ventures
�
401,809

�
371,549

�
Liabilities of centers held for sale (2)
�
652,068

�
�
�
�
�
3,345,087

�
3,721,882

Equity:
�
�
�
�
�
Taubman Centers, Inc. Shareowners' Equity:
�
�
�
�
�
�
Series B Non-Participating Convertible Preferred Stock
�
25

�
25

�
�
Series J Cumulative Redeemable Preferred Stock
�
�
�
�
�
�
Series K Cumulative Redeemable Preferred Stock
�
�
�
�
�
�
Common Stock
�
633

�
631

�
�
Additional paid-in capital
�
809,071

�
796,787

�
�
Accumulated other comprehensive income (loss)
�
(9,258
)
�
(8,914
)
�
�
Dividends in excess of net income
�
(587,291
)
�
(908,656
)
�

�
213,180

�
(120,127
)
�
Noncontrolling interests:
�
�
�
�
�
�
Noncontrolling interests in consolidated joint ventures
�
(17,790
)
�
(37,191
)
�
�
Noncontrolling interests in partnership equity of TRG
�
71,698

�
(58,342
)
�
�
�
�
53,908

�
(95,533
)
�
�
�
�
267,088

�
(215,660
)
�
�
�
�
3,612,175

�
3,506,222

�
�
�
�
�
Combined Balance Sheet of Unconsolidated Joint Ventures (1)(3):
�
�
�
�
Assets:
�
�
�
�
�
Properties
�
1,517,439

�
1,305,658

�
Accumulated depreciation and amortization
�
(539,451
)
�
(478,820
)
�
�
�
�
�
977,988

�
826,838

�
Cash and cash equivalents
�
28,763

�
28,782

�
Accounts and notes receivable, net
�
29,399

�
33,626

�
Deferred charges and other assets
�
31,740

�
28,095

�
�
�
�
�
1,067,890

�
917,341

Liabilities:
�
�
�
�
�
Notes payable
�
1,785,602

�
1,551,161

�
Accounts payable and other liabilities
�
73,889

�
70,226

�
�
�
�
�
1,859,491

�
1,621,387

Accumulated Deficiency in Assets:
�
�
�
�
�
Accumulated deficiency in assets - TRG
�
(448,523
)
�
(406,266
)
�
Accumulated deficiency in assets - Joint Venture Partners
�
(333,220
)
�
(285,904
)
�
Accumulated other comprehensive income (loss) - TRG
�
(4,929
)
�
(5,938
)
�
Accumulated other comprehensive income (loss) - Joint Venture Partners
�
(4,929
)
�
(5,938
)
�
�
�
�
�
(791,601
)
�
(704,046
)
�
�
�
�
�
1,067,890

�
917,341

�
�
�
�
�
�
�
�
(1)
International Plaza was consolidated in the Company's balance sheet as of December 31, 2013 but is an Unconsolidated Joint Venture as of September 30, 2014 as a result of the January 2014 disposition of interests.
�
(2)
Includes the assets and liabilities of the shopping centers included in the sale to Starwood Capital Group in October 2014.
(3)
Unconsolidated Joint Venture amounts exclude the balances of entities that own interests in Asia projects that are currently under development.


Taubman Centers/14

TAUBMAN CENTERS, INC.
Table 9 - Annual Guidance
(all dollar amounts per common share on a diluted basis; amounts may not add due to rounding)
�
�
�
�
�
�
�
�
�
�
Range for Year Ended
�
�
December 31, 2014
�
�
�
�
�
Adjusted Funds from Operations per common share
3.58

�
3.68

�
�
�
�
�
Debt extinguishment costs
(0.39
)
�
(0.39
)
�
�
�
�
�
Discontinuation of hedge accounting - MacArthur
(0.08
)
�
(0.08
)
�
�
�
�
�
Restructuring charge
(0.03
)
�
(0.03
)
�
�
�
�
�
Disposition costs related to the Starwood sale
(0.01
)
�
(0.01
)
�
�
�
�
�
Funds from Operations per common share
3.07

�
3.17

�
�
�
�
�
Gain on dispositions, net of tax (1)
11.95

�
11.95

�
�
�
�
�
Real estate depreciation - TRG (2)
(1.50
)
�
(1.45
)
�
�
�
�
�
Distributions to participating securities of TRG
(0.02
)
�
(0.02
)
�
�
�
�
�
Depreciation of TCO's additional basis in TRG
(0.11
)
�
(0.11
)
�
�
�
�
�
Net income attributable to common shareowners, per common share (EPS)
13.40

�
13.54

�
�
�
�
�
(1
)
During the nine months ended September 30, 2014, the Company recognized a gain (net of tax) of $476.9 million from dispositions of interests in International Plaza, Arizona Mills, and land in Syosset, New York related to the former Oyster Bay project. In the fourth quarter, the Company expects to recognize a gain of approximately $600 million, or $6.65 per share, related to the sale of centers to Starwood in October 2014. This represents an approximation of the Company's share of the gain that will be recorded on the sale of the centers. The actual gain recorded on the sale of centers to Starwood will be based on the balance sheets of the disposed centers at closing and be subject to final prorations and adjustments.
�
(2
)
Effective with the June 2014 announcement of the Starwood sale, the Company ceased recognizing depreciation on the property balances that are classified as held for sale.




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