-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Gy1899Z2hHY2uA2URUKYQBivZzT3qPMYmPtbAo0l+/zuosBPFsFSYp7/FUI4+oPR Cykc5MKfm+vBj/NLaC1VXw== 0000890319-03-000016.txt : 20030813 0000890319-03-000016.hdr.sgml : 20030813 20030813143249 ACCESSION NUMBER: 0000890319-03-000016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 20030630 FILED AS OF DATE: 20030813 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TAUBMAN CENTERS INC CENTRAL INDEX KEY: 0000890319 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 382933632 STATE OF INCORPORATION: MI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11530 FILM NUMBER: 03840580 BUSINESS ADDRESS: STREET 1: 200 E LONG LAKE RD STREET 2: SUITE 300 P O BOX 200 CITY: BLOOMFIELD HILLS STATE: MI ZIP: 48303-0200 BUSINESS PHONE: 2482586800 10-Q 1 form10q2q03.htm TAUBMAN CENTERS, INC. FORM 10-Q JUNE 30, 2003 Form 10Q2Q03

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended: June 30, 2003
Commission File No. 1-11530

Taubman Centers, Inc.
(Exact name of registrant as specified in its charter)


Michigan		38-2033632

(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)



200 East Long Lake Road, Suite 300, P.O. Box 200, Bloomfield Hills, Michigan	48303-0200

(Address of principal executive offices)	(Zip Code)

(248) 258-6800

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.


	Yes X.		No .

Indicate by a check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).


	Yes X.		No .

As of August 11, 2003, there were outstanding 49,343,395 shares of the Company’s common stock, par value $0.01 per share.

PART 1. FINANCIAL INFORMATION

Item 1. Financial Statements.

The following consolidated financial statements of Taubman Centers, Inc. (the Company) are provided pursuant to the requirements of this item.


Consolidated Balance Sheet as of June 30, 2003 and December 31, 2002		2
Consolidated Statement of Operations and Comprehensive Income for the three months ended June 30, 2003 and 2002		3
Consolidated Statement of Operations and Comprehensive Income for the six months ended June 30, 2003 and 2002		4
Consolidated Statement of Cash Flows for the six months ended June 30, 2003 and 2002		5
Notes to Consolidated Financial Statements		6

TAUBMAN CENTERS, INC.

CONSOLIDATED BALANCE SHEET
(in thousands, except share data)


	June 30 2003			December 31 2002
Assets:
Properties	$	2,601,989		$	2,533,530
Accumulated depreciation and amortization		(440,524	)		(404,566	)

	$	2,161,465		$	2,128,964
Cash and cash equivalents		29,015			32,502
Accounts and notes receivable, less allowance
for doubtful accounts of $6,533 and $6,002 in
2003 and 2002		30,843			32,416
Accounts and notes receivable from related parties (Note 5)		2,467			3,887
Deferred charges and other assets		42,582			40,536

	$	2,266,372		$	2,238,305


Liabilities:
Notes payable	$	1,592,990		$	1,543,693
Accounts payable and accrued liabilities		229,387			240,811
Dividends and distributions payable		13,001			13,746
Distributions in excess of net income of (investment in)
Unconsolidated Joint Ventures (Note 4)		5,577			(31,402	)

	$	1,840,955		$	1,766,848

Commitments and Contingencies (Note 8)

Preferred Equity of TRG (Note 1)	$	97,275		$	97,275

Partners' Equity of TRG allocable to minority partners (Note 1)

Shareowners' Equity:
Series A Cumulative Redeemable Preferred Stock,
$0.01 par value, 8,000,000 shares authorized,
$200 million liquidation preference,
8,000,000 shares issued and outstanding at
June 30, 2003 and December 31, 2002	$	80		$	80
Series B Non-Participating Convertible Preferred Stock,
$0.001 par and liquidation value, 40,000,000 shares
authorized and 31,784,842 and 31,767,066 shares issued
and outstanding at June 30, 2003 and December 31, 2002		32			32
Series C Cumulative Redeemable Preferred Stock,
$0.01 par value, 2,000,000 shares authorized, $75 million
liquidation preference, none issued
Series D Cumulative Redeemable Preferred Stock,
$0.01 par value, 250,000 shares authorized, $25 million
liquidation preference, none issued
Common Stock, $0.01 par value, 250,000,000 shares
authorized, 49,343,395 and 52,207,756 issued and
outstanding at June 30, 2003 and December 31, 2002		493			522
Additional paid-in capital		690,159			690,387
Accumulated other comprehensive income		(16,562	)		(17,485	)
Dividends in excess of net income		(346,060	)		(299,354	)

	$	328,142		$	374,182

	$	2,266,372		$	2,238,305

See notes to consolidated financial statements.

TAUBMAN CENTERS, INC.

CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
(in thousands, except share data)


	Three Months Ended June 30
	2003			2002
Income:
Minimum rents	$	52,075		$	46,739
Percentage rents		340			629
Expense recoveries		34,221			29,621
Revenues from management, leasing and
development services		5,571			5,735
Other		5,819			7,347

	$	98,026		$	90,071

Operating Expenses:
Recoverable expenses	$	29,828		$	25,905
Other operating		9,319			6,351
Charge related to technology investments					8,125
Costs related to unsolicited tender offer (Note 8)		9,163
Management, leasing and development services		5,513			5,151
General and administrative		6,297			5,445
Interest expense		22,067			20,764
Depreciation and amortization		22,252			20,218

	$	104,439		$	91,959

Loss before equity in income of Unconsolidated
Joint Ventures, discontinued operations, and minority
and preferred interests	$	(6,413	)	$	(1,888	)
Equity in income of Unconsolidated Joint Ventures (Note 4)		8,282			4,740

Income before discontinued operations and minority and
preferred interests	$	1,869		$	2,852
Discontinued operations (Note 2):
Income from operations					979
Gain on disposition of interests in centers					9,975

Income before minority and preferred interests	$	1,869		$	13,806
Minority interest in consolidated joint ventures		242			435
Minority interest in TRG:
TRG (income) loss allocable to minority partners		965			(4,997	)
Distributions in excess of earnings allocable to minority partners		(9,794	)		(3,148	)
TRG Series C and D preferred distributions (Note 1)		(2,250	)		(2,250	)

Net income (loss)	$	(8,968	)	$	3,846
Series A preferred dividends		(4,150	)		(4,150	)

Net income (loss) allocable to common shareowners	$	(13,118	)	$	(304	)


Net income (loss)	$	(8,968	)	$	3,846
Other comprehensive income (loss):
Unrealized gain (loss) on interest rate instruments		(392	)		(6,508	)
Reclassification adjustment for amounts recognized in net income		164			176

Comprehensive income (loss)	$	(9,196	)	$	(2,486	)


Basic and diluted income (loss) per common share (Note 9):
Income (loss) from continuing operations	$	(0.26	)	$	(0.11	)

Net income (loss)	$	(0.26	)	$	(0.01	)


Cash dividends declared per common share	$	.26		$	.255


Weighted average number of common shares outstanding		50,142,939			51,076,901

See notes to consolidated financial statements.

TAUBMAN CENTERS, INC.

CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
(in thousands, except share data)


	Six Months Ended June 30
	2003			2002
Income:
Minimum rents	$	104,918		$	93,489
Percentage rents		1,526			1,694
Expense recoveries		66,447			57,396
Revenues from management, leasing and
development services		10,363			10,863
Other		16,831			13,251

	$	200,085		$	176,693

Operating Expenses:
Recoverable expenses	$	58,498		$	49,291
Other operating		18,858			16,307
Charge related to technology investments					8,125
Costs related to unsolicited tender offer (Note 8)		19,012
Management, leasing and development services		10,061			10,044
General and administrative		12,237			10,365
Interest expense		44,579			41,393
Depreciation and amortization		45,768			40,921

	$	209,013		$	176,446

Income (loss) before equity in income of Unconsolidated
Joint Ventures, discontinued operations, and minority
and preferred interests	$	(8,928	)	$	247
Equity in income of Unconsolidated Joint Ventures (Note 4)		18,685			10,877

Income before discontinued operations and minority and
preferred interests	$	9,757		$	11,124
Discontinued operations (Note 2):
Income from operations					2,723
Gain on disposition of interests in centers					12,024

Income before minority and preferred interests	$	9,757		$	25,871
Minority interest in consolidated joint ventures		90			646
Minority interest in TRG:
TRG income allocable to minority partners		(242	)		(9,537	)
Distributions in excess of earnings allocable to minority partners		(17,054	)		(6,768	)
TRG Series C and D preferred distributions (Note 1)		(4,500	)		(4,500	)

Net income (loss)	$	(11,949	)	$	5,712
Series A preferred dividends		(8,300	)		(8,300	)

Net income (loss) allocable to common shareowners	$	(20,249	)	$	(2,588	)


Net income (loss)	$	(11,949	)	$	5,712
Other comprehensive income (loss):
Change in fair value of available-for-sale securities		(50	)
Unrealized gain (loss) on interest rate instruments		645			(6,335	)
Reclassification adjustment for amounts recognized in net income		328			352

Comprehensive income (loss)	$	(11,026	)	$	(271	)


Basic income (loss) per common share (Note 9):
Income (loss) from continuing operations	$	(0.40	)	$	(0.17	)

Net income (loss)	$	(0.40	)	$	(0.05	)


Diluted income (loss) per common share (Note 9):
Income (loss) from continuing operations	$	(0.40	)	$	(0.17	)

Net income (loss)	$	(0.40	)	$	(0.06	)


Cash dividends declared per common share	$	.52		$	.51


Weighted average number of common shares outstanding		51,180,513			50,980,530

See notes to consolidated financial statements.

TAUBMAN CENTERS, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)


	Six Months Ended June 30
	2003			2002
Cash Flows from Operating Activities:
Income before minority and preferred interests	$	9,757		$	25,871
Adjustments to reconcile income before
minority and preferred interests to net cash
provided by operating activities:
Depreciation and amortization of continuing operations		45,768			40,921
Depreciation and amortization of discontinued operations					461
Charge related to technology investments					8,125
Provision for losses on accounts receivable		2,536			1,768
Gains on sales of land		(957	)		(4,246	)
Gain on disposition of interests in centers					(12,024	)
Other		2,202			2,026
Increase (decrease) in cash attributable to changes
in assets and liabilities:
Receivables, deferred charges and other assets		(3,014	)		2,702
Accounts payable and other liabilities		(822	)		(9,800	)

Net Cash Provided By Operating Activities	$	55,470		$	55,804


Cash Flows from Investing Activities:
Additions to properties	$	(82,398	)	$	(62,410	)
Proceeds from sales of land		1,344			6,070
Investment in technology business					(4,090	)
Net proceeds from disposition of interests in centers					76,446
Acquisition of interests in Joint Ventures		(3,223	)		(45,203	)
Distributions from Unconsolidated Joint Ventures in excess
of income		37,167			20,103

Net Cash Used In Investing Activities	$	(47,110	)	$	(9,084	)


Cash Flows from Financing Activities:
Debt proceeds	$	379,398		$	49,065
Debt payments		(330,101	)		(6,776	)
Debt issuance costs		(2,651	)
Distributions to minority and preferred interests		(21,796	)		(18,555	)
Issuance of stock pursuant to Continuing Offer		1,529			4,515
Issuance of partnership units (Note 10)		50,000
Repurchase of common stock (Note 10)		(52,762	)
Cash dividends to Series A preferred shareowners		(8,300	)		(4,150	)
Cash dividends to common shareowners		(27,164	)		(25,950	)

Net Cash Used In Financing Activities	$	(11,847	)	$	(1,851	)


Net Increase (Decrease) in Cash and Cash Equivalents	$	(3,487	)	$	44,869

Cash and Cash Equivalents at Beginning of Period		32,502			27,789


Cash and Cash Equivalents at End of Period	$	29,015		$	72,658

See notes to consolidated financial statements.

TAUBMAN CENTERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – Interim Financial Statements

Taubman Centers, Inc. (the Company or TCO), a real estate investment trust, or REIT, is the managing general partner of The Taubman Realty Group Limited Partnership (the Operating Partnership or TRG). The Operating Partnership is an operating subsidiary that engages in the ownership, management, leasing, acquisition, development, and expansion of regional retail shopping centers and interests therein. The Operating Partnership’s owned portfolio as of June 30, 2003 included 20 urban and suburban shopping centers in nine states. Another center will open on September 18, 2003 in Virginia, while an additional center in North Carolina is scheduled to begin construction in October.

The consolidated financial statements of the Company include all accounts of the Company, the Operating Partnership and its consolidated subsidiaries, including The Taubman Company LLC (the Manager); all intercompany transactions have been eliminated. Investments in entities not unilaterally controlled by ownership or contractual obligation (Unconsolidated Joint Ventures) are accounted for under the equity method.

At June 30, 2003, the Operating Partnership’s equity included three classes of preferred equity (Series A, C, and D) and the net equity of the partnership unitholders. Net income and distributions of the Operating Partnership are allocable first to the preferred equity interests, and the remaining amounts to the general and limited partners in the Operating Partnership in accordance with their percentage ownership. The Series A Preferred Equity is owned by the Company and is eliminated in consolidation. The Series C and Series D Preferred Equity are owned by institutional investors and have a fixed 9% coupon rate, no stated maturity, sinking fund, or mandatory redemption requirements. The Company, beginning in September 2004 and November 2004, can redeem the Series C and Series D Preferred Equity, respectively.

Because the net equity of the Operating Partnership unitholders is less than zero, the interest of the noncontrolling unitholders is presented as a zero balance in the consolidated balance sheet as of June 30, 2003 and December 31, 2002. The income allocated to the noncontrolling unitholders is equal to their share of distributions. The net equity of the Operating Partnership is less than zero because of accumulated distributions in excess of net income and not as a result of operating losses. Distributions to partners are usually greater than net income because net income includes non-cash charges for depreciation and amortization.

The Company’s ownership in the Operating Partnership at June 30, 2003 consisted of a 59% managing general partnership interest, as well as the Series A Preferred Equity interest. The Company’s average ownership percentage in the Operating Partnership for the six months ended June 30, 2003 and 2002 was 61% and 62%, respectively. At June 30, 2003, the Operating Partnership had 83,211,570 units of partnership interest outstanding, of which the Company owned 49,343,395. Included in the total units outstanding are 87,028 units issued in connection with the 1999 acquisition of Lord Associates that currently do not receive allocations of income or distributions, and 2,083,333 non-voting units issued in May 2003 (Note 10).

The unaudited interim financial statements should be read in conjunction with the audited financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2002. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the financial statements for the interim periods have been made. The results of interim periods are not necessarily indicative of the results for a full year.

Dollar amounts presented in tables within the notes to the financial statements are stated in thousands, except share data or as otherwise noted.

Certain prior year amounts have been reclassified to conform to 2003 classifications.

Note 2 — Acquisitions and Dispositions

In July 2003, the Company acquired an additional interest in MacArthur Center (Note 13).

In March 2003, the Company acquired the 15% minority interest in Great Lakes Crossing for $3.2 million in cash, pursuant to a favorable pricing formula pre-established in the partnership agreement, bringing its ownership in the center to 100%. The Company has not yet finalized its allocations of the purchase price to the tangible and identifiable intangible assets and liabilities acquired.

TAUBMAN CENTERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

In October 2002, the Company acquired Swerdlow Real Estate Group’s (Swerdlow’s) 50% interest in Dolphin Mall, bringing its ownership in the shopping center to 100%. In May 2002, the Company acquired a 50% general partnership interest in SunValley Associates, a California general partnership that owns the Sunvalley shopping center located in Concord, California. Also in May 2002, the Company purchased an additional interest in Arizona Mills, bringing its interest in the center to 50%, and sold its interest in Paseo Nuevo. In March 2002, the Company sold its interest in La Cumbre Plaza.

Effective January 1, 2002, the Company adopted FASB Statement No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” In accordance with this statement, the Company has separately presented the results of Paseo Nuevo and La Cumbre Plaza as discontinued operations in 2002.

Note 3 – Income Taxes

The Company’s Taxable REIT Subsidiaries are subject to corporate level income taxes, which are provided for in the Company’s financial statements. The Company’s deferred tax assets and liabilities reflect the impact of temporary differences between the amounts of assets and liabilities for financial reporting purposes and the bases of such assets and liabilities as measured by tax laws. Deferred tax assets are reduced, if necessary, by a valuation allowance to the amount where realization is more likely than not assured after considering all available evidence. The Company’s temporary differences primarily relate to deferred compensation and depreciation. During the six months ended June 30, 2003, the Company’s federal income tax expense was zero as a result of a net operating loss incurred from its Taxable REIT Subsidiaries. As of June 30, 2003, the Company had a net deferred tax asset of $3.9 million, after a valuation allowance of $10.0 million.

Note 4 — Investments in Unconsolidated Joint Ventures

Following are the Company’s investments in Unconsolidated Joint Ventures. The Operating Partnership is the managing general partner or managing member in these Unconsolidated Joint Ventures, except for those denoted with an (*).


Unconsolidated Joint Venture	Shopping Center	Ownership as of June 30, 2003
Arizona Mills, L.L.C. *	Arizona Mills	50	%
Fairfax Company of Virginia, L.L.C	Fair Oaks	50
Forbes Taubman Orlando, L.L.C. *	The Mall at Millenia	50
Rich-Taubman Associates	Stamford Town Center	50
SunValley Associates	Sunvalley	50
Tampa Westshore Associates	International Plaza	26
Limited Partnership
Taubman-Cherry Creek	Cherry Creek	50
Limited Partnership
West Farms Associates	Westfarms	79
Woodland	Woodland	50

As of June 30, 2003, the Operating Partnership has a preferred investment in International Plaza of $15 million, on which an annual preferential return of 8.25% will accrue. In addition to the preferred return on its investment, the Operating Partnership will receive a return of its preferred investment before any available cash will be utilized for distributions to non-preferred partners.

The Company’s carrying value of its Investment in Unconsolidated Joint Ventures differs from its share of the deficiency in assets reported in the combined balance sheet of the Unconsolidated Joint Ventures due to (i) the Company’s cost of its investment in excess of the historical net book values of the Unconsolidated Joint Ventures and (ii) the Operating Partnership’s cost of its investment in excess of the historical net book values of Unconsolidated Joint Ventures, and other adjustments to the book basis, including intercompany profits on sales of services that are capitalized by the Unconsolidated Joint Ventures. The Company’s additional basis allocated to depreciable assets is recognized on a straight-line basis over 40 years. The Operating Partnership’s differences in bases are amortized over the useful lives of the related assets. The net investment in Unconsolidated Joint Ventures is less than zero because of accumulated distributions in excess of net income and not as a result of operating losses.

TAUBMAN CENTERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Combined balance sheet and results of operations information are presented in the following table (in thousands) for the Unconsolidated Joint Ventures, followed by the Operating Partnership’s beneficial interest in the combined information. TRG’s basis adjustments as of June 30, 2003 and December 31, 2002 include $73 million in both periods related to the acquisition of an interest in Sunvalley. Also included in TRG’s basis adjustments as of June 30, 2003 and December 31, 2002 is $10 million and $11 million, respectively, related to the acquisition of an additional interest in Arizona Mills. These amounts are being depreciated over the useful lives of the underlying assets. Beneficial interest is calculated based on the Operating Partnership’s ownership interest in each of the Unconsolidated Joint Ventures. The accounts of Dolphin Mall, formerly a 50% Unconsolidated Joint Venture, are included in these results through the date of its acquisition (Note 2).


	June 30 2003			December 31 2002
Assets:
Properties	$	1,250,140		$	1,248,335
Accumulated depreciation and amortization		(309,278	)		(287,670	)

	$	940,862		$	960,665
Cash and cash equivalents		20,697			37,576
Accounts and notes receivable		18,479			16,487
Deferred charges and other assets		36,285			31,668

	$	1,016,323		$	1,046,396

Liabilities and accumulated deficiency in assets:
Notes payable	$	1,350,661		$	1,289,739
Accounts payable and other liabilities		66,326			91,596
TRG's accumulated deficiency in assets		(224,619	)		(191,152	)
Unconsolidated Joint Venture Partners'
accumulated deficiency in assets		(176,045	)		(143,787	)

	$	1,016,323		$	1,046,396


TRG's accumulated deficiency in assets (above)	$	(224,619	)	$	(191,152	)
TRG basis adjustments, including elimination of
intercompany profit		98,315			100,307
TCO's additional basis		120,727			122,247

(Distributions in excess of net income of) Investment in
Unconsolidated Joint Ventures	$	(5,577	)	$	31,402


	Three Months Ended June 30						Six Months Ended June 30

	2003			2002			2003			2002

Revenues	$	79,840		$	69,202		$	159,221		$	133,887

Recoverable and other operating expenses	$	29,464		$	27,754		$	56,554		$	50,155
Interest expense		20,936			19,550			40,656			37,732
Depreciation and amortization		14,321			12,990			27,506			26,941

Total operating costs	$	64,721		$	60,294		$	124,716		$	114,828

Net income	$	15,119		$	8,908		$	34,505		$	19,059


Net income allocable to TRG	$	8,015		$	5,049		$	18,312		$	10,636
Realized intercompany profit and depreciation
of TRG's additional basis		1,027			450			1,893			1,759
Depreciation of TCO's additional basis		(760	)		(759	)		(1,520	)		(1,518	)

Equity in income of Unconsolidated Joint Ventures	$	8,282		$	4,740		$	18,685		$	10,877


Beneficial interest in Unconsolidated Joint Ventures'
operations:
Revenues less recoverable and other operating
expenses	$	28,121		$	22,193		$	57,429		$	46,875
Interest expense		(10,953	)		(9,771	)		(21,293	)		(18,794	)
Depreciation and amortization		(8,886	)		(7,682	)		(17,451	)		(17,204	)

Equity in income of Unconsolidated Joint Ventures	$	8,282		$	4,740		$	18,685		$	10,877

TAUBMAN CENTERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Note 5 – Accounts Receivable from Related Parties

Accounts receivable from related parties include amounts due from Unconsolidated Joint Ventures or other affiliates of the Company, primarily relating to services performed by the Manager. These receivables include certain amounts due to the Manager related to reimbursement of third-party (non-affiliated) costs. In April 2003, the Operating Partnership, as required by a new law, paid certain state taxes on behalf of its non-officer partners, which will be reimbursed by the partners by the end of 2003. As of June 30, 2003, the balance of this receivable was $0.7 million.

Note 6 – Beneficial Interest in Debt and Interest Expense

In June 2003, the Company completed a $150 million refinancing of the $182 million existing construction loan on The Shops at Willow Bend. The loan carries an all-in floating rate of LIBOR plus 2.9% including fees and matures in July 2006, with an option to extend for up to an additional two years. Proceeds were used to pay off the construction financing at the center. The Company also used existing lines of credit to pay down the original loan. Proceeds of $8 million and a letter of credit for $10.25 million were held in escrow for future tenant allowance, leasing, and property tax costs. In addition, the Company expects to complete a $12 million loan during the third quarter to refinance the peripheral land at the center.

In March 2003, the Company closed on a $210 million ten-year non-recourse refinancing of the $156 million outstanding balance of the existing construction loan on The Mall at Millenia at an all-in rate of 5.5%. Proceeds of $10.5 million were held in escrow for future tenant allowances. The Company used its $21 million share of distributed proceeds to pay down lines of credit.

In February 2003, the Company completed a $151 million ten-year fixed-rate non-recourse refinancing of the existing $143 million loan on Great Lakes Crossing at an all-in rate of 5.3%. The Company used its $6.2 million share of excess proceeds to pay down lines of credit.

Payments of principal and interest on the loans in the following table are guaranteed by the Operating Partnership as of June 30, 2003. All of the loan agreements, with the exception of The Shops at Willow Bend, provide for a reduction of the amounts guaranteed as certain center performance and valuation criteria are met.


Center	Loan balance as of 6/30/03	TRG's beneficial interest in loan balance as of 6/30/03	Amount of loan balance guaranteed by TRG as of 6/30/03	% of loan balance guaranteed by TRG		% of interest guaranteed by TRG
	(in millions of dollars)
Dolphin Mall	163.5	163.5	81.7	50	%	100	%
Stony Point Fashion Park	59.6	59.6	59.6	100		100
The Mall at Millenia - term loan	2.7	1.3	1.3	50		50
The Mall at Wellington Green	149.2	134.3	149.2	100		100
The Shops at Willow Bend	150.0	150.0	150.0	100		100

The Operating Partnership’s beneficial interest in the debt, capitalized interest, and interest expense of its consolidated subsidiaries and its Unconsolidated Joint Ventures is summarized in the following table. The Operating Partnership’s beneficial interest in consolidated subsidiaries excludes debt and interest relating to the minority interests in MacArthur Center (30% at June 30, 2003, Note 13), The Mall at Wellington Green, and prior to March 2003, Great Lakes Crossing (Note 2).


	At 100%		At Beneficial Interest

	Consolidated Subsidiaries	Unconsolidated Joint Ventures	Consolidated Subsidiaries	Unconsolidated Joint Ventures	Total

Debt as of:
June 30, 2003	$1,592,990	$1,350,661	$1,535,638	$690,820	$2,226,458
December 31, 2002	1,543,693	1,289,739	1,465,185	660,238	2,125,423

Capitalized Interest:
Six months ended June 30, 2003	$ 4,929		$ 4,832		$ 4,832
Six months ended June 30, 2002	2,571	$ 2,033	2,516	$ 1,017	3,533

Interest Expense:
Six months ended June 30, 2003	$ 44,579	$ 40,656	$ 42,473	$ 21,293	$ 63,766
Six months ended June 30, 2002	41,393	37,732	38,916	18,794	57,710

TAUBMAN CENTERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

Note 7 – Incentive Option Plan

The Operating Partnership has an incentive option plan for employees of the Manager. Incentive options generally become exercisable to the extent of one-third of the units on each of the third, fourth, and fifth anniversaries of the date of grant. Options expire ten years from the date of grant. The Operating Partnership’s units issued in connection with the incentive option plan are exchangeable for shares of the Company’s common stock under the Continuing Offer (Note 8).

There were options for 125,415 units exercised during the six months ended June 30, 2003 at an average exercise price of $12.20 per unit. During the six months ended June 30, 2002, options for 386,156 units were exercised at a weighted average price of $11.69 per unit. There were no options granted during the six months ended June 30, 2003 and 2002. As of June 30, 2003, there were options for 1.5 million units outstanding with a weighted average exercise price of $12.10 per unit, all of which were vested.

Currently, options for 3.7 million Operating Partnership units may be issued under the plan, including options outstanding for 1.5 million units. When the holder of an option elects to pay the exercise price by surrendering partnership units, only those units issued to the holder in excess of the number of units surrendered are counted for purposes of determining the remaining number of units available for future grants under the plan.

In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure, an amendment of FASB Statement No. 123". This Statement amends FASB Statement No. 123, “Accounting for Stock-Based Compensation”, to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this Statement amends the disclosure requirements of Statement 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The Company has determined that it will apply the prospective method of implementing SFAS No. 148, and apply its expense recognition provisions to all employee awards granted, modified, or settled after January 1, 2003. During the six months ended June 30, 2003, there would have been no additional compensation expense if the Company applied the fair value method of SFAS No. 148 to its existing options, as all are vested. The effect of applying this method for the six months ended June 30, 2002 would be immaterial.

Note 8 — Commitments and Contingencies

At the time of the Company’s initial public offering (IPO) and acquisition of its partnership interest in the Operating Partnership, the Company entered into an agreement (the Cash Tender Agreement) with A. Alfred Taubman, who owns an interest in the Operating Partnership, whereby he has the annual right to tender to the Company units of partnership interest in the Operating Partnership (provided that the aggregate value is at least $50 million) and cause the Company to purchase the tendered interests at a purchase price based on a market valuation of the Company on the trading date immediately preceding the date of the tender. The Company will have the option to pay for these interests from available cash, borrowed funds, or from the proceeds of an offering of the Company’s common stock. Generally, the Company expects to finance these purchases through the sale of new shares of its stock. The tendering partner will bear all market risk if the market price at closing is less than the purchase price and will bear the costs of sale. Any proceeds of the offering in excess of the purchase price will be for the sole benefit of the Company. At A. Alfred Taubman’s election, his family and certain others may participate in tenders. Based on a market value at June 30, 2003 of $19.16 per common share, the aggregate value of interests in the Operating Partnership that may be tendered under the Cash Tender Agreement was approximately $473 million. The purchase of these interests at June 30, 2003 would have resulted in the Company owning an additional 30% interest in the Operating Partnership.

The Company has made a continuing, irrevocable offer to all present holders (other than certain excluded holders, including A. Alfred Taubman), assignees of all present holders, those future holders of partnership interests in the Operating Partnership as the Company may, in its sole discretion, agree to include in the continuing offer, and all existing and future optionees under the Operating Partnership’s incentive option plan to exchange shares of common stock for partnership interests in the Operating Partnership (the Continuing Offer). Under the Continuing Offer agreement, one unit of partnership interest is exchangeable for one share of the Company’s common stock.

TAUBMAN CENTERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

In the fall of 2002, the Company received an unsolicited proposal from Simon Property Group, Inc. (SPG) seeking to acquire control of the Company. The proposal was subsequently revised. Thereafter, a tender offer was commenced by SPG and later joined by a subsidiary of Westfield America Trust (Westfield). The Company’s Board of Directors has rejected the proposal and recommended that the Company’s shareholders not tender their shares pursuant to SPG’s and Westfield’s tender offer. SPG has filed suit against the Company to enjoin the voting of the Company’s Series B Non-Participating Convertible Preferred Stock based on a variety of legal theories. The Company believes SPG’s claims to be without merit.

On May 8, 2003 the Court dismissed SPG’s challenge to the 1998 restructuring of the Company and denied SPG’s contention that the Company’s Board improperly rejected the tender offer. The Court entered an order preliminarily enjoining (i) the voting of the shares owned by the members of the Taubman family (owners of over 30% of the Company) and certain other shareholders of the Company (owners of approximately 3% of the Company), and (ii) the enforcement of amendments to the Company’s By-laws adopted on December 20, 2002 setting the procedures for the calling of a special meeting of shareholders.

The Judge’s Order was stayed pending the Company’s appeal of that portion of the Order relating to the voting of the shares owned by members of the Taubman family and certain other shareholders of the Company and the enforcement of the December 20, 2002 amendments to the Company’s By-laws. The United States Court of Appeals has agreed to hear the Company’s appeal on an expedited basis. Briefs have been filed with the Court of Appeals and the Company is awaiting the Court’s scheduling of oral arguments.

During the six months ended June 30, 2003, the Company incurred approximately $19.0 million in costs in connection with the unsolicited tender offer and related litigation and expects to continue incurring significant costs until these matters are resolved. Although the Company expects that costs related to the unsolicited tender offer will be lower in the second half of the year, the ultimate cost will be dependent upon the outcome and duration of these matters. The Company is currently pursuing recovery of a portion of these costs under its Directors and Officers Liability Insurance. The timing and the amount of the reimbursement, which will be significantly less than the total costs incurred in connection with the unsolicited tender offer and related litigation, cannot be determined at this time.

The Company is currently involved in certain litigation arising in the ordinary course of business. Management believes that this litigation will not have a material adverse effect on the Company’s financial statements.

Refer to Note 6 for the Operating Partnership’s guarantees of certain debt.

Note 9 — Earnings Per Share

Basic earnings per common share are calculated by dividing earnings available to common shareowners by the average number of common shares outstanding during each period. For diluted earnings per common share, the Company’s ownership interest in the Operating Partnership (and therefore earnings) is adjusted assuming the exercise of all options for units of partnership interest under the Operating Partnership’s incentive option plan having exercise prices less than the average market value of the units using the treasury stock method. There were no options excluded from the computation of diluted earnings per share for the three and six months ended June 30, 2003 and June 30, 2002.


	Three Months Ended June 30						Six Months Ended June 30

	2003			2002			2003			2002
Income (loss) from continuing operations allocable to
common shareowners (Numerator):
Net income (loss) allocable to common shareowners	$	(13,118	)	$	(304	)	$	(20,249	)	$	(2,588	)
Common shareowners' share of discontinued
operations					(5,477	)					(6,252	)

Basic income (loss) from continuing operations	$	(13,118	)	$	(5,781	)	$	(20,249	)	$	(8,840	)
Effect of dilutive options					(5	)		(64	)		(42	)

Diluted income (loss) from continuing operations	$	(13,118	)	$	(5,786	)	$	(20,313	)	$	(8,882	)


Shares (Denominator) - basic and diluted		50,142,939			51,076,901			51,180,513			50,980,530


Income (loss) from continuing operations per
common share - basic and diluted	$	(0.26	)	$	(0.11	)	$	(0.40	)	$	(0.17	)


Per share effects of discontinued operations:
Basic				$	0.11					$	0.12

Diluted				$	0.10					$	0.12

TAUBMAN CENTERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Note 10 – Equity Transactions

In July 2003, additional partnership units were issued in connection with the acquisition of an additional interest in MacArthur Center (Note 13).

In May 2003, G.K. Las Vegas Limited Partnership, (Sheldon M. Gordon, along with his affiliates in their prior ownership of The Forum Shops at Caesars (Gordon)) invested $50 million in the Operating Partnership in exchange for 2.08 million partnership units at $24 per unit. These operating partnership units have the same attributes as existing partnership units, except that they do not have voting rights and have very limited resale rights for a specified period of time. An affiliate of Gordon owns the minority interest in Beverly Center.

In February 2003, the Company’s Board of Directors authorized the expansion of the existing buyback program to repurchase up to an additional $100 million of the Company’s common shares. The Company had $3 million remaining under its existing buyback program. Repurchases of common stock have been financed through general corporate funds, including funds received from the equity investment described above, and through borrowings under existing lines of credit. Through May 1, 2003, the Company repurchased approximately three million shares at an average cost of $17.75, for a total cost of $52.8 million. There have been no additional purchases since May 1, 2003.

Note 11 – Cash Flow Disclosures and Noncash Investing and Financing Activities

Interest on mortgage notes and other loans paid during the six months ended June 30, 2003 and 2002, net of amounts capitalized of $4.9 million and $2.6 million, was $41.8 million and $38.2 million, respectively. There were $1.0 million of Partnership units released during both the six months ended June 30, 2003 and June 30, 2002.

Note 12 – New Accounting Pronouncement

In May 2003, the FASB issued Statement No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity” (SFAS 150). This Statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. SFAS 150 is currently effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The Company is currently evaluating the effect of the adoption of SFAS 150 during the third quarter of 2003 on its consolidated financial statements.

Note 13 – Subsequent Event

In July 2003, the Company acquired an additional 25% interest in MacArthur Center, bringing its ownership in the shopping center to 95%, for $4.9 million in cash and 190,909 partnership units. Although the number of units issued was determined based on a negotiated value of $27.50 per unit, these units will be recorded based on the Company’s common share price of $19.48 as of the closing date of July 10, 2003.

Item 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains various “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 forward-looking statements represent the Company’s expectations or beliefs concerning future events, including the following: statements regarding future developments and joint ventures, rents and returns, statements regarding the continuation of trends and expectations regarding future income and expenses, and any statements regarding the sufficiency of the Company’s cash balances and cash generated from operating and financing activities for the Company’s future liquidity and capital resource needs. The Company cautions that although forward-looking statements reflect the Company’s good faith beliefs and best judgment based upon current information, these statements are qualified by important factors that could cause actual results to differ materially from those in the forward-looking statements, including those risks, uncertainties, and factors detailed from time to time in reports filed with the SEC, and in particular those set forth under the headings “General Risks of the Company” and “Environmental Matters” in the Company’s Annual Report on Form 10-K. The following discussion should be read in conjunction with the accompanying Consolidated Financial Statements of Taubman Centers, Inc. and the Notes thereto.

General Background and Performance Measurement

The Company owns a managing general partner’s interest in The Taubman Realty Group Limited Partnership (the Operating Partnership or TRG), through which the Company conducts all of its operations. The Operating Partnership owns, develops, acquires, and operates regional shopping centers nationally. The Consolidated Businesses consist of shopping centers that are controlled by ownership or contractual agreement, development projects for future regional shopping centers, and The Taubman Company LLC (the Manager). Shopping centers that are not controlled and that are owned through joint ventures with third parties (Unconsolidated Joint Ventures) are accounted for under the equity method.

The operations of the shopping centers are best understood by measuring their performance as a whole, without regard to the Company’s ownership interest. Consequently, in addition to the discussion of the operations of the Consolidated Businesses, the operations of the Unconsolidated Joint Ventures are presented and discussed as a whole.

During 2002, the Company opened The Mall at Millenia (Results of Operations – Recent Opening). Also during 2002, the Company acquired an interest in Sunvalley and sold its interests in La Cumbre Plaza and Paseo Nuevo (Results of Operations – Acquisitions and Dispositions). The Company also opened four new shopping centers during 2001, which are currently not at stabilization. Additional 2003 and 2002 statistics that exclude The Mall at Millenia, Sunvalley, La Cumbre Plaza, Paseo Nuevo, and the centers that opened in 2001 are provided to present the performance of comparable centers in the Company’s continuing operations.

Seasonality

The regional shopping center industry is seasonal in nature, with mall tenant sales highest in the fourth quarter due to the Christmas season, and with lesser, though still significant, sales fluctuations associated with the Easter holiday and back-to-school events. While minimum rents and recoveries are generally not subject to seasonal factors, most leases are scheduled to expire in the first quarter, and the majority of new stores open in the second half of the year in anticipation of the Christmas selling season. Additionally, most percentage rents are recorded in the fourth quarter. Accordingly, revenues and occupancy levels are generally highest in the fourth quarter.

The following table summarizes certain quarterly operating data for 2002 and the first and second quarters of 2003.


	1st Quarter 2002		2nd Quarter 2002		3rd Quarter 2002		4th Quarter 2002		Total 2002		1st Quarter 2003		2nd Quarter 2003

Mall tenant sales	$	645,317	$	669,448	$	691,205	$	1,107,650	$	3,113,620	$	706,227	$	764,404
Revenues		151,307		159,273		170,320		184,172		665,072		181,440		177,866
Occupancy:


Ending-comparable ⁽¹⁾	86	.8%	87	.9%	89	.1%	90	.2%	90	.2%	87	.9%	87	.7%
Average-comparable ⁽¹⁾	87	.2	87	.4	88	.5	90	.0	88	.3	88	.4	87	.7
Ending	83	.3	84	.2	85	.2	87	.0	87	.0	85	.5	85	.5
Average	83	.3	83	.7	84	.7	86	.5	84	.8	85	.7	85	.4
Leased space:
Comparable ⁽¹⁾	91	.5	91	.4	92	.2	93	.4	93	.4	91	.1	90	.2
All centers	87	.4	87	.6	88	.5	90	.3	90	.3	88	.6	88	.0

(1)

Excludes the centers that opened in 2001, La Cumbre Plaza, Paseo Nuevo, Sunvalley, and The Mall at Millenia.

Because the seasonality of sales contrasts with the generally fixed nature of minimum rents and recoveries, mall tenant occupancy costs (the sum of minimum rents, percentage rents and expense recoveries) relative to sales are considerably higher in the first three quarters than they are in the fourth quarter. The following table summarizes occupancy costs, excluding utilities, for mall tenants as a percentage of sales for 2002 and the first and second quarters of 2003:


	1st Quarter 2002		2nd Quarter 2002		3rd Quarter 2002		4th Quarter 2002		Total 2002		1st Quarter 2003		2nd Quarter 2003

Minimum rents	12	.1%	11	.9%	11	.9%	8	.1%	10	.6%	12	.5%	11	.3%
Percentage rents	0	.3	0	.0	0	.0	0	.4	0	.2	0	.3	0	.1
Expense recoveries	5	.4	5	.7	6	.1	3	.8	5	.0	5	.9	6	.1
Mall tenant occupancy costs	17	.8%	17	.6%	18	.0%	12	.3%	15	.8%	18	.7%	17	.5% ⁽¹⁾

(1)

Excluding the centers that opened in 2001, La Cumbre Plaza, Paseo Nuevo, Sunvalley, and The Mall at Millenia, mall tenant occupancy costs as a percentage of sales were 16.8% during both the three months ended June 30, 2003 and June 30, 2002.

Current Operating Trends

In 2002 and 2003, the regional shopping center industry has been affected by the softness in the national economy. Economic and geopolitical pressures that affect consumer confidence, job growth, energy costs, and income gains can affect retail sales growth and impact the Company’s ability to lease vacancies and negotiate rents at advantageous rates. The impact of a soft economy on the Company’s current results of operations can be moderated by lease cancellation income, which tends to increase in down-cycles of the economy. During the first six months of 2003, the Company recognized its approximately $10.3 million share of lease cancellation revenue, which exceeded historical averages for entire annual periods; this level of lease cancellation income is not indicative of future periods. The Company expects that its share of total lease cancellation revenue could be as much as $12 million for 2003.

While the Company’s sales statistics have recently shown improvement, the sales environment remains challenging and there is no assurance that these trends will continue. Tenant sales per square foot in the second quarter of 2003 increased by 3.2% compared to the same period in 2002. Sales directly impact the amount of percentage rents certain tenants and anchors pay. The effects of declines in sales on the Company’s operations are moderated by the relatively minor share of total rents (approximately one percent) percentage rents represent. However, a sustained period of lower sales could adversely impact the Company’s ability to lease vacancies and negotiate rents at advantageous rates.

Occupancy trends continued to show improvement in the second quarter of 2003, in which ending occupancy increased 1.3% from the second quarter of 2002. The Company anticipates that occupancy will be at or modestly below 2002 levels for the rest of 2003 due to a high level of unexpected terminations. However, increased income from temporary in-line tenants, which has become an integral part of the Company’s business, is expected to partially offset this impact. Temporary tenants, defined as those with leases less than 12 months, are not included in occupancy or leased space statistics and could be as high as three percent of GLA at certain times of the year.

During the first six months of 2003 and 2002, 1.5% and 1.1%, respectively, of the Company’s tenants sought the protection of the bankruptcy laws.

Rental Rates

Annualized average base rent per square foot for all mall tenants at the Company’s 14 comparable centers was $42.12 for the three months ended June 30, 2003, compared to $41.96 for the three months ended June 30, 2002. As leases have expired in the shopping centers, the Company has generally been able to rent the available space, either to the existing tenant or a new tenant, at rental rates that are higher than those of the expired leases. In periods of increasing sales, rents on new leases will tend to rise as tenants’ expectations of future growth become more optimistic. In periods of slower growth or declining sales, rents on new leases will grow more slowly or may decline for the opposite reason. However, center revenues nevertheless increase as older leases roll over or are terminated early and replaced with new leases negotiated at current rental rates that are usually higher than the average rates for existing leases.

Average base rent per square foot on 177 thousand square feet of tenant space opened in the Company’s 14 comparable centers was $47.00 for the three months ended June 30, 2003, compared to average base rent per square foot of $37.22 on 188 thousand square feet of tenant space that closed during the same period, reflecting a spread of $9.78 per square foot between the opening and closing average rent. This spread may not be indicative of future periods, as this statistic is not computed on comparable tenant spaces, and can vary significantly from quarter to quarter depending on the total amount, location, and average size of tenant space opening and closing in the period.

Results of Operations

Acquisitions and Dispositions

In October 2002, the Company acquired Swerdlow Real Estate Group’s (Swerdlow’s) 50% interest in Dolphin Mall, bringing its ownership in the shopping center to 100%. The results of Dolphin have been consolidated in the Company’s results subsequent to the acquisition date (prior to that date, Dolphin was accounted for under the equity method as an Unconsolidated Joint Venture). In May 2002, the Company acquired a 50% general partnership interest in SunValley Associates, a California general partnership that owns the Sunvalley shopping center located in Concord, California; Sunvalley is accounted for under the equity method as an unconsolidated joint venture. Also in May 2002, the Company purchased an additional interest in Arizona Mills, bringing its interest in the center to 50%, and sold its interest in Paseo Nuevo. In March 2002, the Company sold its interest in La Cumbre Plaza.

See also Subsequent Events below.

Debt Transactions

Recent Opening

The Mall at Millenia, a 1.1 million square foot center in which the Operating Partnership has a 50% interest, opened in October 2002 in Orlando, Florida.

Unsolicited Tender Offer

In the fall of 2002, the Company received an unsolicited proposal from Simon Property Group, Inc. (SPG) seeking to acquire control of the Company. The proposal was subsequently revised. Thereafter, a tender offer was commenced by SPG and later joined by a subsidiary of Westfield America Trust (Westfield). The Company’s Board of Directors has rejected the proposal and recommended that the Company’s shareholders not tender their shares pursuant to SPG’s and Westfield’s tender offer. SPG has filed suit against the Company to enjoin the voting of the Company’s Series B Non-participating Convertible Preferred Stock based on a variety of legal theories. The Company believes SPG’s claims to be without merit.

New Accounting Pronouncement

Other

In May 2003, G.K. Las Vegas Limited Partnership, (Sheldon M. Gordon, along with his affiliates in their prior ownership of The Forum Shops at Caesars (Gordon)) invested $50 million in the Operating Partnership in exchange for 2.08 million partnership units at $24 per unit. These operating partnership units have the same attributes as existing partnership units, except that they do not have voting rights and have very limited resale rights for a specified period of time. These funds were used to finance the Company’s share repurchase program. An affiliate of Gordon owns the minority interest in Beverly Center.

Subsequent Events

Also, in July 2003, the May Company announced that it intends to divest 32 of its 86 Lord & Taylor stores, including four at the Company’s centers. As May Company’s press release outlined, the company has decided to exit certain markets in the south and southwest including Florida, Texas, and Colorado. This impacts Wellington Green, International Plaza, Willow Bend, and Cherry Creek. The Company has begun discussions with May, which announced in its press release that it will continue to fulfill its obligations under existing documents to operate each store until satisfactory arrangements can be negotiated to divest each location. The Company expects that a mutually satisfactory and positive solution for each center will be found.

Presentation of Operating Results

The following tables contain the combined operating results of the Company’s Consolidated Businesses and the Unconsolidated Joint Ventures. Income allocated to the minority partners in the Operating Partnership and preferred interests is deducted to arrive at the results allocable to the Company’s common shareowners. Because the net equity of the Operating Partnership is less than zero, the income allocated to the minority partners is equal to their share of distributions. The net equity of these minority partners is less than zero due to accumulated distributions in excess of net income and not as a result of operating losses. Distributions to partners are usually greater than net income because net income includes non-cash charges for depreciation and amortization. Amounts allocable to minority partners in certain consolidated joint ventures are added back or deducted to arrive at the net results of the Company. The Company’s average ownership percentage of the Operating Partnership was approximately 60% and 61% during the three and six months ended June 30, 2003, respectively, and 62% during both the three and six months ended June 30, 2002.

The results of Dolphin Mall are presented within the Consolidated Businesses subsequent to its October 2002 acquisition. Prior to that date, they are included within the Unconsolidated Joint Ventures. The results of Paseo Nuevo and La Cumbre Plaza, including the gain on the first quarter 2002 disposition of La Cumbre Plaza and the second quarter 2002 disposition of Paseo Nuevo, are presented as discontinued operations in 2002.

The operating results in the following tables include the supplemental earnings measures of EBITDA and Funds from Operations (FFO). EBITDA represents earnings before interest and depreciation and amortization, excluding gains on sales of depreciated operating properties. The Company believes EBITDA provides a clear indicator of operating performance, as it is customary in the real estate and shopping center business to evaluate the performance of properties based on net operating income, which is generally equivalent to EBITDA, and both net operating income and EBITDA measure performance unaffected by capital structure.

The National Association of Real Estate Investment Trusts (NAREIT) defines FFO as net income (loss) (computed in accordance with Generally Accepted Accounting Principles (GAAP)), excluding gains (or losses) from extraordinary items and sales of properties, plus real estate related depreciation and after adjustments for unconsolidated partnerships and joint ventures. NAREIT suggests 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, most industry investors have considered presentations of operating results, excluding historical cost depreciation, to be useful in evaluating the performance of REITs. FFO is primarily used by the Company in measuring performance and in formulating corporate goals and compensation. The Company also uses this measure supplementally in determining the amount of dividends payable to shareowners.

Reconciliations of net income to Funds from Operations and EBITDA are presented following the Comparison of the Six Months Ended June 30, 2003 to the Six Months Ended June 30, 2002.

Comparison of the Three Months Ended June 30, 2003 to the Three Months Ended June 30, 2002

The following table sets forth operating results for the three months ended June 30, 2003 and June 30, 2002, showing the results of the Consolidated Businesses and Unconsolidated Joint Ventures:


	Three Months Ended June 30, 2003						Three Months Ended June 30, 2002

	CONSOLIDATED BUSINESSES		UNCONSOLIDATED JOINT VENTURES AT 100% ⁽¹⁾		TOTAL OF CONSOLIDATED BUSINESSES AND UNCONSOLIDATED JOINT VENTURES AT 100%		CONSOLIDATED BUSINESSES		UNCONSOLIDATED JOINT VENTURES AT 100% ⁽¹⁾		TOTAL OF CONSOLIDATED BUSINESSES AND UNCONSOLIDATED JOINT VENTURES AT 100%

	(in millions of dollars)
REVENUES:
Minimum rents	52.1		48.6		100.7		46.7		45.0		91.7
Percentage rents	0.3		0.4		0.7		0.6		(0.1	)	0.5
Expense recoveries	34.2		27.8		62.1		29.6		22.3		51.9
Management, leasing and development	5.6				5.6		5.7				5.7
Other	5.8		3.0		8.8		7.3		2.0		9.4

Total revenues	98.0		79.8		177.9		90.1		69.2		159.3

OPERATING COSTS:
Recoverable expenses	29.8		23.0		52.8		25.9		20.9		46.8
Other operating	9.3		5.1		14.4		6.4		5.8		12.1
Charge related to technology
investments							8.1				8.1
Costs related to unsolicited tender offer	9.2				9.2
Management, leasing and development	5.5				5.5		5.2				5.2
General and administrative	6.3				6.3		5.4				5.4
Interest expense	22.1		20.9		43.0		20.8		19.6		40.3
Depreciation and amortization ⁽²⁾	22.3		14.4		36.7		20.2		13.5		33.7

Total operating costs	104.4		63.5		167.9		92.0		59.7		151.7

	(6.4	)	16.3		9.9		(1.9	)	9.5		7.6


Equity in income of Unconsolidated Joint
Ventures ⁽²⁾	8.3						4.7

Income before discontinued operations
and minority and preferred interests	1.9						2.9
Discontinued operations:
Gain on disposition of interests in centers							10.0
EBITDA							1.0
Minority and preferred interests:
TRG preferred distributions	(2.3	)					(2.3	)
Minority interest in consolidated joint
ventures	0.2						0.4
Minority share of (income) loss of TRG	1.0						(5.0	)
Distributions in excess of minority share
of income	(9.8	)					(3.1	)

Net income (loss)	(9.0	)					3.8
Series A preferred dividends	(4.2	)					(4.2	)

Net income (loss) allocable to common
shareowners	(13.1	)					(0.3	)


SUPPLEMENTAL INFORMATION:
EBITDA - 100% ⁽³⁾	37.9		51.7		89.6		40.1		42.5		82.6
EBITDA - outside partners' share	(1.2	)	(23.6	)	(24.8	)	(2.0	)	(20.3	)	(22.3	)

EBITDA contribution ⁽³⁾	36.7		28.1		64.8		38.1		22.2		60.3
Beneficial interest expense	(21.1	)	(11.0	)	(32.1	)	(19.5	)	(9.8	)	(29.3	)
Non-real estate depreciation	(0.7	)			(0.7	)	(0.7	)			(0.7	)
Preferred dividends and distributions	(6.4	)			(6.4	)	(6.4	)			(6.4	)

Funds from Operations contribution ⁽³⁾	8.5		17.2		25.6		11.5		12.4		23.9

(1)

With the exception of the Supplemental Information, amounts include 100% of the Unconsolidated Joint Ventures and are net of intercompany profits. The Unconsolidated Joint Ventures are presented at 100% in order to allow for measurement of their performance as a whole, without regard to the Company’s ownership interest. In its consolidated financial statements, the Company accounts for its investments in the Unconsolidated Joint Ventures under the equity method.

(2)

Amortization of the Company’s additional basis in the Operating Partnership was $1.9 million in both 2003 and 2002. Of this amount, $0.8 million was included in equity in income of Unconsolidated Joint Ventures, while $1.1 million was included in depreciation and amortization.

(3)

TRG’s EBITDA and FFO for the three months ended June 30, 2003 includes costs of $9.2 million incurred in connection with the unsolicited tender offer. There were no such costs incurred during the three months ended June 30, 2002. TRG’s EBITDA and FFO for the three months ended June 30, 2002 were restated from previously reported amounts to include charges related to technology investments of $8.1 million, recognized during 2002 and previously excluded from EBITDA and FFO.

(4)

Amounts in the table may not add due to rounding.

Consolidated Businesses

Total revenues for the three months ended June 30, 2003 were $98.0 million, a $7.9 million or 8.8% increase over the comparable period in 2002. Minimum rents increased $5.4 million, primarily due to the consolidation of Dolphin Mall. Minimum rents also increased due to increased occupancy and income from temporary tenants and specialty retailers. Expense recoveries increased primarily due to Dolphin Mall. Other revenue decreased by $1.5 million from 2002 primarily due to a decrease in gains on sales of peripheral land, partially offset by an increase in lease cancellation income.

Total operating costs were $104.4 million, a $12.4 million or 13.5% increase over the comparable period in 2002. Recoverable expenses increased primarily due to Dolphin Mall. Other operating expense increased primarily due to an increase in property management costs and the consolidation of Dolphin Mall. During the second quarter of 2003, $9.2 million in costs were incurred in connection with the unsolicited tender offer. During 2002, the Company recognized an $8.1 million charge relating to its investments in MerchantWired and Fashionmall.com. General and administrative expenses increased primarily due to deferred bonus expense based on the Company’s stock price, as well as increases in professional fees and insurance costs. Interest expense increased primarily due to the additional interest related to Dolphin Mall and increases due to the hedging of certain floating rate debt, partially offset by decreases due to the paydown of debt from the proceeds of the sale of Paseo Nuevo and decreases in interest rates on floating rate debt. Depreciation expense increased primarily due to the acquisition of the additional interest in Dolphin Mall.

Unconsolidated Joint Ventures

Total revenues for the three months ended June 30, 2003 were $79.8 million, a $10.6 million or 15.3% increase from the comparable period of 2002. Minimum rents increased $3.6 million, of which $8.2 million was due to Millenia and the acquisition of the interest in Sunvalley, partially offset by a decrease due to the transfer of Dolphin Mall to the Consolidated Businesses. Expense recoveries increased primarily due to Millenia and Sunvalley. Other revenue increased primarily due to an increase in lease cancellation revenue.

Total operating costs increased by $3.8 million to $63.5 million for the three months ended June 30, 2003. Recoverable expenses increased primarily due to Millenia and Sunvalley, partially offset by the transfer of Dolphin Mall. Other operating expense decreased due to the transfer of Dolphin Mall, partially offset by Millenia and Sunvalley. Interest expense increased due to the Sunvalley acquisition and increased debt (and decreased capitalized interest upon opening) of Millenia, partially offset by a decrease due to the transfer of Dolphin Mall.

As a result of the foregoing, income of the Unconsolidated Joint Ventures increased by $6.8 million to $16.3 million. The Company’s equity in income of the Unconsolidated Joint Ventures was $8.3 million, a $3.6 million increase from the comparable period in 2002.

Net Income

As a result of the foregoing, the Company’s income before discontinued operations and minority and preferred interests decreased by $1.0 million to $1.9 million for the three months ended June 30, 2003. Discontinued operations in 2002 included a $10.0 million gain on the disposition of Paseo Nuevo. After allocation of income to minority and preferred interests, the net loss allocable to common shareowners for 2003 was $(13.1) million compared to $(0.3) million in 2002.

Comparison of the Six Months Ended June 30, 2003 to the Six Months Ended June 30, 2002

The following table sets forth operating results for the six months ended June 30, 2003 and June 30, 2002, showing the results of the Consolidated Businesses and Unconsolidated Joint Ventures:


	Six Months Ended June 30, 2003						Six Months Ended June 30, 2002

	CONSOLIDATED BUSINESSES		UNCONSOLIDATED JOINT VENTURES AT 100% ⁽¹⁾		TOTAL OF CONSOLIDATED BUSINESSES AND UNCONSOLIDATED JOINT VENTURES AT 100%		CONSOLIDATED BUSINESSES		UNCONSOLIDATED JOINT VENTURES AT 100% ⁽¹⁾		TOTAL OF CONSOLIDATED BUSINESSES AND UNCONSOLIDATED JOINT VENTURES AT 100%

	(in millions of dollars)
REVENUES:
Minimum rents	104.9		97.0		202.0		93.5		86.5		180.0
Percentage rents	1.5		1.3		2.8		1.7		0.5		2.2
Expense recoveries	66.4		52.6		119.0		57.4		42.9		100.3
Management, leasing and development	10.4				10.4		10.9				10.9
Other	16.8		8.3		25.2		13.3		4.0		17.3

Total revenues	200.1		159.2		359.3		176.7		133.9		310.6

OPERATING COSTS:
Recoverable expenses	58.5		43.6		102.1		49.3		36.4		85.7
Other operating	18.9		10.2		29.0		16.3		11.0		27.3
Charge related to technology investments							8.1				8.1
Costs related to unsolicited tender offer	19.0				19.0
Management, leasing and development	10.1				10.1		10.0				10.0
General and administrative	12.2				12.2		10.4				10.4
Interest expense	44.6		40.7		85.2		41.4		37.8		79.2
Depreciation and amortization ⁽²⁾	45.8		28.2		74.0		40.9		27.6		68.5

Total operating costs	209.0		122.6		331.6		176.4		112.8		289.2

	(8.9	)	36.6		27.7		0.2		21.1		21.4


Equity in income of Unconsolidated Joint
Ventures ⁽²⁾	18.7						10.9

Income before discontinued operations
and minority and preferred interests	9.8						11.1
Discontinued operations:
Gain on disposition of interests in centers							12.0
EBITDA							3.2
Depreciation and amortization							(0.5	)
Minority and preferred interests:
TRG preferred distributions	(4.5	)					(4.5	)
Minority interest in consolidated joint
ventures	0.1						0.6
Minority share of income of TRG	(0.2	)					(9.5	)
Distributions in excess of minority share
of income	(17.1	)					(6.8	)

Net income (loss)	(11.9	)					5.7
Series A preferred dividends	(8.3	)					(8.3	)

Net income (loss) allocable to common
shareowners	(20.2	)					(2.6	)


SUPPLEMENTAL INFORMATION:
EBITDA - 100% ⁽³⁾	81.4		105.5		186.9		85.7		86.5		172.2
EBITDA - outside partners' share	(3.2	)	(48.1	)	(51.3	)	(4.1	)	(39.6	)	(43.7	)

EBITDA contribution ⁽³⁾	78.2		57.4		135.6		81.6		46.9		128.5
Beneficial interest expense	(42.5	)	(21.3	)	(63.8	)	(38.9	)	(18.8	)	(57.7	)
Non-real estate depreciation	(1.3	)			(1.3	)	(1.4	)			(1.4	)
Preferred dividends and distributions	(12.8	)			(12.8	)	(12.8	)			(12.8	)

Funds from Operations contribution ⁽³⁾	21.6		36.1		57.8		28.5		28.1		56.6

(1)

(2)

Amortization of the Company’s additional basis in the Operating Partnership was $3.7 million in 2003 and $3.8 million in 2002. Of this amount, $1.5 million was included in equity in income of Unconsolidated Joint Ventures for both years, while $2.2 million and $2.3 million in 2003 and 2002, respectively, was included in depreciation and amortization.

(3)

TRG’s EBITDA and FFO for the six months ended June 30, 2003 includes costs of $19.0 million incurred in connection with the unsolicited tender offer. There were no such costs incurred during the six months ended June 30, 2002. TRG’s EBITDA and FFO for the six months ended June 30, 2002 were restated from previously reported amounts to include charges related to technology investments of $8.1 million recognized during 2002 and previously excluded from EBITDA and FFO.

(4)

Amounts in the table may not add due to rounding.

Consolidated Businesses

Total revenues for the six months ended June 30, 2003 were $200.1 million, a $23.4 million or 13.2% increase over the comparable period in 2002. Minimum rents increased $11.4 million, primarily due to the consolidation of Dolphin Mall. Minimum rents also increased due to increased occupancy and income from temporary tenants and specialty retailers. The Company expects continued revenue growth from temporary tenants in 2003. Expense recoveries increased primarily due to Dolphin Mall. Revenue from management, leasing, and development services was $10.4 million in 2003, compared to $10.9 million in 2002. Generally, income from management, leasing, and development services, net of related expenses, is approximately $0.5 million on average per quarter. This income varies from quarter to quarter because the timing of income and expense is not matched. Although through June 30, 2003 this income was approximately $0.1 million, the Company presently estimates it will earn up to $1.5 million to $2 million in the second half of the year. Other revenue increased by $3.5 million from 2002 primarily due to an increase in lease cancellation revenue, partially offset by a decrease in gains on sales of peripheral land. The Company estimates that annual 2003 gains on land sales could be as much as $5 million.

Total operating costs were $209.0 million, a $32.6 million or 18.5% increase over the comparable period in 2002. Recoverable expenses increased primarily due to Dolphin Mall. Other operating expense increased due to Dolphin Mall, and increases in property management costs and bad debt expense, partially offset by a decrease in the charge to operations for pre-development activities. During 2003, $19.0 million in costs were incurred in connection with the unsolicited tender offer. During 2002, the Company recognized an $8.1 million charge relating to its investments in MerchantWired and Fashionmall.com. General and administrative expenses increased primarily due to deferred bonus expense based on the Company’s stock price, as well as increases in professional fees and insurance costs. Excluding the impact due to the deferred bonus expense, the Company expects general and administrative expense to be approximately $5.5 million per quarter. Interest expense increased primarily due to the additional interest related to Dolphin Mall and increases due to the hedging of certain floating rate debt, partially offset by decreases due to the paydown of debt from the proceeds of the sale of Paseo Nuevo and La Cumbre Plaza, and decreases in interest rates on floating rate debt. Depreciation expense increased primarily due to the acquisition of the additional interest in Dolphin Mall.

Unconsolidated Joint Ventures

Total revenues for the six months ended June 30, 2003 were $159.2 million, a $25.3 million or 18.9% increase from the comparable period of 2002. Minimum rents increased $10.5 million, of which $18.4 million was due to Millenia and the acquisition of the interest in Sunvalley, partially offset by a decrease due to the transfer of Dolphin Mall to the Consolidated Businesses. Expense recoveries increased primarily due to Millenia and Sunvalley, partially offset by the transfer of Dolphin Mall. Other revenue increased primarily due to an increase in lease cancellation revenue.

Total operating costs increased by $9.8 million to $122.6 million for the six months ended June 30, 2003. Recoverable expenses increased primarily due to Millenia and Sunvalley, partially offset by the transfer of Dolphin Mall. Recoverable expenses in 2002 included the reversal of a $2.9 million special assessment tax accrued during 2001. Other operating expense decreased due to the transfer of Dolphin Mall, partially offset by Millenia and Sunvalley. Interest expense increased due to the Sunvalley acquisition and increased debt (and decreased capitalized interest upon opening) of Millenia, partially offset by a decrease due to the transfer of Dolphin Mall. Depreciation expense increased due to Millenia and Sunvalley, partially offset by Dolphin Mall.

As a result of the foregoing, income of the Unconsolidated Joint Ventures increased by $15.5 million to $36.6 million. The Company’s equity in income of the Unconsolidated Joint Ventures was $18.7 million, a $7.8 million increase from the comparable period in 2002.

Net Income

As a result of the foregoing, the Company’s income before discontinued operations and minority and preferred interests decreased by $1.3 million to $9.8 million for the six months ended June 30, 2003. Discontinued operations in 2002 included $12.0 million of gains on the dispositions of Paseo Nuevo and La Cumbre Plaza. After allocation of income to minority and preferred interests, the net loss allocable to common shareowners for 2003 was $(20.2) million compared to $(2.6) million in 2002.

Estimates regarding anticipated 2003 income and expenses are forward-looking statements and certain significant factors could cause the actual results to differ materially, including but not limited to: 1) actual results of negotiations with tenants, counterparties, and potential purchasers of peripheral land, 2) increases in operating costs, and 3) timing of transactions.

Reconciliation of Net Income to Funds from Operations and EBITDA


	Three Months Ended June 30				Six Months Ended June 30
	2003		2002		2003		2002
	(in millions of dollars)
Net income allocable to common shareowners	(13.1	)	(0.3	)	(20.2	)	(2.6	)

Add (less) depreciation and gains on dispositions
of properties:
Gain on disposition of interests in centers			(10.0	)			(12.0	)
Depreciation and amortization ⁽¹⁾:
Consolidated businesses at 100%	22.3		20.2		45.8		40.9
Minority partners in consolidated joint ventures	(0.5	)	(1.2	)	(1.2	)	(2.3	)
Discontinued operations							0.5
Share of unconsolidated joint ventures	8.9		7.7		17.5		17.2
Non-real estate depreciation	(0.7	)	(0.7	)	(1.3	)	(1.4	)

Add minority interests in TRG:
Minority share of income (loss) in TRG	(1.0	)	5.0		0.2		9.5
Distributions in excess of minority share of income
of TRG	9.8		3.1		17.1		6.8


Funds from Operations - TRG ⁽²⁾	25.6		23.9		57.8		56.6

Funds from Operations - TCO ⁽²⁾	15.4		14.8		35.4		34.9


Funds from Operations - TRG (from above)	25.6		23.9		57.8		56.6

Add (less):
Preferred dividends and distributions	6.4		6.4		12.8		12.8
Non-real estate depreciation	0.7		0.7		1.3		1.4
Interest expense for all businesses	43.0		40.3		85.2		79.2
Interest expense allocable to minority partners in
consolidated joint ventures	(0.9	)	(1.3	)	(2.1	)	(2.5	)
Interest expense allocable to outside partners in
unconsolidated joint ventures	(10.0	)	(9.8	)	(19.4	)	(19.0	)

Beneficial interest in EBITDA - TRG	64.8		60.3		135.6		128.5

(1)

Depreciation includes $2.0 million and $1.4 million of mall tenant allowance amortization for the three months ended June 30, 2003 and 2002, respectively, and $3.5 million and $2.6 million for the six months ended June 30, 2003 and 2002, respectively.

(2)

TRG’s FFO for the three and six months ended June 30, 2003 includes costs of $9.2 million and $19.0 million, respectively, incurred in connection with the unsolicited tender offer. There were no such costs incurred during the three or six months ended June 30, 2002. TCO’s share of TRG’s FFO is based on an average ownership of 60% and 62%, respectively, during the three months ended June 30, 2003 and 2002, and 61% and 62%, respectively, during the six months ended June 30, 2003 and 2002.

(3)

Amounts in this table may not add due to rounding.

Liquidity and Capital Resources

In the following discussion, references to beneficial interest represent the Operating Partnership’s share of the results of its consolidated and unconsolidated businesses. The Company does not have, and has not had, any parent company indebtedness; all debt discussed represents obligations of the Operating Partnership or its subsidiaries and joint ventures.

The Company believes that its net cash provided by operating activities, distributions from its joint ventures, the unutilized portion of its credit facilities, and its ability to access the capital markets assure adequate liquidity to conduct its operations in accordance with its dividend and financing policies, and to provide the liquidity to fund the Company’s anticipated capital spending on new development, as discussed below.

As of June 30, 2003, the Company had a consolidated cash balance of $29.0 million. Additionally, the Company has a secured $275 million line of credit. This line had $175.0 million of borrowings as June 30, 2003 and expires in November 2004 with a one-year extension option. The Company also has available a second secured bank line of credit of up to $40 million. The line had $10.3 million of borrowings as of June 30, 2003 and expires in November 2004.

Refer to Results of Operations – Debt Transactions regarding financing transactions that occurred in the first half of 2003. Refer to Results of Operations – Other regarding the Company’s share repurchase program and an investment in the Company that occurred in May 2003. Refer to Results of Operations – Subsequent Events regarding an issuance of partnership units in connection with an acquisition.

Summary of Operating Activities

The Company’s net cash provided by operating activities was $55.5 million in 2003 and $55.8 million in 2002. Further discussion of operations and future trends that may affect future operating cash flows is included in Results of Operations.

Summary of Investing Activities

Net cash used in investing activities was $47.1 million in 2003 compared to $9.1 million used in 2002. Cash used in investing activities was impacted by the timing of capital expenditures, with additions to properties in 2003 and 2002 for the development and construction of Stony Point Fashion Park and Northlake Mall, as well as other development activities and other capital items. In 2003, the Company invested $3.2 million in acquiring the minority interest in Great Lakes Crossing. In 2002, the Company received net proceeds of $76.4 million from the disposition of La Cumbre and Paseo Nuevo and invested $45.2 million in acquiring interests in Sunvalley and Arizona Mills. Additionally, in 2002, $4.1 million was invested in technology businesses. Net proceeds from sales of peripheral land were $1.3 million in 2003 and $6.1 million in 2002. Distributions from Unconsolidated Joint Ventures in 2003 increased from 2002 primarily due to International Plaza, Millenia, Arizona Mills, and $21.0 million of excess proceeds from the March 2003 refinancing of The Mall at Millenia.

Summary of Financing Activities

Net cash used in financing activities was $11.8 million in 2003, compared to $1.9 million used in 2002. Debt proceeds, net of repayments and issuance costs, provided $46.6 million in 2003 and $42.3 million in 2002. In 2003, the Company used $50 million from the issuance of partnership units (Results of Operations – Other) to fund repurchases of its common stock. These repurchases totaled $52.8 million in 2003. Issuance of stock pursuant to the Continuing Offer related to the exercise of employee options contributed $1.5 million in 2003 and $4.5 million in 2002. Total dividends and distributions paid were $57.3 million and $48.7 million in 2003 and 2002, respectively. The increase from 2002 was due to the timing of payments, an increase in per share dividends, and an increase in the number of shares and unitholders.

Beneficial Interest in Debt

At June 30, 2003, the Operating Partnership’s debt and its beneficial interest in the debt of its Consolidated and Unconsolidated Joint Ventures totaled $2,226.5 million with an average interest rate of 5.92%, excluding amortization of debt issuance costs and the effects of interest rate cap premiums. Debt issuance costs and interest rate cap costs are reported as interest expense in the results of operations. Amortization of debt issuance costs added 0.30% to TRG’s effective interest rate in the second quarter of 2003. Included in beneficial interest in debt is debt used to fund development and expansion costs. Beneficial interest in assets on which interest is being capitalized totaled $185.6 million as of June 30, 2003. Beneficial interest in capitalized interest was $2.6 million and $4.8 million for the three and six months ended June 30, 2003, respectively. The following table presents information about the Company’s beneficial interest in debt as of June 30, 2003 (amounts may not add due to rounding).


	Amount		Interest Rate Including Spread			LIBOR Swap Rate

	(in millions of dollars)
Fixed rate debt	1,492.8		6.77	%	⁽¹⁾

Floating rate debt:
Swapped through September 2003	100.0		4.35			2.50	%	⁽²⁾
Swapped through October 2003	100.0		5.20			4.30
Swapped through June 2004	100.0		5.31		⁽¹⁾	4.13
Swapped through September 2004	140.0	⁽³⁾	4.30			2.05
Floating month to month	293.7		3.34		⁽¹⁾

Total floating rate debt	733.7		4.18		⁽¹⁾


Total beneficial interest in debt	2,226.5		5.92	%	⁽¹⁾

(1)

Denotes weighted average interest rate before amortization of financing costs.

(2)

This debt is also swapped from October 2003 through September 2004 at 4.35% and from October 2004 through April 2005 at 5.25%.

(3)

The notional amount of this swap decreases to $120.0 million on December 1, 2003.

In addition, as of June 30, 2003, $188 million of the Company’s beneficial interest in floating rate debt is covered under interest rate cap agreements with LIBOR cap rates ranging from 4.6% to 8.2% with terms ending August 2004 through July 2006.

The $146 million loan on Beverly Center will be prepayable without penalty in January 2004. The Company expects that it would be able to refinance the center at a significantly higher amount than the current principal balance.

Sensitivity Analysis

The Company has exposure to interest rate risk on its debt obligations and interest rate instruments. The Company uses derivative instruments primarily to manage exposure to interest rate risks inherent in variable rate debt and refinancings. The Company routinely uses cap, swap, and treasury lock agreements to meet these objectives. Based on the Operating Partnership’s beneficial interest in floating rate debt in effect at June 30, 2003, excluding debt fixed under interest rate swaps, a one percent increase or decrease in interest rates on this floating rate debt would decrease or increase cash flows by approximately $3.7 million and, due to the effect of capitalized interest, annual earnings by approximately $3.5 million. Based on the Company’s consolidated debt and interest rates in effect at June 30, 2003, a one percent increase in interest rates would decrease the fair value of debt by approximately $43.9 million, while a one percent decrease in interest rates would increase the fair value of debt by approximately $46.9 million.

Covenants and Commitments

Certain loan agreements contain various restrictive covenants, including minimum net worth requirements, minimum debt service and fixed charges coverage ratios, a maximum payout ratio on distributions, and a minimum debt yield ratio, the latter being the most restrictive. The Operating Partnership is in compliance with all of its covenants.

Certain debt agreements, including all construction facilities, contain performance and valuation criteria that must be met for the loans to be extended at the full principal amounts; these agreements provide for partial prepayments of debt to facilitate compliance with extension provisions.

The Company expects that a partial payment on the Dolphin loan will be required by the terms of the loan agreement in December 2003. The amount of the payment has not been determined, as it is based in part on the center’s third quarter results.


Center	Loan balance as of 6/30/03	TRG's beneficial interest in loan balance as of 6/30/03	Amount of loan balance guaranteed by TRG as of 6/30/03	% of loan balance guaranteed by TRG		% of interest guaranteed by TRG
	(in millions of dollars)
Dolphin Mall	163.5	163.5	81.7	50	%	100	%
Stony Point Fashion Park	59.6	59.6	59.6	100		100
The Mall at Millenia - term loan	2.7	1.3	1.3	50		50
The Mall at Wellington Green	149.2	134.3	149.2	100		100
The Shops at Willow Bend	150.0	150.0	150.0	100		100

A. Alfred Taubman has the annual right to tender to the Company units of partnership interest in the Operating Partnership (provided that the aggregate value is at least $50 million) and cause the Company to purchase the tendered interests at a purchase price based on a market valuation of the Company on the trading date immediately preceding the date of the tender (the Cash Tender Agreement). At A. Alfred Taubman’s election, his family and certain others may participate in tenders. The Company will have the option to pay for these interests from available cash, borrowed funds, or from the proceeds of an offering of the Company’s common stock. Generally, the Company expects to finance these purchases through the sale of new shares of its stock. The tendering partner will bear all market risk if the market price at closing is less than the purchase price and will bear the costs of sale. Any proceeds of the offering in excess of the purchase price will be for the sole benefit of the Company. Based on a market value at June 30, 2003 of $19.16 per common share, the aggregate value of interests in the Operating Partnership that may be tendered under the Cash Tender Agreement was approximately $473 million. The purchase of these interests at June 30, 2003 would have resulted in the Company owning an additional 30% interest in the Operating Partnership.

Capital Spending

Capital spending for routine maintenance of the shopping centers is generally recovered from tenants. The following table summarizes capital spending through June 30, 2003 that is not recovered from tenants.


	For the Six Months Ended June 30, 2003 ⁽¹⁾

	Consolidated Businesses		Unconsolidated Joint Ventures	Beneficial Interest in Consolidated Businesses and Unconsolidated Joint Ventures

	(in millions of dollars)
Development, renovation, and expansion:
Existing centers	1.2		1.9	2.2
New centers	59.7	⁽²⁾	0.4	59.8
Pre-construction development activities,
net of charge to operations	2.1			2.1
Mall tenant allowances ⁽³⁾	3.9		2.8	5.2
Corporate office improvements
and equipment	0.8			0.8
Other	0.3		0.6	0.5

Total	68.1		5.6	70.8

(1)

Costs are net of intercompany profits and are computed on an accrual basis.

(2)

Primarily includes costs related to Stony Point Fashion Park and Northlake Mall.

(3)

Excludes initial tenant allowances on the non-stabilized centers.

(4)

Amounts in table may not add due to rounding.

For the six months ended June 30, 2003, in addition to the costs above, the Company incurred its $4.8 million share of capitalized leasing costs and its $4.7 million share of repair and asset replacement costs that will be reimbursed by tenants. Also during this period, the Company’s share of reimbursements by tenants for capitalizable expenditures of prior periods was $3.3 million. The expenditures reimbursable by the tenants and the related reimbursements are classified as recoverable expenses and expense recoveries, respectively, and both are included in the Company’s Funds from Operations.

The following table presents a reconciliation of the Consolidated Businesses’ capital spending shown above to cash additions to properties as presented in the Company’s Consolidated Statement of Cash Flows for the six months ended June 30, 2003.


	(in millions of dollars)
Consolidated Businesses' capital spending not recovered from tenants	68.1
Repair and asset replacement costs reimbursable by tenants	4.2
Repair and asset replacement costs reimbursed by tenants	(2.0	)
Cash payments for capital spending accrued during 2002	12.1

Additions to properties	82.4

Planned Capital Spending

Stony Point Fashion Park, a new 690,000 square foot open-air center under construction in Richmond, Virginia, will be anchored by Dillard’s, Saks, and Galyan’s. The center, which is opening September 18, 2003, is expected to cost approximately $115 million. Currently over 95% of the available tenant space has executed and committed leases. The Company expects to have an approximately 10.5% return on its investment in 2004, when the center is expected to be close to stabilization. Full stabilization is more likely to occur in 2005.

Northlake Mall, a new 1.2 million square foot enclosed center in Charlotte, North Carolina, will be anchored by Dillard’s, Hecht’s, Belk, and two additional anchors. The center is scheduled to open in the fall of 2005 and is expected to cost approximately $166 million. The Company expects returns on this investment to be approximately 11% at stabilization.

Future construction costs for Stony Point will be funded through its construction facility, while costs for Northlake Mall will be funded through the Company’s existing credit facilities until construction financing is obtained. The financing is expected to be completed in the fourth quarter of 2003.

The Company’s approximately $32 million balance of development pre-construction costs as of June 30, 2003 consists primarily of costs relating to its Oyster Bay project in Syosset, New York. Both Neiman Marcus and Lord & Taylor have made announcements committing to the project. Although the Company still needs to obtain the necessary zoning approvals to move forward with the project, the Company is encouraged by the New York State Supreme Court’s decision to annul the unfavorable zoning actions of the Oyster Bay Town Board. While the Company expects continued success with ongoing litigation, the process may not be resolved in the near future. In addition, if the litigation is unsuccessful, the Company would expect to recover substantially less than its cost in this project under possible alternative uses for the site.

The Operating Partnership and The Mills Corporation have formed an alliance to develop value super-regional projects in major metropolitan markets. The amended agreement, which expires in May 2008, calls for the two companies to jointly develop and own at least four of these centers, each representing approximately $200 million of capital investment. A number of locations across the nation are targeted for future initiatives.

The following table summarizes planned capital spending for the entire year of 2003 (including amounts described in the table above) that is not recovered from tenants. The table excludes acquisitions of interests in operating centers (see Results of Operations — Acquisitions and Dispositions).


	2003 ⁽¹⁾

	Consolidated Businesses		Unconsolidated Joint Ventures	Beneficial Interest in Consolidated Businesses and Unconsolidated Joint Ventures

	(in millions of dollars)
Development, renovation, and expansion	102.0	⁽²⁾	10.9		106.3
Mall tenant allowances	10.2		4.6		11.7
Pre-construction development and other	8.8		1.1		9.4

Total	121.0		16.6		127.3

(1)

Costs are net of intercompany profits.

(2)

Primarily includes costs related to Stony Point Fashion Park and Northlake Mall.

(3)

Amounts in this table may not add due to rounding.

Estimates of future capital spending include only projects approved by the Company’s Board of Directors and, consequently, estimates will change as new projects are approved. Estimates regarding capital expenditures, occupancy, and returns on new developments presented above are forward-looking statements and certain significant factors could cause the actual results to differ materially, including but not limited to: 1) actual results of negotiations with anchors, tenants and contractors, 2) changes in the scope and number of projects, 3) cost overruns, 4) timing of expenditures, 5) financing considerations, 6) actual time to complete projects, 7) changes in economic climate, 8) competition from others attracting tenants and customers, 9) increases in operating costs, 10) timing of tenant and anchor openings, and 11) early lease terminations and bankruptcies.

Dividends

The Company pays regular quarterly dividends to its common and Series A preferred shareowners. Dividends to its common shareowners are at the discretion of the Board of Directors and depend on the cash available to the Company, its financial condition, capital and other requirements, and such other factors as the Board of Directors deems relevant. To qualify as a REIT, the Company must distribute at least 90% of its REIT taxable income to its shareowners, as well as meet certain other requirements. Preferred dividends accrue regardless of whether earnings, cash availability, or contractual obligations were to prohibit the current payment of dividends. The preferred stock became callable in October 2002.

On May 29, 2003, the Company declared a quarterly dividend of $0.26 per common share payable July 22, 2003 to shareowners of record on June 30, 2003. The Board of Directors also declared a quarterly dividend of $0.51875 per share on the Company’s 8.3% Series A Preferred Stock for the quarterly dividend period ended June 30, 2003, which was paid on June 30, 2003 to shareowners of record on June 20, 2003.

The Company’s current estimate of the tax status of total 2003 common dividends declared and to be declared, assuming continuation of a $0.26 per common share quarterly dividend, is approximately 25% return of capital and 75% ordinary income. The tax status of total 2003 dividends to be paid on Series A Preferred Stock is estimated to be 100% ordinary income. Certain significant factors could cause actual results to differ materially, including: 1) the amount of dividends declared, 2) changes in the Company’s share of anticipated taxable income of the Operating Partnership due to the actual results of the Operating Partnership, including actual costs relating to the unsolicited tender offer, 3) changes in the number of the Company’s outstanding shares, 4) property acquisitions or dispositions, 5) financing transactions, including refinancing of existing debt, 6) changes in interest rates, 7) amount and nature of development activities, and 8) changes in the tax laws or their application.

The annual determination of the Company’s common dividends is based on anticipated Funds from Operations available after preferred dividends, as well as assessments of capital spending, financing considerations, and other appropriate factors. Over the past several years, the Company had determined that the growth in common dividends would be less than the growth in Funds from Operations. The Company expects to evaluate its policy and the benefits of increasing dividends at a higher rate than historical increases, subject to its assessment of cash requirements.

Any inability of the Operating Partnership or its Joint Ventures to obtain financing as required to fund maturing debts, capital expenditures and changes in working capital, including development activities and expansions, may require the utilization of cash to satisfy such obligations, thereby possibly reducing distributions to partners of the Operating Partnership and funds available to the Company for the payment of dividends.

Additional Information

The Company provides supplemental investor information coincident with its earning announcements that can be found online at www.taubman.com under “Investor Relations.”

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The information required by this item is included in this report at Item 2 under the caption “Liquidity and Capital Resources – Sensitivity Analysis.”

Item 4. Controls and Procedures

As of the end of the period covered by this quarterly report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial and Administrative Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial and Administrative Officer concluded that the Company’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Company required to be disclosed in the Company’s periodic SEC reports. There have been no significant changes in the Company’s internal controls that could significantly affect these internal controls subsequent to the date the Company carried out its evaluation.

PART II

OTHER INFORMATION

Item 1. Legal Proceedings

On May 8, 2003 the Federal Court issued an Amended Opinion and Order in the Simon and Glancy actions. The Federal Court dismissed Simon’s challenge to the 1998 restructuring of the Company and denied Simon’s contention that the Company’s Board improperly rejected Simon’s tender offer. The Federal Court also dismissed the Glancy case without prejudice and dismissed Smith from the Simon case. The Federal Court entered an order preliminarily enjoining (i) the voting of the shares owned by the members of the Taubman family (owners of over 30% of the Company) and certain other shareholders of the Company (owners of approximately 3% of the Company), and (ii) the enforcement of amendments to the Company’s By-laws adopted on December 20, 2002 setting the procedures for the calling of a special meeting of shareholders. The Judge’s Order was stayed pending the Company’s appeal of that portion of the Order relating to the voting of the shares owned by members of the Taubman family and certain other shareholders of the Company and the enforcement of the December 20, 2002 amendments to the Company’s By-laws.

The United States Court of Appeals has agreed to hear the Company’s appeal on an expedited basis. Briefs have been filed with the Court of Appeals and the Company is awaiting the Court’s scheduling of oral arguments.

Item 5. Other Information

None.

Item 6. Exhibits and Reports on Form 8-K

Exhibits


10 (a) 10 (b) 12 31 (a) 31 (b) 32 (a) 32 (b) 99	-- - -- - -- - -- - -- - -- - -- - --	Third Amendment to the Second Amendment and Restatement of Agreement of Limited Partnership of the Taubman Realty Group Limited Partnership, dated May 2, 2003 Contribution Agreement by and among the Taubman Realty Group Limited Partnership, a Delaware Limited Partnership, and G.K. Las Vegas Limited Partnership, a California Limited Partnership, dated May 2, 2003 Statement Re: Computation of Taubman Centers, Inc. Ratio of Earnings to Combined Fixed Charges and Preferred Dividends and Distributions. Certification of Chief Executive Officer pursuant to 15 U.S.C. Section 10A, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Certification of Chief Financial Officer pursuant to 15 U.S.C. Section 10A, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Debt Maturity Schedule

Current Reports on Form 8-K.

Report on Form 8-K dated May 9, 2003 furnishing under Item 12 a copy of the Company’s first quarter 2003 earnings release.*

Report on Form 8-K dated April 25, 2003 furnishing under Item 12 a copy of the Company’s preliminary first quarter 2003 earnings release.*

* These Reports were furnished to the Securities and Exchange Commission and are not to be deemed “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, and the company is not subject to the liabilities of that section regarding such reports. The company is not incorporating, and will not incorporate by reference, these reports into a filing under the Securities Act of 1933 or the Exchange Act of 1934 except as expressly set forth by a specific reference in such a filing.

SIGNATURES

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


Date: August 13, 2003	TAUBMAN CENTERS, INC. By: /s/ Lisa A. Payne Lisa A. Payne Executive Vice President, Chief Financial and Administrative Officer, and Director

EX-10 3 thirdamendment2q03.htm THIRD AMENDMENT TO SECOND AMENDMENT OF AGREEMENT Third Amendment

THIRD AMENDMENT TO THE SECOND AMENDMENT ANDRESTATEMENT
OF AGREEMENT OF LIMITED PARTNERSHIP OF
THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP

THIS THIRD AMENDMENT (this “Amendment”) TO THE SECOND AMENDMENT AND RESTATEMENT OF AGREEMENT OF LIMITED PARTNERSHIP OF THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP (the “Second Amended and Restated Partnership Agreement”) is entered into effective as of May 2, 2003, and is made by, between, and among TAUBMAN CENTERS, INC., a Michigan corporation (“TCO”), TG PARTNERS LIMITED PARTNERSHIP, a Delaware limited partnership (“TG”), and TAUB-CO MANAGEMENT, INC., a Michigan corporation (“Taub-Co”), who, as the Appointing Persons, pursuant to Section 13.11 of the Second Amended and Restated Partnership Agreement, have the full power and authority to amend the Second Amended and Restated Partnership Agreement on behalf of all of the partners of The Taubman Realty Group Limited Partnership, a Delaware limited partnership (the “Partnership”), with respect to the matters herein provided. (Capitalized terms used herein that are not herein defined shall have the meanings ascribed to them in the Second Amended and Restated Partnership Agreement.)

Recitals:

A. On September 30, 1998, TCO, TG, and Taub-Co entered into the Second Amended and Restated Partnership Agreement as an amendment and restatement of the then-existing partnership agreement (the “Amended and Restated Partnership Agreement”), as authorized under Section 13.11 of the Amended and Restated Partnership Agreement.

B. On March 4, 1999, TCO, TG, and Taub-Co entered into a First Amendment to the Second Amended and Restated Partnership Agreement to facilitate a proposed pledge of Units of Partnership Interest in the Partnership.

C. On September 3, 1999, TCO, TG, and Taub-Co entered into a Second Amendment to the Second Amended and Restated Partnership Agreement (the Second Amended and Restated Partnership Agreement, as amended, is herein referred to as the “Partnership Agreement”) to provide for the contribution of preferred capital in exchange for a preferred equity interest.

D. As authorized under Section 13.11 of the Partnership Agreement, the parties hereto wish to further amend the Partnership Agreement to provide for the issuance of Series E Units of Partnership Interest in exchange for a contribution of cash to the Partnership and for certain other reasons.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1. Article II of the Partnership Agreement is hereby amended by inserting the following new definitions therein, in alphabetical order:

““Continuing Offer” means the Second Amended and Restated Continuing Offer, dated May 16, 2000, as the same may be amended and or supplemented from time to time.

“Contribution Agreement” means that certain Contribution Agreement among G.K. Las Vegas Limited Partnership and the Partnership, of even date herewith.

“Conversion Notice” is defined in Section 8.1(e) hereof.

“NYSE”is defined in Section 8.1(e)(v) hereof.

“Organic Change” means any recapitalization, reorganization, reclassification, consolidation, merger, or other transaction, in each case that is effected in such a manner that the holders of Units of Partnership Interest are entitled to receive (either directly or upon subsequent liquidation) stock, securities, or other assets with respect to or in exchange for Units of Partnership Interest.

“Series E Units of Partnership Interest” means Partnership Interests designated ‘Series E Units of Partnership Interest’ that (i) confer all the rights, privileges, and liabilities of a Limited Partner holding Units of Partnership Interest, other than the right to become a Designated Offeree under the Continuing Offer and the right to acquire Class B Preferred Shares of TCO, and (ii) are convertible on a one-for-one basis into Units of Partnership Interest in accordance with the provisions of Section 8.1(e) hereof. Except as provided in the definition of “Required Distribution Amount,” in no event shall a Series E Unit of Partnership Interest be considered a Unit of Partnership Interest.

“Series E Partnership Interest Certificate” and “Series E Partnership Interest Certificates” are defined in Section 4.7(b) hereof.

“TCO Common Stock” means the common stock of TCO.

“Trading Day” is defined in Section 8.1(e)(v) hereof.

“TRG Change of Control” means the occurrence of any of the following after the date of the Third Amendment to this Agreement: (i) the acquisition by a Person or group of Persons (within the meaning of the federal securities laws) of securities which results in such Person or group having more than fifty percent (50%) of the voting power for the election of directors of TCO, or (ii) for so long as TCO has a class of outstanding securities registered under the federal securities laws, any event that causes TCO not to be the managing member of TRG.”

2. Article II of the Partnership Agreement is hereby further amended by deleting the definitions of “Fractional Unit,” “Limited Partner” and “Limited Partners,” “Partner” and “Partners,” “Partnership Interest Ledger,” “Record Partner,” and “Required Distribution Amount” in their entirety, and by inserting the following new definitions in the place thereof:

““Fractional Unit” means a portion of, or less than the whole of, a Unit of Partnership Interest or a Series E Unit of Partnership Interest.

“Limited Partner” and “Limited Partners” are (i) those Persons identified as such on Schedule A hereto, in their capacities as limited partners of the Partnership, (ii) the successors to any portion or all of the Partnership Interest of those Persons identified as Limited Partners on Schedule A hereto who are admitted to the Partnership as limited partners pursuant to Section 8.2 hereof, (iii) any Parity Preferred Partner and any permitted transferee of a Parity Preferred Partner who has been admitted to the Partnership as a limited partner pursuant to Section 8.2 hereof, (iv) any Person holding Series E Units of Partnership Interest issued pursuant to the Contribution Agreement and any permitted transferee of any such Person who has been admitted to the Partnership as a limited partner pursuant to Section 8.2 hereof, and (v) any Person or Persons to whom an Additional Interest as a limited partner is issued pursuant to Section 8.4 hereof and who is admitted to the Partnership as a limited partner pursuant to Section 8.2 hereof.

“Partner” and “Partners” are (i) those Persons named in the Preamble to this Agreement, (ii) the successors to any portion or all of the Partnership Interest of those Persons named in the Preamble to this Agreement who are admitted as a Partner or Partners pursuant to Section 8.2 hereof, (iii) any Parity Preferred Partner and any permitted transferee of a Parity Preferred Partner who has been admitted to the Partnership as a limited partner pursuant to Section 8.2 hereof, (iv) any Person holding Series E Units of Partnership Interest issued pursuant to the Contribution Agreement and any permitted transferee of any such Person who has been admitted to the Partnership as a limited partner pursuant to Section 8.2 hereof, and (v) any Person or Persons to whom a Partnership Interest has been issued pursuant to Section 8.4 hereof and who is admitted to the Partnership pursuant to Section 8.2 hereof.

“Partnership Interest Ledger” means a ledger maintained at the principal office of the Partnership that shall set forth, among other things, the name and address of each Partner and the nature of the Partnership Interest of each Partner, the number of Units of Partnership Interest held by each Partner, if any, the number of Series E Units of Partnership Interest held by each Partner, if any, and the current Percentage Interest of each Partner, if any.

“Record Partner” means a Person set forth as a Partner on the books and records of the Partnership. No Person other than a Person that was a Partner on the Effective Date shall be a Record Partner until such Person has become a substitute Partner in the Partnership pursuant to Section 8.2 hereof, or has acquired an Additional Interest, Series E Units of Partnership Interest, or an Incentive Interest pursuant to Section 8.4 hereof and, in each such case, has become a Partner in the Partnership pursuant to Section 8.4 hereof. Notwithstanding the foregoing, a Parity Preferred Partner is a Record Partner.”

“Required Distribution Amount” means an amount, as set forth in the Annual Budget, equal to the aggregate cash (or cash per Unit of Partnership Interest, which for purposes solely of this definition of “Required Distribution Amount,” shall include the Series E Units of Partnership Interest) to be distributed to the Partners for such Partnership Fiscal Year, as such amount may be increased or decreased from time to time by the Managing General Partner, in consultation with the Manager, but in no event less than the Estimated Minimum Distribution Amount.”"

3. The heading to Article IV is hereby amended to insert “Series E Units of Partnership Interest;” immediately following “Units of Partnership Interest;” and to insert “Series E Partnership Interest Certificates;” immediately following “Partnership Interest Certificates.”

4. Section 4.6 of the Partnership Agreement is hereby deleted in its entirety, and the following new Section 4.6 is inserted in the place thereof:

"Section 4.6 Partnership Interests; Units of Partnership Interest; Series E Units of Partnership Interest; Percentage Interests.

(a) For the purpose of this Agreement, the term “Partnership Interest” means, with respect to a Partner, such Partner’s right to the allocations (and each item thereof) specified in Section 5.1 hereof and distributions from the Partnership, its share of expenditures of the Partnership described in Section 705(a)(2)(B) of the Code (or treated as such under Regulations Section 1.704-1(b)(2)(iv)(i)) and its rights of management, consent, approval, or participation, if any, as provided in this Agreement. Each Partner’s Partnership Interest (other than TCO’s Preferred Equity and other than a Parity Preferred Partner’s Parity Preferred Equity) shall be divided into units (herein referred to collectively as the “Units of Partnership Interest” and individually as a “Unit of Partnership Interest”) or Series E Units of Partnership Interest, as applicable. Each Partner’s Partnership Interest (other than TCO’s Preferred Equity and other than a Parity Preferred Partner’s Parity Preferred Equity) shall be represented by that number of Units of Partnership Interest or Series E Units of Partnership Interest set forth opposite such Partner’s name on Schedule A attached hereto, as such Schedule may be amended from time to time pursuant to Section 4.8, Article VIII or Article X hereof. The Partnership may issue additional Units of Partnership Interest or Series E Units of Partnership Interest in accordance with Section 8.4 hereof. The Partnership and TCO shall conduct their respective operations, to the extent they are able to do so, so that one Unit of Partnership Interest will be equal in value to one (1) share of TCO’s common stock and one Series E Unit of Partnership Interest will be equal in value to one (1) Unit of Partnership Interest.

(b) For the purpose of this Agreement, the term “Percentage Interest” means, with respect to each Partner (other than a Parity Preferred Partner), the percentage set forth opposite such Partner’s name on Schedule A attached hereto, as such Schedule may be amended from time to time pursuant to Section 4.8, Article VIII or Article X hereof, and shall at any time be equal to a fraction, the numerator of which is the aggregate number of Units of Partnership Interest and Series E Units of Partnership Interest held by such Partner, and the denominator of which is the aggregate number of all Units of Partnership Interest and Series E Units of Partnership Interest that are issued and outstanding. Solely for purposes of calculating Percentage Interests, no interest in the Partnership that is Preferred Equity or Parity Preferred Equity shall be taken into account.”

5. Section 4.7 is hereby amended by adding “; Series E Partnership Interest Certificates” to the heading thereof, byinserting “(a)” before the first paragraph thereof, by deleting the language following the legend in paragraph (a) thereof, and by substituting the following in the place thereof:

“Transfers (except by way of a Pledge) of Units of Partnership Interest shall be made only as permitted herein and then only upon the request of the Person named in the Partnership Interest Certificate, or by its attorney lawfully constituted in writing, and upon surrender and cancellation of a Partnership Interest Certificate for a like number of Units of Partnership Interest, a duly executed and acknowledged written instrument of assignment and agreement by the transferee to be bound by this Agreement, and with such proof of authenticity of the signatures as the Managing General Partner may reasonably require. In the event of a permitted Transfer of a Unit of Partnership Interest or the issuance of additional Units of Partnership Interest pursuant to the provisions of Article VIII or Article X hereof, the Managing General Partner shall cause the Partnership to issue Partnership Interest Certificates to the appropriate Persons to reflect any Transfer of Units of Partnership Interest or issuance of additional Units of Partnership Interest, as the case may be. In the event that the Partnership shall purchase any Units of Partnership Interest (including Fractional Units), such Units of Partnership Interest (or Fractional Units) shall be extinguished, and the Partnership Interest Certificates with respect thereto shall be surrendered and cancelled.”

6. Section 4.7 is further amended by inserting the following new paragraph (b) at the end thereof:

“(b) The Series E Units of Partnership Interest shall be evidenced by Series E Partnership Interest Certificates (herein referred to collectively as the “Series E Partnership Interest Certificates” and individually as a “Series E Partnership Interest Certificate”) which shall be issued in accordance with this Section 4.7 and Section 13.18 hereof, in the form attached hereto as Exhibit A-1, as such form may be amended from time to time by the Managing General Partner. Each Series E Partnership Interest Certificate shall be signed by an authorized signatory or signatories of the Partnership and shall bear the following legend:

“THE SERIES E UNITS OF PARTNERSHIP INTEREST REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AND TRANSFERABLE ONLY IN COMPLIANCE WITH THE SECOND AMENDMENT AND RESTATEMENT OF AGREEMENT OF LIMITED PARTNERSHIP OF THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP, AS THE SAME HAS BEEN AND MAY BE FURTHER AMENDED AND/OR SUPPLEMENTED FROM TIME TO TIME (THE “PARTNERSHIP AGREEMENT”), A COPY OF WHICH IS ON FILE AT THE OFFICE OF THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP. ANY ASSIGNMENT, SALE, TRANSFER, CONVEYANCE, MORTGAGE, OR OTHER ENCUMBRANCE, PLEDGE, GRANT OF AN OPTION OR PROXY, OR OTHER DISPOSITION OR ACT OF ALIENATION, WHETHER VOLUNTARY OR INVOLUNTARY, OR BY OPERATION OF LAW, IN RESPECT OF A SERIES E UNIT OF PARTNERSHIP INTEREST MADE OTHER THAN AS PERMITTED IN THE PARTNERSHIP AGREEMENT SHALL BE NULL AND VOID AND HAVE NO FORCE OR EFFECT WHATSOEVER.”

Transfers of Series E Units of Partnership Interest shall be made only as permitted herein and then only upon the request of the Person named in the Series E Partnership Interest Certificate, or by its attorney lawfully constituted in writing, and upon surrender and cancellation of a Series E Partnership Interest Certificate for a like number of Series E Units of Partnership Interest, a duly executed and acknowledged written instrument of assignment and agreement by the transferee to be bound by the terms of this Agreement, and with such proof of authenticity of the signatures as the Managing General Partner may reasonably require. In the event of a permitted Transfer of a Series E Unit of Partnership Interest, the Managing General Partner shall cause the Partnership to issue Series E Partnership Interest Certificates to the appropriate Persons to reflect any Transfer of Series E Units of Partnership Interest. In the event that the Partnership shall purchase any Series E Units of Partnership Interest (including Fractional Units), such Series E Units of Partnership Interest (or Fractional Units) shall be extinguished and the Series E Partnership Interest Certificates with respect thereto shall be surrendered and cancelled.”

7. Section 4.8 of the Partnership Agreement is hereby deleted in its entirety, and the following is substituted in the place thereof:

“Section 4.8 Purchase of Fractional Units of Partnership Interest and Fractional Series E Units of Partnership Interest; Adjustment of Units of Partnership Interest and Series E Units of Partnership Interest.

(a) If as a result of any division or combination of Units of Partnership Interest (as provided below in this Section 4.8) or Transfer or issuance of Units of Partnership Interest or Series E Units of Partnership Interest, there shall be outstanding any Fractional Unit, the Managing General Partner may, but shall not be obligated to, at any time cause the Partnership to purchase such Fractional Unit, in which event the Partner holding such Fractional Unit shall sell such Fractional Unit to the Partnership for an amount equal to the fair market value of such Fractional Unit as determined in good faith by the Managing General Partner.

The Managing General Partner, in good faith, may, from time to time, divide or combine all Units of Partnership Interest then issued and outstanding; provided, however, that in no event shall the Managing General Partner combine the Units of Partnership Interest unless the fair market value of each resulting Unit of Partnership Interest is One Hundred Thousand Dollars ($100,000) or less. Accordingly, divisions or combinations of Units of Partnership Interest may provide for fractional ratios. In the event of any such action to combine or divide Units of Partnership Interest as provided in this Section 4.8, (i) all Series E Units of Partnership Interest shall be simultaneously divided or combined to maintain a one-to-one conversion ratio with the Units of Partnership Interest, (ii) after such division or combination, all references in this Agreement to a number of Units of Partnership Interest or Series E Units of Partnership Interest shall be combined or divided by the same divisor or multiplier, as the case may be. Any action to divide or combine Units of Partnership Interest and Series E Units of Partnership Interest pursuant to this Section 4.8 shall be effective on the date set forth as the effective date for such action, and each Partner or Person to whom a Unit of Partnership Interest or Series E Unit of Partnership Interest has been pledged shall have the right to request a certification from the Partnership as to the date of the last division or combination of Units of Partnership Interest and Series E Units of Partnership Interest. Promptly following any such action, Schedule A shall be amended to reflect such action, notice of such action shall be provided to each of the Partners and to any Person to whom a Unit of Partnership Interest or Series E Unit of Partnership Interest has been pledged (provided the Partnership shall have received notice of such Pledge and the identity and address of such pledgee), and appropriate substitute Partnership Interest Certificates or Series E Partnership Interest Certificates, as applicable, shall be issued as of the effective date of such action, in exchange for outstanding Partnership Interest Certificates and Series E Partnership Interest Certificates pursuant to such terms as shall be established by the Managing General Partner. For the purpose of this Section 4.8, fair market values shall be as determined in good faith by the Managing General Partner.

(b) In the event the Partnership undergoes an Organic Change, the Series E Units of Partnership Interest shall be deemed to have automatically converted on a one-for-one basis into Units of Partnership Interest on the Day immediately prior to the Day on which the closing of the Organic Change occurs, and subject to the restriction set forth in the last paragraph of Section 8.1(e) hereof, shall entitle the Partners holding such Series E Units of Partnership Interest to acquire or receive such shares of stock, securities, or other assets in connection with such Organic Change on the same terms and in the same manner as a Partner holding Units of Partnership Interest.”

8. Section 5.1 of the Partnership Agreement is hereby amended by deleting paragraph (b) thereof in its entirety, and by inserting the following new paragraph (b) in the place thereof:

“(b) Except as otherwise provided in Section 5.1(d) or 5.1(f) hereof, the Profits and Losses of the Partnership (and each item thereof) for each Partnership Fiscal Year shall be allocated among the Partners in accordance with this Section 5.1(b).

(1) Profits shall be allocated:

(A) first, to TCO, in an amount equal to the excess, if any, of the cumulative amount of Losses allocated to TCO pursuant to Section 5.1(b)(2)(C) hereof over the cumulative amount of Profits allocated to TCO pursuant to this Section 5.1(b)(1)(A); and then

(B) second, to the Parity Preferred Partners, in an amount equal to the Unallocated Parity Preferred Return with respect to each series (proportionate as to such Unallocated Parity Preferred Return among each series); and then

(C) third, to the Parity Preferred Partners, in an amount equal to the excess, if any, of the cumulative amount of Losses allocated to the Parity Preferred Partners pursuant to Section 5.1(b)(2)(B) hereof over the cumulative amount of Profits allocated to the Parity Preferred Partners pursuant to this Section 5.1(b)(1)(C) (proportionate as to the amount of such excess among each series); and then

(D) fourth, to the Partners in an amount equal to the excess, if any, of the cumulative amount of Losses allocated to the Partners pursuant to Section 5.1(b)(2)(D) hereof over the cumulative amount of Profits allocated to the Partners pursuant to this Section 5.1(b)(1)(D) (proportionate as to such excess amounts); and then

(E) fifth, to the Partners holding Units of Partnership Interest and Series E Units of Partnership Interest in accordance with their respective Percentage Interests; provided, however, that Profits for any Partnership Fiscal Year allocated to the Parity Preferred Partners may be limited if so provided in the Designation, Distribution, Redemption, Exchange, and Consent Provisions of the applicable series.

(2) Losses shall be allocated:

(A) first, to Partners holding Units of Partnership Interest and Series E Units of Partnership Interest until the Adjusted Capital Account Balances of all such Partners are reduced to zero, excluding, for purposes of calculating TCO’s Adjusted Capital Account Balance, the Preferred Equity (in proportion to such positive Adjusted Capital Account Balances (excluding the Preferred Equity)); and then

(B) second, to the Parity Preferred Partners until the Adjusted Capital Account Balances of the Parity Preferred Partners are reduced to zero (in proportion to such positive Adjusted Capital Account Balances); and then

(C) third, to TCO until the Adjusted Capital Account Balance of TCO, including the Preferred Equity, is reduced to zero; and then

(D) fourth, to the General Partners or any Limited Partner which has made an election under Section 11.1(d) hereof, in proportion to their respective Percentage Interests.”

9. Section 8.1(b) of the Partnership Agreement is hereby amended by deleting the first paragraph thereof and by inserting the following:

“(b) A Partner (other than TCO or a Parity Preferred Partner) may Transfer all or any portion of its Partnership Interest (but not less than one (1) Unit of Partnership Interest or Series E Unit of Partnership Interest, as applicable) to any other Partner (other than a Parity Preferred Partner), or to one (1) or more members of such Partner’s Immediate Family, or to a Family Trust, or to any Qualified Institutional Transferee (other than a Parity Preferred Partner), or to an entity consisting of or owned entirely by one (1) or more of the foregoing Persons, or to the Partnership, or, in the event that a Partner is a partnership, or other entity (other than TCO and other than a Qualified Institutional Transferee that is not a QIT Entity), to one (1) or more of the constituent partners, or owners of such Partner or other entity, or to one (1) or more members of the respective Immediate Families or Family Trusts of the constituent partners, or owners of such Partner or other entity, or to any Qualified Institutional Transferee (other than a Parity Preferred Partner), or to an entity consisting of or owned entirely by one (1) or more of the foregoing Persons, or to the Partnership, provided that, in each case, the Managing General Partner has determined by written notification (a “Transfer Determination”), to the transferring Partner, which Transfer Determination shall not be unreasonably withheld and shall be deemed given if not refused within seven (7) Business Days of the date of notice thereof to the Partnership, that either (A) such Transfer will not cause (i) any lender of the Partnership or an Owning Entity to hold in excess of ten percent (10%) of the Percentage Interests or any other percentage of the Percentage Interests that would, pursuant to the Regulations under Section 752 of the Code or any successor provision, cause a loan by such lender to constitute Partner Nonrecourse Debt or (ii) a violation of any partnership agreement or other document forming or governing an Owning Entity, or (B) the Managing General Partner has determined to waive such requirement in its reasonable discretion, after having determined that the Transfer will not materially adversely affect the Partnership, its assets or any Partner, or constitute a violation of the Partnership Law, or any other law to which the Partnership or an Owning Entity is subject.”

10. Section 8.1 is hereby further amended to add the following new paragraph (e), and by redesignating the following paragraphs accordingly:

“(e) A Partner holding Series E Units of Partnership Interest may convert all or any portion of its Series E Units of Partnership Interest (but not less than one (1) Series E Unit of Partnership Interest) into Units of Partnership Interest as follows:

(i) on or after January 1, 2004, a conversion of up to three percent (3%) of the number of Series E Units of Partnership Interest originally issued;

(ii) on or after January 1, 2005, a conversion of up to thirty-six and thirty-three hundredths percent (36.33%) of the number of Series E Units of Partnership Interest originally issued, determined after taking into account any conversion under clause (i) of this Section 8.1(e);

(iii) on or after January 1, 2006, a conversion of up to sixty-nine and sixty-seven hundredths percent (69.67%) of the number of Series E Units of Partnership Interest originally issued, determined after taking into account any conversion under clauses (i) and (ii) of this Section 8.1(e);

(iv) on or after January 1, 2007, a conversion of the remaining Series E Units of Partnership Interest; and

(v) a conversion of all of the Series E Units of Partnership Interest in the event that (w) the closing price of TCO Common Stock on the New York Stock Exchange (the “NYSE”) is less than Ten Dollars ($10.00) per share on any Day on which the NYSE is open for business (a “Trading Day”), (x) the closing price of TCO Common Stock on the NYSE is less than Twelve Dollars ($12.00) per share for a period of twenty (20) consecutive Trading Days, (y) the aggregate amount of distributions paid on one (1) share of TCO Common Stock during any calendar quarter is less than eighty-five percent (85%) of the aggregate amount of distributions paid on one (1) share of TCO Common Stock during the corresponding quarter for the prior period, or (z) a TRG Change of Control occurs at any time after the date of the Third Amendment to this Agreement.

In the event a Partner desires to convert all or any portion of the Series E Units of Partnership Interest held by such Partner into the same number of Units of Partnership Interest as and when permitted by, and in accordance with, this Section 8.1(e), such Partner shall give written notice thereof to the Managing General Partner indicating the number of Series E Units of Partnership Interest such Partner desires to so convert. Such Partner shall include with such notice such Partner’s Series E Partnership Interest Certificate (the notice and the Series E Partnership Interest Certificate are hereinafter referred to together as the “Conversion Notice”). On the third ^(3rd) Business Day after the date of receipt by the Managing General Partner of the Conversion Notice, such Partner shall be deemed to have (i) been issued by the Partnership Units of Partnership Interest equal in number to the number of Series E Units of Partnership Interest so converted, and (ii) accepted the Continuing Offer in accordance with its terms with respect to the Units of Partnership Interest deemed issued. If applicable, the Partnership shall issue to such Partner a new Series E Partnership Interest Certificate reflecting the remaining number of Series E Units of Partnership Interest held by such Partner. Solely for purposes of Section 13.11 hereof, the conversion right with respect to the Series E Units of Partnership Interest in accordance with the provisions of this Section 8.1(e) shall be treated as the ability to assign a Partnership Interest.

Any permitted conversion of Series E Units of Partnership Interest into Units of Partnership Interest pursuant to this Section 8.1(e) shall be subject to the further requirement that any shares of TCO Common Stock into which Units of Partnership Interest are converted pursuant to this Section 8.1(e) and the Continuing Offer be sold in the open market as soon as reasonably practicable. As used in this Section 8.1(e), “as soon as reasonably practicable” means as soon as reasonably possible in compliance with all applicable law, including, but not limited to, the Hart Scott Rodino Act and all applicable federal and state securities and other laws.

(f) Notwithstanding the provisions of Section 8.1(b) hereof, in the event a Parity Preferred Partner desires to Transfer its Partnership Interest to a Qualified Institutional Transferee, it may do so provided that it has obtained the prior written consent of each Appointing Person, which consent may be withheld in its sole and absolute discretion, and provided that the Managing General Partner has issued a Transfer Determination or waived such requirement all in accordance with Section 8.1(b) hereof.”

11. Section 8.2 of the Partnership Agreement is hereby amended to delete clause (ii) and to insert the following in the place thereof:

“(ii) if the assignee holds Units of Partnership Interest or Series E Units of Partnership Interest, the assignee delivers to the Partnership a Partnership Interest Certificate or Series E Partnership Interest Certificate evidencing the number of Units of Partnership Interest or Series E Units of Partnership Interest, as applicable, which are the subject of the Transfer, and in the case of each assigning Partner whether or not it holds Units of Partnership Interest or Series E Units of Partnership Interest, the assignee delivers to the Partnership a duly executed and acknowledged written instrument of assignment, which instrument of assignment binds the assignee to all of the terms and conditions of this Agreement as if the assignee were a signatory party hereto and does not release the assignor from any liability or obligation (accrued to the date of Transfer) of or in respect of the Partnership Interest which is the subject of the Transfer;"

12. Section 8.3(a) of the Partnership Agreement is hereby amended to insert “or Series E Units of Partnership Interest” immediately following “Units of Partnership Interest” in the second parenthetical of the proviso in such section.

13. Section 8.3 is hereby further amended by deleting paragraph (b) thereof in its entirety and by inserting the following new paragraph (b) in the place thereof:

“(b) An assignee of any portion of or an interest in a Partnership Interest (an “Assigned Interest”) pursuant to a Transfer with respect to which a Transfer Determination has been granted that has not, for any reason, been admitted as, or become, a partner in the Partnership in the place and stead of an assignor Partner (the “Original Assignor”) in respect of the Assigned Interest, may, by prior written notice to the Managing General Partner, assign the Assigned Interest, in accordance with and subject to the provisions of this Article VIII or, in the event the Assigned Interest is represented by Series E Units of Partnership Interest, convert the Assigned Interest into Units of Partnership Interest in accordance with Section 8.1(e) hereof, in each case in all respects as if or with the same effect as if such assignee were a Partner, and in the event that any subsequent assignee is admitted as a substitute partner in accordance with and subject to Section 8.2 hereof, the Original Assignor, simultaneously with such subsequent assignment, shall Transfer all of its remaining right, title, and interest in the Partnership Interest relating to the Assigned Interest, to the Partner acquiring the Assigned Interest, which Partner shall act and be the partner in respect of the Assigned Interest in the place and stead of the Original Assignor. Each assignor Partner, on behalf of itself and its permitted successors and assigns, hereby agrees to enter into an appropriate amendment to this Agreement, the Certificate of Limited Partnership (if required by the Partnership Law), and any other document determined by the Managing General Partner to be necessary to reflect the foregoing.”

14. Section 10.1 of the Partnership Agreement is hereby amended by deleting paragraph (b) thereof in its entirety and by inserting the following new paragraph (b) in the place thereof:

“(b) Upon the occurrence of a Disabling Event or an Event of Withdrawal in respect of a General Partner, provided that there is a General Partner remaining, the Partnership shall not dissolve but shall be continued in accordance with this Agreement, and the Partnership Interest of the Disabled General Partner shall automatically become that of a limited partner except to the extent such Disabled General Partner, at such time or any time thereafter, assigns its Partnership Interest to another General Partner, subject to the provisions of Section 8.1 hereof; and such Disabled General Partner or Successor shall thereupon have the same interest in the Partnership capital, profits, losses, and distributions as the Disabled General Partner, but otherwise shall have and be subject to all the rights, obligations, restrictions, and attributes of a limited partner, all as provided in this Agreement. Upon the occurrence of a Disabling Event or an Event of Withdrawal in respect of the last remaining General Partner, the Partnership shall dissolve; provided, however, that the Partnership shall not be dissolved if within ninety (90) Days after such Disabling Event or Event of Withdrawal (the “Ninety Day Period”) all Partners (other than any Parity Preferred Partner) agree in writing to continue the business of the Partnership and to the appointment, effective as of the date of such Disabling Event or Event of Withdrawal, of one (1) or more general partners of the Partnership as successor general partner(s) (“Successor General Partner”) to act as, and be in all respects under this Agreement, a general partner. If any such election is made, the Partnership shall continue pursuant to this Agreement for the term provided in Section 1.5 hereof, and the Partnership Interest of the Disabled General Partner in the Partnership (except to the extent such interest is held by the Successor General Partner) shall automatically become that of a limited partner; and such Representative or Successor to the Disabled General Partner (subject, in the case of a Representative or Successor, to Sections 8.1 and 8.2 hereof) shall thereupon have the same interest in the Partnership capital, profits, losses, and distributions as the Disabled General Partner, but otherwise (except to the extent a Successor to the Disabled General Partner shall be the Successor General Partner) shall have and be subject to all the rights, obligations, restrictions, and attributes of a limited partner, all as provided in this Agreement. In the event of the selection of a Successor General Partner, as provided in this Section 10.1(b), (1) each of the Partners, on behalf of itself and its permitted successors and assigns, HEREBY AGREES AND CONSENTS to the admission of any such Successor General Partner as herein provided; and (2) the then Partners shall execute and deliver such instruments and documents, and shall take such actions, as shall be necessary or advisable, in the sole and absolute discretion of the Successor General Partner to carry out the provisions of this Article X, including, but not limited to, (x) the execution of conformed counterparts of this Agreement, amendments to this Agreement, and/or an amended limited partnership agreement, (y) the execution and filing of certificates of discontinuance, assumed or fictitious name certificates, certificates of co-partnership, and/or certificates of limited partnership, and/or amended certificates of limited partnership, and (z) the execution of such instruments and documents (including, but not limited to, deeds, bills of sale, and other instruments of conveyance and/or assignments of Partnership Interest) as shall be necessary or advisable to effect any necessary transfer (nominal or otherwise) of the property, assets, investments, rights, liabilities, and business of the Partnership or of a Partnership Interest and/or to accomplish the purpose and intent of this Article X. In the event that a Partner shall fail to execute any such instruments or documents or fail to take any such actions, when requested to do so by the Successor General Partner, the Successor General Partner and/or any Person designated by the Successor General Partner, as attorney-in-fact for each of the Partners, shall have the right and power for, on behalf of, and in the name of each of the Partners to execute any and all instruments and documents and take any and all such actions.”

15. Section 13.18 is hereby deleted in its entirety, and the following Section 13.18 is substituted in the place thereof:

“Section 13.18 Lost Partnership Interest Certificates and Series E Partnership Interest Certificates

In the event that any Partnership Interest Certificate or Series E Partnership Interest Certificate shall be lost, stolen, or destroyed, the Managing General Partner may authorize the issuance of a substitute Partnership Interest Certificate or Series E Partnership Interest Certificate, as the case may be, in place of the Partnership Interest Certificate or Series E Partnership Interest Certificate so lost, stolen, or destroyed. In each such case, the applicant for a substitute Partnership Interest Certificate or Series E Partnership Interest Certificate shall furnish to the Managing General Partner evidence to its satisfaction of the loss, theft, or destruction of such Partnership Interest Certificate or Series E Partnership Interest Certificate and of the ownership thereof, and also such security or indemnity as the Managing General Partner may reasonably require.”

16. The attached Schedule A and Schedule C are inserted in the Partnership Agreement in the place of the existing Schedule A and Schedule C, and new Exhibit A-1 attached hereto is inserted into the Partnership Agreement.

17. Section and clause references within the Partnership Agreement are renumbered accordingly.

18. Except as expressly set forth herein, the terms and provisions of the Partnership Agreement continue unmodified and are hereby confirmed and ratified.

19. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

20. This Amendment shall be governed by and construed in accordance with the laws of the State of Delaware.

21. This Amendment may be executed in two (2) or more counterparts, all of which as so executed shall constitute one (1) Amendment, binding on all of the parties hereto, notwithstanding that all the parties are not signatory to the original or the same counterpart; provided, however, that no provision of this Amendment shall become effective and binding unless and until all parties hereto have duly executed this Amendment, at which time this Amendment shall then become effective and binding as of the date first-above written.

IN WITNESS WHEREOF, the undersigned Appointing Persons, in accordance with Section 13.11 hereof, on behalf of all of the Partners, have entered into this Amendment as of the date first-above written.


TAUBMAN CENTERS, INC., a Michigan corporation By: /s/ William S. Taubman Its: Authorized Signatory TG PARTNERS LIMITED PARTNERSHIP, a Delaware limited partnership By: TG Michigan, Inc., a Michigan corporation, Managing General Partner By: /s/ William S. Taubman Its: Authorized Signatory TAUB-CO MANAGEMENT, INC., a Michigan corporation By: /s/ William S. Taubman Its: Authorized Signatory

EX-10 4 contributionagreement2q03.htm CONTRIBUTION AGREEMENT Contribution Agreement

CONTRIBUTION AGREEMENT

THIS CONTRIBUTION AGREEMENT (this “Agreement”) is entered into on this 2nd day of May, 2003, by and among The Taubman Realty Group Limited Partnership (“TRG”), a Delaware limited partnership, and G.K. Las Vegas Limited Partnership, a California limited partnership (“Gordon”).

The following are the facts underlying this Agreement:

TRG and Gordon desire to have Gordon subscribe for certain Series E units of partnership interest in TRG upon the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the representations and warranties and the covenants and agreements contained in this Agreement, the parties, intending to be legally bound, hereto hereby agree as follows:

Capitalized terms utilized in this Agreement and not separately defined herein shall be given the meanings ascribed to such terms in the JV Agreement (as defined below).

To the extent that this Agreement requires actions to be taken by TCI (as defined below), it is agreed that any such requirement shall be an obligation of TRG to cause TCI to take such actions, and, if such actions are not taken by TCI, TRG shall be in breach of this Agreement.

ARTICLE I

SUBSCRIPTION AND CONTRIBUTION

1.1 Issuance of and Subscription for Series E Units of Partnership Interest. Taubman Centers, Inc., a Michigan corporation (“TCI”), pursuant to a certain Second Amended and Restated Continuing Offer, dated May 16, 2000 (the “Continuing Offer”), has made available to certain partners in TRG the ability to exchange Units of Partnership Interest in TRG (“Common Units”) for shares of TCI’s common stock (“TCI Stock”), which is currently traded on the New York Stock Exchange. Terms used in this Section 1.1 and in Section 1.3 that are not defined herein and that are defined in the Continuing Offer have the meanings ascribed to them in the Continuing Offer. TRG shall cause TCI to have all shares of TCI Stock referenced in this Agreement to be listed on the New York Stock Exchange promptly after the issuance thereof.

Subject to the accuracy of the representations and warranties set forth in Section 2.1 hereof, Gordon hereby subscribes for, and TRG shall issue to Gordon, units of a new class of limited partnership interest in TRG (the “Series E Units”) in the quantity and on the terms set forth below. The Series E Units shall be evidenced by a certificate (the “Certificate of Units”) and shall be economically equivalent to Common Units of TRG that are issued and outstanding prior to the issuance of the Series E Units and shall otherwise have the terms described herein; provided, however, that the Series E Units shall not entitle Gordon to purchase Class B Preferred Shares of TCI; and provided further that such Series E Units shall not entitle Gordon to become a party to the Continuing Offer until such time as the Series E Units are converted into Common Units in accordance with the TRG Partnership Agreement.

Reference is made to that certain Joint Venture Agreement (the “JV Agreement”), dated as of January 11, 2003, between GK Las Vegas Limited Partnership and TRG. In the event that the GK Closing has occurred as contemplated by Section 3 of the JV Agreement (“Event 3”), 2,083,333 Series E Units shall be issued to Gordon at Closing (as defined below) for the subscription price set forth herein.

In the event that the Simon Closing has occurred as contemplated by Section 4 of the JV Agreement (“Event 4”), TRG shall issue to Gordon, at Closing, 2,416,666.67 Series E Units for the subscription price set forth herein. If Event 4 shall occur, TRG and Gordon hereby agree that Gordon, subject to all of the terms and conditions set forth in this Agreement, shall contribute to TRG, and TRG shall then contribute to TRG Forum LLC (“TRG Forum”), a 33.3% common equity interest in Forum Shops Associates LLC (the “Company”), a Delaware limited liability company (such 33.3% interest being referred to as the “Manager Interest”) in exchange for such Series E Units, effective on and as of the Closing Date (as defined below). As a result of such contributions, Gordon shall own a 66.7% common equity interest in the Company and TRG Forum shall be the Managing Member of the Company. Gordon covenants and agrees that on the Closing Date, the Manager Interest shall be free of any pledge, lien, encumbrance, or rights of others of any kind, except for (i) the rights of TRG and TRG Forum pursuant to this Agreement, (ii) the Amended LLC Agreement, and (iii) liens created by TRG or TRG Forum.

The parties hereto hereby acknowledge the following: Event 3 has occurred, Event 4 has not occurred and shall not occur, and the execution and delivery of the Conversion Restriction Agreement (as defined in the JV Agreement) is being waived by the parties hereto.

1.2 Subscription Price. If Event 3 has occurred, the subscription price for the Series E Units will be the sum of $49,999,992 for the Series E Units (the “Subscription Price”) which will be paid by means of a federal funds wire transfer on the closing date. If Event 4 has occurred, the Manager Interest (as referenced above), which shall have an agreed valuation of $58 million, shall be exchanged for the Series E Units.

1.3 Continuing Offer. TRG or TCI, as applicable, shall, as soon as practicable after the date of conversion of the Series E Units into Common Units, and, in any event, within three (3) Business Days thereafter, (i) designate Gordon as a Designated Offeree under the Continuing Offer and (ii) file with the Securities and Exchange Commission (the “SEC”) a registration statement and related prospectus (the “Registration Statement”) that complies as to form in all material respects with applicable SEC rules providing for the sale of the shares of TCI stock by Gordon and that, when declared effective under the Securities Act of 1933, as amended (the “Securities Act”), will register for resale under the Securities Act the shares of TCI Stock that Gordon would have the right to acquire upon acceptance of the Continuing Offer with respect to the Common Units into which the Series E Units may be converted pursuant to the terms of the TRG Partnership Agreement, assuming that such acceptance occurred on the date that such registration statement is first filed with the SEC. TRG or TCI, as applicable, shall take all steps necessary to cause the Registration Statement to be declared effective as soon as practicable and, thereafter, to keep the Registration Statement effective (including the preparation and filing of any amendments and supplements necessary for that purpose) until the date on which Gordon consummates the sale of all of the shares of TCI Stock registered under the Registration Statement to enable Gordon (or the holder of the subject securities) to sell any of the securities covered by such Registration Statement. Gordon shall provide in a timely manner information regarding the proposed sale by Gordon of the shares of TCI Stock and such other information reasonably requested by TRG or TCI in connection with the preparation of and for inclusion in the Registration Statement. TRG or TCI, as applicable, shall provide to Gordon a reasonable number of copies of the final prospectus and any amendments or supplements thereto. Gordon shall have no right to exchange the Series E Units for Common Units, or to exchange Common Units pursuant to the Continuing Offer, except in accordance with the TRG Partnership Agreement and the Continuing Offer. Gordon acknowledges and agrees that, upon acceptance of the Continuing Offer with respect to any Common Units into which any of the Series E Units may be converted, Gordon may not resell any shares of TCI Stock issued in exchange for such Common Units until the Registration Statement is effective, unless an exemption from the registration requirements is available. Gordon further acknowledges and agrees that its ability to accept the Continuing Offer will be subject to all of the terms, conditions, and limitations contained in the Continuing Offer, including, without limitation, the “Ownership Limit” (as therein defined). References to Gordon with respect to registration rights in favor of Gordon shall be deemed to extend to any holder of the Series E Units, Common Units, shares of TCI Stock or other securities issuable subject to the terms and conditions of the TRG Partnership Agreement. Similarly, all references in this Section 1.3 to the Series E Units held by Gordon and the Common Units and shares of TCI Stock directly or indirectly issuable upon the conversion thereof shall be deemed to include any securities issued or issuable as a distribution upon, or in exchange or replacement of, any such securities.

1.4 Additional Provisions. (a) In addition to the terms described elsewhere in this Agreement, the Series E Units shall have the following terms:

(i)

Series E Units. Whenever any distribution is paid to the holders of Common Units, TRG shall cause a distribution to be paid to the holder(s) of the Series E Units, in the same amount per unit that holders of Common Units receive per Common Unit, on the same terms as and simultaneous with such distribution paid to the holders of Common Units. In the event the outstanding Common Units are subdivided into a greater number of units, the distributions thereafter payable per unit with respect to Series E Units shall be equitably adjusted to the amount that would be payable to the holder of Series E Units if such Series E Units were converted into Common Units prior to such distribution.

(ii)

Conversion to Common Units. The Series E Units shall be convertible into Common Units on a one-for-one basis, subject to adjustment as provided in (d) below and subject to the restrictions on conversion set forth in the TRG Partnership Agreement.

(iii)

Conversion to TCI Stock. Common Units received upon the conversion of Series E Units shall be promptly exchanged into TCI Stock to the extent permissible under state and federal securities and other applicable law, subject to the terms and conditions set forth in this Agreement and in the TRG Partnership Agreement. In addition, subject to the foregoing, Gordon shall be deemed to have automatically accepted the Continuing Offer with respect to Common Units upon receipt of same.

(iv)

Amendment of Partnership Agreement. The amendment to the TRG Partnership Agreement setting forth terms of Series E Units shall be reasonably acceptable to Gordon.

(b)

Gordon Conversion and Disposition. Gordon agrees and acknowledges that:

(i)

all of the Series E Units to be received by Gordon and any Common Units and shares of TCI Stock received by Gordon upon the conversion thereof are subject to compliance with the “Ownership Limit” set forth in Article III(d) of the Restated Articles of Incorporation of TCI in effect on the date hereof; and

(ii)

upon the conversion of Common Units issued upon conversion of the Series E Units held by Gordon, the securities received pursuant to such conversion shall be sold or otherwise disposed of as soon as reasonably possible to the extent permissible under state and federal securities and other applicable law.

(c)

TRG Covenants. TRG agrees to cooperate and use its best efforts to make all filings, including, but not limited to, filings required by the Hart Scott Rodino Act and federal and state securities law, and take all other actions, necessary to allow for the issuance of the Series E Units and the conversions of the Series E Units, Common Units and shares of TCI Stock contemplated by this Agreement and the TRG Partnership Agreement.

(d)

Adjustment of Conversion Ratios. In the event of any TCI or TRG stock or unit dividend, stock or unit split, combination or exchange of shares or units, recapitalization or other change in capital structure, the number of Series E Units and the number of Common Units and shares of TCI Stock issuable upon the conversion of Series E Units and Common Units, respectively, as set forth in Section 1.1 and in this Section 1.4, shall be adjusted as necessary to reflect equitably the effects of such changes.

(e)

Continuing Offer. TRG and TCI agree as follows:

(i)

the Continuing Offer shall remain in effect so long as Series E Units (or Common Units issued upon conversion thereof) remain outstanding.

(ii)

the Continuing Offer shall not be amended in any way which adversely affects Gordon without Gordon’s consent.

(iii)

immediately upon conversion of its Series E Units, Gordon shall be designated as a Designated Offeree under the Continuing Offer.

(iv)

Gordon shall not be listed on Schedule B to the Continuing Offer.

(v)

TRG shall cause a Transfer Determination to be made within three (3) Business Days of any request for same by Gordon.

ARTICLE II

REPRESENTATIONS, WARRANTIES AND COVENANTS

2.1 Representations and Warranties of TRG. To induce Gordon to enter into this Agreement, TRG hereby represents and warrants to Gordon as follows:

(a)

The Series E Units (and the Common Units into which the Series E Units may be converted) will be duly authorized and validly issued and shall be free and clear of any lien, claim, pledge, encumbrance, or rights of others of any kind, except for the terms and conditions of the TRG Partnership Agreement (as defined below); TRG shall reserve Common Units to enable the conversion of the Series E Units; TCI shall reserve shares to enable the exchange of Common Units contemplated by this Agreement;

(b)

No Series E Units are presently outstanding or shall be issued without the consent of Gordon, nor shall the terms and conditions applicable to such Series E Units be amended without the consent of Gordon;

(c)

TRG has furnished to Gordon a true, correct and complete copy of the Second Amended and Restated Agreement of Limited Partnership of The Taubman Realty Group Limited Partnership, dated September 30, 1998, which has not been amended except for amendments dated March 4, 1999, September 3, 1999, and May 2, 2003 (as so amended, the “TRG Partnership Agreement”);

(d)

TRG has delivered to Gordon a true, correct, and complete copy of the Continuing Offer, and there has been no amendment thereto as of the date hereof;

(e)

On the Closing Date, TRG will have all requisite power, authority, and capacity to consummate the transactions contemplated hereunder and to otherwise perform the obligations required of them hereunder;

(f)

TRG’s execution, delivery, and performance of its obligations under this Agreement do not and will not violate any law, regulation, rule, administrative order, judgment, agreement, or instrument to which TRG or any of its properties are subject or by which TRG or any of its properties are bound. No consent of any third party is required in order for TRG to enter into this Agreement or any other agreement contemplated hereunder or for TRG to carry out the transactions contemplated hereby or thereby;

(g)

This Agreement constitutes the legally valid and binding obligation of TRG, enforceable against TRG in accordance with its terms;

(h)

At Closing, TRG shall provide to Gordon a certificate executed by TRG pursuant to which TRG represents and warrants to Gordon that, as of the Closing Date, the representations and warranties set forth on Exhibit A attached hereto are true and correct; and

(i)

From January 11, 2003 through the date of this Agreement, there has been no “TRG Change of Control” (as such term is defined in the JV Agreement).

2.2 Survival of TRG’s Representations and Warranties. All representations and warranties made by TRG in Section 2.1 shall not merge into the instruments of conveyance to be delivered at the Closing and shall survive the Closing until December 31, 2007, at which time such representations and warranties shall automatically expire, except as hereinafter specifically set forth. If, prior to December 31, 2007, Gordon alleges in writing to TRG that any specific representation or warranty given by TRG was untrue when made or was breached by TRG (which written allegation shall identify with reasonable specificity the contested representation or warranty and the facts supporting Gordon’s allegation), then the contested representation and warranty shall survive, solely with respect to the claims so alleged, until December 31, 2008, at which time it shall automatically expire, unless Gordon has filed a lawsuit with respect thereto prior to December 31, 2008 (and if such lawsuit is filed, the contested representation and warranty, solely with respect to the claims alleged in such lawsuit, shall survive until the lawsuit is resolved, at which time it shall automatically expire).

2.3 As-Is Exchange. Nothing in any of the documents or instruments to be delivered by TRG at the Closing shall be deemed to expand or alter in any manner the representations and warranties set forth in Section 2.1 above. Except as expressly set forth in this Agreement and in all certificates, documents and instruments delivered pursuant to Section 3.2 hereof, no representations, warranties or certifications have been made or are made, and no responsibility has been or is assumed, by TRG or by any partner, member, officer, employee or equity owner in TRG, as to any fact or condition which has or might affect the Series E Units or any portion thereof, or as to any other fact or matter. The parties hereto agree that all undertakings and agreements heretofore made between them or their respective agents or representatives are merged in this Agreement and the Exhibits and Schedules attached hereto and in all certificates, documents and instruments to be delivered pursuant to Section 3.2 hereof, which alone fully and completely express their agreement, and that this Agreement has been entered into after full investigation, or with the parties satisfied with the opportunity afforded for investigation of, TRG and the Series E Units and no party is relying upon any statement or representation by any other party unless such statement or representation is specifically embodied in this Agreement or in the Exhibits or the Schedules attached hereto or in any certificates, documents and instruments to be delivered pursuant to Section 3.2 hereof. The terms and provisions of this Section 2.3 shall survive the Closing, notwithstanding any provision of this Agreement to the contrary.

2.4 Representations and Warranties of Gordon. To induce TRG to enter into this Agreement, Gordon hereby represents and warrants to TRG as follows:

(a)

On the Closing Date, Gordon will have all requisite power, authority, and capacity to consummate the transactions contemplated hereunder and otherwise perform the obligations required of it hereunder;

(b)

Gordon’s execution, delivery, and performance of its obligations under this Agreement do not and will not violate any law, regulation, rule, administrative order, judgment, agreement, or instrument to which Gordon or any of its property is subject or by which Gordon or any of its property is bound;

(c)

This Agreement constitutes the legally valid and binding obligation of Gordon, enforceable against Gordon in accordance with its terms;

(d)

Neither the execution, delivery and performance of this Agreement or any other agreement contemplated hereunder nor the carrying out by Gordon of the transactions contemplated hereby or thereby will conflict with, result in a breach of, or constitute a default under any applicable provision of the Existing Partnership Agreement (as defined in the JV Agreement). No material consent of any third party is required in order for Gordon to enter into this Agreement or any other agreement contemplated hereunder or for Gordon to carry out the transactions contemplated hereby or thereby; and

(e)

The Series E Units are being acquired by Gordon as an investment for Gordon and not with a view to the resale or distribution of the Series E Units; Gordon is an “accredited investor” as defined in Regulation D under the Securities Act; in addition to the restrictions on transfers contained in the TRG Partnership Agreement, the Series E Units may not be resold, pledged or otherwise transferred unless permitted under the TRG Partnership Agreement, and unless such transfer is registered under the Securities Act and qualifies under applicable state “Blue Sky” laws and regulations (or unless such transfer is exempt from such registration and qualification); Gordon shall not transfer any Series E Units or Common Units acquired by it (or any securities acquired upon exchange of such Common Units) or any beneficial interest in such Series E Units or Common Units (or exchanged securities) or rights with respect to such Series E Units or Common Units (or exchanged securities) (except as permitted in the TRG Partnership Agreement) so long as Gordon owns Series E Units or Common Units; Gordon shall be bound by all of the terms, conditions, and restrictions of the TRG Partnership Agreement, as amended from time to time, as a holder of Series E Units and Common Units upon conversion of the Series E Units.

2.5 Survival of Gordon’s Representations and Warranties. All representations and warranties made by Gordon in Section 2.4 hereof shall not merge into the instruments of conveyance to be delivered at the Closing and shall survive the Closing until December 31, 2007, at which time such representations and warranties shall automatically expire, except as hereinafter specifically set forth. If, prior to December 31, 2007, TRG alleges in writing to Gordon that any specific representation or warranty given by Gordon was untrue when made or was breached by Gordon (which written allegation shall identify with reasonable specificity the contested representation or warranty and the facts supporting TRG’s allegation), then the contested representation and warranty shall survive, solely with respect to the claims so alleged, until December 31, 2008, at which time it shall automatically expire, unless TRG has filed a lawsuit with respect thereto prior to December 31, 2008 (and if such lawsuit is filed, the contested representation and warranty, solely with respect to the claims alleged in such lawsuit, shall survive until the lawsuit is resolved, at which time it shall automatically expire).

2.6 As-Is Exchange. Nothing in any of the documents or instruments to be delivered by Gordon at the Closing shall be deemed to expand or alter in any manner the representations and warranties set forth in Section 2.4 above. Except as expressly set forth in this Agreement and in all certificates, documents and instruments delivered pursuant to Section 3.2 hereof, no representations, warranties or certifications have been made or are made, and no responsibility has been or is assumed, by Gordon or by any partner, officer, or employee. The parties hereto agree that all undertakings and agreements heretofore made between them or their respective agents or representatives are merged in this Agreement and the Exhibits and Schedules attached hereto and in all certificates, documents and instruments to be delivered pursuant to Section 3.2 hereof, which alone fully and completely express their agreement, and that this Agreement has been entered into after full investigation, and no party is relying upon any statement or representation by any other party unless such statement or representation is specifically embodied in this Agreement or in the Exhibits or the Schedules attached hereto or in any certificates, documents and instruments to be delivered pursuant to Section 3.2 hereof. The terms and provisions of this Section 2.6 shall survive the Closing, notwithstanding any provision of this Agreement to the contrary.

ARTICLE III

CLOSING

3.1 Closing. The consummation of the transactions contemplated by this Agreement (the “Closing”) shall occur at the office of Miro Weiner & Kramer, Suite 100, 500 North Woodward Avenue, Bloomfield Hills, Michigan 48304, or such other place as agreed to by the parties hereto. The Closing shall occur on the date specified in the JV Agreement for such Closing (the “Closing Date”).

3.2 Closing Documents.

3.2.1 TRG's Deliveries. At the Closing, TRG shall deliver to Gordon:

(a)

The Certificate of Units evidencing the issuance of the Series E Units to Gordon in the condition required hereunder.

(b)

A copy of the Continuing Offer, certified by TCI as being true, correct and complete.

(c)

A copy of the TRG Partnership Agreement, including the amendment thereto providing for the creation of the class of Series E Units (which amendment shall include substantially the same provisions as set forth in Section 1.4 (a) through (d) hereof), certified by TRG as being true, correct, and complete.

(d)

TRG’s certification that the representations and warranties contained in Section 2.1 of this Agreement are true and correct in all material respects as of the Closing Date.

(e)

TRG’s Foreign Investment in Real Property Tax Act certification.

3.2.2 Gordon's Deliveries. At the Closing, Gordon shall deliver to TRG:

(a)

If Event 3 shall occur, written confirmation of payment of the Subscription Price in accordance with Section 1.2 hereof. If Event 4 shall occur, an Assignment of LLC Interest.

(b)

Gordon’s certification that the representations and warranties in Section 2.4 of this Agreement are true and correct in all material respects as of the Closing Date.

ARTICLE IV

INDEMNIFICATION

4.1 TRG’s Indemnification of Gordon. TRG hereby agrees to indemnify, defend, and hold Gordon harmless from and against all demands, claims, actions, causes of action, assessments, losses, damages, liabilities, costs, and expenses, including, without limitation, interest, penalties and reasonable attorneys’ fees and disbursements, asserted against, resulting to, imposed upon, or incurred by Gordon by reason of or resulting from (a) any misrepresentation or breach of any of TRG’s representations or warranties contained in this Agreement or in any document or instrument delivered by TRG to Gordon at the Closing; and (b) any breach by TRG of, or a default by TRG under, any of the provisions of this Agreement or any other document or instrument delivered to the Partnership by TRG at the Closing.

4.2 Gordon’s Indemnification of TRG. Gordon hereby agrees to indemnify, defend, and hold harmless TRG from and against all demands, claims, actions, causes of action, assessments, losses, damages, liabilities, costs, and expenses, including, without limitation, interest, penalties and reasonable attorneys’ fees and disbursements, asserted against, resulting to, imposed upon, or incurred by TRG by reason of or resulting from (a) any misrepresentation or breach of any of Gordon’s representations or warranties contained in this Agreement or in any document or instrument delivered by Gordon to TRG at the Closing; (b) any breach by Gordon of, or a default by Gordon under, any of the provisions of this Agreement or any other document or instrument delivered to TRG by Gordon at the Closing.

4.3 Procedure for Indemnification. If a party (the “Obligated Party”) is required to indemnify the other party (the “Indemnified Party”) under the terms of this Agreement, then this Section 4.3 shall govern the procedure with respect to such indemnification. Upon receipt by the Indemnified Party of notice of any claim or matter for which it is entitled to seek indemnification from the Obligated Party under the terms hereof (the “Claim”), the Indemnified Party shall promptly notify the Obligated Party of the Claim. The Obligated Party shall contest and defend against the Claim; provided, however, that the Obligated Party shall not commit, suffer, or permit any act or omission which would cause the Indemnified Party to incur, or expose the Indemnified Party to the incurrence of, any civil fines or criminal penalties. The Obligated Party shall keep the Indemnified Party informed of the progress of the defense against the Claim which shall be diligently pursued. If a final adjudication (i.e., an adjudication with respect to which the time for taking all appeals as of right has lapsed or with respect to which no further appeal is legally available) of such Claim is rendered against the Indemnified Party by a court of competent jurisdiction, the Obligated Party shall, within thirty (30) days after such adjudication becomes final, pay and satisfy such Claim. The Obligated Party shall notify the Indemnified Party in writing within ten (10) business days after an adjudication is rendered as to whether the Obligated Party will appeal the adjudication. If the Obligated Party notifies the Indemnified Party that it will not appeal an adjudication, then the Indemnified Party may undertake such appeal, at its sole cost and expense, in which case the Indemnified Party shall notify the Obligated Party at least ten (10) business days prior to the last date on which the Obligated Party is required to pay and satisfy the Claim pursuant to this Section 4.3, and the Obligated Party shall within twenty (20) business days after such notification deposit into escrow, with a national financial institution or title company reasonably acceptable to the Indemnified Party and the Obligated Party, the amount necessary to pay and satisfy the Claim. Upon depositing such amount, the Obligated Party shall be released from any further obligation hereunder to pay, satisfy and contest the Claim. The escrowed amount shall be disbursed and applied as follows: first, to the Indemnified Party, at any time upon demand by the Indemnified Party, to be used to pay and satisfy such Claim; second, to the Indemnified Party for the payment or reimbursement of the reasonable costs and expenses incurred by the Indemnified Party in prosecuting such appeal; and third, any excess to the Obligated Party. If the Obligated Party fails to contest and defend against, or to pay and satisfy the Claim within such thirty (30) days, then the Indemnified Party may, at its option, contest and defend against and/or pay and satisfy the Claim, in which case the Obligated Party shall immediately reimburse the Indemnified Party for all costs and expenses (such as, but not limited to, actual attorneys’ fees and disbursements) incurred by the Indemnified Party in contesting and defending against and/or paying and satisfying the Claim and enforcing the indemnification, together with interest on such costs and expenses from the time incurred until the time paid at the lower of (i) three percent (3%) in excess of the prime rate announced by Chemical Bank, from time to time, or (ii) the highest rate permitted by law. Each party agrees to cooperate with the reasonable requests of the other party in contesting, defending, paying, satisfying or appealing an adjudication rendered with respect to any Claim. If, as a result of an appeal, insurance recovery or otherwise, the Indemnified Party recovers from a third party any amounts with respect to which the Obligated Party made payments to or for the account of the Indemnified Party under this Article IV, the Indemnified Party shall promptly pay over to the Obligated Party any amounts so recovered.

ARTICLE V

PRORATIONS AND ADJUSTMENTS

If the Closing Date occurs on the 15^th day of a month, Gordon shall not be entitled to any distribution on such date. If the Closing Date occurs after the 15^thday of a month, the first distribution to Gordon will be prorated.

ARTICLE VI

MISCELLANEOUS

6.1 Notices. All notices required, contemplated or sent under this Agreement shall be delivered (a) personally, (b) by confirmed facsimile transmission, (c) by next day courier service (e.g., Federal Express), or (d) by certified or registered mail, return receipt requested, addressed as follows:

If to TRG:





with a copy to:





with a copy to:






If to Gordon:





with a copy to:

The Taubman Realty Group Limited Partnership
200 East Long Lake Road
Bloomfield, Michigan 48304
Facsimile: (248) 258-7601
Attention: Robert S. Taubman

The Taubman Realty Group Limited Partnership
200 East Long Lake Road
Bloomfield, Michigan 48304
Facsimile: (248) 258-7586
Attention: Dennis J. Hecht

Miro Weiner & Kramer
Suite 100
38500 Woodward Avenue
Bloomfield, Michigan 48304
Facsimile: (248) 646-2681
Attention: Ernest Weiner, Esq.

G.K. Las Vegas Limited Partnership
6 Glenville Street
Greenwich, Connecticut 06831
Facsimile: (203) 618-9600
Attention: Sheldon Gordon

Katten Muchin Zavis Rosenman
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661
Facsimile: (312) 902-1061
Attention: Howard Richard, Esq.
Harvey Silets, Esq.

All notices under this Agreement shall be deemed to have been properly given or served, (a) if delivered by hand or mailed, on the date of receipt or date of refusal to accept shown on the delivery receipt or return receipt, (b) if delivered by Federal Express or similar expedited overnight commercial carrier or courier, on the date that is one (1) business day after the date upon which the same shall have been delivered to Federal Express or similar expedited overnight commercial carrier, addressed to the recipient, with all shipping charges prepaid, provided that the same is actually received (or refused) by the recipient in the ordinary course, and (c) if sent by telecopier, on the date of confirmed delivery.

6.2 Successors and Assigns. This Agreement shall be binding upon, and shall inure to the benefit of, the parties hereto, and their respective successors and assigns. Neither TRG nor Gordon shall have the right to assign this Agreement or any portion hereof or any of their rights hereunder without the prior written consent of the other parties, which consent may be given or withheld in such party’s sole and absolute discretion; provided, however, that the rights provided to the holders of Series E Units or other securities issued, directly or indirectly, upon the conversion or exchange thereof, as set forth herein, shall be transferable to the permitted transferees of such Series E Units or other securities. Any purported or attempted assignment of this Agreement or such rights not expressly permitted under this Section 6.2 shall be null and void.

6.3 Governing Law. This Agreement shall be governed by, and shall be interpreted and construed in accordance with, the laws of the State of Delaware applicable to contracts and agreements to be performed solely within the State of Delaware by residents of the State of Delaware i.e., without regard to choice of law principles.

6.4 Captions. The captions used throughout this Agreement are for convenience only and shall not be used in the interpretation or construction of this Agreement.

6.5 References; Gender. Unless the context otherwise requires, references in this Agreement to Sections shall be deemed to refer to Sections of this Agreement. Throughout this Agreement, the use of masculine pronouns shall be deemed to include feminine and neuter pronouns as the context may require.

6.6 Entire Agreement; Amendment. This Agreement, together with the JV Agreement and the TRG Partnership Agreement, contains the entire agreement between the parties hereto with respect to the transaction contemplated herein, supersedes all prior written agreements and negotiations and oral understandings, if any, and may not be amended, supplemented, or discharged except by performance or by an instrument in writing signed by all of the parties hereto.

6.7 Severability. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by, or shall be invalid under, applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

6.8 Time is of the Essence. Time is of the essence with respect to this Agreement.

6.9 Additional Actions and Documents. To the extent not inconsistent with the express terms of this Agreement, each of the parties hereto hereby covenants to take or cause to be taken such further actions, to execute, deliver, and file or cause to be executed, delivered, and filed such further documents and instruments, and to obtain such consents, as may be necessary or as may be reasonably requested in order to effectuate fully the purposes, terms, and conditions of this Agreement, whether before, at, or after the Closing.

6.10 Waiver; Modification. Failure by any party hereto to insist upon or enforce any of its rights shall not constitute a waiver thereof, and nothing shall constitute a waiver of a party’s right to insist upon strict compliance with the provisions hereof. Any party hereto may waive the benefit of any provision or condition for its benefit contained in this Agreement. No oral modification hereof shall be binding upon the parties, and any modification shall be in writing and signed by the parties.

6.11 Cumulative Remedies. Each and every one of the rights, benefits and remedies provided to Gordon by this Agreement, or any instruments or documents executed pursuant to this Agreement, are cumulative, and shall not be exclusive of any other rights, remedies and benefits allowed by law or equity to Gordon. Each and every of the rights, benefits and remedies provided to TRG by this Agreement, or any instruments or documents executed pursuant to this Agreement, are cumulative, and shall not be exclusive of any other rights, remedies and benefits allowed by law or equity to TRG.

6.12 Commission. Gordon represents and warrants to TRG, and TRG represents and warrants to Gordon, that no broker or agent has been engaged by such party in connection with the negotiation and/or consummation of this Agreement. Each of the parties hereto agrees to defend and indemnify the other party against any claims against the other party for any brokerage fees, finders’ fees or commissions with respect to the transaction contemplated by this Agreement which are asserted by any person purporting to act or to have acted for or on behalf of the indemnifying party, and to pay the other party’s reasonable attorneys’ fees and disbursements in connection therewith.

6.13 Counterparts. To facilitate execution, this Agreement may be executed in as many counterparts as may be required; and it shall not be necessary that the signature of, or on behalf of each party, or that the signatures of all persons required to bind any party, appear on each counterpart, but it shall be sufficient that the signature of or on behalf of each party, or the signatures of the persons required to bind any party, appear on one or more of such counterparts. All counterparts shall collectively constitute a single agreement.

6.14 Exhibits and Schedules. The Exhibits and Schedules enumerated herein are attached hereto and incorporated herein by this reference. The Exhibits and Schedules are hereby made a part of this Agreement as fully as if set forth in the text hereof.

[Signature page follows.]

IN WITNESS WHEREOF, the parties have entered into this Agreement on the date first-above written.


G.K. LAS VEGAS LIMITED PARTNERSHIP, a California limited partnership By: GORDON GROUP HOLDINGS, INC. Its: General Partner By: /s/ Sheldon Gordon Sheldon Gordon Its: President THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP, a Delaware limited partnership By: /s/ Steven Eder Its: Authorized Signatory

CONTRIBUTION AGREEMENT

Among

G.K. LAS VEGAS LIMITED PARTNERSHIP

“GORDON,” and

THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP

“TRG”

Dated:

May 2, 2003

RECITALS AND CERTAIN DEFINITIONS

ARTICLE I - ACQUISITION AND CONTRIBUTION

           1.1 Issuance of and Subscription for Series E Units of Partnership Interest
           1.2 Subscription Price
           1.3 Continuing Offer
           1.4 Additional Provisions

ARTICLE II - REPRESENTATIONS, WARRANTIES AND COVENANTS

           2.1 Representations and Warranties of TRG
           2.2 Survival of TRG's Representations and Warranties
           2.3 As-Is Exchange
           2.4 Representations and Warranties of Gordon
           2.5 Survival of Gordon's Representations and Warranties
           2.6 As-Is Exchange

ARTICLE III - CLOSING

           3.1 Closing
           3.2 Closing Documents

                  3.2.1 TRG's Deliveries
                  3.2.2 Gordon's Deliveries

ARTICLE IV - INDEMNIFICATION

           4.1 TRG's Indemnification of Gordon
           4.2 Gordon's Indemnification of TRG
           4.3 Procedure for Indemnification

ARTICLE V - PRORATIONS AND ADJUSTMENTS

ARTICLE VI - MISCELLANEOUS

           6.1 Notices
           6.2 Successors and Assigns
           6.3 Governing Law
           6.4 Captions
           6.5 References; Gender
           6.6 Entire Agreement; Amendment
           6.7 Severability
           6.8 Time is of the Essence
           6.9 Additional Actions and Documents
         6.10 Waiver; Modification
         6.11 Cumulative Remedies
         6.12 Commission
         6.13 Counterparts
         6.14 Exhibits and Schedules

SIGNATURE PAGE

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EX-12 5 ratioofearnings2q03.htm RATIOS OF EARNINGS Ratio of Earnings to Fixed Charges

Exhibit 12

TAUBMAN CENTERS, INC.

Computation of Ratios of Earnings to Combined Fixed Charges and
Preferred Dividends and Distributions
(in thousands, except ratios)


	Six Months Ended June 30
	2003		2002
Earnings from continuing operations before income from
equity investees	$ (8,928	)	$ 247

Add:
Fixed charges	50,684		45,232
Amortization of previously capitalized interest	1,528		1,307
Distributed income of Unconsolidated Joint Ventures	18,685		10,877

Deduct:
Capitalized interest	(4,929	)	(2,571	)


Earnings available for fixed charges
and preferred dividends and distributions	$ 57,040		$ 55,092


Fixed charges:
Interest expense	$ 44,579		$ 41,393
Capitalized interest	4,929		2,571
Interest portion of rent expense	1,176		1,268

Total Fixed Charges	$ 50,684		$ 45,232

Preferred dividends and distributions	12,800		12,800


Total fixed charges and preferred
dividends and distributions	$ 63,484		$ 58,032


Ratio of earnings to fixed charges and
preferred dividends and distributions	0.9 ⁽¹⁾		0.9 ⁽¹⁾

(1)

Earnings available for fixed charges and preferred dividends and distributions are less than the total of fixed charges and preferred dividends and distributions by approximately $6.4 million and $2.9 million in 2003 and 2002, respectively.

EX-31 6 rst302certifcation2q03.htm 302 CERTIFICATION OF CEO 302 Certification of CFO

Exhibit 31 (a)

CERTIFICATION

I, Robert S. Taubman, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Taubman Centers, Inc.;

Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: August 13, 2003	/s/ Robert S. Taubman

	Robert S. Taubman
	Chariman of the Board of Directors, President, and Chief Executive Officer

EX-31 7 lap302certification2q03.htm 302 CERTIFICATION OF CFO 302 Certification of CFO

Exhibit 31 (b)

CERTIFICATION

I, Lisa A. Payne, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Taubman Centers, Inc.;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: August 13, 2003	/s/ Lisa A. Payne

	Lisa A. Payne
	Executive Vice President, Chief Financial and Administrative Officer

EX-32 8 rst906certification2q03.htm 906 CERTIFICATION OF CEO Certification of CEO

Exhibit 32 (a)

Certification of Chief Executive Officer
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

I, Robert S. Taubman, Chief Executive Officer of Taubman Centers, Inc. (the “Registrant”), certify that based upon a review of the Quarterly Report on Form 10-Q for the period ended June 30, 2003 (the “Report”):

(i)

The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

(ii)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.


/s/ Robert S. Taubman	Date:	August 13, 2003

Robert S. Taubman
Chairman of the Board of Directors,
President, and Chief Executive Officer

EX-32 9 lap906certification2q03.htm 906 CERTIFICATION OF CFO Certification of CFO

Exhibit 32 (b)

Certification of Chief Financial Officer
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

I, Lisa A. Payne, Chief Financial Officer of Taubman Centers, Inc. (the "Registrant"), certify that based upon a review of the Quarterly Report on Form 10-Q for the period ended June 30, 2003 (the "Report"):

(i)

The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

(ii)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.


/s/ Lisa A. Payne	Date:	August 13, 2003

Lisa A. Payne
Executive Vice President, Chief Financial Officer
and Administrative Officer

EX-99 10 debtmaturity2q03.htm MORTGAGE AND OTHER NOTES PAYABLE Mortgage and Other Notes Payable

MORTGAGE AND OTHER NOTES PAYABLE
INCLUDING WEIGHTED INTEREST RATES AT JUNE 30, 2003

Exhibit 99


		100% 06/30/03	Beneficial Interest 06/30/03	Effective Rate 06/30/03	(a)	LIBOR Rate Spread	2003	2004	2005	2006	2007	2008	2009	2010	2011	2012	2013	Total
Consolidated Fixed Rate Debt: Beverly Center Biltmore Fashion Park Great Lakes Crossing MacArthur Center Regency Square The Mall at Short Hills Other Total Consolidated Fixed Weighted Rate Consolidated Floating Rate Debt: Dolphin Mall Stony Point Fashion Park The Mall at Wellington Green The Shops at Willow Bend The Shops at Willow Bend Taubman Realty Group Taubman Realty Group Total Consolidated Floating Weighted Rate Total Consolidated Weighted Rate Joint Ventures Fixed Rate Debt: Arizona Mills Cherry Creek Fair Oaks International Plaza Mall at Millenia Sunvalley Sunvalley Bonds Westfarms Mall Woodland Total Joint Venture Fixed Weighted Rate Joint Ventures Floating Rate Debt: Stamford Town Center Other Total Joint Venture Floating Weighted Rate Total Joint Venture Weighted Rate TRG Beneficial Interest Totals Fixed Rate Debt Floating Rate Debt Total	50.00% 50.00% 50.00% 26.49% 50.00% 50.00% 50.00% 78.94% 50.00% 50.00%	146.0 77.8 150.5 141.4 81.2 266.6 21.8 885.3 7.10% 163.5 59.6 149.2 100.0 50.0 10.3 175.0 707.7 3.33% 1,593.0 5.43% 142.9 177.0 140.0 190.7 210.0 134.3 0.4 207.9 66.0 1,269.2 6.25% 76.0 5.5 81.5 2.09% 1,350.7 6.00% 2,154.5 6.60% 789.2 3.20% 2,943.7 5.69% Average	146.0 77.8 150.5 99.0 81.2 266.6 21.8 842.9 7.08% 163.5 59.6 134.3 100.0 50.0 10.3 175.0 692.7 4.31% 1,535.6 5.83% 71.5 88.5 70.0 50.5 105.0 67.1 0.2 164.1 33.0 649.9 6.38% 38.0 3.0 41.0 2.10% 690.9 6.12% 1,492.8 6.77% 733.7 4.18% 2,226.5 5.92% Maturity	8.36% 7.68% 5.25% 7.59% 6.75% 6.70% 12.45% 4.19% 3.03% 4.67% 3.46% 4.81% 2.06% 5.04% 7.90% 7.68% 6.60% 4.21% 5.46% 5.67% 7.20% 6.10% 8.20% 1.98% 3.64%	(b) (c) (d) (e) (f) (g) (h) (i)	2.25% 1.85% 1.85% 2.40% 3.75% 0.90% 0.80%	0.4 1.0 0.5 0.5 1.5 0.3 4.4 6.55% 1.1 0.6 0.3 2.0 4.07% 6.3 5.82% 0.3 0.4 0.4 0.1 1.0 2.2 5.98% 0.3 0.3 3.64% 2.5 5.69% 6.6 6.36% 2.3 4.01% 8.9 5.75% 5.65 ======	146.0 0.9 2.1 1.1 0.9 3.2 0.3 154.6 8.26% 162.3 134.3 1.5 0.7 10.3 175.0 484.1 4.59% 638.7 5.48% 0.7 0.5 0.9 0.9 0.1 2.0 33.0 38.0 7.93% 38.0 0.8 38.8 2.01% 76.8 4.94% 192.6 8.19% 522.9 4.40% 715.5 5.42%	1.0 2.2 1.2 1.0 3.5 0.3 9.2 6.57% 59.6 1.6 0.8 62.0 3.07% 71.2 3.52% 0.8 1.3 0.9 0.9 2.1 6.0 6.30% 0.6 0.6 3.64% 6.6 6.05% 15.2 6.46% 62.6 3.07% 77.8 3.73%	1.1 2.3 1.3 1.1 3.7 0.4 9.8 6.57% 96.4 48.2 144.6 3.91% 154.5 4.08% 0.8 86.7 0.9 1.0 2.3 91.8 7.59% 0.6 0.6 3.64% 92.4 7.56% 101.6 7.49% 145.2 3.91% 246.8 5.38%	1.2 2.5 1.4 1.1 4.0 0.4 10.5 6.58% 10.5 6.58% 0.9 1.0 1.0 2.4 5.3 5.96% 0.6 0.6 3.64% 5.9 5.73% 15.9 6.37% 0.6 3.64% 16.4 6.28%	1.2 2.6 1.5 1.2 4.2 0.1 10.8 6.60% 10.8 6.60% 0.9 70.0 46.4 0.9 1.1 2.6 121.9 5.67% 3.64% 121.9 5.67% 132.7 5.75% 3.64% 132.7 5.75%	72.1 2.7 1.7 1.3 246.4 20.0 344.2 7.26% 344.2 7.26% 1.0 1.4 1.2 2.7 6.3 6.17% 6.3 6.17% 350.5 7.24% 350.5 7.24%	2.9 90.2 1.4 94.4 7.51% 94.4 7.51% 66.0 1.5 1.2 2.9 71.7 7.73% 71.7 7.73% 166.1 7.60% 166.1 7.60%	3.0 72.7 75.7 6.69% 75.7 6.69% 1.6 1.3 3.1 6.0 5.84% 6.0 5.84% 81.7 6.63% 81.7 6.63%	3.2 3.2 5.25% 3.2 5.25% 1.6 58.2 142.9 202.7 5.97% 202.7 5.97% 205.9 5.96% 205.9 5.96%	126.0 126.0 5.25% 126.0 5.25% 98.1 98.1 5.46% 98.1 5.46% 224.1 5.34% 224.1 5.34%	146.0 77.8 150.5 99.0 81.2 266.6 21.8 842.9 163.5 59.6 134.3 100.0 50.0 10.3 175.0 692.7 1,535.6 71.5 88.5 70.0 50.5 105.0 67.1 0.2 164.1 33.0 649.9 38.0 3.0 41.0 690.9 1,492.8 733.7 2,226.5

(a)	Includes the impact of interest rate swaps but does not include effect of amortization of debt issuance costs or interest rate cap costs.

(b)	$140 million of this debt (decreasing to $120 million in December 2003) is swapped to 2.05% plus spread to October 2004. The remaining debt is floating month to month at LIBOR plus spread.

(c)	LIBOR rate is floating month to month.

(d)

$100 million of this debt is swapped to 2.5% plus spread from October 2002 to October 2003, to 4.35% plus spread from October 2003 to October 2004 and to 5.25% plus spread from October 2004 to May 2005.
An additional $30 million is swapped to 4.13% plus spread to July 2004. The remainder is floating month to month at LIBOR plus spread.

(e)	This debt is capped at 4.6% plus spread to July 2006. Effective August 2003, the LIBOR spread was reduced 90bps to 1.50% in exchange for a payment of $2.25M which will be amortized over 5 years.

(f)	This debt is capped at 5.75% plus spread to July 2006.

(g)	Rate floats daily.

(h)	$100 million of this debt is swapped to 4.3% plus spread to November 2003. An additional $70 million is swapped to 4.13% plus spread to July 2004. The remainder is floating month to month at LIBOR plus spread.

(i)	LIBOR rate is floating month to month. This debt is capped at 8.2% plus spread to August 2004.

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THIRD AMENDMENT TO THE SECOND AMENDMENT ANDRESTATEMENT OF AGREEMENT OF LIMITED PARTNERSHIP OFTHE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP

Recitals:

“Section 13.18 Lost Partnership Interest Certificates and Series E Partnership Interest Certificates

CONTRIBUTION AGREEMENT

ARTICLE I

SUBSCRIPTION AND CONTRIBUTION

ARTICLE II

REPRESENTATIONS, WARRANTIES AND COVENANTS

ARTICLE III

CLOSING

ARTICLE IV

INDEMNIFICATION

ARTICLE V

PRORATIONS AND ADJUSTMENTS

ARTICLE VI

MISCELLANEOUS

TABLE OF CONTENTS

Exhibit 12

TAUBMAN CENTERS, INC.

Computation of Ratios of Earnings to Combined Fixed Charges and Preferred Dividends and Distributions(in thousands, except ratios)

CERTIFICATION

CERTIFICATION

Certification of Chief Executive OfficerPursuant to 18 U.S.C. Section 1350, as Adopted Pursuant toSection 906 of the Sarbanes-Oxley Act of 2002

Certification of Chief Financial OfficerPursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

THIRD AMENDMENT TO THE SECOND AMENDMENT ANDRESTATEMENT
OF AGREEMENT OF LIMITED PARTNERSHIP OF
THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP

Computation of Ratios of Earnings to Combined Fixed Charges and
Preferred Dividends and Distributions
(in thousands, except ratios)

Certification of Chief Executive Officer
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

Certification of Chief Financial Officer
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002