10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Form 10-Q

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

For the Quarterly Period Ended: September 30, 2004
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 October 29, 2004, there were outstanding 48,600,865 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 September 30, 2004 and December 31, 2003	2
Consolidated Statement of Operations and Comprehensive Income for the three months ended September 30, 2004 and 2003	3
Consolidated Statement of Operations and Comprehensive Income for the nine months ended September 30, 2004 and 2003	4
Consolidated Statement of Cash Flows for the nine months ended September 30, 2004 and 2003	5
Notes to Consolidated Financial Statements	6

1

TAUBMAN CENTERS, INC.

CONSOLIDATED BALANCE SHEET
(in thousands, except share data)

	September 30 2004			December 31 2003
Assets:
Properties	$	2,906,363		$	2,519,922
Accumulated depreciation and amortization		(539,720	)		(450,515	)
	$	2,366,643		$	2,069,407
Investment in Unconsolidated Joint Ventures (Note 5)		22,629			6,093
Cash and cash equivalents (Note 6)		27,288			30,403
Accounts and notes receivable, less allowance for doubtful accounts of
$9,122 and $7,403 in 2004 and December 31, 2003		29,979			32,592
Accounts and notes receivable from related parties		1,784			1,679
Deferred charges and other assets		55,513			46,796
	$	2,503,836		$	2,186,970
Liabilities:
Notes payable (Note 6)	$	1,892,925		$	1,495,777
Accounts payable and accrued liabilities		224,246			258,938
Dividends and distributions payable		13,105			13,481
	$	2,130,276		$	1,768,196
Commitments and Contingencies (Notes 6 and 9)
Preferred Equity of TRG (Notes 1 and 7)	$	126,492		$	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 September 30, 2004
and December 31, 2003	$	80		$	80
Series B Non-Participating Convertible Preferred Stock, $0.001 par
and liquidation value, 40,000,000 shares authorized, 29,855,737
and 29,819,738 shares issued and outstanding at September 30,
2004 and December 31, 2003		30			30
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
Series F Cumulative Redeemable Preferred Stock, $0.01 par value,
300,000 shares authorized, $30 million liquidation preference, none issued
Common Stock, $0.01 par value, 250,000,000 shares authorized,
48,538,366 and 49,936,786 shares issued and outstanding at
September 30, 2004 and December 31, 2003		485			499
Additional paid-in capital		632,716			664,362
Accumulated other comprehensive income (loss)		(12,648	)		(12,593	)
Dividends in excess of net income		(373,595	)		(330,879	)
	$	247,068		$	321,499
	$	2,503,836		$	2,186,970

See notes to consolidated financial statements.

2

TAUBMAN CENTERS, INC.

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

	Three Months Ended September 30
	2004			2003
Revenues:
Minimum rents	$	61,865		$	51,371
Percentage rents		1,179			951
Expense recoveries		35,006			29,939
Revenues from management, leasing, and development services		6,110			5,087
Other		6,741			5,318
	$	110,901		$	92,666
Operating Expenses:
Recoverable expenses	$	32,845		$	28,409
Other operating		9,509			8,231
Costs related to unsolicited tender offer, net of recoveries (Note 4)					6,046
Management, leasing, and development services		4,890			4,326
General and administrative		7,604			5,837
Interest expense		24,652			20,562
Depreciation and amortization		27,069			22,251
	$	106,569		$	95,662
Income (loss) before equity in income of Unconsolidated Joint Ventures,
discontinued operations, and minority and preferred interests	$	4,332		$	(2,996	)
Equity in income of Unconsolidated Joint Ventures (Note 5)		8,291			8,144
Income before discontinued operations and minority and preferred interests	$	12,623		$	5,148
Discontinued operations:
Net gain on disposition of interest in center		136
Income from operations (Note 1)					55
Income before minority and preferred interests	$	12,759		$	5,203
Minority interest in consolidated joint ventures		221			53
Minority interest in TRG:
TRG income allocable to minority partners		(3,103	)		(287	)
Distributions in excess of income allocable to minority partners		(5,752	)		(8,773	)
TRG Series C, D, and F preferred distributions (Note 1)		(2,865	)		(2,250	)
Net income (loss)	$	1,260		$	(6,054	)
Series A preferred stock dividends		(4,150	)		(4,150	)
Net income (loss) allocable to common shareowners	$	(2,890	)	$	(10,204	)
Net income (loss)	$	1,260		$	(6,054	)
Other comprehensive income (loss):
Change in fair value of available-for-sale securities					(247	)
Unrealized gain on interest rate instruments		366			911
Reclassification adjustment for amounts recognized in net income		315			164
Comprehensive income (loss)	$	1,941		$	(5,226	)
Basic and diluted earnings per common share (Note 10):
Income (loss) from continuing operations	$	(0.06	)	$	(0.21	)
Net income (loss)	$	(0.06	)	$	(0.21	)
Cash dividends declared per common share	$	0.27		$	0.26
Weighted average number of common shares outstanding		48,159,799			49,348,000

See notes to consolidated financial statements.

3

TAUBMAN CENTERS, INC.

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

	Nine Months Ended September 30
	2004			2003
Revenues:
Minimum rents	$	169,511		$	150,764
Percentage rents		2,282			2,440
Expense recoveries		98,996			93,440
Revenues from management, leasing, and development services		16,339			15,450
Other		24,042			21,792
	$	311,170		$	283,886
Operating Expenses:
Recoverable expenses	$	91,304		$	84,114
Other operating		26,344			26,616
Costs related to unsolicited tender offer, net of recoveries (Note 4)		(1,044	)		25,058
Management, leasing, and development services		14,671			14,387
General and administrative		19,384			18,074
Interest expense		70,377			62,083
Depreciation and amortization		73,540			65,596
	$	294,576		$	295,928
Income (loss) before equity in income of Unconsolidated Joint Ventures,
discontinued operations, and minority and preferred interests	$	16,594		$	(12,042	)
Equity in income of Unconsolidated Joint Ventures (Note 5)		26,663			26,829
Income before discontinued operations and minority and preferred interests	$	43,257		$	14,787
Discontinued operations:
Net gain on disposition of interest in center		289
Income from operations (Note 1)					173
Income before minority and preferred interests	$	43,546		$	14,960
Minority interest in consolidated joint ventures		36			143
Minority interest in TRG:
TRG income allocable to minority partners		(11,386	)		(529	)
Distributions in excess of income allocable to minority partners		(15,168	)		(25,827	)
TRG Series C, D, and F preferred distributions (Note 1)		(7,604	)		(6,750	)
Net income (loss)	$	9,424		$	(18,003	)
Series A preferred stock dividends		(12,450	)		(12,450	)
Net income (loss) allocable to common shareowners	$	(3,026	)	$	(30,453	)
Net income (loss)	$	9,424		$	(18,003	)
Other comprehensive income (loss):
Change in fair value of available-for-sale securities					(297	)
Realized loss on interest rate instruments		(6,054	)
Unrealized gain on interest rate instruments		5,054			1,556
Reclassification adjustment for amounts recognized in net income		945			492
Comprehensive income (loss)	$	9,369		$	(16,252	)
Basic and diluted earnings per common share (Note 10):
Income (loss) from continuing operations	$	(0.07	)	$	(0.60	)
Net income (loss)	$	(0.06	)	$	(0.60	)
Cash dividends declared per common share	$	0.81		$	0.78
Weighted average number of common shares outstanding		49,145,132			50,562,963

See notes to consolidated financial statements.

4

TAUBMAN CENTERS, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)

	Nine Months Ended September 30
	2004			2003
Cash Flows From Operating Activities:
Income before minority and preferred interests	$	43,546		$	14,960
Adjustments to reconcile income before minority and preferred interests
to net cash provided by operating activities:
Depreciation and amortization of continuing operations		73,540			65,596
Depreciation and amortization of discontinued operations					3,227
Provision for losses on accounts receivable		2,978			3,633
Gains on sales of land		(5,752	)		(1,361	)
Settlement of swap agreement (Note 6)		(6,054	)
Other		2,448			3,167
Increase (decrease) in cash attributable to changes in assets and liabilities:
Receivables, deferred charges and other assets		(2,079	)		(4,231	)
Accounts payable and other liabilities		(27,469	)		2,548
Net Cash Provided by Operating Activities	$	81,158		$	87,539
Cash Flows From Investing Activities:
Additions to properties	$	(83,137	)	$	(109,015	)
Proceeds from sales of land		7,827			1,344
Acquisition of interests in centers, net of cash transferred in (Note 3)		(61,837	)		(8,126	)
Dividend received from technology investment					305
Contributions to Unconsolidated Joint Ventures (Note 6)		(71,253	)
Distributions from Unconsolidated Joint Ventures in excess of income		19,952			44,994
Net Cash Used In Investing Activities	$	(188,448	)	$	(70,498	)
Cash Flows From Financing Activities:
Debt proceeds	$	786,393		$	397,412
Debt payments		(575,686	)		(333,009	)
Debt issuance costs		(9,229	)		(3,285	)
Issuance of common stock pursuant to Continuing Offer (Note 8)		7,690			1,645
Issuance of partnership units (Note 8)		2,644			49,985
Issuance of preferred equity (Note 7)		29,217
Repurchase of common stock (Note 7)		(50,178	)		(52,762	)
Distributions to minority and preferred interests		(34,158	)		(33,106	)
Cash dividends to Series A preferred shareowners		(12,450	)		(12,450	)
Cash dividends to common shareowners		(40,068	)		(39,994	)
Net Cash Provided By (Used In) Financing Activities	$	104,175		$	(25,564	)
Net Decrease In Cash and Cash Equivalents	$	(3,115	)	$	(8,523	)
Cash and Cash Equivalents at Beginning of Period		30,403			32,470
Cash and Cash Equivalents at End of Period	$	27,288		$	23,947

See notes to consolidated financial statements.

5

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 September 30, 2004 included 21 urban and suburban shopping centers in nine states. Another center is currently under construction in North Carolina.

        The consolidated financial statements of the Company include all accounts of the Company, TRG, and its consolidated subsidiaries, including The Taubman Company LLC (the Manager). The Company also consolidates the accounts of the owner of the Oyster Bay project (Note 6), which qualifies as a variable interest entity under FASB Interpretation No. 46 “Consolidation of Variable Interest Entities” (FIN 46R) and in which the Operating Partnership holds the majority variable interest. All intercompany transactions have been eliminated. Investments in entities not controlled but over which the Company has significant influence (Unconsolidated Joint Ventures) are accounted for under the equity method. The Company has evaluated its investments in the Unconsolidated Joint Ventures and has concluded that the ventures are not variable interest entities as defined in FIN 46R. Accordingly, the Company continues to account for its interests in these ventures under the guidance in Statement of Position 78-9 (SOP 78-9). The Company’s partners or other owners in these Unconsolidated Joint Ventures have important rights, as contemplated by paragraphs .09 and .10 of SOP 78-9, including approval rights over annual operating budgets, capital spending, financing, admission of new partners/members, or sale of the properties and the Company has concluded that the equity method of accounting is appropriate for these interests. Specifically, the Company’s 79% investment in Westfarms is through a general partnership in which the other general partners have approval rights over annual operating budgets, capital spending, refinancing, or sale of the property. Under the equity method of accounting, the investments in Joint Ventures are initially recorded at cost, and subsequently increased for additional contributions and allocations of income and reduced for distributions received.

        At September 30, 2004, the Operating Partnership’s equity included four classes of preferred equity (Series A, C, D, and F) 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, D, and F Preferred Equity are owned by institutional investors and have no stated maturity, sinking fund, or mandatory redemption requirements. The Series C and D Preferred Equity have a fixed 9% coupon rate and the Series F Preferred Equity has a fixed 8.2% coupon rate. The Company can redeem the Series C, D, and F Preferred Equity beginning in September 2004, November 2004, and May 2009, respectively. The Series C, D, and F Preferred Equity are convertible into Taubman Centers Preferred Stock beginning 10 years from the initial dates of issuance, having substantially similar terms as the related classes of preferred equity. The Series B Preferred Stock is currently held by partners in TRG other than the Company. The Series B Preferred Stock entitles its holders to one vote per share on all matters submitted to the Company’s shareholders and votes together with the common stock on all matters as a single class.

        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 September 30, 2004 and December 31, 2003. 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.

6

TAUBMAN CENTERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

        The Company’s ownership in the Operating Partnership at September 30, 2004 consisted of a 60% managing general partnership interest, as well as the Series A Preferred Equity interest. The Company’s average ownership percentage in the Operating Partnership for both the nine months ended September 30, 2004 and 2003 was 61%. At September 30, 2004, the Operating Partnership had 80,510,645 units of partnership interest outstanding, of which the Company owned 48,538,366. Included in the total units outstanding are 43,514 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.

        Biltmore Fashion Park was sold in December 2003. The Company has separately presented the results of Biltmore Fashion Park as discontinued operations through the date of the sale. In 2004, the Company recognized a $0.3 million adjustment to the gain on the disposition of the center.

        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, 2003. 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.

Note 2 – 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 three and nine months ended September 30, 2004, 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 September 30, 2004, the Company had a net deferred tax asset of $3.4 million, after a valuation allowance of $9.8 million.

Note 3 – Acquisitions

        In July 2004, the Company acquired an additional 23.6% interest in International Plaza from an outside owner for $60.2 million in cash, increasing its ownership in the center to 50.1%. The center is encumbered by a $187.5 million mortgage; the beneficial interest in the debt attributable to the additional interest acquired is $44.3 million. In conjunction with the purchase, the Company also repaid its $20 million note to the former investor, which carried an interest rate of 13%. As a result of the acquisition, the Company has a controlling interest in the center and began consolidating its results as of the purchase date. Prior to the acquisition date, the Company accounted for International Plaza on the equity method. At the date of the acquisition, the center’s assets and liabilities were $241 million and $208 million, respectively. The Company has not yet finalized its allocations of the purchase price to the tangible and intangible assets and liabilities acquired. As of September 30, 2004, the Operating Partnership has a preferred investment in International Plaza of $30 million, on which an annual preferential return of 8.25% will accrue. In addition to the preferred return on its investment, the Operating Partnership is entitled to receive the balance of its preferred investment before any available cash will be utilized for distribution to the non-preferred partner.

7

TAUBMAN CENTERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

        In January 2004, the Company purchased the additional 30% ownership of Beverly Center from Sheldon Gordon and the estate of E. Phillip Lyon. Consideration of approximately $11 million for this interest consisted of $3.3 million in cash and 276,724 of newly issued partnership units valued at $27.50 per unit. The price of the acquisition was determined pursuant to a 1988 option agreement between the Company and a partnership controlled by Mr. Gordon and Mr. Lyon. The Company had carried the $11 million net exercise price as a liability on its balance sheet. The Company already recognized 100% of the financial results of the center in its financial statements.

Note 4 – Unsolicited Tender Offer

        During the nine months ended September 30, 2004, the Company received $1.0 million in insurance recoveries relating to the unsolicited tender offer and related litigation, which were withdrawn and ended in October 2003. Costs incurred in connection with the unsolicited tender offer were $25.1 million during the nine months ended September 30, 2003.

Note 5 — Investments in Unconsolidated Joint Ventures

        The Company has investments in joint ventures that own shopping centers. The Operating Partnership is the managing general partner or managing member of these Unconsolidated Joint Ventures, except for the ventures that own Arizona Mills, The Mall at Millenia, and Waterside Shops at Pelican Bay.

Shopping Center	Ownership as of September 30, 2004
Arizona Mills		50	%
Fair Oaks		50
The Mall at Millenia		50
Stamford Town Center		50
Sunvalley		50
Cherry Creek		50
Waterside Shops at Pelican Bay		25
Westfarms		79
Woodland		50

        The Company’s carrying value of its Investment in Unconsolidated Joint Ventures differs from its share of the partnership equity 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 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.

        Combined balance sheet and results of operations information is presented in the following table for all Unconsolidated Joint Ventures, followed by the Operating Partnership’s beneficial interest in the combined information. The combined information of the Unconsolidated Joint Ventures as of December 31, 2003 excludes the balances of Waterside Shops at Pelican Bay. A 25% interest in this center was acquired in December 2003. The results of International Plaza are included in this information through the acquisition date (Note 3). TRG’s basis adjustments as of September 30, 2004 include $67 million, $8 million, and $8 million related to the acquisitions of interests in Sunvalley, Arizona Mills, and Waterside, respectively, representing the differences between the acquisition prices and the book values of the ownership interests acquired. These amounts are being depreciated over the remaining 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.

8

TAUBMAN CENTERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

	September 30			December 31
	2004			2003
Assets:
Properties	$	1,072,956		$	1,250,964
Accumulated depreciation and amortization		(354,578	)		(331,321	)
	$	718,378		$	919,643
Cash and cash equivalents		15,835			28,448
Accounts and notes receivable		13,328			16,504
Deferred charges and other assets		30,279			29,526
	$	777,820		$	994,121
Liabilities and accumulated deficiency in assets:
Notes payable	$	1,008,624		$	1,345,824
Accounts payable and other liabilities		45,784			61,614
TRG's accumulated deficiency in assets		(179,126	)		(231,456	)
Unconsolidated Joint Venture Partners' accumulated
deficiency in assets		(97,462	)		(181,861	)
	$	777,820		$	994,121
TRG's accumulated deficiency in assets (above)	$	(179,126	)	$	(231,456	)
TRG's investment in Waterside Shops at Pelican Bay					22,129
TRG basis adjustments, including elimination of
intercompany profit		84,828			96,213
TCO's additional basis		116,927			119,207
Investment in Unconsolidated Joint Ventures	$	22,629		$	6,093

	Three Months Ended September 30						Nine Months Ended September 30
	2004			2003			2004			2003
Revenues	$	69,446		$	75,714		$	229,005		$	234,935
Recoverable and other operating expenses	$	25,696		$	27,967		$	83,073		$	84,521
Interest expense		17,351			21,077			56,937			61,733
Depreciation and amortization		10,126			12,592			37,191			40,098
Total operating costs	$	53,173		$	61,636		$	177,201		$	186,352
Net income	$	16,273		$	14,078		$	51,804		$	48,583
Net income allocable to TRG	$	8,272		$	7,535		$	26,500		$	25,847
Realized intercompany profit and TRG's
additional basis		779			1,369			2,443			3,262
Depreciation of TCO's additional basis		(760	)		(760	)		(2,280	)		(2,280	)
Equity in income of Unconsolidated Joint Ventures	$	8,291		$	8,144		$	26,663		$	26,829
Beneficial interest in Unconsolidated Joint Ventures'
operations:
Revenues less recoverable and other operating
expenses	$	24,769		$	26,923		$	79,913		$	84,352
Interest expense		(9,641	)		(11,032	)		(30,402	)		(32,325	)
Depreciation and amortization		(6,837	)		(7,747	)		(22,848	)		(25,198	)
Equity in income of Unconsolidated Joint Ventures	$	8,291		$	8,144		$	26,663		$	26,829

9

TAUBMAN CENTERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 6 – Beneficial Interest in Debt and Interest Expense

        In August 2004, the $76 million loan on Stamford Town Center was repaid by the joint venture partners. The Operating Partnership used borrowings under a line of credit for its 50% share of the repayment.

        In July 2004, the Company closed on a $142 million construction facility for Northlake Mall. This loan has a three-year maturity with two one-year extension options and bears interest at a rate of LIBOR plus 1.75%. The payment of principal and interest is guaranteed 100% by the Operating Partnership. The amounts guaranteed and the interest rate on the loan may be reduced as certain performance and valuation criteria are met.

        In June 2004, the Company completed a $115 million refinancing of the $74 million outstanding balance of the existing construction loan on Stony Point Fashion Park. The 10-year mortgage loan bears an all-in interest rate of 6.28%. The Company used the excess proceeds to pay down lines of credit and to pay off the $10.2 million outstanding balance of the land loan on The Shops at Willow Bend.

        In May 2004, the Operating Partnership entered into a series of agreements related to a project at Oyster Bay, New York. The property is being developed in a build-to-suit structure to facilitate a 1031 like-kind exchange in order to provide flexibility for disposing of assets in the future. While the Company has no specific asset sale in mind, the Company is committed to recycling its capital over time and believes that this planning will facilitate future transactions. A third party acquired the Operating Partnership’s option to purchase land at Oyster Bay, New York and reimbursed it for its project costs to date. Subsequently, the third party acquired the land and became the owner of the project. The Operating Partnership is the developer of the project and has an option to purchase the project. The owner will provide 3% of project funding and will lease the property to a wholly owned subsidiary of the Operating Partnership. A senior lender will provide 62% of the project costs at a rate of LIBOR plus 2.0%. A wholly owned subsidiary of the Operating Partnership will provide 35% of the project funding under a junior subordinated financing at LIBOR plus 2.75% to the owner. The Operating Partnership will also guarantee the lease payments and the completion of the project. The lease payments are structured to cover debt service on the senior loan, junior loan, a return (greater of LIBOR plus 4.0% or 8.0%) on the owner’s 3% equity investment during the term of the lease, and repayment of the principal and 3% equity contribution upon termination. As of September 30, 2004, the balances of the senior loan and owner equity contribution were $38.9 million and $1.9 million, respectively; the senior loan is limited to a total commitment of $62 million until municipal approvals have been obtained. The Operating Partnership consolidates the owner and other entities described above and the junior loan and other intercompany transactions are eliminated in consolidation.

        In April 2004, the Company completed a $140 million three-year refinancing of the $130.6 million outstanding balance of the existing construction loan on The Mall at Wellington Green. The loan bears interest at a rate of LIBOR plus 1.5%. The payment of principal and interest is guaranteed 100% by the Operating Partnership. The Company used the excess proceeds to pay down lines of credit.

        In February 2004, the Company completed a $145 million refinancing, secured by a mortgage on Dolphin Mall. The loan matures in February 2006 and may be extended for a total of three years. The loan bears interest at a rate of LIBOR plus 2.15%. The payment of principal and interest is guaranteed 100% by the Operating Partnership. Proceeds from the financing were used to repay the existing $142 million loan.

        Also in February 2004, the $66 million loan on Woodland was repaid by the joint venture partners. The Operating Partnership used borrowings under a line of credit for its 50% share of the repayment.

        In January 2004, the Company completed a $347.5 million refinancing on Beverly Center. The 10-year mortgage loan carries an all-in interest rate of 5.5%. Proceeds were used to pay off the $146 million 8.36% mortgage, pay down lines of credit and $20 million of the Wellington construction loan, and pay transaction fees. At the time of the refinancing, the forward-starting swaps hedging the planned Beverly refinancing were cash settled for $6.0 million. This realized loss is included in Accumulated OCI and is being recognized as interest expense over the ten-year term of the debt.

        Other financing activity is described in Notes 3 and 12.

10

TAUBMAN CENTERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

        Payments of principal and interest on the loans in the following table are guaranteed by the Operating Partnership as of September 30, 2004.

Center	Loan balance as of 9/30/04		TRG's beneficial interest in loan balance as of 9/30/04		Amount of loan balance guaranteed by TRG as of 9/30/04		% of loan balance guaranteed by TRG		% of interest guaranteed by TRG
	(in millions of dollars)
Dolphin Mall	144	.0	144	.0	144	.0	100	%	100	%
The Mall at Millenia	1	.8	0	.9	0	.9	50		50
Northlake Mall	0	.0	0	.0	0	.0	100		100
The Mall at Wellington Green	140	.0	126	.0	140	.0	100		100
The Shops at Willow Bend	147	.5	147	.5	147	.5	100		100

        In addition to the guarantees shown above, payments of rent and all other sums payable related to the Oyster Bay arrangement as described above are also guaranteed by the Operating Partnership.

        The Company is required to escrow cash balances for specific uses stipulated by its lenders, including ground lease payments, taxes, insurance, debt service, capital improvements, leasing costs, and tenant allowances. As of September 30, 2004 and December 31, 2003, the Company’s cash balances restricted for these uses were $21.7 million and $8.4 million, respectively.

        The Operating Partnership’s beneficial interest in the debt, capital lease obligations, 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 International Plaza (49% as of July 2004), MacArthur Center (5% as of July 2003), The Mall at Wellington Green, and prior to March 2003, Great Lakes Crossing. Also excluded from this table is Biltmore Fashion Park, which is classified as discontinued operations through the date of its sale.

	At 100%		At Beneficial Interest
	Consolidated Subsidiaries	Unconsolidated Joint Ventures	Consolidated Subsidiaries	Unconsolidated Joint Ventures
Debt as of:
September 30, 2004	$1,892,925	$1,008,624	$1,778,792	$563,701
December 31, 2003	1,495,777	1,345,824	1,473,680	688,406
Capital lease obligations:
September 30, 2004	$       9,970	$          138	$       9,970	$         69
December 31, 2003	8,038	168	8,038	84
Capitalized interest:
Nine months ended September 30, 2004	$       4,044		$       4,044
Nine months ended September 30, 2003	7,790		7,636
Interest expense:
Nine months ended September 30, 2004	$     70,377	$     56,937	$     68,598	$  30,402
Nine months ended September 30, 2003	62,083	61,733	59,663	32,325

11

TAUBMAN CENTERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 7 – Equity Transactions

        During 2004, under an existing buyback program, the Company repurchased 2,447,781 shares of its common stock at an average price of $20.50. For each share of stock repurchased, an equal number of Operating Partnership units were redeemed. Cumulatively, since the program’s inception in March 2000, the Company has repurchased approximately 9.6 million shares for a total of $150 million, the maximum amount permitted under the program. Repurchases of common stock have been financed through general corporate funds, including equity issuances, and through borrowings under existing lines of credit.

        In May 2004, the Company completed a $30 million private placement of preferred equity in the Operating Partnership. The Series F Preferred Equity was purchased by an institutional investor, and has a fixed 8.2% coupon and no stated maturity, sinking fund, or mandatory redemption requirements. The Series F Preferred Equity is convertible into Taubman Centers Series F Preferred Stock in ten years, having substantially similar terms to the Preferred Equity. The Preferred Equity is callable in five years by the Operating Partnership.

Note 8 – 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 9).

        There were options for 841,816 units exercised during the nine months ended September 30, 2004 at an average exercise price of $12.28 per unit. During the nine months ended September 30, 2003, options for 135,293 units were exercised at a weighted average price of $12.16 per unit. Of the options exercised during 2004, 217,259 were exercised at $12.17 per unit by executive officers of the Company who elected to hold the units instead of exchanging them for common shares under the Continuing Offer. There were no options granted during the nine months ended September 30, 2004 and 2003. As of September 30, 2004, there were options for 0.6 million units outstanding with a weighted average exercise price of $11.96 per unit, all of which were vested.

        Currently, options for 2.8 million Operating Partnership units may be issued under the plan, including options outstanding for 0.6 million units. When the holder of an option elects to pay the exercise price by surrendering mature 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 adopted the prospective method of implementing SFAS No. 148, applying its expense recognition provisions to all employee awards granted, modified, or settled after January 1, 2003. During the nine months ended September 30, 2004 and 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 were vested.

12

TAUBMAN CENTERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 9 — Commitments and Contingencies

        At the time of the Company’s initial public offering 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 September 30, 2004 of $25.83 per common share, the aggregate value of interests in the Operating Partnership that may be tendered under the Cash Tender Agreement was approximately $643 million. The purchase of these interests at September 30, 2004 would have resulted in the Company owning an additional 31% 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 the Operating Partnership interest is exchangeable for one share of the Company’s common stock.

        The Company is not currently involved in any material litigation, nor to its knowledge is any material litigation threatened against it.

        Refer to Note 6 for the Operating Partnership’s guarantees of certain notes payable and to Note 12, Subsequent Events.

13

TAUBMAN CENTERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 10 — Earnings Per Share

        Basic earnings per share amounts are based on the weighted average of common shares outstanding for the respective periods. Diluted earnings per share amounts are based on the weighted average of common shares outstanding plus the dilutive effect of common stock equivalents. Common stock equivalents include outstanding partnership units exchangeable for common shares under the Continuing Offer, outstanding options for units of partnership interest under the Operating Partnership’s incentive option plan, and unissued partnership units under unit option deferral elections. In computing the potentially dilutive effect of these common stock equivalents, they are assumed to be exchanged for common shares under the Continuing Offer, increasing the weighted average number of shares outstanding. The potentially dilutive effects of partnership units outstanding and/or issuable under the unit option deferral elections are calculated using the if-converted method, while the effects of partnership units that would result from the exercise of options are calculated using the treasury stock method. Prior to 2004, diluted earnings per share was computed assuming the Company’s ownership interest in the Operating Partnership (and therefore earnings) were adjusted for additional partnership units issuable for outstanding options and unit option deferral elections, without assuming their exchange for common shares under the Continuing Offer. Earnings per share under this method were not materially different than the results of the method used in 2004.

        As of September 30, 2004, there were options for 0.6 million units of partnership interest outstanding that were excluded from the computation of diluted earnings per share in 2004, as their effect was antidilutive. Additionally, as of September 30, 2004, there were 7.4 million partnership units outstanding and 0.9 million unissued partnership units under unit option deferral elections currently receiving income allocations equal to distributions paid (Note 1), which may be exchanged for common shares of the Company under the Continuing Offer (Note 9). These outstanding units and unissued units could only be dilutive to earnings per share if the minority interests’ ownership share of the Operating Partnership’s income was greater than their share of distributions.

	Three Months Ended September 30				Nine Months Ended September 30
	2004		2003		2004		2003
Income (loss) from continuing operations allocable to
common shareowners (Numerator):
Net income (loss) allocable to common shareowners	$       (2,890	)	$     (10,204	)	$       (3,026	)	$     (30,453	)
Common shareowners' share of discontinued operations	(82	)	(22	)	(175	)	(66	)
Basic income (loss) from continuing operations	$       (2,972	)	$     (10,226	)	$       (3,201	)	$     (30,519	)
Effect of dilutive options			(5	)			(7	)
Diluted income (loss) from continuing operations	$       (2,972	)	$     (10,231	)	$       (3,201	)	$     (30,526	)
TCO Shares - basic and diluted (Denominator)	48,159,799		49,348,000		49,145,132		50,562,963
Income (loss) from continuing operations per
common share - basic and diluted	$         (0.06	)	$         (0.21	)	$         (0.07	)	$         (0.60	)
Income (loss) from discontinued operations per
common share - basic and diluted	$            0.00		$            0.00		$            0.00		$            0.00

14

TAUBMAN CENTERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 11 – Noncash Investing and Financing Activities

        During the nine months ended September 30, 2004, Operating Partnership units valued at $7.6 million were issued in connection with the Company’s acquisition of the outside interest in Beverly Center (Note 3). Also, the Company entered into capital leases valued at $3.5 million relating to renovations and mall furnishings. Additionally, consolidated assets and liabilities increased upon consolidation of the accounts of International Plaza (Note 3).

Note 12 – Subsequent Events

        In October 2004, the Company closed on a $350 million secured revolving credit facility. The facility bears interest at LIBOR plus 0.80% and expires in February 2008, with a one-year extension option. Initial borrowings of $135 million on the new credit facility were used to pay down the balance on the Operating Partnership’s existing $275 million line of credit.

        In October 2004, The Mills Corporation finalized its acquisition of 50 percent interests in nine of General Motors Pension Trusts’ (GMPT) shopping centers, completing a recapitalization of GMPT’s mall portfolio. The Company has reached an agreement with GMPT to cease management of these centers, effective November 1, 2004. The Company expects to recognize a restructuring charge of approximately $6 million during the fourth quarter of 2004 relating to the termination of these contracts. Substantially all of this charge represents employee severance payments.

        Also in October 2004, the maturity date on the Operating Partnership’s existing secured $40 million line of credit was extended to February 2008.

15

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 our 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 any statements regarding the sufficiency of our cash balances and cash generated from operating and financing activities for our future liquidity and capital resource needs. We caution that although forward-looking statements reflect our 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 our 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

        Taubman Centers, Inc. (“we”, “us”, “our” or “TCO”) owns a managing general partner’s interest in The Taubman Realty Group Limited Partnership (the Operating Partnership or TRG), through which we conduct all of our 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, variable interest entities for which we are the primary beneficiary, and The Taubman Company LLC (the Manager). Shopping centers owned through joint ventures that are not controlled but over which we have significant influence (Unconsolidated Joint Ventures) are accounted for under the equity method.

        References in this discussion to “beneficial interest” refer to our ownership or pro-rata share of the item being discussed. Also, the operations of the shopping centers are often best understood by measuring their performance as a whole, without regard to our 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.

        Tenant sales and sales per square foot information are operating statistics used in measuring the productivity of the portfolio and are based on reports of sales furnished by mall tenants.

        There are a number of items that affect the comparability of information used in measuring performance. During 2003, we opened Stony Point Fashion Park, acquired an interest in Waterside Shops at Pelican Bay, and sold our interest in Biltmore Fashion Park. Additional “comparable center” statistics that exclude Biltmore, Stony Point, and Waterside are provided to present the performance of comparable centers in our continuing operations. In July 2004, we acquired an additional controlling interest in International Plaza. The center’s results of operations are included within our consolidated results subsequent to the acquisition date.

Current Operating Trends and Other Recent Events

        Our tenant sales statistics have continued to improve through the third quarter of 2004, with sales per square foot increasing 6.0% over the third quarter of 2003 and 8.9% over the nine month period ended September 30, 2003. Sales directly impact the amount of percentage rents certain tenants and anchors pay. The effects of increases or declines in sales on our operations are moderated by the relatively minor share of total rents (approximately two percent) percentage rents represent. However, a sustained trend in sales does impact, either negatively or positively, our ability to lease vacancies and negotiate rents at advantageous rates.

16

        As anticipated, occupancy trends began to show improvement in the third quarter of 2004, in which ending occupancy increased to 86.9% from 85.2% in the third quarter of 2003. We believe we are on track to exceed occupancy of 87% by year-end. Refer to “Seasonality” for occupancy and leased space statistics. Increased income from temporary in-line tenants and specialty leasing, which have become an integral part of our business, continues to contribute to growth. Temporary tenants, defined as those with lease terms less than 12 months, are not included in occupancy or leased space statistics. As of September 30, 2004, approximately 3.1% of space was occupied by temporary tenants, an increase of 0.6%, from 2.5% at September 30, 2003. Including temporary tenants, occupancy was 90.0% at September 30, 2004, an increase from 87.7% at September 30, 2003. Lease cancellation income can also moderate the effect of vacancies. During the third quarter of 2004, we recognized our approximately $1.5 million and $0.3 million share of the Consolidated Businesses’ and Unconsolidated Joint Ventures’ lease cancellation revenue.

        As leases have expired in the shopping centers, we have 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, such as those we are currently experiencing, 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. Rent per square foot information for comparable centers in our consolidated businesses and unconsolidated joint ventures follows:

	Three Months Ended September 30				Nine Months Ended September 30
	2004		2003		2004		2003
Average rent per square foot:
Consolidated Businesses	$41.48		$40.88		$41.15		$40.11
Unconsolidated Joint Ventures	42.52		42.40		42.73		42.56
Opening base rent per square foot:
Consolidated Businesses	$39.27		$60.41		$43.14		$44.08
Unconsolidated Joint Ventures	42.36		33.07		46.58		39.29
Square feet of GLA opened	272,162		181,942		722,462		730,559
Closing base rent per square foot:
Consolidated Businesses	$47.98		$42.39		$43.86		$42.69
Unconsolidated Joint Ventures	63.75		42.59		48.63		42.29
Square feet of GLA closed	105,299		183,937		670,049		907,066
Releasing spread per square foot:
Consolidated Businesses	$(8.71	)	$18.02		$(0.72	)	$1.39
Unconsolidated Joint Ventures	(21.39	)	(9.52	)	(2.05	)	(3.00	)

        The spread between rents on openings and closings during the third quarter of 2004 was impacted by the Unconsolidated Joint Venture closing statistic being calculated on a very small number of closings, while the opening statistics were affected by openings of large spaces and spaces at value centers, which typically command lower rental rates. The spread between rents on openings and closings 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.

        Recent events include the September 2004 opening of Saks Fifth Avenue (Saks) at The Shops at Willow Bend, which has experienced strong sales growth in 2004 and should be further benefited by Saks. Additionally, a renovation and expansion will begin soon at Waterside Shops at Pelican Bay, which will add approximately 78 thousand feet of mall tenant space. This project is expected to be completed in October 2005.

        We have been very active in managing our balance sheet, completing a series of new financings or refinancings of existing debt as outlined under “Debt and Equity Transactions.” We believe our balance sheet management — both for debt and equity — will continue to minimize exposure to interest rate risk and ensure adequate liquidity over the coming years.

17

        In October 2004, The Mills Corporation finalized its acquisition of 50 percent interests in nine of General Motors Pension Trusts’ (GMPT) shopping centers, completing a recapitalization of GMPT’s mall portfolio. We have reached an agreement with GMPT to cease management of these centers, effective November 1, 2004. We expect to recognize a restructuring charge of approximately $6 million during the fourth quarter of 2004 relating to the termination of these contracts. Substantially all of this charge represents employee severance payments. Excluding the restructuring charge, the impact on our results of operations is not expected to be material in 2004. The impact on 2005 results of operations is expected to be a reduction of income of approximately $4 million. These are forward-looking statements and certain significant factors could cause the actual results to differ materially, including, but not limited to, the number of employees terminated, the nature of the positions eliminated, actual severance payments made, and the results of other restructuring activities undergone.

        In July 2003, May Company (May) announced that it intends to divest 32 of its 86 Lord & Taylor stores, including four at our centers. May had also 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. Lord & Taylor has closed at International Plaza and The Mall at Wellington Green and we have purchased the spaces. We have announced that a 120,000 square foot Robb & Stucky furniture and design studio showroom will open at International Plaza in early 2005. The new store will occupy the entire first level and part of the second level of the former Lord & Taylor space. Plans also include an additional 20,000 square feet of specialty shop space on the second level with retailers to be announced at a future date. We are in discussions with potential tenants for the former Lord & Taylor space at Wellington Green and are optimistic that the center will benefit from a new use of the building. May is continuing to operate the Lord & Taylor stores at the remaining two centers although we are continuing discussions with May about the future of these stores.

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. Included in revenues are gains on sales of peripheral land and lease cancellation income that may vary significantly from quarter to quarter.

	1st Quarter 2003		2nd Quarter 2003		3rd Quarter 2003		4th Quarter 2003		Total 2003		1st Quarter 2004		2nd Quarter 2004		3rd Quarter 2004
	(in thousands)
Mall tenant sales	$706,227		$764,404		$775,154		$1,171,787		$3,417,572		$796,868		$833,223		$829,775
Revenues:
Consolidated Businesses	$97,549		$93,671		$92,666		$104,597		$388,483		$101,332		$98,937		$110,901
Unconsolidated Joint Ventures	79,381		79,840		75,714		85,053		319,988		80,032		79,623		69,446
Occupancy:
Ending-comparable	85.4	%	85.3	%	85.2	%	85.8	%	85.8	%	84.3	%	84.8	%	86.5	%
Average-comparable	85.6		85.4		85.3		85.8		85.5		84.7		84.6		85.8
Ending	85.5		85.5		85.2		86.1		86.1		84.8		85.2		86.9
Average	85.7		85.4		85.4		85.9		85.6		85.1		85.0		86.2
Leased space:
Comparable	88.5	%	88.0	%	88.1	%	88.0	%	88.0	%	87.7	%	87.9	%	88.8	%
All centers	88.6		88.0		88.4		88.4		88.4		88.0		88.2		89.2

18

        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.

	1st Quarter 2003		2nd Quarter 2003		3rd Quarter 2003		4th Quarter 2003		Total 2003		1st Quarter 2004		2nd Quarter 2004		3rd Quarter 2004
Consolidated Businesses:
Minimum rents	12.4	%	11.1	%	11.6	%	8.1	%	10.5	%	11.6	%	11.1	%	11.1	%
Percentage rents	0.3						0.3		0.2		0.3				0.1
Expense recoveries	6.3		6.3		5.4		4.0		5.3		5.5		5.8		5.3
Mall tenant occupancy costs	19.0	%	17.4	%	17.0	%	12.4	%	16.0	%	17.4	%	16.9	%	16.5	%
Unconsolidated Joint Ventures:
Minimum rents	12.6	%	11.6	%	11.4	%	7.9	%	10.5	%	10.9	%	10.4	%	11.2	%
Percentage rents	0.2		0.1		0.1		0.2		0.2		0.4		0.1
Expense recoveries	5.5		5.7		4.7		3.8		4.7		4.9		4.6		4.3
Mall tenant occupancy costs	18.3	%	17.4	%	16.2	%	11.9	%	15.4	%	16.2	%	15.1	%	15.5	%

Results of Operations

Openings and Acquisitions

        In July 2004, we acquired an additional 23.6% interest in International Plaza from an outside owner for $60.2 million in cash, increasing our ownership in the center to 50.1%. The center is encumbered by a mortgage, which had a balance of $187.5 million at the acquisition date; the beneficial interest in the debt attributable to the additional interest acquired was $44.3 million. In conjunction with the purchase, we also repaid our $20 million note to the former investor, which carried an interest rate of 13%. As a result of the acquisition, we have a controlling interest in the center and began consolidating its results as of the purchase date. Prior to the acquisition date, we accounted for International Plaza under the equity method of accounting. At the date of the acquisition, the center’s assets and liabilities were $241 million and $208 million, respectively. We have not yet finalized our allocations of the purchase price to the tangible and intangible assets and liabilities acquired. As of September 30, 2004, the Operating Partnership has a preferred investment in International Plaza of $30 million, on which an annual preferential return of 8.25% will accrue. In addition to the preferred return on our investment, the Operating Partnership is entitled to receive the balance of our preferred investment before any available cash will be utilized for distribution to the non-preferred partner.

        In January 2004, we purchased the additional 30% ownership of Beverly Center from Sheldon Gordon and the estate of E. Phillip Lyon. Consideration of approximately $11 million for this interest consisted of $3.3 million in cash and 276,724 of newly issued partnership units valued at $27.50 per unit. The price of the acquisition was determined pursuant to a 1988 option agreement between us and a partnership controlled by Mr. Gordon and Mr. Lyon. We have carried the $11 million net exercise price as a liability on our balance sheet. We already recognized 100% of the financial results of the center in our financial statements.

        In December 2003, we acquired a 25% interest in Waterside Shops at Pelican Bay, which is managed by our partner, the Forbes Company, for $22 million in cash. A project to redevelop and expand the center began in 2004 (see Liquidity and Capital Resources-Planned Capital Spending).

        Stony Point Fashion Park, a wholly-owned regional center, opened in September 2003.

        In July 2003, we acquired an additional 25% interest in MacArthur Center, bringing our ownership in the shopping center to 95%, for $4.9 million in cash and 190,909 operating partnership units.

        In March 2003, we 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 our ownership in the center to 100%.

19

Debt and Equity Transactions

        The following debt transactions were completed through September 30, 2004.

	Date	Initial Loan Balance/Facility		Stated Interest Rate	Maturity Date (1)
		(in millions)
Northlake Mall construction facility	July 2004	$    142.0		LIBOR plus 1.75%	August 2007
The Mall at Oyster Bay facility (2)	May 2004	$      62.0	(3)	LIBOR plus 2.00%	December 2005 (3)
Stony Point Fashion Park	June 2004	$    115.0		6.24%	June 2014
The Mall at Wellington Green	April 2004	$    140.0		LIBOR plus 1.5%	May 2007
Dolphin Mall	February 2004	$    145.0		LIBOR plus 2.15%	February 2006
Beverly Center	January 2004	$    347.5		5.2785%	February 2014

(1) Excludes any options to extend the maturities.

(2) See Liquidity and Capital Resources – Contractual Obligations.

(3) Initial commitment amount and maturity date until municipal approvals are obtained.

        Proceeds from the financings above were used to repay existing mortgage debt, pay down lines of credit, and to fund project and transaction costs. There were no borrowings on the Northlake Mall construction facility as of September 30, 2004. Additionally, the $76 million and $66 million loans on Stamford Town Center and Woodland were repaid in August and February 2004, respectively, by the joint venture partners; we used our existing lines of credit to fund our share of the repayments.

        In May 2004, we completed a $30 million private placement of 8.2% Series F Cumulative Redeemable Preferred Partnership Equity, which was purchased by an institutional investor.

        In January 2004, we issued partnership units in connection with the acquisition of the additional interest in Beverly Center (see Openings and Acquisitions).

        During 2004, under an existing buyback program, we repurchased 2,447,781 shares of our common stock at an average price of $20.50. For each share of our stock repurchased, an equal number of our Operating Partnership units were redeemed. Cumulatively, since the program’s inception in March 2000, we have repurchased approximately 9.6 million shares for a total of $150 million, the maximum amount permitted under our program. Repurchases of common stock have been financed through general corporate funds, including equity issuances, and through borrowings under existing lines of credit.

Unsolicited Tender Offer

        In the fall of 2002, we received an unsolicited proposal from Simon Property Group, Inc. (SPG) seeking to acquire control of TCO. The proposal was subsequently revised. Thereafter, a tender offer was commenced by SPG and later joined by a subsidiary of Westfield America Trust (Westfield). Our Board of Directors rejected the proposal and recommended that the shareholders not tender their shares pursuant to SPG’s and Westfield’s tender offer. SPG filed suit against us to enjoin the voting of our Series B Non-participating Convertible Preferred Stock based on a variety of legal theories. In October 2003, SPG and Westfield withdrew their tender offer, and TCO and SPG mutually agreed to end the litigation. During the nine months ended September 30, 2004, we recovered through our insurance $1.0 million of costs incurred in connection with the unsolicited tender offer and related litigation, while we incurred $25.1 million in expenses during the nine months ended September 30, 2003.

Subsequent Events

        In October 2004, we closed on a $350 million secured revolving credit facility. The facility bears interest at LIBOR plus 0.80% and expires in February 2008, with a one-year extension option. Initial borrowings of $135 million on the new credit facility were used to pay down the balance on the Operating Partnership’s existing $275 million line of credit.

        Also in October 2004, the maturity date of the Operating Partnership’s existing secured $40 million line of credit was extended to February 2008.

20

Presentation of Operating Results

        The following tables contain the operating results of our 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 our 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 our net results. Our average ownership percentage of the Operating Partnership was 60% and 61% during the three and nine months ended September 30, 2004, respectively, and 59% and 61% during the three and nine months ended September 30, 2003, respectively.

        In December 2003, we sold our interest in Biltmore Fashion Park. The results of Biltmore Fashion Park are presented as discontinued operations. In 2004, we recognized a $0.3 million adjustment to the gain on the disposition of the center. The results of International Plaza are presented within the Consolidated Businesses for periods beginning July 1, 2004, as a result of our acquisition of a controlling interest in the center. Results of International Plaza prior to the acquisition date are included within the Unconsolidated Joint Ventures.

        The operating results in the following tables include the supplemental earnings measures of Beneficial Interest in EBITDA and Funds from Operations (FFO). Beneficial Interest in EBITDA represents the Operating Partnership’s share of the earnings before interest and depreciation and amortization, excluding gains on sales of depreciated operating properties of its consolidated and unconsolidated businesses. We believe Beneficial Interest in EBITDA provides a useful indicator of operating performance, as it is customary in the real estate and shopping center business to evaluate the performance of properties on a basis unaffected by capital structure.

        The 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. We believe that FFO is a useful supplemental measure of operating performance for REITs. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, we and most industry investors and analysts have considered presentations of operating results that exclude historical cost depreciation to be useful in evaluating the operating performance of REITs. We primarily use FFO in measuring performance and in formulating corporate goals and compensation. Our presentation of FFO is not necessarily comparable to the FFO of other REITs due to the fact that not all REITs use the NAREIT definition. FFO should not be considered an alternative to net income as an indicator of our operating performance. Additionally, FFO does not represent cash flows from operating, investing or financing activities as defined by GAAP.

        Reconciliations of Net Income (Loss) to Funds from Operations and Beneficial Interest in EBITDA are presented following the Comparison of the Nine Months Ended September 30, 2004 to the Nine Months Ended September 30, 2003.

21

Comparison of the Three Months Ended September 30, 2004 to the Three Months Ended September 30, 2003

        The following table sets forth operating results for the three months ended September 30, 2004 and September 30, 2003, showing the results of the Consolidated Businesses and Unconsolidated Joint Ventures:

	Three Months Ended September 30, 2004				Three Months Ended September 30, 2003
	CONSOLIDATED BUSINESSES		UNCONSOLIDATED JOINT VENTURES AT 100% (1)		CONSOLIDATED BUSINESSES		UNCONSOLIDATED JOINT VENTURES AT 100% (1)
	(in millions of dollars)
REVENUES:
Minimum rents	61.9		45.7		51.4		49.3
Percentage rents	1.2		0.4		1.0		0.6
Expense recoveries	35.0		21.3		29.9		23.7
Management, leasing and development	6.1				5.1
Other	6.7		2.0		5.3		2.1
Total revenues	110.9		69.4		92.7		75.7
OPERATING EXPENSES:
Recoverable expenses	32.8		18.7		28.4		20.9
Other operating	9.5		5.7		8.2		5.2
Costs related to unsolicited tender offer, net of
recoveries					6.0
Management, leasing and development	4.9				4.3
General and administrative	7.6				5.8
Interest expense	24.7		17.4		20.6		21.1
Depreciation and amortization(2)	27.1		10.8		22.3		13.0
Total operating expenses	106.6		52.5		95.7		60.2
	4.3		16.9		(3.0	)	15.5
Equity in income of Unconsolidated Joint Ventures(2)	8.3				8.1
Income before discontinued operations and minority
and preferred interests	12.6				5.1
Discontinued operations:
Net gain on disposition of interest in center	0.1
EBITDA					2.4
Interest expense					(1.5	)
Depreciation and amortization					(0.8	)
Minority and preferred interests:
TRG preferred distributions	(2.9	)			(2.3	)
Minority share of consolidated joint ventures	0.2				0.1
Minority share of income of TRG	(3.1	)			(0.3	)
Distributions in excess of minority share of income	(5.8	)			(8.8	)
Net income (loss)	1.3				(6.1	)
Series A preferred stock dividends	(4.2	)			(4.2	)
Net income (loss) allocable to common shareowners	(2.9	)			(10.2	)
SUPPLEMENTAL INFORMATION:
EBITDA - 100%	56.1		45.1		42.2		49.6
EBITDA - outside partners' share	(2.8	)	(20.3	)	(0.4	)	(22.7	)
Beneficial interest in EBITDA	53.3		24.8		41.9		26.9
Beneficial interest expense	(23.4	)	(9.6	)	(21.8	)	(11.0	)
Non-real estate depreciation	(0.6	)			(0.6	)
Preferred dividends and distributions	(7.0	)			(6.4	)
Funds from Operations contribution	22.3		15.1		13.1		15.9

(1) With the exception of the Supplemental Information, amounts include 100% of the Unconsolidated Joint Ventures. Amounts are net of intercompany transactions. The Unconsolidated Joint Ventures are presented at 100% in order to allow for measurement of their performance as a whole, without regard to our ownership interest. In our consolidated financial statements, we account for investments in the Unconsolidated Joint Ventures under the equity method. The results of International Plaza are presented within the Consolidated Businesses for periods beginning July 1, 2004, as a result of our acquisition of a controlling interest in the center. Results of International Plaza prior to the acquisition date are included within the Unconsolidated Joint Ventures.

(2) Amortization of our additional basis in the Operating Partnership included in equity in income of Unconsolidated Joint Ventures was $0.8 million in both 2004 and 2003. Also, amortization of the additional basis included in depreciation and amortization was $1.1 million in both 2004 and 2003.

(3) Amounts in this table may not add due to rounding.

22

Consolidated Businesses

        Total revenues for the three months ended September 30, 2004 were $110.9 million, an $18.2 million or 19.6% increase over 2003. Minimum rents increased primarily due to International Plaza, which we began consolidating upon the acquisition of a controlling interest in the center, and the opening of Stony Point. Minimum rents also increased due to tenant rollovers and income from temporary tenants and specialty retailers, as well as increases in occupancy. Expense recoveries increased primarily due to International Plaza. Revenue from management, leasing, and development services increased primarily due to an increase in leasing and development services. Other income increased primarily due to increases in lease cancellation revenue and gains on sales of peripheral land.

        Total operating expenses were $106.6 million, a $10.9 million or 11.4% increase from 2003. Both recoverable expenses and other operating expense increased due to International Plaza. Other operating expense also increased due to development-related costs.

        During the three months ended September 30, 2003, $6.0 million of costs were incurred in connection with the unsolicited tender offer. General and administrative costs increased primarily due to the mark to market of deferred long-term compensation grants. Interest expense increased primarily due to International Plaza, increased debt and decreased capitalized interest upon the opening of Stony Point, and the refinancing of Beverly Center, partially offset by decreases due to the maturity of certain interest rate swap agreements. Depreciation expense increased primarily due to International Plaza and the opening of Stony Point.

Unconsolidated Joint Ventures

        Total revenues for the three months ended September 30, 2004 were $69.4 million, a $6.3 million or 8.3% decrease from 2003. Minimum rents decreased primarily due to the consolidation of International Plaza, which was partially offset by an increase due to the acquisition of the interest in Waterside Shops at Pelican Bay. Expense recoveries decreased primarily due to International Plaza.

        Total operating expenses decreased by $7.7 million to $52.5 million for the three months ended September 30, 2004. Recoverable expenses decreased primarily due to International Plaza. Other operating expense increased primarily due to development-related costs, partially offset by International Plaza. Interest expense decreased due to International Plaza and the payoff of debt on Woodland and Stamford Town Center. Depreciation expense decreased primarily due to International Plaza, which was partially offset by Waterside.

        As a result of the foregoing, income of the Unconsolidated Joint Ventures increased by $1.4 million to $16.9 million. Our equity in income of the Unconsolidated Joint Ventures was $8.3 million, a $0.2 million increase from 2003.

Net Income

        As a result of the foregoing, our income before discontinued operations and minority and preferred interests increased by $7.5 million to $12.6 million for 2004. After allocation of income to minority and preferred interests, the net loss allocable to common shareowners for 2004 was $(2.9) million compared to $(10.2) million in 2003.

23

Comparison of the Nine Months Ended September 30, 2004 to the Nine Months Ended September 30, 2003

        The following table sets forth operating results for the nine months ended September 30, 2004 and September 30, 2003, showing the results of the Consolidated Businesses and Unconsolidated Joint Ventures:

	Nine Months Ended September 30, 2004				Nine Months Ended September 30, 2003
	CONSOLIDATED BUSINESSES		UNCONSOLIDATED JOINT VENTURES AT 100% (1)		CONSOLIDATED BUSINESSES		UNCONSOLIDATED JOINT VENTURES AT 100% (1)
	(in millions of dollars)
REVENUES:
Minimum rents	169.5		146.5		150.8		146.4
Percentage rents	2.3		2.7		2.4		1.9
Expense recoveries	99.0		73.7		93.4		76.2
Management, leasing and development	16.3				15.5
Other	24.0		6.3		21.8		10.4
Total revenues	311.2		229.1		283.9		234.9
OPERATING EXPENSES:
Recoverable expenses	91.3		62.8		84.1		64.5
Other operating	26.3		16.1		26.6		15.3
Costs related to unsolicited tender offer, net of
recoveries	(1.0	)			25.1
Management, leasing and development	14.7				14.4
General and administrative	19.4				18.1
Interest expense	70.4		56.9		62.1		61.7
Depreciation and amortization(2)	73.5		39.3		65.6		41.3
Total operating expenses	294.6		175.2		295.9		182.8
	16.6		53.9		(12.0	)	52.1
Equity in income of Unconsolidated Joint Ventures(2)	26.7				26.8
Income before discontinued operations and minority
and preferred interests	43.3				14.8
Discontinued operations:
Net gain on disposition of interest in center	0.3
EBITDA					8.0
Interest expense					(4.6	)
Depreciation and amortization					(3.2	)
Minority and preferred interests:
TRG preferred distributions	(7.6	)			(6.8	)
Minority share of consolidated joint ventures	0.0				0.1
Minority share of income of TRG	(11.4	)			(0.5	)
Distributions in excess of minority share of income	(15.2	)			(25.8	)
Net income (loss)	9.4				(18.0	)
Series A preferred stock dividends	(12.5	)			(12.5	)
Net income (loss) allocable to common shareowners	(3.0	)			(30.5	)
SUPPLEMENTAL INFORMATION:
EBITDA - 100%	160.5		150.2		123.6		155.1
EBITDA - outside partners' share	(3.4	)	(70.3	)	(3.6	)	(70.8	)
Beneficial interest in EBITDA	157.1		79.9		120.0		84.4
Beneficial interest expense	(68.6	)	(30.4	)	(64.3	)	(32.3	)
Non-real estate depreciation	(1.9	)			(1.9	)
Preferred dividends and distributions	(20.1	)			(19.2	)
Funds from Operations contribution	66.6		49.5		34.7		52.0

(1) With the exception of the Supplemental Information, amounts include 100% of the Unconsolidated Joint Ventures. Amounts are net of intercompany transactions. The Unconsolidated Joint Ventures are presented at 100% in order to allow for measurement of their performance as a whole, without regard to our ownership interest. In our consolidated financial statements, we account for investments in the Unconsolidated Joint Ventures under the equity method. The results of International Plaza are presented within the Consolidated Businesses for periods beginning July 1, 2004, as a result of our acquisition of a controlling interest in the center. Results of International Plaza prior to the acquisition date are included within the Unconsolidated Joint Ventures.

(2) Amortization of our additional basis in the Operating Partnership included in equity in income of Unconsolidated Joint Ventures was $2.3 million in both 2004 and 2003. Also, amortization of the additional basis included in depreciation and amortization was $3.2 million in both 2004 and 2003.

(3) Amounts in this table may not add due to rounding.

24

Consolidated Businesses

        Total revenues for the nine months ended September 30, 2004 were $311.2 million, a $27.3 million or 9.6% increase over 2003. Minimum rents increased primarily due to the opening of Stony Point, as well as International Plaza, which we began consolidating upon the acquisition of a controlling interest in the center. Minimum rent also increased due to tenant rollovers and income from temporary tenants and specialty retailers. Expense recoveries increased due to International Plaza and the opening of Stony Point, as well as increases in recoverable expenses at certain centers, partially offset by adjustments to prior period recoveries. Other income increased primarily due to increases in gains on peripheral land sales, partially offset by decreases in lease cancellation revenue. We expect that gains on sales of peripheral land will be approximately $6 million to $7 million in 2004.

        Total operating expenses were $294.6 million, a $1.3 million or 0.4% decrease over 2003. Recoverable expenses increased primarily due to International Plaza and Stony Point, as well as increases in property taxes at certain other centers. During the nine months ended September 30, 2004, $1.0 million of insurance proceeds were received relating to costs expended in connection with the unsolicited tender offer, while $25.1 million in costs were incurred during the same period in 2003. General and administrative costs increased due to increased compensation and insurance costs. Interest expense increased primarily due to International Plaza and increased debt and decreased capitalized interest upon the opening of Stony Point, decreased capitalized interest upon the opening of the Wellington Green expansion, and the refinancing of Beverly Center, partially offset by decreases due to the maturity of certain interest rate swap agreements. Depreciation expense increased primarily due to International Plaza and Stony Point.

Unconsolidated Joint Ventures

        Total revenues for the nine months ended September 30, 2004 were $229.1 million, a $5.8 million or 2.5% decrease from 2003. Expense recoveries decreased primarily due to the consolidation of International Plaza, offset by the acquisition of the interest in Waterside Shops at Pelican Bay. Other revenue decreased primarily due to a decrease in lease cancellation revenue.

        Total operating expenses decreased by $7.6 million to $175.2 million for the nine months ended September 30, 2004. Recoverable expenses decreased primarily due to International Plaza, partially offset by Waterside. Interest expense decreased primarily due to International Plaza and the payoff of debt on Woodland and Stamford Town Center. Depreciation expense decreased primarily due to International Plaza, partially offset by Waterside.

        As a result of the foregoing, income of the Unconsolidated Joint Ventures increased by $1.8 million to $53.9 million. Our equity in income of the Unconsolidated Joint Ventures was $26.7 million, a $0.1 million decrease from 2003.

Net Income

        As a result of the foregoing, our income before discontinued operations and minority and preferred interests increased by $28.5 million to $43.3 million for 2004. After allocation of income to minority and preferred interests, the net loss allocable to common shareowners for 2004 was $(3.0) million compared to $(30.5) million in 2003.

        Estimates regarding anticipated 2004 income are forward-looking statements and certain significant factors could cause the actual results to differ materially, including but not limited to: actual results of negotiations with tenants, counterparties, potential purchasers of peripheral land, and others, and timing of transactions.

25

Reconciliation of Net Income (Loss) to Funds from Operations

	Three Months Ended September 30				Nine Months Ended September 30
	2004		2003		2004		2003
	(in millions of dollars)
Net income (loss) allocable to common shareowners	(2.9	)	(10.2	)	(3.0	)	(30.5	)
Add (less) depreciation and gain on disposition of property:
Gain on disposition of interest in center	(0.1	)			(0.3	)
Depreciation and amortization (1):
Consolidated businesses at 100%	27.1		22.3		73.5		65.6
Minority partners in consolidated joint ventures	(1.7	)	(0.1	)	(1.6	)	(1.3	)
Discontinued operations			0.8				3.2
Share of unconsolidated joint ventures	6.8		7.7		22.8		25.2
Non-real estate depreciation	(0.6	)	(0.6	)	(1.9	)	(1.9	)
Add minority interests in TRG:
Minority share of income of TRG	3.1		0.3		11.4		0.5
Distributions in excess of minority share of income of TRG	5.8		8.8		15.2		25.8
Funds from Operations - TRG (2)	37.4		29.0		116.1		86.7
Funds from Operations - TCO (2)	22.5		17.2		70.4		52.6

(1) Depreciation includes mall tenant allowance amortization of $2.2 million and $1.6 million for the three months ended September 30, 2004 and 2003, respectively, and $6.1 million and $5.0 million for the nine months ended September 30, 2004 and 2003, respectively.

(2) TRG’s FFO for the nine months ended September 30, 2004 includes insurance recoveries related to the unsolicited tender offer of $1.0 million. TRG’s FFO for the three and nine months ended September 30, 2003 includes costs of $6.0 million and $25.1 million, respectively, incurred in connection with the unsolicited tender offer. TCO’s share of TRG’s FFO is based on an average ownership of 60% and 59% during the three months ended September 30, 2004 and 2003, respectively, and 61% during the nine months ended September 30, 2004 and 2003.

(3) Amounts in this table may not add due to rounding.

Reconciliation of Net Income (Loss) to Beneficial Interest in EBITDA

	Three Months Ended September 30				Nine Months Ended September 30
	2004		2003		2004		2003
	(in millions of dollars)
Net income (loss) allocable to common shareowners	(2.9	)	(10.2	)	(3.0	)	(30.5	)
Add (less) depreciation and gain on disposition of property:
Gain on disposition of interest in center	(0.1	)			(0.3	)
Depreciation and amortization:
Consolidated businesses at 100%	27.1		22.3		73.5		65.6
Minority partners in consolidated joint ventures	(1.7	)	(0.1	)	(1.6	)	(1.3	)
Discontinued operations			0.8				3.2
Share of unconsolidated joint ventures	6.8		7.7		22.8		25.2
Add minority interests in TRG:
Minority share of income of TRG	3.1		0.3		11.4		0.5
Distributions in excess of minority share of income of TRG	5.8		8.8		15.2		25.8
Add (less) preferred interests and interest expense:
Preferred dividends and distributions	7.0		6.4		20.1		19.2
Interest expense for all businesses in continuing operations	42.0		41.6		127.3		123.8
Interest expense allocable to minority partners in
consolidated joint ventures	(1.3	)	(0.3	)	(1.8	)	(2.4	)
Interest expense of discontinued operations			1.5				4.6
Interest expense allocable to outside partners in
unconsolidated joint ventures	(7.7	)	(10.0	)	(26.5	)	(29.4	)
Beneficial interest in EBITDA - TRG	78.1		68.8		237.0		204.4

(1) Amounts in this table may not add due to rounding.

26

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. We do not have, and have not had, any parent company indebtedness; all debt discussed represents obligations of the Operating Partnership or its subsidiaries and joint ventures.

        Capital resources are required to maintain our current operations, complete construction on Northlake Mall, which is currently under development, pay dividends, and fund planned capital spending for future developments and other commitments and contingencies. We believe that our net cash provided by operating activities, distributions from our joint ventures, the unutilized portions of our credit facilities, and our ability to access the capital markets assure adequate liquidity to meet current and future cash requirements and will allow us to conduct our operations in accordance with our dividend and financing policies. The following sections contain information regarding our recent capital transactions and sources and uses of cash; beneficial interest in debt and sensitivity to interest rate risk; and historical capital spending. We then provide information regarding our anticipated future capital spending; covenants, commitments, and contingencies; and dividend policies.

Summaries of 2004 Capital Activities and Transactions

        As of September 30, 2004, we had a consolidated cash balance of $27.3 million. Additionally, we have a secured $275 million line of credit. This line had $135.0 million of borrowings as of September 30, 2004 and was refinanced in October 2004 increasing the facility to $350 million (see Subsequent Events). We also have available a second secured bank line of credit of up to $40 million. This line had $4.2 million outstanding as of September 30, 2004. The term on this facility was extended in October 2004 to February 2008.

        During 2004, we completed transactions to acquire the minority interest in Beverly Center and an additional interest in International Plaza. Also, through September 30, 2004, financings of approximately $952 million were completed relating to Beverly Center, Dolphin Mall, Northlake Mall, Oyster Bay, Stony Point Fashion Park, and The Mall at Wellington Green. These transactions are more fully described in Results of Operations.

Operating Activities

        Our net cash provided by operating activities was $81.2 million in 2004, compared to $87.5 million in 2003. In 2004, increases in cash related primarily to increases in rents and recoveries and additional operating cash flows due to the opening of Stony Point Fashion Park, offset by payments of costs previously accrued in connection with the unsolicited tender offer and settlement of the Beverly Center swap agreement.

Investing Activities

        Net cash used in investing activities was $188.4 million in 2004 compared to $70.5 million in 2003. Cash used in investing activities was impacted by the timing of capital expenditures, with additions to properties in 2004 and 2003 for the construction of Northlake Mall and Stony Point Fashion Park, as well as other development activities and other capital items. A tabular presentation of 2004 capital spending is shown in Capital Spending. During 2004, $58.5 million, net of cash transferred in, was used to purchase an additional interest in International Plaza, and $3.3 million was used to acquire an additional interest in Beverly Center. During 2003, $8.1 million was used to acquire additional interests in Great Lakes Crossing and MacArthur Center. Contributions to Unconsolidated Joint Ventures of $71.3 million in 2004 were made primarily to fund the repayment of debt at Stamford and Woodland.

        Sources of cash used in funding these investing activities included distributions from Unconsolidated Joint Ventures, as well as the transactions described under Financing Activities. Distributions in excess of earnings from Unconsolidated Joint Ventures provided $20.0 million in 2004 and $45.0 million in 2003. In 2003, these distributions included $21.0 million of excess proceeds from the March 2003 refinancing of The Mall at Millenia. Net proceeds from sales of peripheral land were $7.8 million and $1.3 million in 2004 and 2003, respectively. The timing of land sales is variable and proceeds from land sales can vary significantly from period to period.

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Financing Activities

        Net cash provided by financing activities was $104.2 million in 2004, compared to $25.6 million of cash used in 2003. Net cash provided by financing activities was primarily impacted by cash requirements of the investing activities described in the preceding section. Proceeds from the issuance of debt, net of payments and issuance costs, were $201.5 million in 2004, compared to $61.1 million in 2003. Issuance of stock pursuant to the Continuing Offer related to the exercise of employee options contributed $7.7 million in 2004 and $1.6 million in 2003. Issuance of partnership units contributed $2.6 million and $50.0 million in 2004 and 2003, respectively. Issuance of Series F Preferred Equity contributed $29.2 million in 2004. Repurchases of common stock totaled $50.2 million and $52.8 million in 2004 and 2003, respectively. Total dividends and distributions paid were $86.7 million and $85.6 million in 2004 and 2003, respectively.

Beneficial Interest in Debt

        At September 30, 2004, the Operating Partnership’s debt and its beneficial interest in the debt of its Consolidated and Unconsolidated Joint Ventures totaled $2,342.5 million with an average interest rate of 5.54% excluding amortization of debt issuance costs and the effects of interest rate hedging instruments. These costs are reported as interest expense in the results of operations. 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 $121.7 million as of September 30, 2004. Beneficial interest in capitalized interest was $1.6 million and $4.0 million for the three and nine months ended September 30, 2004, respectively. The following table presents information about our beneficial interest in debt as of September 30, 2004 (amounts may not add due to rounding):

	Amount	Interest Rate Including Spread		LIBOR Swap Rate
	(in millions)
Fixed rate debt	$     1,745.0	6.08	%  (1)
Floating rate debt:
Swapped through September 2004	100.0	5.85		4.35	%  (2)
Swapped through September 2004	120.0	4.20		2.05
Floating month to month	377.5	3.37	(1)
Total floating rate debt	$         597.5	3.95	(1)
Total beneficial interest in debt	$     2,342.5	5.54	%  (1)
Amortization of financing costs (3)		0.29	%
Average all-in rate		5.83	%

(1) Represents weighted average interest rate before amortization of financing costs.

(2) This debt is swapped from October 2004 through April 2005 at 5.25%.

(3) Financing costs include financing fees, interest rate cap premiums, and losses on settlement of derivatives used to hedge the refinancing of certain fixed rate debt.

        In addition, as of September 30, 2004, $170.3 million of our beneficial interest in floating rate debt is covered under interest rate cap agreements with LIBOR cap rates ranging from 4.6% to 7.0% with terms ending February 2006 through July 2006.

Subsequent Events

        In October 2004, we closed on a $350 million secured revolving credit facility. The facility bears interest at LIBOR plus 0.80% and expires in February 2008, with a one-year extension option. Initial borrowings of $135 million on the new credit facility were used to pay down the balance on the Operating Partnership’s existing $275 million line of credit.

        Also in October 2004, the maturity date of the Operating Partnership’s existing secured $40 million line of credit was extended to February 2008.

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Sensitivity Analysis

        We have exposure to interest rate risk on our debt obligations and interest rate instruments. We use derivative instruments primarily to manage exposure to interest rate risks inherent in variable rate debt and refinancings. We routinely use 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 September 30, 2004, 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 $5.0 million and, due to the effect of capitalized interest, annual earnings by approximately $4.6 million. Based on our consolidated debt and interest rates in effect at September 30, 2004, a one percent increase in interest rates would decrease the fair value of debt by approximately $67.9 million, while a one percent decrease in interest rates would increase the fair value of debt by approximately $73.9 million.

Contractual Obligations

        In conducting our business, we enter into various contractual obligations, including those for debt, capital leases for property improvements, operating leases for office space and land, purchase obligations (primarily for construction), and other long-term commitments. As debt obligations and the timing of planned capital spending can vary significantly from period to period, updated information relating to these items as of September 30, 2004 is provided in the table below:

	Payments due by period
	Total		Less than 1 year (2004)		1-3 years (2005-2006)		3-5 years (2007-2008)		More than 5 years (2009 +)
	(in millions of dollars)
Debt (1):
Lines of credit (2)	139	.2	139	.2
Property level debt	1,753	.7	4	.5	361	.8	352	.5	1,034	.8
Purchase obligations -
Planned capital spending (3)	122	.3	47	.8	74	.5

(1) The settlement periods for debt do not consider extension options.

(2) The lines of credit were refinanced/amended in October 2004. The new loans mature in 2008.

(3) As of September 30, 2004, we were contractually liable for $72.7 million of this planned spending. See Planned Capital Spending for detail regarding planned funding.

(4) Amounts in this table may not add due to rounding.

        In addition, during the second quarter of 2004, the Company signed a new 10-year lease for its office space, which provides for payments of $18.7 million over the lease term.

        In May 2004, we entered into a series of agreements related to a project at Oyster Bay, New York (see Planned Capital Spending). The property is being developed in a build-to-suit structure to facilitate a 1031 like-kind exchange in order to provide flexibility for disposing of assets in the future. While we have no specific asset sale in mind, we are committed to recycling our capital over time and believe that this planning will facilitate future transactions. A third party acquired our option to purchase land at Oyster Bay, New York and reimbursed us for our project costs to date. Subsequently, the third party acquired the land and became the owner of the project. We are the developer of the project and have an option to purchase the project. The owner will provide 3% of project funding and will lease the property to a wholly owned subsidiary of the Operating Partnership. A senior lender will provide 62% of the project costs at a rate of LIBOR plus 2.0%. We will provide 35% of the project funding under a junior subordinated financing at LIBOR plus 2.75% to the owner. We will also guarantee the lease payments and the completion of the project. The lease payments are structured to cover debt service on the senior loan, junior loan, a return (greater of LIBOR plus 4.0% or 8.0%) on the owner’s 3% equity investment during the term of the lease, and repayment of the principal and 3% equity contribution upon termination. As of September 30, 2004, the balances of the senior loan and owner equity contribution were $38.9 million and $1.9 million, respectively; the senior loan is limited to a total commitment of $62 million until municipal approvals have been obtained. We consolidate the owner and other entities described above and the junior loan and other intercompany transactions are eliminated in consolidation.

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Loan Commitments and Guarantees

        Certain loan agreements contain various restrictive covenants, including minimum net worth requirements, minimum debt service coverage ratios, a maximum payout ratio on distributions, a minimum fixed charges coverage ratio, a maximum leverage ratio, and a minimum debt yield ratio, the latter two 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.

        Payments of principal and interest on the loans in the following table are guaranteed by the Operating Partnership as of September 30, 2004.

Center	Loan balance as of 9/30/04		TRG's beneficial interest in loan balance as of 9/30/04		Amount of loan balance guaranteed by TRG as of 9/30/04		% of loan balance guaranteed by TRG		% of interest guaranteed by TRG
	(in millions of dollars)
Dolphin Mall	144	.0	144	.0	144	.0	100	%	100	%
The Mall at Millenia	1	.8	0	.9	0	.9	50		50
Northlake Mall	0	.0	0	.0	0	.0	100		100
The Mall at Wellington Green	140	.0	126	.0	140	.0	100		100
The Shops at Willow Bend	147	.5	147	.5	147	.5	100		100

        Payments of rent and all other sums payable related to the Oyster Bay agreements are guaranteed by the Operating Partnership. As of September 30, 2004, the balances of the senior loan and owner equity contribution (see Contractual Obligations) were $38.9 million and $1.9 million, respectively.

Cash Tender Agreement

        A. Alfred Taubman has the annual right to tender units of partnership interest in the Operating Partnership (provided that the aggregate value is at least $50 million) and cause us to purchase the tendered interests at a purchase price based on a market valuation of TCO 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. We will have the option to pay for these interests from available cash, borrowed funds, or from the proceeds of an offering of our common stock. Generally, we expect to finance these purchases through the sale of new shares of our 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 TCO.

        Based on a market value at September 30, 2004 of $25.83 per common share, the aggregate value of interests in the Operating Partnership that may be tendered under the Cash Tender Agreement was approximately $643 million. The purchase of these interests at September 30, 2004 would have resulted in our owning an additional 31% interest in the Operating Partnership.

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Capital Spending

        Capital spending for routine maintenance of the shopping centers is generally recovered from tenants. Capital spending through September 30, 2004 not recovered from tenants is summarized in the following table:

	2004 (1)
	Consolidated Businesses		Beneficial Interest in Consolidated Businesses		Unconsolidated Joint Ventures	Beneficial Interest in Unconsolidated Joint Ventures
	(in millions of dollars)
Development, renovation, and expansion:
Existing centers	5.7		5.3		12.1	5.3
New centers	30.2	(2)	30.2	(2)
Pre-construction development activities	30.7	(3)	30.7	(3)
Mall tenant allowances (4)	7.1		7.1		4.2	2.3
Corporate office improvements and
equipment	1.0		1.0
Other	0.8		0.7
Total	75.5		75.0		16.4	7.5

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

(2) Primarily includes costs related to Northlake Mall.

(3) Primarily includes acquisition of land and related project costs of Oyster Bay.

(4) Excludes initial lease-up costs.

(5) Amounts in this table may not add due to rounding.

        For the nine months ended September 30, 2004, in addition to the costs above, we incurred our $5.3 million share of Consolidated Businesses’ and $1.8 million share of Unconsolidated Joint Ventures’ capitalized leasing costs. Our share of repair and asset replacement costs that will be reimbursed by tenants was $3.0 million of Consolidated Businesses’ and $0.8 million of Unconsolidated Joint Ventures’. Also during this period, our share of reimbursements by tenants for capitalizable expenditures of prior periods was $3.2 million for Consolidated Businesses and $2.1 million for Unconsolidated Joint Ventures. The expenditures reimbursable by the tenants and the related reimbursements are classified as recoverable expenses and expense recoveries, respectively, and both are included in our 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 our Consolidated Statement of Cash Flows for the quarter ended September 30, 2004:

	(in millions)
Consolidated Businesses' capital spending not recovered from tenants		$75.5
Repair and asset replacement costs reimbursable by tenants		3.1
Repair and asset replacement costs reimbursed by tenants		(3.3	)
Differences between cash and accrual basis		7.8
Additions to properties		$83.1

Planned Capital Spending

        Northlake Mall, a new 1.1 million square foot enclosed center in Charlotte, North Carolina, will be anchored by Dillard’s, Hecht’s, Belk, Dick’s Sporting Goods, and AMC Theatres. The center is scheduled to open September 15, 2005 and is expected to cost approximately $175 million. We have over 70% of the space committed and nearly all the remaining space is under negotiation. We expect returns on this investment to be approximately 11% at stabilization. Future construction costs for Northlake Mall will be funded through its construction facility.

        Construction will begin shortly on an expansion and renovation at Waterside Shops at Pelican Bay. The expansion will increase mall tenant space by approximately 78 thousand square feet and will cost approximately $48 million. We expect a return of 10% to 11% on our $12 million share of project costs. The project is scheduled to be completed in October 2005.

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        Our approximately $68 million balance of development pre-construction costs as of September 30, 2004 consists of costs relating to a project in the Town of Oyster Bay, New York. Both Neiman Marcus and Lord & Taylor have committed to the project and retailer interest has been very strong. Although we still need to obtain the necessary entitlement approvals to move forward with the project, we are encouraged by nine straight favorable court decisions. We continue to be very confident as we await the court hearing on the opposition’s latest appeal. We expect continued success with the ongoing litigation, but if we are ultimately unsuccessful in the litigation process, it is anticipated that our recovery on this asset would be significantly less than our current investment.

        Assuming we are able to begin construction in late 2004, we would expect to open the center in the fall of 2006. The acquisition of the land occurred in May 2004 and we have completed the demolition of the existing industrial buildings on the site. The amount of additional spending on this project in 2004 is dependent upon the timing of the resolution of the litigation and municipal approvals. The returns on this project will be somewhat lower than our normal targets due to the significant pre-development and construction costs on this site.

        The following table summarizes planned capital spending for the entire year of 2004 (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).

	2004 (1)
	Consolidated Businesses		Beneficial Interest in Consolidated Businesses		Unconsolidated Joint Ventures		Beneficial Interest in Unconsolidated Joint Ventures
	(in millions of dollars)
Development, renovation, and expansion	71.9	(2)	71.9	(2)	16.8	(4)	6.9	(4)
Mall tenant allowances	12.1		11.8		7.5		3.4
Pre-construction development and other	39.3	(3)	39.3	(3)	0.5		0.3
Total	123.3		123.0		24.8		10.6

(1) Costs are net of intercompany profits.

(2) Primarily includes costs related to Northlake Mall.

(3) Primarily includes the land acquisition and other preliminary costs related to the Oyster Bay project.

(4) Includes costs related to Waterside Shops at Pelican Bay.

(5) Amounts in this table may not add due to rounding.

        The Operating Partnership anticipates that its share of costs for development projects scheduled to be completed in 2005 will be as much as $85 million in 2005. Estimates of future capital spending include only projects approved by our Board of Directors and, consequently, estimates will change as new projects are approved.

        Disclosures regarding planned capital spending, including 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) timing and outcome of litigation and entitlement processes, (3) changes in the scope, number, and valuation of projects, (4) cost overruns, (5) timing of expenditures, (6) financing considerations, (7) actual time to complete projects, (8) changes in economic climate, (9) competition from others attracting tenants and customers, (10) increases in operating costs, (11) timing of tenant openings, and (12) early lease terminations and bankruptcies.

Dividends

        We pay regular quarterly dividends to our common and Series A preferred shareowners. Dividends to our common shareowners are at the discretion of the Board of Directors and depend on the cash available to us, our financial condition, capital and other requirements, and such other factors as the Board of Directors deems relevant. To qualify as a REIT, we must distribute at least 90% of our REIT taxable income to our 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 Series A preferred stock became callable in October 2002, while the Operating Partnership’s Series C preferred equity became callable in September 2004. The Operating Partnership’s Series D preferred equity can be called beginning in November 2004.

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        On September 9, 2004, we declared a quarterly dividend of $0.27 per common share payable October 20, 2004 to shareowners of record on September 30, 2004. The Board of Directors also declared a quarterly dividend of $0.51875 per share on our 8.3% Series A Preferred Stock, paid September 30, 2004 to shareowners of record on September 20, 2004.

        The tax status of total 2004 common dividends declared and to be declared, assuming continuation of a $0.27 per common share quarterly dividend is estimated to be approximately 39% return of capital, and approximately 61% ordinary income. The tax status of total 2004 dividends to be paid on Series A Preferred Stock is estimated to be 100% ordinary income. These are forward-looking statements and certain significant factors could cause the actual results to differ materially, including: (1) the amount of dividends declared, (2) changes in our share of anticipated taxable income of the Operating Partnership due to the actual results of the Operating Partnership, (3) changes in the number of our 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 our common dividends is based on anticipated Funds from Operations available after preferred dividends, as well as assessments of annual capital spending, financing considerations, and other appropriate factors. Over the past several years, we have determined that the growth in common dividends would be less than the growth in Funds from Operations. We expect to evaluate our policy and the benefits of increasing dividends at a higher rate than historical increases, subject to our assessment of cash requirements.

        Any inability of the Operating Partnership or its Joint Ventures to secure 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 us 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 or in other factors that could significantly affect these internal controls subsequent to the date the Company carried out its evaluation.

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PART II

OTHER INFORMATION

Item 1. Legal Proceedings

        As a result of the termination of the Unsolicited Tender Offer, the Simon litigation has been dismissed with prejudice (Management’s Discussion and Analysis of Financial Condition and Results of Operations, Unsolicited Tender Offer). There remain two shareholder class and derivative actions which, in the opinion of the Company, are not material.

        Neither we, our subsidiaries, nor any of the joint ventures is presently involved in any material litigation, nor, to our knowledge, is any material litigation threatened against us, our subsidiaries, or any of the properties. Except for routine litigation involving present or former tenants (generally eviction or collection proceedings), substantially all litigation is covered by liability insurance.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

      None.

Item 5. Other Information

      None.

Item 6. Exhibits

10

12
     

31(a)
     

31(b)
     

32(a)
     

32(b)
     

99 --

- --
  

- --
  

- --
  

- --
  

- --
  

- -- Consulting and Non-Competition Agreement between The Taubman Company, L.L.C. and John L. Simon

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

34

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: November 1, 2004
          TAUBMAN CENTERS, INC.



  By: /s/ Lisa A. Payne
       Lisa A. Payne
       Executive Vice President,
       Chief Financial and Administrative Officer,
       and Director

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EX-10

Exhibit 10

CONSULTING AND NON-COMPETITION AGREEMENT

        This Consulting and Non-Competition Agreement is made on July 8th, 2004, by The Taubman Company, L.L.C., a Delaware limited liability corporation, ("Company") and John L. Simon ("Employee").

        In consideration of the representations in this Agreement, Employee’s retirement, and Employee’s non-competition obligation, Company and Employee agree as follows:

    1.        Retirement.

    (a)               Effective December 31, 2004, Employee will retire from his position as Senior Vice President — Development.

    (b)               At the time specified in the Annual Bonus Plan, Company will pay Employee an amount reflective of Employee’s performance during 2004, based on Employee’s annual target bonus calculated on the Annual Bonus Plan’s Company metrics and Employee’s personal performance in 2004.

    (c)               If Employee remains employed and has not violated paragraph 7, Non-Competition, as of December 31, 2004, the amount scheduled for payment on January 1, 2005 under paragraph 11(a) will be paid on January 1, 2005, and the amount scheduled for payment on January 15, 2005 under paragraph 11(c) will become vested, and Company will pay that amount on January 15, 2005.

    2.        Engagement. Effective January 1, 2005, Company will engage Employee as a consultant, and Employee agrees to hold himself available to personally render, at the request of Company, consulting services for Company, to the best of his ability, upon the terms and conditions set forth in this Agreement.

    3.        Term.

    (a)               This Agreement will start on January 1, 2005 and will end on December 31, 2006, unless it is terminated before that date as permitted by this Agreement.

    (b)               (i) Employee’s obligations under paragraphs 6(c), 7, 8, 9, and 10 of this Agreement will survive the termination of this Agreement at any time before December 31, 2006 or the expiration of this Agreement on December 31, 2006, except that Employee’s obligations under paragraphs 6(c), 7, 8, 9, and 10 of this Agreement will terminate immediately if Company experiences a “change in control” event, and Company will pay Employee the unpaid remainder of the paragraph 11(a) and 11(c) amounts in a lump sum payment, minus applicable withholdings. This Agreement incorporates by reference and adopts the definition of a “change in control” contained in the Taubman Centers, Inc. and Taubman Realty Group Limited Partnership 2003 “Change of Control Employment Agreement.”

                     (ii) Company’s obligations under paragraphs 11(b) and 11(c) of this Agreement will survive the expiration of this Agreement on December 31, 2006 or the termination of this Agreement before December 31, 2006.

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    (c)               Employee may terminate this Agreement at any time during the term of this Agreement upon thirty days written notice to Company.

    (d)               Company may terminate this Agreement for “cause” (as defined in this Agreement) at any time during the term of this Agreement. “Cause” is defined as follows: an act of fraud, embezzlement, theft, or other similar dishonest conduct in connection with Employee’s performance of consulting services; intentional action by Employee that is injurious, monetarily (minimum $100,000.00), to Company; criminal conduct; other similar misconduct; Employee’s illness, incapacity, or other inability to perform under this Agreement for a period of six consecutive months; or Employee’s death. Before terminating this Agreement for “cause,” Company will notify Employee of the “cause” and provide Employee a two-week period to cure, if possible, the “cause.”

    (e)               If Employee voluntarily terminates the consulting services under this Agreement or if Company terminates this Agreement for “cause” (as defined in this Agreement) before December 31, 2006, this Agreement and all of Company’s obligations to Employee under this Agreement, except its obligations under paragraphs 11(b) and 11(c), will end upon the date of the termination of this Agreement.

    4.        Time Requirement.

    (a)               Employee will reserve twenty-six hours per month to perform consulting services for Company under this Agreement. Company has the right to request that Employee increase this time requirement, based on its business needs, and Employee may, at Employee’s option, perform consulting services in excess of twenty-six hours per month upon mutual agreement.

    (b)               Employee will maintain a running total of the number of consulting hours pre-approved by Company’s Executive Vice President William S. Taubman and worked by Employee during the twenty-four month period from January 1, 2005 through December 31, 2006 and will submit, on a semi-annual basis, invoices and reconciliations to Company’s Executive Vice President William S. Taubman for approval.

    5.        Independent Contractor.

    (a)               The consulting relationship between Company and Employee will be an independent contractor relationship, not an employment, agency, partnership, or joint venture relationship.

    (b)               Employee will have no authority to enter into contracts or agreements on behalf of Company without the advance permission of Company.

    (c)               Company will determine the consulting services to be done by Employee, but Employee will determine the legal means by which the specified consulting services will be performed. Company seeks the benefits of Employee’s efforts, but the conduct and control of those efforts are solely within Employee’s discretion. Employee will use reasonable efforts to perform the contracted-for consulting services under this Agreement in a diligent and professional manner in accordance with Company’s business requirements.

2

    (d)               Employee will be solely responsible for compliance with all tax and regulatory reporting requirements relating to the contracted-for consulting services performed under this Agreement.

    (e)               To the extent required by law, Employee will comply with the workers’ compensation law concerning his business. Company will have no responsibility to obtain and will not obtain workers’ compensation insurance on behalf of Employee. Employee will indemnify and hold Company harmless from any claims made against Company by Employee for workers’ compensation benefits.

    (f)               Employee will comply with any applicable laws, rules, regulations, and ethical standards applicable to the performance of the contracted-for consulting services under this Agreement. Employee will indemnify and hold Company harmless from and against any fines and costs, excluding Company legal fees, resulting from any failure by Employee to comply with any applicable laws, rules, regulations, and ethical standards.

    (g)               Company will indemnify and hold harmless Employee from any claim or cause of action arising out of or in connection with the performance of Employee’s consulting services under this Agreement, to the full extent provided by Company’s Articles of Incorporation and Bylaws.

    6.        Non-Exclusive Relationship.

    (a)               Employee will be held out to the general community as being available for work and will be free to do so, as long as Employee’s activities do not interfere with Employee’s obligations under this Agreement, including the non-competition obligation. This Agreement does not grant Company the exclusive right to Employee’s services. Between July 1, 2004 and December 31, 2004, Employee will be free to engage in discussions and consultations with and to work with potential future clients, partners, associates, or joint venturers if:

                          (i) the discussions do not interfere with Employee’s ability to perform Employee’s normal job duties as Senior Vice President – Development; and

                          (ii) the discussions do not violate the non-competition obligations contained in paragraph 7, Non-Competition, which will also be effective during the July 1 – December 31, 2004 period.

    (b)               Employee may provide to other persons or business entities services that are either similar or dissimilar to the consulting services that Employee will render to Company under this Agreement as long as those services for other persons or business entities do not interfere with Employee’s obligations under this Agreement, including the non-competition obligation.

    (c)               (i) If, during the entire period from the date when Employee signs this Agreement through January 15, 2008, Employee wishes to offer to any of the entities named in paragraph 7 or their successors in interest any shopping center development project that is beyond the non-competition zone, as defined in paragraph 7(b), and that has an anchor store of at least 75,000 square feet, excluding a discount store, such as, for example, Wal-Mart,

3

Costco, or Target, Employee, in writing, will notify Company of that project and will furnish Company with “sufficient information” about the project to permit Company to evaluate the project. “Sufficient Information,” for the purpose of this paragraph 6(c), will mean a pro forma income and cost budget, a site plan, and a summary of the zoning requirements. Company will then have a reasonable period of time to evaluate the project and will have the right of first refusal to participate, as an investor, owner, partner, joint venturer, or otherwise, in that project. If Company exercises this right of first refusal, it must do so by responding, in writing, to Employee within thirty days after receiving the “sufficient information.” If Company declines to exercise this right of first refusal on a timely basis, Employee may offer the project to any of the entities named in paragraph 7 or their successors in interest.

                    (ii) Except to the extent provided for in paragraph 6(c)(i), Employee has the right to offer any shopping center development project that is beyond the non-competition zone, as defined in paragraph 7(b), to any other potential investors, owners, partners, joint venturers, or other participants without any restrictions or limitations and without any Company right of first refusal.

                   (iii) Paragraph 7, not paragraph 6(c), will be controlling with regard to any shopping center development project within the non-competition zone, as defined in paragraph 7(b); paragraph 6(c) does not authorize Employee to engage, within the non-competition zone, as defined in paragraph 7(b), in any shopping center development project that has an anchor store of at least 75,000 square feet, excluding a discount store, such as, for example, Wal-Mart, Costco, or Target, unless Company’s President/CEO approves, in advance and in writing, the competing work.

    7.        Non-Competition. For the entire period from the date when Employee signs this Agreement through January 15, 2008, Employee is prohibited from engaging in any work, as an employee, independent contractor, consultant, owner, or otherwise, either (a) for Simon Property Group, General Growth Properties, Macerich, The Rouse Company, the Mills Corporation, Westfield America, or any of their successors in interest, or (b) for or at any existing or to be developed shopping center (in excess of 200,000 square feet) that is located within ten miles of any shopping center that Taubman Realty Group Limited Partnership owns (except within four miles of Beverly Center), unless Company’s President/CEO approves, in advance and in writing, the competing work. If a court of competent jurisdiction determines that the scope of the prohibition against competing work or the time or geographical limitations imposed on Employee are unreasonable, excessively broad, or both, the court may instead enforce the scope, time, and geographical limitations as the court deems reasonable and proper. This non-competition provision supersedes and replaces any other non-competition provisions in any other agreements between Company and Employee, specifically including any employment agreement between Company and Employee.

    8.        Non-Solicitation of Employees. For the entire period from the date when Employee signs this Agreement through January 15, 2008, Employee will not, directly or indirectly, either on his own behalf or in the service of or on behalf of any other person or business entity, solicit, hire, or attempt to solicit or hire any person then employed by Company.

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    9.        Non-Disclosure of Confidential Information.

    (a)               Employee will not use or disclose to any third party, except as Employee’s performance of consulting services for Company may require, any of Company’s “Confidential Information” (as defined in this Agreement), whether or not conceived, originated, discovered, or developed by Employee, which Employee may obtain from Company during the term of this Agreement or may have obtained during Employee’s previous employment with Company, unless Company consents, in advance and in writing, to the use or disclosure. This obligation will remain in effect both during the term of this Agreement and for a period of twenty-four months after the termination or expiration of this Agreement.

    (b)               “Confidential Information” means any and all technical data, sales data, data pertaining to merchants, clients, methods, processes, rents, profits, operating procedures, and any other internal business information that is given to Employee by Company, that is not available to the public, and that pertains to Company, the facilities that it owns or manages, its affiliates or related entities, its officers, its directors, or its shareholders. “Confidential Information” excludes any general or specific information about the industry, retailers, rents, methods, and processes that Employee obtained during the course of his career.

    10.        Return of Materials. Upon the termination of this Agreement or, at Company’s discretion, at any time before the termination of this Agreement, Employee will promptly deliver to Company all documents and materials of any nature given to Employee by Company pertaining to Employee’s performance of consulting services for Company and will not remove from the premises any documents, materials, or copies. If Employee discovers after the termination of this Agreement that Employee inadvertently retained any documents, materials, or copies, then Employee will not be in violation of this paragraph by delivering to Company, as soon as practicable after the discovery, any documents, materials, or copies. The parties will interpret this paragraph in good faith and reasonably.

    11.        Compensation. In exchange for Employee’s availability to provide consulting services, his performance of consulting services, and the promises in this Agreement, Company will compensate Employee as follows:

    (a)               For up to 624 hours of consulting services during the twenty-four month period from January 1, 2005 through December 31, 2006, Company will pay Employee, on an automatic basis, the gross amount of $560,000.00, which will be payable in twenty-four, equal, monthly, gross installments of $23,333.00 each, commencing January 1, 2005. For any consulting services requested by Company in excess of 312 hours during either calendar year, Company, in addition, will pay Employee at the rate of $400.00 per hour for each hour of requested consulting services performed in excess of 312 hours during that calendar year, after Company receives from Employee an itemized invoice identifying the date, the amount of time, the project and the services rendered for those requested consulting services. Employee neither will be eligible for nor will receive any employee benefits from Company, except as set forth in this Agreement and the Termination Agreement.

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    (b)               (i) For the eighteen month period starting on January 1, 2005 and ending on June 30, 2006, Company will reimburse Employee for the premiums then in effect for COBRA continuation coverage or, in the event of a family status change, the adjusted premiums for COBRA continuation coverage, if Employee timely elects COBRA continuation coverage.

           If Employee elects to discontinue the COBRA continuation coverage before June 30, 2006 and enrolls in private health insurance coverage before June 30, 2006, Company will reimburse Employee, up to the amount of the COBRA continuation coverage premiums then in effect, through June 30, 2006 for the private health insurance coverage obtained by Employee for Employee and his eligible dependents.

                   (ii) For the six month period starting on July 1, 2006 and ending on December 31, 2006, Company will reimburse Employee up to the amount of the COBRA continuation coverage premiums then in effect, for private health insurance coverage obtained by Employee for Employee and his eligible dependents.

                   (iii) To receive the reimbursement, Employee must submit proof of payment, such as a cancelled check or a receipt from the insurer verifying payment, to Company’s designated Human Resources Administrator. The eighteen month period during which Company reimburses Employee for the premiums for the COBRA continuation coverage will count as the eighteen month period during which Employee is entitled to exercise COBRA rights.

    (c)               Company hereby exercises its discretion under Section 2.33 of The Taubman Company Long-Term Performance Compensation Plan (the “LTPCP”) to designate Employee’s termination of employment as a Retirement for purposes of the LTPCP thereby accelerating the vesting of awards granted under the LTPCP. The Company will make the following payments to Employee in the amounts and on the dates listed below:

         (i)        

Grant Date of Award	Payment Date	Amount
January 1, 2002	January 15, 2005	$267,500.00
January 1, 2003	January 15, 2006	$287,500.00
January 1, 2004	January 15, 2007	$362,500.00
January 1, 2005	January 15, 2008	Amount to be determined in January 2005 based on Employee's 2004 job performance

                   (ii) In addition to the amounts listed above, Company will also pay any premium that is payable under the terms then in effect under the Long-Term Performance Compensation Plan at the time the premium is paid to entire company (see attached).

                   (iii) If Employee passes away between the date on which this Agreement is signed and January 15, 2008, Company will pay the amounts identified in paragraph 11(c)(i) and 11(c)(ii) to Employee’s estate beneficiaries on the payment dates specified in paragraph 11(c)(i).

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    (d)               (i) Company will pay the premiums for Employee’s Executive Long Term Disability policy at the current levels, subject to the terms and conditions of that policy, through December 31, 2006.

                       (ii) If Employee converts the Basic Group Term Life and Optional Life policy to an individual policy within thirty days after his retirement on December 31, 2004 and satisfies the insurer’s evidence of insurability procedure, Company will pay the premiums for that converted policy, subject to the terms and conditions of that policy, through December 31, 2006.

    12.        Company’s Remedies Upon Violation.

    (a)               If Employee, in the reasonable judgment of Company, violates paragraph 7, Non-Competition, paragraph 8, Non-Solicitation of Employees, or paragraph 9, Non-Disclosure of Confidential Information, Employee will forfeit all rights to any further payments under paragraph 11, Compensation, sections (a) and (c), after the date of the violation. Employee’s forfeiture of all rights to any further payments under paragraph 11, Compensation, sections (a) and (c), will be Company’s sole remedy for Employee’s violation of paragraph 7, Non-Competition, paragraph 8, Non-Solicitation of Employees, or paragraph 9, Non-Disclosure of Confidential Information.

    (b)               A dispute about whether Company exercised “reasonable judgment” in concluding that Employee violated paragraph 7, 8, or 9 will be subject to arbitration under paragraph 15. In the event of a final adjudication in which either party is found to be the prevailing party, the other party will be obligated to pay any costs and attorney fees incurred by the prevailing party.

    13.        Expense Reimbursement. Company will reimburse Employee for reasonable, necessary, authorized, and pre-approved business expenses (at the service level of a Senior Vice President of the Company, which is currently first class air travel, but is subject to change) incurred in the course of Employee’s consulting services for Company. Employee will report these expenses and will submit supporting documentation in accordance with Company’s procedures. Company will pay approved expenses within thirty days of submission of the expense report and supporting documentation.

    14.        Governing Law. This Agreement is made under and will be construed in accordance with the laws of the State of Michigan, excluding its choice of law rules.

    15.        Arbitration. Any dispute arising out of or relating to the performance or breach of this Agreement, the termination of this Agreement, or the meaning of or obligations imposed by this Agreement will be decided by arbitration under and in accordance with the Employment Dispute Resolution Rules of the American Arbitration Association then in effect and conducted in Oakland County, Michigan. An arbitration award may be entered as a judgment in any court of competent jurisdiction.

    16.        Severability. If any provision of this Agreement is ruled to be illegal or unenforceable, the rest of this Agreement will remain enforceable.

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    17.        Waivers. The waiver by either party of a violation by the other party of any provision of this Agreement will not operate or be construed as a waiver of any subsequent violation. Any waiver of an obligation under this Agreement will only be valid if it is in writing and signed by an authorized representative of the waiving party.

    18.        Notices. Any notice required by the Agreement to be given or made to a party must be in writing and delivered in person or sent by certified, first class mail, return receipt requested, or equivalent, to the address of each party appearing below its signature. The address may be changed by notifying the other party, in writing, of the new address.

    19.        Statutes of Limitations. Any claim by Employee must be brought within thirty-six months after the termination or expiration of this Agreement. Employee waives any statutes of limitation to the contrary.

    20.        Assignment. This Agreement contemplates personal services by Employee, and Employee cannot transfer or assign Employee’s rights or obligations under this Agreement, except to a business entity formed and controlled by Employee. If Employee transfers any rights to Employee’s business entity, both Employee and the business entity will remain subject to the Employee’s obligations under paragraphs 7, 8, and 9 of this Agreement. Company cannot transfer or assign its rights or obligations under this Agreement.

    21.        Conflicting Agreements. Employee has no other contracts or agreements with or obligations to any other person or entity that might conflict with Employee’s obligations under this Agreement.

    22.        Entire Agreement. This Agreement contains the entire understanding between the parties and supersedes any prior understandings and agreements between them about the subject matter of this Agreement. There are no other representations or agreements, oral or written, modifying the terms of this Agreement.

    23.        Amendment. No amendment of this Agreement will be effective unless it is made in writing and signed by each party.

    24.        Multiple Copies. This Agreement is made in multiple copies, each of which will constitute an original, and all of which together will constitute one instrument.

    25.        Captions. The captions in this Agreement are for the convenience of the parties only and have no effect on the meaning or the interpretation of this Agreement.

    26.        Full and Final Release of All Claims.

    (a)               In exchange for Company’s obligations under this Agreement, Employee will sign, at the time of his retirement on December 31, 2004, the attached Full and Final Release of All Claims.

    (b)               In exchange for Employee’s obligations under this Agreement, Company will sign, at the time of Employee’s retirement on December 31, 2004, a Full and Final Release of All Claims.

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THE TAUBMAN COMPANY, L.L.C	JOHN L. SIMON
By: /s/ William S. Taubman	By: /s/ John L. Simon
Its: Executive Vice President	Dated: 7-8-04
Dated: 7-8-04
Address:	Address:
200 E. Long Lake Road	5761 Concord Court
Bloomfield Hills, MI 48303	Troy, MI 48098

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EX-12

Exhibit 12

TAUBMAN CENTERS, INC.

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

	Nine Months Ended September 30
	2004			2003
Earnings from Continuing Operations before income from
equity investees	$	16,594		$	(12,042	)
Add:
Fixed charges		76,179			71,617
Amortization of previously capitalized interest		2,667			2,279
Distributed income of Unconsolidated Joint Ventures		26,663			26,829
Deduct-
Capitalized interest		(4,044	)		(7,790	)
Earnings available for fixed charges and preferred
dividends and distributions	$	118,059		$	80,893
Fixed charges:
Interest expense	$	70,377		$	62,083
Capitalized interest		4,044			7,790
Interest portion of rent expense		1,758			1,744
Total fixed charges	$	76,179		$	71,617
Preferred dividends and distributions		20,054			19,200
Total fixed charges and preferred dividends and
distributions	$	96,233		$	90,817
Ratio of earnings to fixed charges and
preferred dividends and distributions		1.23			0.89	(1)

(1) Earnings available for fixed charges and preferred dividends are less than the total of fixed charges and preferred dividends and distributions by approximately $9.9 million.

EX-31

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.;

2. 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:

a) 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;

b) 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

c) 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):

a) 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

b) 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: November 1, 2004	/s/ Robert S. Taubman
	Robert S. Taubman
	Chariman of the Board of Directors, President, and Chief Executive Officer

EX-31

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.;

2. 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:

a) 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;

b) 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

c) 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):

a) 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

b) 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: November 1, 2004	/s/ Lisa A. Payne
	Lisa A. Payne
	Executive Vice President, Chief Financial and Administrative Officer

EX-32

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 September 30, 2004 (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:	November 1, 2004
Robert S. Taubman
Chairman of the Board of Directors,
President, and Chief Executive Officer

EX-32

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 September 30, 2004 (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:	November 1, 2004
Lisa A. Payne
Executive Vice President, Chief Financial Officer
and Administrative Officer

EX-99

Exhibit 99

MORTGAGE AND OTHER NOTES PAYABLE
INCLUDING WEIGHTED INTEREST RATES AT SEPTEMBER 30, 2004
(in millions of dollars, amounts may not add due to rounding)

		100%	Beneficial Interest	Effective Rate	(a)	LIBOR Rate
		9/30/04	9/30/04	9/30/04		Spread	2004	2005	2006	2007	2008	2009	2010	2011	2012	2013	2014	Total
Consolidated Fixed Rate Debt:
Beverly Center Great Lakes Crossing International Plaza MacArthur Center Regency Square Stony Point Fashion Park The Mall at Short Hills	50.10% 95.00%	347.5 148.0 (b)                 186.2 144.0  80.1 114.8 262.6	347.5 148.0  93.0 137.0  80.1 114.8 262.6	5.28%  5.25%  4.39%  6.84%  6.75%  6.24%  6.70%	(c) (d)		0.5   0.4   0.6   0.3   0.3   0.8	2.2 1.7 2.4 1.0 1.3 3.5	3.9 2.3 1.8 2.6 1.1 1.4 3.7	4.8 2.5 1.9 2.7 1.1 1.5 4.0	5.0 2.6 87.3 2.8 1.2 1.5 4.2	5.4   2.7       3.0   1.3   1.6 246.4	5.7   2.9     122.9   1.4   1.8	6.0  3.0          72.7  1.9	6.3 3.2 2.0	6.6 126.0 2.1	303.8     99.5	347.5 148.0  93.0 137.0  80.1 114.8 262.6
Total Consolidated Fixed Weighted Rate Consolidated Floating Rate Debt: Dolphin Mall Oyster Bay The Mall at Wellington Green The Shops at Willow Bend The Shops at Willow Bend TRG Revolving Credit TRG Revolving Credit	90.00%	1,283.3 5.79% 144.0  38.9 140.0  98.4  49.1   4.2 135.0	1,183.1 5.89% 144.0  38.9 126.0  98.4  49.1   4.2 135.0	4.15% 3.65% 5.29% 3.26% 5.51% 2.63% 2.55%	(e) (h) (i) (j) (l) (n)	2.15% 2.00% 1.50% 1.50% 3.75%        0.90%	3.0 6.10%   0.5         0.4   0.2   4.2 135.0	12.1 6.09%   2.2  38.9         1.6   0.8 (m)            (o)	16.7 5.91% 141.3 (g)                    96.4  48.2	18.4 5.89% (f)                126.0 (k)              (k)	104.7 4.67%	260.5 6.65%	134.6 6.73%	83.6 6.58%	11.4 5.44%	134.8 5.27%	403.3 5.52%	1,183.1 144.0  38.9 126.0  98.4  49.1   4.2 135.0
Total Consolidated Floating Weighted Rate Total Consolidated Weighted Rate		609.6   3.80% 1,892.9   5.15%	595.6   3.95% 1,778.8   5.24%				140.3 2.56% 143.3 2.64%	43.4 3.69% 55.5 4.22%	285.9 4.08% 302.6 4.18%	126.0 5.29% 144.4 5.37%	104.7 4.67%	260.5 6.65%	134.6 6.73%	83.6 6.58%	11.4 5.44%	134.8 5.27%	403.3 5.52%	595.6 1,778.8
Joint Ventures Fixed Rate Debt:
Arizona Mills Cherry Creek Fair Oaks Mall at Millenia Sunvalley Westfarms Mall	50.00% 50.00% 50.00% 50.00% 50.00% 78.94%	141.3 176.8 140.0 210.0 132.2 204.8	70.6  88.4  70.0 105.0  66.1 161.7	7.90% 7.68% 6.60% 5.46% 5.67% 6.10%			0.2  0.3            0.2  0.5	0.8 1.2         0.9 2.1	0.8 87.0            1.0  2.3	0.9             1.0 2.4	0.9      70.0  0.9  1.1  2.6	1.0         1.4 1.2 2.7	66.0            1.5  1.2  2.9	1.6 1.3 3.1	1.6  58.2 143.0	98.1		70.6  88.4  70.0 105.0  66.1 161.7
Total Joint Venture Fixed Weighted Rate Joint Ventures Floating Rate Debt: Other		1,005.1   6.51%     3.5	561.8 6.47%   1.9	4.10%			1.2 6.67%   0.2	5.0 6.66%   0.7	91.1 7.62%   0.6	4.3 6.36%   0.4	75.5 6.57%   0.0	6.3 6.17%	71.7 7.73%	6.0 5.84%	202.8 5.97%	98.1 5.46%		561.8   1.9
Total Joint Venture Floating Weighted Rate Total Joint Venture Weighted Rate		3.5   4.10% 1,008.6   6.50%	1.9 4.10% 563.7 6.46%				0.2 4.10%   1.4 6.30%	0.7 4.10%   5.6 6.36%	0.6 4.10%  91.7 7.60%	0.4 4.10%   4.7 6.18%	0.0 4.10%  75.5 6.57%	6.3 6.17%	71.7 7.73%	6.0 5.84%	202.8 5.97%	98.1 5.46%		1.9  563.7
TRG Beneficial Interest Totals Fixed Rate Debt                                 Floating Rate Debt                                 Total		2,288.4    6.11%    613.1    3.81%  2,901.5    5.62%	1,745.0    6.08%    597.5    3.95%  2,342.5    5.54% Average Maturity				4.2 6.26% 140.5 2.57% 144.7 2.67%  6.58  ====	17.1 6.26%  44.1 3.70% 61.2 4.41%	107.8 7.36% 286.5 4.08% 394.2 4.97%	22.8 5.98% 126.4 5.29% 149.1 5.39%	180.1 5.47%  0.0 4.10% 180.2 5.47%	266.8 6.64%    266.8 6.64%	206.3 7.08%    206.3 7.08%	89.6 6.53%     89.6 6.53%	214.2 5.94%    214.2 5.94%	232.9 5.35%    232.9 5.35%	403.3 5.52%    403.3 5.52%	1,745.0  597.5 2,342.5

(a) Includes the impact of interest rate swaps but does not include effect of amortization of debt issuance costs, losses on settlement of derivatives used to hedge the refinancing of certain fixed rate debt, or interest rate cap premiums.

(b) On July 1, 2004, an additional 23.6% interest was acquired, increasing the ownership interest and beneficial interest in debt to 50.1%. As of July 1, 2004, the center is accounted for as a consolidated entity.

(c) Debt is reduced by $.5 million of purchase accounting discount from acquisition which increases the stated rate on the debt of 4.21% to an effective rate of 4.39%.

(d) Debt includes $4.5 million of purchase accounting premium from acquisition which reduces the stated rate on the debt of 7.59% to an effective rate of 6.84%.

(e) $120 million of this debt is swapped to 2.05% plus spread to October 6, 2004. Thereafter the debt is floating month to month at LIBOR plus spread and the entire debt balance is capped at 7% plus spread.

(f) Maturity date may be extended for a total of 3 years.

(g) If construction commences prior to 12/31/05, the maturity date is automatically extended from 12/31/05 to three years from the commencement of construction.

(h) $100 million of this debt is swapped to 4.35% plus spread to October 2004, and to 5.25% plus spread from October 2004 to May 2005. The remainder is floating month to month at LIBOR plus spread.

(i) LIBOR rate is floating month to month. $97.5 million of this debt is capped at 4.6% plus spread to July 2006.

(j) LIBOR rate is floating month to month. $48.8 million of this debt is capped at 5.75% plus spread to July 2006.

(k) Maturity date may be extended for a total of 2 years.

(l) Rate floats daily.

(m) In October 2004, the maturity date was extended to February 2008.

(n) LIBOR rate floats month to month.

(o) In October 2004, this loan was refinanced with a $350 million facility at a rate of LIBOR + .80%, maturing February 2008 with a one-year extension option. The balance remains at $135 million after the refinancing.