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: June 30, 2006
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 periods that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

        Yes No

        Indicate by a check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.(Check one):

       Large Accelerated Filer    Accelerated Filer    Non-Accelerated Filer

        Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

        Yes No

        As of August 1, 2006, there were outstanding 52,786,418 shares of the Company’s common stock, par value $0.01 per share.

TAUBMAN CENTERS, INC.
CONTENTS

PART I – FINANCIAL INFORMATION

Item 1.

       

       
       

       
       

       
       

       

Item 2.
       

Item 3.

Item 4. Financial Statements (Unaudited)

Consolidated Balance Sheet - June 30, 2006 and December 31, 2005

Consolidated Statement of Operations and Comprehensive Income - Three
Months Ended June 30, 2006 and 2005

Consolidated Statement of Operations and Comprehensive Income - Six
Months Ended June 30, 2006 and 2005

Consolidated Statement of Cash Flows - Six Months Ended
June 30, 2006 and 2005

Notes to Consolidated Financial Statements

Management's Discussion and Analysis of Financial Condition and
Results of Operations

Quantitative and Qualitative Disclosures About Market Risk

Controls and Procedures     

   2

   3


   4


   5


   6

 20


 38

 38

PART II – OTHER INFORMATION

Item 1.

Item 1A.

Item 4.

Item 6.

SIGNATURES Legal Proceedings

Risk Factors

Submission of Matters to a Vote of Security Holders

Exhibits  39

 39

 39

 39

 40

1

TAUBMAN CENTERS, INC.
CONSOLIDATED BALANCE SHEET
(in thousands, except share data)

	June 30 2006			December 31 2005
Assets (Note 1):
Properties	$	3,311,749		$	3,081,324
Accumulated depreciation and amortization		(766,109	)		(651,665	)
	$	2,545,640		$	2,429,659
Investment in Unconsolidated Joint Ventures (Note 4)		109,316			106,117
Cash and cash equivalents (Note 5)		79,091			163,577
Accounts and notes receivable, less allowance for doubtful accounts of $6,919
and $5,497 in 2006 and 2005		32,821			41,717
Accounts and notes receivable from related parties		3,782			2,400
Deferred charges and other assets (Note 1)		101,910			54,110
	$	2,872,560		$	2,797,580
Liabilities (Note 1):
Notes payable (Note 5)	$	2,377,494		$	2,089,948
Accounts payable and accrued liabilities		213,952			235,410
Dividends and distributions payable		16,099			15,819
Distributions in excess of investments in and net income of Unconsolidated
Joint Ventures (Note 4)		94,078			101,028
	$	2,701,623		$	2,442,205
Commitments and contingencies (Notes 3, 5, 7, and 8)
Preferred Equity of TRG (Note 1)	$	29,217		$	29,217
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, $113 million liquidation preference, 4,520,000
shares issued and outstanding at December 31, 2005. No shares outstanding
or authorized at June 30, 2006 (Note 6)				$	45
Series B Non-Participating Convertible Preferred Stock, $0.001 par and
liquidation value, 40,000,000 shares authorized, 28,258,897 and
29,175,240 shares issued and outstanding at June 30, 2006 and
December 31, 2005	$	28			29
Series G Cumulative Redeemable Preferred Stock, 4,000,000 shares
authorized, no par, $100 million liquidation preference, 4,000,000 shares issued
and outstanding at June 30, 2006 and December 31, 2005
Series H Cumulative Redeemable Preferred Stock, 3,480,000 shares
authorized, no par, $87 million liquidation preference, 3,480,000 shares issued
and outstanding at June 30, 2006 and December 31, 2005
Common Stock, $0.01 par value, 250,000,000 shares authorized, 52,786,236
and 51,866,184 shares issued and outstanding at June 30, 2006 and
December 31, 2005		528			519
Additional paid-in capital		632,658			739,090
Accumulated other comprehensive income (loss)		(5,144	)		(9,051	)
Dividends in excess of net income (Note 1)		(486,350	)		(404,474	)
	$	141,720		$	326,158
	$	2,872,560		$	2,797,580

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 June 30
	2006			2005
Revenues (Note 1):
Minimum rents	$	76,587		$	63,300
Percentage rents		709			721
Expense recoveries		52,152			41,222
Revenues from management, leasing, and development services		3,160			3,334
Other		6,668			8,629
	$	139,276		$	117,206
Expenses (Note 1):
Maintenance, taxes, and utilities	$	40,485		$	32,161
Other operating		16,476			16,164
Management, leasing, and development services		1,527			2,125
General and administrative		7,546			7,786
Interest expense		31,871			26,492
Depreciation and amortization		33,315			33,570
	$	131,220		$	118,298
Gains on land sales and interest income	$	5,504		$	2,947
Income before equity in income of Unconsolidated Joint Ventures and minority
and preferred interests	$	13,560		$	1,855
Equity in income of Unconsolidated Joint Ventures (Note 4)		7,412			9,372
Income before minority and preferred interests	$	20,972		$	11,227
Minority share of consolidated joint ventures		(3,671	)		(10	)
Minority interest in TRG:
Minority share of income of TRG		(2,780	)		(2,364	)
Distributions in excess of minority share of income of TRG (Note 1)		(6,115	)		(6,602	)
TRG Series F preferred distributions		(615	)		(615	)
Net income	$	7,791		$	1,636
Series A , G, H, and I preferred stock dividends (Note 6)		(10,403	)		(6,150	)
Net income (loss) allocable to common shareowners	$	(2,612	)	$	(4,514	)
Net income	$	7,791		$	1,636
Other comprehensive income:
Unrealized gain on interest rate instruments and other		2,219			139
Reclassification adjustment for amounts recognized in net income		313			336
Comprehensive income	$	10,323		$	2,111
Basic and diluted earnings per common share (Note 9) -
Net income (loss)	$	(0.05	)	$	(0.09	)
Cash dividends declared per common share	$	0.305		$	0.285
Weighted average number of common shares outstanding		52,782,144			50,520,169

See notes to consolidated financial statements.

3

TAUBMAN CENTERS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
(in thousands, except share data)

	Six Months Ended June 30
	2006			2005
Revenues (Note 1):
Minimum rents	$	152,582		$	126,378
Percentage rents		3,599			2,417
Expense recoveries		97,045			78,782
Revenues from management, leasing, and development services		6,083			5,534
Other		17,988			16,252
	$	277,297		$	229,363
Expenses (Note 1):
Maintenance, taxes, and utilities	$	75,283		$	62,159
Other operating		33,071			29,589
Management, leasing, and development services		3,045			3,320
General and administrative		14,470			13,745
Interest expense (Note 5)		66,154			52,032
Depreciation and amortization		66,704			63,069
	$	258,727		$	223,914
Gains on land sales and interest income	$	7,927		$	5,552
Income before equity in income of Unconsolidated Joint Ventures and minority
and preferred interests	$	26,497		$	11,001
Equity in income of Unconsolidated Joint Ventures (Note 4)		15,883			18,442
Income before minority and preferred interests	$	42,380		$	29,443
Minority share of consolidated joint ventures		(4,132	)		(16	)
Minority interest in TRG:
Minority share of income of TRG		(8,497	)		(7,529	)
Distributions in excess of minority share of income of TRG (Note 1)		(9,296	)		(10,612	)
TRG Series F preferred distributions		(1,230	)		(1,230	)
Net income	$	19,225		$	10,056
Series A , G, H, and I preferred stock dividends (Note 6)		(16,406	)		(12,300	)
Net income (loss) allocable to common shareowners	$	2,819		$	(2,244	)
Net income	$	19,225		$	10,056
Other comprehensive income:
Unrealized gain on interest rate instruments and other		3,133			839
Reclassification adjustment for amounts recognized in net income		774			655
Comprehensive income	$	23,132		$	11,550
Basic and diluted earnings per common share (Note 9) -
Net income (loss)	$	0.05		$	(0.04	)
Cash dividends declared per common share	$	0.61		$	0.57
Weighted average number of common shares outstanding		52,456,890			50,084,438

See notes to consolidated financial statements.

4

TAUBMAN CENTERS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)

	Six Months Ended June 30
	2006			2005
Cash Flows From Operating Activities:
Net income	$	19,225		$	10,056
Adjustments to reconcile net income to net cash provided by operating activities:
Minority and preferred interests		23,155			19,387
Depreciation and amortization		66,704			63,069
Provision for losses on accounts receivable		2,912			2,293
Gains on sales of land		(4,084	)		(4,833	)
Other		3,401			2,377
Increase (decrease) in cash attributable to changes in assets and liabilities:
Receivables, deferred charges and other assets		(4,400	)		(3,168	)
Accounts payable and other liabilities		(15,439	)		(7,932	)
Net Cash Provided by Operating Activities	$	91,474		$	81,249
Cash Flows From Investing Activities:
Additions to properties	$	(84,864	)	$	(61,207	)
Net proceeds from disposition of interest in center (Note 3)		9,000
Proceeds from sales of land		5,423			4,251
Contributions to Unconsolidated Joint Ventures		(2,129	)		(26,806	)
Distributions from Unconsolidated Joint Ventures in excess of income		4,959			15,562
Net Cash Used In Investing Activities	$	(67,611	)	$	(68,200	)
Cash Flows From Financing Activities:
Debt proceeds	$	495,500		$	248,736
Debt payments		(382,782	)		(199,803	)
Debt issuance costs		(1,154	)		(912	)
Contribution from minority interest (Note 3)		3,500
Issuance of common stock and/or partnership units in connection with Incentive
Option Plan (Note 7)					6,701
Issuance of preferred stock (Note 6)		113,000
Redemption of preferred stock (Note 6)		(226,000	)
Equity issuance costs		(607	)
Distributions to minority and preferred interests (Note 1)		(68,491	)		(19,371	)
Cash dividends to preferred shareowners		(11,754	)		(12,300	)
Cash dividends to common shareowners		(31,915	)		(28,136	)
Net Cash Used In Financing Activities	$	(110,703	)	$	(5,085	)
Net Increase (Decrease) In Cash and Cash Equivalents	$	(86,840	)	$	7,964
Cash and Cash Equivalents at Beginning of Period		163,577			29,081
Effect of consolidating Cherry Creek Shopping Center (Note 1)
(Cherry Creek Shopping Center's cash balance at beginning of year)		2,354
Cash and Cash Equivalents at End of Period	$	79,091		$	37,045

Non-cash investing and financing activities – Consolidated assets and liabilities increased upon consolidation of the accounts of Cherry Creek Shopping Center on January 1, 2006 (Note 1).

See notes to consolidated financial statements.

5

TAUBMAN CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – Interim Financial Statements

General

        Taubman Centers, Inc. (the Company or TCO), a real estate investment trust, or REIT, is the managing general partner of The Taubman Realty Group Limited Partnership (the Operating Partnership or TRG). The Operating Partnership is an operating subsidiary that engages in the ownership, management, leasing, acquisition, development, and expansion of regional retail shopping centers and interests therein. The Operating Partnership’s owned portfolio as of June 30, 2006 included 22 urban and suburban shopping centers in ten states. One new center is under construction in Michigan.

        In 2005, the Company formed Taubman Asia, which will be the platform for its future expansion into the Asia-Pacific region. Taubman Asia is headquartered in Hong Kong and is seeking opportunities in Asia to augment the Company’s existing development and acquisition activities.

Consolidation

        The consolidated financial statements of the Company include all accounts of the Company, the Operating Partnership, and its consolidated subsidiaries, including The Taubman Company LLC (the Manager). The Company consolidates the accounts of the owner of The Mall at Partridge Creek (Note 3), which qualifies as a variable interest entity under FASB Interpretation No. 46 “Consolidation of Variable Interest Entities” (FIN 46R) for which the Operating Partnership is considered to be the primary beneficiary. All intercompany transactions have been eliminated.

        Investments in entities not controlled but over which the Company may exercise 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 accounts for its interests in these ventures under the guidance in Statement of Position 78-9 “Accounting for Investments in Real Estate Ventures,” (SOP 78-9), as amended by FASB Staff Position 78-9-1, and Emerging Issues Task Force Issue No. 04-5 “Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights” (EITF 04-5). The Company’s partners or other owners in these Unconsolidated Joint Ventures have substantive participating rights, as contemplated by paragraphs 16 through 18 of EITF 04-5, 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.

        With the issuance of EITF 04-5 and the amendment of SOP 78-9, the Company began consolidating, as of January 1, 2006, the entity that owns Cherry Creek Shopping Center, a 50% owned joint venture, pursuant to the transition methodology provided in EITF 04-5. The impact to the balance sheet was an increase in assets of approximately $128 million and liabilities of approximately $180 million, and a $52 million reduction of beginning equity representing the cumulative effect of change in accounting principle. The reduction in beginning equity was the result of the Company’s venture partner’s deficit capital account as of December 31, 2005, which was recorded at zero in the consolidated balance sheet as of January 1, 2006.

        Because the net equity balance (accumulated distributions from operations in excess of net income) of the outside partners in certain of the Company’s consolidated joint ventures is less than zero, the interest of these outside partners is presented as a zero balance in the consolidated balance sheet as of June 30, 2006 and December 31, 2005. The income allocated to these noncontrolling partners is equal to their share of operating distributions as long as the net equity of the partners is less than zero.

        The Company accounts for distributions to minority partners that result from financing transactions as a debit balance minority interest upon determination that (1) the distribution was the result of appreciation in the fair value of the property above the book value, (2) the financing was provided at a loan to value ratio commensurate with non-recourse real estate lending, and (3) the excess of the property value over the financing provides support for the eventual recovery of the debit balance minority interest upon sale or disposal of the property. Debit balance minority interests are considered as part of the carrying value of a property, should events or circumstances indicate that it may not be recoverable.

6

TAUBMAN CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

        In May 2006, Cherry Creek Shopping Center refinanced its debt and distributed the excess proceeds to the partners. The joint venture partner’s $45 million share of the distributed excess proceeds is classified as minority interest and included in Deferred Charges and Other Assets in the Company’s consolidated balance sheet.

Ownership

        In addition to the Company’s common stock, there are three classes of preferred stock (Series B, G, and H) outstanding as of June 30, 2006. Dividends on the 8% Series G and 7.625% Series H preferred stocks are cumulative and are payable in arrears on or before the last day of each calendar quarter. The Company owns corresponding Series G and Series H Preferred Equity interests in the Operating Partnership that entitle the Company to income and distributions (in the form of guaranteed payments) in amounts equal to the dividends payable on the Company’s Series G and Series H Preferred Stock. The remaining shares of 8.3% Series A Cumulative Redeemable Preferred Stock (Series A Preferred Stock) were redeemed in May 2006 (Note 6).

        The Company also is obligated to issue to partners in the Operating Partnership other than the Company, upon subscription, one share of nonparticipating Series B Preferred Stock. 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. The holders of Series B Preferred Stock are not entitled to dividends or earnings. Under certain circumstances, the Series B Preferred Stock is convertible into common stock at a ratio of 14,000 shares of Series B Preferred Stock for one share of common stock.

The Operating Partnership

        At June 30, 2006, the Operating Partnership’s equity included three classes of preferred equity (Series F, G, and H) 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 G and Series H Preferred Equity are owned by the Company and are eliminated in consolidation. The Series F Preferred Equity is owned by an institutional investor.

        Because the net equity of the Operating Partnership unitholders is less than zero, $(281) million as of June 30, 2006, the interest of the noncontrolling unitholders is presented as a zero balance in the consolidated balance sheet as of June 30, 2006 and December 31, 2005. The income allocated to the noncontrolling unitholders is equal to their share of distributions as long as the net equity of the Operating Partnership is less than zero. The net equity of the Operating Partnership is less than zero because of accumulated distributions in excess of net income and not as a result of operating losses. Distributions to partners are usually greater than net income because net income includes non-cash charges for depreciation and amortization.

        The Company’s ownership in the Operating Partnership at June 30, 2006 consisted of a 65% managing general partnership interest, as well as the Series G and H Preferred Equity interests. The Company’s average ownership percentage in the Operating Partnership for the six months ended June 30, 2006 and 2005 was 65% and 62%, respectively. At June 30, 2006, the Operating Partnership had 81,078,342 units of partnership interest outstanding, of which the Company owned 52,786,236.

Finite Life Entities

        SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity,” establishes standards for classifying and measuring as liabilities certain financial instruments that embody obligations of the issuer and have characteristics of both liabilities and equity. At June 30, 2006, the Company held controlling majority interests in consolidated entities with specified termination dates in 2080 and 2083. The minority owners’ interests in these entities are to be settled upon termination by distribution or transfer of either cash or specific assets of the underlying entity. The estimated fair value of these minority interests was approximately $121 million at June 30, 2006, compared to a book value of $(45) million, which is classified as Deferred Charges and Other Assets on the Company’s consolidated balance sheet.

7

TAUBMAN CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Modified Useful Lives and Income Statement Reclassifications

        During the first quarter of 2006, the Company modified its estimated useful lives of capital assets that are recoverable from its tenants. This change in estimate was a result of the Company’s initiative of offering its tenants the option to pay for common area maintenance costs through fixed payments versus the historical practice of a tenant paying an amount equal to its proportionate share of common area costs. The change in useful lives better aligns the depreciation of common area assets with the Company’s lease portfolio. This change in estimate did not have a material effect on the current results of operations but could be material in future periods. Beginning in 2006, depreciation on these assets, which was previously included in recoverable expenses, is included in depreciation and amortization.

        Also during the first quarter of 2006, the Company began recognizing revenue for marketing and promotion services at the gross amount billed to tenants, rather than a net amount retained (that is, the amount billed to the tenants less the related costs incurred). Revenues are now included in recoveries from tenants and the related expenses in other operating expense. This presentation change was made as a result of the Company’s recent offering to tenants of an option to pay fixed amounts for marketing and promotion of the shopping centers. In evaluating the accounting for marketing and promotion services, the Company considered that there may no longer be a direct relationship between tenant billings and the marketing and promotion costs incurred, as well as the fact that the Company is the primary obligor on the costs incurred. Historically, revenues from marketing and promotion services have been equal to costs incurred.

        In addition, the Company now classifies gains on peripheral land sales and interest income separately in its income statement.

        Prior year revenues and expenses in the consolidated financial statements and in the combined financial information in Note 4 have been reclassified as described above to be consistent with the 2006 presentation.

Other

        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, 2005. In the opinion of management, all adjustments (consisting only of normal recurring adjustments, except as noted below) necessary for a fair presentation of the financial statements for the interim periods have been made. The results of interim periods are not necessarily indicative of the results for a full year.

        Dollar amounts presented in tables within the notes to the financial statements are stated in thousands, except share data or as otherwise noted. Certain reclassifications have been made to 2005 amounts to conform to current year classifications.

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 six months ended June 30, 2006, the Company’s federal income tax expense was zero as a result of a net operating loss incurred from its taxable REIT subsidiaries. As of June 30, 2006, the Company had a net deferred tax asset of $3.4 million, after a valuation allowance of $8.6 million. As of December 31, 2005, the net deferred tax asset was $3.2 million, after a valuation allowance of $9.6 million.

8

TAUBMAN CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 3 – Disposition and New Center Development

Disposition

        In December 2005, a 50% owned unconsolidated joint venture sold its interest in Woodland for $177.4 million. The Company’s $85.4 million share of proceeds was received in cash with the exception of a $9 million 5.40% note receivable, which was repaid in the first quarter of 2006. The cash proceeds from the sale were used in January 2006 to acquire the land for The Mall at Partridge Creek, as part of a like-kind exchange pursuant to Section 1031 of the Internal Revenue Code and the regulations thereunder (“Section 1031 like-kind exchange”). Additional proceeds were used in February 2006 to purchase the land and real property improvements of the Oyster Bay development, also as part of a Section 1031 like-kind exchange, and to pay off the outstanding balance on the loan on the property.

New Center Development

Northlake Mall

        Northlake Mall, a wholly-owned regional center, opened on September 15, 2005 in Charlotte, North Carolina.

The Mall at Partridge Creek

        The Mall at Partridge Creek, a 640,000 square foot center, is under construction in Clinton Township, Michigan. The center will be anchored by Nordstrom, Parisian, and MJR Theatres, and is scheduled to open in October 2007, with Nordstrom opening in spring 2008. In May 2006, the Operating Partnership engaged the services of a third-party investor to acquire certain property associated with the project, in order to facilitate a Section 1031 like-kind exchange to provide flexibility for disposing of assets in the future. The third-party investor became the owner of the project and leases the land from a subsidiary of the Operating Partnership. In turn, the owner leases the project back to the Operating Partnership.

        Funding for the project is expected from the following sources. The Operating Partnership will provide approximately 45% of the project funding under a junior subordinated financing. The owner will provide $9 million in equity, which included $3.5 million as of June 30, 2006, with the remaining $5.5 million having been received in July 2006. Funding for the remaining project costs is expected to be provided by a third-party construction loan. The owner’s equity contribution, representing minority interest, is included within Accounts Payable and Accrued Liabilities in the Company’s consolidated balance sheet.

        The Operating Partnership is the construction manager for the project and has an option to purchase the property and assume the ground lease from the owner during the 30-month exchange period ending December 2008. The option, if exercised, will provide the owner a 12% cumulative return on its equity. In the event the Operating Partnership does not exercise its right to purchase the property from the owner, the owner will have the right to sell all of its interest in the property, provided that the purchaser shall assume all of the obligations and be assigned all of the owner’s rights under the ground lease, the operating lease, and any remaining obligations under the loans.

        The Operating Partnership has guaranteed the lease payments on the operating lease (excluding annual supplemental rent equal to 1.67% of the owner’s outstanding equity balance, commencing after the exchange period) as well as completion of the project. The Company consolidates the accounts of the owner and the junior loan and other intercompany transactions are eliminated in consolidation.

9

TAUBMAN CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

The Pier at Caesars

        In January 2005, the Company entered into an agreement to invest in The Pier at Caesars (The Pier), located in Atlantic City, New Jersey, with Gordon Group Holdings LLC (Gordon), the developer. Stores began opening at The Pier beginning in late June 2006. The center is approximately 95% leased and committed and is expected to be approximately 80% occupied by year end. Under the agreement, the Company will have a 30% interest in The Pier. The Company’s capital contribution in The Pier will be made in three steps. The initial investment of $4 million was made at the closing in January 2005. A second payment equal to 70% of the Company’s projected required total investment (less the initial $4 million payment) is expected to be made toward the end of this year. The third and final payment will be made in early 2008 based on the project’s actual 2007 net operating income (NOI) and debt levels. The Company’s total capital contribution will be computed at a price based on a seven percent capitalization rate. Depending on the performance of the project and assuming its share of debt to be $30 million, the Company expects its total cash investment to be in the range of $30 million to $35 million. Including its share of debt, the Company’s total investment would be in the range of $60 million to $65 million. During construction of the project, Gordon will loan the venture the funding for capital expenditures in excess of the construction loan financing. Interest on the loan is accruable at the short-term applicable federal rate (AFR) under Section 1274(d) of the Internal Revenue Code and will be repaid before any distributions to the venture partners. The Company’s contributions will be used to repay the principal portion of the Gordon loan. Consequently, the Company expects that its share of distributions and income will initially be less than its residual 30% interest. The outstanding balance on the $100 million construction facility at June 30, 2006 was $58.9 million. This facility bears interest at LIBOR plus 2.65% and matures in August 2007. The maturity may be extended under two one-year extension options, assuming certain requirements have been met. The investment in The Pier is accounted for under the equity method.

Oyster Bay

        The Company’s approximately $119 million balance of development pre-construction costs as of June 30, 2006 consists of costs relating to its Oyster Bay project in Syosset, Long Island, New York. The demolition of the site is finished and the Company is working with the community to resolve all issues remaining prior to special use permit approval and the issuance of building permits. The Company expects success with the ongoing negotiations, but if it is ultimately unsuccessful in the negotiation process, it is anticipated that its recovery on this asset would be significantly less than its current investment.

Note 4 — 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, Waterside Shops at Pelican Bay, and The Pier at Caesars. The Company began providing certain management services upon the opening of The Pier at Caesars on June 27, 2006.

Shopping Center	Ownership as of June 30, 2006 and December 31, 2005
Arizona Mills	50%
Fair Oaks	50
The Mall at Millenia	50
The Pier at Caesars	(Note 3)
Stamford Town Center	50
Sunvalley	50
Waterside Shops at Pelican Bay	25
Westfarms	79

        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.

10

TAUBMAN CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

        In its consolidated balance sheet, the Company separately reports its investment in joint ventures for which accumulated distributions have exceeded investments in and net income of the joint ventures. The net equity of certain joint ventures is less than zero because distributions are usually greater than net income, as net income includes non-cash charges for depreciation and amortization.

        Combined balance sheet and results of operations information is presented in the following table for the Unconsolidated Joint Ventures, followed by the Operating Partnership’s beneficial interest in the combined information. Beneficial interest is calculated based on the Operating Partnership’s ownership interest in each of the Unconsolidated Joint Ventures. The combined information of the Unconsolidated Joint Ventures excludes the balances of The Pier at Caesars (Note 3). The accounts of Woodland, formerly a 50% Unconsolidated Joint Venture sold in December 2005, are included in these results through the date of the sale. Beginning January 1, 2006, the entity that owns Cherry Creek Shopping Center is accounted for as a consolidated entity (Note 1). The accounts of Cherry Creek Shopping Center are included in these results through December 31, 2005. In addition, in 2006 the Company modified its income statement presentation for depreciation of center replacement assets, and revenues and expense related to marketing and promotion services. As a result, certain reclassifications have been made to prior year amounts to conform to current year classifications. (See Note 1 – Modified Useful Lives and Income Statement Reclassifications).

11

TAUBMAN CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

	June 30 2006			December 31 2005
Assets:
Properties	$	922,456		$	1,076,743
Accumulated depreciation and amortization		(303,915	)		(363,394	)
	$	618,541		$	713,349
Cash and cash equivalents		28,283			33,498
Accounts and notes receivable, less allowance for doubtful
accounts of $1,374 and $1,822 in 2006 and 2005		14,615			23,189
Deferred charges and other assets		17,189			24,458
	$	678,628		$	794,494
Liabilities and accumulated deficiency in assets:
Notes payable	$	820,420		$	999,545
Accounts payable and other liabilities		39,535			59,322
TRG's accumulated deficiency in assets		(140,511	)		(172,554	)
Unconsolidated Joint Venture Partners' accumulated
deficiency in assets		(40,816	)		(91,819	)
	$	678,628		$	794,494
TRG's accumulated deficiency in assets (above)	$	(140,511	)	$	(172,554	)
TRG's investment in The Pier at Caesars		4,792			4,663
TRG basis adjustments, including elimination of intercompany profit		79,455			80,424
TCO's additional basis		71,502			92,556
Net Investment in Unconsolidated Joint Ventures	$	15,238		$	5,089
Distributions in excess of investments in and net income of
Unconsolidated Joint Ventures		94,078			101,028
Investment in Unconsolidated Joint Ventures	$	109,316		$	106,117

	Three Months Ended June 30						Six Months Ended June 30
	2006			2005			2006			2005
Revenues	$	58,474		$	72,554		$	117,126		$	145,137
Maintenance, taxes, utilities, and other operating expenses	$	20,844		$	25,981		$	39,995		$	50,807
Interest expense		13,353			16,742			26,595			33,517
Depreciation and amortization		9,470			11,549			18,960			24,395
Total operating costs	$	43,667		$	54,272		$	85,550		$	108,719
Net income	$	14,807		$	18,282		$	31,576		$	36,418
Net income allocable to TRG	$	7,499		$	9,438		$	16,524		$	18,603
Realized intercompany profit, net of depreciation on TRG's
additional basis		399			694			331			1,359
Depreciation of TCO's additional basis		(486	)		(760	)		(972	)		(1,520	)
Equity in income of Unconsolidated Joint Ventures	$	7,412		$	9,372		$	15,883		$	18,442
Beneficial interest in Unconsolidated Joint Ventures'
operations:
Revenues less maintenance, taxes, utilities, and other
operating expenses	$	21,389		$	26,276		$	43,757		$	52,942
Interest expense		(7,617	)		(9,318	)		(15,173	)		(18,647	)
Depreciation and amortization		(6,360	)		(7,586	)		(12,701	)		(15,853	)
Equity in income of Unconsolidated Joint Ventures	$	7,412		$	9,372		$	15,883		$	18,442

12

TAUBMAN CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 5 – Beneficial Interest in Debt and Interest Expense

        In May 2006, Cherry Creek Shopping Center closed on a $280 million non-recourse refinancing. The interest-only loan has a ten-year term and bears interest at an effective rate of 5.24%. Proceeds were used to pay down the existing 7.68%, $173 million mortgage on the center, plus accrued interest and fees. Excess proceeds were distributed to the partners (Note 1).

        In March 2006, the Company entered into two forward starting swaps totaling $100 million, to partially hedge interest rate risk associated with the planned refinancing of International Plaza in January 2008. The weighted average forward swap rate for these two swaps is 5.3%, excluding the credit spread.

        In February 2006, the Company paid off the $56.2 million third-party loan on Oyster Bay. In addition, the remaining $144.4 million balance on the loans on The Shops at Willow Bend was paid off when the loans became prepayable without penalty in February 2006. Interest expense for the six months ended June 30, 2006 includes a $2.1 million charge incurred in connection with the write-off of financing costs related to the pay-off of the loans on The Shops at Willow Bend.

        Also in February 2006, the Company closed on a $215.5 million, 5.41% non-recourse financing of Northlake Mall. This interest-only loan has a 10-year term.

        The Company has given notice of its intent to pay off the remaining $140 million balance on the loan on Dolphin Mall when it becomes prepayable without penalty on August 9, 2006. The Company expects to write-off approximately $1 million of remaining financing costs related to the Dolphin loan at that time.

        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 the Consolidated Subsidiaries excludes debt and interest related to the minority interests in International Plaza (49.9%), MacArthur Center (5%), The Mall at Wellington Green (10%), and Cherry Creek Shopping Center (50%, a consolidated subsidiary as of January 1, 2006). Unconsolidated Joint Venture amounts exclude The Pier at Caesars.

	At 100%		At Beneficial Interest
	Consolidated Subsidiaries	Unconsolidated Joint Ventures	Consolidated Subsidiaries	Unconsolidated Joint Ventures
Debt as of:
June 30, 2006	$2,377,494	$820,420	$2,120,040	$468,414
December 31, 2005	2,089,948	999,545	1,972,046	558,443
Capital lease obligations:
June 30, 2006	$10,283	$1,406	$9,946	$703
December 31, 2005	13,014	1,966	12,510	983
Capitalized interest:
Six months ended June 30, 2006	$4,316		$4,314
Six months ended June 30, 2005	5,155		5,155
Interest expense:
Six months ended June 30, 2006	$66,154	$26,595	$59,864	$15,173
Six months ended June 30, 2005	52,032	33,517	49,382	18,647

13

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 June 30, 2006.

Center	Loan balance as of 6/30/06	TRG's beneficial interest in loan balance as of 6/30/06	Amount of loan balance guaranteed by TRG as of 6/30/06	% of loan balance guaranteed by TRG	% of interest guaranteed by TRG
	(in millions of dollars)
Dolphin Mall	140.1	140.1	140.1	100%	100%
The Mall at Millenia	0.7	0.3	0.3	50%	50%

        Payments of rents and certain other sums payable related to The Mall at Partridge Creek agreements are guaranteed by the Operating Partnership (Note 3).

        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. The Company’s cash balances restricted for these uses were $7.8 million and $8.5 million as of June 30, 2006 and December 31, 2005, respectively. Such amounts are included within cash and cash equivalents in the Company’s consolidated balance sheet.

        In addition, the Operating Partnership has guaranteed the payment of $7.3 million related to the remaining development costs and certain tenant allowances for Northlake Mall.

        Certain loan agreements contain various restrictive covenants, including minimum net worth requirements, minimum debt service coverage ratios, a maximum payout ratio on distributions, a maximum leverage ratio, a minimum debt yield ratio, and a minimum fixed charges coverage ratio, the latter being the most restrictive. The Operating Partnership is in compliance with all of its covenants. The maximum payout ratio on distributions covenant limits the payment of distributions generally to 95% of funds from operations, as defined in the loan agreement except as required to maintain the Company’s tax status, pay preferred distributions, and for distributions related to the sale of certain assets.

Note 6 – Equity Transactions

        In May 2006, the Company redeemed all of the remaining Series A Preferred Stock at a price of $25.2709028 per share, which included accrued and unpaid dividends. The Company previously had $113 million or 4,520,000 shares of its Series A Preferred Stock outstanding. Emerging Issues Task Force Topic D-42, “The Effect on the Calculation of Earnings Per Share for the Redemption or Induced Conversion of Preferred Stock,” provides that any excess of the fair value of the consideration transferred to the holders of preferred stock redeemed over the carrying amount of the preferred stock should be subtracted from net earnings to determine net earnings available to common stockholders. As a result of application of Topic D-42, the Company recognized a charge of $4.0 million in the second quarter of 2006, representing the difference between the carrying value and the redemption price of the Series A Preferred Stock redeemed.

        The Series A Preferred Stock was redeemed with the proceeds of a $113 million private preferred stock issuance, the Series I Cumulative Redeemable Preferred Stock (Series I Preferred Stock). The Series I Preferred Stock paid dividends at a floating rate equal to 3-month LIBOR plus 1.25%, an effective rate of 6.4225% for the period the shares were outstanding. The Company redeemed the Series I Preferred Stock on June 30, 2006, using available cash. The Company recognized a charge of $0.6 million at that time, representing the difference between the carrying value, which includes original issuance costs, and the redemption price of the Series I Preferred Stock.

        In addition, the Board of Directors of the Company declared early dividends of $0.2611111 per share on its Series G Cumulative Redeemable Preferred Stock and $0.2488715 per share on its Series H Cumulative Redeemable Preferred Stock, paid on May 18, 2006 to shareholders of record on May 8, 2006. These dividends were paid pursuant to the terms of the Series G and H Preferred Stock, which require that dividends be paid current in the event of redemption of all or part of a parity class of preferred stock. The dividends required to be paid at the end of the second quarter were reduced by the amount of the early dividends.

14

TAUBMAN CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

        In July 2005, the Company issued $87 million of Series H Cumulative Redeemable Preferred Stock (Series H Preferred Stock). This stock has a fixed 7.625% coupon and no stated maturity, sinking fund, or mandatory redemption requirements. The Series H Preferred Stock will be redeemable by the Company at par, $25 per share, plus accrued dividends, beginning in July 2010. The proceeds were used to redeem $87 million of the Series A Preferred Stock. Offering costs of $3.1 million were incurred in connection with this issuance. As a result of application of Topic D-42, the Company recognized a charge of $3.1 million in the third quarter of 2005, representing the difference between the carrying value and the redemption price of the shares of Series A Preferred Stock redeemed.

        In December 2005, the Company’s Board of Directors authorized the purchase of up to $50 million of the Company’s common stock on the open market. For each share of stock repurchased, one Operating Partnership unit will be redeemed. As of June 30, 2006, the Company had not purchased any shares or redeemed any units under this program. Repurchases of common stock will be financed through general corporate funds and through borrowings under existing lines of credit.

        During the six months ended June 30, 2006 and 2005, 916,343 and 720,499 shares, respectively, of Series B Preferred Stock were converted to 63 and 51 shares of the Company’s common stock, respectively, as a result of tenders of units under the Continuing Offer (defined in Note 8 below).

Note 7 – Share-Based Compensation

        The Company provides certain share-based compensation through an incentive option plan, a long-term incentive plan, and non-employee directors’ stock grant and deferred compensation plans. All of the plans were designed to provide additional incentive for the achievement of financial goals and offer additional alignment of the interests of management and/or the directors with those of shareholders. Additionally, the non-employee directors’ plans are intended to provide incentives for directors to continue to serve on the board and to attract new directors with outstanding qualifications.

        On January 1, 2006, the Company adopted Statement No. 123 (Revised) “Share-Based Payment.” As part of its adoption of the Statement with respect to any grant for which vesting accelerates upon retirement, the Company has begun recognizing compensation cost from the date of the grant through the date the employee first becomes eligible to retire, if this period is shorter than the stated vesting period of the grant. In prior periods, the Company recognized compensation cost using the stated vesting period, regardless of retirement eligibility. As the Company had previously applied the fair value recognition provisions of Statement No. 123, the adoption of Statement No. 123 (Revised) did not have a material effect on the Company’s results of operations.

        The compensation cost charged to income for the above-mentioned share-based compensation plans was $1.1 million and $2.1 million for the three and six months ended June 30, 2006 and $1.0 million for both the three and six months ended June 30, 2005. Compensation cost capitalized as part of properties and deferred leasing costs was $0.2 million and $0.4 million for the three and six months ended June 30, 2006 and $0.2 million for both the three and six months ended June 30, 2005.

        The Company currently recognizes no tax benefits from the recognition of compensation cost or tax deductions incurred upon the exercise or vesting of share-based awards. Any allocations of compensation cost or deduction to the Company’s corporate taxable REIT subsidiaries from the Company’s Manager, which is treated as a partnership for federal income tax purposes, have resulted in a full valuation allowance being recorded against its net deferred tax asset associated with the temporary differences related to share-based compensation. This is primarily due to prior year cumulative tax net operating losses incurred through the quarter ending June 30, 2006.

Incentive Options

        The Company’s incentive option plan (the Option Plan), which is shareholder approved, permits the grant of options to employees. The Operating Partnership’s units issued in connection with the Option Plan are exchangeable for new shares of the Company’s common stock under the Continuing Offer (Note 8). Options for 1.1 million partnership units have been granted and are outstanding at June 30, 2006. Of the 1.1 million options outstanding, 0.6 million have vesting schedules with one-third vesting at each of the third, fifth, and seventh years of the grant anniversary, if continuous service has been provided and certain conditions dependent on the Company’s market performance in comparison to its competitors have been met. Substantially all of the other 0.5 million options outstanding have vesting schedules with one-third vesting at each of the first, second, and third years of the grant anniversary, if continuous service has been provided. The options have ten-year contractual terms. As of June 30, 2006, options for 1.1 million Operating Partnership units remain available for grant under the Option Plan.

15

TAUBMAN CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

        The Company has estimated the value of the options issued during the six months ended June 30, 2006 and 2005 using a Black-Scholes valuation model based on the following assumptions:

	2006	2005
Expected volatility	20.87%-21.14%	21.00%
Expected dividend yield	3.50%	4.00%
Expected terms (in years)	7	7
Risk-free interest rate	4.74%-5.08%	3.83%-4.15%

        Expected volatility and dividend yields are based on historical volatility and yields of the Company’s stock, respectively, as well as other factors. In developing the assumption of expected term, the Company has considered the vesting and contractual terms as well as the expected terms of options disclosed by members of its peer group. The risk-free rates used are based on the U.S. Treasury yield curves in effect at the times of grants. For the options for which vesting is dependent on the Company’s market performance in comparison to its competitors, the Company used a Monte Carlo simulation to estimate the probability of the vesting conditions being met. The Company assumes no forfeitures under the Option Plan due to the small number of participants and low turnover rate. The weighted-average grant-date fair value of all options granted, including those dependent on market performance, during the quarters ended June 30, 2006 and 2005 was $8.44 and $4.86 per option, respectively, and during the six months ended June 30, 2006 and 2005 was $8.11 and $3.81 per option, respectively.

        A summary of option activity under the Option Plan for the six months ended June 30, 2006 is presented below:

	Number of Options	Weighted-Average Exercise Price	Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in millions)
Outstanding at January 1, 2006	852,139	$     30.13
Granted	263,237	40.37
Outstanding at June 30, 2006	1,115,376	$     32.55	9.0	$      9.3
Fully vested options at June 30, 2006	100,434	$     31.31	8.8	$     1.0

        There were 90,852 options that vested during the six months ended June 30, 2006.

        The total intrinsic value of options exercised during the three and six months ended June 30, 2005 was $9.5 million. Cash received from option exercises under the Option Plan for the three and six months ended June 30, 2005 was $6.7 million. There were no options exercised during the three and six months ended June 30, 2006.

        As of June 30, 2006, there were 1.0 million nonvested options outstanding, and $3.4 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the Plan. The cost is expected to be recognized over a weighted-average period of 2.5 years.

        Under the Option Plan, vested unit options can be exercised by tendering mature units with a market value equal to the exercise price of the unit options. In 2002, Robert S. Taubman, the Company's chief executive officer, exercised options for 3.0 million units by tendering 2.1 million mature units and deferring receipt of 0.9 million units under the unit option deferral election. As the Company declares distributions, the deferred option units receive their proportionate share of the distributions in the form of cash payments. These deferred option units will remain in a deferred compensation account until Mr. Taubman's retirement or ten years from the date of exercise. Beginning with the ten year anniversary of the date of exercise, the deferred partnership units will be paid in ten annual installments.

Long-Term Incentive Plan

        In May 2005, the Company's shareholders approved the adoption of The Taubman Company 2005 Long-Term Incentive Plan (LTIP). The LTIP allows the Company to make grants of restricted stock units (RSU) to employees. An aggregate of 1.2 million shares of the Company's common stock remain available for issuance under the LTIP. There were RSU for 0.3 million shares outstanding at June 30, 2006. Each RSU represents the right to receive upon vesting one share of the Company's common stock plus a cash payment equal to the aggregate cash dividends that would have been paid on such share of common stock from the date of grant of the award to the vesting date.

16

TAUBMAN CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

        A summary of activity under the LTIP is presented below:

	Restricted Stock Units		Weighted-Average Grant Date Fair Value
Outstanding at January 1, 2006	138,904		$     31.31
Redeemed	(3,918	)	33.53
Granted	131,698		40.38
Forfeited	(2,051	)	31.31
Outstanding at June 30, 2006	264,633		$     35.79

        The total intrinsic value of RSU redeemed during the three and six months ended June 30, 2006 was $0.1 million.

        These RSU vest on the third year anniversary of the grant if continuous service has been provided for that period, or upon retirement if earlier. Based on an analysis of historical employee turnover, the Company has made an annual forfeiture assumption of 2.4% of grants when recognizing compensation costs relating to the RSU.

        All of the RSU outstanding at June 30, 2006 were nonvested. As of June 30, 2006, there was $6.6 million of total unrecognized compensation cost related to nonvested RSU outstanding under the LTIP. This cost is expected to be recognized over a weighted-average period of 2.3 years.

Non-Employee Directors’ Stock Grant and Deferred Compensation Plans

        In May 2005, the Company’s shareholders approved the adoption of the Taubman Centers, Inc. Non-Employee Directors’ Stock Grant Plan (SGP). The SGP provides for the quarterly grant to each non-employee director of the Company shares of the Company’s common stock having a fair market value of $3,750, and determined based on the fair value of the Company’s common stock on the last business day of the preceding quarter. The Company has authorized 50,000 shares of the Company’s common stock for issuance under the SGP. As of June 30, 2006, 848 shares have been issued under the SGP. Certain directors have elected to defer receipt of their shares (see below).

        Also in May 2005, the Board of Directors of the Company approved the adoption of the Taubman Centers, Inc. Non-Employee Directors’ Deferred Compensation Plan (DCP). The DCP allows each non-employee director of the Company the right to defer the receipt of all or a portion of his or her annual director retainer until the termination of his or her service on the Company’s Board of Directors and for such deferred compensation to be denominated in restricted stock units, representing the right to receive shares of the Company’s common stock at the end of the deferral period. The Company has authorized 175,000 shares of common stock for issuance under the DCP. During the deferral period, when the Company pays cash dividends on its common stock, the directors’ deferral accounts will be credited with dividend equivalents on their deferred restricted stock units, payable in additional restricted stock units based on the then-fair market value of the Company’s common stock. There were 5,339 restricted stock units outstanding under the DCP at June 30, 2006.

Other Employee Plans

        As of June 30, 2006 and 2005, the Company had fully vested awards outstanding for 76,525 and 88,380 notional shares of stock, respectively, under a previous long-term performance compensation plan. These awards will be settled in cash based on a twenty day average of the market value of the Company’s common stock. The cash payment on these cumulative units remaining has been deferred by employees until retirement or termination. The liability for the eventual payout of these awards is marked to market quarterly based on the twenty day average of the Company’s stock price. During the three months ended June 30, 2006 and 2005, compensation cost was increased by $0.3 million and decreased by $0.6 million relating to these awards, respectively. During the six months ended June 30, 2006 and 2005, compensation cost was increased by $0.2 million and $0.5 million relating to these awards, respectively. The Company paid $37,000 and $0.5 million of this deferred liability during the three and six months ended June 30, 2006, respectively. The Company paid $0.8 million and $6.6 million of this deferred liability during the three and six months ended June 30, 2005, respectively.

17

TAUBMAN CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 8 — 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.

        The Company accounts for the Cash Tender Agreement between the Company and Mr. Taubman as a freestanding written put option. As the option put price is defined by the current market price of the Company’s stock at the time of tender, the fair value of the written option defined by the Cash Tender Agreement is considered to be zero.

        Based on a market value at June 30, 2006 of $40.90 per common share, the aggregate value of interests in the Operating Partnership that may be tendered under the Cash Tender Agreement was approximately $1.0 billion. The purchase of these interests at June 30, 2006 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.

        Neither the Company, its subsidiaries, nor any of its joint ventures is presently involved in any material litigation, nor, to its knowledge, is any material litigation threatened against the Company, its 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.

        See Notes 3 and 5 for the Operating Partnership’s guarantees of certain notes payable and other obligations.

Note 9 — 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 (Note 8), outstanding options for units of partnership interest under the Operating Partnership’s incentive option plan (Note 7), RSU under the LTIP and DCP (Note 7), and unissued partnership units under unit option deferral elections. In computing the potentially dilutive effect of these common stock equivalents, partnership units 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 other common stock equivalents are calculated using the treasury stock method.

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TAUBMAN CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

        For the three and six months ended June 30, 2006, there were 10.6 million partnership units outstanding and 0.9 million unissued partnership units under unit option deferral elections which may be exchanged for common shares of the Company under the Continuing Offer (Note 8) excluded from the computation as they were anti-dilutive. 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. Also, for the three months ended June 30, 2006 there were 0.2 million options to receive partnership units under the incentive option plan and 0.1 million deferred shares under the long-term incentive plan (Note 7) and the non-employee directors’ stock grant and deferred compensation plan (Note 7) outstanding that were excluded from the computation as they were anti-dilutive.

	Three Months Ended June 30				Six Months Ended June 30
	2006		2005		2006	2005
Net income (loss) allocable to
common shareowners (Numerator)	$       (2,612	)	$ (4,514	)	$ 2,819	$       (2,244	)
Shares (Denominator) - basic	52,782,144		50,520,169		52,456,890	50,084,438
Effect of dilutive securities					245,043
Shares (Denominator) - diluted	52,782,144		50,520,169		52,701,933	50,084,438
Income (loss) per common share:
Basic	$         (0.05	)	$ (0.09	)	$ 0.05	$         (0.04	)
Diluted	$         (0.05	)	$ (0.09	)	$ 0.05	$         (0.04	)

Note 10 – New Accounting Pronouncements

        In June 2006, the FASB issued Interpretation No. 48, “Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109.” This Interpretation defines a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. This Interpretation is effective for fiscal years beginning after December 15, 2006. The Company is currently evaluating the effect of this Interpretation.

        Also in June 2006, the FASB ratified the EITF’s consensus on Issue No. 06-3 “How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement (That is, Gross versus Net Presentation).” Specifically, EITF 06-3 addresses any tax assessed by a governmental authority that is directly imposed on a revenue-producing transaction between a seller and a customer and may include, but is not limited to, sales, use, value added, and some excise taxes. An accounting policy decision determines if the presentation should be on a gross or a net basis in the income statement. The consensuses in this issue should be applied to financial reports for interim and annual reporting periods beginning after December 15, 2006. The Company primarily accounts for the sales taxes and other taxes subject to the consensus in EITF 06-3 on the net basis in its income statement.

        In April 2006, the FASB issued FASB Staff Position (FSP) FIN 46R-6, “Determining the Variability to Be Considered in Applying FASB Interpretation No. 46(R).” This FSP addresses certain implementation issues related to FASB Interpretation No. 46 (Revised December 2003), “Consolidation of Variable Interest Entities.” Specifically, FSP FIN 46R-6 addresses how a reporting enterprise should determine the variability to be considered in applying FIN 46R. The variability that is considered in applying FIN 46R affects the determination of (a) whether an entity is a variable interest entity (VIE), (b) which interests are “variable interests” in the entity, and (c) which party, if any, is the primary beneficiary of the VIE. That variability affects any calculation of expected losses and expected residual returns, if such a calculation is necessary. The Company is required to apply the guidance in this FSP prospectively to all entities (including newly created entities) and to all entities previously required to be analyzed under FIN 46R when a “reconsideration event” has occurred, beginning July 1, 2006. The Company will evaluate the impact of this Staff Position at the time any such “reconsideration event” occurs, and for any new entities.

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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. 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 (“Manager”). Shopping centers owned through joint ventures that are not controlled by us 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.

        The comparability of information used in measuring performance is affected by the opening of Northlake Mall (Northlake) in September 2005 and the sale of our interest in Woodland in December 2005, as well as the expansion and renovation at Waterside Shops at Pelican Bay (Waterside). Additional “comparable center” statistics that exclude Northlake Mall, Waterside, and Woodland are provided to present the performance of comparable centers in our continuing operations. Comparable centers are generally defined as centers that were owned and open for the full periods presented. As of January 1, 2006, we began consolidating the entity that owns Cherry Creek Shopping Center (Cherry Creek). The center is included within our consolidated results and statistics as of that date, while it continues to be presented as an Unconsolidated Joint Venture for dates and periods prior to January 1, 2006. The Pier at Caesars (The Pier) began opening stores in late June 2006, and will be accounted for under the equity method. The center is excluded from our unconsolidated summary information and statistics as of June 30, 2006 (See “New Center Development”).

Current Operating Trends

        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. Our tenant sales statistics have continued to be strong through the second quarter of 2006, with sales per square foot increasing 8.5% over the second quarter of 2005, and 6.9% for the six months ended June 30, 2006 over the comparable period for 2005. Tenant sales have increased every month for over three years. 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 four percent annually in 2005) 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. We believe these improving tenant sales will provide us an opportunity to increase rents in the future.

        In the second quarter of 2006, occupancy increased to 89.0% compared to 88.7% in the second quarter of 2005. We continue to expect to end the year with increases in occupancy. See “Seasonality” for occupancy and leased space statistics. Temporary tenants, defined as those with lease terms less than 12 months, are not included in occupancy or leased space statistics. As of June 30, 2006, approximately 1.7% of space was occupied by temporary tenants.

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        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 June 30				Six Months Ended June 30
	2006		2005		2006		2005
Average rent per square foot:
Consolidated Businesses	$               43.28		$               47.21		$               43.22		$              41.60
Unconsolidated Joint Ventures	41.12		42.64		41.48		42.62
Opening base rent per square foot:
Consolidated Businesses	$               44.11		$               40.01		$               45.60		$              44.66
Unconsolidated Joint Ventures	33.36		46.09		42.74		49.83
Square feet of GLA opened:
Consolidated Businesses	189,497		142,560		419,923		356,593
Unconsolidated Joint Ventures	75,498		89,863		162,497		250,989
Closing base rent per square foot:
Consolidated Businesses	$               39.60		$               39.92		$               42.00		$              42.72
Unconsolidated Joint Ventures	50.47		47.58		45.83		45.96
Square feet of GLA closed:
Consolidated Businesses	196,713		144,856		586,924		445,919
Unconsolidated Joint Ventures	26,401		52,396		178,743		259,831
Releasing spread per square foot:
Consolidated Businesses	$                 4.51		$                 0.09		$                 3.60		$                1.94
Unconsolidated Joint Ventures	(17.11	)	(1.49	)	(3.09	)	3.87

        The spread between opening and closing rents may not be indicative of future periods, as this statistic is not computed on comparable tenant spaces, and can vary significantly from period to period depending on the total amount, location, and average size of tenant space opening and closing in the period. In 2006, the releasing spread per square foot of the Unconsolidated Joint Ventures was impacted by the opening of large tenant spaces at certain centers.

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. Gains on sales of peripheral land and lease cancellation income may vary significantly from quarter to quarter.

	2nd Quarter 2006	1st Quarter 2006	Total 2005	4th Quarter 2005	3rd Quarter 2005	2nd Quarter 2005	1st Quarter 2005
	(in thousands of dollars)
Mall tenant sales	989,275	927,139	4,124,534	1,393,006	932,229	913,408	885,891
Revenues and gains on land sales
and interest income:
Consolidated Businesses	144,780	140,444	486,102	136,592	114,595	120,153	114,762
Unconsolidated Joint Ventures	58,554	58,576	306,239	88,052	73,050	72,554	72,583
Occupancy:
Ending-comparable	88.7%	88.3%	90.2%	90.2%	89.3%	88.7%	88.5%
Average-comparable	88.6	88.4	89.1	90.0	89.1	88.6	88.7
Ending	89.0	88.3	90.0	90.0	88.9	88.7	88.4
Average	88.7	88.4	88.9	89.7	88.9	88.5	88.6
Leased space:
Comparable	91.6%	90.7%	91.5%	91.5%	91.3%	91.0%	90.5%
All centers	91.8	90.9	91.7	91.7	91.2	90.9	90.5

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        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.

	2nd Quarter 2006		1st Quarter 2006		Total 2005		4th Quarter 2005		3rd Quarter 2005		2nd Quarter 2005		1st Quarter 2005
Consolidated Businesses:
Minimum rents	9.9	%	10.5	%	9.3	%	7.2	%	10.3	%	10.4	%	10.8	%
Percentage rents	0.1		0.4		0.4		0.7		0.1		0.1		0.3
Expense recoveries	5.6		4.8		4.6		3.7		4.9		5.4		4.8
Mall tenant occupancy costs	15.6	%	15.7	%	14.3	%	11.6	%	15.3	%	15.9	%	15.9	%
Unconsolidated Joint Ventures:
Minimum rents	9.1	%	9.7	%	8.9	%	6.6	%	9.6	%	10.0	%	10.2	%
Percentage rents	0.2		0.2		0.3		0.8		0.2				0.3
Expense recoveries	4.1		3.9		4.0		3.6		4.2		4.3		4.0
Mall tenant occupancy costs	13.4	%	13.8	%	13.2	%	11.0	%	14.0	%	14.3	%	14.5	%

New Center Development

        The Mall at Partridge Creek (Partridge Creek), a 640,000 square foot center, is under construction in Clinton Township, Michigan. The center will be anchored by Nordstrom, Parisian, and MJR Theatres, and is scheduled to open in October 2007, with Nordstrom opening in spring 2008. See “Liquidity and Capital Resources — The Mall at Partridge Creek Capital Obligations” and “Planned Capital Spending” regarding this and other projects.

Results of Operations

Opening and Disposition

        Stores began opening at The Pier at Caesars (The Pier) in late June 2006, in Atlantic City, New Jersey. The center is approximately 95% leased and committed and is expected to be approximately 80% occupied by year end. Under our agreement with Gordon Group Holdings LLC (Gordon), who developed the center, we will have a 30% interest in The Pier. The results of operations of The Pier were immaterial in the second quarter. See “Liquidity and Capital Resources” regarding this project.

        In December 2005, a 50% owned unconsolidated joint venture sold its interest in Woodland for $177.4 million. Our $85.4 million share of proceeds was received in cash with the exception of a $9 million 5.40% note receivable, which was repaid in the first quarter of 2006. The cash proceeds from the sale were used in January 2006 to acquire the land for The Mall at Partridge Creek, as part of a like-kind exchange pursuant to Section 1031 of the Internal Revenue Code and the regulations thereunder (“Section 1031 like-kind exchange”). Additional proceeds were used in February 2006 to purchase the land and real property improvements of the Oyster Bay development, also as part of a Section 1031 like-kind exchange, and to pay off the outstanding balance on the loan on the property.

        Northlake Mall, a wholly-owned regional center, opened on September 15, 2005 in Charlotte, North Carolina. The 1.1 million square foot center is anchored by Belk, Dick’s Sporting Goods, Dillard’s, Hecht’s, and AMC Theatres.

Taubman Asia

        In April 2005, we formed Taubman Asia, which will be the platform for our future expansion into the Asia-Pacific region. Taubman Asia is headquartered in Hong Kong and is seeking projects that leverage our strong retail planning, design, and operational capabilities.

        We have fully negotiated the terms of our engagement to provide development, leasing, and on-going management services on a fee basis for the 1.2 million square foot super regional shopping center that will be part of Songdo International City, just south of Seoul, South Korea. The center is anticipated to begin construction in 2007 and open in 2009. The services agreement will extend for 10 years after opening. We have negotiated the opportunity to invest in a portion of the broader project, which will include not only retail, but also office, hotel, and residential uses. We anticipate we will finalize our decision on this investment in the coming months. While we expect the Songdo service agreement to produce revenue in 2006, we may have additional spending on this and other opportunities, and as a result, we continue to expect net spending of approximately $5 million during 2006.

        In addition, we believe there are many other promising opportunities in Asia and we are actively exploring them.

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Debt and Equity Transactions

        In May 2006, we redeemed the remaining $113 million of 8.3% Series A Cumulative Redeemable Preferred Stock. We recognized a charge of approximately $4 million in the second quarter of 2006, representing the difference between the carrying value and the redemption price of the Series A Preferred Stock redeemed.

        The Series A Preferred Stock was redeemed with the proceeds of a $113 million private preferred issuance, the Series I Cumulative Redeemable Preferred Stock (Series I Preferred Stock). The Series I Preferred Stock paid dividends at a floating rate equal to 3-month LIBOR plus 1.25%, an effective rate of 6.4225% during the period the stock was outstanding. We redeemed the Series I Preferred Stock on June 30, 2006 using available cash. We recognized a charge of $0.6 million at that time, representing the difference between the carrying value, which includes original issuance costs, and the redemption price of the Series I Preferred Stock.

        In May 2006, Cherry Creek Shopping Center, a 50% owned consolidated joint venture, closed on a $280 million non-recourse refinancing. The interest-only loan has a ten-year term and bears interest at a rate of 5.24%. Proceeds were used to pay down the existing 7.68%, $173 million mortgage on the center, plus accrued interest and fees. Excess proceeds were distributed to the partners.

        In February 2006, we paid off the remaining $144.4 million balance on the loans on The Shops at Willow Bend, when the loans became prepayable without penalty. As a result, we wrote off the remaining $2.1 million of financing costs related to the loans.

        Also in February 2006, we closed on a $215.5 million, 5.41% non-recourse financing of Northlake Mall. This interest-only loan has a 10-year term. In addition, we paid off the $56.2 million third-party loan on Oyster Bay.

        In December 2005, we closed on a $540 million 5.465% non-recourse refinancing of The Mall at Short Hills. This interest-only loan has a ten-year term. Proceeds were used to pay down the existing 6.7%, $260 million loan on the center, the Northlake Mall construction loan, and our revolver.

        Also in December 2005, our Board of Directors authorized the purchase of up to $50 million of our common stock on the open market. As of June 30, 2006, we had not purchased any shares or redeemed any units under this program. Repurchases of common stock will be financed through general corporate funds and through borrowings under existing lines of credit.

        In July 2005, we issued $87 million of 7.625% Series H Cumulative Redeemable Preferred Stock. Proceeds from the issuance of the Series H Preferred Stock were used to redeem $87 million of our outstanding $200 million 8.3% Series A Cumulative Redeemable Preferred Stock.

        In May 2005, we completed a $200 million non-recourse refinancing of the existing $140 million loan on The Mall at Wellington Green. The ten-year interest-only loan bears an interest rate of 5.44%. We used the excess proceeds to pay down lines of credit.

        See “Liquidity and Capital Resources” regarding additional planned debt transactions and capital spending.

New Accounting Pronouncements

        In June 2006, the FASB issued Interpretation No. 48, “Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109.” This Interpretation defines a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. This Interpretation is effective for fiscal years beginning after December 15, 2006. We are currently evaluating the effect of this Interpretation.

        Also in June 2006, the FASB ratified the EITF’s consensus on Issue No. 06-3 “How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement (That is, Gross versus Net Presentation).” Specifically, EITF 06-3 addresses any tax assessed by a governmental authority that is directly imposed on a revenue-producing transaction between a seller and a customer and may include, but is not limited to, sales, use, value added, and some excise taxes. An accounting policy decision determines if the presentation should be on a gross or a net basis in the income statement. The consensuses in this issue should be applied to financial reports for interim and annual reporting periods beginning after December 15, 2006. We primarily account for the sales taxes and other taxes subject to the consensus in EITF 06-3 on the net basis in our income statement.

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        In April 2006, the FASB issued FASB Staff Position (FSP) FIN 46R-6, “Determining the Variability to Be Considered in Applying FASB Interpretation No. 46(R).” This FSP addresses certain implementation issues related to FASB Interpretation No. 46 (Revised December 2003), “Consolidation of Variable Interest Entities.” Specifically, FSP FIN 46R-6 addresses how a reporting enterprise should determine the variability to be considered in applying FIN 46R. The variability that is considered in applying FIN 46R affects the determination of (a) whether an entity is a variable interest entity (VIE), (b) which interests are “variable interests” in the entity, and (c) which party, if any, is the primary beneficiary of the VIE. That variability affects any calculation of expected losses and expected residual returns, if such a calculation is necessary. We are required to apply the guidance in this FSP prospectively to all entities (including newly created entities) and to all entities previously required to be analyzed under FIN 46R when a “reconsideration event” has occurred, beginning July 1, 2006. We will evaluate the impact of this Staff Position at the time any such “reconsideration event” occurs, and for any new entities.

Presentation of Operating Results

Income Allocation

        The following table contains 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 balances of the Operating Partnership and the outside partners in certain consolidated joint ventures are less than zero, the income allocated to the minority and outside partners is equal to their share of operating distributions. The net equity of these minority and outside 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. Our average ownership percentage of the Operating Partnership was 65% during the three and six months ended June 30, 2006, and 62% during the three and six months ended June 30, 2005.

        Under guidance in EITF 04-5 “Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights” and Statement of Position 78-9, “Accounting for Investments in Real Estate Ventures” (SOP 78-9) as amended by FASB Staff Position 78-9-1 and the corresponding changes and considerations surrounding control, we began consolidating the entity that owns the Cherry Creek Shopping Center as of January 1, 2006. This entity was previously accounted for under the equity method in accordance with the provisions of SOP 78-9. As of January 1, 2006, the impact to the balance sheet was an increase in assets of approximately $128 million and liabilities of approximately $180 million, and a $52 million reduction of beginning equity representing the cumulative effect of change in accounting principle.

        The results of Cherry Creek Shopping Center are presented within the Consolidated Businesses for periods beginning January 1, 2006, as a result of our adoption of EITF 04-5. Results of Cherry Creek prior to 2006 are included within the Unconsolidated Joint Ventures.

EBITDA and Funds from Operations

        The operating results in the following table include the supplemental earnings measures of Beneficial Interest in EBITDA and Funds from Operations (FFO). Beneficial Interest in EBITDA represents the Company’s share of the earnings before interest and depreciation and amortization 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.

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        Our presentations of EBITDA and FFO are not necessarily comparable to the similarly titled measures of other REITs due to the fact that not all REITs use the same definitions. These measures should not be considered alternatives to net income (loss) or as an indicator of our operating performance. Additionally, neither represents cash flows from operating, investing or financing activities as defined by GAAP. Reconciliations of Net Income (Loss) Allocable to Common Shareowners to Funds from Operations and Net Income to Beneficial Interest in EBITDA are presented following the Comparison of the Six Months Ended June 30, 2006 to the Six Months Ended June 30, 2005. See the following section regarding certain presentation changes affecting EBITDA and FFO.

Presentation Changes

        As previously reported for 2005, because of a change in our business practice to offer our tenants the option to pay a fixed charge or pay their share of common area maintenance (CAM) costs and the related change to contractual terms of leases, we began adding back in the fourth quarter of 2005 all depreciation on CAM assets to calculate EBITDA and FFO. We have restated previously reported quarterly amounts in order to be comparable with 2006. Additionally, we have reclassified depreciation on all CAM expenditures from recoverable expenses to depreciation and amortization expense for all periods presented.

        Also, as a result of this change in our business practice, we modified our estimated useful lives of CAM assets that are recoverable from tenants as of January 1, 2006. The change in useful lives better aligns the depreciation of common area assets with our lease portfolio. The change in estimate did not have a material effect on the current results of operations but could be material in future periods. The Operating Partnership’s share of depreciation on all capital expenditures was $3.8 million and $4.0 million for the three months ended June 30, 2006 and 2005, respectively, and $5.7 million and $6.4 million for the six months ended June 30, 2006 and 2005, respectively.

        During 2006, we began recognizing revenue for marketing and promotion services at the gross amount billed to tenants, rather than a net amount retained (that is, the amount billed to the tenants less the related costs incurred). Revenues are now included in recoveries from tenants and the related expenses in other operating expense. This presentation change was made as a result of our recent offering to tenants of an option to pay fixed amounts for marketing and promotion of the shopping centers. In evaluating the accounting for marketing and promotion services, we considered that there may no longer be a direct relationship between tenant billings and the marketing and promotion costs incurred, as well as the fact that we are the primary obligor on the costs incurred. Historically, revenues from marketing and promotion services have been equal to costs incurred.

        In addition, we now separately present gains on peripheral land sales and interest income in the income statement following revenues and expenses.

        Prior year revenues and expenses in the following table have been reclassified as described above to be consistent with the 2006 presentation.

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        Comparison of the Three Months Ended June 30, 2006 to the Three Months Ended June 30, 2005

        The following table sets forth operating results for the three months ended June 30, 2006 and June 30, 2005, showing the results of the Consolidated Businesses and Unconsolidated Joint Ventures:

	Three Months Ended June 30, 2006				Three Months Ended June 30, 2005
	CONSOLIDATED BUSINESSES		UNCONSOLIDATED JOINT VENTURES AT 100% (1)		CONSOLIDATED BUSINESSES		UNCONSOLIDATED JOINT VENTURES AT 100% (1)
	(in millions of dollars)
REVENUES:
Minimum rents	76.6		35.9		63.3		46.0
Percentage rents	0.7		0.8		0.7		0.3
Expense recoveries	52.2		20.4		41.2		24.2
Management, leasing and development services	3.2				3.3
Other	6.7		1.2		8.6		1.8
Total revenues	139.3		58.3		117.2		72.4
EXPENSES:
Maintenance, taxes, and utilities	40.5		14.2		32.2		17.7
Other operating	16.5		5.9		16.2		7.2
Management, leasing and development services	1.5				2.1
General and administrative	7.5				7.8
Interest expense	31.9		13.4		26.5		16.7
Depreciation and amortization (2) (3)	33.3		10.2		33.6		12.3
Total expenses	131.2		43.8		118.3		54.0
Gains on land sales and interest income	5.5		0.3		2.9		0.2
	13.6		14.8		1.9		18.6
Equity in income of Unconsolidated Joint Ventures (3)	7.4				9.4
Income before minority and preferred interests	21.0				11.2
Minority and preferred interests:
TRG preferred distributions	(0.6	)			(0.6	)
Minority share of consolidated joint ventures	(3.7	)			(0.0	)
Minority share of income of TRG	(2.8	)			(2.4	)
Distributions in excess of minority share of income
of TRG	(6.1	)			(6.6	)
Net income	7.8				1.6
Preferred dividends	(10.4	)			(6.2	)
Net income (loss) allocable to common shareowners	(2.6	)			(4.5	)
SUPPLEMENTAL INFORMATION (4):
EBITDA - 100%	78.7		38.4		61.9		47.7
EBITDA - outside partners' share	(6.8	)	(17.0	)	(3.9	)	(21.4	)
Beneficial interest in EBITDA	71.9		21.4		58.0		26.3
Beneficial interest expense	(28.7	)	(7.6	)	(25.1	)	(9.3	)
Non-real estate depreciation	(0.6	)			(0.5	)
Preferred dividends and distributions	(11.0	)			(6.8	)
Funds from Operations contribution	31.6		13.8		25.6		17.0

(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.

(2) Included in depreciation and amortization of the Consolidated Businesses and Unconsolidated Joint Ventures (at 100%) are $3.0 million and $1.4 million, respectively, of depreciation of center replacement assets for 2006, and $3.3 million and $1.5 million, respectively, for 2005.

(3) Amortization of our additional basis in the Operating Partnership included in depreciation and amortization was $1.2 million and $1.1 million in 2006 and 2005, respectively. Also, amortization of our additional basis included in equity in income of Unconsolidated Joint Ventures was $0.5 million and $0.8 million in 2006 and 2005, respectively.

(4) EBITDA and FFO for 2005 have been restated from amounts previously reported to include an add-back of depreciation of center replacement assets reimbursed in the year of acquisition.

(5) Certain reclassifications have been made to prior year information to conform to current year classifications. Amounts in this table may not add due to rounding.

26

Consolidated Businesses

        Total revenues for the quarter ended June 30, 2006 were $139.3 million, a $22.1 million or 18.9% increase over the comparable period in 2005. Minimum rents increased $13.3 million, primarily due to Cherry Creek Shopping Center, which we began consolidating in 2006 upon our adoption of EITF 04-5, and the September 2005 opening of Northlake Mall. Minimum rents also increased due to tenant rollovers. Expense recoveries increased primarily due to Cherry Creek, Northlake, and increases in maintenance costs, electricity expense, and property taxes at certain centers. We expect our management, leasing, and development revenues, net of the related expenses, to be approximately $5.0 million in 2006. Other income decreased primarily due to decreases in lease cancellation revenue in 2006 and approximately $0.6 million of non-recurring income during 2005, which were partially offset by Cherry Creek. During the second quarter of 2006, we recognized our approximately $1.3 million and $0.1 million share of the Consolidated Businesses’ and Unconsolidated Joint Ventures’ lease cancellation revenue. For 2006, we are estimating that our share of lease cancellation revenue will be approximately $10 million.

        Total expenses were $131.2 million, a $12.9 million or 10.9% increase over the comparable period in 2005. Maintenance, taxes, and utilities expense increased primarily due to Cherry Creek, Northlake, and increases in maintenance costs, electricity expense, and property taxes at certain centers. Other operating expense remained relatively flat, with increases due to Cherry Creek, office and deal pursuit costs in Asia, and bad debt expense, offset by decreases in development-related costs and severance and relocation costs. General and administrative expense decreased primarily due to severance costs. We expect that the amount of general and administrative expense for each of the remaining quarters of 2006 will be approximately $7.0 million. Interest expense increased due to Cherry Creek, Northlake, and the refinancing of The Mall at Short Hills, which were partially offset by the payoff of the loans on The Shops at Willow Bend. Depreciation expense decreased primarily due to changes in depreciable lives of tenant and anchor allowances in connection with early terminations during 2005, which were partially offset by increases due to Cherry Creek and Northlake.

        Gains on land sales and interest income increased due to higher gains recognized on sales of land and increased interest income, which was primarily due to a higher cash balance on our balance sheet. We do not expect any further peripheral land sales to occur in 2006.

Unconsolidated Joint Ventures

        Total revenues for the three months ended June 30, 2006 were $58.3 million, a $14.1 million or 19.5% decrease from the comparable period in 2005. Minimum rents decreased by $10.1 million, primarily due to the consolidation of Cherry Creek in 2006 and the sale of Woodland in December 2005. Expense recoveries decreased primarily due to Cherry Creek and Woodland, which were partially offset by increased recoveries at certain centers due to increases in CAM expenditures. Other income decreased primarily due to Cherry Creek and Woodland.

        Total expenses decreased by $10.2 million to $43.8 million for the three months ended June 30, 2006. Maintenance, taxes, and utilities expense decreased primarily due to Cherry Creek and Woodland, which were partially offset by increases in maintenance costs, electricity expense, and property taxes at certain centers. Other operating expense decreased due to Cherry Creek and Woodland, which were partially offset by increases in professional fees. Interest expense decreased primarily due to Cherry Creek. Depreciation expense decreased due to Cherry Creek and Woodland.

        As a result of the foregoing, income of the Unconsolidated Joint Ventures decreased by $3.8 million to $14.8 million for the three months ended June 30, 2006. Our equity in income of the Unconsolidated Joint Ventures was $7.4 million, a $2.0 million decrease from the comparable period in 2005.

Net Income

        Our income before minority and preferred interests increased by $9.8 million to $21.0 million for the three months ended June 30, 2006. Preferred dividends in 2006 include $4.7 million of charges recognized in connection with the redemption of the Series A and Series I Preferred Stock. Minority share of income of consolidated joint ventures increased due to Cherry Creek (see “Presentation of Operating Results – Income Allocation.”) After allocation of income to minority and preferred interests, net loss allocable to common shareowners for 2006 was $2.6 million compared to $4.5 million in the comparable period in 2005.

27

        Comparison of the Six Months Ended June 30, 2006 to the Six Months Ended June 30, 2005

        The following table sets forth operating results for the six months ended June 30, 2006 and June 30, 2005, showing the results of the Consolidated Businesses and Unconsolidated Joint Ventures:

	Six Months Ended June 30, 2006				Six Months Ended June 30, 2005
	CONSOLIDATED BUSINESSES		UNCONSOLIDATED JOINT VENTURES AT 100% (1)		CONSOLIDATED BUSINESSES		UNCONSOLIDATED JOINT VENTURES AT 100% (1)
	(in millions of dollars)
REVENUES:
Minimum rents	152.6		70.4		126.4		91.3
Percentage rents	3.6		1.7		2.4		1.7
Expense recoveries	97.0		38.5		78.8		47.1
Management, leasing and development services	6.1				5.5
Other	18.0		6.0		16.3		4.8
Total revenues	277.3		116.6		229.4		144.9
EXPENSES:
Maintenance, taxes, and utilities	75.3		27.6		62.2		33.7
Other operating	33.1		11.2		29.6		14.9
Management, leasing and development services	3.0				3.3
General and administrative	14.5				13.7
Interest expense (2)	66.2		26.6		52.0		33.5
Depreciation and amortization (3) (4)	66.7		20.4		63.1		25.9
Total expenses	258.7		85.8		223.9		108.0
Gains on land sales and interest income	7.9		0.5		5.6		0.3
	26.5		31.3		11.0		37.1
Equity in income of Unconsolidated Joint Ventures (4)	15.9				18.4
Income before minority and preferred interests	42.4				29.4
Minority and preferred interests:
TRG preferred distributions	(1.2	)			(1.2	)
Minority share of consolidated joint ventures	(4.1	)			(0.0	)
Minority share of income of TRG	(8.5	)			(7.5	)
Distributions in excess of minority share of income
of TRG	(9.3	)			(10.6	)
Net income	19.2				10.1
Preferred dividends	(16.4	)			(12.3	)
Net income (loss) allocable to common shareowners	2.8				(2.2	)
SUPPLEMENTAL INFORMATION (5):
EBITDA - 100%	159.4		78.4		126.1		96.5
EBITDA - outside partners' share	(14.7	)	(34.6	)	(7.3	)	(43.6	)
Beneficial interest in EBITDA	144.6		43.8		118.8		52.9
Beneficial interest expense	(59.9	)	(15.2	)	(49.4	)	(18.6	)
Non-real estate depreciation	(1.2	)			(1.1	)
Preferred dividends and distributions	(17.6	)			(13.5	)
Funds from Operations contribution	65.9		28.6		54.8		34.3

(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.

(2) Interest expense for the six months ended June 30, 2006 includes a $2.1 million charge in the first quarter of 2006 in connection with the write-off of financing costs related to the pay-off of the loans on The Shops at Willow Bend when the loans became prepayable without penalty.

(3) Included in depreciation and amortization of the Consolidated Businesses and Unconsolidated Joint Ventures (at 100%) are $4.7 million and $2.1 million, respectively, of depreciation of center replacement assets for 2006, and $5.0 million and $3.0 million, respectively, for 2005.

(4) Amortization of the additional basis included in depreciation and amortization was $2.4 million and $2.1 million in 2006 and 2005, respectively. Also, amortization of our additional basis in the Operating Partnership included in equity in income of Unconsolidated Joint Ventures was $1.0 million and $1.5 million in 2006 and 2005, respectively.

(5) EBITDA and FFO for 2005 have been restated from amounts previously reported to include an add-back of depreciation of center replacement assets reimbursed in the year of acquisition.

(6) Certain reclassifications have been made to prior year information to conform to current year classifications. Amounts in this table may not add due to rounding.

28

Consolidated Businesses

        Total revenues for the six months ended June 30, 2006 were $277.3 million, a $47.9 million or 20.9% increase over the comparable period in 2005. Minimum rents increased $26.2 million, primarily due to Cherry Creek Shopping Center, which we began consolidating in 2006 upon our adoption of EITF 04-5, and the September 2005 opening of Northlake Mall. Minimum rents also increased due to tenant rollovers and income from temporary tenants and specialty retailers. Percentage rents increased due to increasing tenant sales and Cherry Creek. Expense recoveries increased primarily due to Cherry Creek, Northlake, and increases in CAM expenditures. Other income increased primarily due to Cherry Creek and Northlake, which were partially offset by approximately $0.6 million of non-recurring income during 2005.

        Total expenses were $258.7 million, a $34.8 million or 15.5% increase over the comparable period in 2005. Maintenance, taxes, and utilities expense increased primarily due to Cherry Creek, Northlake, and increases in maintenance costs, electricity expense, and property taxes at certain centers. Other operating expense increased primarily due to Cherry Creek, as well as increases in professional fees, office and deal pursuit costs in Asia, and bad debt expense. These increases were partially offset by decreases in development-related costs and relocation costs. Interest expense increased due to Cherry Creek, Northlake, the write-off of financing costs related to the pay-off of the loans on The Shops at Willow Bend, and refinancings. These increases were partially offset by a decrease due to the payoff of the loans on The Shops at Willow Bend. Depreciation expense increased primarily due to Cherry Creek and Northlake, which were partially offset by a decrease due to changes in depreciable lives of tenant and anchor allowances in connection with early terminations during 2005.

        Gains on land sales and interest income increased due to increases in interest income due to a higher cash balance on our balance sheet, which were partially offset by a decrease in gains on peripheral land sales.

Unconsolidated Joint Ventures

        Total revenues for the six months ended June 30, 2006 were $116.6 million, a $28.3 million or 19.5% decrease from the comparable period in 2005. Minimum rents decreased by $20.9 million, primarily due to the consolidation of Cherry Creek in 2006 and the sale of Woodland in December 2005. Expense recoveries decreased primarily due to Cherry Creek and Woodland, which were partially offset by increased recoveries at certain centers due primarily to increases in CAM expenditures. Other income increased due to increases in lease cancellation revenue, which were partially offset by Cherry Creek and Woodland.

        Total expenses decreased by $22.2 million to $85.8 million for the six months ended June 30, 2006. Maintenance, taxes, and utilities expense decreased primarily due to Cherry Creek and Woodland, which were partially offset by increases in maintenance costs, electricity expense, and property taxes at certain centers. Other operating expense decreased due to Cherry Creek and Woodland, as well as decreases in professional fees and bad debt expense. Interest expense decreased primarily due to Cherry Creek. Depreciation expense decreased due to Cherry Creek and Woodland.

        As a result of the foregoing, income of the Unconsolidated Joint Ventures decreased by $5.8 million to $31.3 million for the six months ended June 30, 2006. Our equity in income of the Unconsolidated Joint Ventures was $15.9 million, a $2.5 million decrease from the comparable period in 2005.

Net Income

        Our income before minority and preferred interests increased by $13.0 million to $42.4 million for the six months ended June 30, 2006. Preferred dividends in 2006 include $4.7 million of charges recognized in connection with the redemption of the Series A and Series I Preferred Stock. Minority share of income of consolidated joint ventures increased due to Cherry Creek (see “Presentation of Operating Results – Income Allocation.”) After allocation of income to minority and preferred interests, net income (loss) allocable to common shareowners for 2006 was $2.8 million compared to $(2.2) million in the comparable period in 2005.

29

Reconciliation of Net Income (Loss) Allocable to Common Shareowners to Funds from Operations

	Three Months Ended June 30				Six Months Ended June 30
	2006		2005		2006		2005
	(in millions of dollars)
Net income (loss) allocable to common shareowners	(2.6	)	(4.5	)	2.8		(2.2	)
Add (less) depreciation and amortization: (1)
Consolidated businesses at 100%	33.3		33.6		66.7		63.1
Minority partners in consolidated joint ventures	(2.9	)	(2.6	)	(6.0	)	(4.7	)
Share of unconsolidated joint ventures	6.4		7.6		12.7		15.9
Non-real estate depreciation	(0.6	)	(0.5	)	(1.2	)	(1.1	)
Add minority interests:
Minority share of income of TRG	2.8		2.4		8.5		7.5
Distributions in excess of minority share of
income of TRG	6.1		6.6		9.3		10.6
Distributions in excess of minority share of
income of consolidated joint ventures	2.9		0.0		1.7		0.1
Funds from Operations (2)	45.4		42.6		94.5		89.1
TCO's average ownership percentage of TRG	65.1	%	62.3	%	64.7	%	61.8	%
Funds from Operations allocable to TCO (2)	29.6		26.5		61.1		55.1

(1) Depreciation includes $2.8 million and $2.3 million of mall tenant allowance amortization for the three months ended June 30, 2006 and 2005, respectively, and $4.6 million and $5.1 million for the six months ended June 30, 2006 and 2005, respectively. Depreciation also includes TRG’s beneficial interest in depreciation of center replacement assets recoverable from tenants of $3.8 million and $4.0 million for the three months ended June 30, 2006 and 2005, respectively, and $5.7 million and $6.4 million for the six months ended June 30, 2006 and 2005, respectively.

(2) FFO for the three and six months ended June 30, 2005 has been restated from previously reported amounts to include the add-back of depreciation of center replacement assets reimbursed in the year of acquisition.

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

Reconciliation of Net Income to Beneficial Interest in EBITDA

	Three Months Ended June 30				Six Months Ended June 30
	2006		2005		2006		2005
	(in millions of dollars)
Net income	7.8		1.6		19.2		10.1
Add (less) depreciation and amortization:
Consolidated businesses at 100%	33.3		33.6		66.7		63.1
Minority partners in consolidated joint ventures	(2.9	)	(2.6	)	(6.0	)	(4.7	)
Share of unconsolidated joint ventures	6.4		7.6		12.7		15.9
Add (less) preferred interests and interest expense:
Preferred distributions	0.6		0.6		1.2		1.2
Interest expense:
Consolidated businesses at 100%	31.9		26.5		66.2		52.0
Minority partners in consolidated joint ventures	(3.2	)	(1.4	)	(6.3	)	(2.7	)
Share of unconsolidated joint ventures	7.6		9.3		15.2		18.6
Add minority interests:
Minority share of income of TRG	2.8		2.4		8.5		7.5
Distributions in excess of minority share of
income of TRG	6.1		6.6		9.3		10.6
Distributions in excess of minority share of
income of consolidated joint ventures	2.9		0.0		1.7		0.1
Beneficial interest in EBITDA (1)	93.3		84.2		188.4		171.8
TCO's average ownership percentage of TRG	65.1	%	62.3	%	64.7	%	61.8	%
Beneficial interest in EBITDA allocable to TCO (1)	60.7		52.5		121.9		106.1

(1) Beneficial interest in EBITDA for the three and six months ended June 30, 2005 has been restated from previously reported amounts to include the add-back of depreciation of center replacement assets reimbursed in the year of acquisition.

(2) Amounts in this table may not recalculate due to rounding.

30

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, fund construction costs on The Mall at Partridge Creek and other projects, pay dividends, and fund other planned capital spending 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; contractual obligations; covenants, commitments, and contingencies; and historical capital spending. We then provide information regarding our anticipated future capital spending.

        As of June 30, 2006, we had a consolidated cash balance of $79.1 million, of which $7.8 million is restricted to specific uses stipulated by our lenders, including ground lease payments, taxes, insurance, debt service, capital improvements, leasing costs, and tenant allowances. We also have secured lines of credit of $350 million and $40 million. Neither line had outstanding borrowings as of June 30, 2006. Both lines of credit mature in February 2008. We are currently finalizing an amendment to the $350 million line of credit (see “Beneficial Interest in Debt”).

Operating Activities

        Our net cash provided by operating activities was $91.5 million in 2006, compared to $81.2 million in 2005. In 2006, increases in cash from 2005 related primarily to increases in rents, lease cancellation revenue, and the opening of Northlake Mall. See also “Results of Operations” for descriptions of 2006 and 2005 transactions.

Investing Activities

        Net cash used in investing activities was $67.6 million in 2006 compared to $68.2 million in 2005. Cash used in investing activities was impacted by the timing of capital expenditures, with additions to properties in 2006 and 2005 for the construction of Northlake Mall, The Mall at Partridge Creek, and our Oyster Bay project, the expansion and renovation at Twelve Oaks Mall, and other development activities and capital items. A tabular presentation of 2006 capital spending is shown in Capital Spending. Contributions to Unconsolidated Joint Ventures of $2.1 million in 2006 were made primarily to fund the expansion at Waterside Shops at Pelican Bay (see “Capital Spending – New Centers”) and $26.8 million in 2005 were made primarily for the purchase of anchor spaces at Stamford Town Center and Cherry Creek Shopping Center, to fund the expansion at Waterside Shops at Pelican Bay, and to fund the initial investment in The Pier at Caesars.

        Sources of cash used in funding these investing activities, other than cash flow from operating activities, included distributions from Unconsolidated Joint Ventures and the transactions described under Financing Activities. Distributions in excess of earnings from Unconsolidated Joint Ventures provided $5.0 million in 2006 and $15.6 million in 2005, which included Cherry Creek and Woodland. Net proceeds from sales of peripheral land were $5.4 million and $4.3 million in 2006 and 2005, respectively. The timing of land sales is variable and proceeds from land sales can vary significantly from period to period. In addition, a $9.0 million note received in connection with the sale of Woodland was collected during the first quarter of 2006.

Financing Activities

        Net cash used in financing activities was $110.7 million in 2006, compared to $5.1 million in 2005. Proceeds from the issuance of debt, net of payments and issuance costs, were $111.6 million in 2006, compared to $48.0 million in 2005. The third-party owner of the Mall at Partridge Creek contributed $3.5 million in 2006 to fund the project (see “Contractual Obligations — The Mall at Partridge Creek Contractual Obligations” regarding the ownership structure of this project). Issuances of stock and partnership units related to the exercise of employee options contributed $6.7 million in 2005. In May 2006, we used the proceeds from the issuance of the $113.0 million Series I Preferred Stock to redeem the outstanding Series A Preferred Stock. The Series I Preferred Stock was then redeemed in June 2006 using available cash. Equity issuance costs were $0.6 million in 2006. Total dividends and other distributions paid were $112.2 million and $59.8 million in 2006 and 2005, respectively. Distributions to minority interests in 2006 included $45.3 million of excess proceeds from the refinancing of Cherry Creek Shopping Center.

31

Beneficial Interest in Debt

        At June 30, 2006, the Operating Partnership’s debt and its beneficial interest in the debt of its Consolidated and Unconsolidated Joint Ventures totaled $2,588.5 million with an average interest rate of 5.76% 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. Interest expense for the six months ended June 30, 2006 includes $0.3 million of non-cash amortization relating to acquisitions or 0.02% of the average all-in rate. Included in beneficial interest in debt is debt used to fund development and expansion costs. Beneficial interest in construction work in process totaled $186.0 million as of June 30, 2006, which includes $168.5 million of assets on which interest is being capitalized. Beneficial interest in capitalized interest was $4.3 million for the six months ended June 30, 2006. The following table presents information about our beneficial interest in debt as of June 30, 2006:

	Amount	Interest Rate Including Spread
	(in millions of dollars)
Fixed rate debt	2,446.0	5.67	% (1)
Floating rate debt-
Floating month to month	142.4	7.36	% (1)
Total beneficial interest in debt	2,588.5	5.76	% (1)
Amortization of financing costs (2)		0.17	%
Average all-in rate		5.93	%

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

(2) 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.

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

        As of June 30, 2006, $140.1 million of our beneficial interest in floating rate debt is covered under an interest rate cap agreement with a LIBOR cap rate of 7.0% ending February 2007.

        In addition, in March 2006, we entered into two forward starting swaps totaling $100 million, to partially hedge interest rate risk associated with the planned refinancing of International Plaza in January 2008. The weighted average forward swap rate for these two swaps is 5.3% excluding the credit spread.

        We have given notice to pay off the remaining $140 million balance on the loan on Dolphin Mall when it becomes prepayable without penalty on August 9, 2006. We will write off approximately $1 million of financing costs related to the Dolphin loan at that time.

        We are currently finalizing an amendment to our $350 million revolver and expect to close in August 2006. The amendment will extend the maturity date by one year, to February 2009, with a one year extension option. The interest rate will decrease from LIBOR plus 0.80% to LIBOR plus 0.70%. Under the revised terms, borrowings under the line of credit will be primary obligations of the entities owning Dolphin Mall, Fairlane Town Center, and Twelve Oaks Mall, which are the collateral for the line of credit. The amended line of credit will be guaranteed by the Operating Partnership. In addition, Fairlane and Twelve Oaks will guarantee each other’s lines of credit, as well as Dolphin’s line.

        We expect to close on a third-party construction loan on The Mall at Partridge Creek in the third quarter of 2006. The $81 million, four-year construction facility will bear interest at LIBOR plus 1.15%. We are also working on permanent financing for The Pier and Waterside, both of which we expect to finalize this year.

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, treasury lock, and rate lock agreements to meet these objectives. Based on the Operating Partnership’s beneficial interest in floating rate debt in effect at June 30, 2006, a one percent increase or decrease in interest rates on this floating rate debt would decrease or increase annual earnings by approximately $1.3 million, due to the effect of capitalized interest, and cash flows by approximately $1.4 million. Based on our consolidated debt and interest rates in effect at June 30, 2006, a one percent increase in interest rates would decrease the fair value of debt by approximately $126.2 million, while a one percent decrease in interest rates would increase the fair value of debt by approximately $135.4 million.

32

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. Disclosure of these items is contained in our Annual Report on Form 10-K. Updates of the 10-K disclosures for debt obligations and planned capital spending, which can vary significantly from period to period, as of June 30, 2006 are provided in the table below:

	Payments due by period
	Total	Less than 1 year (2006)		1-3 years (2007-2008)	3-5 years (2009-2010)	More than 5 years (2011+)
	(in millions of dollars)
Debt (1):
Property level debt	2,377.5	147.8	(2)	205.5	155.5	1,868.7
Interest payments	973.3	63.8		240.0	226.0	443.5
Purchase obligations -
Planned capital spending (3)	152.8	152.8

(1) The settlement periods for debt do not consider extension options. Amounts relating to interest on floating rate debt are calculated based on the debt balances and interest rates as of June 30, 2006.

(2) Includes anticipated repayment of $140.1 million Dolphin Mall loan in August 2006.

(3) As of June 30, 2006, we were contractually liable for $88.8 million of this planned spending. See “Planned Capital Spending” for detail regarding planned funding. The Pier is not included in these amounts.

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

        During the first quarter of 2006, we exercised options to acquire property and land at the Mall at Partridge Creek and Oyster Bay through Section 1031 like-kind exchanges. Our obligations to third-party accommodators under prior contractual agreements existing at December 31, 2005 were terminated and all related third-party obligations were repaid.

The Mall at Partridge Creek Contractual Obligations

        In May 2006, we engaged the services of a third-party investor to acquire certain property associated with The Mall at Partridge Creek, in order to facilitate a Section 1031 like-kind exchange to provide flexibility for disposing of assets in the future. The third-party investor became the owner of the project and leases the land from one of our subsidiaries. In turn, the owner leases the project back to us.

        Funding for the project is expected from the following sources. We will provide approximately 45% of the project funding under a junior subordinated financing. The owner will provide $9 million in equity, which included $3.5 million as of June 30, 2006, with the remaining $5.5 million having been received in July 2006. Funding for the remaining project costs is expected to be provided by a third-party construction loan, which is expected to close in the third quarter of 2006. The owner’s equity contribution is included within Accounts Payable and Other Liabilities in our consolidated balance sheet.

        We are the construction manager for the project and have an option to purchase the property and assume the ground lease from the owner during the 30-month exchange period ending December 2008. The option, if exercised, will provide the owner a 12% cumulative return on its equity. In the event that we do not exercise our right to purchase the property from the owner, the owner will have the right to sell all of its interest in the property, provided that the purchaser shall assume all of the obligations and be assigned all of the owner’s rights under the ground lease, the operating lease, and any remaining obligations under the loans.

        We have guaranteed the lease payments on the operating lease (excluding annual supplemental rent equal to 1.67% of the owner’s outstanding equity balance, commencing after the exchange period) as well as completion of the project. We consolidate the accounts of the owner 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 maximum leverage ratio, a minimum debt yield ratio, and a minimum fixed charges coverage ratio, the latter being the most restrictive. The Operating Partnership is in compliance with all of its covenants.

        Payments of principal and interest on the loans in the following table are guaranteed by the Operating Partnership as of June 30, 2006.

Center	Loan balance as of 6/30/06	TRG's beneficial interest in loan balance as of 6/30/06	Amount of loan balance guaranteed by TRG as of 6/30/06	% of loan balance guaranteed by TRG	% of interest guaranteed by TRG
	(in millions of dollars)
Dolphin Mall	140.1	140.1	140.1	100%	100%
The Mall at Millenia	0.7	0.3	0.3	50%	50%

        In addition, we have guaranteed the payment of $7.3 million related to the remaining development costs and certain tenant allowances for Northlake Mall.

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.

        We account for the Cash Tender Agreement between us and Mr. Taubman as a freestanding written put option. As the option put price is defined by the current market price of our stock at the time of tender, the fair value of the written option defined by the Cash Tender Agreement is considered to be zero.

        Based on a market value at June 30, 2006 of $40.90 per common share, the aggregate value of interests in the Operating Partnership that may be tendered under the Cash Tender Agreement was approximately $1.0 billion. The purchase of these interests at June 30, 2006 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. 2006 capital spending through June 30, 2006 is summarized in the following table:

	2006 (1)
	Consolidated Businesses	Beneficial Interest in Consolidated Businesses	Unconsolidated Joint Ventures	Beneficial Interest in Unconsolidated Joint Ventures
	(in millions of dollars)
New Development Projects
Pre-construction development activities (2)	15.0	15.0
New centers (3)	10.1	10.1
Existing Centers
Renovation projects with incremental GLA
and/or anchor replacement (4)	22.7	22.7	19.6	5.2
Renovations with no incremental GLA effect
and other	1.7	1.7	1.1	0.6
Mall tenant allowances (5)	4.7	4.5	2.8	1.4
Asset replacement costs reimbursable by tenants	4.0	3.9	1.5	0.9
Corporate office improvements and equipment	3.4	3.4
Additions to properties	61.5	61.2	25.0	8.0

(1) Costs are net of intercompany profits and are computed on an accrual basis. Unconsolidated joint venture amounts exclude costs related to The Pier at Caesars.

(2) Includes project costs of Oyster Bay.

(3) Includes costs related to The Mall at Partridge Creek.

(4) Includes costs related to the renovation of the former Filene’s space at Stamford Town Center, the expansion at Twelve Oaks Mall, and the expansion and renovation of Waterside Shops at Pelican Bay.

(5) Excludes initial lease-up costs.

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

        For the six months ended June 30, 2006, in addition to the costs above, we incurred our $2.6 million share of Consolidated Businesses’ and $0.5 million share of Unconsolidated Joint Ventures’ capitalized leasing costs.

        The following table presents a reconciliation of the Consolidated Businesses’ capital spending shown above (on an accrual basis) to additions to properties (on a cash basis) as presented in our Consolidated Statement of Cash Flows for the six months ended June 30, 2006:

	(in millions)
Consolidated Businesses' capital spending	$61.5
Differences between cash and accrual basis	23.4
Additions to properties	$84.9

Planned Capital Spending

New Centers

        The Mall at Partridge Creek, a 640,000 square foot center, is under construction in Clinton Township, Michigan. The center will be anchored by Nordstrom, Parisian, and MJR Theatres, and is scheduled to open in October 2007, with Nordstrom opening in spring 2008. Our investment in this center will be approximately $155 million and we are expecting a stabilized return of 9.5%.

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        In January 2005, we entered into an agreement to invest in The Pier at Caesars (The Pier), located in Atlantic City, New Jersey, with Gordon Group Holdings LLC (Gordon), who developed the center. Under the agreement, we will have a 30% interest in The Pier. Our capital contribution in The Pier will be made in three steps. The initial investment of $4 million was made at the closing in January 2005. A second payment equal to 70% of our projected required total investment (less the initial $4 million payment) is expected to be made toward the end of this year. The third and final payment will be made in early 2008 based on the project’s actual 2007 net operating income (NOI) and debt levels. Our total capital contribution will be computed at a price based on a seven percent capitalization rate. Depending on the performance of the project and assuming our share of debt to be $30 million, we expect our total cash investment to be in the range of $30 million to $35 million. Including our share of debt, our total investment would be in the range of $60 million to $65 million. During construction of the project, Gordon loaned the venture the funding for capital expenditures in excess of the construction loan financing. Interest on the loan is accruable at the short-term applicable federal rate (AFR) under Section 1274(d) of the Internal Revenue Code and will be repaid before any distributions to the venture partners. Our contributions will be used to repay the principal portion of the loan. Consequently, we expect that our share of distributions and income will initially be less than our residual 30% interest. The outstanding balance on the $100 million construction facility at June 30, 2006 was $58.9 million. This facility bears interest at LIBOR plus 2.65% and matures in August 2007. The maturity may be extended under two one-year extension options, assuming certain requirements have been met. The investment in The Pier is accounted for under the equity method.

        In 2004, we signed a conditional letter of intent regarding a future development in Salt Lake City, Utah. The project would be a reconfiguration of two existing properties. The ownership structure and amount of our investment in this project have not yet been finalized.

        Our approximately $119 million balance of development pre-construction costs as of June 30, 2006 consists of costs relating to our Oyster Bay project in Syosset, Long Island, New York. The mall will be anchored by Nordstrom and Neiman Marcus. The demolition of the site is finished, and we are working with the community to resolve all issues remaining prior to special use permit approval and the issuance of building permits. Once we have received the necessary approvals we expect to finalize our anticipated costs and return on this project and set an opening date. 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 resulting from the unanticipated delays in the approval and entitlement process. We expect success with the ongoing negotiations, but if we are ultimately unsuccessful in the negotiation process, it is anticipated that the recovery on this asset would be significantly less than our current investment.

Existing Centers

        Construction is underway on an expansion and renovation at Waterside Shops at Pelican Bay. The expansion will increase the size of the center to 282,000 square feet and will cost approximately $51 million. We expect a return of approximately 11% on our $13 million share of project costs. The tenants have begun opening and will continue to open in stages throughout 2006. In addition, Nordstrom will join the center as an anchor in fall 2008 and an expansion of the current anchor, Saks Fifth Avenue, will be completed in late 2007 or early 2008.

        At Twelve Oaks Mall, construction has begun on an addition of a 167,000 square foot Nordstrom, a 60,000 square foot expansion and renovation of Marshall Fields (name will change to Macy’s in September 2006), and approximately 97,000 square feet of additional new store space. A grand opening is planned for September 28, 2007. We expect a return of approximately 10% on our estimated cost of $63 million.

        Demolition is nearly complete on the building once occupied by Filene’s department store at Stamford Town Center, which will be transformed into a mix of signature retail and restaurant offerings, creating significantly greater visibility to the city and much-needed pedestrian access to the center. Barnes & Noble will be opening a 40,000 square foot store in the new space. We expect a 7.5% to 8% return on the $51 million project, which is expected to open in fall 2007.

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        The following table summarizes planned capital spending for 2006, excluding the capital contribution related to The Pier (above), as well as costs related to the future development in Salt Lake City and projects or expansions for which budgets have not yet been approved by the Board of Directors:

	2006 (1)
	Consolidated Businesses	Beneficial Interest in Consolidated Businesses	Unconsolidated Joint Ventures	Beneficial Interest in Unconsolidated Joint Ventures
	(in millions of dollars)
New Development Projects (2)	146.2	146.2
Existing Centers (3)	62.9	62.4	32.6	17.1
Corporate office improvements and equipment	5.3	5.3
Total	214.3	213.8	32.6	17.1

(1) Costs are net of intercompany profits.

(2) Includes costs related to Oyster Bay and The Mall at Partridge Creek.

(3) Includes costs related to the expansion and renovation of Twelve Oaks Mall and Stamford Town Center.

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

        Estimates of future capital spending include only projects approved by our Board of Directors and, consequently, estimates will change as new projects are approved. Costs of potential development projects, including our exploration of development possibilities in Asia, are expensed until we conclude that it is probable that the project will reach a successful conclusion.

        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 G and Series H 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.

        On May 15, 2006, we declared a quarterly dividend of $0.305 per common share that was paid on July 20, 2006 to shareowners of record on June 30, 2006. The Board of Directors also declared a quarterly dividend of $0.2388889 per share on our 8% Series G Cumulative Redeemable Preferred Stock (Series G Preferred Stock) and a quarterly dividend of $0.2276910 per share on our 7.625% Series H Cumulative Redeemable Preferred Stock (Series H Preferred Stock), paid on June 30, 2006 to shareholders of record on June 20, 2006.

        The 8.3% Series A Cumulative Redeemable Preferred Stock (Series A Preferred Stock) was called on April 18, 2006 and was redeemed on May 18, 2006. Included in the redemption price of the Series A Preferred Stock were accrued and unpaid dividends of $0.2709028 per share. See “Results of Operations – Debt and Equity Transactions” regarding the redemption of Series A Preferred Stock. On April 18, 2006, we also declared early dividends of $0.2611111 per share on our Series G Preferred Stock and $0.2488715 per share on our Series H Preferred Stock. The preferred dividends were paid on May 18, 2006 to shareholders of record on May 8, 2006. These dividends were paid pursuant to the terms of the Series G and H Preferred Stock, which require that dividends be paid current in the event of redemption of all or part of a parity class of preferred stock. The dividends required to be paid at the end of the second quarter were reduced by the amount of the early dividend.

        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.

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        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 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 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 were no changes in the Company’s internal control over financial reporting that occurred during the quarter ended June 30, 2006 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II
OTHER INFORMATION

Item 1. Legal Proceedings

        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 1A. Risk Factors

        There were no material changes from risk factors as previously disclosed in Part I, Item 1A. of our 2005 Form 10-K.

Item 4. Submission of Matters to a Vote of Security Holders

        On May 15, 2006, we held our annual meeting of shareholders. The matters on which shareholders voted were: the election of three directors to serve a three-year term and the ratification of the Board’s selection of KPMG LLP as our independent registered public accounting firm for the year ended December 31, 2006. William S. Taubman, Graham T. Allison, and Peter Karmanos, Jr. were re-elected at the meeting. The six remaining incumbent directors, Robert S. Taubman, Lisa A. Payne, Allan J. Bloostein, Jerome A. Chazen, Craig M. Hatkoff, and William U. Parfet continued to hold office after the meeting. The shareholders also ratified the selection of KPMG LLP as our independent registered public accounting firm. The results of the voting are shown below:

Election of Directors

NOMINEES	VOTES FOR	VOTES WITHHELD
William S. Taubman	73,468,374	3,174,280
Graham T. Allison	75,500,818	1,141,837
Peter Karmanos, Jr.	75,358,696	1,283,959

Ratification of Selection of KPMG LLP as
the Company's Independent Registered Public Accounting Firm

75,990,966	Votes were cast for ratification;
644,983	Votes were cast against ratification; and
6,704	Votes abstained (including broker non-votes).

Item 6. Exhibits

3
     

12
     

31(a)
     

31(b)
     

32(a)
     

32(b)
     

99 --
  

- --
  

- --
  

- --
  

- --
  

- --
  

- -- Restated Articles of Incorporation of Taubman Centers, Inc., as amended through August
4, 2006.

Statement Re: Computation of Taubman Centers, Inc. Ratio of Earnings to Combined Fixed
Charges and Preferred Dividends

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

39

SIGNATURES

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

Date: August 4, 2006
    TAUBMAN CENTERS, INC.


  By:   /s/ Lisa A. Payne
         Lisa A. Payne
         Vice Chairman, Chief Financial Officer,
         and Director (Principal Financial Officer)

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EX-3

As Amended Through August 4, 2006

RESTATED ARTICLES OF INCORPORATION

OF

TAUBMAN CENTERS, INC.

1. These Restated Articles of Incorporation are executed on behalf of Taubman Centers, Inc. (the "Corporation") pursuant to the provisions of Section 643 of the Michigan Business Corporation Act (the "Act").

2. The present name of the Corporation is: Taubman Centers, Inc.

3. The corporation identification number (CID) assigned by the Bureau is: 011-602.

4. Except for the Corporation's present name, the Corporation has not used any name other than Taubman Realty, Inc.

5. The date of filing the original articles of incorporation was November 21, 1973.

6. These Restated Articles of Incorporation were duly adopted by the Board of Directors of the Corporation in accordance with the provisions of Section 641(4) of the Act.

7. The following Restated Articles of Incorporation only restate and integrate (and do not further amend) the Corporation's Second Amended and Restated Articles of Incorporation, as previously amended.

ARTICLE I

Name

The name of the Corporation is: Taubman Centers, Inc.

ARTICLE II

Purpose

The purpose for which the Corporation is organized is to:

1. own, hold, develop and dispose of and invest in any type of retail real property or mixed use real property having a retail component of significant value in relation to the value of the entire mixed use real property, including any entity whose material assets include such real properties including, but not limited to, partnership interests in The Taubman Realty Group Limited Partnership, a Delaware limited partnership, and any successor thereto ("TRG");

2. act as managing general partner of TRG;

3. at such time, if ever, as TRG distributes its assets to its partners, own, hold, manage, develop and dispose of said assets and in all other respects, carry on the business of TRG;

4. qualify as a REIT (as hereinafter defined); and

5. engage in any other lawful act or activity for which corporations may be organized under the Michigan Business Corporation Act in addition to any of the foregoing purposes, that is consistent with the Corporation's qualification as a REIT.

ARTICLE III

Capital

1. Classes and Number of Shares.

The total number of shares of all classes of stock that the Corporation shall have authority to issue is 500,000,000 shares. The classes and the aggregate number of shares of stock of each class are as follows:

250,000,000 shares of Common Stock, par value $0.01 per share (the "Common Stock"), which shall have the rights and limitations set forth below.

250,000,000 shares of preferred stock (the "Preferred Stock"), which may be issued in one or more series having such relative rights, preferences, priorities, privileges, restrictions, and limitations as the Board of Directors may determine from time to time.

2. Certain Powers, Rights, and Limitations of Capital Stock.

(a)Common Stock. Subject to the rights, preferences, and limitations that the Board of Directors designates with respect to any series of Preferred Stock, a statement of certain powers, rights, and limitations of the shares of the Common Stock is as follows:

(i)Dividend Rights. The holders of shares of the Common Stock shall be entitled to receive such dividends as may be declared by the Board of Directors of the Corporation with respect to the Common Stock, subject to the preferential rights of any series of Preferred Stock designated by the Corporation's Board of Directors.

(ii)Rights Upon Liquidation. Subject to the provisions of Subsection (e) of this Section 2 of this Article III, in the event of any voluntary or involuntary liquidation, dissolution or winding up of, or any distribution of the assets of, the Corporation, each holder of shares of the Common Stock shall be entitled to receive, ratably with each other holder of shares of the Common Stock, that portion of the assets of the Corporation available for distribution to its holders of shares of Common Stock as the number of shares of the Common Stock held by such holder bears to the total number of shares of Common Stock (including shares of Common Stock that have become Excess Stock) then outstanding.

2

(b)Voting Rights. Subject to the provisions of Subsection (e) of this Section 2 of this Article III, the holders of shares of the Common Stock shall be entitled to vote on all matters (for which a common shareholder shall be entitled to vote thereon) at all meetings of the shareholders of the Corporation, and shall be entitled to one vote for each share of the Common Stock entitled to vote at such meeting. Any action to be taken by the shareholders, other than the election of directors or adjourning a meeting, including, but not limited to, the approval of an amendment to these Amended and Restated Articles of Incorporation (other than an amendment by the Board of Directors to establish the relative rights, preferences, priorities, privileges, restrictions, and limitations of Preferred Stock as provided in Subsection (c) of this Section 2 of this Article III, which amendment by the Board of Directors shall require no action to be taken by the shareholders), shall be authorized if approved by the affirmative vote of two-thirds of the shares of Capital Stock entitled to vote thereon. Directors shall be elected if approved by a plurality of the votes cast at an election.

(c)Preferred Stock. The Preferred Stock shall have such relative rights, preferences, priorities, privileges, restrictions, and limitations as the Board of Directors may determine from time to time by one or more amendments to these Amended and Restated Articles of Incorporation.

(i) [Intentionally Omitted.]

(ii)Series B Preferred Stock. Subject in all cases to the other provisions of this Section 2 of this Article III, including, without limitation, those provisions restricting the Beneficial Ownership and Constructive Ownership of shares of Capital Stock and those provisions with respect to Excess Stock, the following sets forth the designation, preference, limitation as to dividends, voting, and other rights of the Series B Preferred Stock (defined below) of the Corporation. Terms that are used and not otherwise defined in this Item (ii) have the meanings ascribed to them elsewhere in these Amended and Restated Articles of Incorporation or, if not so defined, their conventional meanings.

(a)There is hereby established a series of Preferred Stock designated "Series B Non-Participating Convertible Preferred Stock," (the "Series B Preferred Stock"), which shall initially consist of 40,000,000 authorized shares, subject to one or more increases in the authorized shares of the series by a further amendment(s) to these Amended and Restated Articles of Incorporation to permit the issuance of additional shares upon the issuance of additional Units (defined below) to Registered Unitholders (defined below) and to accommodate stock dividends or stock splits as provided below.

(b)All shares of Series B Preferred Stock purchased, exchanged, or otherwise acquired by the Corporation or that are converted into Common Stock shall be restored to the status of authorized but unissued shares of Preferred Stock.

(c)Except upon the dissolution, liquidation, or winding up of the Corporation, the Series B Preferred Stock shall have no right to any assets of the Corporation, and (except as expressly set forth in this Item (ii)) shall have no right

3

to cash dividends or distributions (from whatever source), but shall have the preference rights upon dissolution, liquidation, and winding up that are set forth in this Item (ii) of this Section 2. The Series B Preferred Stock ranks (i) junior to any Parity Preferred Stock or Senior Preferred Stock (the Parity Preferred Stock and the Senior Preferred Stock are collectively referred to as the "Series B Senior Preferred Stock"), (ii) pari passu with any other series of Preferred Stock hereafter duly established by the Board of Directors of the Corporation, the terms of which specifically provide that such series shall rank pari passu with the Series B Preferred Stock as to the distribution of assets upon liquidation (the "Series B Parity Preferred Stock"), and (iii) prior to any other class or series of Capital Stock, including, without limitation, the Common Stock of the Corporation, whether now existing or hereafter created (collectively, the "Series B Junior Stock"). If shares of Common Stock or other securities are distributed on the Common Stock or other voting Capital Stock (as a stock dividend or otherwise) (a "Voting Stock Dividend"), then each share of Series B Preferred Stock shall receive a distribution of the number of shares (or warrants or rights to acquire shares, as the case may be) of Series B Preferred Stock that would then be necessary to preserve the relative voting power of the Series B Preferred Stock (i.e., in relation to the voting power of all outstanding shares of voting Capital Stock) that existed prior to the Voting Stock Dividend.

(d)Subject to the rights of the Series B Senior Preferred Stock, upon any voluntary or involuntary dissolution, liquidation, or winding up of the affairs of the Corporation, and before any distribution of assets shall be made in respect of any Series B Junior Stock, the holders of the Series B Preferred Stock shall be entitled to be paid out of the assets of the Corporation legally available for distribution to its shareholders a liquidation preference of $0.001 per share in cash (or property having a fair market value as determined by the Board of Directors valued at $0.001 per share). After payment of the full amount of the liquidating distributions to which they are entitled, the holders of Series B Preferred Stock shall have no right or claims to any of the remaining assets of the Corporation.

(e)The Series B Preferred Stock has no stated maturity and shall not be subject to redemption; however, the foregoing shall not be a restriction on the Corporation's otherwise lawful redemption of shares of Series B Preferred Stock on a consensual basis with each holder of the shares to be redeemed.

(f)(1)The Series B Preferred Stock is convertible, and will be automatically converted under the circumstances described below, into Common Stock at a conversion ratio of 14,000:1; i.e., each 14,000 shares of Series B Preferred Stock may be converted into one share of Common Stock. In lieu of issuing less than a full share (a "fractional share") of Common Stock upon the conversion of fewer than 14,000 shares (or an integral multiple of 14,000 shares) of Series B Preferred Stock, the Corporation shall redeem the shares of Series B Preferred Stock that would otherwise be convertible into a fractional share of Common Stock (the "Scrip Shares"), and from and after the date of the

4

conversion, the Scrip Shares shall cease to be outstanding shares of Series B Preferred Stock, shall not constitute any other class of Capital Stock, and shall entitle the holder only to receive the cash redemption price, as provided below.

(2)The Corporation will initially issue the Series B Preferred Stock to each Person who, on the initial date of issuance, is a Registered Unitholder at the rate of one share for each Unit held by such Registered Unitholder, if such Registered Unitholder subscribes for the shares and pays to the Corporation an amount equal to the product of $0.001 multiplied by the number of shares of Series B Preferred Stock to be issued to him. Shares of Series B Preferred Stock may be issued only in certificated, fully registered form and may be issued only to Registered Unitholders. The Corporation may issue fractional shares of Series B Preferred Stock. Following the initial issuance of the Series B Preferred Stock, each Registered Unitholder acquiring one or more newly issued Units shall be entitled to receive from the Corporation shares of Series B Preferred Stock equal in number to the number of newly issued Units acquired by such Registered Unitholder, provided that the Registered Unitholder subscribes for the shares and pays to the Corporation an amount equal to the product of $0.001 multiplied by the number of shares of Series B Preferred Stock to be issued to him. Except as provided below, a holder of shares of Series B Preferred Stock may freely effect a transfer of the shares to any Person (subject to the Transfer being in compliance with, or (to the satisfaction of the Corporation) exempt from, applicable securities laws and regulations). Upon a Registered Unitholder's Transfer of one or more Units to another Registered Unitholder, then (to the extent of the transferring Registered Unitholder's then ownership of Series B Preferred Stock) the transferring Registered Unitholder shall be deemed to have transferred to the transferee of the Units (i) shares of Series B Preferred Stock equal in number to the number of transferred Units or if, after giving effect to the Unit Transfer, the transferring Registered Unitholder will cease to own any Units, (ii) all of the transferring Registered Unitholder's shares of Series B Preferred Stock. Notwithstanding the foregoing, a Registered Unitholder shall have the right (which shall be exercised by delivering written notice at the time of the Unit Transfer to the Corporation and the transferee of the Units) to negate the deemed simultaneous Transfer of Series B Preferred Stock. A Registered Unitholder desiring to sell (by exchange or otherwise) Units to the Corporation shall be required to surrender to the Corporation for conversion shares of Series B Preferred Stock equal in number to the number of Units being sold (by exchange or otherwise), but only if and to the extent that, after giving effect to the Corporation's proposed purchase of Units, the number of outstanding shares of Series B Preferred Stock will exceed the aggregate number of Units held by all Registered Unitholders. Shares of Series B Preferred Stock surrendered for conversion as provided in the immediately preceding sentence shall be converted into Common Stock, as provided in subparagraph (1) of this Paragraph (f), upon the Corporation's purchase of the Units of the surrendering Registered Unitholder, and the Corporation shall promptly redeem any resulting Scrip Shares for cash, as provided below. Except as provided above in this subparagraph (f)(2), a holder of

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Series B Preferred Stock shall have no voluntary conversion rights with respect to the Series B Preferred Stock, but shares of Series B Preferred Stock shall automatically convert into Common Stock as provided in subparagraph (3) of this Paragraph (f).

(3)After giving effect to a Transfer of shares of Series B Preferred Stock to a Registered Unitholder, the transferee Registered Unitholder is permitted to own shares of Series B Preferred Stock up to (i) the number of Units then owned by such transferee Registered Unitholder or (ii) 5% of the outstanding shares of Series B Preferred Stock, whichever is greater (any shares in excess of a transferee Registered Unitholder's permitted ownership of Series B Preferred Stock are referred to as the "Disproportionate Shares"). After giving effect to a Transfer of shares of Series B Preferred Stock to any Person who is not a Registered Unitholder, the transferee is permitted to own up to 5% of the outstanding shares of Series B Preferred Stock (any shares held by a transferee of Series B Preferred Stock who is not a Registered Unitholder in excess of such 5% limit are referred to as the "Greater than 5% Shares"). Upon a Transfer of Series B Preferred Stock resulting in the transferee holding Disproportionate Shares or Greater than 5% Shares, as applicable, the Disproportionate Shares or Greater than 5% Shares, as applicable, shall automatically convert into Common Stock as provided in subparagraph (1) of this Paragraph (f) without action on the part of anyone, and the Corporation shall promptly redeem any resulting Scrip Shares for cash, as provided below. Upon any such automatic conversion, each certificate evidencing converted shares of Series B Preferred Stock shall instead represent the whole number of shares of Common Stock into which such shares of Series B Preferred Stock were converted and the right to receive the cash redemption payment for any Scrip Shares evidenced by such certificate until such certificate is surrendered to the Corporation for cancellation in exchange for a Common Stock certificate and the redemption price of the Scrip Shares (if any).

(4)Upon conversion of any shares of Series B Preferred Stock, no payment or adjustment shall be made on account of dividends declared and payable to holders of Common Stock of record on a date prior to the date of conversion.

(5)As soon as practicable on or after the date of conversion of shares of Series B Preferred Stock and the surrender to the Corporation of the certificate(s) evidencing the converted shares, the Corporation will issue and deliver to or at the direction of the converting shareholder a certificate(s) for the whole number of shares of Common Stock issuable upon such conversion. The Corporation shall redeem Scrip Shares resulting from a voluntary or automatic conversion of Series B Preferred Stock for a cash payment equal to the fair value of the fractional share of Common Stock into which the Scrip Shares would otherwise be convertible (the fair value shall be the product of the relevant fraction multiplied by the closing price of the Common Stock on the trading date next preceding the date of conversion on the principal national securities

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exchange on which the Common Stock is listed (or the average of the high and low prices of the Common Stock on such date on the principal national market system on which the Common Stock is traded) or (if the Common Stock is not so listed or traded) the fair value of the Common Stock on such date as determined by the Corporation's Board of Directors). The Corporation shall be responsible for any stamp or other issuance taxes payable upon the issuance of Common Stock in exchange for surrendered or automatically converted shares of Series B Preferred Stock.

(g)(1)On all matters with respect to which shareholders of the Corporation vote, each share of Series B Preferred Stock shall be entitled to one vote. On all matters with respect to which the Series B Preferred Stock is entitled to vote as a separate class, including the nomination of directors pursuant to subparagraph (2) of this Paragraph (g), the action shall be determined by the vote (which may be by non-unanimous written consent) of a majority of the outstanding shares of Series B Preferred Stock entitled to vote. On all other matters, including the election of directors, the Series B Preferred Stock will vote as a single class with all other Capital Stock entitled to vote.

(2)With respect to each annual meeting of the Corporation's shareholders, commencing with the annual meeting of the Corporation's shareholders to be held in 1999 (the "1999 Annual Meeting"), the holders of shares of Series B Preferred Stock shall have the right, voting as a separate class, to designate nominees for election as directors of the Corporation and to have such nominees included as such in the Corporation's proxy statement and ballots (or, if none, in a specially prepared proxy statement and ballots) submitted to the shareholders of the Corporation entitled to vote in a timely manner prior to the annual meeting. The Corporation shall use all reasonable efforts, consistent with the Board of Directors' exercise of its fiduciary duties, to cause the election of the nominees designated by the holders of Series B Preferred Stock. With respect to the 1999 Annual Meeting, the holders of Series B Preferred Stock shall have the right to designate four nominees. With respect to each succeeding annual meeting of shareholders, the number of nominees to be designated by the holders of Series B Preferred Stock (the "Base Number of Series B Nominees") shall be equal to the difference between (i) four and (ii) the number of directors whose terms commenced prior to and will continue after such meeting and who were nominated to serve such terms by the holders of Series B Preferred Stock, voting as a separate class. The Base Number of Series B Nominees calculated as set forth in the immediately preceding sentence shall be reduced (i) by one, if as of the record date for determining the shareholders entitled to vote for the election of directors at the relevant annual meeting (the "Record Date"), the Registered Unitholders collectively own less than 25% (but at least 15%) of the Fully Diluted Common Stock of the Corporation, (ii) by two, if as of the Record Date, the Registered Unitholders collectively own less than 15% (but at least 10%) of the Fully Diluted Common Stock of the Corporation, (iii) by three, if as of the Record Date, the Registered Unitholders collectively own less than 10% (but at least 5%)

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of the Fully Diluted Common Stock of the Corporation, and (iv) to zero, if as of the Record Date, the Registered Unitholders collectively own less than 5% of the Fully Diluted Common Stock of the Corporation. For purposes of the immediately preceding sentence, (i) "Fully Diluted Common Stock of the Corporation" means all shares of Common Stock issued and outstanding on the relevant Record Date, plus all shares of Common Stock issuable upon the exercise of vested employee stock options to acquire Common Stock and issuable upon the exchange of Units owned by the Registered Unitholders (assuming a 1:1 exchange ratio and calculated without regard to limitations imposed on the ability or rights of certain Registered Unitholders to exchange Units for Common Stock), and (ii) the Registered Unitholders shall be deemed to "collectively own" all shares of Common Stock that they own in fact, that they have the right to acquire upon the exercise of vested employee stock options, and that would be issued upon the exchange (without regard to limitations imposed on the ability or rights of certain Registered Unitholders to exchange Units for Common Stock) of all outstanding Units (and Units issuable upon the exercise of options to acquire Units) held by the Registered Unitholders.

(h)At all times when the holders of Series B Preferred Stock, voting as a separate class, are entitled to designate nominees for election as directors of the Corporation, (i) the Board of Directors shall consist of nine directors (other than during any vacancy caused by the death, resignation, or removal of a director), plus the number of directors that any series of Preferred Stock, voting separately as a class, has the right to elect because of the Corporation's default in the payment of preferential dividends due on such series, and (ii) a majority of the directors shall be "independent" (for these purposes, an individual shall be deemed "independent" if such individual is neither an officer nor an employee of the Corporation or any of its direct or indirect subsidiaries). At such time as the holders of Series B Preferred Stock no longer have the right to designate any nominees for election as directors of the Corporation, the size of the Board of Directors shall be as determined in accordance with the provisions of the By-Laws of the Corporation.

(i)For purposes of this Item (ii) of this Subsection (c) of this Section 2 of this Article III, the following terms have the indicated meanings:

(1)"Registered Unitholder" means a Person, other than the Corporation, (i) who at the relevant time is reflected in the records of The Taubman Realty Group Limited Partnership as a partner in such partnership (or who as the result of a Transfer of Units is being admitted as a partner in such partnership) or (ii) who is (or upon completion of the relevant Transfer (including, for these purposes, the exercise of an option to acquire a Unit) will become) a beneficial owner of Units.

(2)"Units" means Units of Partnership Interest in The Taubman Realty Group Limited Partnership (and its successors), and any

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securities into which such Units of Partnership Interest (as a class) are converted or for which such Units (as a class) are exchanged, whether by merger, reclassification, or otherwise. All references in this Item (ii) of this Subsection (c) of this Section 2 of this Article III to numbers of Units shall be adjusted to reflect any splits, reverse splits, or reclassifications of Units of Partnership Interest.

(j)As long as shares of Series B Preferred Stock remain outstanding, the Corporation shall not, without the affirmative vote or consent of the holders of a majority of the outstanding shares of Series B Preferred Stock (voting as a separate class):

(1)create, authorize, or issue any securities or any obligation or security convertible into or evidencing the right to purchase any such securities, the issuance of which could adversely and (relative to the other outstanding Capital Stock) disparately affect the voting power or voting rights of the Series B Preferred Stock or the holders of Series B Preferred Stock (including the rights under Paragraph (g) of this Item (ii) of this Subsection (c) of this Section 2 of this Article III, and disregarding, for these purposes, the right of any series of Preferred Stock, voting as a separate class, to elect directors of the Corporation as the result of the Corporation's default in the payment of a preferential dividend to which the holders of such series of Preferred Stock are entitled);

(2)amend, alter, or repeal the provisions of these Amended and Restated Articles of Incorporation, whether by merger, consolidation, or otherwise, in a manner that could adversely affect the voting power or voting rights of the Series B Preferred Stock or the holders of Series B Preferred Stock (including the rights under Paragraph (g) of this Item (ii) of this Subsection (c) of this Section 2 of this Article III, and disregarding, for these purposes, the right of any series of Preferred Stock, voting as a separate class, to elect directors of the Corporation as the result of the Corporation's default in the payment of a preferential dividend to which the holders of such series of Preferred Stock are entitled);

(3)be a party to a material transaction (including, without limitation, a merger, consolidation, or share exchange) (a "Series B Transaction") if the Series B Transaction could adversely and (relative to the other outstanding Capital Stock) disparately affect the voting power or voting rights of the Series B Preferred Stock or the holders of Series B Preferred Stock (including the rights under Paragraph (g) of this Item (ii) of this Subsection (c) of this Section 2 of this Article III, and disregarding, for these purposes, the right of any series of Preferred Stock, voting as a separate class, to elect directors of the Corporation as the result of the Corporation's default in the payment of a preferential dividend to which the holders of such series of Preferred Stock are entitled). The provisions of this subparagraph (3) shall apply to successive Series B Transactions; or

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(4)issue any shares of Series B Preferred Stock to anyone other than a Registered Unitholder as provided in Paragraph (c) or subparagraph (f)(2) of this Item (ii).

(iii) Intentionally omitted.

(iv) Intentionally omitted.

(v)Series F Preferred Stock. Subject in all cases to the other provisions of this Section 2 of this Article III, including, without limitation, those provisions restricting the Beneficial Ownership and Constructive Ownership of shares of Capital Stock and those provisions with respect to Excess Stock, the following sets forth the designation, preferences, limitations as to dividends, voting and other rights, and the terms and conditions of redemption of the Series F Preferred Stock (defined below) of the Corporation.

(a)There is hereby established a series of Preferred Stock designated "8.20% Series F Cumulative Redeemable Preferred Stock, par value $0.01 per share" (the "Series F Preferred Stock"), which shall consist of 300,000 authorized shares.

(b)All shares of Series F Preferred Stock redeemed, purchased, exchanged, or otherwise acquired by the Corporation shall be restored to the status of authorized but unissued shares of Preferred Stock.

(c)The Series F Preferred Stock shall, with respect to dividend rights, rights upon liquidation, winding up or dissolution, and redemption rights, rank (i) junior to any other series of Preferred Stock hereafter duly established by the Board of Directors of the Corporation, the terms of which specifically provide that such series shall rank prior to the Series F Preferred Stock as to the payment of dividends and distribution of assets upon liquidation (the "Senior Preferred Stock"), (ii) pari passu with the Series B Preferred Stock and any other series of Preferred Stock hereafter duly established by the Board of Directors of the Corporation, the terms of which specifically provide that such series shall rank pari passu with the Series F Preferred Stock as to the payment of dividends and distribution of assets upon liquidation (the "Parity Preferred Stock"), and (iii) prior to any other class or series of Capital Stock, including, without limitation, the Common Stock of the Corporation, whether now existing or hereafter created (collectively, the "Junior Stock").

(d)(1) Subject to the rights of any Senior Preferred Stock, the holders of the then outstanding shares of Series F Preferred Stock shall be entitled to receive, as and when declared by the Board of Directors, out of funds legally available for the payment of dividends, cumulative preferential cash dividends at the annual rate of 8.20% of the $100 per share liquidation preference (i.e., $8.20 per annum per share). Such dividends shall accrue and be cumulative from the

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date of original issue and shall be payable in equal quarterly amounts in arrears on or before the last day of each March, June, September, and December or, if such day is not a business day, the next succeeding business day except that, if such business day is in the next succeeding calendar year, such payment shall be made on the immediately preceding business day, in each case with the same force and effect as if made on such date (each, a "Dividend Payment Date") (for the purposes of this Subparagraph (1) of this Paragraph (d), a "business day" is any day, other than a Saturday, Sunday, or legal holiday, on which banks in Detroit, Michigan, are open for business). The first dividend may be for less than a full quarter. All dividends on the Series F Preferred Stock, including any dividend for any partial dividend period, shall be computed on the basis of a 360-day year consisting of twelve 30-day months. Dividends will be payable to holders of record as they appear in the stock records of the Corporation at the close of business on the applicable record date, which shall be the 15^th day of the calendar month in which the applicable Dividend Payment Date falls or on such other date designed by the Board of Directors of the Corporation for the payment of dividends that is not more than 30 nor less than ten days prior to such Dividend Payment Date (each, a "Dividend Record Date").

(2)No dividends on the Series F Preferred Stock shall be declared by the Board of Directors or paid or set apart for payment by the Corporation at such time as any agreement of the Corporation, including any agreement relating to its indebtedness, prohibits such declaration, payment, or setting apart for payment or provides that such declaration, payment, or setting apart for payment would constitute a breach of, or a default under, such agreement or if such declaration, payment, or setting aside shall be restricted or prohibited by law.

(3)Dividends on the Series F Preferred Stock shall accrue and be cumulative regardless of whether the Corporation has earnings, regardless of whether there are funds legally available for the payment of such dividends, and regardless of whether such dividends are declared. Accrued but unpaid dividends on the Series F Preferred Stock will accumulate as of the Dividend Payment Date on which they first become payable. Except as set forth below in this Subparagraph (3), no dividends shall be declared or paid or set apart for payment on any Common Stock or any other series of Preferred Stock ranking, as to dividends, on a parity with or junior to the Series F Preferred Stock (other than a dividend in shares of Junior Stock) for any period unless full cumulative dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof is set apart for such payment on the Series F Preferred Stock for all past dividend periods and the then current dividend period. When dividends are not paid in full (and a sum sufficient for such full payment is not so set apart) upon the Series F Preferred Stock and the shares of any other series of Preferred Stock ranking on a parity as to dividends with the Series F Preferred Stock, all dividends declared upon the Series F Preferred Stock and any other series of Preferred Stock ranking on a parity as to

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dividends with the Series F Preferred Stock shall be declared pro rata, so that the amount of dividends declared per share of Series F Preferred Stock and such other series of Preferred Stock shall in all cases bear to each other the same ratio that accrued dividends per share on the Series F Preferred Stock and such other series of Preferred Stock (which shall not include any accrual in respect of unpaid dividends for prior dividend periods if such Preferred Stock does not have a cumulative dividend) bear to each other. No interest shall be payable in respect of any dividend payment on the Series F Preferred Stock that may be in arrears. Holders of shares of the Series F Preferred Stock shall not be entitled to any dividend, whether payable in cash, property, or stock, in excess of full cumulative dividends on the Series F Preferred Stock as provided above. Any dividend payment made on shares of the Series F Preferred Stock shall first be credited against the earliest accumulated but unpaid dividend due with respect to such shares that remains payable.

(4)Except as provided in Subparagraph (3) of this Paragraph (d) of this Item (v) of this Subsection (c) of this Section 2 of this Article III, unless full cumulative dividends on the Series F Preferred Stock have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof is set apart for payment for all past dividend periods and the then current dividend period: (i) no dividends (other than in shares of Junior Stock) shall be declared or paid or set aside for payment nor shall any other distribution be declared or made upon the Common Stock and the Series B Preferred Stock (or any other Preferred Stock ranking junior to or on a parity with the Series F Preferred Stock as to dividends or upon liquidation); and (ii) no shares of Common Stock and the Series B Preferred Stock (or any other Preferred Stock of the Corporation ranking junior to or on a parity with the Series F Preferred Stock as to dividends or upon liquidation) shall be redeemed, purchased, or otherwise acquired for any consideration (nor shall any moneys be paid to or made available for a sinking fund for the redemption of any such shares) by the Corporation (except by conversion into or exchange for Junior Stock).

(5)If for any taxable year the Corporation elects to designate as "capital gains dividends" (as defined in Section 857 of the Code) any portion (the "Capital Gains Amount") of the dividends paid or made available for the year to holders of all classes of Capital Stock (the "Total Dividends"), then the portion of the Capital Gains Amount that shall be allocable to the holders of Series F Preferred Stock shall be the amount that the total dividends paid or made available to the holders of the Series F Preferred Stock for the year bears to the Total Dividends.

(6)Notwithstanding anything to the contrary set forth herein, the Corporation may declare and pay a dividend on the Common Stock, without preserving the priority of distributions described in Subparagraphs 3 and 4 of this Paragraph (d) of this Item (v) of this Subsection (c) of this Section 2 of this Article III, but only to the extent such dividends are required to preserve the Real

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Estate Investment Trust status of the Corporation and to avoid the imposition of an excise tax on the Corporation.

(e)Subject to the rights of any Senior Preferred Stock, upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, and before any distribution of assets shall be made in respect of any Junior Stock, the holders of the Series F Preferred Stock shall be entitled to be paid out of the assets of the Corporation legally available for distribution to its shareholders a liquidation preference of $100 per share in cash (or property having a fair market value as determined by the Board of Directors valued at $100 per share), plus an amount equal to any accrued but unpaid dividends to the date of payment. After payment of the full amount of the liquidating distributions to which they are entitled, the holders of Series F Preferred Stock shall have no right or claims to any of the remaining assets of the Corporation. Neither the consolidation or merger of the Corporation with or into any other corporation, trust, or entity (or of any other corporation with or into the Corporation) nor the sale, lease, or conveyance of all or substantially all of the property or business of the Corporation shall be deemed to constitute a liquidation, dissolution or winding up of the Corporation for the purpose of this Paragraph (e) of this Item (v).

(f)(1) The Series F Preferred Stock is not redeemable prior to May 27, 2009. On and after May 27, 2009, the Corporation, at its option upon not less than 30 nor more than 60 days’ written notice, may redeem shares of the Series F Preferred Stock, in whole or in part, at any time and from time to time, for a cash redemption price of $100 per share, plus all accrued and unpaid dividends to the date fixed for redemption (except as provided below).

(2)Holders of Series F Preferred Stock to be redeemed shall surrender such shares at the place designated in the notice of redemption and shall be entitled to the redemption price and any accrued and unpaid dividends payable upon such redemption following such surrender. If notice of redemption has been given and if the Corporation has set aside in trust the funds necessary for the redemption, then from and after the redemption date: (i) dividends shall cease to accrue on such shares of Series F Preferred Stock; (ii) such shares of Series F Preferred Stock shall no longer be deemed outstanding; and (iii) all rights of the holders of such shares shall terminate, except the right to receive the redemption price. If less than all of the outstanding Series F Preferred Stock is to be redeemed, the Series F Preferred Stock to be redeemed shall be selected pro rata (as nearly as may be practicable without creating fractional shares) or by any other equitable method determined by the Corporation.

(3)Unless full cumulative dividends on all shares of Series F Preferred Stock shall have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for payment, no shares of Series F Preferred Stock shall be redeemed unless all outstanding shares of Series F Preferred Stock are simultaneously redeemed, and the Corporation

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shall not purchase or otherwise acquire directly or indirectly any shares of Series F Preferred Stock (except by exchange for Junior Stock); however, the foregoing shall not prevent the purchase or acquisition of shares of Series F Preferred Stock pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding shares of Series F Preferred Stock.

(4)Notice of redemption shall be mailed by the Corporation, postage prepaid, not less than 30 nor more than 60 days prior to the redemption date, addressed to the respective holders of record of the Series F Preferred Stock to be redeemed at their respective addresses as they appear on the stock transfer records of the Corporation. No failure to give or defect in such notice shall affect the validity of the proceedings for the redemption of any shares of Series F Preferred Stock except as to the holder to whom notice was defective or not given. Each notice shall state: (i) the redemption date; (ii) the redemption price; (iii) the number of shares of Series F Preferred Stock to be redeemed; (iv) the place or places where the Series F Preferred Stock is to be surrendered for payment of the redemption price; and (v) that dividends on the shares to be redeemed will cease to accrue on such redemption date. If fewer than all shares of the Series F Preferred Stock held by any holder are to be redeemed, the notice mailed to such holder shall also specify the number of shares of Series F Preferred Stock to be redeemed from such holder.

(5)The holders of Series F Preferred Stock at the close of business on a Dividend Record Date shall be entitled to receive the dividend payable with respect to such Series F Preferred Stock on the corresponding Dividend Payment Date notwithstanding the redemption thereof between such Dividend Record Date and the corresponding Dividend Payment Date or the Corporation’s default in the payment of the dividend due. Except as provided above, the Corporation will make no payment or allowance for unpaid dividends, regardless of whether in arrears, on called Series F Preferred Stock.

(6)The Series F Preferred Stock has no stated maturity and no sinking fund shall be required and shall not be subject to mandatory redemption. The Series F Preferred Stock is not convertible into any other securities of the Corporation, but is subject to the Excess Stock (and all other) provisions of this Article III.

(g)(1)Except as may be required by law or as otherwise expressly provided in this Item (v) of this Subsection (c) of this Section 2 of this Article III, the holders of Series F Preferred Stock shall not be entitled to vote. On all matters with respect to which the Series F Preferred Stock is entitled to vote, each share of Series F Preferred Stock shall be entitled to one vote.

(2)Whenever dividends on the Series F Preferred Stock are in arrears (which shall, with respect to any quarterly dividend, mean that any such divided has not been paid in full whether or not earned or declared) for six or more

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quarterly periods (whether consecutive or not), the number of directors then constituting the Board of Directors shall be increased by two, and the holders of Series F Preferred Stock (voting separately as a class with all other series of Voting Parity Preferred) shall have the right to elect two directors of the Corporation at a special meeting called by the holders of record of at least 10% of the Series F Preferred Stock or at least 10% of any other Voting Parity Preferred so in arrears (unless such request is received less than 90 days before the date fixed for the next annual or special meeting of the shareholders) or at the next annual meeting of shareholders, and at each subsequent annual meeting, until all dividends accumulated on the Series F Preferred Stock for the past dividend periods and the then current dividend period have been fully paid or declared and a sum sufficient for the payment of such dividends has been set aside for payment. If and when all accumulated dividends and the dividend for the then current dividend period on the Series F Preferred Stock shall have been paid in full or set aside for payment in full, the holders of the Series F Preferred Stock shall be divested of the foregoing voting rights (but subject always to the same provision for the vesting of such voting rights in the case of any similar future arrearages in six quarterly dividends), and if all accumulated dividends and the dividend for the then current period have been paid in full or set aside for payment in full on all series of Voting Parity Preferred, the term of office of each director so elected by the holders of the Series F Preferred Stock and the Voting Parity Preferred shall terminate.

(3)As long as any shares of Series F Preferred Stock remain outstanding, the Corporation shall not, without the affirmative vote or consent of the holders of at least two-thirds of the outstanding shares of Series F Preferred Stock (voting as a separate class); (i) authorize or create, or increase the authorized or issued amount of, any Capital Stock ranking senior to the Series F Preferred Stock with respect to the payment of dividends or the distribution of assets upon liquidation, dissolution, or winding up or reclassify any authorized Capital Stock of the Corporation into or exchangeable for such shares, or create, authorize, or issue any obligation or security convertible into or evidencing the right to purchase any such shares; or (ii) amend, alter, or repeal the provisions of these Amended and Restated Articles of Incorporation, whether by merger, consolidation or otherwise (an "Event"), so as to materially and adversely affect any right, preference, privilege, or voting power of the Series F Preferred Stock or the holders thereof; however, as long as the Series F Preferred Stock remains outstanding with its terms materially unchanged, taking into account that upon the occurrence of an Event, the Corporation may not be the surviving entity, the occurrence of an Event described in clause (ii) above of this Subparagraph (3) shall not be deemed to materially and adversely affect such rights, preferences, privileges, or voting power of the holders of Series F Preferred Stock, and (x) any increase in the amount of the authorized Preferred Stock or the creation or issuance of any other series of Preferred Stock, or (y) any increase in the amount of authorized shares of the Series F Preferred Stock or any other series of Preferred Stock, in the case of either (x) or (y) ranking on a parity with or junior to the Series F Preferred Stock with respect to payment of dividends or the

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distribution of assets upon liquidation, dissolution, or winding up, shall not be deemed to materially and adversely affect such rights, preferences, privileges, or voting powers.

(4)Notwithstanding the foregoing, the Series F Preferred Stock shall not be entitled to vote, and the foregoing voting provisions shall not apply, if at or prior to the time when the act with respect to which such vote would otherwise be required is effected, all outstanding shares of the Series F Preferred Stock have been redeemed or called for redemption, and sufficient funds have been deposited in trust for the benefit of the holders of the Series F Preferred Stock to effect such redemption.

(vi)Series G Preferred Stock. Subject in all cases to the other provisions of this Section 2 of this Article III, including, without limitation, those provisions restricting the Beneficial Ownership and Constructive Ownership of shares of Capital Stock and those provisions with respect to Excess Stock, the following sets forth the designation, preferences, limitations as to dividends, voting and other rights, and the terms and conditions of redemption of the Series G Preferred Stock (defined below) of the Corporation.

(a)There is hereby established a series of Preferred Stock designated "8% Series G Cumulative Redeemable Preferred Stock" (the "Series G Preferred Stock"), which shall consist of 4,000,000 authorized shares.

(b)All shares of Series G Preferred Stock redeemed, purchased, exchanged, or otherwise acquired by the Corporation shall be restored to the status of authorized but unissued shares of Preferred Stock.

(c)The Series G Preferred Stock shall, with respect to dividend rights and rights upon liquidation, winding up or dissolution, rank (i) junior to any other series of Preferred Stock hereafter duly established by the Board of Directors of the Corporation, the terms of which specifically provide that such series shall rank prior to the Series G Preferred Stock as to the payment of dividends and distribution of assets upon liquidation, winding up or dissolution (the "Senior Preferred Stock"), (ii) pari passu with the Series F Preferred Stock and any other series of Preferred Stock hereafter duly established by the Board of Directors of the Corporation, the terms of which specifically provide that such series shall rank pari passu with the Series G Preferred Stock as to the payment of dividends and distribution of assets upon liquidation, winding up or dissolution (the "Parity Preferred Stock"), and (iii) prior to the Common Stock, the Series B Preferred Stock and any other class or series of Capital Stock, the terms of which specifically provide that such class or series of Capital Stock shall rank junior to the Series G Preferred Stock as to the payment of dividends and distribution of assets upon liquidation, winding up or dissolution, whether now existing or hereafter created (collectively, the "Junior Stock").

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(d)(1) Subject to the rights of any Senior Preferred Stock, the holders of the then outstanding shares of Series G Preferred Stock shall be entitled to receive, as and when declared by the Board of Directors, out of funds legally available for the payment of dividends, cumulative preferential cash dividends at the annual rate of 8% of the $25.00 per share liquidation preference (i.e., $2.00 per annum per share). Such dividends shall accrue and be cumulative from the date of original issue and shall be payable in equal quarterly amounts in arrears on or about the last day of each March, June, September, and December or, if such day is not a business day, the next succeeding business day with the same force and effect as if made on such date (each, a "Dividend Payment Date") (for the purposes of this Subparagraph (1) of this Paragraph (d), a "business day" is any day, other than a Saturday, Sunday, or legal holiday, on which banks in Detroit, Michigan, are open for business). The first dividend, which shall be paid on December 31, 2004, will be for less than a full quarter. All dividends on the Series G Preferred Stock, including any dividend for any partial dividend period, shall be computed on the basis of a 360-day year consisting of twelve 30-day months. Dividends will be payable to holders of record as they appear in the stock records of the Corporation at the close of business on the applicable record date, which shall be the 15^th day of the calendar month in which the applicable Dividend Payment Date falls or on such other date designed by the Board of Directors of the Corporation for the payment of dividends that is not more than 30 nor less than ten days prior to such Dividend Payment Date (each, a "Dividend Record Date").

(2)No dividends on the Series G Preferred Stock shall be declared by the Board of Directors or paid or set apart for payment by the Corporation at such time as any agreement of the Corporation, including any agreement relating to its indebtedness, prohibits such declaration, payment, or setting apart for payment or provides that such declaration, payment, or setting apart for payment would constitute a breach of, or a default under, such agreement or if such declaration, payment, or setting aside shall be restricted or prohibited by law.

(3)Dividends on the Series G Preferred Stock shall accrue and be cumulative regardless of whether the Corporation has earnings, regardless of whether there are funds legally available for the payment of such dividends, and regardless of whether such dividends are declared. Accrued but unpaid dividends on the Series G Preferred Stock will accumulate as of the Dividend Payment Date on which they first become payable. Except as provided in this Subparagraph (3), unless full cumulative dividends on the Series G Preferred Stock have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof is set apart for payment for all past dividend periods and the then current dividend period: (i) no dividends (other than in shares of Junior Stock) shall be declared by the Board of Directors or paid or set aside for payment nor shall any other distribution be declared or made upon the Common Stock, the Series B Preferred Stock, the Series F Preferred Stock or any other class or series

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of Capital Stock ranking junior to or on a parity with the Series G Preferred Stock as to dividend rights and rights upon liquidation, winding up or dissolution; and (ii) no shares of Common Stock, the Series B Preferred Stock, the Series F Preferred Stock or any other class or series of Capital Stock ranking junior to or on a parity with the Series G Preferred Stock as to dividend rights and rights upon liquidation, winding up or dissolution shall be redeemed, purchased, or otherwise acquired for any consideration (nor shall any moneys be paid to or made available for a sinking fund for the redemption of any such shares) by the Corporation (except by conversion into or exchange for Junior Stock). When dividends are not paid in full (or a sum sufficient for such full payment is not so set apart) upon the Series G Preferred Stock and the shares of any other series of Preferred Stock ranking on a parity as to dividends with the Series G Preferred Stock, all dividends declared upon the Series G Preferred Stock and any other series of Preferred Stock ranking on a parity as to dividends with the Series G Preferred Stock shall be declared pro rata, so that the amount of dividends declared per share of Series G Preferred Stock and such other series of Preferred Stock shall in all cases bear to each other the same ratio that accrued dividends per share on the Series G Preferred Stock and such other series of Preferred Stock (which shall not include any accrual in respect of unpaid dividends for prior dividend periods if such Preferred Stock does not have a cumulative dividend) bear to each other. No interest shall be payable in respect of any dividend payment on the Series G Preferred Stock that may be in arrears. Holders of shares of the Series G Preferred Stock shall not be entitled to any dividend, whether payable in cash, property, or stock, in excess of full cumulative dividends on the Series G Preferred Stock as provided above. Any dividend payment made on shares of the Series G Preferred Stock shall first be credited against the earliest accumulated but unpaid dividend due with respect to such shares that remains payable.

(4)If for any taxable year the Corporation elects to designate as "capital gains dividends" (as defined in Section 857 of the Code) any portion (the "Capital Gains Amount") of the dividends paid or made available for the year to holders of all classes of Capital Stock (the "Total Dividends"), then the portion of the Capital Gains Amount that shall be allocable to the holders of Series G Preferred Stock shall be the amount that the total dividends paid or made available to the holders of the Series G Preferred Stock for the year bears to the Total Dividends.

(e)Subject to the rights of any Senior Preferred Stock, upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, and before any distribution of assets shall be made in respect of any Junior Stock, the holders of the Series G Preferred Stock shall be entitled to be paid out of the assets of the Corporation legally available for distribution to its shareholders a liquidation preference of $25.00 per share in cash (or property having a fair market value as determined by the Board of Directors valued at $25.00 per share), plus an amount equal to any accrued but unpaid dividends to the date of payment. After payment of the full amount of the liquidating

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distributions to which they are entitled, the holders of Series G Preferred Stock shall have no right or claims to any of the remaining assets of the Corporation. In the event that, upon such voluntary or involuntary liquidation, dissolution or winding-up of the affairs of the Corporation, the available assets of the Corporation are insufficient to pay the amount of the liquidating distributions on all outstanding shares of Series G Preferred Stock and the corresponding amounts payable on all shares of Parity Preferred Stock, then the holders of the Series G Preferred Stock and Parity Preferred Stock shall share ratably in any such distribution of assets in proportion to the full liquidating distributions to which they would otherwise be respectively entitled. Neither the consolidation or merger of the Corporation with or into any other corporation, trust, or entity (or of any other corporation with or into the Corporation) nor the sale, lease, or conveyance of all or substantially all of the property or business of the Corporation shall be deemed to constitute a liquidation, dissolution or winding up of the Corporation for the purpose of this Paragraph (e) of this Item (vi). Written notice of any such liquidation, dissolution or winding up of the Corporation, stating the payment date or dates when, and the place or places where, the amounts distributable in such circumstances shall be payable, shall be given by first class mail, postage pre-paid, not less than 30 nor more than 60 days prior to the payment date stated therein, to each record holder of shares of Series G Preferred Stock at the respective addresses of such holders as the same shall appear on the stock transfer records of the Corporation.

(f)(1) The Series G Preferred Stock is not redeemable prior to November 23, 2009. On and after November 23, 2009, the Corporation, at its option upon not less than 30 nor more than 60 days’ written notice, may redeem shares of the Series G Preferred Stock, in whole or in part, at any time and from time to time, for a cash redemption price of $25.00 per share, plus all accrued and unpaid dividends to the date fixed for redemption (except as provided below).

(2)Holders of Series G Preferred Stock to be redeemed shall surrender such shares at the place designated in the notice of redemption and shall be entitled to the redemption price and any accrued and unpaid dividends payable upon such redemption following such surrender. If notice of redemption has been given and if the Corporation has set aside in trust the funds necessary for the redemption for the benefit of the holders of the Series G Preferred Stock called for redemption, then from and after the redemption date: (i) dividends shall cease to accrue on such shares of Series G Preferred Stock; (ii) such shares of Series G Preferred Stock shall no longer be deemed outstanding; and (iii) all rights of the holders of such shares shall terminate, except the right to receive the redemption price. If less than all of the outstanding Series G Preferred Stock is to be redeemed, the Series G Preferred Stock to be redeemed shall be selected pro rata (as nearly as may be practicable without creating fractional shares) or by any other equitable method determined by the Corporation.

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(3)Unless full cumulative dividends on all shares of Series G Preferred Stock shall have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for payment for all past dividend periods and the then current dividend period, no shares of Series G Preferred Stock shall be redeemed unless all outstanding shares of Series G Preferred Stock are simultaneously redeemed, and the Corporation shall not purchase or otherwise acquire directly or indirectly any shares of Series G Preferred Stock or any class or series of Capital Stock ranking junior to or on a parity with the Series G Preferred Stock as to payment of dividends and distribution of assets upon liquidation, dissolution or winding-up of the Corporation (except by exchange for Junior Stock); however, the foregoing shall not prevent the purchase or acquisition of shares of Series G Preferred Stock pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding shares of Series G Preferred Stock.

(4)Notice of redemption shall be mailed by the Corporation, postage prepaid, not less than 30 nor more than 60 days prior to the redemption date, addressed to the respective holders of record of the Series G Preferred Stock to be redeemed at their respective addresses as they appear on the stock transfer records of the Corporation. No failure to give or defect in such notice shall affect the validity of the proceedings for the redemption of any shares of Series G Preferred Stock except as to the holder to whom notice was defective or not given. Each notice shall state: (i) the redemption date; (ii) the redemption price and accrued and unpaid dividends payable on the redemption date; (iii) the number of shares of Series G Preferred Stock to be redeemed; (iv) the place or places where the Series G Preferred Stock is to be surrendered for payment of the redemption price; and (v) that dividends on the shares to be redeemed will cease to accrue on such redemption date. If fewer than all shares of the Series G Preferred Stock held by any holder are to be redeemed, the notice mailed to such holder shall also specify the number of shares of Series G Preferred Stock to be redeemed from such holder.

(5)The holders of Series G Preferred Stock at the close of business on a Dividend Record Date shall be entitled to receive the dividend payable with respect to such Series G Preferred Stock on the corresponding Dividend Payment Date notwithstanding the redemption thereof between such Dividend Record Date and the corresponding Dividend Payment Date or the Corporation’s default in the payment of the dividend due. Except as provided above, the Corporation will make no payment or allowance for unpaid dividends, regardless of whether in arrears, on called Series G Preferred Stock.

(6)The Series G Preferred Stock has no stated maturity and shall not be subject to any sinking fund or mandatory redemption. The Series G Preferred Stock is not convertible into any other securities of the Corporation, but is subject to the Excess Stock (and all other) provisions of this Article III.

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(g)(1)Except as may be required by law or as otherwise expressly provided in this Item (vi) of this Subsection (c) of this Section 2 of this Article III, the holders of Series G Preferred Stock shall not be entitled to vote. On all matters with respect to which the Series G Preferred Stock is entitled to vote, each share of Series G Preferred Stock shall be entitled to one vote.

(2)Whenever dividends on the Series G Preferred Stock are in arrears (which shall, with respect to any quarterly dividend, mean that any such dividend has not been paid in full whether or not earned or declared) for six or more quarterly periods (whether consecutive or not), the number of directors then constituting the Board of Directors shall be increased by two, and the holders of Series G Preferred Stock (voting separately as a class with all other series of Preferred Stock upon which like voting rights have been conferred and are exercisable (“Voting Parity Preferred”)) shall have the right to elect two directors of the Corporation at a special meeting called by the holders of record of at least 10% of the Series G Preferred Stock or at least 10% of any other Voting Parity Preferred so in arrears (unless such request is received less than 90 days before the date fixed for the next annual or special meeting of the shareholders) or at the next annual meeting of shareholders, and at each subsequent annual meeting, until all dividends accumulated on the Series G Preferred Stock for the past dividend periods and the then current dividend period have been fully paid or declared and a sum sufficient for the payment of such dividends has been set aside for payment. If and when all accumulated dividends and the dividend for the then current dividend period on the Series G Preferred Stock shall have been paid in full or set aside for payment in full, the holders of the Series G Preferred Stock shall be divested of the foregoing voting rights (but subject always to the same provision for the vesting of such voting rights in the case of any similar future arrearages in six quarterly dividends), and if all accumulated dividends and the dividend for the then current period have been paid in full or set aside for payment in full on all series of Voting Parity Preferred, the term of office of each director so elected by the holders of the Series G Preferred Stock and the Voting Parity Preferred shall terminate.

(3)As long as any shares of Series G Preferred Stock remain outstanding, the Corporation shall not, without the affirmative vote or consent of the holders of at least two-thirds of the outstanding shares of Series G Preferred Stock (voting as a separate class); (i) authorize or create, or increase the authorized or issued amount of, any Capital Stock ranking senior to the Series G Preferred Stock with respect to the payment of dividends or the distribution of assets upon liquidation, dissolution, or winding up or reclassify any authorized Capital Stock into, or create, authorize, or issue any obligation or security convertible into, exchangeable for or evidencing the right to purchase, any such shares; or (ii) amend, alter, or repeal the provisions of these Restated Articles of Incorporation, as amended, whether by merger, consolidation or otherwise (an "Event"), so as to materially and adversely affect any right, preference, privilege, or voting power of the Series G Preferred Stock or the holders thereof; however, as long as the Series G Preferred Stock remains outstanding with its terms

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materially unchanged, taking into account that upon the occurrence of an Event, the Corporation may not be the surviving entity, the occurrence of an Event described in clause (ii) above of this Subparagraph (3) shall not be deemed to materially and adversely affect such rights, preferences, privileges, or voting power of the holders of Series G Preferred Stock, and (x) any increase in the amount of the authorized Preferred Stock or the creation or issuance of any other series of Preferred Stock, or (y) any increase in the amount of authorized shares of the Series G Preferred Stock or any other series of Preferred Stock, in the case of either (x) or (y) ranking on a parity with or junior to the Series G Preferred Stock with respect to payment of dividends or the distribution of assets upon liquidation, dissolution, or winding up, shall not be deemed to materially and adversely affect such rights, preferences, privileges, or voting powers.

(4)Notwithstanding the foregoing, the Series G Preferred Stock shall not be entitled to vote, and the foregoing voting provisions shall not apply, if at or prior to the time when the act with respect to which such vote would otherwise be required is effected, all outstanding shares of the Series G Preferred Stock have been redeemed or called for redemption, and sufficient funds have been deposited in trust for the benefit of the holders of the Series G Preferred Stock to effect such redemption.

(vii)Series H Preferred Stock. Subject in all cases to the other provisions of this Section 2 of this Article III, including, without limitation, those provisions restricting the Beneficial Ownership and Constructive Ownership of shares of Capital Stock and those provisions with respect to Excess Stock, the following sets forth the designation, preferences, limitations as to dividends, voting and other rights, and the terms and conditions of redemption of the Series H Preferred Stock (defined below) of the Corporation.

(a)There is hereby established a series of Preferred Stock designated "7.625% Series H Cumulative Redeemable Preferred Stock" (the "Series H Preferred Stock"), which shall consist of 3,480,000 authorized shares.

(b)All shares of Series H Preferred Stock redeemed, purchased, exchanged, or otherwise acquired by the Corporation shall be restored to the status of authorized but unissued shares of Preferred Stock.

(c)The Series H Preferred Stock shall, with respect to dividend rights and rights upon liquidation, winding up or dissolution, rank (i) junior to any other series of Preferred Stock hereafter duly established by the Board of Directors of the Corporation, the terms of which specifically provide that such series shall rank prior to the Series H Preferred Stock as to the payment of dividends and distribution of assets upon liquidation, winding up or dissolution (the "Senior Preferred Stock"), (ii) pari passu with the Series F Preferred Stock, the Series G Preferred Stock and any other series of Preferred Stock hereafter duly established by the Board of Directors of the Corporation, the terms of which specifically

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provide that such series shall rank pari passu with the Series H Preferred Stock as to the payment of dividends and distribution of assets upon liquidation, winding up or dissolution (the "Parity Preferred Stock"), and (iii) prior to the Common Stock, the Series B Preferred Stock and any other class or series of Capital Stock, the terms of which specifically provide that such class or series of Capital Stock shall rank junior to the Series H Preferred Stock as to the payment of dividends and distribution of assets upon liquidation, winding up or dissolution, whether now existing or hereafter created (collectively, the "Junior Stock").

(d)(1) Subject to the rights of any Senior Preferred Stock, the holders of the then outstanding shares of Series H Preferred Stock shall be entitled to receive, as and when declared by the Board of Directors, out of funds legally available for the payment of dividends, cumulative preferential cash dividends at the annual rate of 7.625% of the $25.00 per share liquidation preference (i.e., $1.90625 per annum per share). Such dividends shall accrue and be cumulative from the date of original issue and shall be payable in equal quarterly amounts in arrears on or about the last day of each March, June, September, and December or, if such day is not a business day, the next succeeding business day with the same force and effect as if made on such date (each, a "Dividend Payment Date") (for the purposes of this Subparagraph (1) of this Paragraph (d), a "business day" is any day, other than a Saturday, Sunday, or legal holiday, on which banks in Detroit, Michigan, are open for business). The first dividend, which shall be paid on September 30, 2005, will be for less than a full quarter. All dividends on the Series H Preferred Stock, including any dividend for any partial dividend period, shall be computed on the basis of a 360-day year consisting of twelve 30-day months. Dividends will be payable to holders of record as they appear in the stock records of the Corporation at the close of business on the applicable record date, which shall be the 15^th day of the calendar month in which the applicable Dividend Payment Date falls or on such other date designed by the Board of Directors of the Corporation for the payment of dividends that is not more than 30 nor less than ten days prior to such Dividend Payment Date (each, a "Dividend Record Date").

(2)No dividends on the Series H Preferred Stock shall be declared by the Board of Directors or paid or set apart for payment by the Corporation at such time as any agreement of the Corporation, including any agreement relating to its indebtedness, prohibits such declaration, payment, or setting apart for payment or provides that such declaration, payment, or setting apart for payment would constitute a breach of, or a default under, such agreement or if such declaration, payment, or setting aside shall be restricted or prohibited by law.

(3)Dividends on the Series H Preferred Stock shall accrue and be cumulative regardless of whether the Corporation has earnings, regardless of whether there are funds legally available for the payment of such dividends, and regardless of whether such dividends are declared. Accrued but unpaid dividends

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on the Series H Preferred Stock will accumulate as of the Dividend Payment Date on which they first become payable. Except as provided in this Subparagraph (3), unless full cumulative dividends on the Series H Preferred Stock have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof is set apart for payment for all past dividend periods and the then current dividend period: (i) no dividends (other than in shares of Junior Stock) shall be declared by the Board of Directors or paid or set aside for payment nor shall any other distribution be declared or made upon the Common Stock, the Series B Preferred Stock, the Series F Preferred Stock, the Series G Preferred Stock or any other class or series of Capital Stock ranking junior to or on a parity with the Series H Preferred Stock as to dividend rights and rights upon liquidation, winding up or dissolution; and (ii) no shares of Common Stock, the Series B Preferred Stock, the Series F Preferred Stock, the Series G Preferred Stock or any other class or series of Capital Stock ranking junior to or on a parity with the Series H Preferred Stock as to dividend rights and rights upon liquidation, winding up or dissolution shall be redeemed, purchased, or otherwise acquired for any consideration (nor shall any moneys be paid to or made available for a sinking fund for the redemption of any such shares) by the Corporation (except by conversion into or exchange for Junior Stock). When dividends are not paid in full (or a sum sufficient for such full payment is not so set apart) upon the Series H Preferred Stock and the shares of any other series of Preferred Stock ranking on a parity as to dividends with the Series H Preferred Stock, all dividends declared upon the Series H Preferred Stock and any other series of Preferred Stock ranking on a parity as to dividends with the Series H Preferred Stock shall be declared pro rata, so that the amount of dividends declared per share of Series H Preferred Stock and such other series of Preferred Stock shall in all cases bear to each other the same ratio that accrued dividends per share on the Series H Preferred Stock and such other series of Preferred Stock (which shall not include any accrual in respect of unpaid dividends for prior dividend periods if such Preferred Stock does not have a cumulative dividend) bear to each other. No interest shall be payable in respect of any dividend payment on the Series H Preferred Stock that may be in arrears. Holders of shares of the Series H Preferred Stock shall not be entitled to any dividend, whether payable in cash, property, or stock, in excess of full cumulative dividends on the Series H Preferred Stock as provided above. Any dividend payment made on shares of the Series H Preferred Stock shall first be credited against the earliest accumulated but unpaid dividend due with respect to such shares that remains payable.

(4)If for any taxable year the Corporation elects to designate as "capital gains dividends" (as defined in Section 857 of the Code) any portion (the "Capital Gains Amount") of the dividends paid or made available for the year to holders of all classes of Capital Stock (the "Total Dividends"), then the portion of the Capital Gains Amount that shall be allocable to the holders of Series H Preferred Stock shall be the amount that the total dividends paid or made available to the holders of the Series H Preferred Stock for the year bears to the Total Dividends.

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(e)Subject to the rights of any Senior Preferred Stock, upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, and before any distribution of assets shall be made in respect of any Junior Stock, the holders of the Series H Preferred Stock shall be entitled to be paid out of the assets of the Corporation legally available for distribution to its shareholders a liquidation preference of $25.00 per share in cash (or property having a fair market value as determined by the Board of Directors valued at $25.00 per share), plus an amount equal to any accrued but unpaid dividends to the date of payment. After payment of the full amount of the liquidating distributions to which they are entitled, the holders of Series H Preferred Stock shall have no right or claims to any of the remaining assets of the Corporation. In the event that, upon such voluntary or involuntary liquidation, dissolution or winding-up of the affairs of the Corporation, the available assets of the Corporation are insufficient to pay the amount of the liquidating distributions on all outstanding shares of Series H Preferred Stock and the corresponding amounts payable on all shares of Parity Preferred Stock, then the holders of the Series H Preferred Stock and Parity Preferred Stock shall share ratably in any such distribution of assets in proportion to the full liquidating distributions to which they would otherwise be respectively entitled. Neither the consolidation or merger of the Corporation with or into any other corporation, trust, or entity (or of any other corporation with or into the Corporation) nor the sale, lease, or conveyance of all or substantially all of the property or business of the Corporation shall be deemed to constitute a liquidation, dissolution or winding up of the Corporation for the purpose of this Paragraph (e) of this Item (vii). Written notice of any such liquidation, dissolution or winding up of the Corporation, stating the payment date or dates when, and the place or places where, the amounts distributable in such circumstances shall be payable, shall be given by first class mail, postage pre-paid, not less than 30 nor more than 60 days prior to the payment date stated therein, to each record holder of shares of Series H Preferred Stock at the respective addresses of such holders as the same shall appear on the stock transfer records of the Corporation.

(f)(1) The Series H Preferred Stock is not redeemable prior to July 1, 2010. On and after July 1, 2010, the Corporation, at its option upon not less than 30 nor more than 60 days’ written notice, may redeem shares of the Series H Preferred Stock, in whole or in part, at any time and from time to time, for a cash redemption price of $25.00 per share, plus all accrued and unpaid dividends to the date fixed for redemption (except as provided below).

(2)Holders of Series H Preferred Stock to be redeemed shall surrender such shares at the place designated in the notice of redemption and shall be entitled to the redemption price and any accrued and unpaid dividends payable upon such redemption following such surrender. If notice of redemption has been given and if the Corporation has set aside in trust the funds necessary for the redemption for the benefit of the holders of the Series H Preferred Stock called for

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redemption, then from and after the redemption date: (i) dividends shall cease to accrue on such shares of Series H Preferred Stock; (ii) such shares of Series H Preferred Stock shall no longer be deemed outstanding; and (iii) all rights of the holders of such shares shall terminate, except the right to receive the redemption price. If less than all of the outstanding Series H Preferred Stock is to be redeemed, the Series H Preferred Stock to be redeemed shall be selected pro rata (as nearly as may be practicable without creating fractional shares) or by any other equitable method determined by the Corporation.

(3)Unless full cumulative dividends on all shares of Series H Preferred Stock shall have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for payment for all past dividend periods and the then current dividend period, no shares of Series H Preferred Stock shall be redeemed unless all outstanding shares of Series H Preferred Stock are simultaneously redeemed, and the Corporation shall not purchase or otherwise acquire directly or indirectly any shares of Series H Preferred Stock or any class or series of Capital Stock ranking junior to or on a parity with the Series H Preferred Stock as to payment of dividends and distribution of assets upon liquidation, dissolution or winding-up of the Corporation (except by exchange for Junior Stock); however, the foregoing shall not prevent the purchase or acquisition of shares of Series H Preferred Stock pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding shares of Series H Preferred Stock.

(4)Notice of redemption shall be mailed by the Corporation, postage prepaid, not less than 30 nor more than 60 days prior to the redemption date, addressed to the respective holders of record of the Series H Preferred Stock to be redeemed at their respective addresses as they appear on the stock transfer records of the Corporation. No failure to give or defect in such notice shall affect the validity of the proceedings for the redemption of any shares of Series H Preferred Stock except as to the holder to whom notice was defective or not given. Each notice shall state: (i) the redemption date; (ii) the redemption price and accrued and unpaid dividends payable on the redemption date; (iii) the number of shares of Series H Preferred Stock to be redeemed; (iv) the place or places where the Series H Preferred Stock is to be surrendered for payment of the redemption price; and (v) that dividends on the shares to be redeemed will cease to accrue on such redemption date. If fewer than all shares of the Series H Preferred Stock held by any holder are to be redeemed, the notice mailed to such holder shall also specify the number of shares of Series H Preferred Stock to be redeemed from such holder.

(5)The holders of Series H Preferred Stock at the close of business on a Dividend Record Date shall be entitled to receive the dividend payable with respect to such Series H Preferred Stock on the corresponding Dividend Payment Date notwithstanding the redemption thereof between such Dividend Record Date and the corresponding Dividend Payment Date or the

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Corporation’s default in the payment of the dividend due. Except as provided above, the Corporation will make no payment or allowance for unpaid dividends, regardless of whether in arrears, on called Series H Preferred Stock.

(6)The Series H Preferred Stock has no stated maturity and shall not be subject to any sinking fund or mandatory redemption. The Series H Preferred Stock is not convertible into any other securities of the Corporation, but is subject to the Excess Stock (and all other) provisions of this Article III.

(g)(1)Except as may be required by law or as otherwise expressly provided in this Item (vii) of this Subsection (c) of this Section 2 of this Article III, the holders of Series H Preferred Stock shall not be entitled to vote. On all matters with respect to which the Series H Preferred Stock is entitled to vote, each share of Series H Preferred Stock shall be entitled to one vote.

(2)Whenever dividends on the Series H Preferred Stock are in arrears (which shall, with respect to any quarterly dividend, mean that any such dividend has not been paid in full whether or not earned or declared) for six or more quarterly periods (whether consecutive or not), the number of directors then constituting the Board of Directors shall be increased by two, and the holders of Series H Preferred Stock (voting separately as a class with all other series of Preferred Stock upon which like voting rights have been conferred and are exercisable (“Voting Parity Preferred”)) shall have the right to elect two directors of the Corporation at a special meeting called by the holders of record of at least 10% of the Series H Preferred Stock or at least 10% of any other Voting Parity Preferred so in arrears (unless such request is received less than 90 days before the date fixed for the next annual or special meeting of the shareholders) or at the next annual meeting of shareholders, and at each subsequent annual meeting, until all dividends accumulated on the Series H Preferred Stock for the past dividend periods and the then current dividend period have been fully paid or declared and a sum sufficient for the payment of such dividends has been set aside for payment. If and when all accumulated dividends and the dividend for the then current dividend period on the Series H Preferred Stock shall have been paid in full or set aside for payment in full, the holders of the Series H Preferred Stock shall be divested of the foregoing voting rights (but subject always to the same provision for the vesting of such voting rights in the case of any similar future arrearages in six quarterly dividends), and if all accumulated dividends and the dividend for the then current period have been paid in full or set aside for payment in full on all series of Voting Parity Preferred, the term of office of each director so elected by the holders of the Series H Preferred Stock and the Voting Parity Preferred shall terminate.

(3)As long as any shares of Series H Preferred Stock remain outstanding, the Corporation shall not, without the affirmative vote or consent of the holders of at least two-thirds of the outstanding shares of Series H Preferred Stock (voting as a separate class); (i) authorize or create, or increase the authorized or issued amount of, any Capital Stock ranking senior to the Series H

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Preferred Stock with respect to the payment of dividends or the distribution of assets upon liquidation, dissolution, or winding up or reclassify any authorized Capital Stock into, or create, authorize, or issue any obligation or security convertible into, exchangeable for or evidencing the right to purchase, any such shares; or (ii) amend, alter, or repeal the provisions of these Restated Articles of Incorporation, as amended, whether by merger, consolidation or otherwise (an "Event"), so as to materially and adversely affect any right, preference, privilege, or voting power of the Series H Preferred Stock or the holders thereof; however, as long as the Series H Preferred Stock remains outstanding with its terms materially unchanged, taking into account that upon the occurrence of an Event, the Corporation may not be the surviving entity, the occurrence of an Event described in clause (ii) above of this Subparagraph (3) shall not be deemed to materially and adversely affect such rights, preferences, privileges, or voting power of the holders of Series H Preferred Stock, and (x) any increase in the amount of the authorized Preferred Stock or the creation or issuance of any other series of Preferred Stock, or (y) any increase in the amount of authorized shares of the Series H Preferred Stock or any other series of Preferred Stock, in the case of either (x) or (y) ranking on a parity with or junior to the Series H Preferred Stock with respect to payment of dividends or the distribution of assets upon liquidation, dissolution, or winding up, shall not be deemed to materially and adversely affect such rights, preferences, privileges, or voting powers.

(4)Notwithstanding the foregoing, the Series H Preferred Stock shall not be entitled to vote, and the foregoing voting provisions shall not apply, if at or prior to the time when the act with respect to which such vote would otherwise be required is effected, all outstanding shares of the Series H Preferred Stock have been redeemed or called for redemption, and sufficient funds have been deposited in trust for the benefit of the holders of the Series H Preferred Stock to effect such redemption.

(viii) [Intentionally Omitted.]

(d) Restrictions on Transfer.

(i)Definitions. The following terms shall have the following meanings for purposes of these Amended and Restated Articles of Incorporation:

"Affiliate" and "Affiliates" mean, (i) with respect to any individual, any member of such individual's Immediate Family, a Family Trust with respect to such individual, and any Person (other than an individual) in which such individual and/or his Affiliate(s) owns, directly or indirectly, more than 50% of any class of Equity Security or of the aggregate Beneficial Interest of all beneficial owners, or in which such individual or his Affiliate is the sole general partner, or is the sole managing general partner, or which is controlled by such individual and/or his Affiliates; and (ii) with respect to any Person (other than an individual), any Person (other than an individual) which controls, is controlled by, or is under common control with, such Person, and any individual who is

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the sole general partner or the sole managing general partner in, or who controls, such Person. The terms "Affiliated" and "Affiliated with" shall have the correlative meanings.

"Beneficial Interest" means an interest, whether as partner, joint venturer, cestui que trust, or otherwise, a contract right, or a legal or equitable position under or by which the possessor participates in the economic or other results of the Person (other than an individual) to which such interest, contract right, or position relates.

"Beneficial Ownership" means ownership of shares of Capital Stock (including Capital Stock that may be acquired upon conversion of Debentures) (i) by a Person who owns such shares of Capital Stock in his own name or is treated as an owner of such shares of Capital Stock constructively through the application of Section 544 of the Code, as modified by Sections 856(h)(1)(B) and 856(h)(3)(A) of the Code; or (ii) by a person who falls within the definition of "Beneficial Owner" under Section 776(4) of the Act. The terms "Beneficial Owner", "Beneficially Owns" and "Beneficially Owned" shall have the correlative meanings.

"Capital Stock" means the Common Stock and the Preferred Stock, including shares of Common Stock and Preferred Stock that have become Excess Stock.

"Charitable Proceeds" means the amounts due from time to time to the Designated Charity, consisting of (i) dividends or other distributions, including capital gain distributions (but not including liquidating distributions not otherwise within the definition of Excess Liquidation Proceeds), paid with respect to Excess Stock, (ii) in the case of a sale of Excess Stock, the excess, if any, of the Net Sales Proceeds over the amount due to the Purported Transferee as determined under Item (iii)(b) of Subsection (e) of this Section 2 of this Article III, and (iii) in the case of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the Excess Liquidation Proceeds.

"Code" means the Internal Revenue Code of 1986, as amended from time to time.

"Constructive Ownership" means ownership of shares of Capital Stock (including Capital Stock that may be acquired upon conversion of Debentures) by a Person who owns such shares of Capital Stock in his own name or would be treated as an owner of such shares of Capital Stock constructively through the application of Section 318 of the Code, as modified by Section 856 (d)(5) of the Code. The terms "Constructive Owner", "Constructively Owns" and "Constructively Owned" shall have the correlative meanings.

"Control(s)" (and its correlative terms "Controlled By" and "Under Common Control With") means, with respect to any Person (other than an individual), possession by the applicable Person or Persons of the power, acting alone (or solely among such applicable Person or Persons, acting together), to designate and direct or

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cause the designation and direction of the management and policies thereof, whether through the ownership of voting securities, by contract, or otherwise.

"Debentures" means any convertible debentures or other convertible debt securities issued by the Corporation from time to time.

"Demand" means the written notice to the Purported Transferee demanding delivery to the Designated Agent of (i) all certificates or other evidence of ownership of shares of Excess Stock and (ii) Excess Share Distributions. Any reference to "the date of the Demand" means the date upon which the Demand is mailed or otherwise transmitted by the Corporation.

"Designated Agent" means the agent designated by the Board of Directors, from time to time, to act as attorney-in-fact for the Designated Charity and to take delivery of certificates or other evidence of ownership of shares of Excess Stock and Excess Share Distributions from a Purported Transferee.

"Designated Charity" means any one or more organizations described in Sections 501(c)(3) and 170(c) of the Code, as may be designated by the Board of Directors from time to time to receive any Charitable Proceeds.

"Equity Security" has the meaning ascribed to it in the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations thereunder (and any successor laws, rules and regulations of similar import).

"Excess Liquidation Proceeds" means, with respect to shares of Excess Stock, the excess, if any, of (i) the amount which would have been due to the Purported Transferee pursuant to Subsection (a)(ii) of this Section 2 of this Article III with respect to such stock in the case of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation if the Transfer had been valid under Item (ii) of this Subsection (d) of this Section 2 of this Article III, over (ii) the amount due to the Purported Transferee as determined under Item (iii)(b)(2) of Subsection (e) of this Section 2 of this Article III.

"Excess Share Distributions" means dividends or other distributions, including, without limitation, capital gain distributions and liquidating distributions, paid with respect to shares of Excess Stock.

"Excess Stock" means shares of Common Stock and shares of Preferred Stock that have been automatically converted to Excess Stock pursuant to the provisions of Item (iii) of this Subsection (d) of this Section 2 of this Article III, and which are subject to the provisions of Subsection (e) of this Section 2 of this Article III.

"Existing Holder" means (i) the General Motors Hourly-Rate Employees Pension Trust, (ii) the General Motors Salaried Employes Pension Trust (such trusts referred to in (i) or (ii) are hereinafter referred to as "GMPTS"), (iii) the AT&T Master

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Pension Trust, (iv) any nominee of the foregoing, and (v) any Person to whom an Existing Holder transfers Beneficial Interest of Regular Capital Stock if (x) the result of such transfer would be to cause the transferee to Beneficially Own shares of Regular Capital Stock in excess of the greater of the Ownership Limit or any pre-existing Existing Holder Limit with respect to such transferee (such excess being herein referred to as the "Excess Amount") and (y) the transferor Existing Holder, by notice to the Corporation in connection with such transfer, designates such transferee as a successor Existing Holder (it being understood that, upon any such transfer, the Existing Holder Limit for the transferor Existing Holder shall be reduced by the Excess Amount and the then applicable Ownership Limit or Existing Holder Limit for the transferee Existing Holder shall be increased by such Excess.

"Existing Holder Limit" (i) for any Existing Holder who is an Existing Holder by virtue of Clauses (i) and (ii) of the definition thereof means the greater of (x) 9.9% of the outstanding Capital Stock, reduced (but not below the Ownership Limit) by any Excess Amount transferred in accordance with clause (v) of the definition of Existing Holder and (y) 4,365,713 shares of Regular Capital Stock (as adjusted to reflect any increase in the number of outstanding shares as the result of a stock dividend or any increase or decrease in the number of outstanding shares resulting from a stock split or reverse stock split), reduced (but not below the Ownership Limit) by any Excess Amount transferred in accordance with clause (v) of the definition of Existing Holder, (ii) for any Existing Holder who is an Existing Holder by virtue of Clause (iii) of the definition thereof means the greater of (x) 13.74% of the outstanding Capital Stock, reduced (but not below the Ownership Limit) by any Excess Amount transferred in accordance with clause (v) of the definition of Existing Holder and (y) 6,059,080 shares of Regular Capital Stock (as adjusted to reflect any increase in the number of outstanding shares as the result of a stock dividend or any increase or decrease in the number of outstanding shares resulting from a stock split or reverse stock split), reduced (but not below the Ownership Limit) by any Excess Amount transferred in accordance with Clause (v) of the definition of Existing Holder, (iii) for any Existing Holder who is an Existing Holder by virtue of Clause (iv) of the definition thereof means the percentage of the outstanding Capital Stock or the number of shares of the outstanding Regular Capital Stock that the Beneficial Owner for whom the Existing Holder is acting as nominee is permitted to own under this definition, and (iv) for any Existing Holder who is an Existing Holder by virtue of Clause (v) of the definition thereof means the greater of (x) a percentage of the outstanding Capital Stock equal to the Ownership Limit or pre-existing Existing Holder Limit applicable to such Person plus the Excess Amount transferred to such Person pursuant to clause (v) of the definition of Existing Holder and (y) the number of shares of outstanding Regular Capital Stock equal to the Ownership Limit or pre-existing Existing Holder Limit applicable to such Person plus the Excess Amount transferred to such Person pursuant to clause (v) of the definition of Existing Holder.

"Family Trust" means, with respect to an individual, a trust for the benefit of such individual or for the benefit of any member or members of such individual's Immediate Family or for the benefit of such individual and any member or members of such individual's Immediate Family (for the purpose of determining whether or not a trust

31

is a Family Trust, the fact that one or more of the beneficiaries (but not the sole beneficiary) of the trust includes a Person or Persons, other than a member of such individual's Immediate Family, entitled to a distribution after the death of the settlor if he, she, it, or they shall have survived the settlor of such trust and/or includes an organization or organizations exempt from federal income taxes pursuant to the provisions of Section 501(a) of the Code and described in Section 501(c)(3) of the Code, shall be disregarded); provided, however, that in respect of transfers by way of testamentary or inter vivos trust, the trustee or trustees shall be solely such individual, a member or members of such individual's Immediate Family, a responsible financial institution and/or an attorney that is a member of the bar of any state in the United States.

"Immediate Family" means, with respect to a Person, (i) such Person's spouse (former or then current), (ii) such Person's parents and grandparents, and (iii) ascendants and descendants (natural or adoptive, of the whole or half blood) of such Person's parents or of the parents of such Person's spouse (former or then current).

"Look Through Entity" means any Person that (i) is not an individual or an organization described in Sections 401(a), 501(c)(17), or 509(a) of the Code or a portion of a trust permanently set aside or to be used exclusively for the purposes described in Section 642(c) of the Code or a corresponding provision of a prior income tax law, and (ii) provides the Corporation with (a) a written affirmation and undertaking, subject only to such exceptions as are acceptable to the Corporation in its sole discretion, that (x) it is not an organization described in Sections 401(a), 501(c)(17) or 509(a) of the Code or a portion of a trust permanently set aside or to be used exclusively for the purposes described in Section 642(c) of the Code or a corresponding provision of a prior income tax law, (y) after the application of the rules for determining stock ownership, as set forth in Section 544(a) of the Code, as modified by Sections 856(h)(1)(B) and 856(h)(3)(A) of the Code, no "individual" would own, Beneficially or Constructively, more than the then-applicable Ownership Limit, taking into account solely for the purpose of determining such "individual's" ownership for the purposes of this clause (y) (but not for determining whether such "individual" is in compliance with the Ownership Limit for any other purpose) only such "individual's" Beneficial and Constructive Ownership derived solely from such Person and (z) it does not Constructively Own 10% or more of the equity of any tenant with respect to real property from which the Corporation or TRG receives or accrues any rent from real property, and (b) such other information regarding the Person that is relevant to the Corporation's qualifications to be taxed as a REIT as the Corporation may reasonably request.

"Market Price" means, with respect to any class or series of shares of Regular Capital Stock, the last reported sales price of such class or series of shares reported on the New York Stock Exchange on the trading day immediately preceding the relevant date, or if such class or series of shares of Regular Capital Stock is not then traded on the New York Stock Exchange, the last reported sales price of such class or series of shares on the trading day immediately preceding the relevant date as reported on any exchange or quotation system over which such class or series of shares may be traded, or if such class or series of shares of Regular Capital Stock is not then traded over

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any exchange or quotation system, then the market price of such class or series of shares on the relevant date as determined in good faith by the Board of Directors of the Corporation.

"Net Sales Proceeds" means the gross proceeds received by the Designated Agent upon a sale of Regular Capital Stock that has become Excess Stock, reduced by (i) all expenses (including, without limitation, any legal expenses or fees) incurred by the Designated Agent in obtaining possession of (x) the certificates or other evidence of ownership of the Regular Capital Stock that had become Excess Stock and (y) any Excess Share Distributions, and (ii) any expenses incurred in selling or transferring such shares (including, without limitation, any brokerage fees, commissions, stock transfer taxes or other transfer fees or expenses).

"Ownership Limit" means 8.23% of the value of the outstanding Capital Stock of the Corporation.

"Person" means (a) an individual, corporation, partnership, estate, trust (including a trust qualified under Section 401(a) or 501(c)(17) of the Code), a portion of a trust permanently set aside for or to be used exclusively for the purposes described in Section 642(c) of the Code, association, private foundation within the meaning of Section 509(a) of the Code, joint stock company or other entity and (b) also includes a group as that term is used for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations thereunder (and any successor laws, rules and regulations of similar import).

"Purported Transferee" means, with respect to any purported Transfer which results in Excess Stock, the purported beneficial transferee for whom the shares of Regular Capital Stock would have been acquired if such Transfer had been valid under Item (ii) of this Subsection (d) of this Section 2 of this Article III.

"Regular Capital Stock" means shares of Common Stock and Preferred Stock that are not Excess Stock.

"REIT" means a Real Estate Investment Trust defined in Section 856 of the Code.

"Transfer" means any sale, transfer, gift, assignment, devise or other disposition of Capital Stock, (including (i) the granting of any option or entering into any agreement for the sale, transfer or other disposition of Capital Stock or (ii) the sale, transfer, assignment or other disposition of any securities or rights convertible into or for Capital Stock), whether voluntary or involuntary, whether of record or beneficial ownership, and whether by operation of law or otherwise.

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(ii) Restriction on Transfers.

(a)Except as provided in Item (viii) of this Subsection (d) of this Section 2 of this Article III, no Person (other than an Existing Holder) shall Beneficially Own or Constructively Own shares of Capital Stock having an aggregate value in excess of the Ownership Limit, and No Existing Holder shall Beneficially Own or Constructively Own shares of Capital Stock in excess of the Existing Holder Limit for such Existing Holder.

(b)Except as provided in Item (viii) of this Subsection (d) of this Section 2 of this Article III, any Transfer that, if effective, would result in any Person (other than an Existing Holder) Beneficially Owning or Constructively Owning shares of Regular Capital Stock having an aggregate value in excess of the Ownership Limit shall be void ab initio as to the Transfer of such shares which would be otherwise Beneficially Owned or Constructively Owned by such Person in excess of the Ownership Limit, and the intended transferee shall acquire no rights in such shares.

(c)Except as provided in Item (viii) of this Subsection (d) of this Section 2 of this Article III, any Transfer that, if effective, would result in any Existing Holder Beneficially Owning or Constructively Owning shares of Regular Capital Stock in excess of the applicable Existing Holder Limit shall be void ab initio as to the Transfer of such shares which would be otherwise Beneficially Owned or Constructively Owned by such Existing Holder in excess of the applicable Existing Holder Limit, and such Existing Holder shall acquire no rights in such shares.

(d)Except as provided in Item (viii) of this Subsection (d) of this Section 2 of this Article III, any Transfer that, if effective, would result in the Capital Stock being beneficially owned by fewer than 100 Persons (determined without reference to any rules of attribution) shall be void ab initio as to the Transfer of such shares which would be otherwise beneficially owned by the transferee, and the intended transferee shall acquire no rights in such shares.

(e)Any Transfer that, if effective, would result in the Corporation being "closely held" within the meaning of Section 856(h) of the Code shall be void ab initio as to the Transfer of the shares of Regular Capital Stock which would cause the Corporation to be "closely held" within the meaning of Section 856(h) of the Code, and the intended transferee shall acquire no rights in such shares.

(f)In determining the shares which any Person Beneficially Owns (or would Beneficially Own following a purported Transfer) or Constructively Owns (or would Constructively Own following a purported Transfer) for purposes of applying the limitations contained in Paragraphs (a), (b), (c), (d) and (e) of this Item (ii) of this Subsection (d) of this Article III:

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(1)shares of Capital Stock that may be acquired upon conversion of Debentures Beneficially Owned or Constructively Owned by such Person, but not shares of Capital Stock issuable upon conversion of Debentures held by others, are deemed to be outstanding.

(2)a pension trust shall be treated as owning all shares of Capital Stock (including Capital Stock that may be acquired upon conversion of Debentures) as are (x) owned in its own name or with respect to which it is treated as an owner constructively through the application of Section 544 of the Code as modified by Section 856(h)(1)(B) of the Code but not by Section 856(h)(3)(A) of the Code and (y) owned by, or treated as owned by, constructively through the application of Section 544 of the Code as modified by Section 856(h)(1)(B) of the Code but not by Section 856(h)(3)(A) of the Code, all pension trusts sponsored by the same employer as such pension trust or sponsored by any of such employer's Affiliates. Notwithstanding the foregoing, (y) above shall not apply in the case of either Motors Insurance Corporation and its subsidiaries (collectively, "MIC") or any pension trusts sponsored by the General Motors Corporation, a Delaware corporation ("GMC"), or the American Telephone and Telegraph Company, a New York corporation ("AT&T"), or by any of their respective Affiliates, provided that with respect to MIC and each such pension trust sponsored by GMC, AT&T or any of their respective Affiliates, other than the Existing Holders described in (i) through (iii) in the definition thereof, all of the following conditions are met: (i) each such pension trust is administered, and will continue to be administered, by persons who do not serve in an administrative or other capacity to any other such pension trust sponsored by GMC or any Affiliate of GMC or AT&T or any Affiliate of AT&T, as applicable, including the Existing Holders described in (i) through (iv) in the definition thereof, (it being understood that the fact that any two such pension trusts may have in common one or more, but less than a majority, of the persons having ultimate investment authority for such pension trusts shall not cause such trusts to be treated as one Person, provided that they are otherwise separately administered as hereinbefore described), (ii) day to day investment decisions with respect to MIC are made by a person or persons different than the person or persons who make such decisions for the pension trusts sponsored by GMC or its affiliates, including the Existing Holders described in (i), (ii) and, in respect of (i) and (ii), item (iv) in the definition thereof, (although MIC and the pension trusts sponsored by GMC may have in common the person or persons with ultimate investment authority for such entities), and the investment of MIC in the Corporation does not exceed 2% of the value of the outstanding Capital Stock of the Corporation, (iii) neither MIC nor any such pension trust acts or will act, in concert with MIC, any other pension trust sponsored by GMC or any Affiliate of GMC or AT&T or any Affiliate of AT&T, as applicable, including the Existing Holders described in (i) through (iv) in the definition thereof, with respect to its investment in the Corporation, and (iv) as from time to time requested by the Corporation, MIC and each pension trust

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shall provide the Corporation with a representation and undertaking in writing to the foregoing effect.

(3)If there are two or more classes of stock then outstanding, the total value of the outstanding Capital Stock shall be allocated among the different classes and series according to the relative value of each class or series, as determined by reference to the Market Price per share of each such class or series, using the date on which the Transfer occurs as the relevant date, or the effective date of the change in capital structure as the relevant date, as appropriate.

(g)If any shares are transferred resulting in a violation of the Ownership Limit or Paragraphs (b), (c), (d) or (e) of this Item (ii) of this Subsection (d) of this Section 2 of this Article III, such Transfer shall be valid only with respect to such amount of shares transferred as does not result in a violation of such limitations, and such Transfer otherwise shall be null and void ab initio.

(iii) Conversion to Excess Stock.

(a)If, notwithstanding the other provisions contained in this Article III, at any time there is a purported Transfer or other change in the capital structure of the Corporation such that any Person (other than an Existing Holder) would Beneficially Own or any Person (other than an Existing Holder) would Constructively Own shares of Regular Capital Stock in excess of the Ownership Limit, or that any Person who is an Existing Holder would Beneficially Own or any Person who is an Existing Holder would Constructively Own shares of Regular Capital Stock in excess of the Existing Holder Limit, then, except as otherwise provided in Item (viii) of this Subsection (d) of this Section 2 of this Article III, such shares of Common Stock or Preferred Stock, or both, in excess of the Ownership Limit or Existing Holder Limit, as the case may be, (rounded up to the nearest whole share) shall automatically become Excess Stock. Such conversion shall be effective as of the close of business on the business day prior to the date of the Transfer or change in capital structure.

(b)If, notwithstanding the other provisions contained in this Article III, at any time, there is a purported Transfer or other change in the capital structure of the Corporation which, if effective, would cause the Corporation to become "closely held" within the meaning of Section 856(h) of the Code then the shares of Common Stock or Preferred Stock, or both, being Transferred which would cause the Corporation to be "closely held" within the meaning of Section 856(h) of the Code or held by a Person in excess of that Person's Ownership Limit or Existing Holder Limit, as applicable (rounded up to the nearest whole share) shall automatically become Excess Stock. Such conversion shall be effective as of the close of business on the business day prior to the date of the Transfer or change in capital structure.

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(c)Shares of Excess Stock shall be issued and outstanding stock of the Corporation. The Purported Transferee shall have no rights in such shares of Excess Stock except as provided in Subsection (e) of this Section 2 of this Article III.

(iv)Notice of Restricted Transfer. Any Person who acquires or attempts to acquire shares in violation of Item (ii) of this Subsection (d) of this Section 2 of this Article III, or any Person who is a transferee such that Excess Stock results under Item (iii) of this Subsection (d) of this Section 2 of this Article III, shall immediately give written notice to the Corporation of such event and shall provide to the Corporation such other information as the Corporation may request regarding such Person's ownership of Capital Stock.

(v) Owners Required to Provide Information.

(a)Every Beneficial Owner of more than 5% (or such other percentage, as provided in the applicable regulations adopted under Sections 856 through 859 of the Code) of the outstanding shares of the Capital Stock of the Corporation shall, within 30 days after January 1 of each year, give written notice to the Corporation stating the name and address of such Beneficial Owner, the number of shares Beneficially Owned and Constructively Owned, and a full description of how such shares are held. Every Beneficial Owner shall, upon demand by the Corporation, disclose to the Corporation in writing such additional information with respect to the Beneficial Ownership and Constructive Ownership of the Capital Stock as the Board of Directors deems appropriate or necessary (i) to comply with the provisions of the Code, regarding the qualification of the Corporation as a REIT under the Code, and (ii) to ensure compliance with the Ownership Limit or the Existing Holder Limit.

(b)Any Person who is a Beneficial Owner or Constructive Owner of shares of Capital Stock and any Person (including the shareholder of record) who is holding Capital Stock for a Beneficial Owner or Constructive Owner, and any proposed transferee of shares, upon the determination by the Board of Directors to be reasonably necessary to protect the status of the Corporation as a REIT under the Code, shall provide a statement or affidavit to the Corporation, setting forth the number of shares of Capital Stock already Beneficially Owned or Constructively Owned by such shareholder or proposed transferee and any related person specified, which statement or affidavit shall be in the form prescribed by the Corporation for that purpose.

(vi)Remedies Not Limited. Subject to Subsection (h) of this Section 2 of this Article III, nothing contained in this Article III shall limit the authority of the Board of Directors to take such other action as it deems necessary or advisable (i) to protect the Corporation and the interests of its shareholders in the preservation of the Corporation's

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status as a REIT, and (ii) to insure compliance with the Ownership Limit and the Existing Holder Limit.

(vii)Determination. Any question regarding the application of any of the provisions of this Subsection (d) of this Section 2 of this Article III, including any definition contained in Item (i) of this Subsection (d) of this Section 2 of this Article III, shall be determined or resolved by the Board of Directors and any such determination or resolution shall be final and binding on the Corporation, its shareholders, and all parties in interest.

(viii)Exceptions. The Board of Directors, upon advice from, or an opinion from, Counsel, may exempt a Person from the Ownership Limit if such Person is a Look Through Entity, provided, however, in no event may any such exception cause such Person's ownership, direct or indirect (without taking into account such Person's ownership of interests in TRG), to exceed 9.9% of the value of the outstanding Capital Stock.

For a period of 90 days following the purchase of Regular Capital Stock by an underwriter that (i) is a Look Through Entity and (ii) participates in a public offering of the Regular Capital Stock, such underwriter shall not be subject to the Ownership Limit with respect to the Regular Capital Stock purchased by it as a part of such public offering.

(e) Excess Stock.

(i)Surrender of Excess Stock to Designated Agent. Within thirty business days of the date upon which the Corporation determines that shares have become Excess Stock, the Corporation, by written notice to the Purported Transferee, shall demand that any certificate or other evidence of ownership of the shares of Excess Stock be immediately surrendered to the Designated Agent (the "Demand").

(ii)Excess Share Distributions. The Designated Agent shall be entitled to receive all Excess Share Distributions. The Purported Transferee of Regular Capital Stock that has become Excess Stock shall not be entitled to any dividends or other distributions, including, without limitation, capital gain distributions, with respect to the Excess Stock. Any Excess Share Distributions paid to a Purported Transferee shall be remitted to the Designated Agent within thirty business days after the date of the Demand.

(iii) Restrictions on Transfer; Sale of Excess Stock.

(a)Excess Stock shall be transferable by the Designated Agent as attorney-in-fact for the Designated Charity. Excess Stock shall not be transferable by the Purported Transferee.

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(b)Upon delivery of the certificates or other evidence of ownership of the shares of Excess Stock to the Designated Agent, the Designated Agent shall immediately sell such shares in an arms-length transaction (over the New York Stock Exchange or such other exchange over which the shares of the applicable class or series of Regular Capital Stock may then be traded, if practicable), and the Purported Transferee shall receive from the Net Sales Proceeds, the lesser of:

(1) the Net Sales Proceeds; or

(2)the price per share that such Purported Transferee paid for the Regular Capital Stock in the purported Transfer that resulted in the Excess Stock, or if the Purported Transferee did not give value for such shares (because the Transfer was, for example, through a gift, devise or other transaction), a price per share equal to the Market Price determined using the date of the purported Transfer that resulted in the Excess Stock as the relevant date.

(c)If some or all of the shares of Excess Stock have been sold prior to receiving the Demand, such sale shall be deemed to been made for the benefit of and as the agent for the Designated Charity. The Purported Transferee shall pay to the Designated Agent, within thirty business days of the date of the Demand, the entire gross proceeds realized upon such sale. Notwithstanding the preceding sentence, the Designated Agent may grant written permission to the Purported Transferee to retain an amount from the gross proceeds equal to the amount the Purported Transferee would have been entitled to receive had the Designated Agent sold the shares as provided in Item (iii)(b) of this Subsection (e) of this Section 2 of this Article III.

(d)The Designated Agent shall promptly pay to the Designated Charity any Excess Share Distributions recovered by the Designated Agent and the excess, if any, of the Net Sales Proceeds over the amount due to the Purported Transferee as provided in Item (iii)(b) of this Subsection (e) of this Section 2 of this Article III.

(iv)Voting Rights. The Designated Agent shall have the exclusive right to vote all shares of Excess Stock as the attorney-in-fact for the Designated Charity. The Purported Transferee shall not be entitled to vote such shares (except as required by applicable law). Notwithstanding the foregoing, votes erroneously cast by a Prohibited Transferee shall not be invalidated in the event that the Corporation has already taken irreversible corporate action to effect a reorganization, merger, sale or dissolution of the Corporation.

(v)Rights Upon Liquidation. In the event of any voluntary or involuntary liquidation, dissolution or winding up of, or any distribution of the assets of the Corporation, a Purported Transferee shall be entitled to receive the lesser of (i) that amount which would have been due to such Purported Transferee had the Designated

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Agent sold the shares of Excess Stock as provided in Item (iii)(b) of this Subsection (e) of this Section 2 of this Article III and (ii) that amount which would have been due to the Purported Transferee if the Transfer had been valid under Item (ii) of Subsection (d) of this Section 2 of this Article III, determined (A) in the case of Common Stock, pursuant to Subsection (a)(ii) of this Section 2 of this Article III, and (B) in the case of Preferred Stock, pursuant to the provisions of these Amended and Restated Articles of Incorporation, amended as authorized by Section 1 of this Article III, which sets forth the liquidation rights of such class or series of Preferred Stock. With respect to shares of Excess Stock, a Purported Transferee shall not have any rights to share in the assets of the Corporation upon the liquidation, dissolution or winding up of the Corporation other than the right to receive the amount determined in the preceding sentence and shall not be entitled to any preference or priority (as a creditor of the Corporation) over the holders of the shares of Regular Capital Stock. Any Excess Liquidation Proceeds shall be paid to the Designated Charity.

(vi)Action by Corporation to Enforce Transfer Restrictions. If the Purported Transferee fails to deliver the certificates or other evidence of ownership and all Excess Share Distributions to the Designated Agent within thirty business days of the date of Demand, the Corporation shall take such legal action to enforce the provisions of this Article III as may be permitted under applicable law.

(f) Legend. Each certificate for Capital Stock shall bear the following legend:

"The Amended and Restated Articles of Incorporation, as the same may be amended (the "Articles"), impose certain restrictions on the transfer and ownership of the shares represented by this Certificate based upon the percentage of the outstanding shares owned by the shareholder. At no charge, any shareholder may receive a written statement of the restrictions on transfer and ownership that are imposed by the Articles."

(g)Severability. If any provision of this Article III or any application of any such provision is determined to be invalid by any Federal or state court having jurisdiction over the issues, the validity of the remaining provisions shall not be affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of such court.

(h)New York Stock Exchange Settlement. Nothing contained in these Amended and Restated Articles of Incorporation shall preclude the settlement of any transaction entered into through the facilities of the New York Stock Exchange or of any other stock exchange on which shares of the Common Stock or class or series of Preferred Stock may be listed, or of the Nasdaq National Market (if the shares are quoted on such Market) and which has conditioned such listing or quotation on the inclusion in the Corporation's Amended and Restated Articles of Incorporation of a provision such as this Subsection (h). The fact that the settlement of any transaction is permitted shall not negate the effect of any other provision of this Article III and any transferee in such a transaction shall be subject to all of the provisions and limitations set forth in this Article III.

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ARTICLE IV

Registered Office and Registered Agent

1. Registered Office.

The address and mailing address of the registered office of the Corporation is 500 North Woodward Avenue, Suite 100, Bloomfield Hills, Michigan 48304.

2. Resident Agent.

The resident agent for service of process on the Corporation at the registered office is Jeffrey H. Miro.

ARTICLE V

Plan of Compromise or Reorganization

When a compromise or arrangement or a plan of reorganization of the Corporation is proposed between the Corporation and its creditors or any class of them or between the Corporation and its shareholders or any class of them, a court of equity jurisdiction within the State of Michigan, on application of the Corporation or of a creditor or shareholder thereof, or on application of a receiver appointed for the Corporation, may order a meeting of the creditors or class of creditors or of the shareholders or class of shareholders to be affected by the proposed compromise or arrangement or reorganization, to be summoned in such manner as the court directs. If a majority in number representing 75% in value of the creditors or class of creditors, or of the shareholders or class of shareholders to be affected by the proposed compromise or arrangement or a reorganization, agree to a compromise or arrangement or a reorganization of the Corporation as a consequence of the compromise or arrangement, the compromise or arrangement and the reorganization, if sanctioned by the court to which the application has been made, shall be binding on all the creditors or class of creditors, or on all the shareholders or class of shareholders and also on the Corporation.

ARTICLE VI

Directors

For so long as the Corporation has the right to designate, pursuant to The Amended and Restated Agreement of Limited Partnership of TRG (as the same may be amended, the Partnership Agreement"), members of the committee of TRG that have the power to approve or propose all actions, decisions, determinations, designations, delegations, directions, appointments, consents, approvals, selections, and the like to be taken, made or given, with respect to TRG, its business and its properties as well as the management of all affairs of TRG (the "Partnership Committee"), the Board of Directors shall consist of, except during the period of any vacancy between annual meetings of the shareholders, that number of members as are set forth in the By-Laws of the Corporation of which, except during the period of any vacancy between annual meetings of the shareholders, not less than 40% (rounded up to the next whole number) of the members shall be Independent Directors (as hereinafter defined), and, thereafter,

41

the Board of Directors shall consist of, except during the period of any vacancy between annual meetings of the shareholders, that number of members as are set forth in the By-Laws of the Corporation. For purposes of this Article VI, "Independent Director" shall mean an individual who is neither one of the following named persons nor an employee, beneficiary, principal, director, officer or agent of, or a general partner in, or limited partner (owning in excess of 5% of the Beneficial Interest) or shareholder (owning in excess of 5% of the Beneficial Interest) in, any such named Person: (i) for so long as TG Partners Limited Partnership, a Delaware limited partnership, has the right to appoint one or more Partnership Committee members, A. Alfred Taubman and any Affiliate of A. Alfred Taubman or any member of his Immediate Family, (ii) for so long as Taub-Co Management, Inc., a Michigan corporation (formerly The Taubman Company, Inc. ("T-Co")) has the right to appoint one or more Partnership Committee members, T-Co or an Affiliate of T-Co, (iii) for so long as a Taubman Transferee (as hereinafter defined) has the right to appoint one or more Partnership Committee members, a Taubman Transferee, or an Affiliate of such Taubman Transferee, (iv) for so long as GMPTS has the right to appoint one or more Partnership Committee members, GMPTS, General Motors Corporation, or an Affiliate of GMPTS or of General Motors Corporation, and (v) for so long as a GMPTS Transferee (as hereinafter defined) has the right to appoint one or more Partnership Committee members, a GMPTS Transferee or an Affiliate of such GMPTS Transferee. "Taubman Transferee" means a single Person that acquires, pursuant to Section 8.1(b) or Section 8.3(a) of The Partnership Agreement, or upon the foreclosure or like action in respect of a pledge of a partnership interest in TRG, the then (i.e., at the time of such acquisition) entire partnership interest in TRG (excluding, in the case of an acquisition pursuant to Section 8.3(a) of the Partnership Agreement or pursuant to a foreclosure or like action in respect of a pledge of a partnership interest in TRG, the ability of such Person to act as a substitute partner) of A. Alfred Taubman, and any Affiliate of A. Alfred Taubman or any member of his Immediate Family, from one or more such persons or from any Taubman Transferee; provided that the percentage interest in TRG being transferred exceeds 7.7%. "GMPTS Transferee" means a single Person that acquires, pursuant to Section 8.1(b) or Section 8.3(a) of the Partnership Agreement, or upon the foreclosure or like action in respect of a pledge of a partnership interest in TRG, the then (i.e., at the time of such acquisition) entire such partnership interest in TRG (excluding, in the case of an acquisition pursuant to Section 8.3(a) of the Partnership Agreement or pursuant to a foreclosure or like action in respect of a pledge of partnership interests in TRG, the ability of such Person to act as a substitute partner) of GMPTS or of any GMPTS Transferee; provided that the percentage interest in TRG being transferred exceeds 7.7%.

For so long as the Corporation has the right to designate, pursuant to the Partnership Agreement, any members of the Partnership Committee, the affirmative vote of both a majority of the Independent Directors who do not have a beneficial financial interest in the action before the Board of Directors and a majority of all members of the Board of Directors who do not have a beneficial financial interest in the action before the Board of Directors is required for the approval of all actions to be taken by the Board of Directors; provided, however, the Corporation may not appoint to the Partnership Committee as a Corporation appointee an individual who does not satisfy the definition of Independent Director in one or more respects without the affirmative vote of all of the Independent Directors then in office. Thereafter, the affirmative vote of a majority of all members of the Board of Directors who do not have a beneficial financial interest in the action before the Board of Directors is required for the approval of all

42

actions to be taken by the Board of Directors. The establishment of reasonable compensation of Directors for services to the Corporation as Directors or officers shall not constitute action in which any Director has a beneficial financial interest.

Subject to the foregoing, a Director shall be deemed and considered in all respects and for all purposes to be a Director of the Corporation, including, without limitation, having the authority to vote or act on all matters, including, without limitation, matters submitted to a vote at any meeting of the Board of Directors or at any meeting of a committee of the Board of Directors, and the application to such Director of Articles VII and VIII of these Amended and Restated Articles of Incorporation, notwithstanding a Purported Transferee's unauthorized exercise of voting rights with respect to such Director's election.

ARTICLE VII

Limited Liability of Directors

No director of the Corporation shall be liable to the Corporation or its shareholders for monetary damages for a breach of the director's fiduciary duty; provided, however, the foregoing provision shall not be deemed to limit a director's liability to the Corporation or its shareholders resulting from:

(i) a breach of the director's duty of loyalty to the Corporation or its shareholders;

(ii) acts or omissions of the director not in good faith or which involve intentional misconduct or knowing violation of law;

(iii) a violation of Section 551(1) of the Act or;

(iv) a transaction from which the director derived an improper personal benefit.

ARTICLE VIII

Indemnification of Officers, Directors, Etc.

1. Indemnification of Directors.

The Corporation shall and does hereby indemnify a person (including the heirs, executors, and administrators of such person) who is or was a party to, or who is threatened to be made a party to, a threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative and whether formal or informal, including, without limitation, an action by or in the right of the Corporation, by reason of the fact that he or she is or was a director of the Corporation, or is or was serving at the request of the Corporation as a director (or in a similar capacity, including serving as a member of the Partnership Committee and of any other committee of TRG) or in any other representative capacity of another foreign or domestic corporation or of or with respect to any other entity (including TRG), whether for profit or not, against expenses, attorneys' fees, judgments, penalties, fines, and amounts paid in

43

settlement actually and reasonably incurred by him or her in connection with the action, suit, or proceeding. This Section 1 of this Article VIII is intended to grant the persons herein described with the fullest protection not prohibited by existing law in effect as of the date of filing this Amended and Restated Articles of Incorporation or such greater protection as may be permitted or not prohibited under succeeding provisions of law.

2. Indemnification of Officers, Etc.

The Corporation has the power to indemnify a person (including the heirs, executors, and administrators of such person) who is or was a party to, or who is threatened to be made a party to, a threatened, pending, or contemplated action, suit, or proceeding, whether civil, criminal, administrative, or investigative and whether formal or informal, including an action by or in the right of the Corporation, by reason of the fact that he or she is or was an officer, employee, or agent of the Corporation or is or was serving at the request of the Corporation as an officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership (including TRG), joint venture, trust or other enterprise, whether for profit or not, against expenses, including attorneys' fees, judgments, penalties, fines, and amounts paid in settlement actually and reasonably incurred by him or her in connection with the action, suit, or proceeding, if the person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation or its shareholders, and with respect to a criminal action or proceeding, if the person had no reasonable cause to believe his or her conduct was unlawful. Unless ordered by a court, an indemnification under this Section 2 of this Article VIII shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the officer, employee, or agent is proper in the circumstances because he or she has met the applicable standard of conduct set forth in this Section 2 of this Article VIII.

3. Advancement of Expenses.

The Corporation shall pay the expenses incurred by a person described in Section 1 of this Article VIII in defending a civil or criminal action, suit, or proceeding described in such Section 1 in advance of the final disposition of the action, suit, or proceeding. The Corporation shall pay the expenses incurred by a person described in Section 2 of this Article VIII in defending a civil or criminal action, suit, or proceeding described in such Section 2 in advance of the final disposition of the action, suit, or proceeding upon receipt of an undertaking by or on behalf of such person to repay the expenses if it is ultimately determined that the person is not entitled to be indemnified by the Corporation. Such undertaking shall be by unlimited general obligation of the person on whose behalf advances are made but need not be secured.

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EX-12

Exhibit 12

TAUBMAN CENTERS, INC.
Computation of Ratios of Earnings to Combined Fixed Charges and Preferred Dividends
(in thousands, except ratios)

	Six Months Ended June 30
	2006			2005
Earnings before income from equity investees	$	26,497		$	11,001
Add back:
Fixed charges	$	74,401		$	60,151
Amortization of previously capitalized interest		2,165			1,822
Distributed income of Unconsolidated Joint Ventures		15,883			18,442
Deduct:
Capitalized interest		(4,316	)		(5,155	)
Preferred distributions		(1,230	)		(1,230	)
Earnings available for fixed charges and preferred dividends	$	113,400		$	85,031
Fixed Charges
Interest expense (1)	$	66,154		$	52,032
Capitalized interest		4,316			5,155
Interest portion of rent expense		2,701			1,734
Preferred distributions		1,230			1,230
Total fixed charges	$	74,401		$	60,151
Preferred dividends (2)		16,406			12,300
Total fixed charges and preferred dividends	$	90,807		$	72,451
Ratio of earnings to fixed charges and preferred dividends		1.2			1.2

(1) Interest expense for the six months ended June 30, 2006 includes a $2.1 million charge in connection with the write-off of financing costs related to the pay-off of the loans on The Shops at Willow Bend.

(2) Preferred dividends for the six months ended June 30 ,2006 include $4.7 million of charges recognized in connection with the redemption of the Series A and I Preferred Stock.

EX-31

Exhibit 31 (a)

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

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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) 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

d) 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: August 4, 2006	/s/ Robert S. Taubman
	Robert S. Taubman
	Chairman of the Board of Directors, President, and Chief Executive Officer

EX-31

Exhibit 31 (b)

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

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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) 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

d) 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: August 4, 2006	/s/ Lisa A. Payne
	Lisa A. Payne
	Vice Chairman, Chief Financial Officer, and Director (Principal Financial 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 June 30, 2006 (the "Report"):

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

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

/s/ Robert S. Taubman	Date: August 4, 2006
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 June 30, 2006 (the "Report"):

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

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

/s/ Lisa A. Payne	Date: August 4, 2006
Lisa A. Payne
Vice Chairman, Chief Financial Officer, and Director (Principal Financial Officer)

EX-99

Exhibit 99

MORTGAGE AND OTHER NOTES PAYABLE
INCLUDING WEIGHTED INTEREST RATES AT JUNE 30, 2006
(in millions of dollars, amounts may not add due to rounding)

		100%	Beneficial Interest	Effective Rate	(a)	LIBOR Rate
		6/30/06	6/30/06	6/30/06		Spread	2006	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016	Total
Consolidated Fixed Rate Debt:
Beverly Center Cherry Creek Shopping Center Great Lakes Crossing International Plaza MacArthur Center Northlake Mall Regency Square Stony Point Fashion Park The Mall at Short Hills The Mall at Wellington Green	50.00% 50.10% 95.00% 90.00%	345.9 280.0 144.1 180.4 139.6 215.5  78.3 112.5 540.0 200.0	345.9 140.0 144.1  90.3 132.8 215.5  78.3 112.5 540.0 180.0	5.28%  5.24%  5.25%  4.38%  6.85%  5.41%  6.75%  6.24%  5.47%  5.44%	(b) (c)		2.3   1.2 0.8 1.3 0.5 0.7	4.8   2.5 1.7 2.7 1.1 1.5	5.0 2.6 87.8 2.8 1.2 1.5	5.4 2.7   3.0 1.3 1.6	5.7 2.9   122.9 1.4 1.8	6.0 3.0     72.8 1.9	6.3 3.2 2.0	6.6 126.0 2.1	303.8     99.5	540.0 180.0	140.0 215.5	345.9 140.0 144.1  90.3 132.8 215.5  78.3 112.5 540.0 180.0
Total Consolidated Fixed Weighted Rate Consolidated Floating Rate Debt: Dolphin Mall TRG Revolving Credit TRG Revolving Credit Other		2,236.4 5.47% 140.1 0.0  0.0 1.0	1,979.4 5.53% 140.1  0.0   0.0 0.5	7.35% 8.25%	(d) (e) (f)(i)	2.15% 0.80%	6.8 5.68% 140.1  0.1	14.3 5.68% (g)                   0.2	100.9 4.57%  0.0  0.0 0.1	14.1 5.86%       (h)                       0.1	134.6 6.74%	83.7 6.58%	11.4 5.44%	134.8 5.27%	403.3 5.52%	720.0 5.46%	355.5 5.34%	1,979.4 140.1  0.0  0.0  0.5
Total Consolidated Floating Weighted Rate Total Consolidated Weighted Rate		141.1   7.36% 2,377.5   5.58%	140.6   7.35% 2,120.0   5.65%				140.2 7.35% 147.0 7.27%	0.2 8.25% 14.4 5.71%	0.1 8.25% 101.1 4.58%	0.1 8.25% 14.2 5.88%	134.6 6.74%	83.7 6.58%	11.4 5.44%	134.8 5.27%	403.3 5.52%	720.0 5.46%	355.5 5.34%	140.6 2,120.0
Joint Ventures Fixed Rate Debt:
Arizona Mills Fair Oaks The Mall at Millenia Sunvalley Westfarms	50.00% 50.00% 50.00% 50.00% 78.94%	138.6 140.0 210.0 128.9 200.0	69.3  70.0 105.0  64.5 157.9	7.90% 6.60% 5.46% 5.67% 6.10%			0.4         0.5 1.1	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  58.2 142.9	98.1				69.3  70.0 105.0  64.5 157.9
Total Joint Venture Fixed Weighted Rate Joint Ventures Floating Rate Debt: Other		817.5   6.26%     2.9	466.6 6.24%   1.8	7.99%			2.0 6.35%   0.4	4.3 6.36%   0.6	75.5 6.57%   0.3	6.3 6.17%   0.3	71.7 7.73%    0.1	6.0 5.84%	202.7 5.97%	98.1 5.46%				466.6   1.8
Total Joint Venture Floating Weighted Rate Total Joint Venture Weighted Rate		2.9 7.99% 820.4   6.26%	1.8 7.99% 468.4 6.25%				0.4 7.99%   2.5 6.64%	0.6 7.99%   5.0 6.56%	0.3 7.99%  75.8 6.58%	0.3 7.99%   6.6 6.25%	0.1 7.99%  71.8 7.73%	6.0 5.84%	202.7 5.97%	98.1 5.46%				1.8  468.4
TRG Beneficial Interest Totals Fixed Rate Debt                                 Floating Rate Debt                                 Total		3,053.9    5.68%    144.0    7.37%  3,197.9    5.76%	2,446.0    5.67%    142.4    7.36%  2,588.5    5.76%				8.8 5.83% 140.7 7.35% 149.5 7.26%	18.6 5.84% 0.8 8.04% 19.4 5.92%	176.4 5.43% 0.5 8.06% 176.8 5.43%	20.4 5.96% 0.4 8.07% 20.8 6.00%	206.3 7.09% 0.1 7.99% 206.4 7.09%	89.7 6.53%     89.7 6.53%	214.1 5.94%    214.1 5.94%	232.9 5.35%    232.9 5.35%	403.3 5.52%    403.3 5.52%	720.0 5.46%    720.0 5.46%	355.5 5.34%    355.5 5.34%	2,446.0  142.4 2,588.5
Average Maturity							6.92 =======

(a) Includes the impact of interest rate swaps, if any, 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) Debt is reduced by $0.2 million of purchase accounting discount from acquisition which increases the stated rate on the debt of 4.21% to an effective rate of 4.38%.

(c) Debt includes $3.2 million of purchase accounting premium from acquisition which reduces the stated rate on the debt of 7.59% to an effective rate of 6.85%.

(d) The debt is floating month to month at LIBOR plus spread and the entire debt balance is capped at 7% plus spread to February 2007.

(e) Rate floats daily.

(f) LIBOR rate floats month to month.

(g) The Company has given notice to pay off the loan when it becomes prepayable without penalty in August 2006.

(h) In August 2006 the maturity date is expected to be extended to 2009 with a 1 year extension option.

(i) LIBOR spread is expected to be reduced in August 2006 to 0.70%.