Michigan | 38-2033632 | ||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||
200 East Long Lake Road, Suite 300, Bloomfield Hills, Michigan | 48304-2324 | ||
(Address of principal executive offices) | (Zip code) | ||
(248) 258-6800 | |||
(Registrant's telephone number, including area code) |
PART I – FINANCIAL INFORMATION | ||
Item 1. | ||
Consolidated Balance Sheet – June 30, 2013 and December 31, 2012 | ||
Consolidated Statement of Operations and Comprehensive Income – Three and Six Months Ended June 30, 2013 and 2012 | ||
Consolidated Statement of Changes in Equity – Six Months Ended June 30, 2013 and 2012 | ||
Consolidated Statement of Cash Flows – Six Months Ended June 30, 2013 and 2012 | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II – OTHER INFORMATION | ||
Item 1. | ||
Item 1A. | ||
Item 6. | ||
June 30 2013 | December 31 2012 | ||||||
Assets: | |||||||
Properties | $ | 4,331,214 | $ | 4,246,000 | |||
Accumulated depreciation and amortization | (1,452,935 | ) | (1,395,876 | ) | |||
$ | 2,878,279 | $ | 2,850,124 | ||||
Investment in Unconsolidated Joint Ventures (Notes 2 and 4) | 274,308 | 214,152 | |||||
Cash and cash equivalents (Note 2) | 63,487 | 32,057 | |||||
Restricted cash (Note 5) | 6,346 | 6,138 | |||||
Accounts and notes receivable, less allowance for doubtful accounts of $3,803 and $3,424 in 2013 and 2012 | 56,852 | 69,033 | |||||
Accounts receivable from related parties | 2,960 | 2,009 | |||||
Deferred charges and other assets (Note 2) | 87,571 | 94,982 | |||||
Total Assets | $ | 3,369,803 | $ | 3,268,495 | |||
Liabilities: | |||||||
Notes payable (Note 5) | $ | 2,910,585 | $ | 2,952,030 | |||
Accounts payable and accrued liabilities | 271,995 | 278,098 | |||||
Distributions in excess of investments in and net income of Unconsolidated Joint Ventures (Note 4) | 378,641 | 383,293 | |||||
$ | 3,561,221 | $ | 3,613,421 | ||||
Commitments and contingencies (Notes 5, 7, 8, 9, and 10) | |||||||
Equity: | |||||||
Taubman Centers, Inc. Shareowners’ Equity: | |||||||
Series B Non-Participating Convertible Preferred Stock, $0.001 par and liquidation value, 40,000,000 shares authorized, 25,179,072 and 25,327,699 shares issued and outstanding at June 30, 2013 and December 31, 2012 | $ | 25 | $ | 25 | |||
Series J Cumulative Redeemable Preferred Stock, 7,700,000 shares authorized, no par, $192.5 million liquidation preference, 7,700,000 shares issued and outstanding at June 30, 2013 and December 31, 2012 | |||||||
Series K Cumulative Redeemable Preferred Stock, 6,800,000 shares authorized, no par, $170.0 million liquidation preference, 6,800,000 shares issued and outstanding at June 30, 2013 (Note 6). No shares outstanding or authorized at December 31, 2012. | |||||||
Common Stock, $0.01 par value, 250,000,000 shares authorized, 63,816,192 and 63,310,148 shares issued and outstanding at June 30, 2013 and December 31, 2012 | 638 | 633 | |||||
Additional paid-in capital | 824,779 | 657,071 | |||||
Accumulated other comprehensive income (loss) | (17,732 | ) | (22,064 | ) | |||
Dividends in excess of net income | (909,503 | ) | (891,283 | ) | |||
$ | (101,793 | ) | $ | (255,618 | ) | ||
Noncontrolling interests (Note 7) | (89,625 | ) | (89,308 | ) | |||
$ | (191,418 | ) | $ | (344,926 | ) | ||
Total Liabilities and Equity | $ | 3,369,803 | $ | 3,268,495 |
Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Revenues: | |||||||||||||||
Minimum rents | $ | 103,233 | $ | 98,940 | $ | 205,542 | $ | 192,684 | |||||||
Percentage rents | 1,083 | 2,049 | 6,711 | 6,452 | |||||||||||
Expense recoveries | 65,569 | 62,215 | 129,606 | 118,692 | |||||||||||
Management, leasing, and development services | 1,819 | 8,559 | 5,201 | 17,207 | |||||||||||
Other | 6,483 | 7,702 | 14,384 | 13,694 | |||||||||||
$ | 178,187 | $ | 179,465 | $ | 361,444 | $ | 348,729 | ||||||||
Expenses: | |||||||||||||||
Maintenance, taxes, utilities, and promotion | $ | 52,762 | $ | 48,903 | $ | 99,319 | $ | 90,601 | |||||||
Other operating | 18,492 | 19,922 | 34,655 | 36,232 | |||||||||||
Management, leasing, and development services | 1,119 | 6,987 | 3,145 | 15,509 | |||||||||||
General and administrative | 12,628 | 10,043 | 24,864 | 18,450 | |||||||||||
Interest expense | 32,622 | 36,676 | 67,074 | 74,203 | |||||||||||
Depreciation and amortization | 38,258 | 36,235 | 75,280 | 72,669 | |||||||||||
$ | 155,881 | $ | 158,766 | $ | 304,337 | $ | 307,664 | ||||||||
Nonoperating income | 50 | 71 | 2,287 | 195 | |||||||||||
Income before income tax expense and equity in income of Unconsolidated Joint Ventures | $ | 22,356 | $ | 20,770 | $ | 59,394 | $ | 41,260 | |||||||
Income tax expense (Note 3) | (234 | ) | (492 | ) | (1,262 | ) | (706 | ) | |||||||
Equity in income of Unconsolidated Joint Ventures (Note 4) | 11,481 | 11,170 | 21,827 | 23,071 | |||||||||||
Net income | $ | 33,603 | $ | 31,448 | $ | 79,959 | $ | 63,625 | |||||||
Net income attributable to noncontrolling interests (Note 7) | (9,561 | ) | (11,013 | ) | (24,131 | ) | (21,598 | ) | |||||||
Net income attributable to Taubman Centers, Inc. | $ | 24,042 | $ | 20,435 | $ | 55,828 | $ | 42,027 | |||||||
Distributions to participating securities of TRG (Note 9) | (436 | ) | (403 | ) | (878 | ) | (806 | ) | |||||||
Preferred stock dividends (Note 6) | (5,764 | ) | (3,659 | ) | (9,364 | ) | (7,317 | ) | |||||||
Net income attributable to Taubman Centers, Inc. common shareowners | $ | 17,842 | $ | 16,373 | $ | 45,586 | $ | 33,904 | |||||||
Net income | $ | 33,603 | $ | 31,448 | $ | 79,959 | $ | 63,625 | |||||||
Other comprehensive income (Note 13): | |||||||||||||||
Unrealized gain (loss) on interest rate instruments and other | 7,309 | (7,223 | ) | 7,741 | (4,438 | ) | |||||||||
Cumulative translation adjustment | (653 | ) | (3,512 | ) | |||||||||||
Reclassification adjustment for amounts recognized in net income | 1,719 | 245 | 2,094 | 490 | |||||||||||
$ | 8,375 | $ | (6,978 | ) | $ | 6,323 | $ | (3,948 | ) | ||||||
Comprehensive income | $ | 41,978 | $ | 24,470 | $ | 86,282 | $ | 59,677 | |||||||
Comprehensive income attributable to noncontrolling interests | (12,134 | ) | (8,692 | ) | (26,164 | ) | (20,277 | ) | |||||||
Comprehensive income attributable to Taubman Centers, Inc. | $ | 29,844 | $ | 15,778 | $ | 60,118 | $ | 39,400 | |||||||
Basic earnings per common share (Note 11) | $ | 0.28 | $ | 0.28 | $ | 0.72 | $ | 0.58 | |||||||
Diluted earnings per common share (Note 11) | $ | 0.28 | $ | 0.27 | $ | 0.71 | $ | 0.57 | |||||||
Cash dividends declared per common share | $ | 0.5000 | $ | 0.4625 | $ | 1.0000 | $ | 0.9250 | |||||||
Weighted average number of common shares outstanding – basic | 63,786,083 | 58,789,737 | 63,602,025 | 58,518,442 |
Taubman Centers, Inc. Shareowners’ Equity | |||||||||||||||||||||||||||||||||
Preferred Stock | Common Stock | Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Dividends in Excess of Net Income | Non-Redeemable Noncontrolling Interests | Total Equity | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||
Balance, January 1, 2012 | 33,941,958 | $ | 26 | 58,022,475 | $ | 580 | $ | 673,923 | $ | (27,613 | ) | $ | (863,040 | ) | $ | (124,324 | ) | $ | (340,448 | ) | |||||||||||||
Issuance of stock pursuant to Continuing Offer (Notes 9 and 10) | (46,900 | ) | 46,902 | ||||||||||||||||||||||||||||||
Share-based compensation under employee and director benefit plans (Note 9) | 743,211 | 8 | (3,207 | ) | (3,199 | ) | |||||||||||||||||||||||||||
Tax impact of share-based compensation (Note 3) | 530 | 530 | |||||||||||||||||||||||||||||||
Adjustments of noncontrolling interests (Note 7) | (1,900 | ) | (584 | ) | 10 | 107 | (467 | ) | |||||||||||||||||||||||||
Dividend equivalents (Note 9) | (68 | ) | (68 | ) | |||||||||||||||||||||||||||||
Dividends and distributions (excludes $1,226 of distributions attributable to redeemable noncontrolling interests) | (62,510 | ) | (32,434 | ) | (94,944 | ) | |||||||||||||||||||||||||||
Net income (excludes $1,206 of net loss attributable to redeemable noncontrolling interests) (Note 7) | 42,027 | 22,804 | 64,831 | ||||||||||||||||||||||||||||||
Other comprehensive income (Note 8): | |||||||||||||||||||||||||||||||||
Unrealized loss on interest rate instruments and other (excludes $59 of other comprehensive loss attributable to redeemable noncontrolling interests) | (2,966 | ) | (1,413 | ) | (4,379 | ) | |||||||||||||||||||||||||||
Reclassification adjustment for amounts recognized in net income | 338 | 152 | 490 | ||||||||||||||||||||||||||||||
Balance, June 30, 2012 | 33,893,158 | $ | 26 | 58,812,588 | $ | 588 | $ | 670,662 | $ | (30,231 | ) | $ | (883,591 | ) | $ | (135,108 | ) | $ | (377,654 | ) | |||||||||||||
Balance, January 1, 2013 | 33,027,699 | $ | 25 | 63,310,148 | $ | 633 | $ | 657,071 | $ | (22,064 | ) | $ | (891,283 | ) | $ | (89,308 | ) | $ | (344,926 | ) | |||||||||||||
Issuance of stock pursuant to Continuing Offer (Notes 9 and 10) | (148,627 | ) | 148,636 | 1 | (1 | ) | |||||||||||||||||||||||||||
Issuance of Series K Preferred Stock, net of offering costs (Note 6) | 6,800,000 | 164,374 | 164,374 | ||||||||||||||||||||||||||||||
Share-based compensation under employee and director benefit plans (Note 9) | 357,408 | 4 | 3,556 | 3,560 | |||||||||||||||||||||||||||||
Tax impact of share-based compensation (Note 3) | 242 | 242 | |||||||||||||||||||||||||||||||
Adjustments of noncontrolling interests (Note 7) | (463 | ) | 43 | 420 | |||||||||||||||||||||||||||||
Contributions from noncontrolling interests | 2,486 | 2,486 | |||||||||||||||||||||||||||||||
Dividend equivalents (Note 9) | (84 | ) | (84 | ) | |||||||||||||||||||||||||||||
Dividends and distributions | (73,964 | ) | (29,388 | ) | (103,352 | ) | |||||||||||||||||||||||||||
Net income | 55,828 | 24,131 | 79,959 | ||||||||||||||||||||||||||||||
Other comprehensive income (Note 13): | |||||||||||||||||||||||||||||||||
Unrealized gain on interest rate instruments and other | 5,365 | 2,376 | 7,741 | ||||||||||||||||||||||||||||||
Cumulative translation adjustment | (2,518 | ) | (994 | ) | (3,512 | ) | |||||||||||||||||||||||||||
Reclassification adjustment for amounts recognized in net income | 1,442 | 652 | 2,094 | ||||||||||||||||||||||||||||||
Balance, June 30, 2013 | 39,679,072 | $ | 25 | 63,816,192 | $ | 638 | $ | 824,779 | $ | (17,732 | ) | $ | (909,503 | ) | $ | (89,625 | ) | $ | (191,418 | ) |
Six Months Ended June 30 | |||||||
2013 | 2012 | ||||||
Cash Flows From Operating Activities: | |||||||
Net income | $ | 79,959 | $ | 63,625 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 75,280 | 72,669 | |||||
Provision for bad debts | 1,230 | 1,445 | |||||
Gain on sale of peripheral land | (863 | ) | |||||
Gain on sale of marketable securities (Note 12) | (1,323 | ) | |||||
Other | 6,264 | 6,293 | |||||
Increase (decrease) in cash attributable to changes in assets and liabilities: | |||||||
Receivables, restricted cash, deferred charges, and other assets | 8,613 | 6,410 | |||||
Accounts payable and other liabilities | 2,188 | (4,874 | ) | ||||
Net Cash Provided By Operating Activities | $ | 171,348 | $ | 145,568 | |||
Cash Flows From Investing Activities: | |||||||
Additions to properties | $ | (117,745 | ) | $ | (118,582 | ) | |
Issuances of notes receivable | (1,489 | ) | |||||
Proceeds from sale of peripheral land | 6,916 | ||||||
Proceeds from sale of marketable securities (Note 12) | 2,493 | ||||||
Repayments of notes receivable | 166 | 5,329 | |||||
Collection and release of TCBL related proceeds (Note 2) | 12,903 | ||||||
Release of restricted cash | 289,389 | ||||||
Contributions to Unconsolidated Joint Ventures | (58,382 | ) | (2,440 | ) | |||
Investments in Asia Unconsolidated Joint Ventures (Note 2) | (5,963 | ) | |||||
Distributions from Unconsolidated Joint Ventures in excess of income | 5,698 | 114,340 | |||||
Net Cash Provided By (Used In) Investing Activities | $ | (155,403 | ) | $ | 288,036 | ||
Cash Flows From Financing Activities: | |||||||
Debt proceeds | $ | 97,566 | |||||
Debt payments | (135,717 | ) | $ | (24,817 | ) | ||
Repayment of installment notes | (281,467 | ) | |||||
Debt issuance costs | (6,454 | ) | |||||
Issuance of common stock and/or partnership units in connection with incentive plans | (3,418 | ) | (10,083 | ) | |||
Issuance of Series K Preferred Stock, net of offering costs | 164,374 | ||||||
Distributions to noncontrolling interests | (29,388 | ) | (33,660 | ) | |||
Distributions to participating securities of TRG | (878 | ) | (806 | ) | |||
Contributions from noncontrolling interests | 2,486 | 231 | |||||
Cash dividends to preferred shareowners | (9,364 | ) | (7,317 | ) | |||
Cash dividends to common shareowners | (63,722 | ) | (54,387 | ) | |||
Other | (104 | ) | |||||
Net Cash Provided By (Used In) Financing Activities | $ | 15,485 | $ | (412,410 | ) | ||
Net Increase In Cash and Cash Equivalents | $ | 31,430 | $ | 21,194 | |||
Cash and Cash Equivalents at Beginning of Period | 32,057 | 24,033 | |||||
Cash and Cash Equivalents at End of Period | $ | 63,487 | $ | 45,227 |
Note 1 - | Interim Financial Statements |
Note 2 - | Acquisitions, Dispositions, and Development |
Note 3 - | Income Taxes |
Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
State current | $ | 95 | $ | 22 | $ | 251 | $ | 65 | |||||||
State deferred | (25 | ) | (8 | ) | (25 | ) | (12 | ) | |||||||
Federal current | 156 | 335 | 308 | 538 | |||||||||||
Federal deferred | (77 | ) | 199 | 289 | 165 | ||||||||||
Foreign current | 230 | (56 | ) | 630 | (50 | ) | |||||||||
Foreign deferred | (145 | ) | (191 | ) | |||||||||||
Total income tax expense | $ | 234 | $ | 492 | $ | 1,262 | $ | 706 |
2013 | 2012 | ||||||
Deferred tax assets: | |||||||
Federal | $ | 3,119 | $ | 3,378 | |||
Foreign | 1,823 | 1,090 | |||||
State | 245 | 182 | |||||
Total deferred tax assets | $ | 5,187 | $ | 4,650 | |||
Valuation allowances | (1,558 | ) | (991 | ) | |||
Net deferred tax assets | $ | 3,629 | $ | 3,659 | |||
Deferred tax liabilities: | |||||||
Federal | $ | 633 | $ | 609 | |||
Foreign | 404 | 401 | |||||
State | 123 | 107 | |||||
Total deferred tax liabilities | $ | 1,160 | $ | 1,117 |
Note 4 - | Investments in Unconsolidated Joint Ventures |
Shopping Center | Ownership as of June 30, 2013 and December 31, 2012 | |
Arizona Mills | 50% | |
Fair Oaks | 50 | |
Hanam Union Square (under development) | Note 2 | |
The Mall at Millenia | 50 | |
The Mall at University Town Center (under development) | Note 2 | |
Stamford Town Center | 50 | |
Sunvalley | 50 | |
Waterside Shops | 50 | |
Westfarms | 79 | |
Retail component of Xi'an Saigao City Plaza (under development) | Note 2 | |
Zhengzhou Vancouver Times Square (under development) | Note 2 |
June 30 2013 | December 31 2012 | ||||||
Assets: | |||||||
Properties | $ | 1,133,342 | $ | 1,129,647 | |||
Accumulated depreciation and amortization | (483,534 | ) | (473,101 | ) | |||
$ | 649,808 | $ | 656,546 | ||||
Cash and cash equivalents | 25,163 | 30,070 | |||||
Accounts and notes receivable, less allowance for doubtful accounts of $1,115 and $1,072 in 2013 and 2012 | 22,683 | 26,032 | |||||
Deferred charges and other assets | 28,647 | 31,282 | |||||
$ | 726,301 | $ | 743,930 | ||||
Liabilities and accumulated deficiency in assets: | |||||||
Mortgage notes payable | $ | 1,485,340 | $ | 1,490,857 | |||
Accounts payable and other liabilities | 51,050 | 68,282 | |||||
TRG's accumulated deficiency in assets | (466,888 | ) | (470,411 | ) | |||
Unconsolidated Joint Venture Partners' accumulated deficiency in assets | (343,201 | ) | (344,798 | ) | |||
$ | 726,301 | $ | 743,930 | ||||
TRG's accumulated deficiency in assets (above) | $ | (466,888 | ) | $ | (470,411 | ) | |
TRG's investment in property under development (Note 2) | 187,202 | 128,279 | |||||
TRG basis adjustments, including elimination of intercompany profit | 117,471 | 114,136 | |||||
TCO's additional basis | 57,882 | 58,855 | |||||
Net investment in Unconsolidated Joint Ventures | $ | (104,333 | ) | $ | (169,141 | ) | |
Distributions in excess of investments in and net income of Unconsolidated Joint Ventures | 378,641 | 383,293 | |||||
Investment in Unconsolidated Joint Ventures | $ | 274,308 | $ | 214,152 |
Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Revenues | $ | 69,774 | $ | 66,771 | $ | 137,325 | $ | 132,081 | |||||||
Maintenance, taxes, utilities, promotion, and other operating expenses | $ | 22,613 | $ | 22,108 | $ | 44,104 | $ | 42,330 | |||||||
Interest expense | 17,259 | 15,823 | 34,456 | 31,490 | |||||||||||
Depreciation and amortization | 8,599 | 8,849 | 17,918 | 17,123 | |||||||||||
Total operating costs | $ | 48,471 | $ | 46,780 | $ | 96,478 | $ | 90,943 | |||||||
Nonoperating income | (8 | ) | (7 | ) | 1 | ||||||||||
Net income | $ | 21,295 | $ | 19,984 | 40,847 | $ | 41,139 | ||||||||
Net income attributable to TRG | $ | 11,755 | $ | 11,282 | $ | 22,701 | $ | 23,286 | |||||||
Realized intercompany profit, net of depreciation on TRG’s basis adjustments | 212 | 373 | 99 | 757 | |||||||||||
Depreciation of TCO's additional basis | (486 | ) | (485 | ) | (973 | ) | (972 | ) | |||||||
Equity in income of Unconsolidated Joint Ventures | $ | 11,481 | $ | 11,170 | $ | 21,827 | $ | 23,071 | |||||||
Beneficial interest in Unconsolidated Joint Ventures’ operations: | |||||||||||||||
Revenues less maintenance, taxes, utilities, promotion, and other operating expenses | $ | 26,746 | $ | 24,759 | $ | 52,777 | $ | 49,865 | |||||||
Interest expense | (9,401 | ) | (8,225 | ) | (18,777 | ) | (16,319 | ) | |||||||
Depreciation and amortization | (5,864 | ) | (5,364 | ) | (12,173 | ) | (10,475 | ) | |||||||
Equity in income of Unconsolidated Joint Ventures | $ | 11,481 | $ | 11,170 | $ | 21,827 | $ | 23,071 |
Note 5 - | Beneficial Interest in Debt and Interest Expense |
At 100% | At Beneficial Interest | |||||||||||||||
Consolidated Subsidiaries | Unconsolidated Joint Ventures | Consolidated Subsidiaries | Unconsolidated Joint Ventures | |||||||||||||
Debt as of: | ||||||||||||||||
June 30, 2013 | $ | 2,910,585 | $ | 1,485,340 | $ | 2,744,089 | $ | 837,326 | ||||||||
December 31, 2012 | 2,952,030 | 1,490,857 | 2,785,501 | 841,363 | ||||||||||||
Capitalized interest: | ||||||||||||||||
Six Months Ended June 30, 2013 | $ | 6,874 | (1 | ) | $ | 24 | $ | 6,707 | $ | 14 | ||||||
Six Months Ended June 30, 2012 | 98 | 96 | ||||||||||||||
Interest expense: | ||||||||||||||||
Six Months Ended June 30, 2013 | $ | 67,074 | $ | 34,456 | $ | 62,697 | $ | 18,777 | ||||||||
Six Months Ended June 30, 2012 | 74,203 | 31,490 | 65,794 | 16,319 |
(1) | The Company capitalizes interest costs incurred in funding its equity contributions to development projects accounted for as UJVs. The capitalized interest cost is included in the Company's basis in its investment in UJVs. Such capitalized interest reduces interest expense in the Company's Consolidated Statement of Operations and Comprehensive Income and in the table above is included within Consolidated Subsidiaries. |
Note 6 - | Equity Transactions |
Note 7 - | Noncontrolling Interests |
2013 | 2012 | ||||||
Non-redeemable noncontrolling interests: | |||||||
Noncontrolling interests in consolidated joint ventures | $ | (41,630 | ) | $ | (45,066 | ) | |
Noncontrolling interests in partnership equity of TRG | (47,995 | ) | (44,242 | ) | |||
$ | (89,625 | ) | $ | (89,308 | ) |
2013 | 2012 | ||||||
Net income attributable to noncontrolling interests: | |||||||
Non-redeemable noncontrolling interests: | |||||||
Noncontrolling share of income of consolidated joint ventures | $ | 1,773 | $ | 3,564 | |||
Noncontrolling share of income of TRG | 7,788 | 7,731 | |||||
$ | 9,561 | $ | 11,295 | ||||
Redeemable noncontrolling interests | (282 | ) | |||||
$ | 9,561 | $ | 11,013 |
2013 | 2012 | ||||||
Net income attributable to noncontrolling interests: | |||||||
Non-redeemable noncontrolling interests: | |||||||
Noncontrolling share of income of consolidated joint ventures | $ | 4,554 | $ | 6,758 | |||
Noncontrolling share of income of TRG | 19,577 | 16,046 | |||||
$ | 24,131 | $ | 22,804 | ||||
Redeemable noncontrolling interests | (1,206 | ) | |||||
$ | 24,131 | $ | 21,598 |
2013 | 2012 | ||||||
Net income attributable to Taubman Centers, Inc. common shareowners | $ | 45,586 | $ | 33,904 | |||
Transfers (to) from the noncontrolling interest – | |||||||
Decrease in Taubman Centers, Inc.’s paid-in capital for the adjustments of noncontrolling interest (1) | (463 | ) | (584 | ) | |||
Net transfers (to) from noncontrolling interests | (463 | ) | (584 | ) | |||
Change from net income attributable to Taubman Centers, Inc. and transfers (to) from noncontrolling interests | $ | 45,123 | $ | 33,320 |
(1) | In 2013 and 2012, adjustments of the noncontrolling interest were made as a result of changes in the Company's ownership of the Operating Partnership in connection with the Company's share-based compensation under employee and director benefit plans (Note 9), issuances of stock pursuant to the Continuing Offer (Note 10), and redemptions of certain redeemable Operating Partnership Units. |
Note 8 - | Derivative and Hedging Activities |
Instrument Type | Ownership | Notional Amount | Swap Rate | Credit Spread on Loan | Total Swapped Rate on Loan | Maturity Date | ||||||||||||
Consolidated Subsidiary: | ||||||||||||||||||
Receive variable (LIBOR) /pay-fixed swap (1) | 95.0 | % | $ | 129,898 | 2.64 | % | 2.35 | % | 4.99 | % | September 2020 | |||||||
Unconsolidated Joint Ventures: | ||||||||||||||||||
Receive variable (LIBOR) /pay-fixed swap (2) | 50.0 | % | 137,500 | 2.40 | % | 1.70 | % | 4.10 | % | April 2018 | ||||||||
Receive variable (LIBOR) /pay-fixed swap (2) | 50.0 | % | 137,500 | 2.40 | % | 1.70 | % | 4.10 | % | April 2018 |
(1) | The notional amount of the swap is equal to the outstanding principal balance on the loan. |
(2) | The notional amount on each of these swaps is equal to 50% of the outstanding principal balance on the loan, which begins amortizing in August 2014. |
Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion) | Location of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion) | Amount of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion) | |||||||||||||||
Three Months Ended June 30 | Three Months Ended June 30 | ||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Derivatives in cash flow hedging relationships: | |||||||||||||||||
Interest rate contract – consolidated subsidiary | $ | 5,161 | $ | (4,506 | ) | Interest Expense | $ | (801 | ) | $ | (794 | ) | |||||
Interest rate contracts – UJVs | 3,716 | (2,757 | ) | Equity in Income of UJVs | (766 | ) | (925 | ) | |||||||||
Total derivatives in cash flow hedging relationships | $ | 8,877 | $ | (7,263 | ) | $ | (1,567 | ) | $ | (1,719 | ) | ||||||
Realized losses on settled cash flow hedges: | |||||||||||||||||
Interest rate contract – consolidated subsidiary | Interest Expense | $ | (151 | ) | $ | (151 | ) | ||||||||||
Interest rate contract – UJVs | Equity in Income of UJVs | (94 | ) | ||||||||||||||
Total realized losses on settled cash flow hedges | $ | (151 | ) | $ | (245 | ) |
Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion) | Location of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion) | Amount of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion) | |||||||||||||||
Six Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Derivatives in cash flow hedging relationships: | |||||||||||||||||
Interest rate contract – consolidated subsidiary | $ | 6,442 | $ | (2,774 | ) | Interest Expense | $ | (1,594 | ) | $ | (1,578 | ) | |||||
Interest rate contracts – UJVs | 4,368 | (1,909 | ) | Equity in Income of UJVs | (1,520 | ) | (1,835 | ) | |||||||||
Total derivatives in cash flow hedging relationships | $ | 10,810 | $ | (4,683 | ) | $ | (3,114 | ) | $ | (3,413 | ) | ||||||
Realized losses on settled cash flow hedges: | |||||||||||||||||
Interest rate contract – consolidated subsidiary | Interest Expense | $ | (303 | ) | $ | (302 | ) | ||||||||||
Interest rate contract – UJVs | Equity in Income of UJVs | (188 | ) | ||||||||||||||
Total realized losses on settled cash flow hedges | $ | (303 | ) | $ | (490 | ) |
Fair Value | |||||||||
Consolidated Balance Sheet Location | June 30 2013 | December 31 2012 | |||||||
Derivatives designated as hedging instruments: | |||||||||
Liability derivatives: | |||||||||
Interest rate contract – consolidated subsidiary | Accounts Payable and Accrued Liabilities | $ | (5,423 | ) | $ | (11,865 | ) | ||
Interest rate contracts – UJVs | Investment in UJVs | (6,654 | ) | (11,021 | ) | ||||
Total liabilities designated as hedging instruments | $ | (12,077 | ) | $ | (22,886 | ) |
Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (in years) | Range of Exercise Prices | ||||||||||||||
Outstanding at January 1, 2013 | 689,802 | $ | 42.50 | 3.8 | $ | 24.74 | - | $ | 55.90 | ||||||||
Exercised | (84,225 | ) | 33.92 | ||||||||||||||
Outstanding at June 30, 2013 | 605,577 | $ | 43.70 | 3.1 | $ | 29.38 | - | $ | 55.90 | ||||||||
Fully vested options at June 30, 2013 | 605,577 | $ | 43.70 | 3.1 |
Number of Performance Share Units | Weighted Average Grant Date Fair Value | |||||
Outstanding at January 1, 2013 | 262,740 | $ | 122.52 | |||
Vested | (73,259 | ) | (1) | 65.29 | ||
Granted (three-year vesting) | 42,178 | 103.37 | ||||
Granted (four-year vesting) | 15,444 | 171.05 | ||||
Forfeited | (11,479 | ) | 139.19 | |||
Outstanding at June 30, 2013 | 235,624 | $ | 139.25 |
(1) | Based on the Company's market performance relative to that of a peer group, the actual number of shares of common stock issued upon vesting during the six months ended June 30, 2013 equaled 300% of the number of PSU awards vested in the table above. |
Number of Restricted Share Units | Weighted Average Grant Date Fair Value | |||||
Outstanding at January 1, 2013 | 322,305 | $ | 48.19 | |||
Vested | (138,028 | ) | 37.03 | |||
Granted (three-year vesting) | 92,103 | 71.67 | ||||
Granted (staggered vesting) | 5,197 | 81.38 | ||||
Forfeited | (8,455 | ) | 56.72 | |||
Outstanding at June 30, 2013 | 273,122 | $ | 61.98 |
Note 10 - | Commitments and Contingencies |
Note 11 - | Earnings Per Share |
Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net income attributable to Taubman Centers, Inc. common shareowners (Numerator): | |||||||||||||||
Basic | $ | 17,842 | $ | 16,373 | $ | 45,586 | $ | 33,904 | |||||||
Impact of additional ownership of TRG | 92 | 134 | 245 | 302 | |||||||||||
Diluted | $ | 17,934 | $ | 16,507 | $ | 45,831 | $ | 34,206 | |||||||
Shares (Denominator) – basic | 63,786,083 | 58,789,737 | 63,602,025 | 58,518,442 | |||||||||||
Effect of dilutive securities | 1,056,428 | 1,411,648 | 1,105,659 | 1,536,180 | |||||||||||
Shares (Denominator) – diluted | 64,842,511 | 60,201,385 | 64,707,684 | 60,054,622 | |||||||||||
Earnings per common share - basic | $ | 0.28 | $ | 0.28 | $ | 0.72 | $ | 0.58 | |||||||
Earnings per common share – diluted | $ | 0.28 | $ | 0.27 | $ | 0.71 | $ | 0.57 |
Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||
Weighted average noncontrolling partnership units outstanding | 4,520,675 | 3,978,205 | 4,589,542 | 5,713,669 | |||||||
Unissued partnership units under unit option deferral elections | 871,262 | 871,262 | 871,262 | 871,262 |
Note 12 - | Fair Value Disclosures |
Fair Value Measurements as of June 30, 2013 Using | Fair Value Measurements as of December 31, 2012 Using | |||||||||||||||
Description | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | ||||||||||||
Available-for-sale securities | $ | 2,452 | ||||||||||||||
Insurance deposit | $ | 12,289 | 11,291 | |||||||||||||
Total assets | $ | 12,289 | $ | 13,743 | ||||||||||||
Derivative interest rate contract | $ | (5,423 | ) | $ | (11,865 | ) | ||||||||||
Total liabilities | $ | (5,423 | ) | $ | (11,865 | ) |
2013 | 2012 | ||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||
Notes payable | $ | 2,910,585 | $ | 2,992,647 | $ | 2,952,030 | $ | 3,082,265 |
Taubman Centers, Inc. AOCI | Noncontrolling Interests AOCI | ||||||||||||||||||||||
Cumulative translation adjustment | Unrealized gains (losses) on interest rate instruments and other | Total | Cumulative translation adjustment | Unrealized gains (losses) on interest rate instruments and other | Total | ||||||||||||||||||
January 1, 2013 | $ | 1,888 | $ | (23,952 | ) | $ | (22,064 | ) | $ | 756 | $ | 1,739 | $ | 2,495 | |||||||||
Other comprehensive income/(loss) before reclassifications | (2,518 | ) | 5,365 | 2,847 | (994 | ) | 2,376 | 1,382 | |||||||||||||||
Amounts reclassified from AOCI | 1,442 | 1,442 | 652 | 652 | |||||||||||||||||||
Net current period other comprehensive income/(loss) | (2,518 | ) | 6,807 | 4,289 | (994 | ) | 3,028 | 2,034 | |||||||||||||||
Adjustments due to changes in ownership | 7 | 36 | 43 | (7 | ) | (36 | ) | (43 | ) | ||||||||||||||
June 30, 2013 | $ | (623 | ) | $ | (17,109 | ) | $ | (17,732 | ) | $ | (245 | ) | $ | 4,731 | $ | 4,486 |
Taubman Centers, Inc. AOCI | Noncontrolling Interests AOCI | ||||||||||||||||||
Cumulative translation adjustment | Unrealized gains (losses) on interest rate instruments and other | Total | Cumulative translation adjustment | Unrealized gains (losses) on interest rate instruments and other | Total | ||||||||||||||
January 1, 2012 | $ | (27,613 | ) | $ | (27,613 | ) | $ | 9,113 | $ | 9,113 | |||||||||
Current period other comprehensive income | (2,628 | ) | (2,628 | ) | (1,320 | ) | (1,320 | ) | |||||||||||
Adjustments due to changes in ownership | 10 | 10 | (10 | ) | (10 | ) | |||||||||||||
June 30, 2012 | $ | (30,231 | ) | $ | (30,231 | ) | $ | 7,783 | $ | 7,783 |
Details about AOCI Components | Amounts reclassified from AOCI | Affected line item in Consolidated Statement of Operations | ||||
(Gains)/losses on interest rate instruments and other: | ||||||
Realized loss on interest rate contracts - consolidated subsidiaries | $ | 1,897 | Interest Expense | |||
Realized loss on interest rate contracts - UJVs | 1,520 | Equity in Income of UJVs | ||||
Realized gain on sale of securities (Note 12) | (1,323 | ) | Nonoperating Income | |||
Total reclassifications for the period | $ | 2,094 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Average rent per square foot: | |||||||||||||||
Consolidated Businesses | $ | 48.89 | $ | 47.07 | $ | 48.49 | $ | 46.71 | |||||||
Unconsolidated Joint Ventures | 49.20 | 45.94 | 48.08 | 45.13 | |||||||||||
Combined | 48.98 | 46.73 | 48.37 | 46.23 |
Trailing 12 Months Ended June 30 | |||||||
2013 (1) | 2012 (1) (2) | ||||||
Opening base rent per square foot: | |||||||
Consolidated Businesses | $ | 52.05 | $ | 54.89 | |||
Unconsolidated Joint Ventures | 59.46 | 48.31 | |||||
Combined | 54.36 | 53.43 | |||||
Square feet of GLA opened: | |||||||
Consolidated Businesses | 848,308 | 965,378 | |||||
Unconsolidated Joint Ventures | 384,178 | 276,756 | |||||
Combined | 1,232,486 | 1,242,134 | |||||
Closing base rent per square foot: | |||||||
Consolidated Businesses | $ | 41.90 | $ | 46.39 | |||
Unconsolidated Joint Ventures | 51.43 | 44.51 | |||||
Combined | 44.61 | 45.89 | |||||
Square feet of GLA closed: | |||||||
Consolidated Businesses | 868,216 | 899,454 | |||||
Unconsolidated Joint Ventures | 344,965 | 325,444 | |||||
Combined | 1,213,181 | 1,224,898 | |||||
Releasing spread per square foot: | |||||||
Consolidated Businesses | $ | 10.15 | $ | 8.50 | |||
Unconsolidated Joint Ventures | 8.03 | 3.80 | |||||
Combined | 9.75 | 7.54 |
(1) | Opening and closing statistics exclude spaces greater than or equal to 10,000 square feet. |
(2) | 2012 statistics were not restated for 2013 comparable centers as the non-comparable centers were not owned and open for the trailing 12 months ended June 30, 2012. |
2013 | 2012 | ||||||||||||||||||||
2nd Quarter | 1st Quarter | Total | 4th Quarter | 3rd Quarter | 2nd Quarter | 1st Quarter | |||||||||||||||
Mall tenant sales (1) | $1,406,196 | $1,454,788 | $6,008,265 | $ | 1,879,341 | $1,378,384 | $1,396,440 | $1,354,100 | |||||||||||||
Revenues and gains on peripheral land sales and other nonoperating income from continuing operations: | |||||||||||||||||||||
Consolidated Businesses | 178,237 | 185,494 | 748,251 | 209,732 | 189,595 | 179,536 | 169,388 | ||||||||||||||
Unconsolidated Joint Ventures | 69,766 | 67,559 | 282,154 | 79,619 | 70,453 | 66,764 | 65,318 | ||||||||||||||
Occupancy: | |||||||||||||||||||||
Ending - comparable | 90.6 | % | 90.2 | % | 91.8 | % | 91.8 | % | 90.5 | % | 90.3 | % | 89.7 | % | |||||||
Average - comparable | 90.6 | 90.4 | 90.4 | 91.4 | 90.3 | 90.1 | 89.8 | ||||||||||||||
Ending - all centers | 90.7 | 90.3 | 91.8 | 91.8 | 90.4 | 90.1 | 89.5 | ||||||||||||||
Average - all centers | 90.7 | 90.4 | 90.3 | 91.4 | 90.1 | 89.9 | 89.7 | ||||||||||||||
Leased space: | |||||||||||||||||||||
Comparable | 92.5 | % | 92.3 | % | 93.3 | % | 93.3 | % | 92.5 | % | 92.3 | % | 92.2 | % | |||||||
All centers | 92.6 | 92.4 | 93.4 | 93.4 | 92.6 | 92.3 | 91.9 |
(1) | Based on reports of sales furnished by mall tenants. |
2013 | 2012 | |||||||||||||||||||
2nd Quarter | 1st Quarter | Total | 4th Quarter | 3rd Quarter | 2nd Quarter | 1st Quarter | ||||||||||||||
Consolidated Businesses: | ||||||||||||||||||||
Minimum rents | 9.0 | % | 8.8 | % | 8.1 | % | 6.8 | % | 8.8 | % | 8.6 | % | 8.7 | % | ||||||
Percentage rents | 0.1 | 0.5 | 0.6 | 0.9 | 0.5 | 0.2 | 0.5 | |||||||||||||
Expense recoveries | 4.6 | 4.4 | 4.1 | 3.9 | 4.7 | 4.3 | 4.0 | |||||||||||||
Mall tenant occupancy costs | 13.7 | % | 13.7 | % | 12.8 | % | 11.6 | % | 14.0 | % | 13.1 | % | 13.2 | % | ||||||
Unconsolidated Joint Ventures: | ||||||||||||||||||||
Minimum rents | 9.0 | % | 7.7 | % | 7.7 | % | 6.3 | % | 8.5 | % | 8.5 | % | 7.8 | % | ||||||
Percentage rents | 0.3 | 0.5 | 0.5 | 0.7 | 0.5 | 0.3 | 0.5 | |||||||||||||
Expense recoveries | 4.3 | 3.8 | 4.0 | 4.0 | 4.5 | 4.0 | 3.7 | |||||||||||||
Mall tenant occupancy costs | 13.6 | % | 12.0 | % | 12.2 | % | 11.0 | % | 13.5 | % | 12.8 | % | 12.0 | % | ||||||
Combined: | ||||||||||||||||||||
Minimum rents | 9.0 | % | 8.5 | % | 8.0 | % | 6.7 | % | 8.7 | % | 8.6 | % | 8.4 | % | ||||||
Percentage rents | 0.2 | 0.5 | 0.5 | 0.9 | 0.5 | 0.2 | 0.5 | |||||||||||||
Expense recoveries | 4.4 | 4.2 | 4.2 | 3.7 | 4.7 | 4.2 | 4.0 | |||||||||||||
Mall tenant occupancy costs | 13.6 | % | 13.2 | % | 12.7 | % | 11.3 | % | 13.9 | % | 13.0 | % | 12.9 | % |
Three Months Ended | Three Months Ended | ||||||||||||||
June 30, 2013 | June 30, 2012 | ||||||||||||||
CONSOLIDATED BUSINESSES | UNCONSOLIDATED JOINT VENTURES AT 100%(1) | CONSOLIDATED BUSINESSES | UNCONSOLIDATED JOINT VENTURES AT 100%(1) | ||||||||||||
(in millions) | |||||||||||||||
REVENUES: | |||||||||||||||
Minimum rents | $ | 103.2 | $ | 42.1 | $ | 98.9 | $ | 40.6 | |||||||
Percentage rents | 1.1 | 1.4 | 2.0 | 1.2 | |||||||||||
Expense recoveries | 65.6 | 24.6 | 62.2 | 23.6 | |||||||||||
Management, leasing, and development services | 1.8 | 8.6 | |||||||||||||
Other | 6.5 | 1.7 | 7.7 | 1.4 | |||||||||||
Total revenues | $ | 178.2 | $ | 69.8 | $ | 179.5 | $ | 66.8 | |||||||
EXPENSES: | |||||||||||||||
Maintenance, taxes, utilities, and promotion | $ | 52.8 | $ | 18.0 | $ | 48.9 | $ | 17.5 | |||||||
Other operating | 18.5 | 4.2 | 19.9 | 4.3 | |||||||||||
Management, leasing, and development services | 1.1 | 7.0 | |||||||||||||
General and administrative | 12.6 | 10.0 | |||||||||||||
Interest expense | 32.6 | 17.0 | 36.7 | 15.8 | |||||||||||
Depreciation and amortization (2) | 38.3 | 9.2 | 36.2 | 9.0 | |||||||||||
Total expenses | $ | 155.9 | $ | 48.3 | $ | 158.8 | $ | 46.6 | |||||||
Nonoperating income | 0.1 | — | 0.1 | — | |||||||||||
Income before income tax expense and equity in income of Unconsolidated Joint Ventures | $ | 22.4 | $ | 21.4 | $ | 20.8 | $ | 20.2 | |||||||
Income tax expense | (0.2 | ) | (0.5 | ) | |||||||||||
Equity in income of Unconsolidated Joint Ventures (2) | 11.5 | 11.2 | |||||||||||||
Net income | $ | 33.6 | $ | 31.4 | |||||||||||
Net income attributable to noncontrolling interests: | |||||||||||||||
Noncontrolling share of income of consolidated joint ventures | (1.8 | ) | (2.9 | ) | |||||||||||
Noncontrolling share of income of TRG | (7.8 | ) | (8.1 | ) | |||||||||||
Distributions to participating securities of TRG | (0.4 | ) | (0.4 | ) | |||||||||||
Preferred stock dividends | (5.8 | ) | (3.7 | ) | |||||||||||
Net income attributable to Taubman Centers, Inc. common shareowners | $ | 17.8 | $ | 16.4 | |||||||||||
SUPPLEMENTAL INFORMATION (3): | |||||||||||||||
EBITDA – 100% | $ | 93.2 | $ | 47.6 | $ | 93.7 | $ | 45.0 | |||||||
EBITDA – outside partners' share | (5.4 | ) | (20.9 | ) | (9.4 | ) | (20.2 | ) | |||||||
Beneficial interest in EBITDA | $ | 87.9 | $ | 26.7 | $ | 84.3 | $ | 24.8 | |||||||
Beneficial interest expense | (30.4 | ) | (9.4 | ) | (32.5 | ) | (8.2 | ) | |||||||
Beneficial income tax expense - TRG and TCO | (0.2 | ) | (0.5 | ) | |||||||||||
Beneficial income tax expense - TCO | 0.1 | ||||||||||||||
Non-real estate depreciation | (0.7 | ) | (0.7 | ) | |||||||||||
Preferred dividends and distributions | (5.8 | ) | (3.7 | ) | |||||||||||
Funds from Operations contribution | $ | 50.9 | $ | 17.3 | $ | 47.0 | $ | 16.5 |
(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) | Amortization of our additional basis in the Operating Partnership included in depreciation and amortization was $1.2 million in both 2013 and 2012. Also, amortization of our additional basis included in equity in income of Unconsolidated Joint Ventures was $0.5 million in both 2013 and 2012. |
(3) | See “General Background and Performance Measurement – Use of Non-GAAP Measures” for the definition and discussion of EBITDA and FFO. |
(4) | Amounts in this table may not add due to rounding. |
Six Months Ended | Six Months Ended | ||||||||||||||
June 30, 2013 | June 30, 2012 | ||||||||||||||
CONSOLIDATED BUSINESSES | UNCONSOLIDATED JOINT VENTURES AT 100%(1) | CONSOLIDATED BUSINESSES | UNCONSOLIDATED JOINT VENTURES AT 100%(1) | ||||||||||||
(in millions) | |||||||||||||||
REVENUES: | |||||||||||||||
Minimum rents | $ | 205.5 | $ | 82.1 | $ | 192.7 | $ | 79.2 | |||||||
Percentage rents | 6.7 | 3.6 | 6.5 | 3.4 | |||||||||||
Expense recoveries | 129.6 | 48.2 | 118.7 | 46.3 | |||||||||||
Management, leasing, and development services | 5.2 | 17.2 | |||||||||||||
Other | 14.4 | 3.4 | 13.7 | 3.1 | |||||||||||
Total revenues | $ | 361.4 | $ | 137.3 | $ | 348.7 | $ | 132.1 | |||||||
EXPENSES: | |||||||||||||||
Maintenance, taxes, utilities, and promotion | $ | 99.3 | $ | 35.2 | $ | 90.6 | $ | 33.6 | |||||||
Other operating | 34.7 | 8.3 | 36.2 | 7.9 | |||||||||||
Management, leasing, and development services | 3.1 | 15.5 | |||||||||||||
General and administrative | 24.9 | 18.5 | |||||||||||||
Interest expense | 67.1 | 33.9 | 74.2 | 31.5 | |||||||||||
Depreciation and amortization (2) | 75.3 | 19.3 | 72.7 | 17.6 | |||||||||||
Total expenses | $ | 304.3 | $ | 96.6 | $ | 307.7 | $ | 90.6 | |||||||
Nonoperating income | 2.3 | — | 0.2 | — | |||||||||||
Income before income tax expense and equity in income of Unconsolidated Joint Ventures | $ | 59.4 | $ | 40.7 | $ | 41.3 | $ | 41.5 | |||||||
Income tax expense | (1.3 | ) | (0.7 | ) | |||||||||||
Equity in income of Unconsolidated Joint Ventures (2) | 21.8 | 23.1 | |||||||||||||
Net income | $ | 80.0 | $ | 63.6 | |||||||||||
Net income attributable to noncontrolling interests: | |||||||||||||||
Noncontrolling share of income of consolidated joint ventures | (4.6 | ) | (4.7 | ) | |||||||||||
Noncontrolling share of income of TRG | (19.6 | ) | (16.9 | ) | |||||||||||
Distributions to participating securities of TRG | (0.9 | ) | (0.8 | ) | |||||||||||
Preferred stock dividends | (9.4 | ) | (7.3 | ) | |||||||||||
Net income attributable to Taubman Centers, Inc. common shareowners | $ | 45.6 | $ | 33.9 | |||||||||||
SUPPLEMENTAL INFORMATION (4): | |||||||||||||||
EBITDA – 100% | $ | 201.7 | $ | 93.9 | $ | 188.1 | $ | 90.6 | |||||||
EBITDA – outside partners' share | (11.4 | ) | (41.1 | ) | (17.9 | ) | (40.7 | ) | |||||||
Beneficial interest in EBITDA | $ | 190.3 | $ | 52.8 | $ | 170.3 | $ | 49.9 | |||||||
Beneficial interest expense | (62.7 | ) | (18.8 | ) | (65.8 | ) | (16.3 | ) | |||||||
Beneficial income tax expense - TRG and TCO | (1.3 | ) | (0.7 | ) | |||||||||||
Beneficial income tax expense - TCO | 0.2 | ||||||||||||||
Non-real estate depreciation | (1.4 | ) | (1.3 | ) | |||||||||||
Preferred dividends and distributions | (9.4 | ) | (7.3 | ) | |||||||||||
Funds from Operations contribution | $ | 115.7 | $ | 34.0 | $ | 95.1 | $ | 33.5 |
Reconciliation of Net Income Attributable to Taubman Centers, Inc. Common Shareowners to Funds from Operations | |||||||||||||||||||||
Three Months Ended June 30 | |||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||
Dollars in millions | Diluted Shares/ Units | Per Share/ Unit | Dollars in millions | Diluted Shares/ Units | Per Share/ Unit | ||||||||||||||||
Net income attributable to TCO common shareowners – Basic | $ | 17.8 | 63,786,083 | $ | 0.28 | $ | 16.4 | 58,789,737 | $ | 0.28 | |||||||||||
Add impact of share-based compensation | 0.1 | 1,056,428 | 0.1 | 1,411,648 | |||||||||||||||||
Net income attributable to TCO common shareowners – Diluted | $ | 17.9 | 64,842,511 | $ | 0.28 | $ | 16.5 | 60,201,385 | $ | 0.27 | |||||||||||
Add depreciation of TCO’s additional basis | 1.7 | 0.03 | 1.7 | 0.03 | |||||||||||||||||
Add TCO's additional income tax expense | 0.1 | — | |||||||||||||||||||
Net income attributable to TCO common shareowners, excluding step-up depreciation and additional income tax expense | $ | 19.8 | 64,842,511 | $ | 0.31 | $ | 18.2 | 60,201,385 | $ | 0.30 | |||||||||||
Add: | |||||||||||||||||||||
Noncontrolling share of income of TRG | 7.8 | 25,227,629 | 8.1 | 26,439,387 | |||||||||||||||||
Distributions to participating securities of TRG | 0.4 | 871,262 | 0.4 | 871,262 | |||||||||||||||||
Net income attributable to partnership unitholders and participating securities | $ | 28.0 | 90,941,402 | $ | 0.31 | $ | 26.8 | 87,512,034 | $ | 0.31 | |||||||||||
Add (less) depreciation and amortization (1): | |||||||||||||||||||||
Consolidated businesses at 100% | 38.3 | 0.42 | 36.2 | 0.41 | |||||||||||||||||
Depreciation of TCO’s additional basis | (1.7 | ) | (0.02 | ) | (1.7 | ) | (0.02 | ) | |||||||||||||
Noncontrolling partners in consolidated joint ventures | (1.4 | ) | (0.02 | ) | (2.3 | ) | (0.03 | ) | |||||||||||||
Share of Unconsolidated Joint Ventures | 5.9 | 0.06 | 5.4 | 0.06 | |||||||||||||||||
Non-real estate depreciation | (0.7 | ) | (0.01 | ) | (0.7 | ) | (0.01 | ) | |||||||||||||
Less impact of share-based compensation | (0.1 | ) | — | (0.1 | ) | — | |||||||||||||||
Funds from Operations | $ | 68.2 | 90,941,402 | $ | 0.75 | $ | 63.5 | 87,512,034 | $ | 0.73 | |||||||||||
TCO's average ownership percentage of TRG | 71.7 | % | 69.0 | % | |||||||||||||||||
Funds from Operations attributable to TCO, excluding additional income tax expense | $ | 48.9 | $ | 0.75 | $ | 43.8 | $ | 0.73 | |||||||||||||
Less TCO's additional income tax expense | (0.1 | ) | — | ||||||||||||||||||
Funds from Operations attributable to TCO | $ | 48.8 | $ | 0.75 | $ | 43.8 | $ | 0.73 |
(1) | Depreciation includes $4.6 million and $5.2 million of mall tenant allowance amortization for the three months ended June 30, 2013 and 2012, respectively. |
(2) | Amounts in this table may not recalculate due to rounding. |
Reconciliation of Net Income Attributable to Taubman Centers, Inc. Common Shareowners to Funds from Operations | |||||||||||||||||||||
Six Months Ended June 30 | |||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||
Dollars in millions | Diluted Shares/ Units | Per Share/ Unit | Dollars in millions | Diluted Shares/ Units | Per Share/ Unit | ||||||||||||||||
Net income attributable to TCO common shareowners – Basic | $ | 45.6 | 63,602,025 | $ | 0.72 | $ | 33.9 | 58,518,442 | $ | 0.58 | |||||||||||
Add impact of share-based compensation | 0.2 | 1,105,659 | 0.3 | 1,536,180 | |||||||||||||||||
Net income attributable to TCO common shareowners – Diluted | $ | 45.8 | 64,707,684 | $ | 0.71 | $ | 34.2 | 60,054,622 | $ | 0.57 | |||||||||||
Add depreciation of TCO’s additional basis | 3.4 | 0.05 | 3.4 | 0.06 | |||||||||||||||||
Add TCO's additional income tax expense | 0.2 | ||||||||||||||||||||
Net income attributable to TCO common shareowners, excluding step-up depreciation and additional income tax expense | $ | 49.4 | 64,707,684 | $ | 0.76 | $ | 37.6 | 60,054,622 | $ | 0.63 | |||||||||||
Add: | |||||||||||||||||||||
Noncontrolling share of income of TRG | 19.6 | 25,285,965 | 16.9 | 26,459,564 | |||||||||||||||||
Distributions to participating securities of TRG | 0.9 | 871,262 | 0.8 | 871,262 | |||||||||||||||||
Net income attributable to partnership unitholders and participating securities | $ | 69.9 | 90,864,911 | $ | 0.77 | $ | 55.3 | 87,385,448 | $ | 0.63 | |||||||||||
Add (less) depreciation and amortization (1): | |||||||||||||||||||||
Consolidated businesses at 100% | 75.3 | 0.83 | 72.7 | 0.83 | |||||||||||||||||
Depreciation of TCO’s additional basis | (3.4 | ) | (0.04 | ) | (3.4 | ) | (0.04 | ) | |||||||||||||
Noncontrolling partners in consolidated joint ventures | (2.5 | ) | (0.03 | ) | (4.8 | ) | (0.05 | ) | |||||||||||||
Share of Unconsolidated Joint Ventures | 12.2 | 0.13 | 10.5 | 0.12 | |||||||||||||||||
Non-real estate depreciation | (1.4 | ) | (0.02 | ) | (1.3 | ) | (0.01 | ) | |||||||||||||
Less impact of share-based compensation | (0.2 | ) | — | (0.3 | ) | — | |||||||||||||||
Funds from Operations | $ | 149.7 | 90,864,911 | $ | 1.65 | $ | 128.7 | 87,385,448 | $ | 1.47 | |||||||||||
TCO's average ownership percentage of TRG | 71.6 | % | 68.9 | % | |||||||||||||||||
Funds from Operations attributable to TCO, excluding additional income tax expense | $ | 107.1 | $ | 1.65 | $ | 88.6 | $ | 1.47 | |||||||||||||
Less TCO's additional income tax expense | (0.2 | ) | — | ||||||||||||||||||
Funds from Operations attributable to TCO | $ | 107.0 | $ | 1.65 | $ | 88.6 | $ | 1.47 |
(1) | Depreciation includes $9.2 million and $10.1 million of mall tenant allowance amortization for the six months ended June 30, 2013 and 2012, respectively. |
(2) | 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 | ||||||||||||||
(in millions) | |||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net income | $ | 33.6 | $ | 31.4 | $ | 80.0 | $ | 63.6 | |||||||
Add (less) depreciation and amortization: | |||||||||||||||
Consolidated businesses at 100% | 38.3 | 36.2 | 75.3 | 72.7 | |||||||||||
Noncontrolling partners in consolidated joint ventures | (1.4 | ) | (2.3 | ) | (2.5 | ) | (4.8 | ) | |||||||
Share of Unconsolidated Joint Ventures | 5.9 | 5.4 | 12.2 | 10.5 | |||||||||||
Add (less) interest expense and income tax expense: | |||||||||||||||
Interest expense: | |||||||||||||||
Consolidated businesses at 100% | 32.6 | 36.7 | 67.1 | 74.2 | |||||||||||
Noncontrolling partners in consolidated joint ventures | (2.2 | ) | (4.2 | ) | (4.4 | ) | (8.4 | ) | |||||||
Share of Unconsolidated Joint Ventures | 9.4 | 8.2 | 18.8 | 16.3 | |||||||||||
Share of income tax expense | 0.2 | 0.5 | 1.3 | 0.7 | |||||||||||
Less noncontrolling share of income of consolidated joint ventures | (1.8 | ) | (2.9 | ) | (4.6 | ) | (4.7 | ) | |||||||
Beneficial interest in EBITDA | $ | 114.6 | $ | 109.0 | $ | 243.1 | $ | 220.1 | |||||||
TCO's average ownership percentage of TRG | 71.7 | % | 69.0 | % | 71.6 | % | 68.9 | % | |||||||
Beneficial interest in EBITDA attributable to TCO | $ | 82.1 | $ | 75.2 | $ | 173.9 | $ | 151.6 |
(1) | Amounts in this table may not add due to rounding. |
Reconciliation of Net Income to Net Operating Income | |||||||||||||||
Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||
(in millions) | |||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net income | $ | 33.6 | $ | 31.4 | $ | 80.0 | $ | 63.6 | |||||||
Add (less) depreciation and amortization: | |||||||||||||||
Consolidated businesses at 100% | 38.3 | 36.2 | 75.3 | 72.7 | |||||||||||
Noncontrolling partners in consolidated joint ventures | (1.4 | ) | (2.3 | ) | (2.5 | ) | (4.8 | ) | |||||||
Share of Unconsolidated Joint Ventures | 5.9 | 5.4 | 12.2 | 10.5 | |||||||||||
Add (less) interest expense and income tax expense: | |||||||||||||||
Interest expense: | |||||||||||||||
Consolidated businesses at 100% | 32.6 | 36.7 | 67.1 | 74.2 | |||||||||||
Noncontrolling partners in consolidated joint ventures | (2.2 | ) | (4.2 | ) | (4.4 | ) | (8.4 | ) | |||||||
Share of Unconsolidated Joint Ventures | 9.4 | 8.2 | 18.8 | 16.3 | |||||||||||
Share of income tax expense | 0.2 | 0.5 | 1.3 | 0.7 | |||||||||||
Less noncontrolling share of income of consolidated joint ventures | (1.8 | ) | (2.9 | ) | (4.6 | ) | (4.7 | ) | |||||||
Add EBITDA attributable to outside partners: | |||||||||||||||
EBITDA attributable to noncontrolling partners in consolidated joint ventures | 5.4 | 9.4 | 11.4 | 17.9 | |||||||||||
EBITDA attributable to outside partners in Unconsolidated Joint Ventures | 20.9 | 20.2 | 41.1 | 40.7 | |||||||||||
EBITDA at 100% | $ | 140.9 | $ | 138.7 | $ | 295.6 | $ | 278.7 | |||||||
Add (less) items excluded from shopping center Net Operating Income: | |||||||||||||||
General and administrative expenses | 12.6 | 10.0 | 24.9 | 18.5 | |||||||||||
Management, leasing, and development services, net | (0.7 | ) | (1.6 | ) | (2.1 | ) | (1.7 | ) | |||||||
Gain on sale of peripheral land | (0.9 | ) | |||||||||||||
Interest income | — | (0.1 | ) | (0.1 | ) | (0.2 | ) | ||||||||
Gain on sale of marketable securities | (1.3 | ) | |||||||||||||
Straight-line of rents | (1.2 | ) | (1.8 | ) | (2.6 | ) | (2.5 | ) | |||||||
Non-center specific operating expenses and other | 6.9 | 8.5 | 10.8 | 15.4 | |||||||||||
Net Operating Income at 100% - all centers | $ | 158.5 | $ | 153.8 | $ | 324.3 | $ | 308.2 | |||||||
Less - Net Operating Income of non-comparable center (1) | (2.4 | ) | (3.0 | ) | (5.5 | ) | (3.4 | ) | |||||||
Net Operating Income at 100% - comparable centers | $ | 156.1 | $ | 150.8 | $ | 318.8 | $ | 304.9 | |||||||
Lease cancellation income | (0.4 | ) | (1.0 | ) | (2.3 | ) | (1.9 | ) | |||||||
Net Operating Income at 100% excluding lease cancellation income (2) | $ | 155.7 | $ | 149.8 | $ | 316.5 | $ | 302.9 |
(1) | Includes City Creek Center. |
(2) | See "General Background and Performance Measurement - Use of Non-GAAP Measures" for a discussion of the use and utility of Net Operating Income excluding lease cancellation income as a performance measure. |
(3) | Amounts in this table may not recalculate due to rounding. |
Amount | Interest Rate Including Spread | ||||||
(in millions) | |||||||
Fixed rate debt | $ | 3,019.1 | 4.98 | % | (1) | ||
Floating rate debt swapped to fixed rate: | |||||||
Swapped through April 2018 | 137.5 | 4.10 | % | ||||
Swapped through August 2020 | 123.4 | 4.99 | % | ||||
$ | 260.9 | 4.52 | % | (1) | |||
Floating month to month | 301.4 | 1.61 | % | (1) | |||
Total floating rate debt | $ | 562.3 | 2.96 | % | (1) | ||
Total beneficial interest in debt | $ | 3,581.4 | 4.66 | % | (1) | ||
Amortization of financing costs (2) | 0.19 | % | |||||
Average all-in rate | 4.85 | % |
(1) | Represents weighted average interest rate before amortization of financing costs. |
(2) | Financing costs include debt issuance costs and costs related to interest rate agreements of certain fixed rate debt. |
(3) | Amounts in table may not add due to rounding. |
2013 (1) | |||||||||||||||
Consolidated Businesses | Beneficial Interest in Consolidated Businesses | Unconsolidated Joint Ventures | Beneficial Interest in Unconsolidated Joint Ventures | ||||||||||||
(in millions) | |||||||||||||||
New development projects - U.S. (2) | $ | 88.4 | $ | 77.7 | $ | 121.4 | $ | 59.4 | |||||||
New development projects - Asia (3) (4) | 6.0 | 6.0 | |||||||||||||
Existing centers: | |||||||||||||||
Projects with no incremental GLA and other | 4.6 | 3.8 | 3.6 | 1.9 | |||||||||||
Mall tenant allowances | 5.1 | 5.0 | 4.8 | 2.6 | |||||||||||
Asset replacement costs recoverable from tenants | 15.0 | 11.9 | 3.5 | 2.1 | |||||||||||
Corporate office improvements, technology, equipment, and other | 2.9 | 2.9 | |||||||||||||
Total | $ | 116.0 | $ | 101.4 | $ | 139.3 | $ | 72.0 |
(1) | Costs are net of intercompany profits and are computed on an accrual basis. |
(2) | Includes costs related to The Mall of San Juan, Taubman Prestige Outlets Chesterfield, and The Mall at University Town Center. |
(3) | Includes costs related to the retail component of Xi'an Saigao City Plaza, Hanam Union Square, and Zhengzhou Vancouver Times Square. Asia spending is included at our beneficial interest in both the Unconsolidated Joint Ventures and Beneficial Interest in Unconsolidated Joint Ventures columns. |
(4) | Asia costs exclude $4.1 million in net unfavorable currency translation adjustments. |
(5) | Amounts in this table may not add due to rounding. |
(in millions) | |||
Consolidated Businesses’ capital spending | $ | 116.0 | |
Differences between cash and accrual basis and other | 1.8 | ||
Additions to properties | $ | 117.7 |
2013 (1) | |||||||||||||||
Consolidated Businesses | Beneficial Interest in Consolidated Businesses | Unconsolidated Joint Ventures | Beneficial Interest in Unconsolidated Joint Ventures | ||||||||||||
(in millions) | |||||||||||||||
New development projects - U.S. (2) | $ | 181.7 | $ | 156.6 | $ | 174.1 | $ | 87.1 | |||||||
New development projects - Asia (3)(4) | 79.2 | 79.2 | |||||||||||||
Existing centers: | |||||||||||||||
Projects with no incremental GLA and other | 27.5 | 18.6 | 17.4 | 8.7 | |||||||||||
Mall tenant allowances | 26.0 | 24.9 | 8.7 | 4.7 | |||||||||||
Asset replacement costs recoverable from tenants | 27.0 | 21.4 | 13.3 | 9.4 | |||||||||||
Corporate office improvements, technology, equipment, and other | 4.5 | 4.5 | |||||||||||||
Total | $ | 266.6 | $ | 226.0 | $ | 292.6 | $ | 189.1 |
(1) | Costs are net of intercompany profits and are computed on an accrual basis. |
(2) | Includes costs related to The Mall at San Juan, Taubman Prestige Outlets Chesterfield, and The Mall at University Town Center. |
(3) | Includes costs related to the retail component of Xi'an Saigao City Plaza, Hanam Union Square, and Zhengzhou Vancouver Times Square. Asia spending is included at our beneficial interest in both the Unconsolidated Joint Ventures and Beneficial Interest in Unconsolidated Joint Ventures columns. |
(4) | Asia costs exclude currency translation adjustments. |
(5) | Amounts in this table may not add due to rounding. |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings |
Item 1 A. | Risk Factors |
Incorporated by Reference | ||||||||||||
Exhibit Number | Exhibit Description | Form | Period Ending | Exhibit | Filing Date | Filed Herewith | ||||||
12 | Statement Re: Computation of Taubman Centers, Inc. Ratio of Earnings to Combined Fixed Charges and Preferred Dividends | X | ||||||||||
31.1 | 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 | X | ||||||||||
31.2 | 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 | X | ||||||||||
32.1 | 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 | X | ||||||||||
32.2 | 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 | X | ||||||||||
99 | Debt Maturity Schedule | X | ||||||||||
101.INS | XBRL Instance Document | X | ||||||||||
101.SCH | XBRL Taxonomy Extension Schema Document | X | ||||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | X | ||||||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | X | ||||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | X | ||||||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | X |
TAUBMAN CENTERS, INC. | ||
Date: | July 30, 2013 | By: /s/ Lisa A. Payne |
Lisa A. Payne | ||
Vice Chairman, Chief Financial Officer, and Director (Principal Financial Officer) |
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 | |||||||||
2013 | 2012 | ||||||||
Earnings operations before income from equity investees and taxes | $ | 59,394 | $ | 41,260 | |||||
Add back: | |||||||||
Fixed charges | 77,002 | 77,145 | |||||||
Amortization of previously capitalized interest | 2,221 | 2,211 | |||||||
Distributed income of Unconsolidated Joint Ventures | 21,827 | 23,071 | |||||||
Deduct: | |||||||||
Capitalized interest | (6,874 | ) | (98 | ) | |||||
Earnings available for fixed charges and preferred dividends | $ | 153,570 | $ | 143,589 | |||||
Fixed charges: | |||||||||
Interest expense | $ | 67,074 | $ | 74,203 | |||||
Capitalized interest | 6,874 | 98 | |||||||
Interest portion of rent expense | 3,054 | 2,844 | |||||||
Total fixed charges | $ | 77,002 | $ | 77,145 | |||||
Preferred dividends | 9,364 | 7,317 | |||||||
Total fixed charges and preferred dividends | $ | 86,366 | $ | 84,462 | |||||
Ratio of earnings to fixed charges and preferred dividends | 1.8 | 1.7 | |||||||
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: | July 30, 2013 | /s/ Robert S. Taubman |
Robert S. Taubman | ||
Chairman of the Board of Directors, President, and Chief Executive Officer |
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: | July 30, 2013 | /s/ Lisa A. Payne |
Lisa A. Payne | ||
Vice Chairman, Chief Financial Officer, and Director (Principal Financial Officer) |
(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: | July 30, 2013 |
Robert S. Taubman | ||
Chairman of the Board of Directors, President, and Chief Executive Officer |
(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: | July 30, 2013 |
Lisa A. Payne | ||
Vice Chairman, Chief Financial Officer, and Director (Principal Financial Officer) |
TAUBMAN CENTERS, INC. | Exhibit 99 | |||||||||||||||||||||||||||||||||||||||||||
Debt Summary | ||||||||||||||||||||||||||||||||||||||||||||
As of June 30, 2013 | ||||||||||||||||||||||||||||||||||||||||||||
(in millions of dollars, amounts may not add due to rounding) | ||||||||||||||||||||||||||||||||||||||||||||
MORTGAGE AND OTHER NOTES PAYABLE (a) | ||||||||||||||||||||||||||||||||||||||||||||
INCLUDING WEIGHTED AVERAGE INTEREST RATES AT JUNE 30, 2013 | ||||||||||||||||||||||||||||||||||||||||||||
100% | Beneficial Interest | Effective Rate | LIBOR Rate | Principal Amortization and Debt Maturities | ||||||||||||||||||||||||||||||||||||||||
6/30/2013 | 6/30/2013 | 6/30/2013 | (b) | Spread | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | Total | |||||||||||||||||||||||||||
Consolidated Fixed Rate Debt: | ||||||||||||||||||||||||||||||||||||||||||||
Beverly Center | 307.2 | 307.2 | 5.28 | % | 3.3 | 303.8 | 307.2 | |||||||||||||||||||||||||||||||||||||
Cherry Creek Shopping Center | 50.00 | % | 280.0 | 140.0 | 5.24 | % | 140.0 | 140.0 | ||||||||||||||||||||||||||||||||||||
El Paseo Village | 16.5 | (c) | 16.5 | 3.87 | % | (c) | 0.2 | 0.4 | 15.9 | 16.5 | (k) | |||||||||||||||||||||||||||||||||
Great Lakes Crossing Outlets | 223.6 | 223.6 | 3.60 | % | 2.1 | 4.3 | 4.4 | 4.6 | 4.8 | 4.9 | 5.1 | 5.3 | 5.5 | 5.7 | 177.0 | 223.6 | ||||||||||||||||||||||||||||
International Plaza | 325.0 | 325.0 | 4.85 | % | 4.9 | 5.2 | 5.4 | 5.7 | 6.0 | 6.3 | 291.5 | 325.0 | ||||||||||||||||||||||||||||||||
Northlake Mall | 215.5 | 215.5 | 5.41 | % | 215.5 | 215.5 | ||||||||||||||||||||||||||||||||||||||
Stony Point Fashion Park | 100.6 | 100.6 | 6.24 | % | 1.1 | 99.5 | 100.6 | |||||||||||||||||||||||||||||||||||||
The Gardens on El Paseo | 84.8 | (d) | 84.8 | 4.53 | % | (d) | 0.6 | 1.1 | 1.1 | 81.9 | 84.8 | (k) | ||||||||||||||||||||||||||||||||
The Mall at Green Hills | 106.5 | (e) | 106.5 | 4.76 | % | (e) | 106.5 | 106.5 | (k) | |||||||||||||||||||||||||||||||||||
The Mall at Partridge Creek | 79.7 | 79.7 | 6.15 | % | 0.5 | 1.1 | 1.2 | 1.3 | 1.4 | 1.4 | 1.5 | 71.2 | 79.7 | |||||||||||||||||||||||||||||||
The Mall at Short Hills | 540.0 | 540.0 | 5.47 | % | 540.0 | 540.0 | ||||||||||||||||||||||||||||||||||||||
The Mall at Wellington Green | 90.00 | % | 200.0 | 180.0 | 5.44 | % | 180.0 | 180.0 | ||||||||||||||||||||||||||||||||||||
Total Consolidated Fixed | 2,479.3 | 2,319.3 | 114.3 | 410.3 | 747.6 | 448.4 | 11.5 | 12.1 | 12.6 | 82.8 | 297.0 | 5.7 | 177.0 | 2,319.3 | ||||||||||||||||||||||||||||||
Weighted Rate | 5.14 | % | 5.13 | % | 4.77 | % | 5.49 | % | 5.41 | % | 5.17 | % | 4.49 | % | 4.50 | % | 4.50 | % | 5.89 | % | 4.83 | % | 3.60 | % | 3.60 | % | ||||||||||||||||||
Consolidated Floating Rate Debt: | ||||||||||||||||||||||||||||||||||||||||||||
MacArthur Center | 95.00 | % | 129.9 | 123.4 | 4.99 | % | (f) | 0.7 | 1.4 | 1.5 | 1.6 | 1.7 | 1.8 | 2.0 | 112.8 | 123.4 | ||||||||||||||||||||||||||||
TRG $65M Revolving Credit | 11.4 | 11.4 | 1.59 | % | (g) | 1.40 | % | 11.4 | 11.4 | |||||||||||||||||||||||||||||||||||
TRG $1.1B Revolving Credit Facility | 290.0 | 290.0 | 1.61 | % | (h) | 1.45 | % | 290.0 | (h) | 290.0 | ||||||||||||||||||||||||||||||||||
Total Consolidated Floating | 431.3 | 424.8 | 0.7 | 12.8 | 1.5 | 1.6 | 291.7 | 1.8 | 2.0 | 112.8 | 424.8 | |||||||||||||||||||||||||||||||||
Weighted Rate | 2.63 | % | 2.59 | % | 4.99 | % | 1.96 | % | 4.99 | % | 4.99 | % | 1.63 | % | 4.99 | % | 4.99 | % | 4.99 | % | ||||||||||||||||||||||||
Total Consolidated | 2,910.6 | 2,744.1 | 114.9 | 423.0 | 749.1 | 450.0 | 303.2 | 13.9 | 14.6 | 195.5 | 297.0 | 5.7 | 177.0 | 2,744.1 | ||||||||||||||||||||||||||||||
Weighted Rate | 4.77 | % | 4.74 | % | 4.77 | % | 5.39 | % | 5.41 | % | 5.17 | % | 1.74 | % | 4.56 | % | 4.57 | % | 5.37 | % | 4.83 | % | 3.60 | % | 3.60 | % | ||||||||||||||||||
Joint Ventures Fixed Rate Debt: | ||||||||||||||||||||||||||||||||||||||||||||
Arizona Mills | 50.00 | % | 168.5 | 84.3 | 5.76 | % | 0.6 | 1.3 | 1.4 | 1.4 | 1.5 | 1.6 | 1.7 | 74.7 | 84.3 | |||||||||||||||||||||||||||||
The Mall at Millenia | 50.00 | % | 350.0 | 175.0 | 4.00 | % | 0.5 | 3.1 | 3.2 | 3.4 | 3.5 | 3.6 | 3.8 | 3.9 | 149.9 | 175.0 | (l) | |||||||||||||||||||||||||||
Sunvalley | 50.00 | % | 187.8 | 93.9 | 4.44 | % | 0.8 | 1.6 | 1.6 | 1.7 | 1.8 | 1.9 | 2.0 | 2.1 | 2.2 | 78.3 | 93.9 | |||||||||||||||||||||||||||
Taubman Land Associates | 50.00 | % | 23.8 | 11.9 | 3.84 | % | 0.1 | 0.2 | 0.2 | 0.2 | 0.2 | 0.3 | 0.3 | 0.3 | 0.3 | 9.7 | 11.9 | |||||||||||||||||||||||||||
Waterside Shops | 50.00 | % | 165.0 | 85.9 | (i) | 4.11 | % | (i) | 0.5 | 1.1 | 1.1 | 83.3 | 85.9 | (k) | ||||||||||||||||||||||||||||||
Westfarms | 78.94 | % | 315.3 | 248.9 | 4.50 | % | 2.1 | 4.3 | 4.5 | 4.8 | 5.0 | 5.2 | 5.4 | 5.7 | 5.9 | 205.9 | 248.9 | |||||||||||||||||||||||||||
Total Joint Venture Fixed | 1,210.3 | 699.8 | 4.1 | 8.5 | 8.8 | 91.9 | 11.6 | 12.2 | 12.8 | 86.3 | 12.0 | 297.8 | 3.9 | 149.9 | 699.8 | |||||||||||||||||||||||||||||
Weighted Rate | 4.46 | % | 4.46 | % | 4.61 | % | 4.61 | % | 4.62 | % | 4.16 | % | 4.51 | % | 4.51 | % | 4.51 | % | 5.57 | % | 4.32 | % | 4.46 | % | 4.00 | % | 4.00 | % | ||||||||||||||||
Joint Ventures Floating Rate Debt: | ||||||||||||||||||||||||||||||||||||||||||||
Fair Oaks | 50.00 | % | 275.0 | 137.5 | 4.10 | % | (j) | 0.8 | 2.0 | 2.2 | 2.3 | 130.2 | 137.5 | |||||||||||||||||||||||||||||||
Total Joint Venture Floating | 275.0 | 137.5 | 0.8 | 2.0 | 2.2 | 2.3 | 130.2 | 137.5 | ||||||||||||||||||||||||||||||||||||
Weighted Rate | 4.10 | % | 4.10 | % | 4.10 | % | 4.10 | % | 4.10 | % | 4.10 | % | 4.10 | % | ||||||||||||||||||||||||||||||
Total Joint Venture | 1,485.3 | 837.3 | 4.1 | 9.3 | 10.8 | 94.1 | 14.0 | 142.4 | 12.8 | 86.3 | 12.0 | 297.8 | 3.9 | 149.9 | 837.3 | |||||||||||||||||||||||||||||
Weighted Rate | 4.39 | % | 4.40 | % | 4.61 | % | 4.57 | % | 4.52 | % | 4.16 | % | 4.44 | % | 4.14 | % | 4.51 | % | 5.57 | % | 4.32 | % | 4.46 | % | 4.00 | % | 4.00 | % | ||||||||||||||||
TRG Beneficial Interest Totals | ||||||||||||||||||||||||||||||||||||||||||||
Fixed Rate Debt | 3,689.7 | 3,019.1 | (c),(d),(e),(i) | 118.3 | 418.7 | 756.4 | 540.3 | 23.2 | 24.3 | 25.4 | 169.0 | 309.1 | 303.5 | 181.0 | 149.9 | 3,019.1 | ||||||||||||||||||||||||||||
4.92 | % | 4.98 | % | 4.77 | % | 5.48 | % | 5.40 | % | 5.00 | % | 4.50 | % | 4.50 | % | 4.51 | % | 5.73 | % | 4.81 | % | 4.44 | % | 3.61 | % | 4.00 | % | |||||||||||||||||
Floating Rate Debt | 706.3 | 562.3 | 0.7 | 13.5 | 3.5 | 3.8 | 294.0 | 132.0 | 2.0 | 112.8 | 562.3 | |||||||||||||||||||||||||||||||||
3.20 | % | 2.96 | % | 4.99 | % | 2.09 | % | 4.48 | % | 4.48 | % | 1.65 | % | 4.11 | % | 4.99 | % | 4.99 | % | |||||||||||||||||||||||||
Total | 4,395.9 | 3,581.4 | (c),(d),(e),(i) | 119.0 | 432.3 | 759.9 | 544.1 | 317.2 | 156.3 | 27.3 | 281.8 | 309.1 | 303.5 | 181.0 | 149.9 | 3,581.4 | ||||||||||||||||||||||||||||
4.64 | % | 4.66 | % | 4.77 | % | 5.37 | % | 5.40 | % | 5.00 | % | 1.86 | % | 4.17 | % | 4.54 | % | 5.43 | % | 4.81 | % | 4.44 | % | 3.61 | % | 4.00 | % | |||||||||||||||||
Average Maturity Fixed Debt | 5 | |||||||||||||||||||||||||||||||||||||||||||
Average Maturity Total Debt | 5 | |||||||||||||||||||||||||||||||||||||||||||
(a) | All debt is secured and non-recourse to TRG unless otherwise indicated. | (g) | Rate floats daily at LIBOR plus spread. Letters of credit totaling $5.4 million are also outstanding on the facility. | |||||||||||||||||||||||||||||||||||||||||
(b) | 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. | (h) | TRG is the direct borrower under the $1.1 billion unsecured revolving credit facility. The facility bears interest at a range of LIBOR + 1.45% to 1.85% with a facility fee ranging from 0.20% to 0.35% based on the Company's total leverage ratio. At June 30, 2013, the interest rate is LIBOR + 1.45% with a 0.20% facility fee. A one year extension option is available. | |||||||||||||||||||||||||||||||||||||||||
(c) | Debt includes $0.2 million of purchase accounting premium from acquisition which reduces the stated rate on the debt of 4.42% to an effective rate of 3.87%. | |||||||||||||||||||||||||||||||||||||||||||
(i) | Beneficial interest in debt includes $3.4 million of purchase accounting premium from acquisition of an additional 25% investment in Waterside Shops which reduces the stated rate on the debt of 5.54% to an effective rate of 4.11% on total beneficial interest in debt. | |||||||||||||||||||||||||||||||||||||||||||
(d) | Debt includes $3.3 million of purchase accounting premium from acquisition which reduces the stated rate on the debt of 6.10% to an effective rate of 4.53%. | |||||||||||||||||||||||||||||||||||||||||||
(j) | Debt is swapped to an effective rate of 4.10% until 2.5 months prior to maturity. | |||||||||||||||||||||||||||||||||||||||||||
(e) | Debt includes $0.9 million of purchase accounting premium from acquisition which reduces the stated rate on the debt of 6.89% to an effective rate of 4.76%. | (k) | Principal amortization includes amortization of purchase accounting adjustments. | |||||||||||||||||||||||||||||||||||||||||
(l) | The loan on The Mall at Millenia is interest only until November 2016 and then amortizes principal based on 30 years. The interest only period may be extended until the maturity date provided that the net income available for debt service equals or exceeds a certain amount for the calendar year 2015. | |||||||||||||||||||||||||||||||||||||||||||
(f) | Debt is swapped to the effective rate indicated until maturity. |
Commitments and Contingencies
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6 Months Ended |
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Jun. 30, 2013
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Notes to Financial Statements [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Cash Tender At the time of the Company's initial public offering and acquisition of its partnership interest in the Operating Partnership in 1992, 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 partnership units 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. At A. Alfred Taubman's election, his family may participate in tenders. The Company will have the option to pay for these interests from available cash, borrowed funds, or from the proceeds of an offering of the Company's common stock. Generally, the Company expects to finance these purchases through the sale of new shares of its stock. The tendering partner will bear all market risk if the market price at closing is less than the purchase price and will bear the costs of sale. Any proceeds of the offering in excess of the purchase price will be for the sole benefit of the Company. 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, 2013 of $75.15 per common share, the aggregate value of interests in the Operating Partnership that may be tendered under the Cash Tender Agreement was $1.8 billion. The purchase of these interests at June 30, 2013 would have resulted in the Company owning an additional 27% interest in the Operating Partnership. Continuing Offer The Company has made a continuing, irrevocable offer to all present holders (other than certain excluded holders, including A. Alfred Taubman), permitted 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, all existing optionees under the previous option plan, and all existing and future optionees under the 2008 Omnibus 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. Upon a tender of Operating Partnership units, the corresponding shares of Series B Preferred Stock, if any, will automatically be converted into the Company’s common stock at a ratio of 14,000 shares of Series B Preferred Stock for one share of common stock. Litigation In April 2009, two restaurant owners, their two restaurants, and their principal filed a lawsuit in United States District Court for the Eastern District of Pennsylvania (Case No. April 2009) against Atlantic Pier Associates LLC ("APA", the then owner of the leasehold interest in The Pier Shops), the Operating Partnership, Taubman Centers, Inc., the owners of APA and certain affiliates of such owners, three individuals affiliated with, or at one time employed by an affiliate of one of the owners, and, subsequently added the Manager as a defendant. The plaintiffs are alleging the defendants misrepresented and concealed the status of certain tenant leases at The Pier Shops and that such status was relied upon by the plaintiffs in making decisions about their own leases. The plaintiffs are seeking damages exceeding $20 million, rescission of their leases, exemplary or punitive damages, costs and expenses, attorney's fees, return of certain rent, and other relief as the court may determine. The claims against the Operating Partnership, Taubman Centers, Inc., the Manager, other Taubman defendants, and one of the owners were dismissed in July 2011, but, in August 2011, the restaurant owners reinstated the same claims in a state court action that was then removed to the United States District Court for the Eastern District of Pennsylvania (Case No. 11-CV-05676). The defendants are vigorously defending the action. The outcome of this lawsuit cannot be predicted with any certainty and management is currently unable to estimate a range of potential loss that could result if an unfavorable outcome occurs. While management does not believe that an adverse outcome in this lawsuit would have a material adverse effect on the Company's financial condition, there can be no assurance that an adverse outcome would not have a material effect on the Company's results of operations for any particular period. Other See Note 7 for contingent features relating to certain joint venture agreements, Note 8 for contingent features relating to derivative instruments, and Note 9 for obligations under existing share-based compensation plans. |
Subsequent Events (Details) (Refinancing of Debt [Member], City Creek Center [Member], USD $)
In Millions, unless otherwise specified |
6 Months Ended |
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Jun. 30, 2013
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Refinancing of Debt [Member] | City Creek Center [Member]
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Subsequent Event [Line Items] | |
Term of loan, in years | 10 years |
Debt Instrument, Face Amount | $ 85 |
Debt Instrument, Interest Rate, Effective Percentage | 4.43% |
Period Over Which Principal Balance Is Amortized | 30 years |
Income Taxes
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Jun. 30, 2013
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Notes to Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes Income Tax Expense The Company’s income tax expense for the three and six months ended June 30, 2013 and 2012 is as follows:
Deferred Taxes Deferred tax assets and liabilities as of June 30, 2013 and December 31, 2012 are as follows:
The Company believes that it is more likely than not the results of future operations will generate sufficient taxable income to recognize the net deferred tax assets. These future operations are primarily dependent upon the Manager’s profitability, the timing and amounts of gains on peripheral land sales, the profitability of Taubman Asia's operations, and other factors affecting the results of operations of the Taxable REIT Subsidiaries. The valuation allowances relate to net operating loss carryforwards and tax basis differences where there is uncertainty regarding their realizability. The Company realized a tax benefit as additional paid-in capital relating to the redemption of certain share-based compensation awards of $0.2 million and $0.5 million during the six months ended June 30, 2013 and 2012, respectively. This benefit represents the amount of reduced Federal income tax attributed to the tax deduction that exceeds the recognized deferred tax asset relating to the awards, which was based on their cumulative book compensation cost. This excess tax deduction is due to changes in the fair value of the Company's shares between the grant date (the measurement date for book purposes) and the exercise date (the measurement date for tax purposes) of the awards. |
Beneficial Interest in Debt and Interest Expense (Tables)
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Jun. 30, 2013
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Notes to Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Partnership's beneficial interest | The Operating Partnership's beneficial interest in the debt, capitalized interest, and interest expense of its consolidated subsidiaries and its Unconsolidated Joint Ventures is summarized in the following table. The Operating Partnership's beneficial interest in the consolidated subsidiaries excludes debt and interest related to the noncontrolling interests in Cherry Creek Shopping Center (50%), International Plaza (49.9%) in 2012 (Note 2), The Mall at Wellington Green (10%), and MacArthur Center (5%).
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Earnings Per Share
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Jun. 30, 2013
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Notes to Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | 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 potential common stock. Potential common stock includes outstanding partnership units exchangeable for common shares under the Continuing Offer (Note 10), outstanding options for partnership units, PSU, RSU, deferred shares under the Non-Employee Directors’ Deferred Compensation Plan, and unissued partnership units under a unit option deferral election (Note 9). In computing the potentially dilutive effect of potential common stock, 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 potential common stock are calculated using the treasury method. Contingently issuable shares are included in diluted EPS based on the number of shares, if any, that would be issuable if the end of the reporting period were the end of the contingency period.
The calculation of diluted earnings per share excluded certain potential common stock including outstanding partnership units and unissued partnership units under a unit option deferral election, both of which may be exchanged for common shares of the Company under the Continuing Offer. The table below presents the potential common stock excluded from the calculation of diluted earnings per share as they were anti-dilutive in the period presented.
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Share-Based Compensation (Tables)
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Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] | A summary of option activity for the six months ended June 30, 2013 is presented below:
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Schedule of Nonvested Performance-based Units Activity [Table Text Block] | A summary of PSU activity for the six months ended June 30, 2013 is presented below:
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Schedule of Nonvested Restricted Stock Units Activity [Table Text Block] | A summary of RSU activity for the six months ended June 30, 2013 is presented below:
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Derivative and Hedging Activities (Tables)
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Jun. 30, 2013
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Notes to Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest rate derivatives designated as cash flow hedges | As of June 30, 2013, the Company had the following outstanding interest rate derivatives that were designated and are expected to be effective as cash flow hedges of the interest payments on the associated debt.
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Effect of derivative instruments on the Consolidated Statement of Operations and Comprehensive Income | During the three months ended June 30, 2013 and June 30, 2012, the Company did not have any hedge ineffectiveness or amounts that were excluded from the assessment of hedge effectiveness recorded in earnings.
During the six months ended June 30, 2013 and June 30, 2012, the Company did not have any hedge ineffectiveness or amounts that were excluded from the assessment of hedge effectiveness recorded in earnings.
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Location and fair value of derivative instruments as reported in the Consolidated Balance Sheet | The Company records all derivative instruments at fair value in the Consolidated Balance Sheet. The following table presents the location and fair value of the Company’s derivative financial instruments as reported in the Consolidated Balance Sheet as of June 30, 2013 and December 31, 2012.
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Beneficial Interest in Debt and Interest Expense (Debt Covenants and Guarantees) (Details) (USD $)
In Thousands, unless otherwise specified |
6 Months Ended | |
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Jun. 30, 2013
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Dec. 31, 2012
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Guarantor Obligations [Line Items] | ||
Other Restrictions on Payment of Dividends | .95 | |
Restricted cash | $ 6,346 | $ 6,138 |
Fair Value Disclosures (Fair Value Assets and Liabilities Measured on Recurring Basis) (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||||
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Mar. 31, 2013
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Jun. 30, 2013
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Jun. 30, 2013
Fair Value, Inputs, Level 1 [Member]
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Dec. 31, 2012
Fair Value, Inputs, Level 1 [Member]
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Jun. 30, 2013
Fair Value, Inputs, Level 2 [Member]
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Dec. 31, 2012
Fair Value, Inputs, Level 2 [Member]
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Assets and liabilities measured at fair value on a recurring basis [Abstract] | ||||||
Available-for-sale securities | $ 2,452 | |||||
Insurance deposit | 12,289 | 11,291 | ||||
Total assets | 12,289 | 13,743 | ||||
Derivative interest rate contract | (5,423) | (11,865) | ||||
Total liabilities | (5,423) | (11,865) | ||||
Proceeds from sale of marketable securities | 2,500 | 2,493 | ||||
Realized gain on sale of securities (Note 12) | $ (1,300) | $ (1,323) |
Interim Financial Statements (Details)
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6 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | ||||||
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Jun. 30, 2013
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Dec. 31, 2012
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Jun. 30, 2013
Westfarms [Member]
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Dec. 31, 2012
Westfarms [Member]
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Jun. 30, 2013
Series J Preferred Stock [Member]
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Dec. 31, 2012
Series J Preferred Stock [Member]
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Mar. 31, 2013
Series K Preferred Stock [Member]
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Jun. 30, 2013
Series K Preferred Stock [Member]
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Jun. 30, 2013
Series B Preferred Stock [Member]
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Dec. 31, 2012
Series B Preferred Stock [Member]
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Schedule of Equity Method Investments [Line Items] | ||||||||||
Number of urban and suburban shopping centers in the Company's owned portfolio | 24 | |||||||||
Number of states in which Company operates | 12 | |||||||||
Ownership percentage (in hundredths) | 79.00% | 79.00% | ||||||||
Number Of Classes Of Preferred Stock | three | |||||||||
Dividend rate (in hundredths) | 6.50% | 6.25% | 6.25% | |||||||
Units of Partnership Interest, Terms of Conversion | one share of nonparticipating Series B Preferred Stock per each Operating Partnership unit | |||||||||
Preferred Stock, voting rights | one vote per share | |||||||||
Convertible Preferred Stock, Terms of Conversion | ratio of 14,000 shares of Series B Preferred Stock for one share of common stock | |||||||||
Preferred Stock, Non-Participating, Convertible, Shares Outstanding | 7,700,000 | 7,700,000 | 6,800,000 | 25,179,072 | 25,327,699 | |||||
Common stock, shares outstanding | 63,816,192 | 63,310,148 |
Noncontrolling Interests (Tables)
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Jun. 30, 2013
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Notes to Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net equity balance of noncontrolling interests | The net equity balance of the noncontrolling interests as of June 30, 2013 and December 31, 2012 includes the following:
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Net income (loss) attributable to noncontrolling interests | Net income attributable to the noncontrolling interests for the three months ended June 30, 2013 and June 30, 2012 includes the following:
Net income attributable to the noncontrolling interests for the six months ended June 30, 2013 and June 30, 2012 includes the following:
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Effects of changes in ownership interest in consolidated subsidiaries on equity | The following schedule presents the effects of changes in Taubman Centers, Inc.’s ownership interest in consolidated subsidiaries on Taubman Centers, Inc.’s equity for the six months ended June 30, 2013 and June 30, 2012:
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Parenthetical) (USD $)
In Thousands, unless otherwise specified |
6 Months Ended |
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Jun. 30, 2012
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Distributions attributable to noncontrolling interests | $ (1,226) |
Net loss attributable to redeemable noncontrolling interest | (1,206) |
Other comprehensive income attributable to redeemable noncontrolling interests | $ (59) |
Interim Financial Statements
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6 Months Ended |
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Jun. 30, 2013
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Notes to Financial Statements [Abstract] | |
Interim Financial Statements | Interim Financial Statements General Taubman Centers, Inc. (the Company or TCO) is a Michigan corporation that operates as a self-administered and self-managed real estate investment trust (REIT). The Taubman Realty Group Limited Partnership (the Operating Partnership or TRG) is a majority-owned partnership subsidiary of TCO that owns direct or indirect interests in all of the Company’s real estate properties. In this report, the term “Company" refers to TCO, the Operating Partnership, and/or the Operating Partnership's subsidiaries as the context may require. The Company engages in the ownership, management, leasing, acquisition, disposition, development, and expansion of regional and super-regional retail shopping centers and interests therein. The Company’s owned portfolio as of June 30, 2013 included 24 urban and suburban shopping centers in 12 states. Taubman Properties Asia LLC and its subsidiaries (Taubman Asia), which is the platform for the Company’s expansion into China and South Korea, is headquartered in Hong Kong. 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, 2012. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the financial statements for the interim periods have been made. The results of interim periods are not necessarily indicative of the results for a full year. Dollar amounts presented in tables within the notes to the financial statements are stated in thousands, except share data or as otherwise noted. 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) and Taubman Asia. All intercompany transactions have been eliminated. The entities included in these consolidated financial statements are separate legal entities and maintain records and books of account separate from any other entity. However, inclusion of these separate entities in the consolidated financial statements does not mean that the assets and credit of each of these legal entities are available to satisfy the debts or other obligations of any other such legal entity included in the consolidated financial statements. Investments in entities not controlled but over which the Company may exercise significant influence (Unconsolidated Joint Ventures or UJVs) are accounted for under the equity method. The Company has evaluated its investments in the Unconsolidated Joint Ventures under guidance for determining whether an entity is a variable interest entity and has concluded that the ventures are not variable interest entities. Accordingly, the Company accounts for its interests in these entities under general accounting standards for investments in real estate ventures (including guidance for determining effective control of a limited partnership or similar entity). The Company’s partners or other owners in these Unconsolidated Joint Ventures have substantive participating rights 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. Ownership In addition to the Company’s common stock, there are three classes of preferred stock outstanding (Series B, J and K) as of June 30, 2013. Dividends on the 6.5% Series J Cumulative Redeemable Preferred Stock (Series J Preferred Stock) and the 6.25% Series K Cumulative Redeemable Preferred Stock (Series K Preferred Stock) are cumulative and are paid on the last day of each calendar quarter. The Company owns corresponding Series J and Series K 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 J and Series K Preferred Stock. See "Note 6 - Equity Transactions" for further details on the Series K Preferred Stock issuance. 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 per each Operating Partnership unit. The Series B Preferred Stock entitles its holders to one vote per share on all matters submitted to the Company’s shareowners 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. The Series B Preferred Stock is convertible into the Company’s common stock at a ratio of 14,000 shares of Series B Preferred Stock for one share of common stock. Outstanding voting securities of the Company at June 30, 2013 consisted of 25,179,072 shares of Series B Preferred Stock and 63,816,192 shares of common stock. The Operating Partnership At June 30, 2013, the Operating Partnership’s equity included two classes of preferred equity (Series J and K) 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 J and Series K Preferred Equity are owned by the Company and are eliminated in consolidation. The Company's ownership in the Operating Partnership at June 30, 2013 consisted of a 72% managing general partnership interest, as well as the Series J and Series K Preferred Equity interests. The Company's average ownership percentage in the Operating Partnership for the six months ended June 30, 2013 and 2012 was 72% and 69%, respectively. At June 30, 2013, the Operating Partnership had 89,013,714 partnership units outstanding, of which the Company owned 63,816,192 units. |
Investments in Unconsolidated Joint Ventures
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Jun. 30, 2013
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Notes to Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments in Unconsolidated Joint Ventures | Investments in Unconsolidated Joint Ventures General Information The Company owns beneficial interests in joint ventures that own shopping centers. The Operating Partnership is the sole direct or indirect managing general partner or managing member of Fair Oaks, Stamford Town Center, Sunvalley, and Westfarms. The Operating Partnership also provides certain management, leasing, and/or development services to the other shopping centers.
The Company's carrying value of its Investment in Unconsolidated Joint Ventures differs from its share of the partnership or members’ 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 or terms of the related assets and liabilities. In its Consolidated Balance Sheet, the Company separately reports its investment in Unconsolidated Joint Ventures for which accumulated distributions have exceeded investments in and net income of the Unconsolidated 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. In addition, any distributions related to refinancing of the centers further decrease the net equity of the centers. The estimated fair value of the Unconsolidated Joint Ventures’ notes payable was $1.5 billion at June 30, 2013 and December 31, 2012. The methodology for determining this fair value is consistent with that used for determining the fair value of consolidated mortgage notes payable (Note 12). Combined Financial Information 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 operations information. The combined information of the Unconsolidated Joint Ventures as of June 30, 2013 excludes the balances of Hanam Union Square, The Mall at University Town Center, the retail component of Xi'an Saigao City Plaza, and Zhengzhou Vancouver Times Square, which are currently under development (Note 2). Beneficial interest is calculated based on the Operating Partnership's ownership interest in each of the Unconsolidated Joint Ventures.
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Acquisitions, Dispositions, and Development
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6 Months Ended |
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Jun. 30, 2013
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Acquisitions, Dispositions, and Development [Abstract] | |
Mergers, Acquisitions and Dispositions Disclosures [Text Block] | Acquisitions, Dispositions, and Development Acquisitions International Plaza In December 2012, the Company acquired an additional 49.9% interest in International Plaza from CSAT, LP, which increased its ownership in the center to 100%. Waterside Shops In December 2012, the Company acquired an additional 25% interest in Waterside Shops, which brought the Company's ownership interest in the center to 50%. After the acquisition, the Company continues to recognize its investment in Waterside Shops in Investment in Unconsolidated Joint Ventures on the Consolidated Balance Sheet. The Company's share of the difference between the purchase price and the net book value of the additional interest in the Unconsolidated Joint Venture was estimated to be $52.7 million, which has been preliminarily allocated to land, buildings, improvements, and equipment. In addition, beneficial interest in debt was increased by a $3.9 million purchase accounting premium to record the debt at fair value. The premium is being amortized as a reduction to interest expense over the remaining term of the debt and had a balance of $3.4 million as of June 30, 2013. Development The Mall at University Town Center The Mall at University Town Center, a 0.9 million square foot center, is under construction in Sarasota, Florida. The Company is funding its 50% share of the project. The center will be anchored by Saks Fifth Avenue, Macy's, and Dillard's and is expected to open in October 2014. As of June 30, 2013, the Company's share of capitalized costs was $65.3 million. This investment is classified within Investment in Unconsolidated Joint Ventures on the Consolidated Balance Sheet. The Mall of San Juan The Mall of San Juan, a 0.7 million square foot center, is under construction in San Juan, Puerto Rico. In 2012, the Company closed on the purchase of the land and owns 80% of the project. The center will be anchored by Nordstrom and Saks Fifth Avenue and is expected to open in March 2015. As of June 30, 2013, the Company has capitalized costs of $77.5 million ($61.9 million at TRG's share). Taubman Prestige Outlets Chesterfield Taubman Prestige Outlets Chesterfield, 0.3 million square foot outlet project in Chesterfield, Missouri, is scheduled to open in August 2013. The Company has a 90% ownership interest in the project. As of June 30, 2013, the Company has capitalized costs of $95.8 million ($86.4 million at TRG's share). Asia Hanam Union Square The Company has partnered with Shinsegae Group, South Korea's largest retailer, to build an approximately 1.7 million square foot shopping mall in Hanam, Gyeonggi Province, South Korea. In 2012, upon completion of due diligence, the Company confirmed its 30% interest in the development, which is scheduled to open in 2016. As of June 30, 2013, the Company has invested $76.2 million in the project, after cumulative currency translation adjustments. This investment is classified within Investment in Unconsolidated Joint Ventures on the Consolidated Balance Sheet. Retail component of Xi'an Saigao City Plaza In 2012, the Company entered into a joint venture with Beijing Wangfujing Department Store (Group) Co., Ltd, one of China's largest department store chains. The joint venture will own a 60% controlling interest in and manage an approximately 1.0 million square foot shopping center to be located at Xi'an Saigao City Plaza, a large-scale mixed-use development in Xi'an, China. Through this joint venture, the Company will beneficially own a 30% interest in the shopping center, which is scheduled to open in late 2015. As of June 30, 2013, the Company has invested $52.7 million in the project, after cumulative currency translation adjustments. This investment is classified within Investment in Unconsolidated Joint Ventures on the Consolidated Balance Sheet. Zhengzhou Vancouver Times Square In 2013, the Company entered into a joint venture with Beijing Wangfujing Department Store (Group) Co., Ltd. The joint venture will own a majority interest in and manage an approximately 1.0 million square foot multi-level shopping center to be located in Zhengzhou, China. Through this joint venture, the Company will beneficially own a 32% interest in the shopping center, which is scheduled to open in 2015. As of June 30, 2013, the Company has invested $1.2 million in the project, which is classified within Investment in Unconsolidated Joint Ventures on the Consolidated Balance Sheet. Additionally, as of June 30, 2013, the Company has $36.1 million in cash on the Consolidated Balance Sheet denominated in Renminbi, which was invested in this project in July 2013. Dispositions TCBL In 2012, the Company sold assets of the Taubman TCBL business. In connection with the sale, the Company received cash of approximately $4.4 million, while the remaining consideration consisted of approximately $3.6 million held in an escrow account that was pending receipt of consideration in an equivalent amount of Chinese Renminbi, a note receivable of approximately $8.5 million, and other receivables of approximately $0.8 million. In 2013, the Company collected this remaining consideration from the sale. As of December 31, 2012, the cash held in escrow was included within Deferred Charges and Other Assets on the Consolidated Balance Sheet and the note receivable and other receivables were included within Accounts and Notes Receivable on the Consolidated Balance Sheet. Peripheral Land Sale - Non-Cash Investing Activity In 2013, the Company recognized a $0.9 million gain on the sale of peripheral land. In connection with this sale, the Company received a $7.4 million note as part of the purchase price consideration. The note, which bears interest at 1% during the first year and 7% in the second year, is due in February 2015 and is collateralized by the land. |
Equity Transactions (Details) (USD $)
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3 Months Ended | 6 Months Ended |
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Mar. 31, 2013
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Jun. 30, 2013
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Schedule of Equity Transactions [Line Items] | ||
Issuance of Series K Preferred Stock, net of offering costs (Note 6) | $ 164,374,000 | |
Series K Preferred Stock [Member]
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Schedule of Equity Transactions [Line Items] | ||
Issuance of Series K Preferred Stock, net of issuance costs (in shares) | 6,800,000 | |
Preferred Stock, Dividend Rate, Percentage | 6.25% | 6.25% |
Issuance of Series K Preferred Stock, net of offering costs (Note 6) | 164,400,000 | |
Adjustments to Additional Paid in Capital, Stock Issued, Issuance Costs | 5,600,000 | |
Preferred Stock, Liquidation Preference, Value | $ 170,000,000 | |
Preferred Stock, Liquidation Preference Per Share | $ 25 | |
Preferred Stock, Redemption Price Per Share | $ 25 |
Earnings Per Share (Tables)
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Jun. 30, 2013
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Notes to Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basic and diluted earnings per share |
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Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block] | The table below presents the potential common stock excluded from the calculation of diluted earnings per share as they were anti-dilutive in the period presented.
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Interim Financial Statements (Operating Partnership) (Details)
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6 Months Ended | |
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Jun. 30, 2013
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Jun. 30, 2012
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The Operating Partnership [Abstract] | ||
Number Of Classes Of Preferred Equity | two | |
Managing general partnership interest of the Company in the Operating Partnership (in hundredths) | 72.00% | |
Limited Liability Company (LLC) or Limited Partnership (LP), Managing Member or General Partner, Ownership Interest | 72.00% | 69.00% |
Units of Partnership Interest, Amount | 89,013,714 | |
Number Of Operating Partnership Units Outstanding Owned By Company | 63,816,192 |