UNITED STATES | ||
SECURITIES AND EXCHANGE COMMISSION | ||
Washington, D.C. 20549 | ||
FORM 8-K | ||
Current Report Pursuant | ||
to Section 13 or 15(d) of the | ||
Securities Exchange Act of 1934 | ||
Date of report (date of earliest event reported): February 8, 2018 | ||
TAUBMAN CENTERS, INC. | ||
(Exact Name of Registrant as Specified in its Charter) | ||
Michigan | ||
(State of Other Jurisdiction of Incorporation) | ||
1-11530 | 38-2033632 | |
(Commission File Number) | (I.R.S. Employer Identification No.) | |
200 East Long Lake Road, Suite 300, Bloomfield Hills, Michigan | 48304-2324 | |
(Address of Principal Executive Office) | (Zip Code) | |
Registrant’s Telephone Number, Including Area Code: (248) 258-6800 | ||
None | ||
(Former Name or Former Address, if Changed Since Last Report) | ||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (See General Instruction A.2. below): | ||
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Date: February 8, 2018 | TAUBMAN CENTERS, INC. | |
By: | /s/ Simon J. Leopold | |
Simon J. Leopold | ||
Executive Vice President, Chief Financial Officer, and Treasurer |
Taubman Centers, Inc. | T 248.258.6800 | ![]() | ||
200 East Long Lake Road | www.taubman.com | |||
Suite 300 | ||||
Bloomfield Hills, Michigan | ||||
48304-2324 |
– | Mall Tenant Sales Per Square Foot Up 3.2 Percent for the Quarter, Sixth Consecutive Quarter of Positive Sales Growth |
– | Industry-leading Sales Per Square Foot $810, Up 2.3 Percent for the Year |
– | Occupancy and Average Rent Per Square Foot Up |
– | Nordstrom Joining Country Club Plaza Lineup |
December 31, 2017 Three Months Ended | December 31, 2016 Three Months Ended | December 31, 2017 Year Ended | December 31, 2016 Year Ended | |
Net income attributable to common shareowners, diluted (in thousands) Growth rate | $20,291 (30.9)% | $29,361 | $55,381 (48.5)% | $107,615 |
Net income attributable to common shareowners (EPS) per diluted common share Growth rate | $0.33 (31.3)% | $0.48 | $0.91 (48.6)% | $1.77 |
Funds from Operations (FFO) per diluted common share Growth rate | $1.02 (7.3)% | $1.10 | $3.51 (10.2)% | $3.91 |
Adjusted Funds from Operations (Adjusted FFO) per diluted common share Growth rate | $1.03 (1) 2.0% | $1.01 (2) | $3.70 (1) 3.4% | $3.58 (2) |
(1) Adjusted FFO for the three months and year ended December 31, 2017 excludes a restructuring charge, costs associated with shareowner activism, and a gain recognized upon the conversion of the company’s remaining investment in Simon Property Group Limited Partnership units (SPG LP Units) to common shares of SPG. Adjusted FFO for the year ended December 31, 2017 also excludes a charge recognized in connection with the partial write-off of deferred financing costs related to an amendment of the company's primary line of credit in February 2017. (2) Adjusted FFO for the three months and year ended December 31, 2016 excludes costs associated with shareowner activism and a gain, net of tax, recognized upon the conversion of a portion of the company’s investment in SPG LP Units to common shares of SPG. Adjusted FFO for the year ended December 31, 2016 also excludes a one-time payment the company received in the second quarter due to the termination of the company’s leasing services agreement at The Shops at Crystals (Las Vegas, Nev.). |
• | Amended and restated the company’s primary revolving line of credit, which included a new, unsecured, $300 million term loan and an extension of the $1.1 billion revolving credit facility to February 2021, with two six-month extension options. Both the term loan and the revolving line of credit facility bear interest at a range based on the company’s total leverage ratio. See Taubman Centers Announces the Amendment and Restatement of $1.1 Billion Line of Credit Including Additional $300 Million Unsecured Term Loan - February 7, 2017. |
• | Increased the regular quarterly dividend by 5 percent to $0.625 per share of common stock. See Taubman Centers Increases Quarterly Common Dividend 5 Percent to $0.625 Per Share - March 2, 2017. |
• | Celebrated the opening of CityOn.Zhengzhou in Zhengzhou, China, 100 percent leased with nearly 200 retailers, restaurants and entertainment venues. The center was jointly developed by Taubman Asia and Wangfujing Group Co., Ltd. See The New CityOn.Zhengzhou Shopping Center Opened to Capacity Crowds Today in Henan Province - March 16, 2017. |
• | Repaid the $302 million construction loan on The Mall of San Juan (San Juan, Puerto Rico) - March 16, 2017. |
• | Sold the company’s 50 percent owned Valencia Place office tower located within the Country Club Plaza (Kansas City, Mo.) for a net value of $37.6 million at the company’s share - March 17, 2017. |
• | In September was impacted by Hurricane Irma in Florida and Hurricane Maria in Puerto Rico. The company’s five centers in Florida sustained minimal damage, but were closed between four and 11 days. The Mall of San Juan was closed for approximately one month. The center’s performance will continue to be impacted for the foreseeable future. |
• | Announced the appointments of Mayree C. Clark and Michael J. Embler to the company’s Board of Directors, and declassification of the Board by the 2020 annual meeting of shareholders. See Taubman Appoints Two New Independent Directors and Announces Other Governance Enhancements - November 9, 2017. |
• | Underwent a restructuring of its workforce and reorganization of various functions in response to the completion of another major development cycle and in order to create operational efficiencies. During the three months and year ended December 31, 2017, the company incurred $9.8 million and $13.8 million, respectively, of expenses related to the restructuring. |
• | Earnings Press Release |
• | Company Overview |
• | Operational Statistics |
• | Summary of Key Guidance Measures |
• | Income Statements |
• | Changes in Funds from Operations and Earnings Per Common Share |
• | Balance Sheet Information |
• | Debt Summary |
• | Capital Spending |
• | Owned Centers |
• | Redevelopments |
• | Anchors & Major Tenants in Owned Portfolio |
• | Components of Other Income, Other Operating Expense, and Nonoperating Income, Net |
• | Earnings Reconciliations |
• | Operating Statistics Glossary |
TAUBMAN CENTERS, INC. | ||||||||||||
Table 1 - Income Statement | ||||||||||||
For the Three Months Ended December 31, 2017 and 2016 | ||||||||||||
(in thousands of dollars) | ||||||||||||
2017 | 2016 | |||||||||||
CONSOLIDATED | UNCONSOLIDATED | CONSOLIDATED | UNCONSOLIDATED | |||||||||
BUSINESSES | JOINT VENTURES (1) | BUSINESSES | JOINT VENTURES (1) | |||||||||
REVENUES: | ||||||||||||
Minimum rents | 89,980 | 92,794 | 87,252 | 90,580 | ||||||||
Overage rents | 9,569 | 8,758 | 10,060 | 7,193 | ||||||||
Expense recoveries | 57,240 | 48,240 | 55,176 | 50,393 | ||||||||
Management, leasing, and development services | 944 | 1,736 | ||||||||||
Other | 14,451 | 7,028 | 11,967 | 9,405 | ||||||||
Total revenues | 172,184 | 156,820 | 166,191 | 157,571 | ||||||||
EXPENSES: | ||||||||||||
Maintenance, taxes, utilities, and promotion | 45,510 | 42,479 | 46,598 | 44,212 | ||||||||
Other operating | 29,157 | 10,504 | 21,012 | 13,458 | ||||||||
Management, leasing, and development services | 459 | 1,008 | ||||||||||
General and administrative | 9,369 | 13,405 | ||||||||||
Restructuring charge | 9,785 | |||||||||||
Costs associated with shareowner activism | 2,500 | 3,000 | ||||||||||
Interest expense | 28,498 | 33,141 | 24,440 | 30,304 | ||||||||
Depreciation and amortization | 44,848 | 33,274 | 38,040 | 34,022 | ||||||||
Total expenses | 170,126 | 119,398 | 147,503 | 121,996 | ||||||||
Nonoperating income, net (2) | 15,481 | 459 | 14,212 | 144 | ||||||||
17,539 | 37,881 | 32,900 | 35,719 | |||||||||
Income tax benefit (expense) (2) | 270 | (1,338 | ) | (1,928 | ) | (413 | ) | |||||
36,543 | 35,306 | |||||||||||
Equity in income of Unconsolidated Joint Ventures | 20,275 | 19,922 | ||||||||||
Net income | 38,084 | 50,894 | ||||||||||
Net income attributable to noncontrolling interests: | ||||||||||||
Noncontrolling share of income of consolidated joint ventures | (2,496 | ) | (2,292 | ) | ||||||||
Noncontrolling share of income of TRG | (8,975 | ) | (12,998 | ) | ||||||||
Distributions to participating securities of TRG | (577 | ) | (544 | ) | ||||||||
Preferred stock dividends | (5,785 | ) | (5,785 | ) | ||||||||
Net income attributable to Taubman Centers, Inc. common shareowners | 20,251 | 29,275 | ||||||||||
SUPPLEMENTAL INFORMATION: | ||||||||||||
EBITDA - 100% | 90,885 | 104,296 | 95,380 | 100,045 | ||||||||
EBITDA - outside partners' share | (7,435 | ) | (49,274 | ) | (7,093 | ) | (47,138 | ) | ||||
Beneficial interest in EBITDA | 83,450 | 55,022 | 88,287 | 52,907 | ||||||||
Beneficial interest expense | (25,494 | ) | (17,079 | ) | (21,495 | ) | (15,665 | ) | ||||
Beneficial income tax benefit (expense) - TRG and TCO | 317 | (554 | ) | (1,898 | ) | (307 | ) | |||||
Beneficial income tax (benefit) expense - TCO | (28 | ) | 465 | |||||||||
Non-real estate depreciation | (1,229 | ) | (591 | ) | ||||||||
Preferred dividends and distributions | (5,785 | ) | (5,785 | ) | ||||||||
Funds from Operations attributable to partnership unitholders and participating securities of TRG | 51,231 | 37,389 | 58,983 | 36,935 | ||||||||
STRAIGHTLINE AND PURCHASE ACCOUNTING ADJUSTMENTS: | ||||||||||||
Net straight-line adjustments to rental revenue, recoveries, and ground rent expense at TRG% | 828 | 705 | 1,420 | 303 | ||||||||
Country Club Plaza purchase accounting adjustments - minimum rents increase at TRG% | 39 | 27 | ||||||||||
The Mall at Green Hills purchase accounting adjustments - minimum rents increase | 44 | 56 | ||||||||||
(1) With the exception of the Supplemental Information, amounts include 100% of the Unconsolidated Joint Ventures. Amounts are net of intercompany transactions. The Unconsolidated Joint Ventures are presented at 100% in order to allow for measurement of their performance as a whole, without regard to the Company's ownership interest. | ||||||||||||
(2) During the three months ended December 31, 2017 the Company recognized an $11.6 million gain upon the conversion of the Company's remaining investment in SPG LP Units to common shares of SPG. During the three months ended December 31, 2016, the Company recognized an $11.1 million gain and $0.5 million of income tax expense upon the conversion of a portion of the Company's investment in SPG LP Units to common shares of SPG. |
TAUBMAN CENTERS, INC. | |||||||||||||
Table 2 - Income Statement | |||||||||||||
For the Year Ended December 31, 2017 and 2016 | |||||||||||||
(in thousands of dollars) | |||||||||||||
2017 | 2016 | ||||||||||||
CONSOLIDATED BUSINESSES | UNCONSOLIDATED JOINT VENTURES (1) | CONSOLIDATED BUSINESSES | UNCONSOLIDATED JOINT VENTURES (1) | ||||||||||
REVENUES: | |||||||||||||
Minimum rents | 345,557 | 344,613 | 333,325 | 281,892 | |||||||||
Overage rents | 16,923 | 25,393 | 20,020 | 13,220 | |||||||||
Expense recoveries | 211,625 | 186,161 | 202,467 | 162,652 | |||||||||
Management, leasing, and development services (2) | 4,383 | 28,059 | |||||||||||
Other | 50,677 | 29,872 | 28,686 | 19,152 | |||||||||
Total revenues | 629,165 | 586,039 | 612,557 | 476,916 | |||||||||
EXPENSES: | |||||||||||||
Maintenance, taxes, utilities, and promotion | 167,091 | 158,437 | 156,506 | 130,971 | |||||||||
Other operating | 94,513 | 45,371 | 78,794 | 28,384 | |||||||||
Management, leasing, and development services | 2,157 | 4,042 | |||||||||||
General and administrative | 39,018 | 48,056 | |||||||||||
Restructuring charge | 13,848 | ||||||||||||
Costs associated with shareowner activism | 14,500 | 3,000 | |||||||||||
Interest expense | 108,572 | 130,339 | 86,285 | 103,185 | |||||||||
Depreciation and amortization | 167,806 | 130,537 | 138,139 | 97,859 | |||||||||
Total expenses | 607,505 | 464,684 | 514,822 | 360,399 | |||||||||
Nonoperating income, net (3) | 23,828 | 3,010 | 22,927 | 656 | |||||||||
45,488 | 124,365 | 120,662 | 117,173 | ||||||||||
Income tax expense (3) | (105 | ) | (5,837 | ) | (2,212 | ) | (728 | ) | |||||
118,528 | |||||||||||||
Gain on disposition, net of tax (4) | 3,713 | ||||||||||||
122,241 | 116,445 | ||||||||||||
Equity in income of Unconsolidated Joint Ventures | 67,374 | 69,701 | |||||||||||
Net income | 112,757 | 188,151 | |||||||||||
Net income attributable to noncontrolling interests: | |||||||||||||
Noncontrolling share of income of consolidated joint ventures | (6,775 | ) | (8,105 | ) | |||||||||
Noncontrolling share of income of TRG | (25,277 | ) | (47,433 | ) | |||||||||
Distributions to participating securities of TRG | (2,300 | ) | (2,117 | ) | |||||||||
Preferred stock dividends | (23,138 | ) | (23,138 | ) | |||||||||
Net income attributable to Taubman Centers, Inc. common shareowners | 55,267 | 107,358 | |||||||||||
SUPPLEMENTAL INFORMATION: | |||||||||||||
EBITDA - 100% | 321,866 | 389,685 | 345,086 | 318,217 | |||||||||
EBITDA - outside partners' share | (26,315 | ) | (184,539 | ) | (24,329 | ) | (140,208 | ) | |||||
Beneficial interest in EBITDA | 295,551 | 205,146 | 320,757 | 178,009 | |||||||||
Beneficial share of gain on disposition (4) | (2,814 | ) | |||||||||||
Beneficial interest expense | (96,630 | ) | (67,283 | ) | (75,954 | ) | (54,674 | ) | |||||
Beneficial income tax benefit (expense) - TRG and TCO | 29 | (2,825 | ) | (2,163 | ) | (622 | ) | ||||||
Beneficial income tax (benefit) expense - TCO | (315 | ) | 446 | ||||||||||
Non-real estate depreciation | (3,596 | ) | (2,472 | ) | |||||||||
Preferred dividends and distributions | (23,138 | ) | (23,138 | ) | |||||||||
Funds from Operations attributable to partnership unitholders and participating securities of TRG | 171,901 | 132,224 | 217,476 | 122,713 | |||||||||
STRAIGHTLINE AND PURCHASE ACCOUNTING ADJUSTMENTS: | |||||||||||||
Net straight-line adjustments to rental revenue, recoveries, and ground rent expense at TRG% | 1,261 | 1,932 | 2,311 | 2,316 | |||||||||
Country Club Plaza purchase accounting adjustments - minimum rents increase at TRG% | 34 | 109 | |||||||||||
The Mall at Green Hills purchase accounting adjustments - minimum rents increase | 174 | 223 | |||||||||||
(1) With the exception of the Supplemental Information, amounts include 100% of the Unconsolidated Joint Ventures. Amounts are net of intercompany transactions. The Unconsolidated Joint Ventures are presented at 100% in order to allow for measurement of their performance as a whole, without regard to the Company's ownership interest. | |||||||||||||
(2) The 2016 amount includes the $21.7 million lump sum payment received in May 2016 for the termination of the Company's third party leasing agreement at Crystals due to a change in ownership in the center. | |||||||||||||
(3) During the year ended December 31, 2017, the Company recognized an $11.6 million gain upon the conversion of the Company's remaining investment in SPG LP Units to common shares of SPG. During the year ended December 31, 2016, the Company recognized an $11.1 million gain and $0.5 million of income tax expense upon the conversion of a portion of the Company's investment in SPG LP Units to common shares of SPG. | |||||||||||||
(4) During the year ended December 31, 2017, the joint venture that owns the Valencia Place office tower at Country Club Plaza recognized a $4.4 million gain ($2.8 million at TRG's share) and $0.7 million of income tax expense ($0.7 million at TRG's share) in connection with the sale of the office tower. |
TAUBMAN CENTERS, INC. | ||||||||||||||||||
Table 3 - Reconciliation of Net Income Attributable to Taubman Centers, Inc. Common Shareowners to Funds From Operations and Adjusted Funds From Operations | ||||||||||||||||||
For the Three Months Ended December 31, 2017 and 2016 | ||||||||||||||||||
(in thousands of dollars except as noted; may not add or recalculate due to rounding) | ||||||||||||||||||
2017 | 2016 | |||||||||||||||||
Shares | Per Share | Shares | Per Share | |||||||||||||||
Dollars | /Units | /Unit | Dollars | /Units | /Unit | |||||||||||||
Net income attributable to TCO common shareowners - basic | 20,251 | 60,737,750 | 0.33 | 29,275 | 60,427,603 | 0.48 | ||||||||||||
Add impact of share-based compensation | 40 | 367,344 | 86 | 565,777 | ||||||||||||||
Net income attributable to TCO common shareowners - diluted | 20,291 | 61,105,094 | 0.33 | 29,361 | 60,993,380 | 0.48 | ||||||||||||
Add depreciation of TCO's additional basis | 1,617 | 0.03 | 1,617 | 0.03 | ||||||||||||||
Add (less) TCO's additional income tax (benefit) expense | (28 | ) | (0.00 | ) | 465 | 0.01 | ||||||||||||
Net income attributable to TCO common shareowners, | ||||||||||||||||||
excluding step-up depreciation and additional income tax (benefit) expense | 21,880 | 61,105,094 | 0.36 | 31,443 | 60,993,380 | 0.52 | ||||||||||||
Add noncontrolling share of income of TRG | 8,975 | 24,955,434 | 12,998 | 25,046,278 | ||||||||||||||
Add distributions to participating securities of TRG | 577 | 871,262 | 544 | 871,262 | ||||||||||||||
Net income attributable to partnership unitholders | ||||||||||||||||||
and participating securities of TRG | 31,432 | 86,931,790 | 0.36 | 44,985 | 86,910,920 | 0.52 | ||||||||||||
Add (less) depreciation and amortization: | ||||||||||||||||||
Consolidated businesses at 100% | 44,848 | 0.52 | 38,040 | 0.44 | ||||||||||||||
Depreciation of TCO's additional basis | (1,617 | ) | (0.02 | ) | (1,617 | ) | (0.02 | ) | ||||||||||
Noncontrolling partners in consolidated joint ventures | (1,888 | ) | (0.02 | ) | (1,826 | ) | (0.02 | ) | ||||||||||
Share of Unconsolidated Joint Ventures | 17,114 | 0.20 | 17,013 | 0.20 | ||||||||||||||
Non-real estate depreciation | (1,229 | ) | (0.01 | ) | (591 | ) | (0.01 | ) | ||||||||||
Less impact of share-based compensation | (40 | ) | (0.00 | ) | (86 | ) | (0.00 | ) | ||||||||||
Funds from Operations attributable to partnership unitholders | ||||||||||||||||||
and participating securities of TRG | 88,620 | 86,931,790 | 1.02 | 95,918 | 86,910,920 | 1.10 | ||||||||||||
TCO's average ownership percentage of TRG - basic (1) | 70.9 | % | 70.7 | % | ||||||||||||||
Funds from Operations attributable to TCO's common shareowners, | ||||||||||||||||||
excluding additional income tax benefit (expense) (1) | 62,812 | 1.02 | 67,811 | 1.10 | ||||||||||||||
Add (less) TCO's additional income tax benefit (expense) | 28 | 0.00 | (465 | ) | (0.01 | ) | ||||||||||||
Funds from Operations attributable to TCO's common shareowners (1) | 62,840 | 1.02 | 67,346 | 1.10 | ||||||||||||||
Funds from Operations attributable to partnership unitholders | ||||||||||||||||||
and participating securities of TRG | 88,620 | 86,931,790 | 1.02 | 95,918 | 86,910,920 | 1.10 | ||||||||||||
Restructuring charge | 9,785 | 0.10 | ||||||||||||||||
Costs associated with shareowner activism | 2,500 | 0.03 | 3,000 | 0.03 | ||||||||||||||
Gains on SPG common stock conversions | (11,613 | ) | (0.13 | ) | (11,069 | ) | (0.13 | ) | ||||||||||
Adjusted Funds from Operations attributable to partnership unitholders | ||||||||||||||||||
and participating securities of TRG | 89,292 | 86,931,790 | 1.03 | 87,849 | 86,910,920 | 1.01 | ||||||||||||
TCO's average ownership percentage of TRG - basic (2) | 70.9 | % | 70.7 | % | ||||||||||||||
Adjusted Funds from Operations attributable to TCO's common shareowners, | ||||||||||||||||||
excluding additional income tax benefit (2) | 63,289 | 1.03 | 62,107 | 1.01 | ||||||||||||||
Add TCO's additional income tax benefit | 1 | 0.00 | ||||||||||||||||
Adjusted Funds from Operations attributable to TCO's common shareowners (2) | 63,289 | 1.03 | 62,108 | 1.01 | ||||||||||||||
(1) For the three months ended December 31, 2017, Funds from Operations attributable to TCO's common shareowners was $61,946 using TCO's diluted average ownership percentage of TRG of 69.9%. For the three months ended December 31, 2016, Funds from Operations attributable to TCO's common shareowners was $66,225 using TCO's diluted average ownership percentage of TRG of 69.5%. | ||||||||||||||||||
(2) For the three months ended December 31, 2017, Adjusted Funds from Operations attributable to TCO's common shareowners was $62,387 using TCO's diluted average ownership percentage of TRG of 69.9%. For the three months ended December 31, 2016, Adjusted Funds from Operations attributable to TCO's common shareowners was $61,081 using TCO's diluted average ownership percentage of TRG of 69.5%. |
TAUBMAN CENTERS, INC. | ||||||||||||||||||
Table 4 - Reconciliation of Net Income Attributable to Taubman Centers, Inc. Common Shareowners to Funds from Operations and Adjusted Funds from Operations | ||||||||||||||||||
For the Year Ended December 31, 2017 and 2016 | ||||||||||||||||||
(in thousands of dollars except as noted; may not add or recalculate due to rounding) | ||||||||||||||||||
2017 | 2016 | |||||||||||||||||
Shares | Per Share | Shares | Per Share | |||||||||||||||
Dollars | /Units | /Unit | Dollars | /Units | /Unit | |||||||||||||
Net income attributable to TCO common shareowners - basic | 55,267 | 60,675,129 | 0.91 | 107,358 | 60,363,416 | 1.78 | ||||||||||||
Add impact of share-based compensation | 114 | 365,366 | 257 | 466,139 | ||||||||||||||
Net income attributable to TCO common shareowners - diluted | 55,381 | 61,040,495 | 0.91 | 107,615 | 60,829,555 | 1.77 | ||||||||||||
Add depreciation of TCO's additional basis | 6,468 | 0.11 | 6,468 | 0.11 | ||||||||||||||
Add (less) TCO's additional income tax (benefit) expense | (315 | ) | (0.01 | ) | 446 | 0.01 | ||||||||||||
Net income attributable to TCO common shareowners, | ||||||||||||||||||
excluding step-up depreciation and additional income tax (benefit) expense | 61,534 | 61,040,495 | 1.02 | 114,529 | 60,829,555 | 1.88 | ||||||||||||
Add noncontrolling share of income of TRG | 25,277 | 24,965,157 | 47,433 | 25,055,654 | ||||||||||||||
Add distributions to participating securities of TRG | 2,300 | 871,262 | 2,117 | 871,262 | ||||||||||||||
Net income attributable to partnership unitholders | ||||||||||||||||||
and participating securities of TRG | 89,111 | 86,876,914 | 1.03 | 164,079 | 86,756,471 | 1.89 | ||||||||||||
Add (less) depreciation and amortization: | ||||||||||||||||||
Consolidated businesses at 100% | 167,806 | 1.93 | 138,139 | 1.59 | ||||||||||||||
Depreciation of TCO's additional basis | (6,468 | ) | (0.07 | ) | (6,468 | ) | (0.07 | ) | ||||||||||
Noncontrolling partners in consolidated joint ventures | (7,464 | ) | (0.09 | ) | (5,844 | ) | (0.07 | ) | ||||||||||
Share of Unconsolidated Joint Ventures | 66,933 | 0.77 | 53,012 | 0.61 | ||||||||||||||
Non-real estate depreciation | (3,596 | ) | (0.04 | ) | (2,472 | ) | (0.03 | ) | ||||||||||
Less beneficial gain on disposition, net of tax | (2,083 | ) | (0.02 | ) | ||||||||||||||
Less impact of share-based compensation | (114 | ) | (0.00 | ) | (257 | ) | (0.00 | ) | ||||||||||
Funds from Operations attributable to partnership unitholders | ||||||||||||||||||
and participating securities of TRG | 304,125 | 86,876,914 | 3.50 | 340,189 | 86,756,471 | 3.92 | ||||||||||||
TCO's average ownership percentage of TRG - basic (1) | 70.8 | % | 70.7 | % | ||||||||||||||
Funds from Operations attributable to TCO's common shareowners, | ||||||||||||||||||
excluding additional income tax benefit (expense) (1) | 215,471 | 3.50 | 240,409 | 3.92 | ||||||||||||||
Add (less) TCO's additional income tax benefit (expense) | 315 | 0.00 | (446 | ) | (0.01 | ) | ||||||||||||
Funds from Operations attributable to TCO's common shareowners (1) | 215,786 | 3.51 | 239,963 | 3.91 | ||||||||||||||
Funds from Operations attributable to partnership unitholders | ||||||||||||||||||
and participating securities of TRG | 304,125 | 86,876,914 | 3.50 | 340,189 | 86,756,471 | 3.92 | ||||||||||||
Restructuring charge | 13,848 | 0.16 | ||||||||||||||||
Costs associated with shareowner activism | 14,500 | 0.17 | 3,000 | 0.03 | ||||||||||||||
Partial write-off of deferred financing costs | 413 | 0.00 | ||||||||||||||||
Gains on SPG common stock conversions | (11,613 | ) | (0.13 | ) | (11,069 | ) | (0.13 | ) | ||||||||||
Crystals lump sum payment for termination of leasing agreement | (21,702 | ) | (0.25 | ) | ||||||||||||||
Adjusted Funds from Operations attributable to partnership unitholders | ||||||||||||||||||
and participating securities of TRG | 321,273 | 86,876,914 | 3.70 | 310,418 | 86,756,471 | 3.58 | ||||||||||||
TCO's average ownership percentage of TRG - basic (2) | 70.8 | % | 70.7 | % | ||||||||||||||
Adjusted Funds from Operations attributable to TCO's common shareowners, | ||||||||||||||||||
excluding additional income tax benefit (2) | 227,619 | 3.70 | 219,370 | 3.58 | ||||||||||||||
Add TCO's additional income tax benefit | 20 | 0.00 | ||||||||||||||||
Adjusted Funds from Operations attributable to TCO's common shareowners (2) | 227,619 | 3.70 | 219,390 | 3.58 | ||||||||||||||
(1) For the year ended December 31, 2017, Funds from Operations attributable to TCO's common shareowners was $212,715 using TCO's diluted average ownership percentage of TRG of 69.8%. For the year ended December 31, 2016, Funds from Operations attributable to TCO's common shareowners was $236,257 using TCO's diluted average ownership percentage of TRG of 69.6%. | ||||||||||||||||||
(2) For the year ended December 31, 2017, Adjusted Funds from Operations attributable to TCO's common shareowners was $224,374 using TCO's diluted average ownership percentage of TRG of 69.8%. For the year ended December 31, 2016, Adjusted Funds from Operations attributable to TCO's common shareowners was $215,994 using TCO's diluted average ownership percentage of TRG of 69.6%. |
TAUBMAN CENTERS, INC. | ||||||||||||||
Table 5 - Reconciliation of Net Income to Beneficial Interest in EBITDA and Adjusted Beneficial Interest in EBITDA | ||||||||||||||
For the Periods Ended December 31, 2017 and 2016 | ||||||||||||||
(in thousands of dollars; amounts attributable to TCO may not recalculate due to rounding) | ||||||||||||||
Three Months Ended | Year to Date | |||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||
Net income | 38,084 | 50,894 | 112,757 | 188,151 | ||||||||||
Add (less) depreciation and amortization: | ||||||||||||||
Consolidated businesses at 100% | 44,848 | 38,040 | 167,806 | 138,139 | ||||||||||
Noncontrolling partners in consolidated joint ventures | (1,888 | ) | (1,826 | ) | (7,464 | ) | (5,844 | ) | ||||||
Share of Unconsolidated Joint Ventures | 17,114 | 17,013 | 66,933 | 53,012 | ||||||||||
Add (less) interest expense and income tax expense (benefit): | ||||||||||||||
Interest expense: | ||||||||||||||
Consolidated businesses at 100% | 28,498 | 24,440 | 108,572 | 86,285 | ||||||||||
Noncontrolling partners in consolidated joint ventures | (3,004 | ) | (2,945 | ) | (11,942 | ) | (10,331 | ) | ||||||
Share of Unconsolidated Joint Ventures | 17,079 | 15,665 | 67,283 | 54,674 | ||||||||||
Income tax expense (benefit): | ||||||||||||||
Consolidated businesses at 100% | (270 | ) | 1,462 | 105 | 1,746 | |||||||||
Noncontrolling partners in consolidated joint ventures | (47 | ) | (30 | ) | (134 | ) | (49 | ) | ||||||
Share of Unconsolidated Joint Ventures | 554 | 307 | 2,825 | 622 | ||||||||||
Income tax expense on SPG common stock conversion | 466 | 466 | ||||||||||||
Share of income tax expense on disposition | 731 | |||||||||||||
Less noncontrolling share of income of consolidated joint ventures | (2,496 | ) | (2,292 | ) | (6,775 | ) | (8,105 | ) | ||||||
Beneficial interest in EBITDA | 138,472 | 141,194 | 500,697 | 498,766 | ||||||||||
TCO's average ownership percentage of TRG - basic | 70.9 | % | 70.7 | % | 70.8 | % | 70.7 | % | ||||||
Beneficial interest in EBITDA attributable to TCO | 98,146 | 99,814 | 354,740 | 352,465 | ||||||||||
Beneficial interest in EBITDA | 138,472 | 141,194 | 500,697 | 498,766 | ||||||||||
Add (less): | ||||||||||||||
Restructuring charge | 9,785 | 13,848 | ||||||||||||
Costs associated with shareowner activism | 2,500 | 3,000 | 14,500 | 3,000 | ||||||||||
Beneficial share of gain on disposition | (2,814 | ) | ||||||||||||
Gains on SPG common stock conversions | (11,613 | ) | (11,069 | ) | (11,613 | ) | (11,069 | ) | ||||||
Crystals lump sum payment for termination of leasing agreement | (21,702 | ) | ||||||||||||
Adjusted Beneficial interest in EBITDA | 139,144 | 133,125 | 514,618 | 468,995 | ||||||||||
TCO's average ownership percentage of TRG - basic | 70.9 | % | 70.7 | % | 70.8 | % | 70.7 | % | ||||||
Adjusted Beneficial interest in EBITDA attributable to TCO | 98,623 | 94,116 | 364,603 | 331,434 |
TAUBMAN CENTERS, INC. | |||||||||||||||||||||||||||
Table 6 - Reconciliation of Net Income to Net Operating Income (NOI) | |||||||||||||||||||||||||||
For the Periods Ended December 31, 2017, 2016, and 2015 | |||||||||||||||||||||||||||
(in thousands of dollars) | |||||||||||||||||||||||||||
Three Months Ended | Three Months Ended | Year Ended | Year Ended | ||||||||||||||||||||||||
2017 | 2016 | 2016 | 2015 | 2017 | 2016 | 2016 | 2015 | ||||||||||||||||||||
Net income | 38,084 | 50,894 | 50,894 | 46,595 | 112,757 | 188,151 | 188,151 | 192,557 | |||||||||||||||||||
Add (less) depreciation and amortization: | |||||||||||||||||||||||||||
Consolidated businesses at 100% | 44,848 | 38,040 | 38,040 | 28,780 | 167,806 | 138,139 | 138,139 | 106,355 | |||||||||||||||||||
Noncontrolling partners in consolidated joint ventures | (1,888 | ) | (1,826 | ) | (1,826 | ) | (1,085 | ) | (7,464 | ) | (5,844 | ) | (5,844 | ) | (3,681 | ) | |||||||||||
Share of Unconsolidated Joint Ventures | 17,114 | 17,013 | 17,013 | 9,133 | 66,933 | 53,012 | 53,012 | 34,361 | |||||||||||||||||||
Add (less) interest expense and income tax expense (benefit): | |||||||||||||||||||||||||||
Interest expense: | |||||||||||||||||||||||||||
Consolidated businesses at 100% | 28,498 | 24,440 | 24,440 | 18,590 | 108,572 | 86,285 | 86,285 | 63,041 | |||||||||||||||||||
Noncontrolling partners in consolidated joint ventures | (3,004 | ) | (2,945 | ) | (2,945 | ) | (1,871 | ) | (11,942 | ) | (10,331 | ) | (10,331 | ) | (6,965 | ) | |||||||||||
Share of Unconsolidated Joint Ventures | 17,079 | 15,665 | 15,665 | 11,365 | 67,283 | 54,674 | 54,674 | 45,564 | |||||||||||||||||||
Income tax expense (benefit): | |||||||||||||||||||||||||||
Consolidated businesses at 100% | (270 | ) | 1,462 | 1,462 | 138 | 105 | 1,746 | 1,746 | 2,248 | ||||||||||||||||||
Noncontrolling partners in consolidated joint ventures | (47 | ) | (30 | ) | (30 | ) | (134 | ) | (49 | ) | (49 | ) | |||||||||||||||
Share of Unconsolidated Joint Ventures | 554 | 307 | 307 | 2,825 | 622 | 622 | |||||||||||||||||||||
Income tax expense on SPG common stock conversion | 466 | 466 | 466 | 466 | |||||||||||||||||||||||
Share of income tax expense on disposition | 731 | ||||||||||||||||||||||||||
Reduction of income tax expense on dispositions of International Plaza, Arizona Mills, and Oyster Bay | (437 | ) | |||||||||||||||||||||||||
Less noncontrolling share of income of consolidated joint ventures | (2,496 | ) | (2,292 | ) | (2,292 | ) | (3,179 | ) | (6,775 | ) | (8,105 | ) | (8,105 | ) | (11,222 | ) | |||||||||||
Add EBITDA attributable to outside partners: | |||||||||||||||||||||||||||
EBITDA attributable to noncontrolling partners in consolidated joint ventures | 7,435 | 7,093 | 7,093 | 6,135 | 26,315 | 24,329 | 24,329 | 21,868 | |||||||||||||||||||
EBITDA attributable to outside partners in Unconsolidated Joint Ventures | 49,274 | 47,138 | 47,138 | 32,969 | 184,539 | 140,208 | 140,208 | 116,024 | |||||||||||||||||||
Add beneficial interest in UJV impairment charge - Miami Worldcenter | 11,754 | 11,754 | |||||||||||||||||||||||||
EBITDA at 100% | 195,181 | 195,425 | 195,425 | 159,324 | 711,551 | 663,303 | 663,303 | 571,467 | |||||||||||||||||||
Add (less) items excluded from shopping center NOI: | |||||||||||||||||||||||||||
General and administrative expenses | 9,369 | 13,405 | 13,405 | 13,132 | 39,018 | 48,056 | 48,056 | 45,727 | |||||||||||||||||||
Management, leasing, and development services, net | (485 | ) | (728 | ) | (728 | ) | (1,697 | ) | (2,226 | ) | (24,017 | ) | (1) | (24,017 | ) | (1) | (7,263 | ) | |||||||||
Restructuring charge | 9,785 | 13,848 | |||||||||||||||||||||||||
Costs associated with shareowner activism | 2,500 | 3,000 | 3,000 | 14,500 | 3,000 | 3,000 | |||||||||||||||||||||
Straight-line of rents | (2,861 | ) | (1,908 | ) | (1,908 | ) | (1,417 | ) | (7,698 | ) | (7,620 | ) | (7,620 | ) | (5,211 | ) | |||||||||||
Gains on SPG common stock conversions | (11,613 | ) | (11,069 | ) | (11,069 | ) | (11,613 | ) | (11,069 | ) | (11,069 | ) | |||||||||||||||
Insurance recoveries - The Mall of San Juan | (1,101 | ) | (1,101 | ) | |||||||||||||||||||||||
Gain on disposition | (4,445 | ) | |||||||||||||||||||||||||
Gains on sales of peripheral land | (2,613 | ) | (1,828 | ) | (1,828 | ) | |||||||||||||||||||||
Dividend income | (1,091 | ) | (974 | ) | (974 | ) | (944 | ) | (4,219 | ) | (3,836 | ) | (3,836 | ) | (3,570 | ) | |||||||||||
Interest income | (2,202 | ) | (2,309 | ) | (2,309 | ) | (403 | ) | (7,251 | ) | (6,488 | ) | (6,488 | ) | (1,999 | ) | |||||||||||
Other nonoperating expense (income) | 67 | (4 | ) | (4 | ) | (192 | ) | (41 | ) | (362 | ) | (362 | ) | 314 | |||||||||||||
Unallocated operating expenses and other | 12,443 | 12,574 | 12,574 | 12,319 | 39,256 | 44,576 | 44,576 | 36,651 | |||||||||||||||||||
NOI at 100% - total portfolio | 209,992 | 207,412 | 207,412 | 180,122 | 776,966 | 703,715 | 703,715 | 636,116 | |||||||||||||||||||
Less NOI of non-comparable centers | (40,408 | ) | (2) | (37,984 | ) | (3) | (37,984 | ) | (3) | (11,238 | ) | (4) | (152,970 | ) | (2) | (90,229 | ) | (3) | (90,229 | ) | (3) | (42,862 | ) | (4) | |||
NOI at 100% - comparable centers | 169,584 | 169,428 | 169,428 | 168,884 | 623,996 | 613,486 | 613,486 | 593,254 | |||||||||||||||||||
NOI - growth % | 0.1 | % | 0.3 | % | 1.7 | % | 3.4 | % | |||||||||||||||||||
NOI at 100% - comparable centers | 169,584 | 169,428 | 169,428 | 168,884 | 623,996 | 613,486 | 613,486 | 593,254 | |||||||||||||||||||
Lease cancellation income | (2,699 | ) | (3,325 | ) | (3,325 | ) | (2,667 | ) | (12,669 | ) | (6,200 | ) | (6,200 | ) | (8,865 | ) | |||||||||||
NOI at 100% - comparable centers excluding lease cancellation income | 166,885 | 166,103 | 166,103 | 166,217 | 611,327 | 607,286 | 607,286 | 584,389 | |||||||||||||||||||
NOI at 100% excluding lease cancellation income - growth % | 0.5 | % | (0.1 | )% | 0.7 | % | 3.9 | % | |||||||||||||||||||
(1 | ) | Amount includes the lump sum payment of $21.7 million received in May 2016 in connection with the termination of the Company's third party leasing agreement at Crystals due to a change in ownership of the center. | |||||||||||||||||||||||||
(2 | ) | Includes Beverly Center, CityOn.Xi'an, CityOn.Zhengzhou, Country Club Plaza, International Market Place, The Mall of San Juan, and Starfield Hanam. | |||||||||||||||||||||||||
(3 | ) | Includes Beverly Center, CityOn.Xi'an, Country Club Plaza, International Market Place, The Mall of San Juan, Starfield Hanam, and certain post-closing adjustments relating to the portfolio of centers sold to Starwood. | |||||||||||||||||||||||||
(4 | ) | Includes Beverly Center and The Mall of San Juan. |
TAUBMAN CENTERS, INC. | |||||||
Table 7 - Annual Guidance | |||||||
(all dollar amounts per common share on a diluted basis; amounts may not add due to rounding) | |||||||
Range for the Year Ended | |||||||
December 31, 2018 (1) | |||||||
Funds from Operations per common share | 3.72 | 3.86 | |||||
Real estate depreciation - TRG | (2.43 | ) | (2.33 | ) | |||
Distributions to participating securities of TRG | (0.03 | ) | (0.03 | ) | |||
Depreciation of TCO's additional basis in TRG | (0.11 | ) | (0.11 | ) | |||
Net income attributable to common shareowners, per common share (EPS) | 1.15 | 1.39 | |||||
(1 | ) | This guidance does not reflect any future costs that may be incurred related to shareowner activism. |