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): July 30, 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: July 30, 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 |
– | Net Income and Earnings Per Diluted Common Share (EPS) Up |
– | Comparable Center Net Operating Income (NOI), Excluding Lease Cancellation Income, Up 3.5 Percent for the Quarter, Up 4.1 percent Year-to-Date |
– | Mall Tenant Sales Per Square Foot Up 6 Percent for the Quarter, Eighth Consecutive Quarter of Positive Sales Growth |
– | Year-to-date Mall Tenant Sales Per Square Foot Up 9.1 Percent |
– | Next Taubman Asia Development in South Korea Announced |
– | 2018 NOI Guidance Increased |
– | 2018 EPS, Funds from Operations (FFO) and Adjusted FFO Guidance Revised |
June 30, 2018 Three Months Ended (1) | June 30, 2017 Three Months Ended (2) | June 30, 2018 Six Months Ended (1) | June 30, 2017 Six Months Ended (2) | |
Net income attributable to common shareowners, diluted (in thousands) Growth rate | $15,324 13.5% | $13,505 | $33,943 10.5% | $30,720 |
Net income attributable to common shareowners (EPS) per diluted common share Growth rate | $0.25 13.6% | $0.22 | $0.55 10.0% | $0.50 |
Funds from Operations (FFO) per diluted common share Growth rate | $0.92 7.0% | $0.86 | $1.80 5.3% | $1.71 |
Adjusted Funds from Operations (Adjusted FFO) per diluted common share Growth rate | $0.87 (5.4)% | $0.92 | $1.91 3.2% | $1.85 |
(1) Primary exclusions to Adjusted FFO for the three and six month periods ended June 30, 2018 were costs associated with shareowner activism and the fluctuation in the fair value of the Simon Property Group (SPG) common shares investment (due to the adoption of new accounting related to investments in securities this year). (2) Primary exclusions to Adjusted FFO for the three and six month periods ended June 30, 2017 were a restructuring charge and costs associated with shareowner activism. |
• | 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 Sheets |
• | Debt Summary |
• | Capital Spending and Certain Balance Sheet Information |
• | Owned Centers |
• | Redevelopments & New Developments |
• | 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 June 30, 2018 and 2017 | |||||||||||
(in thousands of dollars) | |||||||||||
2018 | 2017 | ||||||||||
CONSOLIDATED | UNCONSOLIDATED | CONSOLIDATED | UNCONSOLIDATED | ||||||||
BUSINESSES | JOINT VENTURES (1) | BUSINESSES | JOINT VENTURES (1) | ||||||||
REVENUES: | |||||||||||
Minimum rents | 87,580 | 87,734 | 86,787 | 84,957 | |||||||
Overage rents | 1,565 | 5,789 | 1,179 | 5,215 | |||||||
Expense recoveries | 50,553 | 43,526 | 49,413 | 43,692 | |||||||
Management, leasing, and development services | 826 | 1,375 | |||||||||
Other | 12,245 | 6,742 | 15,922 | 8,349 | |||||||
Total revenues | 152,769 | 143,791 | 154,676 | 142,213 | |||||||
EXPENSES (2): | |||||||||||
Maintenance, taxes, utilities, and promotion | 38,085 | 43,757 | 39,519 | 41,795 | |||||||
Other operating | 21,034 | 5,125 | 22,098 | 6,591 | |||||||
Management, leasing, and development services | 408 | 595 | |||||||||
General and administrative | 8,522 | 9,416 | |||||||||
Restructuring charge | (77 | ) | 416 | ||||||||
Costs associated with shareowner activism | 5,000 | 5,000 | |||||||||
Interest expense | 33,023 | 33,650 | 26,746 | 34,721 | |||||||
Depreciation and amortization | 42,996 | 33,949 | 39,442 | 34,146 | |||||||
Total expenses | 148,991 | 116,481 | 143,232 | 117,253 | |||||||
Nonoperating income, net (3) | 12,301 | 581 | 3,074 | 360 | |||||||
16,079 | 27,891 | 14,518 | 25,320 | ||||||||
Income tax expense | (28 | ) | (1,527 | ) | (113 | ) | (1,220 | ) | |||
26,364 | 24,100 | ||||||||||
Equity in income of Unconsolidated Joint Ventures | 14,042 | 13,258 | |||||||||
Net income | 30,093 | 27,663 | |||||||||
Net income attributable to noncontrolling interests: | |||||||||||
Noncontrolling share of income of consolidated joint ventures | (1,480 | ) | (1,605 | ) | |||||||
Noncontrolling share of income of TRG | (6,922 | ) | (6,214 | ) | |||||||
Distributions to participating securities of TRG | (599 | ) | (576 | ) | |||||||
Preferred stock dividends | (5,785 | ) | (5,785 | ) | |||||||
Net income attributable to Taubman Centers, Inc. common shareowners | 15,307 | 13,483 | |||||||||
SUPPLEMENTAL INFORMATION: | |||||||||||
EBITDA - 100% | 92,098 | 95,490 | 80,706 | 94,187 | |||||||
EBITDA - outside partners' share | (6,258 | ) | (46,206 | ) | (6,456 | ) | (45,041 | ) | |||
Beneficial interest in EBITDA | 85,840 | 49,284 | 74,250 | 49,146 | |||||||
Beneficial interest expense | (29,995 | ) | (17,263 | ) | (23,749 | ) | (17,849 | ) | |||
Beneficial income tax expense - TRG and TCO | 5 | (654 | ) | (70 | ) | (518 | ) | ||||
Beneficial income tax expense - TCO | — | 2 | |||||||||
Non-real estate depreciation | (1,128 | ) | (745 | ) | |||||||
Preferred dividends and distributions | (5,785 | ) | (5,785 | ) | |||||||
Funds from Operations attributable to partnership unitholders and participating securities of TRG | 48,937 | 31,367 | 43,903 | 30,779 | |||||||
STRAIGHTLINE AND PURCHASE ACCOUNTING ADJUSTMENTS: | |||||||||||
Net straight-line adjustments to rental revenue, recoveries, and ground rent expense at TRG% | 699 | 441 | 483 | 246 | |||||||
Country Club Plaza purchase accounting adjustments - minimum rents increase at TRG% | (100 | ) | 2 | ||||||||
The Mall at Green Hills purchase accounting adjustments - minimum rents increase | 27 | 33 | |||||||||
(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) Certain expenses of Starfield Hanam, which were previously classified in "Other operating" expense, are now included in "Maintenance, taxes, utilities and promotion" expense. Amounts for 2017 have been reclassified to conform to the 2018 classification. | |||||||||||
(3) During the three months ended June 30, 2018, a gain of $9.3 million was recognized for the fluctuation in the fair value of the SPG common shares investment. In connection with the adoption of Accounting Standards Update No. 2016-01 on January 1, 2018, the Company now measures its investment in SPG common shares at fair value with changes in value recorded through net income. |
TAUBMAN CENTERS, INC. | |||||||||||
Table 2 - Income Statement | |||||||||||
For the Six Months Ended June 30, 2018 and 2017 | |||||||||||
(in thousands of dollars) | |||||||||||
2018 | 2017 | ||||||||||
CONSOLIDATED BUSINESSES | UNCONSOLIDATED JOINT VENTURES (1) | CONSOLIDATED BUSINESSES | UNCONSOLIDATED JOINT VENTURES (1) | ||||||||
REVENUES: | |||||||||||
Minimum rents | 174,405 | 179,775 | 171,090 | 168,482 | |||||||
Overage rents | 4,190 | 11,670 | 3,754 | 10,277 | |||||||
Expense recoveries | 102,081 | 89,396 | 102,425 | 89,440 | |||||||
Management, leasing, and development services | 1,620 | 2,292 | |||||||||
Other | 31,965 | 18,238 | 24,198 | 14,614 | |||||||
Total revenues | 314,261 | 299,079 | 303,759 | 282,813 | |||||||
EXPENSES (2): | |||||||||||
Maintenance, taxes, utilities, and promotion | 75,722 | 84,135 | 79,230 | 79,976 | |||||||
Other operating | 44,900 | 15,111 | 41,417 | 13,527 | |||||||
Management, leasing, and development services | 710 | 1,174 | |||||||||
General and administrative | 17,015 | 20,167 | |||||||||
Restructuring charge | (423 | ) | 2,312 | ||||||||
Costs associated with shareowner activism | 8,500 | 8,500 | |||||||||
Interest expense | 63,846 | 66,117 | 52,292 | 65,090 | |||||||
Depreciation and amortization | 78,018 | 67,418 | 77,153 | 64,654 | |||||||
Total expenses | 288,288 | 232,781 | 282,245 | 223,247 | |||||||
Nonoperating income, net (3) | 5,158 | 928 | 5,853 | 2,211 | |||||||
31,131 | 67,226 | 27,367 | 61,777 | ||||||||
Income tax expense | (212 | ) | (3,264 | ) | (321 | ) | (4,163 | ) | |||
63,962 | 57,614 | ||||||||||
Gain on disposition, net of tax (4) | 3,713 | ||||||||||
63,962 | 61,327 | ||||||||||
Equity in income of Unconsolidated Joint Ventures | 33,770 | 33,376 | |||||||||
Net income | 64,689 | 60,422 | |||||||||
Net income attributable to noncontrolling interests: | |||||||||||
Noncontrolling share of income of consolidated joint ventures | (2,824 | ) | (3,049 | ) | |||||||
Noncontrolling share of income of TRG | (15,201 | ) | (14,004 | ) | |||||||
Distributions to participating securities of TRG | (1,198 | ) | (1,147 | ) | |||||||
Preferred stock dividends | (11,569 | ) | (11,569 | ) | |||||||
Net income attributable to Taubman Centers, Inc. common shareowners | 33,897 | 30,653 | |||||||||
SUPPLEMENTAL INFORMATION: | |||||||||||
EBITDA - 100% | 172,995 | 200,761 | 156,812 | 195,965 | |||||||
EBITDA - outside partners' share | (12,515 | ) | (97,233 | ) | (12,702 | ) | (92,904 | ) | |||
Beneficial interest in EBITDA | 160,480 | 103,528 | 144,110 | 103,061 | |||||||
Beneficial share of gain on disposition (3) | (2,814 | ) | |||||||||
Beneficial interest expense | (57,807 | ) | (34,014 | ) | (46,320 | ) | (33,630 | ) | |||
Beneficial income tax expense - TRG and TCO | (129 | ) | (1,364 | ) | (247 | ) | (2,151 | ) | |||
Beneficial income tax expense - TCO | 3 | 102 | |||||||||
Non-real estate depreciation | (2,264 | ) | (1,434 | ) | |||||||
Preferred dividends and distributions | (11,569 | ) | (11,569 | ) | |||||||
Funds from Operations attributable to partnership unitholders and participating securities of TRG | 88,714 | 68,150 | 84,642 | 64,466 | |||||||
STRAIGHTLINE AND PURCHASE ACCOUNTING ADJUSTMENTS: | |||||||||||
Net straight-line adjustments to rental revenue, recoveries, and ground rent expense at TRG% | 1,355 | 1,152 | 435 | 647 | |||||||
Country Club Plaza purchase accounting adjustments - minimum rents increase at TRG% | 1,387 | 54 | |||||||||
The Mall at Green Hills purchase accounting adjustments - minimum rents increase | 58 | 82 | |||||||||
(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) Certain expenses of Starfield Hanam, which were previously classified in "Other operating" expense, are now included in "Maintenance, taxes, utilities and promotion" expense. Amounts for 2017 have been reclassified to conform to the 2018 classification. | |||||||||||
(3) During the six months ended June 30, 2018, an expense of $0.9 million was incurred for the fluctuation in the fair value of the SPG common shares investment. In connection with the adoption of Accounting Standards Update No. 2016-01 on January 1, 2018, the Company now measures its investment in SPG common shares at fair value with changes in value recorded through net income. | |||||||||||
(4) During the six months ended June 30, 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 June 30, 2018 and 2017 | |||||||||||||||||
(in thousands of dollars except as noted; may not add or recalculate due to rounding) | |||||||||||||||||
2018 | 2017 | ||||||||||||||||
Shares | Per Share | Shares | Per Share | ||||||||||||||
Dollars | /Units | /Unit | Dollars | /Units | /Unit | ||||||||||||
Net income attributable to TCO common shareowners - basic | 15,307 | 60,992,200 | 0.25 | 13,483 | 60,694,727 | 0.22 | |||||||||||
Add impact of share-based compensation | 17 | 240,333 | 22 | 306,861 | |||||||||||||
Net income attributable to TCO common shareowners - diluted | 15,324 | 61,232,533 | 0.25 | 13,505 | 61,001,588 | 0.22 | |||||||||||
Add depreciation of TCO's additional basis | 1,617 | 0.03 | 1,617 | 0.03 | |||||||||||||
Add TCO's additional income tax expense | — | 0.00 | 2 | 0.00 | |||||||||||||
Net income attributable to TCO common shareowners, excluding step-up depreciation and additional income tax expense | 16,941 | 61,232,533 | 0.28 | 15,124 | 61,001,588 | 0.25 | |||||||||||
Add noncontrolling share of income of TRG | 6,922 | 24,951,981 | 6,214 | 24,970,351 | |||||||||||||
Add distributions to participating securities of TRG | 599 | 871,262 | 576 | 871,262 | |||||||||||||
Net income attributable to partnership unitholders and participating securities of TRG | 24,462 | 87,055,776 | 0.28 | 21,914 | 86,843,201 | 0.25 | |||||||||||
Add (less) depreciation and amortization: | |||||||||||||||||
Consolidated businesses at 100% | 42,996 | 0.49 | 39,442 | 0.45 | |||||||||||||
Depreciation of TCO's additional basis | (1,617 | ) | (0.02 | ) | (1,617 | ) | (0.02 | ) | |||||||||
Noncontrolling partners in consolidated joint ventures | (1,717 | ) | (0.02 | ) | (1,811 | ) | (0.02 | ) | |||||||||
Share of Unconsolidated Joint Ventures | 17,325 | 0.20 | 17,521 | 0.20 | |||||||||||||
Non-real estate depreciation | (1,128 | ) | (0.01 | ) | (745 | ) | (0.01 | ) | |||||||||
Less impact of share-based compensation | (17 | ) | (0.00 | ) | (22 | ) | (0.00 | ) | |||||||||
Funds from Operations attributable to partnership unitholders and participating securities of TRG | 80,304 | 87,055,776 | 0.92 | 74,682 | 86,843,201 | 0.86 | |||||||||||
TCO's average ownership percentage of TRG - basic (1) | 71.0 | % | 70.9 | % | |||||||||||||
Funds from Operations attributable to TCO's common shareowners, excluding additional income tax expense (1) | 56,990 | 0.92 | 52,913 | 0.86 | |||||||||||||
Less TCO's additional income tax expense | — | 0.00 | (2 | ) | (0.00 | ) | |||||||||||
Funds from Operations attributable to TCO's common shareowners (1) | 56,990 | 0.92 | 52,911 | 0.86 | |||||||||||||
Funds from Operations attributable to partnership unitholders and participating securities of TRG | 80,304 | 87,055,776 | 0.92 | 74,682 | 86,843,201 | 0.86 | |||||||||||
Restructuring charge | (77 | ) | (0.00 | ) | 416 | 0.00 | |||||||||||
Costs associated with shareowner activism | 5,000 | 0.06 | 5,000 | 0.06 | |||||||||||||
Fluctuation in fair value of SPG common shares investment | (9,348 | ) | (0.11 | ) | |||||||||||||
Adjusted Funds from Operations attributable to partnership unitholders and participating securities of TRG | 75,879 | 87,055,776 | 0.87 | 80,098 | 86,843,201 | 0.92 | |||||||||||
TCO's average ownership percentage of TRG - basic (2) | 71.0 | % | 70.9 | % | |||||||||||||
Adjusted Funds from Operations attributable to TCO's common shareowners (2) | 53,849 | 0.87 | 56,750 | 0.92 | |||||||||||||
(1) For the three months ended June 30, 2018, Funds from Operations attributable to TCO's common shareowners was $56,262 using TCO's diluted average ownership percentage of TRG of 70.1%. For the three months ended June 30, 2017, Funds from Operations attributable to TCO's common shareowners was $52,193 using TCO's diluted average ownership percentage of TRG of 69.9%. | |||||||||||||||||
(2) For the three months ended June 30, 2018, Adjusted Funds from Operations attributable to TCO's common shareowners was $53,162 using TCO's diluted average ownership percentage of TRG of 70.1%. For the three months ended June 30, 2017, Adjusted Funds from Operations attributable to TCO's common shareowners was $55,981 using TCO's diluted average ownership percentage of TRG of 69.9%. |
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 Six Months Ended June 30, 2018 and 2017 | |||||||||||||||||
(in thousands of dollars except as noted; may not add or recalculate due to rounding) | |||||||||||||||||
2018 | 2017 | ||||||||||||||||
Shares | Per Share | Shares | Per Share | ||||||||||||||
Dollars | /Units | /Unit | Dollars | /Units | /Unit | ||||||||||||
Net income attributable to TCO common shareowners - basic | 33,897 | 60,954,924 | 0.56 | 30,653 | 60,625,481 | 0.51 | |||||||||||
Add impact of share-based compensation | 46 | 264,738 | 67 | 402,760 | |||||||||||||
Net income attributable to TCO common shareowners - diluted | 33,943 | 61,219,662 | 0.55 | 30,720 | 61,028,241 | 0.50 | |||||||||||
Add depreciation of TCO's additional basis | 3,234 | 0.05 | 3,234 | 0.05 | |||||||||||||
Add TCO's additional income tax expense | 3 | 0.00 | 102 | 0.00 | |||||||||||||
Net income attributable to TCO common shareowners, excluding step-up depreciation and additional income tax expense | 37,180 | 61,219,662 | 0.60 | 34,056 | 61,028,241 | 0.56 | |||||||||||
Add noncontrolling share of income of TRG | 15,201 | 24,953,313 | 14,004 | 24,974,128 | |||||||||||||
Add distributions to participating securities of TRG | 1,198 | 871,262 | 1,147 | 871,262 | |||||||||||||
Net income attributable to partnership unitholders and participating securities of TRG | 53,579 | 87,044,237 | 0.60 | 49,207 | 86,873,631 | 0.57 | |||||||||||
Add (less) depreciation and amortization: | |||||||||||||||||
Consolidated businesses at 100% | 78,018 | 0.90 | 77,153 | 0.89 | |||||||||||||
Depreciation of TCO's additional basis | (3,234 | ) | (0.04 | ) | (3,234 | ) | (0.04 | ) | |||||||||
Noncontrolling partners in consolidated joint ventures | (3,569 | ) | (0.04 | ) | (3,607 | ) | (0.04 | ) | |||||||||
Share of Unconsolidated Joint Ventures | 34,380 | 0.39 | 33,173 | 0.38 | |||||||||||||
Non-real estate depreciation | (2,264 | ) | (0.03 | ) | (1,434 | ) | (0.02 | ) | |||||||||
Less beneficial gain on disposition, net of tax | (2,083 | ) | (0.02 | ) | |||||||||||||
Less impact of share-based compensation | (46 | ) | (0.00 | ) | (67 | ) | (0.00 | ) | |||||||||
Funds from Operations attributable to partnership unitholders and participating securities of TRG | 156,864 | 87,044,237 | 1.80 | 149,108 | 86,873,631 | 1.72 | |||||||||||
TCO's average ownership percentage of TRG - basic (1) | 71.0 | % | 70.8 | % | |||||||||||||
Funds from Operations attributable to TCO's common shareowners, excluding additional income tax expense (1) | 111,301 | 1.80 | 105,605 | 1.72 | |||||||||||||
Less TCO's additional income tax expense | (3 | ) | (0.00 | ) | (102 | ) | (0.00 | ) | |||||||||
Funds from Operations attributable to TCO's common shareowners (1) | 111,298 | 1.80 | 105,503 | 1.71 | |||||||||||||
Funds from Operations attributable to partnership unitholders and participating securities of TRG | 156,864 | 87,044,237 | 1.80 | 149,108 | 86,873,631 | 1.72 | |||||||||||
Restructuring charge | (423 | ) | (0.00 | ) | 2,312 | 0.03 | |||||||||||
Costs associated with shareowner activism | 8,500 | 0.10 | 8,500 | 0.10 | |||||||||||||
Fluctuation in fair value of SPG common shares investment | 914 | 0.01 | |||||||||||||||
Partial write-off of deferred financing costs | 382 | 0.00 | 413 | 0.00 | |||||||||||||
Adjusted Funds from Operations attributable to partnership unitholders and participating securities of TRG | 166,237 | 87,044,237 | 1.91 | 160,333 | 86,873,631 | 1.85 | |||||||||||
TCO's average ownership percentage of TRG - basic (2) | 71.0 | % | 70.8 | % | |||||||||||||
Adjusted Funds from Operations attributable to TCO's common shareowners (2) | 117,949 | 1.91 | 113,555 | 1.85 | |||||||||||||
(1) For the six months ended June 30, 2018, Funds from Operations attributable to TCO's common shareowners was $109,847 using TCO's diluted average ownership percentage of TRG of 70.0%. For the six months ended June 30, 2017, Funds from Operations attributable to TCO's common shareowners was $103,954 using TCO's diluted average ownership percentage of TRG of 69.8%. | |||||||||||||||||
(2) For the six months ended June 30, 2018, Adjusted Funds from Operations attributable to TCO's common shareowners was $116,407 using TCO's diluted average ownership percentage of TRG of 70.0%. For the six months ended June 30, 2017, Adjusted Funds from Operations attributable to TCO's common shareowners was $111,890 using TCO's diluted average ownership percentage of TRG of 69.8%. |
TAUBMAN CENTERS, INC. | ||||||||||||||
Table 5 - Reconciliation of Net Income to Beneficial Interest in EBITDA and Adjusted Beneficial Interest in EBITDA | ||||||||||||||
For the Periods Ended June 30, 2018 and 2017 | ||||||||||||||
(in thousands of dollars; amounts attributable to TCO may not recalculate due to rounding) | ||||||||||||||
Three Months Ended | Year to Date | |||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||
Net income | 30,093 | 27,663 | 64,689 | 60,422 | ||||||||||
Add (less) depreciation and amortization: | ||||||||||||||
Consolidated businesses at 100% | 42,996 | 39,442 | 78,018 | 77,153 | ||||||||||
Noncontrolling partners in consolidated joint ventures | (1,717 | ) | (1,811 | ) | (3,569 | ) | (3,607 | ) | ||||||
Share of Unconsolidated Joint Ventures | 17,325 | 17,521 | 34,380 | 33,173 | ||||||||||
Add (less) interest expense and income tax expense: | ||||||||||||||
Interest expense: | ||||||||||||||
Consolidated businesses at 100% | 33,023 | 26,746 | 63,846 | 52,292 | ||||||||||
Noncontrolling partners in consolidated joint ventures | (3,028 | ) | (2,997 | ) | (6,039 | ) | (5,972 | ) | ||||||
Share of Unconsolidated Joint Ventures | 17,263 | 17,849 | 34,014 | 33,630 | ||||||||||
Income tax expense: | ||||||||||||||
Consolidated businesses at 100% | 28 | 113 | 212 | 321 | ||||||||||
Noncontrolling partners in consolidated joint ventures | (33 | ) | (43 | ) | (83 | ) | (74 | ) | ||||||
Share of Unconsolidated Joint Ventures | 654 | 518 | 1,364 | 2,151 | ||||||||||
Share of income tax expense on disposition | 731 | |||||||||||||
Less noncontrolling share of income of consolidated joint ventures | (1,480 | ) | (1,605 | ) | (2,824 | ) | (3,049 | ) | ||||||
Beneficial interest in EBITDA | 135,124 | 123,396 | 264,008 | 247,171 | ||||||||||
TCO's average ownership percentage of TRG - basic | 71.0 | % | 70.9 | % | 71.0 | % | 70.8 | % | ||||||
Beneficial interest in EBITDA attributable to TCO | 95,894 | 87,428 | 187,324 | 175,058 | ||||||||||
Beneficial interest in EBITDA | 135,124 | 123,396 | 264,008 | 247,171 | ||||||||||
Add (less): | ||||||||||||||
Restructuring charge | (77 | ) | 416 | (423 | ) | 2,312 | ||||||||
Costs associated with shareowner activism | 5,000 | 5,000 | 8,500 | 8,500 | ||||||||||
Fluctuation in the fair value of SPG common shares investment | (9,348 | ) | 914 | |||||||||||
Beneficial share of gain on disposition | (2,814 | ) | ||||||||||||
Adjusted Beneficial interest in EBITDA | 130,699 | 128,812 | 272,999 | 255,169 | ||||||||||
TCO's average ownership percentage of TRG - basic | 71 | % | 70.9 | % | 71.0 | % | 70.8 | % | ||||||
Adjusted Beneficial interest in EBITDA attributable to TCO | 92,753 | 91,265 | 193,700 | 180,723 |
TAUBMAN CENTERS, INC. | |||||||||||||||
Table 6 - Reconciliation of Net Income to Net Operating Income (NOI) | |||||||||||||||
For the Three Months Ended June 30, 2018, 2017, and 2016 | |||||||||||||||
(in thousands of dollars) | |||||||||||||||
Three Months Ended | Three Months Ended | ||||||||||||||
2018 | 2017 | 2017 | 2016 | ||||||||||||
Net income | 30,093 | 27,663 | 27,663 | 57,744 | |||||||||||
Add (less) depreciation and amortization: | |||||||||||||||
Consolidated businesses at 100% | 42,996 | 39,442 | 39,442 | 29,716 | |||||||||||
Noncontrolling partners in consolidated joint ventures | (1,717 | ) | (1,811 | ) | (1,811 | ) | (1,267 | ) | |||||||
Share of Unconsolidated Joint Ventures | 17,325 | 17,521 | 17,521 | 11,669 | |||||||||||
Add (less) interest expense and income tax expense (benefit): | |||||||||||||||
Interest expense: | |||||||||||||||
Consolidated businesses at 100% | 33,023 | 26,746 | 26,746 | 20,588 | |||||||||||
Noncontrolling partners in consolidated joint ventures | (3,028 | ) | (2,997 | ) | (2,997 | ) | (2,566 | ) | |||||||
Share of Unconsolidated Joint Ventures | 17,263 | 17,849 | 17,849 | 13,207 | |||||||||||
Income tax expense: | |||||||||||||||
Consolidated businesses at 100% | 28 | 113 | 113 | 434 | |||||||||||
Noncontrolling partners in consolidated joint ventures | (33 | ) | (43 | ) | (43 | ) | |||||||||
Share of Unconsolidated Joint Ventures | 654 | 518 | 518 | ||||||||||||
Less noncontrolling share of income of consolidated joint ventures | (1,480 | ) | (1,605 | ) | (1,605 | ) | (1,630 | ) | |||||||
Add EBITDA attributable to outside partners: | |||||||||||||||
EBITDA attributable to noncontrolling partners in consolidated joint ventures | 6,258 | 6,456 | 6,456 | 5,471 | |||||||||||
EBITDA attributable to outside partners in Unconsolidated Joint Ventures | 46,206 | 45,041 | 45,041 | 31,869 | |||||||||||
EBITDA at 100% | 187,588 | 174,893 | 174,893 | 165,235 | |||||||||||
Add (less) items excluded from shopping center NOI: | |||||||||||||||
General and administrative expenses | 8,522 | 9,416 | 9,416 | 11,693 | |||||||||||
Management, leasing, and development services, net | (418 | ) | (780 | ) | (780 | ) | (22,302 | ) | (1) | ||||||
Restructuring charge | (77 | ) | 416 | 416 | |||||||||||
Costs associated with shareowner activism | 5,000 | 5,000 | 5,000 | ||||||||||||
Straight-line of rents | (1,927 | ) | (2,869 | ) | (2,869 | ) | (2,024 | ) | |||||||
Fluctuation in fair value of SPG common shares investment | (9,348 | ) | |||||||||||||
Insurance recoveries - The Mall of San Juan | (360 | ) | |||||||||||||
Dividend income | (1,150 | ) | (1,033 | ) | (1,033 | ) | (944 | ) | |||||||
Interest income | (2,024 | ) | (2,245 | ) | (2,245 | ) | (1,760 | ) | |||||||
Other nonoperating income | — | (156 | ) | (156 | ) | (832 | ) | ||||||||
Unallocated operating expenses and other | 8,402 | 9,054 | 9,054 | 12,148 | |||||||||||
NOI at 100% - total portfolio | 194,208 | 191,696 | 191,696 | 161,214 | |||||||||||
Less NOI of non-comparable centers | (13,799 | ) | (2) | (14,315 | ) | (2) | (36,843 | ) | (3) | (15,841 | ) | (4) | |||
NOI at 100% - comparable centers | 180,409 | 177,381 | 154,853 | 145,373 | |||||||||||
NOI - growth % | 1.7 | % | 6.5 | % | |||||||||||
NOI at 100% - comparable centers | 180,409 | 177,381 | 154,853 | 145,373 | |||||||||||
Lease cancellation income | (2,060 | ) | (5,139 | ) | (5,671 | ) | (251 | ) | |||||||
NOI at 100% - comparable centers excluding lease cancellation income | 178,349 | 172,242 | 149,182 | 145,122 | |||||||||||
NOI at 100% excluding lease cancellation income - growth % | 3.5 | % | 2.8 | % | |||||||||||
(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 for Crystals due to a change in ownership of the center. | |||||||||||||
(2 | ) | Includes Beverly Center, CityOn.Zhengzhou, The Mall of San Juan, and Taubman Prestige Outlets Chesterfield. | |||||||||||||
(3 | ) | Includes Beverly Center, CityOn.Xi'an, CityOn.Zhengzhou, Country Club Plaza, International Market Place, and Starfield Hanam. | |||||||||||||
(4 | ) | Includes Beverly Center, CityOn.Xi'an, and Country Club Plaza. |
TAUBMAN CENTERS, INC. | |||||||||||||||
Table 7 - Reconciliation of Net Income to Net Operating Income (NOI) | |||||||||||||||
For the Six Months Ended June 30, 2018, 2017, and 2016 | |||||||||||||||
(in thousands of dollars) | |||||||||||||||
Year to Date | Year to Date | ||||||||||||||
2018 | 2017 | 2017 | 2016 | ||||||||||||
Net income | 64,689 | 60,422 | 60,422 | 102,073 | |||||||||||
Add (less) depreciation and amortization: | |||||||||||||||
Consolidated businesses at 100% | 78,018 | 77,153 | 77,153 | 59,462 | |||||||||||
Noncontrolling partners in consolidated joint ventures | (3,569 | ) | (3,607 | ) | (3,607 | ) | (2,686 | ) | |||||||
Share of Unconsolidated Joint Ventures | 34,380 | 33,173 | 33,173 | 21,004 | |||||||||||
Add (less) interest expense and income tax expense (benefit): | |||||||||||||||
Interest expense: | |||||||||||||||
Consolidated businesses at 100% | 63,846 | 52,292 | 52,292 | 39,716 | |||||||||||
Noncontrolling partners in consolidated joint ventures | (6,039 | ) | (5,972 | ) | (5,972 | ) | (4,518 | ) | |||||||
Share of Unconsolidated Joint Ventures | 34,014 | 33,630 | 33,630 | 24,735 | |||||||||||
Income tax expense: | |||||||||||||||
Consolidated businesses at 100% | 212 | 321 | 321 | 736 | |||||||||||
Noncontrolling partners in consolidated joint ventures | (83 | ) | (74 | ) | (74 | ) | |||||||||
Share of Unconsolidated Joint Ventures | 1,364 | 2,151 | 2,151 | ||||||||||||
Share of income tax expense on disposition | 731 | 731 | |||||||||||||
Less noncontrolling share of income of consolidated joint ventures | (2,824 | ) | (3,049 | ) | (3,049 | ) | (4,151 | ) | |||||||
Add EBITDA attributable to outside partners: | |||||||||||||||
EBITDA attributable to noncontrolling partners in consolidated joint ventures | 12,515 | 12,702 | 12,702 | 11,363 | |||||||||||
EBITDA attributable to outside partners in Unconsolidated Joint Ventures | 97,233 | 92,904 | 92,904 | 62,777 | |||||||||||
EBITDA at 100% | 373,756 | 352,777 | 352,777 | 310,511 | |||||||||||
Add (less) items excluded from shopping center NOI: | |||||||||||||||
General and administrative expenses | 17,015 | 20,167 | 20,167 | 23,073 | |||||||||||
Management, leasing, and development services, net | (910 | ) | (1,118 | ) | (1,118 | ) | (23,158 | ) | (1) | ||||||
Restructuring charge | (423 | ) | 2,312 | 2,312 | |||||||||||
Costs associated with shareowner activism | 8,500 | 8,500 | 8,500 | ||||||||||||
Straight-line of rents | (7,414 | ) | (4,725 | ) | (4,725 | ) | (3,138 | ) | |||||||
Fluctuation in fair value of SPG common shares investment | 914 | ||||||||||||||
Insurance recoveries - The Mall of San Juan | (1,030 | ) | |||||||||||||
Gain on disposition | (4,445 | ) | (4,445 | ) | |||||||||||
Gains on sales of peripheral land | (1,668 | ) | (1,668 | ) | (403 | ) | |||||||||
Dividend income | (2,301 | ) | (2,066 | ) | (2,066 | ) | (1,888 | ) | |||||||
Interest income | (3,644 | ) | (4,277 | ) | (4,277 | ) | (2,272 | ) | |||||||
Other nonoperating expense (income) | (25 | ) | (53 | ) | (53 | ) | (689 | ) | |||||||
Unallocated operating expenses and other | 16,523 | 16,376 | 16,376 | 22,176 | |||||||||||
NOI at 100% - total portfolio | 400,961 | 381,780 | 381,780 | 324,212 | |||||||||||
Less NOI of non-comparable centers | (26,602 | ) | (2) | (26,725 | ) | (2) | (70,767 | ) | (3) | (28,491 | ) | (4) | |||
NOI at 100% - comparable centers | 374,359 | 355,055 | 311,013 | 295,721 | |||||||||||
NOI - growth % | 5.4 | % | 5.2 | % | |||||||||||
NOI at 100% - comparable centers | 374,359 | 355,055 | 311,013 | 295,721 | |||||||||||
Lease cancellation income | (13,744 | ) | (8,746 | ) | (9,279 | ) | (2,226 | ) | |||||||
NOI at 100% - comparable centers excluding lease cancellation income | 360,615 | 346,309 | 301,734 | 293,495 | |||||||||||
NOI at 100% excluding lease cancellation income - growth % | 4.1 | % | 2.8 | % | |||||||||||
(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 for Crystals due to a change in ownership of the center. | |||||||||||||
(2 | ) | Includes Beverly Center, CityOn.Zhengzhou, The Mall of San Juan, and Taubman Prestige Outlets Chesterfield. | |||||||||||||
(3 | ) | Includes Beverly Center, CityOn.Xi'an, CityOn.Zhengzhou, Country Club Plaza, International Market Place, and Starfield Hanam. | |||||||||||||
(4 | ) | Includes Beverly Center, CityOn.Xi'an, and Country Club Plaza. |
TAUBMAN CENTERS, INC. | |||||||
Table 8 - 2018 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 | |||||||
Adjusted Funds from Operations per common share | 3.74 | 3.84 | |||||
Costs associated with shareowner activism (1) | (0.10 | ) | (0.10 | ) | |||
Fluctuations in fair value of SPG common shares investment (1) | (0.01 | ) | (0.01 | ) | |||
Funds from Operations per common share | 3.63 | 3.73 | |||||
Real estate depreciation - TRG | (2.37 | ) | (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) | 1.11 | 1.26 | |||||
(1 | ) | Amount represents actual amounts recognized through the second quarter of 2018. Amount does not include future assumptions of amounts to be incurred during 2018. In connection with the adoption of Accounting Standards Update No. 2016-01 on January 1, 2018, the Company now measures its investment in SPG common shares at fair value with changes in value recorded through net income. |