Taubman Centers Announces Strong 2011 Results and Introduces 2012 Guidance
BLOOMFIELD HILLS -- Taubman Centers, Inc. today reported financial results for the quarter and full year periods ended December 31, 2011.
“We’re thrilled with our year,” said Robert S. Taubman, chairman, president and chief executive officer of Taubman Centers. “Our results benefited from our record tenant sales, increased rents, and our continued focus on expense control at our centers. These were partially offset by a significant reduction in lease cancellation income.”
Mall tenant sales per square foot at Taubman properties were up 14.2 percent during the quarter and 13.7 percent for the year ended December 31, 2011. The resulting sales per square foot of $641 is another record for the company and for the publicly held U.S. regional mall industry. This follows a record-setting 2010 sales per square foot of $564. “We’ve now reported an unprecedented eight quarters of double-digit tenant sales increases,” said Mr. Taubman.
Leased space for Taubman’s portfolio was 92.4 percent at December 31, 2011, up from 92.0 percent on December 31, 2010. Ending occupancy was 90.7 percent on December 31, 2011, up from 90.1 percent on December 31, 2010.
Average rent per square foot for the year ended December 31, 2011 was $45.22, up 3.6 percent from $43.66 for the year ended December 31, 2010. Opening rents per square foot for the year were $56.20, up 13.1 percent from opening rents per square foot of $49.69 in 2010.
NOI excluding lease cancellation income was up 4.9 percent for the year and 2.1 percent over fourth quarter 2010. “The fundamentals of our business are outstanding,” added Mr. Taubman. “We’re firing on all cylinders. The high quality regional mall is alive and well.”
In December 2011, the company completed the purchase of The Mall at Green Hills (Nashville, Tenn.) and The Gardens on El Paseo and El Paseo Village (Palm Desert, Calif.). “The addition of these assets both enhance the quality of the company’s portfolio and affirm our commitment to acquisitions as a part of our external growth strategy,” said Mr. Taubman.
Also in December 2011, the company completed the acquisition of a 90 percent controlling interest in a leading China-based retail real estate consultancy headquartered in Beijing. The new company, Taubman TCBL, will combine the local insights and network of TCBL with Taubman’s global industry expertise and reputation and will serve as the platform for Taubman’s future investments in mainland China.
The grand opening of City Creek Center (Salt Lake City, Utah), the centerpiece of a 20-acre mixed-use development in downtown Salt Lake City, is scheduled for 10:00 a.m. on March 22, 2012. This is the only regional mall slated to open in the U.S. this year. The center will be anchored by Macy’s and Nordstrom. Leasing is now 92 percent committed featuring stores such as Tiffany & Co., Rolex, Hugo Boss, BCBGMAXAZRIA, Cheesecake Factory, Michael Kors, Coach and Brooks Brothers. “This is an extraordinary project, one of the most complex we’ve ever developed, and it is at the core of revitalizing the city. We believe both the design and merchandising will create a unique customer experience,” said Mr. Taubman.
In November 2011, the company completed a $325 million 10-year, non-recourse financing on its 50.1 percent owned International Plaza (Tampa, Fla.). The loan bears interest at an all-in fixed rate of 4.89%. The company received $25.2 million as its share of the excess proceeds, which it used to pay down its lines of credit.
In October 2011, the company successfully redeemed the Series F 8.2% Preferred Equity for $27 million, a $2.2 million discount from book value. As a result, there was a positive impact to the company’s share of earnings in the fourth quarter of 2011, due to the reduction in distributions, partially offset by a modest increase in interest expense on borrowings used for the redemption.
In December 2011, the company increased its regular quarterly dividend by 2.9 percent. Since its public offering in 1992, Taubman Centers’ dividend has been increased 14 times, achieving a 3.9 percent compounded annual growth rate.
During 2011, the company enjoyed a 27 percent total shareholder return. This compares to the MSCI US REIT Index of 8.7 percent and the S&P 500 Index of 2.1 percent. Over the 10 years ending December 31, 2011, the company's compounded annual shareholder return has been 20.5 percent. This compares to the MSCI US REIT Index of 10.2 percent and the S&P 500 Index of 2.9 percent.
The company recently announced that titles to The Pier Shops and Regency Square have been transferred to the mortgage lenders and management of the centers has been fully transitioned. Taubman was relieved of debt obligations totaling $207.2 million plus accrued interest associated with the properties. As a result, non-cash accounting gains totaling $174.2 million were recognized in the fourth quarter of 2011 on extinguishment of the debt obligations.
The company is introducing guidance for 2012. The company expects FFO per diluted share to be in the range of $3.14 to $3.24 in 2012. Net income allocable to common shareholders for the year is expected to be in the range of $1.14 to $1.29.