Taubman Centers Inc. (TCO), a real estate investment trust (:REIT), reported first quarter 2012 FFO (funds from operations) of $65.1 million or 75 cents per share, compared with $52.7 million or 63 cents in the year-earlier quarter. Fund from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income, while adjusted FFO excludes impairment and restructuring charges.
The adjusted FFO for the reported quarter was 75 cents per share compared with 69 cents in the year-ago period. The first quarter 2012 adjusted FFO per share beat the Zacks Consensus Estimate by 5 cents.
Total revenue during the reported quarter stood at $169.3 million versus $149.6 million in the year-ago quarter. Total revenue in the quarter was well ahead of the Zacks Consensus Estimate of $157 million. Occupancy of the entire portfolio increased to 89.5% during the quarter from 87.9% in the year-ago period.
Average rent in the overall portfolio was $46.14 per square foot during the quarter compared with $45.20 in the year-ago quarter. Mall tenant sales per square foot improved 13.3% during the quarter,bringing the tally on a 12-month trailing basis to $659.
During the reported quarter, Net Operating Income (:NOI),excluding lease cancellation income, increased to 9.3%.
During first half 2012, Taubman expects to begin construction on a 640.000 square feet center named Plaza Internacional in San Juan, Puerto Rico. The mall would be anchored by the island's first Nordstrom and first Saks Fifth Avenue store totaling 400,000 square feet of restaurants and mall tenant space. The center is expected to open in late 2014.
Additionally, the company also plans to start construction on The Mall at University Town Center in Florida in the second half of 2012. Spanning 900,000 square feet, the mall would be anchored by Saks Fifth Avenue, Macy's and Dillard's totaling 460,000 square feet of restaurants and mall tenant space.
During the quarter, the company opened doors to the City Creek Center, a 23-acre mixed-use development in Salt Lake City, Utah. This center has an upscale focus with a healthy visitors market.
During the quarter,Taubman also announced that it has broken ground on a new premium outlet development center named Taubman Prestige Outlets Chesterfield, located in the suburban city of Chesterfield, Missouri. The shopping center, spanning 450,000 square feet, will consist of more than 100 stores and is expected to open in fall 2013.
The company’s debt to total market cap ratio was 33.3% at the end of the quarter and had $27.1 million in cash and cash equivalents. With strong results in the reported quarter, Taubman increased its 2012 FFO guidance per share from $3.14 - $3.24 to $3.18 - $3.25.
Taubman currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock. One of its competitors, Simon Property Group Inc (SPG) holds a Zacks #2 Rank which translates into a short-term Buy rating.
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