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Taubman to Buy Back Shares

Zacks Equity Research

As part of its effort to enhance shareholder value, Taubman Centers, Inc. (TCO) disclosed a $200 million share buyback program. Authorized by the company’s Board of Directors, this share buyback program, upon full execution, would reflect nearly 5% of the company’s outstanding common shares.

This strategic move is expected to be accretive to Taubman’s earnings and net asset value per share. and will help in lifting the relatively undervalued share price. The company will finance the share repurchase scheme with its general corporate funds but may also borrow under its line of credit depending on several factors.

Moreover, Taubman has established an impressive track record in conservative capital management as well as returning cash to shareholders through regular dividends. Recently, the company declared a quarterly common stock dividend of 50 cents per share, which is payable on Sep 30, 2013 to shareholders of record as of Sep 16.

Notably, the company never reduced its common dividend since it went public in 1992 but has, on the other hand, hiked its payout 16 times since then. Such efforts boost shareholders’ confidence on the stock.

Last month, Taubman reported second-quarter 2013 funds from operations (:FFO) per share of 75 cents, missing the Zacks Consensus Estimate by 4 cents. The estimate miss was mainly due to lower-than-expected revenues in the quarter. The company has, however, reiterated its guidance range for 2013.

Taubman currently carries a Zacks Rank #3 (Hold). Other well performing REITs include EastGroup Properties Inc. (EGP), Highwoods Properties Inc. (HIW) and Douglas Emmett Inc. (DEI). All these stocks carry a Zacks Rank #2 (Buy).

Note: FFO, 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.

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