Taubman Centers, Inc. Issues Third Quarter Results

·29 min read

- Earnings Impacted by COVID-19 Pandemic

- All U.S. Properties and Nearly 94 Percent of Tenants Have Reopened

- U.S. Total Mall Tenant Sales, Traffic and Tenant Revenue Collections Have Improved Each Month Since May

- Asia Mall Tenant Sales per Square Foot Up

- Starfield Anseong, Taubman Asia’s Fourth Investment, Opened on October 7 Nearly 100 Percent Leased and Over 90 Percent Occupied

Taubman Centers, Inc. (NYSE: TCO) today reported financial results for the third quarter of 2020.

September 30, 2020
Three Months
Ended

September 30, 2019
Three Months
Ended

September 30, 2020
Nine Months
Ended

September 30, 2019
Nine Months
Ended

Net income (loss) attributable to common shareowners, diluted (in thousands)

($30,072)(1)

$216,873

($44,269)(1)

$239,223

Net income (loss) attributable to common shareowners (EPS) per diluted common share

($0.49)(1)

$3.48

($0.72)(1)

$3.84

Funds from Operations (FFO) per diluted common share

$0.39

$0.88

$1.47

$2.59

Growth rate

(55.7)%

(43.2)%

Adjusted FFO (AFFO) per diluted common share

$0.60(2)

$0.86 (3)

$1.90(2)

$2.74(3)

Growth rate

(30.2)%

(30.7)%

(1) Net income (loss) and EPS for the three and nine-month periods ended September 30, 2020 were lower primarily due to the sale of 50 percent of our interest in Starfield Hanam (Hanam, South Korea) and a litigation settlement related to The Mall of San Juan that resulted in the recognition of gains totaling approximately $3.30 per diluted common share in the third quarter of 2019, as well as the disruption associated with the COVID-19 pandemic in 2020. EPS for the three-month period ended September 30, 2020 included an impairment charge related to Stamford Town Center of $0.23 per diluted common share, partially offset by a gain on the transfer of building and improvements of an anchor space of $0.06 per diluted common share. EPS for the nine-month period ended September 30, 2020 also included gains totaling approximately $0.28 per diluted common share related to the sale of 50 percent of our interest in CityOn.Xi’an (Xi’an, China), as well as accelerated amortization of an allowance related to the closing of an anchor space at a U.S. property.

(2) AFFO for the three and nine-month periods ended September 30, 2020 excluded costs related to the Simon Property Group, Inc. transaction, restructuring charges, fluctuations in the fair value of equity securities and adjustments to the previously recognized promote fee (net of tax) related to Starfield Hanam recorded last year. AFFO for the nine-month period ended September 30, 2020 also excluded deferred income tax expense incurred related to the sale of CityOn.Xi’an and costs associated with the Taubman Asia President transition.

(3) AFFO for the three and nine-month periods ended September 30, 2019 excluded restructuring charges, a promote fee (net of tax) related to Starfield Hanam and costs associated with shareholder activism. AFFO for the nine-month period ended September 30, 2019 also excluded pre-closing costs related to the sale of our interest in three Taubman Asia properties to Blackstone and the fluctuation in the fair value of equity securities.

For the quarter ended September 30, 2020, AFFO per diluted share was $0.60. Disruption related to the COVID-19 pandemic, including mall closures, tenant bankruptcies and nonpayments, significantly impacted third quarter results. Accordingly, the company recognized uncollectible tenant revenues of $28 million at our beneficial interest, or $0.32 per diluted share of AFFO during the quarter. In addition, the company received lease termination income of $19.3 million, at our beneficial interest, or $0.22 per diluted share of AFFO, in the third quarter.

"Operations across our portfolio are steadily improving, despite the continuing impact of the pandemic," said the company’s Chairman, President and CEO Robert S. Taubman. "All of our properties are open and operating and nearly 94 percent of our U.S. tenants have reopened. Since May, traffic, sales and collections have consistently improved."

Operating Statistics

Comparable center NOI (comp center NOI) at our beneficial interest, including lease cancellation income, was down 18.3 percent in the third quarter and 14.4 percent year-to-date, using constant currency exchange rates. Excluding lease cancellation income, comp center NOI was down 29 percent in the quarter and down 18.5 percent year-to-date, using constant currency exchange rates. Higher year-over-year uncollectible tenant revenues impacted comp center NOI excluding lease cancellation income by 16.5 percent in the quarter and 12.6 percent year-to-date.

In the U.S., total mall tenant sales have improved every month since May. In addition, tenant sales per square foot in comparable centers improved throughout the third quarter. Excluding Apple and Tesla (two tenants that create volatility in quarterly reporting) sales per square foot were down 16.4 percent in the third quarter, sequentially improving each month, with September down 5.7 percent. In Asia, sales per square foot were up modestly in the third quarter and year-to-date.

Average rent per square foot for the quarter in U.S. comparable centers was $59.28, down 6.4 percent. Year-to-date average rent per square foot in U.S. comparable centers was $60.52, down 4.7 percent. Lower sales-based rents and rent relief (including abatements) related to the COVID-19 pandemic together impacted average rent per square foot by 5.6 percent in the third quarter and 2.4 percent year-to-date.

Ending occupancy in U.S. comparable centers was 89.9 percent on September 30, 2020, down 2.7 percent from September 30, 2019 largely due to tenant bankruptcies related to the COVID-19 pandemic.

Leased space in U.S. comparable centers was 92.6 percent on September 30, 2020, down 3 percent from September 30, 2019.

Financing and Portfolio Activity

The joint venture that owns Starfield Hanam (17.15 percent owned by the company) has fully refinanced its two construction loans that together had a balance of approximately $319 million U.S. dollars (using September 30 exchange rates) and a weighted average effective rate of 2.67 percent.

In September, the joint venture first repaid the $52 million U.S. dollar construction loan using the property’s available cash.

In October, the joint venture completed two new loans that replace the original construction facilities. The primary new loan is a five-year, non-recourse Korean Won denominated facility with a capacity of approximately $535 million U.S. dollars at current exchange rates. The facility is fully drawn and bears interest at fixed rate of 2.38 percent. This loan is interest-only, until the final year when principal payments are required. The additional facility is a one-year, interest-only, Korean Won denominated loan with a capacity of approximately $9 million U.S. dollars at current exchange rates. This facility is expected to be fully drawn in the fourth quarter and the interest rate will be fixed at that time. These financings have resulted in excess proceeds of approximately $34 million, at our beneficial interest. Together with additional reserves at the property this refinancing is expected to result in the repatriation of $58 million later this year.

In October, the company also completed the sale of Stamford Town Center (Stamford, Conn.), a 50 percent owned joint venture. As a result of the sale, an impairment charge of $19.8 million at our beneficial interest was recognized during the third quarter.

Starfield Anseong Grand Opening

On October 7, the company opened Starfield Anseong (Gyeonggi Province, South Korea) to tremendous enthusiasm from the local community. The one million square foot, modern shopping, entertainment and dining destination, featuring 280 tenants, opened over 90 percent occupied and nearly 100 percent leased. We expect to have 99 percent occupancy by year-end.

Starfield Anseong’s collection of prominent international brands includes Zara, Nike, Uniqlo, H&M, Vans, COS, Guess, Adidas, BMW, Patagonia, Camper, Polo Ralph Lauren, Lacoste, West Elm and Under Armour. The mall is anchored by Shinsegae Factory Store, E-Mart, Toy Kingdom and successful entertainment concepts, including Aquafield, Sports Monster and Megabox, an upscale cinema. Starfield Anseong will serve as the primary shopping destination for Anseong, Asan, Jincheon and Pyeongtaek, four high-growth cities in Greater Seoul.

Early sales and traffic results have been very strong. Starfield Anseong welcomed over one million customers and generated tenant sales of nearly $32 million U.S. dollars within the first ten days following its grand opening. Starfield Anseong is Taubman Asia’s fourth successful development project and its second joint venture with Shinsegae Property.

See Taubman Asia and Shinsegae Group Celebrate the Opening of Starfield Anseong in South Korea Today – Oct. 7, 2020.

COVID-19 Update

Most of Taubman’s U.S. operating properties closed on March 19th, in response to the COVID-19 pandemic, and have reopened gradually with enhanced safety protocols. All U.S. properties and nearly 85 percent of stores had reopened by June 30, 2020. Three of our properties were closed intermittently in the third quarter as a result of state regulations but are once again open. Nearly 94 percent of our tenants have now reopened with traffic, sales, and tenant collections improving each month since May.

In Asia, CityOn.Xi’an, CityOn.Zhengzhou (Zhengzhou, Henan, China) and Starfield Hanam experienced varying levels of disruption from the pandemic but have largely recovered. In the third quarter NOI at our beneficial interest was essentially flat compared to last year and tenant sales per square foot were up modestly. Over 98 percent of tenants are open throughout the three properties.

The company has taken several actions to enhance liquidity due to the disruption caused by the COVID-19 pandemic. U.S. planned capital expenditures for the year have been lowered by approximately $135 million, at our beneficial interest, which represents a reduction of nearly 65 percent from the original budget. In Asia, the only material capital spending this year has been related to the completion of Starfield Anseong, which has been funded by the construction loan.

Operating expenses for the year are expected to be reduced by about $17 million at our beneficial interest. In addition, the company did not pay a dividend on its common stock in the second or third quarter, preserving approximately $120 million of cash.

These initiatives, coupled with improving operations, have significantly enhanced the company’s liquidity position. Total liquidity, which includes cash on hand and borrowing capacity under our lines of credit, was $455 million at the end of the third quarter, up about $90 million from June 30, 2020.

Investor Conference Call

Due to the pending transaction with Simon Property Group, which is currently the subject of litigation, the company will not host a conference call to review the third quarter 2020 financial results.

About Taubman

Taubman Centers is an S&P MidCap 400 Real Estate Investment Trust engaged in the ownership, management and/or leasing of 26 regional, super-regional and outlet malls in the U.S. and Asia. Taubman’s U.S.-owned properties are the most productive in the publicly held U.S. mall industry. Founded in 1950, Taubman is headquartered in Bloomfield Hills, Mich. Taubman Asia, founded in 2005, is headquartered in Hong Kong. www.taubman.com.

For ease of use, references in this press release to "Taubman Centers," "we," "us," "our," "company," "Taubman" or an operating platform mean Taubman Centers, Inc. and/or one or more of a number of separate, affiliated entities. Business is actually conducted by an affiliated entity rather than Taubman Centers, Inc. itself or the named operating platform.

This press release contains certain "forward-looking" statements as that term is defined by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements that are predictive in nature, that depend on or relate to future events or conditions, or that include words such as "believes", "anticipates", "expects", "may", "will", "would," "should", "estimates", "could", "intends", "plans" or other similar expressions are forward-looking statements.

Forward-looking statements involve significant known and unknown risks and uncertainties that may cause actual results in future periods to differ materially from those projected or contemplated in the forward-looking statements as a result of, but not limited to, the following factors: the COVID-19 pandemic and related challenges, risks and uncertainties which have had, and may continue to have, direct and indirect adverse impacts on the general economy, mall environment, tenants, customers, and employees, as well as mall and tenant operations (including the ability to remain open) and operating procedures, occupancy, anchor and mall tenant sales, sales-based rent, rent collection, leasing and negotiated rents, mall development and redevelopment activities and the fair value of assets (increasing the likelihood of future impairment charges); future economic performance, including stabilization and recovery from the impact of the COVID-19 pandemic; savings due to cost-cutting measures; payments of dividends and the sufficiency of cash to meet operational needs; changes in market rental rates; unscheduled closings or bankruptcies of tenants; relationships with anchor tenants; trends in the mall industry; challenges with department stores; changes in consumer shopping behavior, including accelerated trends resulting from the COVID-19 pandemic; the liquidity of real estate investments; Taubman’s ability to comply with debt covenants; the availability and terms of financings; changes in market rates of interest and foreign exchange rates for foreign currencies; changes in value of investments; the ability to hedge interest rate and currency risk; risks related to acquiring, developing, expanding, leasing and managing properties; competitors gaining economies of scale through M&A and consolidation activity; changes in value of investments in foreign entities; risks related to joint venture properties; insurance costs and coverage; security breaches that could impact Taubman’s information technology, infrastructure or personal data; costs associated with response to technology breaches; the loss of key management personnel; shareholder activism costs and related diversion of management time; terrorist activities; maintaining Taubman’s status as a real estate investment trust; changes in the laws of states, localities, and foreign jurisdictions that may increase taxes on the company’s operations; changes in global, national, regional and/or local economic and geopolitical climates; the outcome of any litigation between Taubman and Simon Property Group, Inc. ("Simon") related to the proposed transactions between Taubman and Simon, including the litigation in the State of Michigan Circuit Court for the Sixth Judicial Circuit (Oakland County); the outcome of any shareholder litigation related to the proposed transactions, and insurance coverage for liabilities of Taubman or its directors, if any, thereunder; the inability to complete the proposed transactions due to the failure to satisfy any conditions to completion of the proposed transactions; the risk that a condition to closing of the transaction may not be satisfied; Simon’s and Taubman’s ability to consummate the transaction; the possibility that the anticipated benefits from the transaction will not be fully realized; the ability of Taubman to retain key personnel and maintain relationships with business partners pending the consummation of the transaction; and the impact of legislative, regulatory and competitive changes and other risk factors relating to the industry in which Taubman operates, as detailed from time to time in Taubman’s reports filed with the SEC. There can be no assurance that the transaction will in fact be consummated.

Additional information about these factors and about the material factors or assumptions underlying such forward-looking statements may be found under Item 1.A in Taubman’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as amended, and subsequent reports filed with the Securities and Exchange Commission. Taubman cautions that the foregoing list of important factors that may affect future results is not exhaustive. When relying on forward-looking statements to make decisions with respect to the proposed transaction, shareholders and others should carefully consider the foregoing factors and other uncertainties and potential events. All subsequent written and oral forward-looking statements concerning the proposed transaction or other matters attributable to Taubman or any other person acting on their behalf are expressly qualified in their entirety by the cautionary statements referenced above. The forward-looking statements contained herein speak only as of the date of this communication or the date otherwise specified herein. Taubman does not undertake any obligation to update or revise any forward-looking statements for any reason, even if new information becomes available or other events occur in the future, except as may be required by law.

TAUBMAN CENTERS, INC.

Table 1 - Summary of Results

For the Periods Ended September 30, 2020 and 2019

(in thousands of dollars, except as indicated)

Three Months Ended

Year to Date

2020

2019

2020

2019

Net income (loss)

(36,648

)

316,390

(41,959

)

363,005

Noncontrolling share of income (loss) of consolidated joint ventures

308

(958

)

(1,015

)

(3,219

)

Noncontrolling share of (income) loss of TRG

12,052

(93,690

)

16,653

(103,899

)

Distributions to participating securities of TRG

(597

)

(595

)

(1,817

)

Preferred stock dividends

(5,784

)

(5,784

)

(17,353

)

(17,353

)

Net income (loss) attributable to Taubman Centers, Inc. common shareholders

(30,072

)

215,361

(44,269

)

236,717

Net income (loss) per common share - basic

(0.49

)

3.52

(0.72

)

3.87

Net income (loss) per common share - diluted

(0.49

)

3.48

(0.72

)

3.84

Funds from Operations attributable to partnership unitholders and participating securities of TRG (1)

34,458

78,387

130,379

228,470

Funds from Operations attributable to TCO's common shareholders (1)

24,226

54,747

91,316

160,544

Funds from Operations per common share - basic (1)

0.39

0.89

1.48

2.62

Funds from Operations per common share - diluted (1)

0.39

0.88

1.47

2.59

Adjusted Funds from Operations attributable to partnership unitholders and participating securities of TRG (1)

53,640

75,977

168,542

241,489

Adjusted Funds from Operations attributable to TCO's common shareholders (1)

37,719

53,064

118,108

169,648

Adjusted Funds from Operations per common share - basic (1)

0.61

0.87

1.92

2.77

Adjusted Funds from Operations per common share - diluted (1)

0.60

0.86

1.90

2.74

Weighted average number of common shares outstanding - basic

61,696,565

61,211,249

61,512,816

61,169,279

Weighted average number of common shares outstanding - diluted

61,696,565

62,245,414

61,512,816

62,232,496

Common shares outstanding at end of period

61,723,103

61,213,170

Weighted average units - Operating Partnership - basic

87,713,880

87,641,965

87,696,394

87,097,595

Weighted average units - Operating Partnership - diluted

88,874,258

88,676,130

88,807,212

88,160,812

Units outstanding at end of period - Operating Partnership

87,719,766

87,643,886

Ownership percentage of the Operating Partnership at end of period

70.4

%

69.8

%

Number of owned shopping centers at end of period

24

24

Operating Statistics:

NOI at 100% - comparable centers - growth % (1)(2)

(16.9

)%

(2.5

)%

(14.4

)%

(1.3

)%

NOI at 100% - comparable centers including lease cancellation income at constant
currency - growth % (1)

(16.9

)%

(14.0

)%

NOI at 100% - comparable centers excluding lease cancellation income - growth % (1)(2)

(27.2

)%

(1.5

)%

(18.3

)%

0.3

%

NOI at 100% - comparable centers excluding lease cancellation income at constant
currency - growth % (1)(2)

(27.2

)%

(0.9

)%

(17.9

)%

1.1

%

Beneficial interest in NOI - comparable centers including lease cancellation income - growth % (1)

(18.3

)%

(14.5

)%

Beneficial interest in NOI - comparable centers including lease cancellation income
at constant currency - growth % (1)

(18.3

)%

(14.4

)%

Beneficial interest in NOI - comparable centers excluding lease cancellation income - growth % (1)

(29.0

)%

(18.7

)%

Beneficial interest in NOI - comparable centers excluding lease cancellation income
at constant currency - growth % (1)

(29.0

)%

(18.5

)%

Beneficial interest in NOI - total portfolio excluding lease cancellation income - growth % (1)(2)

(33.9

)%

0.7

%

(22.8

)%

3.6

%

Average rent per square foot - U.S. Consolidated Businesses (3)

65.24

70.52

68.45

70.97

Average rent per square foot - U.S. UJVs (3)

53.23

56.03

52.44

55.91

Average rent per square foot - Combined U.S. centers (3)

59.28

63.36

60.52

63.48

Average rent per square foot growth % - U.S. comparable centers (3)

(6.4

)%

(4.7

)%

Ending occupancy - all U.S. centers

88.5

%

91.7

%

Ending occupancy - U.S. comparable centers (3)

89.9

%

92.6

%

Leased space - all U.S. centers

91.1

%

94.7

%

Leased space - U.S. comparable centers (3)

92.6

%

95.6

%

Mall tenant sales - all U.S. centers (4)

938,843

1,570,828

2,690,070

4,776,719

Mall tenant sales - U.S. comparable centers (3)(4)

836,342

1,376,324

2,366,916

4,263,932

12-Months Trailing

Operating Statistics:

2020

2019

Mall tenant sales - all U.S. centers (4)

4,828,525

6,741,322

Mall tenant sales - U.S. comparable centers (3)(4)

4,233,859

6,063,124

Sales per square foot - U.S. comparable centers (3)(4)

790

980

All U.S. centers (4):

Mall tenant occupancy costs as a percentage of tenant sales - U.S. Consolidated Businesses

19.0

%

13.2

%

Mall tenant occupancy costs as a percentage of tenant sales - U.S. UJVs

15.6

%

11.7

%

Mall tenant occupancy costs as a percentage of tenant sales - Combined U.S. centers

17.3

%

12.5

%

U.S. comparable centers (3)(4):

Mall tenant occupancy costs as a percentage of tenant sales - U.S. Consolidated Businesses

18.4

%

12.8

%

Mall tenant occupancy costs as a percentage of tenant sales - U.S. UJVs

15.4

%

11.5

%

Mall tenant occupancy costs as a percentage of tenant sales - Combined U.S. centers

17.0

%

12.2

%

(1) See 'Use of Non-GAAP Financial Measures' for the definition and use of EBITDA, NOI, and FFO.

(2) Statistics exclude non-comparable centers as defined in the respective periods and have not been subsequently restated for changes in the pools of comparable centers.

(3) Statistics exclude non-comparable centers for all periods presented. The September 30, 2019 statistics have been restated to include comparable centers to 2020.

(4) Based on reports of sales furnished by mall tenants. Sales per square foot exclude spaces greater than or equal to 10,000 square feet.

TAUBMAN CENTERS, INC.

Table 2 - Income Statement

For the Three Months Ended September 30, 2020 and 2019

(in thousands of dollars)

2020

2019

CONSOLIDATED

UNCONSOLIDATED

CONSOLIDATED

UNCONSOLIDATED

BUSINESSES

JOINT VENTURES (1)

BUSINESSES

JOINT VENTURES (1)

REVENUES:

Rental revenues

122,817

125,744

141,213

138,960

Overage rents

540

3,219

3,865

6,736

Management, leasing, and development services

440

1,927

Other

7,201

4,334

15,501

7,413

Total revenues

130,998

133,297

162,506

153,109

EXPENSES:

Maintenance, taxes, utilities, and promotion

37,053

44,558

40,786

45,274

Other operating

13,289

5,147

19,753

6,412

Management, leasing, and development services

435

1,895

General and administrative

7,048

9,632

Restructuring charges

2,395

876

Simon Property Group, Inc. transaction costs

17,060

Impairment charge

39,668

Costs associated with shareholder activism

675

Interest expense

33,052

34,927

37,695

35,398

Depreciation and amortization

49,235

34,983

47,849

33,865

Total expenses

159,567

159,283

159,161

120,949

Nonoperating income, net

1,694

11,804

11,108

5,657

(26,875

)

(14,182

)

14,453

37,817

Income tax expense

(37

)

(3,425

)

(2,021

)

(2,266

)

Equity in income (loss) of UJVs

(9,736

)

20,252

Gains on partial dispositions of ownership interests in UJVs, net of tax

138,696

Gains on remeasurements of ownership interests in UJVs

145,010

Net income (loss)

(36,648

)

(17,607

)

316,390

35,551

Net income/loss attributable to noncontrolling interests:

Noncontrolling share of income (loss) of consolidated joint ventures

308

(958

)

Noncontrolling share of (income) loss of TRG

12,052

(93,690

)

Distributions to participating securities of TRG

(597

)

Preferred stock dividends

(5,784

)

(5,784

)

Net income (loss) attributable to Taubman Centers, Inc. common shareholders

(30,072

)

215,361

SUPPLEMENTAL INFORMATION:

EBITDA - 100%

55,412

55,728

383,703

107,080

EBITDA - outside partners' share

(4,404

)

(32,180

)

(5,623

)

(50,377

)

Beneficial interest in EBITDA

51,008

23,548

378,080

56,703

Gain on transfer of building and improvements

(5,600

)

(10,095

)

Beneficial share of impairment charge

19,834

Gains on partial dispositions of ownership interests in UJVs

(138,696

)

Gains on remeasurements of ownership interests in UJVs

(145,010

)

Beneficial interest expense

(30,319

)

(16,127

)

(34,851

)

(17,798

)

Beneficial income tax expense - TRG and TCO

(37

)

(933

)

(2,021

)

(991

)

Beneficial income tax expense - TCO

11

Non-real estate depreciation

(1,143

)

(1,150

)

Preferred dividends and distributions

(5,784

)

(5,784

)

Funds from Operations attributable to partnership unitholders and participating securities of TRG

13,736

20,722

40,473

37,914

STRAIGHTLINE AND PURCHASE ACCOUNTING ADJUSTMENTS:

Net straight-line adjustments to rental revenues, recoveries, and ground rent expense at TRG%

441

(1,543

)

1,712

(422

)

The Mall at Green Hills purchase accounting adjustments - rental revenues

24

13

Country Club Plaza purchase accounting adjustments - rental revenues at TRG%

235

61

The Gardens Mall purchase accounting adjustments - rental revenues at TRG%

(377

)

(639

)

The Gardens Mall purchase accounting adjustments - interest expense at TRG%

(528

)

(528

)

(1) With the exception of the Supplemental Information, amounts include 100% of the UJVs. Amounts are net of intercompany transactions. The UJVs are presented at 100% in order to allow for measurement of their performance as a whole, without regard to our ownership interest.

TAUBMAN CENTERS, INC.

Table 3 - Income Statement

For the Nine Months Ended September 30, 2020 and 2019

(in thousands of dollars)

2020

2019

CONSOLIDATED

UNCONSOLIDATED

CONSOLIDATED

UNCONSOLIDATED

BUSINESSES

JOINT VENTURES (1)

BUSINESSES

JOINT VENTURES (1)

REVENUES:

Rental revenues

377,693

371,282

432,508

410,613

Overage rents

5,506

11,965

8,719

18,279

Management, leasing, and development services

1,830

4,035

Other

23,963

17,697

39,056

20,779

Total revenues

408,992

400,944

484,318

449,671

EXPENSES:

Maintenance, taxes, utilities, and promotion

110,315

133,524

118,506

132,413

Other operating

44,223

18,448

60,210

18,786

Management, leasing, and development services

1,587

2,917

General and administrative

22,587

26,762

Restructuring charges

2,757

1,585

Simon Property Group, Inc. transaction costs

32,505

Impairment charge

39,668

Costs associated with shareholder activism

16,675

Interest expense

101,254

104,101

112,590

103,581

Depreciation and amortization

162,769

102,846

137,064

103,177

Total expenses

477,997

398,587

476,309

357,957

Nonoperating income, net

1,332

12,628

26,468

6,981

(67,673

)

14,985

34,477

98,695

Income tax expense

(545

)

(6,653

)

(4,924

)

(6,635

)

Equity in income of UJVs

836

49,746

Gains on partial dispositions of ownership interests in UJVs, net of tax

11,277

138,696

Gains on remeasurements of ownership interests in UJVs

14,146

145,010

Net income (loss)

(41,959

)

8,332

363,005

92,060

Net income/loss attributable to noncontrolling interests:

Noncontrolling share of income of consolidated joint ventures

(1,015

)

(3,219

)

Noncontrolling share of (income) loss of TRG

16,653

(103,899

)

Distributions to participating securities of TRG

(595

)

(1,817

)

Preferred stock dividends

(17,353

)

(17,353

)

Net income (loss) attributable to Taubman Centers, Inc. common shareholders

(44,269

)

236,717

SUPPLEMENTAL INFORMATION:

EBITDA - 100%

223,255

221,932

567,837

305,453

EBITDA - outside partners' share

(15,126

)

(122,990

)

(18,475

)

(146,640

)

Beneficial interest in EBITDA

208,129

98,942

549,362

158,813

Gain on insurance recoveries - The Mall of San Juan

(1,418

)

Gain on transfer of building and improvements

(5,600

)

(10,095

)

Beneficial share of impairment charge

19,834

Gains on partial dispositions of ownership interests in UJVs

(12,759

)

(138,696

)

Gains on remeasurements of ownership interests in UJVs

(14,146

)

(145,010

)

Beneficial interest expense

(92,977

)

(48,487

)

(103,692

)

(52,579

)

Beneficial income tax expense - TRG and TCO

(545

)

(1,362

)

(4,735

)

(2,680

)

Beneficial income tax expense - TCO

30

Non-real estate depreciation

(3,327

)

(3,447

)

Preferred dividends and distributions

(17,353

)

(17,353

)

Funds from Operations attributable to partnership unitholders and participating securities of TRG

67,052

63,327

124,916

103,554

STRAIGHTLINE AND PURCHASE ACCOUNTING ADJUSTMENTS:

Net straight-line adjustments to rental revenues, recoveries, and ground rent expense at TRG%

(2,487

)

(2,097

)

4,427

181

The Mall at Green Hills purchase accounting adjustments - rental revenues

43

61

Country Club Plaza purchase accounting adjustments - rental revenues at TRG%

346

257

The Gardens Mall purchase accounting adjustments - rental revenues at TRG%

(1,018

)

(816

)

The Gardens Mall purchase accounting adjustments - interest expense at TRG%

(1,584

)

(1,056

)

(1) With the exception of the Supplemental Information, amounts include 100% of the UJVs. Amounts are net of intercompany transactions. The UJVs are presented at 100% in order to allow for measurement of their performance as a whole, without regard to our ownership interest.

TAUBMAN CENTERS, INC.

Use of Non-GAAP Financial Measures

In this press release, the terms "we", "us", and "our" refer to Taubman Centers, Inc. (TCO), The Taubman Realty Group Limited Partnership (TRG), and/or TRG's subsidiaries as the context may require.

We use certain non-GAAP operating measures, including EBITDA, beneficial interest in EBITDA, Net Operating Income (NOI), beneficial interest in NOI, and Funds from Operations (FFO). These measures are reconciled to the most comparable GAAP measures. Additional information as to the use of these measures are as follows.

EBITDA represents earnings (loss) before interest, income taxes, and depreciation and amortization of our consolidated and unconsolidated businesses. Beneficial interest in EBITDA represents our share of the earnings (loss) before interest, income taxes, and depreciation and amortization of our consolidated and unconsolidated businesses. We believe EBITDA and beneficial interest in EBITDA provide useful indicators of operating performance, as it is customary in the real estate and shopping center business to evaluate the performance of properties on a basis unaffected by capital structure.

We use NOI as an alternative measure to evaluate the operating performance of centers, both on individual and stabilized portfolio bases, and in formulating corporate goals and compensation. We define NOI as property-level operating revenues (includes rental income excluding straight-line adjustments of minimum rent) less maintenance, property taxes, utilities, promotion, ground rent (including straight-line adjustments), and other property operating expenses. Beneficial interest in NOI represents our share of NOI (as previously defined) of our consolidated and unconsolidated businesses. Since NOI excludes general and administrative expenses, pre-development charges, interest income and expense, depreciation and amortization, impairment charges, restructuring charges, and gains from peripheral land and property dispositions, it provides a performance measure that, when compared period over period, reflects the revenues and expenses most directly associated with owning and operating rental properties, as well as the impact on their operations from trends in tenant sales, occupancy and rental rates, and operating costs. We also use NOI excluding lease cancellation income as an alternative measure because this income may vary significantly from period to period, which can affect comparability and trend analysis. We generally provide separate projections for expected comparable center NOI growth and lease cancellation income. Comparable centers are generally defined as centers that were owned and open for the entire current and preceding period presented, excluding centers impacted by significant redevelopment activity. In addition, The Mall of San Juan has been excluded from comparable center statistics as a result of Hurricane Maria given that the center's performance has been and is expected to continue to be materially impacted for the foreseeable future. Stamford Town Center has also been excluded from comparable center statistics as the center was being marketed for sale until it was ultimately sold in October 2020. We also use NOI excluding lease cancellation income using constant currency exchange rates as an alternative measure because exchange rates may vary significantly from period to period, which can affect comparability and trend analysis.

The National Association of Real Estate Investment Trusts (NAREIT) defines FFO as net income (loss) (calculated in accordance with Generally Accepted Accounting Principles (GAAP)), excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control, and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. We believe that FFO is a useful supplemental measure of operating performance for REITs. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, we and most industry investors and analysts have considered presentations of operating results that exclude historical cost depreciation to be useful in evaluating the operating performance of REITs. We primarily use FFO in measuring performance and in formulating corporate goals and compensation.

We may also present adjusted versions of NOI, beneficial interest in EBITDA, and FFO when used by management to evaluate operating performance when certain significant items have impacted results that affect comparability with prior or future periods due to the nature or amounts of these items. We believe the disclosure of the adjusted items is similarly useful to investors and others to understand management's view on comparability of such measures between periods. The following table summarizes adjustments to FFO and EBITDA for the three and nine months ended September 30, 2020 and 2019:

FFO

EBITDA

Three Months Ended

Year to Date

Three Months Ended

Year to Date

2020

2019

2020

2019

2020

2019

2020

2019

Simon Property Group, Inc. transaction costs

Costs associated with shareholder activism

Restructuring charges

Costs related to Blackstone transactions

Taubman Asia President transition costs

Promote fee - Starfield Hanam

Fluctuation in fair value of equity securities

Gains on partial dispositions of ownership interests in UJVs

Gains on remeasurements of ownership interests in UJVs

Gain on insurance recoveries - The Mall of San Juan

Gain on transfer of building and improvements

Beneficial share of impairment charge

These non-GAAP measures as presented by us are not necessarily comparable to similarly titled measures used by other REITs due to the fact that not all REITs use the same definitions. These measures should not be considered alternatives to net income (loss) or as an indicator of our operating performance. Additionally, these measures do not represent cash flows from operating, investing, or financing activities as defined by GAAP.

We also provide our beneficial interest in certain financial information of our UJVs. This beneficial information is derived as our ownership interest in the investee multiplied by the specific financial statement item being presented. Investors are cautioned that deriving our beneficial interest in this manner may not accurately depict the legal and economic implications of holding a noncontrolling interest in the investee.

TAUBMAN CENTERS, INC.

Table 4 - Reconciliation of Net Income (Loss) Attributable to Taubman Centers, Inc. Common Shareholders to Funds From Operations and Adjusted Funds From Operations

For the Three Months Ended September 30, 2020 and 2019

(in thousands of dollars except as noted; may not add or recalculate due to rounding)

2020

2019

Shares

Per Share

Shares

Per Share

Dollars

/Units

/Unit

Dollars

/Units

/Unit

Net income (loss) attributable to TCO common shareholders - basic

(30,072

)

61,696,565

(0.49

)

215,361

61,211,249

3.52

Add distributions to participating securities of TRG

597

871,262

Add impact of share-based compensation

915

162,903

Net income (loss) attributable to TCO common shareholders - diluted

(30,072

)

61,696,565

(0.49

)

216,873

62,245,414

3.48

Add TCO's additional income tax expense

11

Add depreciation of TCO's additional basis

1,482

0.02

1,617

0.03

Net income (loss) attributable to TCO common shareholders,
excluding step-up depreciation and additional income tax expense

(28,579

)

61,696,565

(0.46

)

218,490

62,245,414

3.51

Add noncontrolling share of income (loss) of TRG

(12,052

)

26,306,431

93,690

26,430,716

Add distributions to participating securities of TRG

871,262

Net income (loss) attributable to partnership unitholders and
participating securities of TRG

(40,631

)

88,874,258

(0.46

)

312,180

88,676,130

3.52

Add (less) depreciation and amortization:

Consolidated businesses at 100%

49,235

0.55

47,849

0.54

Depreciation of TCO's additional basis

(1,482

)

(0.02

)

(1,617

)

(0.02

)

Noncontrolling partners in consolidated joint ventures

(1,979

)

(0.02

)

(1,821

)

(0.02

)

Share of UJVs

16,224

0.18

17,662

0.20

Non-real estate depreciation

(1,143

)

(0.01

)

(1,150

)

(0.01

)

Less gain on transfer of building and improvements

(5,600

)

(0.06

)

(10,095

)

(0.11

)

Add beneficial share of impairment charge

19,834

0.22

Less gain on partial disposition of ownership interest in UJV

(138,696

)

(1.56

)

Less gain on remeasurement of ownership interest in UJV

(145,010

)

(1.64

)

Less impact of share-based compensation

(915

)

(0.01

)

Funds from Operations attributable to partnership unitholders
and participating securities of TRG

34,458

88,874,258

0.39

78,387

88,676,130

0.88

TCO's average ownership percentage of TRG - basic (1)

70.3

%

69.8

%

Funds from Operations attributable to TCO's common shareholders, excluding additional income tax expense

24,237

0.39

54,747

0.88

Less TCO's additional income tax expense

(11

)

Funds from Operations attributable to TCO's common shareholders (1)

24,226

0.39

54,747

0.88

Funds from Operations attributable to partnership unitholders
and participating securities of TRG

34,458

88,874,258

0.39

78,387

88,676,130

0.88

Simon Property Group, Inc. transaction costs

17,060

0.19

Costs associated with shareholder activism

675

0.01

Restructuring charges

2,395

0.03

876

0.01

Promote fee, net of tax - Starfield Hanam (2)

329

(3,961

)

(0.04

)

Fluctuation in fair value of equity securities

(602

)

(0.01

)

Adjusted Funds from Operations attributable to partnership unitholders
and participating securities of TRG

53,640

88,874,258

0.60

75,977

88,676,130

0.86

TCO's average ownership percentage of TRG - basic (3)

70.3

%

69.8

%

Adjusted Funds from Operations attributable to TCO's common shareholders, excluding additional income tax expense

37,730

0.60

53,064

0.86

Less TCO's additional income tax expense

(11

)

Adjusted Funds from Operations attributable to TCO's common shareholders (3)

37,719

0.60

53,064

0.86

(1) For the three months ended September 30, 2020, Funds from Operations attributable to TCO's common shareholders was $23,910 using TCO's diluted average ownership percentage of TRG of 69.4%. For the three months ended September 30, 2019, Funds from Operations attributable to TCO's common shareholders was $54,109 using TCO's diluted average ownership percentage of TRG of 69.0%.

(2) For the nine months ended September 30, 2020, includes a reduction of $0.3 million of promote fee income related to the previously recognized promote fee, net of tax, for Starfield Hanam, which was recorded within Equity in Income (Loss) of UJVs in our Statement of Operations and Comprehensive Income (Loss). For the three months ended September 30, 2019, includes $4.8 million of promote fee income related to Starfield Hanam less $0.9 million of income tax expense, which have been recorded within Equity in Income (Loss) of UJVs and Income Tax Expense, respectively, in our Statement of Operations and Comprehensive Income (Loss).

(3) For the three months ended September 30, 2020, Adjusted Funds from Operations attributable to TCO's common shareholders was $37,226 using TCO's diluted average ownership percentage of TRG of 69.4%. For the three months ended September 30, 2019, Adjusted Funds from Operations attributable to TCO's common shareholders was $52,445 using TCO's diluted average ownership percentage of TRG of 69.0%.

TAUBMAN CENTERS, INC.

Table 5 - Reconciliation of Net Income (Loss) Attributable to Taubman Centers, Inc. Common Shareholders to Funds from Operations and Adjusted Funds from Operations

For the Nine Months Ended September 30, 2020 and 2019

(in thousands of dollars except as noted; may not add or recalculate due to rounding)

2020

2019

Shares

Per Share

Shares

Per Share

Dollars

/Units

/Unit

Dollars

/Units

/Unit

Net income (loss) attributable to TCO common shareholders - basic

(44,269

)

61,512,816

(0.72

)

236,717

61,169,279

3.87

Add distributions to participating securities of TRG

1,817

871,262

Add impact of share-based compensation

689

191,955

Net income (loss) attributable to TCO common shareholders - diluted

(44,269

)

61,512,816

(0.72

)

239,223

62,232,496

3.84

Add TCO's additional income tax expense

30

Add depreciation of TCO's additional basis

4,444

0.07

4,851

0.08

Net income (loss) attributable to TCO common shareholders,
excluding step-up depreciation and additional income tax expense

(39,795

)

61,512,816

(0.65

)

244,074

62,232,496

3.92

Add noncontrolling share of income (loss) of TRG

(16,653

)

26,423,134

103,899

25,928,316

Add distributions to participating securities of TRG

595

871,262

Net income (loss) attributable to partnership unitholders and
participating securities of TRG

(55,853

)

88,807,212

(0.63

)

347,973

88,160,812

3.95

Add (less) depreciation and amortization:

Consolidated businesses at 100%

162,769

1.83

137,064

1.55

Depreciation of TCO's additional basis

(4,444

)

(0.05

)

(4,851

)

(0.06

)

Noncontrolling partners in consolidated joint ventures

(5,834

)

(0.07

)

(6,169

)

(0.07

)

Share of UJVs

48,257

0.54

53,808

0.61

Non-real estate depreciation

(3,327

)

(0.03

)

(3,447

)

(0.04

)

Less gain on insurance recoveries - The Mall of San Juan

(1,418

)

(0.02

)

Less gain on transfer of building and improvements

(5,600

)

(0.06

)

(10,095

)

(0.11

)

Add beneficial share of impairment charge

19,834

0.22

Less gains on partial dispositions of ownership interests in UJVs, net of tax

(11,277

)

(0.13

)

(138,696

)

(1.57

)

Less gains on remeasurements of ownership interests in UJVs

(14,146

)

(0.16

)

(145,010

)

(1.64

)

Less impact of share-based compensation

(689

)

(0.01

)

Funds from Operations attributable to partnership unitholders
and participating securities of TRG

130,379

88,807,212

1.47

228,470

88,160,812

2.59

TCO's average ownership percentage of TRG - basic (1)

70.1

%

70.2

%

Funds from Operations attributable to TCO's common shareholders, excluding additional income tax expense

91,346

1.47

160,544

2.59

Less TCO's additional income tax expense

(30

)

Funds from Operations attributable to TCO's common shareholders (1)

91,316

1.47

160,544

2.59

Funds from Operations attributable to partnership unitholders and
participating securities of TRG

130,379

88,807,212

1.47

228,470

88,160,812

2.59

Simon Property Group, Inc. transaction costs

32,505

0.37

Costs associated with shareholder activism

16,675

0.19

Restructuring charges

2,757

0.03

1,585

0.02

Costs related to Blackstone transactions (2)

1,113

0.01

2,066

0.02

Taubman Asia President transition costs

244

Promote fee, net of tax - Starfield Hanam (3)

611

0.01

(3,961

)

(0.04

)

Fluctuation in fair value of equity securities

933

0.01

(3,346

)

(0.04

)

Adjusted Funds from Operations attributable to partnership unitholders
and participating securities of TRG

168,542

88,807,212

1.90

241,489

88,160,812

2.74

TCO's average ownership percentage of TRG - basic (4)

70.1

%

70.2

%

Adjusted Funds from Operations attributable to TCO's common shareholders, excluding additional income tax expense

118,138

1.90

169,648

2.74

Less TCO's additional income tax expense

(30

)

Adjusted Funds from Operations attributable to TCO's common shareholders (1)

118,108

1.90

169,648

2.74

(1) For the nine months ended September 30, 2020, Funds from Operations attributable to TCO's common shareholders was $90,175 using TCO's diluted average ownership percentage of TRG of 69.3%. For the nine months ended September 30, 2019, Funds from Operations attributable to TCO's common shareholders was $158,583 using TCO's diluted average ownership percentage of TRG of 69.4%.

(2) For the nine months ended September 30, 2020, includes $1.1 million of deferred income tax expense related to the Blackstone transactions, which has been recorded within Income Tax Expense in our Statement of Operations and Comprehensive Income (Loss). For the nine months ended September 30, 2019, includes $0.5 million of disposition costs and $1.6 million of deferred income tax expense related to the Blackstone transactions, which have been recorded within Nonoperating Income (Expense) and Income Tax Expense, respectively, in our Statement of Operations and Comprehensive Income (Loss).

(3) For the nine months ended September 30, 2020, includes a reduction of $0.6 million of promote fee income related to the previously recognized promote fee, net of tax, for Starfield Hanam, which have been recorded within Equity in Income (Loss) of UJVs in our Statement of Operations and Comprehensive Income (Loss). For the nine months ended September 30, 2019, includes $4.8 million of promote fee income related to Starfield Hanam less $0.9 million of income tax expense, which have been recorded within Equity in Income (Loss) of UJVs and Income Tax Expense, respectively, in our Statement of Operations and Comprehensive Income (Loss).

(4) For the nine months ended September 30, 2020, Adjusted Funds from Operations attributable to TCO's common shareholders was $116,628 using TCO's diluted average ownership percentage of TRG of 69.3%. For the nine months ended September 30, 2019, Adjusted Funds from Operations attributable to TCO's common shareholders was $167,578 using TCO's diluted average ownership percentage of TRG of 69.4%.

TAUBMAN CENTERS, INC.

Table 6 - Reconciliation of Net Income (Loss) to Beneficial Interest in EBITDA and Adjusted Beneficial Interest in EBITDA

For the Periods Ended September 30, 2020 and 2019

(in thousands of dollars; amounts attributable to TCO may not recalculate due to rounding)

Three Months Ended

Year to Date

2020

2019

2020

2019

Net income (loss)

(36,648

)

316,390

(41,959

)

363,005

Add (less) depreciation and amortization:

Consolidated businesses at 100%

49,235

47,849

162,769

137,064

Noncontrolling partners in consolidated joint ventures

(1,979

)

(1,821

)

(5,834

)

(6,169

)

Share of UJVs

16,224

17,662

48,257

53,808

Add (less) interest expense and income tax expense:

Interest expense:

Consolidated businesses at 100%

33,052

37,695

101,254

112,590

Noncontrolling partners in consolidated joint ventures

(2,733

)

(2,844

)

(8,277

)

(8,898

)

Share of UJVs

16,127

17,798

48,487

52,579

Income tax expense:

Consolidated businesses at 100%

37

2,021

545

4,924

Noncontrolling partners in consolidated joint ventures

(189

)

Share of UJVs

933

991

1,362

2,680

Share of income tax expense on dispositions of ownership interests

1,482

Less noncontrolling share of (income) loss of consolidated joint ventures

308

(958

)

(1,015

)

(3,219

)

Beneficial interest in EBITDA

74,556

434,783

307,071

708,175

TCO's average ownership percentage of TRG - basic

70.3

%

69.8

%

70.1

%

70.2

%

Beneficial interest in EBITDA attributable to TCO

52,472

303,663

215,257

496,283

Beneficial interest in EBITDA

74,556

434,783

307,071

708,175

Add (less):

Simon Property Group, Inc. transaction costs

17,060

32,505

Costs associated with shareholder activism

675

16,675

Restructuring charges

2,395

876

2,757

1,585

Disposition costs related to Blackstone transactions

487

Taubman Asia President transition costs

244

Promote fee - Starfield Hanam

329

(4,820

)

638

(4,820

)

Fluctuation in fair value of equity securities

(602

)

933

(3,346

)

Gains on partial dispositions of ownership interests in UJVs

(138,696

)

(12,759

)

(138,696

)

Gains on remeasurements of ownership interests in UJVs

(145,010

)

(14,146

)

(145,010

)

Gain on insurance recoveries - The Mall of San Juan

(1,418

)

Gain on transfer of building and improvements

(5,600

)

(10,095

)

(5,600

)

(10,095

)

Beneficial share of impairment charge

19,834

19,834

Adjusted Beneficial interest in EBITDA

107,972

137,713

331,477

423,537

TCO's average ownership percentage of TRG - basic

70.3

%

69.8

%

70.1

%

70.2

%

Adjusted Beneficial interest in EBITDA attributable to TCO

75,846

96,182

232,365

297,496

TAUBMAN CENTERS, INC.

Table 7 - Reconciliation of Net Income (Loss) to Net Operating Income (NOI)

For the Periods Ended September 30, 2020, 2019, and 2018

(in thousands of dollars)

Three Months Ended

Three Months Ended

2020

2019

Growth %

2019

2018

Growth %

Net income (loss)

(36,648

)

316,390

316,390

38,115

Add (less) depreciation and amortization:

Consolidated businesses at 100%

49,235

47,849

47,849

46,307

Noncontrolling partners in consolidated joint ventures

(1,979

)

(1,821

)

(1,821

)

(1,911

)

Share of UJVs

16,224

17,662

17,662

17,190

Add (less) interest expense and income tax expense:

Interest expense:

Consolidated businesses at 100%

33,052

37,695

37,695

33,396

Noncontrolling partners in consolidated joint ventures

(2,733

)

(2,844

)

(2,844

)

(2,984

)

Share of UJVs

16,127

17,798

17,798

17,093

Income tax expense:

Consolidated businesses at 100%

37

2,021

2,021

(996

)

Noncontrolling partners in consolidated joint ventures

(51

)

Share of UJVs

933

991

991

1,023

Less noncontrolling share of loss (income) of consolidated joint ventures

308

(958

)

(958

)

(1,564

)

Add EBITDA attributable to outside partners:

EBITDA attributable to noncontrolling partners in consolidated joint ventures

4,404

5,623

5,623

6,510

EBITDA attributable to outside partners in UJVs

32,180

50,377

50,377

48,438

EBITDA at 100%

111,140

490,783

490,783

200,566

Add (less) items excluded from shopping center NOI:

General and administrative expenses

7,048

9,632

9,632

8,530

Management, leasing, and development services, net

(5

)

(32

)

(32

)

(384

)

Simon Property Group, Inc. transaction costs

17,060

Restructuring charges

2,395

876

876

Costs associated with shareholder activism

675

675

1,500

Straight-line of rents

1,661

(809

)

(809

)

(2,292

)

Nonoperating income, net

(13,498

)

(16,765

)

(16,765

)

(9,263

)

Gain on partial disposition of ownership interest in UJV

(138,696

)

(138,696

)

Gain on remeasurement of ownership interest in UJV

(145,010

)

(145,010

)

Impairment charge

39,668

Unallocated operating expenses and other

3,850

6,749

6,749

8,131

NOI at 100% - total portfolio

169,319

207,403

207,403

206,788

Less - NOI of non-comparable centers

(14,677

)

(1)

(21,295

)

(1)

(18,731

)

(2)

(13,187

)

(3)

NOI at 100% - comparable centers

154,642

186,108

(16.9)%

188,672

193,601

(2.5)%

Foreign currency exchange rate fluctuation adjustment

(77

)

NOI at 100% - comparable centers including lease cancellation income at constant currency

154,565

186,108

(16.9)%

NOI at 100% - comparable centers

154,642

186,108

188,672

193,601

Less lease cancellation income - comparable centers

(19,843

)

(1,045

)

(1,045

)

(3,041

)

NOI at 100% - comparable centers excluding lease cancellation income

134,799

185,063

(27.2)%

187,627

190,560

(1.5)%

Foreign currency exchange rate fluctuation adjustment

(77

)

1,202

NOI at 100% - comparable centers excluding lease cancellation income at constant currency

134,722

185,063

(27.2)%

188,829

190,560

(0.9)%

NOI at 100% - comparable centers

154,642

186,108

Less NOI of comparable centers attributable to noncontrolling partners in consolidated joint ventures and outside partners in UJVs

(48,832

)

(56,577

)

Beneficial interest in NOI - comparable centers including lease cancellation income

105,810

129,531

(18.3)%

Beneficial interest in foreign currency exchange rate fluctuation adjustment

(15

)

Beneficial interest in NOI - comparable centers including lease cancellation income at constant currency

105,795

129,531

(18.3)%

NOI at 100% - comparable centers excluding lease cancellation income

134,799

185,063

Less NOI of comparable centers excluding lease cancellation income attributable to noncontrolling partners in consolidated joint ventures and outside partners in UJVs

(43,401

)

(56,271

)

Beneficial interest in NOI - comparable centers excluding lease cancellation income

91,398

128,792

(29.0)%

Beneficial interest in foreign currency exchange rate fluctuation adjustment

(15

)

Beneficial interest in NOI - comparable centers excluding lease cancellation income at constant currency

91,383

128,792

(29.0)%

NOI at 100% - total portfolio

169,319

207,403

207,403

206,788

Less lease cancellation income - total portfolio

(25,953

)

(2,407

)

(2,407

)

(3,822

)

Less NOI attributable to noncontrolling partners in consolidated joint ventures and outside partners in UJVs excluding lease cancellation income - total portfolio

(45,202

)

(56,393

)

(56,393

)

(55,345

)

Beneficial interest in NOI - total portfolio excluding lease cancellation income

98,164

148,603

(33.9)%

148,603

147,621

0.7%

(1) Includes Beverly Center, The Gardens Mall, The Mall of San Juan, Stamford Town Center, and Taubman Prestige Outlets Chesterfield.

(2) Includes Beverly Center, The Gardens Mall, The Mall of San Juan, and Taubman Prestige Outlets Chesterfield.

(3) Includes Beverly Center, The Mall of San Juan, and Taubman Prestige Outlets Chesterfield.

TAUBMAN CENTERS, INC.

Table 8 - Reconciliation of Net Income (Loss) to Net Operating Income (NOI)

For the Periods Ended September 30, 2020, 2019, and 2018

(in thousands of dollars)

Year to Date

Year to Date

2020

2019

Growth %

2019

2018

Growth %

Net income (loss)

(41,959

)

363,005

363,005

102,804

Add (less) depreciation and amortization:

Consolidated businesses at 100%

162,769

137,064

137,064

124,325

Noncontrolling partners in consolidated joint ventures

(5,834

)

(6,169

)

(6,169

)

(5,480

)

Share of UJVs

48,257

53,808

53,808

51,570

Add (less) interest expense and income tax expense:

Interest expense:

Consolidated businesses at 100%

101,254

112,590

112,590

97,242

Noncontrolling partners in consolidated joint ventures

(8,277

)

(8,898

)

(8,898

)

(9,023

)

Share of UJVs

48,487

52,579

52,579

51,107

Income tax expense:

Consolidated businesses at 100%

545

4,924

4,924

(784

)

Noncontrolling partners in consolidated joint ventures

(189

)

(189

)

(134

)

Share of UJVs

1,362

2,680

2,680

2,387

Share of income tax expense on disposition of ownership interests

1,482

Less noncontrolling share of income of consolidated joint ventures

(1,015

)

(3,219

)

(3,219

)

(4,388

)

Add EBITDA attributable to outside partners:

EBITDA attributable to noncontrolling partners in consolidated joint ventures

15,126

18,475

18,475

19,025

EBITDA attributable to outside partners in UJVs

122,990

146,640

146,640

145,671

EBITDA at 100%

445,187

873,290

873,290

574,322

Add (less) items excluded from shopping center NOI:

General and administrative expenses

22,587

26,762

26,762

25,545

Management, leasing, and development services, net

(243

)

(1,118

)

(1,118

)

(1,294

)

Simon Property Group, Inc. transaction costs

32,505

Restructuring charges

2,757

1,585

1,585

(423

)

Costs associated with shareholder activism

16,675

16,675

10,000

Straight-line of rents

4,729

(5,993

)

(5,993

)

(9,706

)

Nonoperating income, net

(13,960

)

(33,449

)

(33,449

)

(15,349

)

Gains on partial dispositions of ownership interests in UJVs

(12,759

)

(138,696

)

(138,696

)

Gains on remeasurements of ownership interests in UJVs

(14,146

)

(145,010

)

(145,010

)

Impairment charge

39,668

Unallocated operating expenses and other

13,826

22,871

22,871

24,654

NOI at 100% - total portfolio

520,151

616,917

616,917

607,749

Less - NOI of non-comparable centers

(41,434

)

(1)

(57,636

)

(1)

(48,662

)

(2)

(32,015

)

(3)

NOI at 100% - comparable centers

478,717

559,281

(14.4)%

568,255

575,734

(1.3)%

Foreign currency exchange rate fluctuation adjustment

2,075

NOI at 100% - comparable centers including lease cancellation income at constant currency

480,792

559,281

(14.0)%

NOI at 100% - comparable centers

478,717

559,281

568,255

575,734

Less lease cancellation income - comparable centers

(26,938

)

(6,488

)

(7,480

)

(16,785

)

NOI at 100% - comparable centers excluding lease cancellation income

451,779

552,793

(18.3)%

560,775

558,949

0.3%

Foreign currency exchange rate fluctuation adjustment

2,075

4,572

NOI at 100% - comparable centers excluding lease cancellation income at constant currency

453,854

552,793

(17.9)%

565,347

558,949

1.1%

NOI at 100% - comparable centers

478,717

559,281

Less NOI of comparable centers attributable to noncontrolling partners in consolidated joint ventures and outside partners in UJVs

(145,357

)

(169,181

)

Beneficial interest in NOI - comparable centers including lease cancellation income

333,360

390,100

(14.5)%

Beneficial interest in foreign currency exchange rate fluctuation adjustment

436

Beneficial interest in NOI - comparable centers including lease cancellation income at constant currency

333,796

390,100

(14.4)%

NOI at 100% - comparable centers excluding lease cancellation income

451,779

(1)

552,793

(1)

Less NOI of comparable centers excluding lease cancellation income attributable to noncontrolling partners in consolidated joint ventures and outside partners in UJVs

(138,580

)

(167,770

)

Beneficial interest in NOI - comparable centers excluding lease cancellation income

313,199

385,023

(18.7)%

Beneficial interest in foreign currency exchange rate fluctuation adjustment

436

Beneficial interest in NOI - comparable centers excluding lease cancellation income at constant currency

313,635

385,023

(18.5)%

NOI at 100% - total portfolio

520,151

616,917

616,917

607,749

Less lease cancellation income - total portfolio

(33,695

)

(10,407

)

(10,407

)

(19,667

)

Less NOI attributable to noncontrolling partners in consolidated joint ventures and outside partners in UJVs excluding lease cancellation income - total portfolio

(145,973

)

(165,307

)

(165,307

)

(162,184

)

Beneficial interest in NOI - total portfolio excluding lease cancellation income

340,483

441,203

(22.8)%

441,203

425,898

3.6%

(1) Includes Beverly Center, The Gardens Mall, The Mall of San Juan, Stamford Town Center, and Taubman Prestige Outlets Chesterfield.

(2) Includes Beverly Center, The Gardens Mall, The Mall of San Juan, and Taubman Prestige Outlets Chesterfield.

(3) Includes Beverly Center, The Mall of San Juan, and Taubman Prestige Outlets Chesterfield.

TAUBMAN CENTERS, INC.

Table 9 - Debt Summary

As of September 30, 2020

(in millions of dollars, amounts may not add due to rounding)

Ownership %

Amortizing (A)/

Maturity

100%

Beneficial Interest

Effective Rate

LIBOR Rate

Consolidated Fixed Rate Debt:

(if not 100%)

Interest Only (I)

Date

9/30/2020

9/30/2020

(a)

9/30/2020

(b)

Spread

Cherry Creek Shopping Center

50.00

%

I

6/1/2028

550.0

275.0

3.85

%

City Creek Center

A

8/1/2023

74.0

74.0

4.37

%

Great Lakes Crossing Outlets

A

1/6/2023

189.6

189.6

3.60

%

The Mall at Short Hills

I

10/1/2027

1,000.0

1,000.0

3.48

%

Twelve Oaks Mall

A

3/6/2028

288.8

288.8

4.85

%

2,102.5

1,827.5

3.81

%

3.80

%

Consolidated Floating Rate Debt:

The Mall at Green Hills

I

12/1/2021

150.0

150.0

1.61

%

(c)

1.45%

(c)

International Market Place

93.50

%

I

8/9/2021

(d)

250.0

233.8

2.31

%

2.15%

(d)

TRG $65M Revolving Credit Facility

I

4/24/2021

0.0

(e)

0.0

1.55

%

(e)

1.40%

TRG $1.1B Revolving Credit Facility

I

2/1/2024

(f)

845.0

845.0

2.10

%

(f)(i)

1.60%

(f)(i)

1,245.0

1,228.8

2.08

%

2.08

%

Consolidated Floating Rate Debt Swapped to Fixed:

TRG $275M Term Loan

I

2/1/2025

275.0

275.0

3.94

%

(g)

1.80%

(g)(i)

TRG $250M Term Loan

I

3/31/2023

250.0

250.0

4.92

%

(h)

1.90%

(h)(i)

TRG $1.1B Revolving Credit Facility (portion swapped)

I

2/1/2024

(f)

25.0

25.0

3.74

%

(f)

1.60%

(f)(i)

U.S. Headquarters

I

3/1/2024

12.0

12.0

3.49

%

(j)

562.0

562.0

4.35

%

4.35

%

Total Consolidated Deferred Financing Costs, Net

(11.9

)

(11.5

)

Total Consolidated

3,897.5

3,606.7

Weighted Rate (excluding deferred financing costs)

3.34

%

3.30

%

Joint Ventures Fixed Rate Debt:

CityOn.Xi'an

25.00

%

A

3/14/2029

156.1

(k)

39.0

6.00

%

CityOn.Zhengzhou

24.50

%

A

3/22/2032

76.9

(l)

18.8

5.60

%

(l)

Country Club Plaza

50.00

%

A

(m)

4/1/2026

312.9

156.5

3.85

%

Fair Oaks Mall

50.00

%

A

5/10/2023

251.8

125.9

5.32

%

The Gardens Mall

48.50

%

I - until 8/15/2021

(n)

7/15/2025

(n)

195.0

104.8

(n)

4.13

%

(n)

International Plaza

50.10

%

A

12/1/2021

293.1

146.9

4.85

%

The Mall at Millenia

50.00

%

I

10/15/2024

350.0

175.0

4.00

%

The Mall at Millenia

50.00

%

I

10/15/2024

100.0

50.0

3.75

%

Starfield Anseong

49.00

%

I

2/28/2025

239.7

(o)

117.5

2.16

%

(o)

Starfield Hanam

17.15

%

I

11/25/2020

266.6

(p)

45.7

2.58

%

(p)

Sunvalley

50.00

%

A

9/1/2022

162.0

81.0

4.44

%

Taubman Land Associates

50.00

%

A

11/1/2022

20.2

10.1

3.84

%

The Mall at University Town Center

50.00

%

I - until 12/1/2022

11/1/2026

280.0

140.0

3.40

%

Waterside Shops

50.00

%

I

(q)

4/15/2026

165.0

82.5

3.86

%

Westfarms

78.94

%

A

7/1/2022

270.2

213.3

4.50

%

3,139.7

1,507.0

4.05

%

4.09

%

Joint Venture Floating Rate Debt Swapped to Fixed:

International Plaza

50.10

%

A

12/1/2021

155.8

78.1

3.58

%

(r)

155.8

78.1

3.58

%

3.58

%

Total Joint Venture Deferred Financing Costs, Net

(7.0

)

(3.4

)

Total Joint Venture

3,288.4

1,581.6

Weighted Rate (excluding deferred financing costs)

4.03

%

4.07

%

TRG Beneficial Interest Totals:

Fixed Rate Debt

5,242.1

3,334.4