Taubman Centers (TCO) 8-K Taubman Centers, Inc. Issues Solid Second Quarter Results and Raises Guidance

Taubman Centers, Inc.	T 248.258.6800
200 East Long Lake Road	www.taubman.com
Suite 300
Bloomfield Hills, Michigan
48304-2324

Taubman Centers, Inc. Issues Solid Second Quarter Results and Raises Guidance

• Comparable Center Net Operating Income (NOI) and Mall Tenant Sales Per Square Foot Up

• Average Rent Per Square Foot, Comparable Center Ending Occupancy, and Leased Space all Increased

• Releasing Spreads 29.2 Percent

• Hanam Union Square Construction Financing Complete

• 2015 FFO Guidance Raised 8 cents

BLOOMFIELD HILLS, Mich., July 30, 2015 - - Taubman Centers, Inc. (NYSE: TCO) today reported financial results for the second quarter of 2015.

		June 30, 2015 Three Months Ended	June 30, 2014 Three Months Ended	June 30, 2015 Six Months Ended	June 30, 2014 Six Months Ended
Net income attributable to common shareholders (EPS) per diluted common share		$0.37 (1)	$0.33	$0.84 (1)	$6.08 (2)
Funds from Operations (FFO) per diluted common share Growth rate		$0.76 (1) (5.0)%	$0.80	$1.57 (1) (7.6)%	$1.70
Adjusted Funds from Operations (Adjusted FFO) per diluted common share Growth rate		$0.76 (1) (11.6)%	$0.86 (3)	$1.57 (1) (10.8)%	$1.76 (3)
(1)	Excludes the operations of the seven centers sold to Starwood Capital Group in October 2014 and Arizona Mills (Tempe, Ariz.), which was sold in January 2014. Includes the operations of The Mall at University Town Center (Sarasota, Fla.), which opened in October 2014, and The Mall of San Juan (San Juan, Puerto Rico), which opened in March 2015.
(2)	Includes a net gain of $477 million ($5.30 per share) on the sale of a 49.9 percent interest in the entity that owns International Plaza (Tampa, Fla.), as well as investments in Arizona Mills and land in Syosset, New York (Oyster Bay).
(3)	Adjusted FFO for the three and six months ended June 30, 2014 excludes charges related to the sale of seven centers to Starwood.

“We delivered another solid quarter,” said Robert S. Taubman, chairman, president and chief executive officer of Taubman Centers. “Our performance was driven by increased rents and net recoveries, as well as the excellent performance of The Mall at University Town Center in Sarasota, Florida.”

The October 2014 sale of seven centers to Starwood reduced FFO by 14.5 cents during the second quarter in comparison to the prior period.

Operating Statistics

Comparable center NOI, excluding lease cancellation income, was up 2.5 percent for the quarter, bringing year-to-date growth to 3.1 percent.

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Comparable center mall tenant sales per square foot rose 2.8 percent from the second quarter of 2014. This brings the company's 12-month trailing mall tenant sales per square foot to $818, an increase of 1.4 percent from the 12-months ended June 30, 2014. Year-to-date, sales were up 2.5 percent.

“The positive sales trend during the quarter was very encouraging,” said Mr. Taubman. “We saw solid growth in May and sales growth accelerated through June.”

Average rent per square foot for the quarter was $60.35, up 1.4 percent from $59.50 in the comparable period last year. Year-to-date, average rent per square foot was up 2.8 percent.

Trailing 12-month releasing spreads per square foot for the period ended June 30, 2015 were a robust 29.2 percent.

Ending occupancy in comparable centers was 93 percent on June 30, 2015, up 0.2 percent from 92.8 percent on June 30, 2014. Leased space in comparable centers was 96.9 percent on June 30, 2015, up 1 percent from 95.9 percent on June 30, 2014.

“Nearly all our key metrics are up,” added Mr. Taubman. “The fundamentals of our business continue to be strong.”

Financing Activity

In July, the construction loan financing for Hanam Union Square (Hanam, Gyeonggi Province, South Korea) closed. The company owns a 34.3 percent interest in the joint venture. The financing consists of a 5-year Korean Won denominated loan of approximately $445 million U.S. dollars at current exchange rates and a 5-year U.S. dollar loan of approximately $50 million. The Korean Won denominated portion of the loan bears interest at the KDB Bank Five-Year Bond Yield plus 1.06 percent and is fixed upon each draw. At current bond yields, the rate would be approximately 3.2 percent. The U.S. dollar denominated floating rate loan bears interest at 3 month LIBOR plus 1.6 percent.

Share Repurchase Program

During the quarter ended June 30, 2015, the company purchased 1,650,191 shares of its common stock at an average price of $74.23 per share. Since the program’s inception in August 2013, the company has purchased 3,590,492 shares of its common stock at an average price of $72.35 per share. At June 30, 2015, the company had approximately $190 million available under its share repurchase authorization.

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2015 Guidance

The company is increasing its guidance for 2015 FFO per diluted common share to $3.28 to $3.36, up from the previous range of $3.20 to $3.28. The new guidance includes the impact of share repurchases through June 30, 2015, but excludes assumptions for future repurchases. This improved guidance also assumes a better than anticipated contribution from The Mall of San Juan. Comparable center NOI growth, excluding lease cancellation income, of 2.5 to 3 percent for the year, remains unchanged from the last quarter.

The company is also increasing its guidance for 2015 EPS to $1.65 to $1.78, up from $1.59 to $1.72.

Supplemental Investor Information Available

The company provides supplemental investor information along with its earnings announcements, available online at www.taubman.com under “Investors.” This includes the following:

• Company Information

• Income Statements

• Earnings Reconciliations

• Changes in Funds from Operations and Earnings Per Common Share

• Components of Other Income, Other Operating Expense, and Nonoperating Income (Expense)

• Recoveries Ratio Analysis

• Balance Sheets

• Debt Summary

• Other Debt, Equity and Certain Balance Sheet Information

• Construction and Redevelopment

• Capital Spending

• Operational Statistics

• Summary of Key Guidance Measures

• Owned Centers

• Major Tenants in Owned Portfolio

• Anchors in Owned Portfolio

• Operating Statistics Glossary

Investor Conference Call

The company will host a conference call at 11:00 a.m. EDT on Friday, July 31 to discuss its results, business conditions and the company’s outlook for the remainder of 2015. The conference call will be simulcast at www.taubman.com. An online replay will be available shortly after the call and will continue for approximately 90 days.

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Taubman Centers is an S&P MidCap 400 Real Estate Investment Trust engaged in the ownership, management and/or leasing of 22 regional, super-regional and outlet shopping centers in the U.S. and Asia. Taubman’s U.S.-owned properties are the most productive in the publicly held U.S. regional mall industry. Taubman is currently developing four properties in the U.S. and Asia totaling 4.1 million square feet. Taubman, with more than 60 years of experience in the shopping center industry, is headquartered in Bloomfield Hills, Mich., and Taubman Asia is headquartered in Hong Kong. www.taubman.com.

For ease of use, references in this press release to “Taubman Centers,” “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 may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements reflect management's current views with respect to future events and financial performance. The forward-looking statements included in this release are made as of the date hereof. Except as required by law, we assume no obligation to update these forward-looking statements, even if new information becomes available in the future. Actual results may differ materially from those expected because of various risks and uncertainties.  You should review the company's filings with the Securities and Exchange Commission, including “Risk Factors” in its most recent Annual Report on Form 10-K and subsequent quarterly reports, for a discussion of such risks and uncertainties.

CONTACTS:

Barbara Baker, Taubman, Vice President, Corporate Affairs & Investor Relations, 248-258-7367

bbaker@taubman.com

Maria Mainville, Taubman, Director, Strategic Communications, 248-258-7469

mmainville@taubman.com

# # #

Taubman Centers/5

TAUBMAN CENTERS, INC.
Table 1 - Summary of Results
For the Periods Ended June 30, 2015 and 2014
(in thousands of dollars, except as indicated)
	Three Months Ended				Year to Date
	2015		2014		2015		2014
Net income (1)	42,333		39,054		93,333		565,211
Noncontrolling share of income of consolidated joint ventures	(2,672)		(2,252)		(5,263)		(5,370)
Noncontrolling share of income of TRG	(10,153)		(9,203)		(22,664)		(156,865)
Distributions to participating securities of TRG	(493)		(470)		(985)		(938)
Preferred stock dividends	(5,785)		(5,785)		(11,569)		(11,569)
Net income attributable to Taubman Centers, Inc. common shareowners (1)	23,230		21,344		52,852		390,469
Net income per common share - basic (1)	0.38		0.34		0.85		6.18
Net income per common share - diluted (1)	0.37		0.33		0.84		6.08
Beneficial interest in EBITDA - Combined (2)	99,134		112,054		202,640		721,043
Adjusted Beneficial interest in EBITDA - Combined (2)	99,134		117,890		202,640		240,259
Funds from Operations attributable to partnership unitholders and participating securities of TRG (1)(2)	67,596		71,864		140,512		153,087
Funds from Operations attributable to TCO's common shareowners (1)(2)	47,939		51,337		99,909		109,373
Funds from Operations per common share - basic (1)(2)	0.78		0.81		1.60		1.73
Funds from Operations per common share - diluted (1)(2)	0.76		0.80		1.57		1.70
Adjusted Funds from Operations attributable to partnership unitholders and participating securities of TRG (1)(2)	67,596		77,700		140,512		158,923
Adjusted Funds from Operations attributable to TCO's common shareowners (1)(2)	47,939		55,513		99,909		113,549
Adjusted Funds from Operations per common share - basic (1)(2)	0.78		0.88		1.60		1.80
Adjusted Funds from Operations per common share - diluted (1)(2)	0.76		0.86		1.57		1.76
Weighted average number of common shares outstanding - basic	61,606,563		63,263,237		62,319,211		63,214,694
Weighted average number of common shares outstanding - diluted	62,386,042		63,974,613		63,156,702		64,834,009
Common shares outstanding at end of period	60,886,865		63,263,470
Weighted average units - Operating Partnership - basic	86,669,952		88,408,808		87,402,848		88,361,090
Weighted average units - Operating Partnership - diluted	88,320,693		89,991,446		89,111,601		89,980,405
Units outstanding at end of period - Operating Partnership	85,950,254		88,408,920
Ownership percentage of the Operating Partnership at end of period	70.8	%	71.6	%
Number of owned shopping centers at end of period	19		24
Operating Statistics:
Net Operating Income excluding lease cancellation income - growth % (2)(3)	2.5	%	4.6	%	3.1	%	3.2	%
Net Operating Income including lease cancellation income - growth % (2)(3)	-0.4%		7.6	%	2.4	%	4.7	%
Mall tenant sales - all centers (4)	1,203,516		1,129,184		2,379,273		2,246,681
Mall tenant sales - comparable (3)(4)	1,142,136		1,129,184		2,265,974		2,246,681
Ending occupancy - all centers	90.6	%	92.6	%	90.6	%	92.6	%
Ending occupancy - comparable (3)	93.0	%	92.8	%	93.0	%	92.8	%
Leased space - all centers	95.7	%	95.3	%	95.7	%	95.3	%
Leased space - comparable (3)	96.9	%	95.9	%	96.9	%	95.9	%
Average rent per square foot - Consolidated Businesses (3)	61.52		60.54		61.12		59.71
Average rent per square foot - Unconsolidated Joint Ventures (3)	58.70		58.06		58.95		56.99
Average rent per square foot - Combined (3)	60.35		59.50		60.22		58.60
	Twelve Months Trailing
	2015		2014
Operating Statistics:
Mall tenant sales - all centers (4)	5,102,054		4,939,615
Mall tenant sales - comparable (3)(4)	4,883,247		4,903,359
Sales per square foot (3)(4)	818		807
All centers (4):
Mall tenant occupancy costs as a percentage of tenant sales - Consolidated Businesses	14.1	%	13.6	%
Mall tenant occupancy costs as a percentage of tenant sales - Unconsolidated Joint Ventures	13.2	%	13.1	%
Mall tenant occupancy costs as a percentage of tenant sales - Combined	13.7	%	13.4	%
Comparable centers (3)(4):
Mall tenant occupancy costs as a percentage of tenant sales - Consolidated Businesses	14.2	%	13.7	%
Mall tenant occupancy costs as a percentage of tenant sales - Unconsolidated Joint Ventures	13.3	%	13.1	%
Mall tenant occupancy costs as a percentage of tenant sales - Combined	13.8	%	13.5	%

Taubman Centers/6

(1)	Earnings no longer reflect the results of the centers sold to the Starwood Capital Group (Starwood) for periods after the October 2014 disposition date. During the six month period ended June 30, 2014, the Company recognized a gain (net of tax) of $476.9 million from dispositions of interests in International Plaza, Arizona Mills, and land in Syosset, New York related to the former Oyster Bay project. The effect of the gain on dispositions from the International Plaza, Arizona Mills, and Oyster Bay dispositions on diluted earnings per common share (EPS) was $5.30 per share.
(2)	Beneficial interest in EBITDA represents the Operating Partnership’s share of the earnings before interest, income taxes, and depreciation and amortization of its consolidated and unconsolidated businesses. The Company believes Beneficial interest in EBITDA provides a useful indicator 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.
	The Company uses Net Operating Income (NOI) as an alternative measure to evaluate the operating performance of centers, both on individual and stabilized portfolio bases. The Company defines NOI as property-level operating revenues (includes rental income excluding straight-line adjustments of minimum rent) less maintenance, taxes, utilities, promotion, ground rent (including straight-line adjustments), and other property operating expenses. 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. The Company also uses 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. The Company generally provides 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.
	The National Association of Real Estate Investment Trusts (NAREIT) defines Funds from Operations (FFO) as net income (computed in accordance with Generally Accepted Accounting Principles (GAAP)), excluding gains (or losses) from extraordinary items and sales of properties and impairment write-downs of depreciable real estate, plus real estate related depreciation and after adjustments for unconsolidated partnerships and joint ventures. The Company believes 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, the Company 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. The Company primarily uses FFO in measuring performance and in formulating corporate goals and compensation.
	The Company 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. The Company believes 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. For the three and six month periods ended June 30, 2014, FFO and EBITDA were adjusted for expenses related to the sale of centers to Starwood. Specifically, these measures were adjusted for a charge related to the discontinuation of hedge accounting on the interest rate swap previously designated to hedge the MacArthur Center (MacArthur) note payable as well as disposition costs incurred related to the sale.In addition, for the six months ended June 30, 2014, EBITDA was adjusted for the gain on dispositions of interests in International Plaza, Arizona Mills, and land in Syosset, New York related to the former Oyster Bay project.
	These non-GAAP measures as presented by the Company 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 or as an indicator of the Company's operating performance. Additionally, these measures do not represent cash flows from operating, investing, or financing activities as defined by GAAP.
(3)	Statistics exclude non-comparable centers for all periods presented. The June 30, 2014 statistics have been restated to include comparable centers to 2015. Sales per square foot exclude spaces greater than or equal to 10,000 square feet. In addition, Taubman Prestige Outlets Chesterfield has also been excluded from comparable trailing 12 month statistics reported for 2015 and 2014 as the center was not open for the entire 12 months ended June 30, 2014.
(4)	Based on reports of sales furnished by mall tenants. The 2014 sales statistics have been adjusted to exclude the portfolio of seven centers included in the sale to Starwood in October 2014.

Taubman Centers/7

TAUBMAN CENTERS, INC.
Table 2 - Income Statement
For the Three Months Ended June 30, 2015 and 2014
(in thousands of dollars)
				2015				2014
				CONSOLIDATED BUSINESSES		UNCONSOLIDATED JOINT VENTURES (1)		CONSOLIDATED BUSINESSES (1)		UNCONSOLIDATED JOINT VENTURES (1)
REVENUES:
		Minimum rents		76,869		52,865		96,532		48,364
		Percentage rents		1,077		1,203		1,094		1,103
		Expense recoveries		46,020		31,694		61,203		27,591
		Management, leasing, and development services		3,341				2,965
		Other		4,666		2,112		8,191		3,236
			Total revenues	131,973		87,874		169,985		80,294
EXPENSES:
		Maintenance, taxes, utilities, and promotion		35,107		22,772		48,830		19,989
		Other operating		14,680		4,647		16,050		4,497
		Management, leasing, and development services		1,411				1,696
		General and administrative		12,055				11,587
		Interest expense		14,781		21,056		25,434		18,137
		Depreciation and amortization		26,378		14,370		36,850		11,092
			Total expenses	104,412		62,845		140,447		53,715
Nonoperating income (expense) (2)				1,456		(3	)	(5,321	)	(5	)
				29,017		25,026		24,217		26,574
Income tax expense				(688	)			(311	)
Equity in income of Unconsolidated Joint Ventures				14,004				14,675
				42,333				38,581
Gain on dispositions, net of tax (3)								473
Net income				42,333				39,054
Net income attributable to noncontrolling interests:
		Noncontrolling share of income of consolidated joint ventures		(2,672	)			(2,252	)
		Noncontrolling share of income of TRG		(10,153	)			(9,203	)
Distributions to participating securities of TRG				(493	)			(470	)
Preferred stock dividends				(5,785	)			(5,785	)
Net income attributable to Taubman Centers, Inc. common shareowners				23,230				21,344
SUPPLEMENTAL INFORMATION:
		EBITDA - 100%		70,176		60,452		86,501		55,803
		EBITDA - outside partners' share		(4,953	)	(26,541	)	(5,931	)	(24,319	)
		Beneficial interest in EBITDA		65,223		33,911		80,570		31,484
		Beneficial interest expense		(13,047	)	(11,405	)	(23,348	)	(9,955	)
		Beneficial income tax expense - TRG and TCO		(688	)			(311	)
		Beneficial income tax expense - TCO		109				87
		Non-real estate depreciation		(722	)			(878	)
		Preferred dividends and distributions		(5,785	)			(5,785	)
		Funds from Operations attributable to partnership unitholders and participating securities of TRG		45,090		22,506		50,335		21,529
STRAIGHTLINE AND PURCHASE ACCOUNTING ADJUSTMENTS:
		Net straight-line adjustments to rental revenue, recoveries,
			and ground rent expense at TRG %	(116	)	496		398		398
		The Mall at Green Hills purchase accounting adjustments - minimum rents increase		87				199
		El Paseo Village and The Gardens on El Paseo purchase accounting
			adjustments - interest expense reduction	305				305
		Waterside Shops purchase accounting adjustments - interest expense reduction				262				263
		U.S. headquarters purchase accounting adjustment - interest expense reduction						181
(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. In its consolidated financial statements, the Company accounts for its investments in the Unconsolidated Joint Ventures under the equity method. International Plaza's operations were consolidated through the January 2014 disposition date. Subsequent to the disposition, the Company's remaining 50.1% interest is accounted for under the equity method within Unconsolidated Joint Ventures. In addition, Arizona Mills' operations were accounted for under equity method through the disposition in January 2014. The results of the centers sold to Starwood were consolidated through the October 2014 disposition.
(2	)	Nonoperating expense for the three months ended June 30, 2014 includes $5.7 million in connection with the discontinuation of hedge accounting related to the MacArthur interest rate swap and $0.4 million of disposition costs related to the sale of centers to Starwood.
(3	)	During the three months ended June 30, 2014, a reduction of $0.5 million to the tax on the gain on the disposition of interests in International Plaza was recognized.

Taubman Centers/8

TAUBMAN CENTERS, INC.
Table 3 - Income Statement
For the Six Months Ended June 30, 2015 and 2014
(in thousands of dollars)
				2015				2014
				CONSOLIDATED BUSINESSES		UNCONSOLIDATED JOINT VENTURES (1)		CONSOLIDATED BUSINESSES (1)		UNCONSOLIDATED JOINT VENTURES (1)
REVENUES:
		Minimum rents		151,436		105,574		194,422		94,872
		Percentage rents		4,007		3,450		5,756		3,157
		Expense recoveries		89,932		63,251		123,912		54,627
		Management, leasing, and development services		6,298				5,470
		Other		9,289		7,513		15,203		4,863
			Total revenues	260,962		179,788		344,763		157,519
EXPENSES:
		Maintenance, taxes, utilities, and promotion		66,740		44,271		96,771		39,992
		Other operating		27,898		10,077		31,546		9,424
		Management, leasing, and development services		2,541				2,981
		General and administrative		23,980				23,124
		Interest expense		28,306		42,022		51,564		36,029
		Depreciation and amortization		50,419		27,869		71,968		22,792
			Total expenses	199,884		124,239		277,954		108,237
Nonoperating income (expense) (2)				2,702		5		(4,218	)	(3	)
				63,780		55,554		62,591		49,279
Income tax expense				(1,526	)			(1,010	)
Equity in income of Unconsolidated Joint Ventures				31,079				26,743
				93,333				88,324
Gain on dispositions, net of tax (3)								476,887
Net income				93,333				565,211
Net income attributable to noncontrolling interests:
		Noncontrolling share of income of consolidated joint ventures		(5,263	)			(5,370	)
		Noncontrolling share of income of TRG		(22,664	)			(156,865	)
Distributions to participating securities of TRG				(985	)			(938	)
Preferred stock dividends				(11,569	)			(11,569	)
Net income attributable to Taubman Centers, Inc. common shareowners				52,852				390,469
SUPPLEMENTAL INFORMATION:
		EBITDA - 100% (4)		142,505		125,445		672,743		108,100
		EBITDA - outside partners' share		(10,282	)	(55,028	)	(12,274	)	(47,526	)
		Beneficial interest in EBITDA		132,223		70,417		660,469		60,574
		Gain on dispositions						(486,620	)
		Beneficial interest expense		(24,918	)	(22,768	)	(47,414	)	(19,799	)
		Beneficial income tax expense - TRG and TCO		(1,526	)			(1,010	)
		Beneficial income tax expense - TCO		288				146
		Non-real estate depreciation		(1,635	)			(1,690	)
		Preferred dividends and distributions		(11,569	)			(11,569	)
		Funds from Operations attributable to partnership unitholders and participating securities of TRG		92,863		47,649		112,312		40,775
STRAIGHTLINE AND PURCHASE ACCOUNTING ADJUSTMENTS:
		Net straight-line adjustments to rental revenue, recoveries,
			and ground rent expense at TRG %	(373	)	889		807		556
		The Mall at Green Hills purchase accounting adjustments - minimum rents increase		180				391
		El Paseo Village and The Gardens on El Paseo purchase accounting
			adjustments - interest expense reduction	611				611
		Waterside Shops purchase accounting adjustments - interest expense reduction				525				525
		U.S. headquarters purchase accounting adjustment - interest expense reduction		182				242
(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. In its consolidated financial statements, the Company accounts for its investments in the Unconsolidated Joint Ventures under the equity method. International Plaza's operations were consolidated through the January 2014 disposition date. Subsequent to the disposition, the Company's remaining 50.1% interest is accounted for under the equity method within Unconsolidated Joint Ventures. In addition, Arizona Mills' operations were accounted for under equity method through the disposition in January 2014. The results of the centers sold to Starwood were consolidated through the October 2014 disposition.
(2	)	Nonoperating expense for the six months ended June 30, 2014 includes $5.7 million in connection with the discontinuation of hedge accounting related to the MacArthur interest rate swap and $0.4 million of disposition costs related to the sale of centers to Starwood.
(3	)	During the six months ended June 30, 2014, the gain on dispositions of interests in International Plaza, Arizona Mills, and land in Syosset, New York related to the former Oyster Bay project is net of income tax expense of $9.7 million.
(4	)	For the six months ended June 30, 2014, EBITDA includes the Company's $486.6 million (before tax) gain from the dispositions of interests in International Plaza, Arizona Mills, and land in Syosset, New York related to the former Oyster Bay project.

Taubman Centers/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 Three Months Ended June 30, 2015 and 2014
(in thousands of dollars except as noted; may not add or recalculate due to rounding)
		2015					2014
				Shares	Per Share				Shares	Per Share
		Dollars		/Units	/Unit		Dollars		/Units	/Unit
Net income attributable to TCO common shareowners - Basic		23,230		61,606,563	0.38		21,344		63,263,237	0.34
Add impact of share-based compensation		91		779,479			74		711,376
Net income attributable to TCO common shareowners - Diluted		23,321		62,386,042	0.37		21,418		63,974,613	0.33
Add depreciation of TCO's additional basis		1,617			0.03		1,720			0.03
Add TCO's additional income tax expense		109			0.00		87			0.00
Net income attributable to TCO common shareowners,
	excluding step-up depreciation and additional income tax expense	25,047		62,386,042	0.40		23,225		63,974,613	0.36
Add noncontrolling share of income of TRG		10,153		25,063,389			9,203		25,145,571
Add distributions to participating securities of TRG		493		871,262			470		871,262
Net income attributable to partnership unitholders
	and participating securities	35,693		88,320,693	0.40		32,898		89,991,446	0.37
Add (less) depreciation and amortization:
	Consolidated businesses at 100%	26,378			0.30		36,850			0.41
	Depreciation of TCO's additional basis	(1,617	)		(0.02	)	(1,720	)		(0.02	)
	Noncontrolling partners in consolidated joint ventures	(547	)		(0.01	)	(1,593	)		(0.02	)
	Share of Unconsolidated Joint Ventures	8,502			0.10		6,854			0.08
	Non-real estate depreciation	(722	)		(0.01	)	(878	)		(0.01	)
Less gain on dispositions, net of tax							(473	)		(0.01	)
Less impact of share-based compensation		(91	)		(0.00	)	(74	)		(0.00	)
Funds from Operations attributable to partnership unitholders
	and participating securities of TRG	67,596		88,320,693	0.77		71,864		89,991,446	0.80
TCO's average ownership percentage of TRG		71.1	%				71.6	%
Funds from Operations attributable to TCO's common shareowners,
	excluding additional income tax expense	48,048			0.77		51,424			0.80
Less TCO's additional income tax expense		(109	)		(0.00	)	(87	)		(0.00	)
Funds from Operations attributable to TCO's common shareowners		47,939			0.76		51,337			0.80
Funds from Operations attributable to partnership unitholders
	and participating securities of TRG	67,596		88,320,693	0.77		71,864		89,991,446	0.80
Beneficial share of disposition costs related to the Starwood sale							441			0.00
Beneficial share of discontinuation of hedge accounting - MacArthur							5,395			0.06
Adjusted Funds from Operations attributable to partnership unitholders
	and participating securities of TRG	67,596		88,320,693	0.77		77,700		89,991,446	0.86
TCO's average ownership percentage of TRG		71.1	%				71.6	%
Adjusted Funds from Operations attributable to TCO's common shareowners,
	excluding additional income tax expense	48,048			0.77		55,600			0.86
Less TCO's additional income tax expense		(109	)		(0.00	)	(87	)		(0.00	)
Adjusted Funds from Operations attributable to TCO's common shareowners		47,939			0.76		55,513			0.86

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TAUBMAN CENTERS, INC.
Table 5 - 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, 2015 and 2014
(in thousands of dollars except as noted; may not add or recalculate due to rounding)
		2015					2014
				Shares	Per Share				Shares	Per Share
		Dollars		/Units	/Unit		Dollars		/Units	/Unit
Net income attributable to TCO common shareowners - Basic		52,852		62,319,211	0.85		390,469		63,214,694	6.18
Add distributions to participating securities of TRG							938		871,262
Add impact of share-based compensation		196		837,491			2,618		748,053
Net income attributable to TCO common shareowners - Diluted		53,048		63,156,702	0.84		394,025		64,834,009	6.08
Add depreciation of TCO's additional basis		3,234			0.05		3,440			0.05
Add TCO's additional income tax expense		288			0.00		146			0.00
Net income attributable to TCO common shareowners,
	excluding step-up depreciation and additional income tax expense	56,570		63,156,702	0.90		397,611		64,834,009	6.13
Add noncontrolling share of income of TRG		22,664		25,083,637			156,865		25,146,396
Add distributions to participating securities of TRG		985		871,262
Net income attributable to partnership unitholders
	and participating securities	80,219		89,111,601	0.90		554,476		89,980,405	6.16
Add (less) depreciation and amortization:
	Consolidated businesses at 100%	50,419			0.57		71,968			0.80
	Depreciation of TCO's additional basis	(3,234	)		(0.04	)	(3,440	)		(0.04	)
	Noncontrolling partners in consolidated joint ventures	(1,631	)		(0.02	)	(2,754	)		(0.03	)
	Share of Unconsolidated Joint Ventures	16,570			0.19		14,032			0.16
	Non-real estate depreciation	(1,635	)		(0.02	)	(1,690	)		(0.02	)
Less gain on dispositions, net of tax							(476,887	)		(5.30	)
Less impact of share-based compensation		(196	)		(0.00	)	(2,618	)		(0.03	)
Funds from Operations attributable to partnership unitholders
	and participating securities of TRG	140,512		89,111,601	1.58		153,087		89,980,405	1.70
TCO's average ownership percentage of TRG		71.3	%				71.5	%
Funds from Operations attributable to TCO's common shareowners,
	excluding additional income tax expense	100,197			1.58		109,519			1.70
Less TCO's additional income tax expense		(288	)		(0.00	)	(146	)		(0.00	)
Funds from Operations attributable to TCO's common shareowners		99,909			1.57		109,373			1.70
Funds from Operations attributable to partnership unitholders
	and participating securities of TRG	140,512		89,111,601	1.58		153,087		89,980,405	1.70
Beneficial share of disposition costs related to the Starwood sale							441			0.00
Beneficial share of discontinuation of hedge accounting - MacArthur							5,395			0.06
Adjusted Funds from Operations attributable to partnership unitholders
	and participating securities of TRG	140,512		89,111,601	1.58		158,923		89,980,405	1.77
TCO's average ownership percentage of TRG		71.3	%				71.5%
Adjusted Funds from Operations attributable to TCO's common shareowners,
	excluding additional income tax expense	100,197			1.58		113,695			1.77
Less TCO's additional income tax expense		(288	)		(0.00	)	(146	)		(0.00	)
Adjusted Funds from Operations attributable to TCO's common shareowners		99,909			1.57		113,549			1.76

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TAUBMAN CENTERS, INC.
Table 6 - Reconciliation of Net Income to Beneficial Interest in EBITDA and Adjusted Beneficial Interest in EBITDA
For the Periods Ended June 30, 2015 and 2014
(in thousands of dollars; amounts attributable to TCO may not recalculate due to rounding)
			Three Months Ended				Year to Date
			2015		2014		2015		2014
Net income			42,333		39,054		93,333		565,211
Add (less) depreciation and amortization:
	Consolidated businesses at 100%		26,378		36,850		50,419		71,968
	Noncontrolling partners in consolidated joint ventures		(547	)	(1,593	)	(1,631	)	(2,754	)
	Share of Unconsolidated Joint Ventures		8,502		6,854		16,570		14,032
Add (less) interest expense and income tax expense:
	Interest expense:
		Consolidated businesses at 100%	14,781		25,434		28,306		51,564
		Noncontrolling partners in consolidated joint ventures	(1,734	)	(2,086	)	(3,388	)	(4,150	)
		Share of Unconsolidated Joint Ventures	11,405		9,955		22,768		19,799
	Income tax expense:
		Income tax expense on dispositions of International Plaza, Arizona Mills, and Oyster Bay			(473	)			9,733
		Other income tax expense	688		311		1,526		1,010
Less noncontrolling share of income of consolidated joint ventures			(2,672	)	(2,252	)	(5,263	)	(5,370	)
Beneficial interest in EBITDA			99,134		112,054		202,640		721,043
TCO's average ownership percentage of TRG			71.1	%	71.6	%	71.3	%	71.5	%
Beneficial interest in EBITDA attributable to TCO			70,466		80,183		144,493		515,761
Beneficial interest in EBITDA			99,134		112,054		202,640		721,043
Add (less):
	Gain on dispositions								(486,620	)
	Beneficial share of disposition costs related to the Starwood sale				441				441
	Beneficial share of discontinuation of hedge accounting - MacArthur				5,395				5,395
Adjusted Beneficial interest in EBITDA			99,134		117,890		202,640		240,259
TCO's average ownership percentage of TRG			71.1	%	71.6	%	71.3	%	71.5	%
Adjusted Beneficial interest in EBITDA attributable to TCO			70,466		84,359		144,493		171,883

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TAUBMAN CENTERS, INC.
Table 7 - Reconciliation of Net Income to Net Operating Income (NOI)
For the Periods Ended June 30, 2015, 2014, and 2013
(in thousands of dollars)
				Three Months Ended						Three Months Ended						Year to Date						Year to Date
				2015			2014			2014			2013			2015			2014			2014				2013
Net income				42,333			39,054			39,054			33,603			93,333			565,211			565,211				79,959
Add (less) depreciation and amortization:
		Consolidated businesses at 100%		26,378			36,850			36,850			38,258			50,419			71,968			71,968				75,280
		Noncontrolling partners in consolidated joint ventures		(547	)		(1,593	)		(1,593	)		(1,368	)		(1,631	)		(2,754	)		(2,754	)			(2,484	)
		Share of Unconsolidated Joint Ventures		8,502			6,854			6,854			5,864			16,570			14,032			14,032				12,173
Add (less) interest expense and income tax expense:
		Interest expense:
			Consolidated businesses at 100%	14,781			25,434			25,434			32,622			28,306			51,564			51,564				67,074
			Noncontrolling partners in consolidated joint ventures	(1,734	)		(2,086	)		(2,086	)		(2,214	)		(3,388	)		(4,150	)		(4,150	)			(4,377	)
			Share of Unconsolidated Joint Ventures	11,405			9,955			9,955			9,401			22,768			19,799			19,799				18,777
		Income tax expense:
			Income tax expense on dispositions of International Plaza, Arizona Mills, and Oyster Bay				(473	)		(473	)								9,733			9,733
			Other income tax expense	688			311			311			234			1,526			1,010			1,010				1,262
Less noncontrolling share of income of consolidated joint ventures				(2,672	)		(2,252	)		(2,252	)		(1,773	)		(5,263	)		(5,370	)		(5,370	)			(4,554	)
Add EBITDA attributable to outside partners:
		EBITDA attributable to noncontrolling partners in consolidated joint ventures		4,953			5,931			5,931			5,355			10,282			12,274			12,274				11,415
		EBITDA attributable to outside partners in Unconsolidated Joint Ventures		26,541			24,319			24,319			20,877			55,028			47,526			47,526				41,091
EBITDA at 100%				130,628			142,304			142,304			140,859			267,950			780,843			780,843				295,616
Add (less) items excluded from shopping center NOI:
		General and administrative expenses		12,055			11,587			11,587			12,628			23,980			23,124			23,124				24,864
		Management, leasing, and development services, net		(1,930	)		(1,269	)		(1,269	)		(700	)		(3,757	)		(2,489	)		(2,489	)			(2,056	)
		Straight-line of rents		(1,378	)		(1,243	)		(1,243	)		(1,158	)		(2,098	)		(2,287	)		(2,287	)			(2,614	)
		Gain on dispositions																	(486,620	)		(486,620	)
		Disposition costs related to the Starwood sale					441			441									441			441
		Discontinuation of hedge accounting - MacArthur					5,678			5,678									5,678			5,678
		Gain on sale of peripheral land																								(863	)
		Gain on sale of marketable securities																								(1,323	)
		Dividend income		(885	)		(612	)		(612	)					(1,711	)		(836	)		(836	)
		Interest income		(553	)		(181	)		(181	)		(42	)		(1,219	)		(308	)		(308	)			(101	)
		Other nonoperating (income) expense		(15	)											223			(754	)		(754	)
		Non-center specific operating expenses and other		5,961			5,211			5,211			6,924			10,309			8,959			8,959				10,516
NOI - all centers at 100%				143,883			161,916			161,916			158,511			293,677			325,751			325,751				324,039
Less - NOI of non-comparable centers				(5,997	)	(1)	(23,505	)	(2)	(22,015	)	(3)	(28,449	)	(4)	(11,152	)	(1)	(49,976	)	(5)	(46,981	)	(6	)	(57,782	)	(4)
NOI at 100% - comparable centers				137,886			138,411			139,901			130,062			282,525			275,775			278,770				266,257
NOI - growth %				-0.4%						7.6	%					2.4	%					4.7	%
NOI at 100% - comparable centers				137,886			138,411			139,901			130,062			282,525			275,775			278,770				266,257
Lease cancellation income				(321	)		(4,146	)		(4,146	)		(309	)		(4,403	)		(5,999	)		(5,999	)			(2,000	)
NOI at 100% - comparable centers excluding lease cancellation income				137,565			134,265			135,755			129,753			278,122			269,776			272,771				264,257
NOI excluding lease cancellation income - growth %				2.5	%					4.6	%					3.1	%					3.2	%
(1	)	Includes The Mall of San Juan and The Mall at University Town Center.
(2	)	Includes the portfolio of centers sold to Starwood and an adjustment to reflect the allocation of costs to Starwood centers that are now being allocated to the remainder of the portfolio.
(3	)	Includes the portfolio of centers sold to Starwood and Taubman Prestige Outlets Chesterfield.
(4	)	Includes the portfolio of centers sold to Starwood and Arizona Mills.
(5	)	Includes the portfolio of centers sold to Starwood and Arizona Mills for the approximately one-month period prior to its disposition. Includes an adjustment to reflect the allocation of costs to Starwood centers that are now being allocated to the remainder of the portfolio.
(6	)	Includes the portfolio of centers sold to Starwood, Taubman Prestige Outlets Chesterfield, and Arizona Mills for the approximately one-month period prior to its disposition.

Taubman Centers/13

TAUBMAN CENTERS, INC.
Table 8 - Balance Sheets
As of June 30, 2015 and December 31, 2014
(in thousands of dollars)
			As of
			June 30, 2015		December 31, 2014
Consolidated Balance Sheet of Taubman Centers, Inc.:
Assets:
	Properties		3,467,620		3,262,505
	Accumulated depreciation and amortization		(1,010,571	)	(970,045	)
			2,457,049		2,292,460
	Investment in Unconsolidated Joint Ventures		412,377		370,004
	Cash and cash equivalents		42,328		276,423
	Restricted cash		16,917		37,502
	Accounts and notes receivable, net		41,190		49,245
	Accounts receivable from related parties		2,754		832
	Deferred charges and other assets		206,662		188,435
			3,179,277		3,214,901
Liabilities:
	Notes payable		2,212,461		2,025,505
	Accounts payable and accrued liabilities		303,878		292,802
	Distributions in excess of investments in and net income of
	Unconsolidated Joint Ventures		474,449		476,651
			2,990,788		2,794,958
Equity:
	Taubman Centers, Inc. Shareowners' Equity:
		Series B Non-Participating Convertible Preferred Stock	25		25
		Series J Cumulative Redeemable Preferred Stock
		Series K Cumulative Redeemable Preferred Stock
		Common Stock	609		633
		Additional paid-in capital	678,883		815,961
		Accumulated other comprehensive income (loss)	(19,284	)	(15,068	)
		Dividends in excess of net income	(500,344	)	(483,188	)
			159,889		318,363
	Noncontrolling interests:
		Noncontrolling interests in consolidated joint ventures	(22,912	)	(14,796	)
		Noncontrolling interests in partnership equity of TRG	51,512		116,376
			28,600		101,580
			188,489		419,943
			3,179,277		3,214,901
Combined Balance Sheet of Unconsolidated Joint Ventures (1):
Assets:
	Properties		1,601,636		1,580,926
	Accumulated depreciation and amortization		(568,755	)	(548,646	)
			1,032,881		1,032,280
	Cash and cash equivalents		29,252		49,765
	Accounts and notes receivable, net		35,695		38,788
	Deferred charges and other assets		41,079		33,200
			1,138,907		1,154,033
Liabilities:
	Notes payable		2,006,424		1,989,546
	Accounts payable and other liabilities		68,735		103,161
			2,075,159		2,092,707
Accumulated Deficiency in Assets:
	Accumulated deficiency in assets - TRG		(518,775	)	(520,714	)
	Accumulated deficiency in assets - Joint Venture Partners		(407,553	)	(407,870	)
	Accumulated other comprehensive loss - TRG		(4,962	)	(5,045	)
	Accumulated other comprehensive loss - Joint Venture Partners		(4,962	)	(5,045	)
			(936,252	)	(938,674	)
			1,138,907		1,154,033
(1)	Unconsolidated Joint Venture amounts exclude the balances of entities that own interests in projects that are currently under development.

Taubman Centers/14

TAUBMAN CENTERS, INC.
Table 9 - Annual Guidance
(all dollar amounts per common share on a diluted basis; amounts may not add due to rounding)
	Range for Year Ended
	December 31, 2015
Funds from Operations per common share	3.28		3.36
Real estate depreciation - TRG	(1.50	)	(1.45	)
Distributions to participating securities of TRG	(0.02	)	(0.02	)
Depreciation of TCO's additional basis in TRG	(0.10	)	(0.10	)
Net income attributable to common shareowners, per common share (EPS)	1.65		1.78