SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): July 19, 1996
TAUBMAN CENTERS, INC.
(Exact Name of Registrant as Specified in its Charter)
MICHIGAN
(State or Other Jurisdiction of Incorporation)
1-11530 38-2033632
(Commission File Number) (I.R.S Employer Identification Number)
200 East Long Lake Road, Bloomfield Hills, Michigan 48304
(Address of Principal Executive Office) (Zip Code)
(810) 258-6800
(Registrant's Telephone Number, Including Area Code)
None
(Former Name or Former Address, if Changed Since Last Report)
Item 5. Other Matters.
On July 19, 1996, The Taubman Realty Group Limited Partnership (TRG) completed
transactions that resulted in it acquiring the 75% interest in Fairlane Town
Center (Fairlane) previously held by a joint venture partner, leaving TRG with
100% ownership of the Center. The 75% interest was acquired from Boston Safe
Deposit and Trust Company, as trustee of the Pacific Telesis Group Master
Pension Trust ("PacTel"), for $65.6 million. TRG also assumed mortgage debt of
approximately $26 million, representing PacTel's beneficial interest in the
$34.6 million mortgage encumbering the property. TRG borrowed under an existing
revolving credit facility with Union Bank of Switzerland (New York Branch) to
fund the cash portion of the purchase price. The borrowing was subsequently
repaid with the $65.6 million proceeds from the issuance of 3,096 TRG units of
partnership interest to PacTel . Taubman Centers, Inc. (the "Company") is the
managing general partner of TRG. PacTel is unaffiliated with TRG and the
Company, and the transactions were negotiated at arm's length. The units of
partnership interest issued to PacTel will be exchangeable (after one year),
under the Company's on-going exchange offer to certain of TRG's partners, for
approximately 6.1 million shares of the Company's common stock. The common stock
had a closing price of $10.75 per share on July 17, 1996. PacTel is obligated to
hold the units of partnership interest for at least one year. TRG used unsecured
debt to fund the repayment of Fairlane's 9.73% mortgage and the prepayment
penalty of approximately $1.2 million.
Fairlane is a 1.5 million square foot regional shopping center located in
Dearborn, Michigan. Fairlane opened in 1976 with JCPenney, Hudson's and Sears as
anchors. Lord & Taylor and Saks Fifth Avenue were added as anchors in 1978 and
1980, respectively.
Item 7. Financial Statements and Exhibits.
The following financial statements and pro forma information are being
supplied as supplementary information to this voluntary filing on Form 8-K.
a-b Financial Statements and Pro Forma Information.
Independent Auditors' Report.
Fairlane Town Center, Historical Summaries of Revenues and Direct
Operating Expenses for Each of the Three Years in the Period Ended
December 31, 1995.
Taubman Centers, Inc., Pro Forma Condensed Statement of Operations,
Year Ended December 31, 1995, and the Three Months Ended March 31,
1996 (unaudited).
The Taubman Realty Group Limited Partnership, Pro Forma Condensed
Consolidated Balance Sheet, March 31, 1996 (unaudited).
The Taubman Realty Group Limited Partnership, Pro Forma Condensed
Consolidated Statement of Operations, Year Ended December 31, 1995
(unaudited).
The Taubman Realty Group Limited Partnership, Pro Forma Condensed
Consolidated Statement of Operations, Three Months Ended March 31,
1996 (unaudited).
The Taubman Realty Group Limited Partnership, Statement of Estimated
Taxable Operating Results of Fairlane Town Center and Estimated Cash
to be Made Available by Operations of Fairlane Town Center for a
Twelve Month Period Ended March 31, 1996 (unaudited).
2
FAIRLANE TOWN CENTER
Historical Summaries of
Revenues and Direct Operating Expenses
for Each of the Three Years in the
Period Ended December 31, 1995, and
Independent Auditors' Report
3
INDEPENDENT AUDITORS' REPORT
Partners
The Taubman Realty Group Limited Partnership
We have audited the accompanying historical summaries of revenues and direct
operating expenses of Fairlane Town Center (Fairlane) for each of the three
years in the period ended December 31, 1995. The historical summaries are the
responsibility of Fairlane's management. Our responsibility is to express an
opinion on these historical summaries based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the historical summaries are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the historical summaries. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the historical
summaries. We believe that our audits provide a reasonable basis for our
opinion.
The accompanying historical summaries are prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission (for
inclusion in a Form 8-K of The Taubman Realty Group Limited Partnership). They
exclude material expenses, as described in Note 1, and are not intended to be a
complete presentation of Fairlane's revenues and expenses.
In our opinion, such historical summaries present fairly, in all material
respects, the revenues and direct operating expenses, as described in Note 1, of
Fairlane for each of the three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Detroit, Michigan
July 31, 1996
4
FAIRLANE TOWN CENTER
HISTORICAL SUMMARIES OF REVENUES AND DIRECT OPERATING EXPENSES
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1995
Year Ended December 31
1993 1994 1995
-----------------------------------------
REVENUES:
Minimum rents $14,966,455 $15,298,788 $15,241,634
Percentage rents 210,282 169,306 221,069
Expense recoveries 10,753,973 11,522,556 11,767,749
Other 737,515 529,899 1,109,431
----------- ----------- -----------
Total revenues $26,668,225 $27,520,549 $28,339,883
DIRECT OPERATING EXPENSES:
Recoverable expenses $10,137,673 $10,753,352 $10,402,236
Other 1,711,831 1,533,225 1,326,053
----------- ----------- -----------
Total direct operating expenses $11,849,504 $12,286,577 $11,728,289
----------- ----------- -----------
EXCESS OF REVENUES OVER DIRECT
OPERATING EXPENSES $14,818,721 $15,233,972 $16,611,594
=========== =========== ===========
5
FAIRLANE TOWN CENTER
HISTORICAL SUMMARIES OF REVENUES AND DIRECT OPERATING EXPENSES
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General - Fairlane Town Center (Fairlane) is a regional shopping center in
Dearborn, Michigan, which is owned and operated by Fairlane Town Center (a
partnership). Shopping center space is leased to tenants and anchors
pursuant to lease agreements. Leases typically provide for guaranteed
minimum rent, percentage rent, and other charges to cover certain operating
costs.
Basis of Presentation - Revenues and expenses are presented on the accrual
basis of accounting. The accompanying financial summaries of historical
revenues and direct operating expenses have been prepared for the purpose
of complying with the rules and regulations of the Securities and Exchange
Commission for inclusion in a report on Form 8-K of The Taubman Realty
Group Limited Partnership (TRG). The accompanying financial summaries are
not representative of the actual operations for the periods presented as
material expenses which may not be comparable to the proposed future
operations of Fairlane by TRG have been excluded. Excluded expenses consist
of interest and depreciation and amortization not directly related to
future operations of Fairlane. Expenses include the costs of management
services provided by The Taubman Company Limited Partnership, approximately
99% beneficially owned by TRG, to Fairlane.
Revenue Recognition - Shopping Center space is generally leased to
specialty retail tenants under short and intermediate term leases which are
accounted for as operating leases. Minimum rents are recognized on an
accrual basis as earned, the result of which does not differ materially
from a straight-line basis. Percentage rents are recognized on an accrual
basis as earned. Expense recoveries, which include an administrative fee,
are recognized as revenue in the period applicable costs are accrued.
6
TAUBMAN CENTERS, INC.
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
Year Ended December 31, 1995 and the Three
Months Ended March 31, 1996
(unaudited)
(in thousands, except share data)
The accompanying Pro Forma Condensed Statement of Operations is presented as
if The Taubman Realty Group Limited Partnership's (TRG) acquisition of its joint
venture partner's 75% ownership of Fairlane Town Center (Fairlane) and the
related issuance of additional units of partnership interest, which caused the
Company's ownership of TRG to decrease from 35.10% to 33.47%, and various other
transactions of TRG, occurred as of January 1, 1995. In management's opinion,
all adjustments necessary to reflect the effects of these transactions have been
made. This unaudited Pro Forma Condensed Statement of Operations is not
necessarily indicative of what actual results of operations would have been had
these transactions occurred on January 1, 1995, nor does it purport to represent
the results of operations for future periods.
Year Ended Three Months Ended
December 31, 1995 March 31, 1996
------------------------------------------ -----------------------------------------
Historical Adjustment<F1>(A) Pro Forma Historical Adjustment<F1>(A) Pro Forma
---------- ---------- --------- ---------- ---------- ---------
Income:
Equity in TRG's income
before extraordinary
items <F2>(B) $19,831 $(472) $19,359 $5,414 $ 111 $5,525
Interest and other 331 331 68 68
------ ----- ------- ------ ----- ------
$20,162 $(472) $19,690 $5,482 $ 111 $5,593
------- ----- ------- ------ ----- ------
Operating expenses $ 895 $ 895 $ 238 $ 238
------ ------- ------ ----- ------
Income before extraordinary
items $19,267 $(472) $18,795 $5,244 $ 111 $5,355
======= ===== ======= ====== ===== ======
Earnings per common share:
Income before extraordinary
items $ .44 $ .43 $ .12 $ .12
====== ======= ====== ======
Weighted average number
of common shares
outstanding 44,249,617 44,249,617 44,111,232 44,111,232
========== ========== ========== ==========
<FN>
<F1>
(A) Adjustment is due to the impact of TRG's acquisition of its joint venture
partner's 75% interest in Fairlane and the related issuance of additional
units of partnership interest, which caused the Company's ownership of TRG
to decrease from 35.10% to 33.47%, and various other transactions which
occurred in 1995 and 1996. See TRG's Pro Forma Condensed Consolidated
Statements of Operations for the year ended December 31, 1995 and the three
months ended March 31, 1996 included in this report.
<F2>
(B) Includes a $1.8 million gain in the 1995 Historical column and the reversal
of $1.8 million gain in the 1995 Adjustment column, related to TRG's
disposition of Bellevue Center in November 1995.
</FN>
7
THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
March 31, 1996
(unaudited)
(in thousands)
This unaudited Pro Forma Condensed Consolidated Balance Sheet is presented as
if TRG's acquisition of its joint venture partner's 75% interest in Fairlane
Town Center (Fairlane) and TRG's acquisition of the Paseo Nuevo shopping center
(Paseo) had occurred on March 31, 1996. In management's opinion, all adjustments
necessary to reflect the effects of these transactions have been made.
This unaudited Pro Forma Condensed Consolidated Balance Sheet is not
necessarily indicative of what the actual financial position would have been at
March 31, 1996, nor does it purport to represent the future financial position
of TRG.
Adjustments Adjustments
for for
Acquisition Pro Acquisition Pro
Historical of Fairlane<F1>(A) Forma of Paseo<F2>(B) Forma
---------- ----------- --------- ----------- ---------
Assets:
Properties, net $ 724,794 $ 95,318 $ 820,112 $ 35,398 $ 855,510
Other assets 81,430 5,473 86,903 2,400 89,303
---------- -------- ---------- -------- ----------
$ 806,224 $100,791 $ 907,015 $ 37,798 $ 944,813
========== ======== ========== ======== ==========
Liabilities:
Debt $ 964,820 $ 36,333 $1,001,153 $ 37,000 $1,038,153
Capital lease obligation 17,277 17,277 17,277
Accounts payable and
other liabilities 80,533 2,931 83,464 798 84,262
Distributions in excess of
net income of unconsolidated
Joint Ventures 154,629 (2,848) 151,781 151,781
---------- -------- ---------- -------- ----------
$1,217,259 $ 36,416 $1,253,675 $ 37,798 $1,291,473
Accumulated deficiency in
assets (411,035) 64,375 (346,660) (346,660)
----------- -------- ---------- -------- ----------
$ 806,224 $100,791 $ 907,015 $ 37,798 $ 944,813
========== ======== ========== ======== ==========
Allocation of accumulated
deficiency in assets:
General Partners $ (328,897) $ (264,497) $ (264,497)
Limited Partners (82,138) (82,163) (82,163)
---------- ---------- ----------
$ (411,035) $ (346,660) $ (364,660)
========== ========== ==========
<FN>
<F1>
(A) Represents TRG's acquisition of its joint venture partner's 75% interest
in Fairlane Town Center and the subsequent consolidation of Fairlane as a
wholly owned entity. The ownership interest was acquired in connection
with the issuance of 3,096 units of partnership interest (exchangeable,
after one year, for approximately 6.1 million shares of Taubman Centers,
Inc. common stock, having a closing price of $10.75 per share on July 17,
1996). The units issued represent limited partnership interests.
Transaction costs were approximately $0.8 million. TRG also assumed
mortgage debt of $26 million, representing the former joint venture
partner's beneficial interest in the $34.6 million mortgage encumbering
the property. TRG used unsecured debt to fund the repayment of the 9.73%
mortgage and the prepayment penalty of approximately $1.2 million. The
acquisition was accounted for at fair value. Prior to the acquisition
date, TRG's 25% interest in Fairlane was accounted for under the equity
method.
<F2>
(B) Represents TRG's June 1996 acquisition of Paseo, located in Santa Barbara,
California, for $37 million. TRG borrowed under its existing lines of
credit to fund the acquisition. Transaction costs were approximately $0.8
million. TRG also assumed a $2.0 million note receivable plus accrued
interest due from the lessor of one of Paseo's ground leases. The
acquisition was accounted for at fair value.
</FN>
8
THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 1995
(unaudited)
(in thousands, except unit data)
The accompanying Pro Forma Condensed Consolidated Statement of Operations is
presented as if (i) TRG's acquisition of its joint venture partner's 75%
interest in Fairlane Town Center (Fairlane) occurred on January 1, 1995 and (ii)
TRG acquired the Paseo Nuevo shopping center and certain other transactions
occurred on January 1, 1995. In management's opinion, all adjustments necessary
to reflect the effects of these transactions have been made. This unaudited Pro
Forma Condensed Consolidated Statement of Operations is not necessarily
indicative of what actual results of operations would have been had these
transactions been completed as of January 1, 1995, nor does it purport to
represent the results of operations for future periods.
Adjustments Adjustments
for for
Acquisition Pro Other Pro
Historical of Fairlane<F1>(A) Forma Transactions Forma
---------- ------------ --------- ------------ ---------
Revenues $228,918 $28,340 $257,258 $ 6,645<F2>(B) $263,903
-------- ------- -------- -------- --------
Operating Costs:
Recoverable expenses $ 62,910 $10,402 $ 73,312 $ 1,785<F2>(B) $ 75,097
Other operating 22,512 1,326 23,838 1,468<F2>(B) 25,306
Management, leasing and
development services 3,696 3,696 3,696
General and administrative 19,790 19,790 19,790
Interest 65,858 2,792 68,650 2,812<F3>(B)(C) 71,462
Depreciation and amortization 32,393 3,792 36,185 1,106<F2>(B) 37,291
-------- ------- ------- -------- --------
$207,159 $18,312 $225,471 $ 7,171 $232,642
-------- ------- -------- -------- --------
Income before equity in income
of unconsolidated Joint Ventures
and before extraordinary items $ 21,759 $10,028 $ 31,787 $ (526) $ 31,261
Equity in income before extra-
ordinary items of unconsolidated
Joint Ventures 57,940 (2,698) 55,242 (4,330)<F4>(D) 50,912
-------- ------- -------- -------- --------
Income before extraordinary items $ 79,699 $ 7,330 $ 87,029 $ (4,856) $ 82,173
======== ======= ======== ======== ========
Allocation of income before
extraordinary items:
General Partners $ 63,773 $ 66,402 $ 62,697
Limited Partners 15,926 20,627 19,476
-------- -------- --------
$ 79,699 $ 87,029 $ 82,173
======== ======== ========
Earnings per Unit of Partnership
Interest:
Income before extraordinary
items $ 1,255 $ 1,306 $ 1,234
======== ======== ========
Weighted Average Number of
Units of Partnership Interest
Outstanding 63,521 3,096 66,617 66,617
======== ======= ======== ========
See the accompanying Notes and Significant Assumptions
9
THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP
NOTES AND SIGNIFICANT ASSUMPTIONS
<FN>
<F1>
(A) Acquisition of Fairlane Town Center Interests
In July 1996, The Taubman Realty Group Limited Partnership (TRG) completed
transactions that resulted in the acquisition of the 75% interest in Fairlane
Town Center (Fairlane), previously held by a joint venture partner. In
connection with the transactions, TRG issued 3,096 units of partnership interest
to the joint venture partner. The units are exchangeable, after one year, for
approximately 6.1 million shares of Taubman Centers, Inc. common stock, having a
closing price of $10.75 per share on July 17, 1996. The former joint venture
partner is obligated to hold the partnership units for at least one year. TRG
also assumed mortgage debt of $26 million, representing the former joint venture
partner's beneficial interest in the $34.6 million mortgage encumbering the
property. TRG used unsecured debt (average rates of 7.59% and 7.44% in 1995 and
1996, respectively) to fund the repayment of the 9.73% mortgage and the
prepayment penalty of approximately $1.2 million. The acquisition, which
resulted in TRG owning 100% of Fairlane, was accounted for at fair value. Prior
to the acquisition date, TRG's interest in Fairlane was accounted for under the
equity method. The purchase price has been allocated 15% to land and 85% to
buildings and site improvements, which will be depreciated over 40 years and 15
years, respectively. Pro forma revenues and expenses, other than interest and
depreciation and amortization, represent the historical amounts of Fairlane.
Other Transactions
<F2>
(B) Acquisition of Paseo Nuevo
In June 1996, TRG acquired the Paseo Nuevo shopping center (Paseo), located in
Santa Barbara, California, for $37 million. TRG borrowed under its existing
lines of credit (average rates of 7.75% and 7.03% in 1995 and 1996,
respectively) to fund the acquisition. The Center is owned subject to two
participating ground leases with remaining terms of approximately 70 years. TRG
also assumed a $2.0 million note receivable due from the lessor of one of the
ground leases. The note accrues interest at an annual rate of 10%. The purchase
price has been allocated primarily to the buildings and site improvements, which
will be depreciated over 40 years and 15 years, respectively. Pro forma revenues
and expenses other than interest, depreciation and management fee expense are
based on unaudited information provided by the seller of the property.
<F3>
(C) Medium-Term Note Program
In the second quarter of 1995, TRG initiated a medium-term note program under
its $500 million shelf registration statement and issued during the year $133.4
million of unsecured notes at a weighted average rate of 7.45% and a weighted
average maturity of approximately seven years. The net proceeds were used to pay
down floating rate debt under TRG's revolving credit facilities as well as to
pay off the $22.6 million mortgage, bearing a 9.44% rate, encumbering a wholly
owned Center. In July 1996, TRG issued $154 million of unsecured notes ($70
million of 8% notes and $84 million of floating rate notes). The net proceeds
were used to repay the Fairlane mortgage and the related prepayment penalty, and
to pay down borrowings under TRG's revolving credit facilities. Interest rates
used in determining the adjustments for debt issued and retired are based on
actual rates achieved, including where applicable the impact of interest rate
hedging instruments, and are not necessarily indicative of the rates which could
have been achieved if the transactions had actually occurred as of the beginning
of the periods presented.
<F4>
(D) Disposal of Bellevue Center
In December 1995, the bank group holding the $99.5 million nonrecourse mortgage
encumbering Bellevue Center acquired title to the Center through a nonjudicial
foreclosure sale. The mortgage, which had a below market interest rate of 5.91%,
matured on November 1, 1995. TRG's share of the ordinary gain on the disposition
of the Center was $5.0 million. TRG ceased to recognize the results of
operations of Bellevue Associates (Bellevue), a 60% owned joint venture, as of
November 1, 1995. TRG's share of Bellevue's net loss from operations for the ten
months ended October 31, 1995 was $0.7 million. The pro forma adjustment
represents the reversal of the $5.0 million gain and the $0.7 million loss from
operations.
</FN>
THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Three Months Ended March 31, 1996
(unaudited)
(in thousands, except unit data)
The accompanying Pro Forma Condensed Consolidated Statement of Operations is
presented as if (i) TRG's acquisition of its joint venture partner's 75%
interest in Fairlane Town Center (Fairlane) and (ii) TRG's acquisition of the
Paseo Nuevo shopping center and certain other transactions occurred on January
1, 1995. In management's opinion, all adjustments necessary to reflect the
effects of these transactions have been made. This unaudited Pro Forma Condensed
Consolidated Statement of Operations is not necessarily indicative of what
actual results of operations would have been had these transactions been
completed as of January 1, 1995, nor does it purport to represent the results of
operations for future periods.
Adjustments Adjustments
for for
Acquisition Pro Other Pro
Historical of Fairlane<F1>(A) Forma Transactions Forma
---------- ------------ --------- ------------ ---------
Revenues $59,732 $6,977 $66,709 $1,801<F2>(B) $68,510
------- ------ ------- ------ -------
Operating Costs:
Recoverable expenses $15,586 $2,746 $18,332 $ 464<F2>(B) $18,796
Other operating 5,219 584 5,803 384<F2>(B) 6,187
Management, leasing and
development services 1,245 1,245 1,245
General and administrative 4,753 4,753 4,753
Interest 17,102 685 17,787 825<F3>(B)(C) 18,612
Depreciation and amortization 8,322 987 9,309 277<F2>(B) 9,586
------- ------ ------- ------ -------
$52,227 $5,002 $57,229 $1,950 $59,179
------- ------ ------- ------ -------
Income before equity in income
of unconsolidated Joint Ventures
and before extraordinary items $ 7,505 $1,975 $ 9,480 $ (149) $ 9,331
Equity in income before extra-
ordinary items of unconsolidated
Joint Ventures 13,363 (476) 12,887 12,887
------- ------ ------- ------ -------
Income before extraordinary items $20,868 $1,499 $22,367 $ (149) $22,218
======= ====== ======= ====== =======
Allocation of income before
extraordinary items:
General Partners $16,698 $17,066 $16,952
Limited Partners 4,170 5,301 5,266
------- ------- -------
$20,868 $22,367 $22,218
======= ======= =======
Earnings per Unit of Partnership
Interest:
Income before extraordinary
items $ 329 $ 336 $ 334
======= ======= =======
Weighted Average Number of
Units of Partnership Interest
Outstanding 63,521 3,096 66,617 66,617
======= ====== ======= =======
See the accompanying Notes and Significant Assumptions
10
THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP
NOTES AND SIGNIFICANT ASSUMPTIONS
<FN>
<F1>
(A) Acquisition of Fairlane Town Center Interests
In July 1996, The Taubman Realty Group Limited Partnership (TRG) completed
transactions that resulted in the acquisition of the 75% interest in Fairlane
Town Center (Fairlane), previously held by a joint venture partner. In
connection with the transactions, TRG issued 3,096 units of partnership interest
to the joint venture partner. The units are exchangeable, after one year, for
approximately 6.1 million shares of Taubman Centers, Inc. common stock, having a
closing price of $10.75 per share on July 17, 1996. The former joint venture
partner is obligated to hold the partnership units for at least one year. TRG
also assumed mortgage debt of $26 million, representing the former joint venture
partner's beneficial interest in the $34.6 million mortgage encumbering the
property. TRG used unsecured debt (average rates of 7.59% and 7.44% in 1995 and
1996, respectively) to fund the repayment of the 9.73% mortgage and the
prepayment penalty of approximately $1.2 million. The acquisition, which
resulted in TRG owning 100% of Fairlane, was accounted for at fair value. Prior
to the acquisition date, TRG's interest in Fairlane was accounted for under the
equity method. The purchase price has been allocated 15% to land and 85% to
buildings and site improvements, which will be depreciated over 40 years and 15
years, respectively. Pro forma revenues and expenses, other than interest and
depreciation and amortization, represent the historical amounts of Fairlane.
Other Transactions
<F2>
(B) Acquisition of Paseo Nuevo
In June 1996, TRG acquired the Paseo Nuevo shopping center (Paseo), located in
Santa Barbara, California, for $37 million. TRG borrowed under its existing
lines of credit (average rates of 7.75% and 7.03% in 1995 and 1996,
respectively) to fund the acquisition. The Center is owned subject to two
participating ground leases with remaining terms of approximately 70 years. TRG
also assumed a $2.0 million note receivable due from the lessor of one of the
ground leases. The note accrues interest at an annual rate of 10%. The purchase
price has been allocated primarily to the buildings and site improvements, which
will be depreciated over 40 years and 15 years, respectively. Pro forma revenues
and expenses other than interest, depreciation and management fee expense are
based on unaudited information provided by the seller of the property.
<F3>
(C) Medium-Term Note Program
In the second quarter of 1995, TRG initiated a medium-term note program under
its $500 million shelf registration statement and issued during the year $133.4
million of unsecured notes at a weighted average rate of 7.45% and a weighted
average maturity of approximately seven years. The net proceeds were used to pay
down floating rate debt under TRG's revolving credit facilities as well as to
pay off the $22.6 million mortgage, bearing a 9.44% rate, encumbering a wholly
owned Center. In July 1996, TRG issued $154 million of unsecured notes ($70
million of 8% notes and $84 million of floating rate notes). The net proceeds
were used to repay the Fairlane mortgage and the related prepayment penalty, and
to pay down borrowings under TRG's revolving credit facilities. Interest rates
used in determining the adjustments for debt issued and retired are based on
actual rates achieved, including where applicable the impact of interest rate
hedging instruments, and are not necessarily indicative of the rates which could
have been achieved if the transactions had actually occurred as of the beginning
of the periods presented.
</FN>
11
THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP
STATEMENT OF ESTIMATED TAXABLE OPERATING
RESULTS OF FAIRLANE TOWN CENTER AND ESTIMATED CASH TO BE MADE
AVAILABLE BY OPERATIONS OF FAIRLANE TOWN CENTER
FOR A TWELVE-MONTH PERIOD ENDED March 31, 1996
(unaudited)
(in thousands)
Revenues:
Minimum rents $15,218
Percentage rents 235
Expense recoveries 12,203
Other 873
-------
$28,529
Operating Costs:
Recoverable expenses $10,850
Other operating 1,603
Interest 2,783
Depreciation and amortization 3,824
-------
$19,060
-------
Estimated taxable operating income $9,469
Add back depreciation and amortization 3,824
-------
Estimated cash to be made available by operations $13,293
=======
Note
This statement of estimated taxable operating results and estimated cash to be
made available from operations is an estimate of operating results of Fairlane
Town Center for a period of twelve months and does not purport to reflect actual
results for any period.
12
c. Exhibits.
Exhibit Number Description
23 Consent of Deloitte & Touche LLP.
* 99 (a) Purchase and Sale Agreement By and Between
The Pacific Telesis Group Master Pension
Trust and The Taubman Realty Group Limited
Partnership, dated July 17, 1996 (without
exhibits or schedules, which will be
supplementally provided to the Securities
and Exchange Commission upon its request).
* 99 (b) Subscription Agreement By and Between The
Pacific Telesis Group Master Pension Trust
and The Taubman Realty Group Limited
Partnership dated July 18, 1996 (without
exhibits or schedules, which will be
supplementally provided to the Securities
and Exchange Commission upon its request).
* Certain portions of this document have been omitted and are being
separately filed with the Securities and Exchange Commission by TRG
with its request for confidential treatment.
13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
TAUBMAN CENTERS, INC.
Date: August 1, 1996 By: /s/ Bernard Winograd
--------------------
Bernard Winograd
Executive Vice President and
Chief Financial Officer
14
EXHIBIT INDEX
Exhibit Number Description
23 Consent of Deloitte & Touche LLP.
* 99 (a) Purchase and Sale Agreement By and Between
The Pacific Telesis Group Master Pension
Trust and The Taubman Realty Group Limited
Partnership, dated July 17, 1996 (without
exhibits or schedules, which will be
supplementally provided to the Securities
and Exchange Commission upon its request).
* 99 (b) Subscription Agreement By and Between The
Pacific Telesis Group Master Pension Trust
and The Taubman Realty Group Limited
Partnership dated July 18, 1996 (without
exhibits or schedules, which will be
supplementally provided to the Securities
and Exchange Commission upon its request).
* Certain portions of this document have been omitted and are being
separately filed with the Securities and Exchange Commission by TRG
with its request for confidential treatment.
15