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): April 23, 1998
TAUBMAN CENTERS, INC.
(Exact Name of Registrant as Specified in its Charter)
MICHIGAN 1-11530 38-2033632
(State or Other Jurisdiction (Commission (I.R.S Employer
of Incorporation) File Number) Identification Number)
200 East Long Lake Road, Suite 300, Bloomfield Hills, Michigan 48303-0200
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, Including Area Code: (248) 258-6800
None
(Former Name or Former Address, if Changed Since Last Report)
Item 5. Other matters.
(a) On April 23, 1998 the Registrant priced an offering of 2,021,611 shares
of its Common Stock pursuant to the terms of an underwriting agreement of that
date between the Registrant and Merrill Lynch & Co., which is being filed as
an exhibit to this Current Report.
(b) The following is the text of a press release issued by the Registrant on
April 27, 1998.
CONTACT: Christopher J. Tennyson FOR IMMEDIATE RELEASE
(248) 258-7519 April 27, 1998
Barbara K. Baker
(248) 258-7367
www.taubman.com
TAUBMAN CENTERS ISSUES FIRST QUARTER RESULTS
FFO Per Share Up 8 Percent, Development Progress Continues
BLOOMFIELD HILLS, Mich., April 27 -- Taubman Centers, Inc. (NYSE:TCO)
today issued its financial results for the quarter ended March 31, 1998.
Taubman Centers, Inc., a real estate investment trust, is the managing
general partner of The Taubman Realty Group Limited Partnership (TRG), which
owns, develops, acquires and operates regional shopping centers nationally.
For the quarter ended March 31, 1998, diluted Funds from Operations (FFO)
per share for Taubman Centers increased 8.0 percent to $0.27 compared to $0.25
per share in the first quarter of 1997. As of March 31, 1998, there were 50.8
million Taubman Centers shares outstanding.
TRG's EBITDA for the first quarter of 1998 was $73.3 million, a 21.6
percent increase from 1997's comparable period. "Our 1997 openings of The Mall
at Tuttle Crossing (Columbus, Ohio), Arizona Mills (Tempe, Arizona), and
expansion of Westfarms (West Hartford, Connecticut) all contributed
significantly to our EBITDA growth during the quarter. In addition, last year's
acquisitions of The Falls (Miami, Florida) and Regency Square (Richmond,
Virginia) favorably impacted our growth," said Robert S. Taubman, president and
chief executive officer.
(more)
Taubman Centers/2
Growth from Development
"1998 is an important year for our development program, as our pipeline of
new projects continues to strengthen. This fall we will open Michigan's first
value regional mall, Great Lakes Crossing, in Auburn Hills, Michigan. The 17
anchor stores we've announced for this 1.4 million square foot center include
Bass Pro Outdoor World, Neiman Marcus Last Call, Off 5th -- Saks Fifth Avenue
Outlet, JCPenney Outlet Store, a 25-screen Star Theatre megaplex, Wolfgang Puck
Cafe, GameWorks, Rainforest Cafe, Group USA, and Oshman's Supersports USA. We're
very pleased with the leasing progress and are on schedule for our November 12
grand opening," said Mr. Taubman.
"In March we announced the first 50 mall tenants who will be joining
Nordstrom and Dillard's at MacArthur Center in Norfolk, Virginia. Over 30 of
these merchants are new to the market, including Restoration Hardware, Cache,
Esprit, Enzo Angiolino, Learningsmith, Crabtree & Evelyn, and L'Occitane. Here
too, we are on schedule for the center's grand opening on March 17, 1999.
"Also in March we announced the first anchor tenants for our International
Plaza project in Tampa, Florida. Nordstrom and Lord & Taylor, both new to the
market, address the need for distinctive, upscale merchandise in the affluent
and growing west Florida region. Our site is immediately adjacent to Tampa
International Airport, which serves over 13 million people annually, and central
to the more than one million residents who live within a 15-mile radius. With
these first two commitments in hand, we have started our final design and
engineering work and plan to begin construction later this year. That will put
us on schedule for a fall 2001 opening.
"And, of course, across the state in western Palm Beach County, we are
developing Wellington Green. With commitments from Burdines, Dillard's, and
JCPenney in hand, we are on track for a 2001 opening.
"Today in Dallas we announced the commitments of three additional anchor
stores for our center in Plano, Texas. Dillard's, Foley's and Lord & Taylor will
be joining previously announced Neiman Marcus at this powerful center located in
the heart of the attractive North Dallas market. We expect to begin construction
this year for a fall 2001 grand opening.
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Taubman Centers/3
"And earlier this month we began development of a value regional mall in
the Philadelphia market. Our site is in Chester County, west of the city, just
off the Downingtown exit of the Pennsylvania Turnpike. This is an ideal
location, central to the state's fastest growing region. We're currently working
with the township and securing anchor commitments for this center, which we are
targeting for a 2000 opening."
Occupancy, Sales per Square Foot, and Rents Increase
Average occupancy for the first quarter of 1998 was 88.5 percent, a 2.0
percent increase from the 86.5 percent reported during the first quarter of
1997. "We are pleased with this strong occupancy achievement," said Mr. Taubman.
"In addition, our leased space statistic of 91.3 percent, an increase of 2.6
percent from March 31, 1997, bodes well for occupancy during 1998." Mall tenant
sales were $740.1 million versus $600.7 million during the comparable period
last year, while mall tenant sales per square foot increased 2.2 percent.
For the twelve months ended March 31, 1998, average rent per square foot
for stores in the TRG centers owned and operating at least five years was
$38.88, up 1.6 percent from $38.25 for the twelve months ended March 31, 1997.
Participation in Cohen & Steers Unit Investment Trust
Taubman Centers was one of 27 real estate investment trusts who are
selling shares to the Equity Investor Fund Cohen & Steers Realty Major Portfolio
Unit Investment Trust, a UIT sponsored by Merrill Lynch. The approximately 2.0
million Taubman Centers shares were priced at the closing price on April 23,
1998 of $13-3/16 per share, before deducting the underwriting commission and
expenses of the offering. The offering to the UIT is being made under the
company's shelf registration statement. Net proceeds of approximately $25
million will be used for general partnership purposes.
"We are delighted to be asked by Cohen & Steers to be included in this
UIT," said Lisa A. Payne, Taubman Centers executive vice president and chief
financial officer. "This is an excellent opportunity to widen the distribution
of our stock."
Taubman Centers' portfolio includes 25 urban and suburban regional and
super regional shopping centers in 12 states. The company is headquartered in
Bloomfield Hills, Michigan.
# # #
Taubman Centers/4
Three months ended
TAUBMAN CENTERS, INC. (TCO) March 31
- --------------------------- ------------------
1998 1997
---- ----
(in thousands of dollars,
except as indicated)
Funds from Operations (1) 13,903 12,981
Funds from Operations per common share: (1)
Diluted 0.27 0.25
Basic 0.27 0.26
Income from Series A Preferred Equity in TRG (2) 4,150 --
Equity in TRG's income before extraordinary
item allocable to unitholders (2) 5,287 6,606
Other (net) (171) (181)
Income before extraordinary item 9,266 6,425
Equity in TRG's extraordinary item (3) (366) --
Net income 8,900 6,425
Preferred dividends (2) (4,150) --
Net income available to common shareowners 4,750 6,425
Income before extraordinary item per
common share - basic and diluted 0.10 0.13
Net income per common share -
basic and diluted 0.09 0.13
Weighted average number of
common shares outstanding 50,773,099 50,720,358
Common shares outstanding at end of period 50,828,785 50,720,358
Ownership percentage of TRG at end of period 38.43% 36.68%
THE TAUBMAN REALTY GROUP LIMITED Three months ended
PARTNERSHIP (TRG) March 31
- -------------------------------- ------------------
1998 1997
---- ----
(in thousands of dollars,
except as indicated)
Income before extraordinary item 23,305 23,584
Extraordinary item (3) (957) --
Net income 22,348 23,584
Preferred distributions to TCO (2) (4,150) --
Net income allocable to unitholders 18,198 23,584
EBITDA (4) 73,264 60,272
Distributable Cash Flow (5) 36,757 35,882
Weighted average units 132,609,399 138,251,907
Units outstanding at end of period 132,254,411 138,251,907
Mall tenant sales 740,104 600,709
Mall tenant sales - comparable centers (6) 636,181 600,709
Average occupancy 88.5% 86.5%
Leased space at end of period (7) 91.3% 88.7%
Mall tenant occupancy costs as a
percentage of tenant sales (8) 17.0% 18.0%
Number of shopping centers at end
of period 25 21
Twelve months ended
March 31
-------------------
Rent per square foot 1998(9) 1997(9)
---- ----
All mall tenants $38.88 $38.25
Taubman Centers/5
Notes:
(1) Funds from Operations is calculated by adding TCO's beneficial interest in
TRG's Distributable Cash Flow to TCO's other income, less TCO's operating
expenses. TCO's other income less operating expenses is reported as "other
(net)" in the table. Diluted FFO per share as calculated under FAS 128 was
$0.24, $0.26, and $0.28 for the second, third, and fourth quarters of 1997.
For the year ended December 31, 1997, diluted FFO per share was $1.04.
(2) Effective with its October 1997 acquisition of an 8.3% Series A Preferred
Equity interest in TRG, TCO receives income and distributions (in the form
of guaranteed payments) equal to the dividends payable on TCO's 8.3% Series
A Preferred Stock. TCO continues to participate in the income allocable to
TRG partnership unitholders to the extent of TCO's ownership in TRG,
including adjustments arising from TCO's additional basis in TRG's net
assets.
(3) Charge related to the extinguishment of debt, primarily consisting of a
prepayment penalty.
(4) Defined as TRG's beneficial interest in the revenues, less operating costs
before interest and depreciation and amortization of TRG's wholly and
partially owned managed businesses.
(5) Defined as EBITDA less TRG's beneficial interest in interest expense,
non-real estate depreciation and amortization, and preferred distributions.
TRG's beneficial interest in debt, excluding capital lease obligations, at
March 31, 1998 was $1.870 billion compared to $1.737 billion at December
31, 1997.
(6) Includes centers that were owned and open for the entire reported periods.
(7) Leased space comprises both occupied space and space that is leased but not
yet occupied.
(8) Mall tenant occupancy costs are defined as the sum of minimum rents,
percentage rents and expense recoveries, excluding utilities.
(9) Amounts include 18 centers owned and open for at least five years.
Taubman Centers/6
Reconciliation of TRG's Net Income to Funds from Operations
Three months ended Three months ended
March 31, 1998 March 31, 1997
------------------------------------------- --------------------------------------------
Unconsolidated Unconsolidated
Consolidated Joint Consolidated Joint
Businesses Ventures(1) Total Businesses Ventures(1) Total
---------- -------- ----- ---------- -------- -----
(in thousands of dollars) (in thousands of dollars)
TRG's net income (2) 22,348 23,584
Extraordinary item 957
Depreciation and
amortization (3) 18,117 12,815
TRG's beneficial
interest expense (3) 31,842 23,873
------- -------
EBITDA 47,212 26,052 73,264 38,643 21,629 60,272
TRG's beneficial
interest expense (3) (22,637) (9,205) (31,842) (17,284) (6,589) (23,873)
Non-real estate depreciation (515) (515) (517) (517)
Preferred distributions to TCO (4,150) (4,150)
------- ------- ------- ------- ------- -------
Distributable Cash Flow 19,910 16,847 36,757 20,842 15,040 35,882
======= ======= ======= ======= ======= =======
TCO's share of
Distributable Cash Flow 14,074 13,162
Other income/expenses, net (171) (181)
------- --------
Funds from Operations 13,903 12,981
======= =======
Notes:
(1) Amounts represent TRG's beneficial interest in the operations of its
Unconsolidated Joint Ventures.
(2) Net income includes TRG's share of gains on peripheral land sales of $400
thousand and $65 thousand for the three months ended March 31, 1998 and
1997, respectively.
(3) Amounts represent TRG's and TRG's beneficial interest in the Unconsolidated
Joint Ventures' depreciation and amortization and interest expense.
Taubman Centers/7
Comparison of the Three Months Ended March 31, 1998 to the Three Months Ended
March 31, 1997
The following table sets forth operating results for entities that TRG
controls by ownership or contractual agreement (the "Consolidated Businesses")
and Taubman shopping centers owned through joint ventures with third parties
that are not controlled ("Unconsolidated Joint Ventures") for the three months
ended March 31, 1998 and 1997:
Three Months Ended March 31, 1998 Three Months Ended March 31, 1997
-------------------------------------------- --------------------------------------------
TRG UNCONSOLIDATED TOTAL TRG UNCONSOLIDATED TOTAL
CONSOLIDATED JOINT MANAGED CONSOLIDATED JOINT MANAGED
BUSINESSES(1) VENTURES(2) BUSINESSES BUSINESSES(1) VENTURES(2) BUSINESSES
-------------------------------------------- --------------------------------------------
(in millions of dollars)
REVENUES:
Minimum rents 49.9 44.2 94.1 40.8 37.6 78.5
Percentage rents 1.2 0.7 2.0 1.4 0.3 1.7
Expense recoveries 26.3 23.9 50.1 21.9 21.5 43.5
Management, leasing and
development 1.8 1.8 2.0 2.0
Other 5.1 3.3 8.4 3.9 1.2 5.1
----- ----- ----- ----- ----- -----
Total revenues 84.3 72.1 156.4 70.0 60.7 130.7
OPERATING COSTS:
Recoverable expenses 22.1 20.3 42.4 18.0 18.3 36.3
Other operating 7.3 3.3 10.6 6.5 2.7 9.2
Management, leasing and
development 1.1 1.1 1.1 1.1
General and administrative 6.6 6.6 5.7 5.7
Interest expense 22.6 17.2 39.9 17.3 12.5 29.8
Depreciation and amortization 13.8 8.0 21.8 10.0 5.1 15.2
----- ----- ----- ----- ----- -----
Total operating costs 73.5 48.8 122.3 58.7 38.6 97.2
Net results of Memorial City(1) (0.1) (0.1) (0.1) (0.1)
----- ----- ----- ----- ----- -----
10.7 23.3 34.0 11.3 22.1 33.4
===== ===== ===== =====
Equity in income before extraordinary
item of Unconsolidated Joint Ventures 12.6 12.3
----- -----
Income before extraordinary item 23.3 23.6
Extraordinary item (1.0)
----- -----
Net income 22.3 23.6
Preferred Distributions to TCO (4.2)
----- -----
Net income available to unitholders 18.2 23.6
===== =====
SUPPLEMENTAL INFORMATION:
EBITDA contribution 47.2 26.0 73.3 38.6 21.6 60.3
TRG's Beneficial Interest Expense (22.6) (9.2) (31.8) (17.3) (6.6) (23.9)
Non-real estate depreciation (0.5) (0.5) (0.5) (0.5)
Preferred Distributions to TCO (4.2) (4.2)
----- ----- ----- ----- ----- -----
Distributable Cash Flow contribution 19.9 16.8 36.8 20.8 15.0 35.9
===== ===== ===== ===== ===== =====
(1) The results of operations of Memorial City are presented net in this table.
TRG expects that Memorial City's net operating income will approximate the
ground rent payable under the lease for the immediate future.
(2) With the exception of the Supplemental Information, amounts represent 100%
of the Unconsolidated Joint Ventures. Amounts are net of intercompany
profits. The Unconsolidated Joint Ventures are accounted for under the
equity method in TRG's Consolidated Financial Statements.
(3) Amounts in the table may not add due to rounding.
(4) Certain 1997 amounts have been reclassified to conform to 1998
classifications.
Item 7(c). EXHIBITS
1 -- Underwriting Agreement, dated April 23, 1998, between Taubman Centers,
Inc. and Merrill Lynch & Co.
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: April 27, 1998 By: /s/ Lisa A. Payne
--------------------
Lisa A. Payne
Executive Vice President
and Chief Financial Officer