Retail real estate investment trust (REIT) -
Taubman Centers Inc.
) - adjusted FFO (funds from operations) per share of 89 cents
rose 3.5% year over year and 2.3% ahead of the Zacks Consensus
Estimate of 87 cents. The results were backed by
better-than-expected growth in revenues.
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Taubman's total revenue during the reported quarter stood at
$193.9 million, up 2.3% from the year-ago quarter and 3.7% above
the Zacks Consensus Estimate of $187 million. This was mainly
driven by a rise in minimum rents. On the other hand, total
expenses increased 2.9% year over year.
Quarter in Detail
Taubman's leased space in comparable centers increased to 93.1%
as of Sep 30, 2013 from 92.5% at prior-year quarter end.
Moreover, as of Sep 30, 2013, ending occupancy at comparable
centers moved north to 91.3% from 90.5% on Sep 30, 2012.
Average rent per square foot for the quarter was $48.66,
increasing 4.6% from $46.52 in the year-ago quarter. Net
Operating Income (NOI), excluding lease cancellation income,
increased 3.2% year over year.
Mall tenant sales per square foot climbed 0.4% year over year,
leading the tally to $699 over the trailing 12-month period.
Notable Activities during Q3
Taubman Prestige Outlets Chesterfield opened on Aug 2 in
Chesterfield, Mo. The center boasts several outlet stores
including retailers like
Ralph Lauren Corporation
Abercrombie & Fitch Co.
Moreover, the company disclosed its intention to redevelop the
International Market Place (Waikiki, Honolulu, Hawaii). It will
include 360,000 square feet of space for retail, dining, and
entertainment purposes and exhibit luxury-focused merchandising
with the sole full-line Saks Fifth Avenue store chain owned by
) in Hawaii. For this project, which is schedule to open in
spring 2016, the projected cost is approximately $400 million and
the company would have a 93.5% ownership interest in the project.
Balance Sheet Position
As of Sep 30, 2013, Taubman's cash and cash equivalents stood at
$32.3 million, compared with $32.1 million at year-end 2012.
Taubman disclosed a $200 million share buyback program in August.
Around 313,042 shares of its common stock were repurchased for
$67.68 per share. Following this, the company had $179 million
remaining under its share buyback authorization as of Sep 30.
Taubman has kept its guidance range for 2013 FFO per share
unchanged at $3.57 - $3.67 and expects NOI growth of about 3% for
We are encouraged with the decent results at Taubman. Given its
solid portfolio of best-in-class retail malls, Taubman is poised
to improve its results in the years ahead. Strategic developments
at high-end markets are expected to be accretive to its top line
Yet, the protracted economic recovery remains a concern for this
Zacks Rank #4 (Sell) stock. Tenant bankruptcies, lease
terminations as well as rising customer purchases through
catalogs and the Internet could hurt the demand for its
FFO, a widely used metric to gauge the performance of REITs,
is obtained after adding depreciation and amortization and other
non-cash expenses to net income.