Real estate investment trust (REIT) -
Taubman Centers Inc.
) FFO (funds from operations) per share rose 2.7% year over year
but the figure came 5.1% short of the Zacks Consensus Estimate.
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The company reported second-quarter 2013 FFO per share of 75
cents, missing the Zacks Consensus Estimate by 4 cents. The miss
is mainly due to the lower-than-expected revenue generated in the
However, FFO per share moved up 2 cents from the year ago-quarter
as the decline in expenses was more than the fall in revenues.
The company has, however, reiterated its guidance range for 2013.
Taubman's total revenue during the reported quarter stood at
$178.2 million, down 0.7% from the year-ago quarter and below the
Zacks Consensus Estimate of $180 million. While the company
experienced growth in minimum rents, a fall in revenue from
management, leasing, and development services pulled the revenue
figure down. On the other hand, total expenses decreased 1.8%
year over year.
Behind the Headline Numbers
Taubman's leased space in all centers increased to 92.6% as of
Jun 30, 2013 from 92.3% at prior-year end. Ending occupancy in
all centers rose to 90.7% at the second-quarter end from 90.1%
reported a year ago.
Average rent per square foot for the quarter was $48.98,
increasing 4.8% from $46.73 in the year-ago quarter. Net
Operating Income (NOI), excluding lease cancellation income,
increased 3.9% year over year.
Mall tenant sales per square foot remained unchanged year over
year, leading the tally to be at $698 over the trailing 12-month
period. Though shoes and women's specialty delivered decent
performance, a weak feat by the electronics segment marred that
Taubman completed was carried on progressing with the development
work in Taubman Prestige Outlets Chesterfield (Chesterfield,
Mo.). Slated to open on Aug 2, the center will have several
outlet stores including retailers like
Ralph Lauren Corporation
Abercrombie & Fitch Co.
In addition, Taubman announced in June that Saks Fifth Avenue, an
upscale department store chain owned by
), will anchor the International Market Place (Waikiki, Honolulu,
Hawaii). The move comes as part of the revitalization efforts for
the shopping center.
Balance Sheet Position
As of Jun 30, 2013, Taubman's cash and cash equivalents stood at
$63.5 million, compared with $32.1 million at year-end 2012.
Subsequent to the quarter-end, the company accomplished a secured
financing on City Creek Center (Salt Lake City, Utah) worth $85
million (10-year, non-recourse, all-in fixed rate of 4.43%). The
move helped the company reap proceeds that were above its
investment of $76 million and were utilized for lowering the debt
under its revolving credit facility.
Taubman has kept its guidance range for 2013 FFO per share
unchanged at $3.57 - $3.67. It includes a negative impact of 6.5
cent of its Series K Preferred Stock offering in Mar 2013.
An earnings miss at Taubman is obviously disappointing but we
believe that given its solid portfolio of best-in-class retail
malls, the company would be able to improve its results in the
quarters ahead. It has hiked its dividend 16 times since it went
public, leading to a 4.2% compounded annual growth rate. Yet,
increase in consumer purchases through catalogs and the Internet
could hurt the demand for its properties.
Taubman currently carries a Zacks Rank #3 (Hold).
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.