Retail real estate investment trust ("REIT") Taubman Centers Inc. 's TCO fourth-quarter 2015 adjusted funds from operations ("FFO") per share of 98 cents beat the Zacks Consensus Estimate by a penny. Results were driven by increase in occupancy and average rent at its centers.
However, the figure was down 2% from $1.00 earned a year ago. Revenues came in at $156.2 million, beating the Zacks Consensus Estimate of $154 million but below the year-ago tally of $158.3 million.
For full-year 2015, the company reported adjusted FFO per share of $3.42, down 6.8% from $3.67 in the prior year. Revenues for the year fell 18.0% year over year to $557.2 million.
Quarter in Detail
Comparable center net operating income ("NOI"), excluding lease cancellation income, rose 3.4% year over year; while average rent per square foot was $60.71, up 1.7% year over year. For the year ended Dec 31, 2015, trailing 12-month releasing spreads per square foot were 23.3%.
For the fourth quarter, mall tenant sales per square foot decreased 2.2%. Comparable center mall tenant sales per square foot increased 1% year over year to $800 for 2015.
As of Dec 31, 2015, the comparable centers' portfolio was 97.0% leased, denoting a 0.8% year-over-year increase; while ending occupancy was 95.3%, up 0.6% year over year.
Notably, throughout the year, weakness in South American tourism, coupled with a strengthening U.S. dollar, had adversely impacted the performance of two tourist-oriented centers in Florida.
Liquidity
Taubman exited fourth-quarter 2015 with cash and cash equivalents of $206.6 million, down from $276.4 million recorded at year-end 2014.
Share Repurchase
During the quarter, Taubman repurchased 26,093 shares of its common stock at an average price of $69.95 per share. As of Dec 31, 2015, the company had around $145 million available under its share repurchase authorization.
2016 Guidance
Taubman has disclosed its outlook for 2016. The company expects 2015 FFO per share in the range of $3.45-$3.65. Importantly, this FFO guidance does not take into account the positive impact of the impending acquisition of Country Club Plaza, slated to be closed in Mar 2016. Currently, the Zacks Consensus Estimate for 2016 is pegged at $3.67.
Our Viewpoint
We are encouraged by Taubman's better-than-expected FFO per share in the fourth quarter. Rise in rents and occupancy reflected strong demand for the company's properties. In fact, we expect the company to grow on the back of a solid retail portfolio and a strong tenant base, going forward.
Taubman currently has a Zacks Rank #2 (Buy). Investors interested in the retail REIT space can also consider stocks like Realty Income Corporation O , Regency Centers Corporation REG and Rouse Properties, Inc. RSE . All these stocks carry the same Zacks Rank as Taubman.
Note: 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.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
