TAUBMAN CENTERS INC - FORM 8-K - EX-99 - EXHIBIT

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8-K - 8-K - TAUBMAN CENTERS INC	a2014q38-k.htm



Taubman Centers, Inc.	T 248.258.6800
200 East Long Lake Road	www.taubman.com
Suite 300
Bloomfield Hills, Michigan
48304-2324

TAUBMAN CENTERS ISSUES SOLID THIRD QUARTER RESULTS


•	Adjusted FFO, Net Operating Income (NOI), Average Rent Per Square Foot, and Mall Tenant Sales Per Square Foot Up


•	The Mall at University Town Center Opens Over 90 percent Leased


•	Sale of Seven Malls to Starwood Capital Group Complete


•	Post-Sale Portfolio Releasing Spreads 30 percent

BLOOMFIELD HILLS, Mich., Oct. 30, 2014 - - Taubman Centers, Inc. (NYSE: TCO) today reported financial results for the third quarter of 2014.



	September 30, 2014 Three Months Ended	September 30, 2013 Three Months Ended	September 30, 2014 Nine Months Ended	September 30, 2013 Nine Months Ended
Net income allocable to common shareholders (EPS) per diluted share	$0.53	$0.38	$6.60	$1.09
Funds from Operations (FFO) per diluted share Growth rate	$0.87 (2.2)%	$0.89	$2.57 1.6%	$2.53
Adjusted Funds from Operations (Adjusted FFO) per diluted share⁽¹⁾ Growth rate	$0.91 2.2%	$0.89	$2.67 5.5%	$2.53
(1) Adjusted FFO for the three and nine months ended September 30, 2014 excludes charges related to the sale of seven centers to Starwood.

“It was a productive quarter with solid results,” said Robert S. Taubman, chairman, president and chief executive officer of Taubman Centers. “Then in October, we were delighted with the very successful opening of University Town Center in Sarasota, Florida. We were also pleased to complete the Starwood transaction, which is transformational for the company.

“With increased rents and recoveries and lower predevelopment expenses, our adjusted FFO grew by two cents in the quarter despite a tough comparison with last year,” added Mr. Taubman. Last year the company received the final incentive fee for leasing IFC Mall in Seoul, South Korea. This year the company is also experiencing dilution from the January 2014 sales of Arizona Mills (Tempe, Ariz.) and a 49.9 percent interest in International Plaza (Tampa, Fla.). These items combined for nearly 10 cents of FFO during the third quarter of last year.

Operating Statistics

Comparable center NOI excluding lease cancellation income was up 2.5 percent in the quarter, bringing year-to-date growth to 3 percent. Excluding the company’s assets that were sold to Starwood, comparable center NOI excluding lease cancellation income was up 2.8 percent in the quarter, and up 3.1 percent year-to-date.

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Average rent per square foot for the quarter was $51.54, up 4.5 percent from $49.31 in the comparable period last year. Excluding the company’s assets that were sold to Starwood, average rent per square foot for the quarter was $61.12, up 6.3 percent.

Trailing 12-month releasing spreads per square foot for the period ended September 30, 2014 were 22.3 percent. Excluding the company’s assets that were sold to Starwood, spreads were 29.9 percent.

Excluding the company’s assets that were sold to Starwood, mall tenant sales per square foot were up 0.2 percent from the third quarter of 2013. This brings the company's 12-month trailing mall tenant sales per square foot to $807, a 1 percent decline from the 12-months ended September 30, 2013.

“Our releasing spreads were outstanding and although mall tenant sales per square foot were only modestly positive, we were encouraged by an acceleration throughout the quarter,” said Mr. Taubman.

Excluding the company’s assets that were sold to Starwood, ending occupancy in comparable centers was 94.1 percent, down 1.5 percent. This includes temporary tenants of 2.7 percent.

Sale of Seven Malls to Starwood Complete

In October, the company completed the previously announced sales of seven malls to Starwood. The sales are part of the company’s ongoing strategy to recycle capital, maximize its NOI growth rate and create net asset value for investors over time. Total consideration, excluding transaction costs, was $1.403 billion. See Taubman Completes Sale of Seven Malls to Starwood Capital Group - Oct. 17, 2014.

The Mall at University Town Center Successfully Opened October 16, 2014

On October 16, 2014, the company held the grand opening of The Mall at University Town Center (UTC) (Sarasota, Fla.), the only newly built enclosed regional shopping center to open in the United States this year. The Mall at UTC, which is anchored by Saks Fifth Avenue, Macy’s and Dillard’s, opened over 90 percent leased. Well over half of the center’s more than 100 retailers and restaurants are unique to the Sarasota-Manatee market.

The Mall at UTC is the focal point of the larger University Town Center Development that features additional retail, dining and hotels, with a world-class rowing competition facility located immediately adjacent to the mall. “We have filled the tremendous void for upscale retail in the broader Sarasota market,” said Mr. Taubman. See Shoppers Welcome Sarasota’s Premier Shopping Destination - Oct. 16, 2014.

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Ownership in Hanam Union Square Increased

In August, the company announced it increased its ownership in the Hanam Union Square project. Taubman Asia partnered with a major institution in Asia to acquire an additional 19 percent stake from Shinsegae Group. The new institutional partner owns 14.7 percent of the project, increasing Taubman Asia’s effective ownership from 30 percent to 34.3 percent. Collectively, the partnership has a 49 percent ownership interest. See Taubman Asia Announces Additional Partner and Ownership Increase in Hanam Union Square, South Korea - Aug. 26, 2014.

2014 Guidance

The company is changing its guidance for 2014 Adjusted FFO per diluted share to the range of $3.58 to $3.68 from the previous range of $3.72 to $3.82. This guidance now includes the impact of the company’s sale of seven centers to Starwood, which the company estimates will reduce adjusted FFO by 14 cents. The company’s Adjusted FFO guidance excludes charges related to the discontinuation of hedge accounting on the interest rate swap previously designated to hedge the MacArthur note payable, a restructuring charge, and disposition and debt extinguishment costs incurred related to the sale of centers to Starwood.

The company’s 2014 FFO per diluted share guidance is $3.07 to $3.17 per share.

2014 EPS is expected to be in the range of $13.40 to $13.54. 2014 EPS includes $5.30 per share gains from the first quarter 2014 sales of the company's 50 percent interest in Arizona Mills, land in Syosset, New York, and a 49.9 percent interest in International Plaza. The range also includes the impact of the company’s sale of seven centers to Starwood. The impact includes an estimated gain of approximately $600 million, or $6.65 per share, to be recognized in the fourth quarter of 2014.

Supplemental Investor Information Available

The company provides supplemental investor information along with its earnings announcements, available online at www.taubman.com under “Investors.” This includes the following:


•	Company Information


•	Income Statements


•	Earnings Reconciliations


•	Changes in Funds from Operations and Earnings Per Share


•	Components of Other Income, Other Operating Expense, and Nonoperating Income


•	Recoveries Ratio Analysis


•	Balance Sheets


•	Debt Summary


•	Other Debt, Equity and Certain Balance Sheet Information


•	Construction and Redevelopment


•	Dispositions


•	Capital Spending

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•	Operational Statistics


•	Operational Statistics - Excluding Centers Sold to Starwood Capital Group in October 2014


•	Owned Centers


•	Major Tenants in Owned Portfolio - Excluding Centers Sold to Starwood Capital Group in October 2014


•	Anchors in Owned Portfolio - Excluding Centers Sold to Starwood Capital Group in October 2014


•	Operating Statistics Glossary

Investor Conference Call

The company will host a conference call at 11:00 a.m. EDT on Friday, October 31 to discuss these results, business conditions and the company’s outlook for the remainder of 2014. The conference call will be simulcast at www.taubman.com. An online replay will follow shortly after the call and continue for approximately 90 days.

About Taubman

Taubman Centers, Inc. is an S&P MidCap 400 Real Estate Investment Trust engaged in the ownership, management and/or leasing of 21 regional, super-regional and outlet shopping centers in the U.S. and Asia. Taubman’s U.S.-owned properties are the most productive in the publicly held U.S. regional mall industry. Taubman is currently developing five properties in the U.S. and Asia totaling 4.7 million square feet. Taubman, with more than 60 years of experience in the shopping center industry, is headquartered in Bloomfield Hills, Mich., and Taubman Asia is headquartered in Hong Kong. www.taubman.com.

For ease of use, references in this press release to “Taubman Centers,” “company,” “Taubman” or an operating platform mean Taubman Centers, Inc. and/or one or more of a number of separate, affiliated entities. Business is actually conducted by an affiliated entity rather than Taubman Centers, Inc. itself or the named operating platform.

This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements reflect management's current views with respect to future events and financial performance. The forward-looking statements included in this release are made as of the date hereof. Except as required by law, we assume no obligation to update these forward-looking statements, even if new information becomes available in the future. Actual results may differ materially from those expected because of various risks and uncertainties. You should review the company's filings with the Securities and Exchange Commission, including “Risk Factors” in its most recent Annual Report on Form 10-K and subsequent quarterly reports, for a discussion of such risks and uncertainties.

CONTACTS:

Barbara Baker, Taubman, Vice President, Corporate Affairs & Investor Relations, 248-258-7367

bbaker@taubman.com

Maria Mainville, Taubman, Director, Strategic Communications, 248-258-7469

mmainville@taubman.com

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Taubman Centers/5



TAUBMAN CENTERS, INC.
Table 1 - Summary of Results
For the Periods Ended September 30, 2014 and 2013
(in thousands of dollars, except as indicated)
	Three Months Ended				Year to Date
	2014		2013		2014		2013
Net income	56,637		43,243		621,848		123,202
Noncontrolling share of income of consolidated joint ventures	(2,643)		(2,198)		(8,013)		(6,752)
Noncontrolling share of income of TRG	(14,057)		(10,338)		(170,922)		(29,915)
Preferred stock dividends	(5,784)		(5,784)		(17,353)		(15,148)
Distributions to participating securities of TRG	(471)		(435)		(1,409)		(1,313)
Net income attributable to Taubman Centers, Inc. common shareowners	33,682		24,488		424,151		70,074
Net income per common share - basic	0.53		0.38		6.71		1.10
Net income per common share - diluted	0.53		0.38		6.60		1.09
Beneficial interest in EBITDA - Combined (1)	116,972		128,320		838,015		371,430
Adjusted Beneficial interest in EBITDA - Combined (1)	120,354		128,320		360,613		371,430
Funds from Operations (1)	78,450		80,500		231,537		230,222
Funds from Operations attributable to TCO (1)	56,045		57,737		165,418		164,692
Funds from Operations per common share - basic (1)	0.89		0.91		2.62		2.59
Funds from Operations per common share - diluted (1)	0.87		0.89		2.57		2.53
Adjusted Funds from Operations (1)	81,832		80,500		240,755		230,222
Adjusted Funds from Operations attributable to TCO (1)	58,466		57,737		172,015		164,692
Adjusted Funds from Operations per common share- basic (1)	0.92		0.91		2.72		2.59
Adjusted Funds from Operations per common share- diluted (1)	0.91		0.89		2.67		2.53
Weighted average number of common shares outstanding - basic	63,317,680		63,753,748		63,249,400		63,653,155
Weighted average number of common shares outstanding - diluted	64,087,742		64,690,909		64,876,051		64,702,648
Common shares outstanding at end of period	63,319,539		63,524,788
Weighted average units - Operating Partnership - basic	88,453,782		88,933,226		88,392,327		88,903,234
Weighted average units - Operating Partnership - diluted	90,095,106		90,741,649		90,018,978		90,823,989
Units outstanding at end of period - Operating Partnership	88,454,989		88,702,310
Ownership percentage of the Operating Partnership at end of period	71.6	%	71.6	%
Number of owned shopping centers at end of period (2)	24		25		24		25

Operating Statistics:
Net Operating Income excluding lease cancellation income - growth % (1)(3)	2.5	%	3.2	%	3	%	4.0	%
Ending occupancy - all centers	89.0	%	90.9	%	89.0	%	90.9	%
Ending occupancy - comparable (3)	89.6	%	91.0	%	89.6	%	91.0	%
Average occupancy - all centers	89.2	%	90.8	%	89.7	%	90.7	%
Average occupancy - comparable (3)	89.7	%	90.8	%	90.3	%	90.6	%
Leased space - all centers	91.2	%	92.6	%	91.2	%	92.6	%
Leased space - comparable (3)	91.6	%	92.8	%	91.6	%	92.8	%
Average rent per square foot - Consolidated Businesses (3)	48.58		48.13		48.11		48.04
Average rent per square foot - Unconsolidated Joint Ventures (3)	58.20		52.79		58.02		52.19
Average rent per square foot - Combined (3)	51.54		49.31		51.07		49.09

Operating Statistics Excluding Centers Sold to Starwood Capital Group in October 2014(5):
Net Operating Income excluding lease cancellation income - growth % (1)	2.8	%			3.1	%
Ending occupancy - comparable (3)	91.4	%	92.9	%	91.4	%	92.9	%
Ending occupancy - comparable with TILs (3)	94.1	%	95.6	%	94.1	%	95.6	%
Leased space - comparable (3)	93.4	%	94.7	%	93.4	%	94.7	%
Average rent per square foot - Combined (3)	61.12		57.50		60.37		57.15
All centers (4):
Mall tenant occupancy costs as a percentage of tenant sales - Consolidated Businesses	15.0	%	14.4	%	14.8	%	13.9	%
Mall tenant occupancy costs as a percentage of tenant sales - Unconsolidated Joint Ventures	14.5	%	14.1	%	14.1	%	13.2	%
Mall tenant occupancy costs as a percentage of tenant sales - Combined	14.8	%	14.3	%	14.5	%	13.7	%
Comparable centers (3)(4):
Mall tenant occupancy costs as a percentage of tenant sales - Consolidated Businesses	15.1	%	14.5	%	14.9	%	14.0	%
Mall tenant occupancy costs as a percentage of tenant sales - Unconsolidated Joint Ventures	14.5	%	13.9	%	14.1	%	13.0	%
Mall tenant occupancy costs as a percentage of tenant sales - Combined	14.9	%	14.3	%	14.5	%	13.6	%
Mall tenant sales - all centers (4)	1,121,619		1,177,657		3,368,300		3,578,702
Mall tenant sales - comparable (3)(4)	1,111,848		1,126,993		3,344,320		3,447,116

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(1)	Beneficial Interest in EBITDA represents the Operating Partnership’s share of the earnings before interest, income taxes, and depreciation and amortization of its consolidated and unconsolidated businesses. The Company believes Beneficial Interest in EBITDA provides a useful indicator of operating performance, as it is customary in the real estate and shopping center business to evaluate the performance of properties on a basis unaffected by capital structure.
	The Company uses Net Operating Income (NOI) as an alternative measure to evaluate the operating performance of centers, both on individual and stabilized portfolio bases. The Company defines NOI as property-level operating revenues (includes rental income excluding straight-line adjustments of minimum rent) less maintenance, taxes, utilities, promotion, ground rent (including straight-line adjustments), and other property operating expenses. Since NOI excludes general and administrative expenses, pre-development charges, interest income and expense, depreciation and amortization, impairment charges, restructuring charges, and gains from peripheral land and property dispositions, it provides a performance measure that, when compared period over period, reflects the revenues and expenses most directly associated with owning and operating rental properties, as well as the impact on their operations from trends in tenant sales, occupancy and rental rates, and operating costs. The Company also uses NOI excluding lease cancellation income as an alternative measure because this income may vary significantly from period to period, which can affect comparability and trend analysis. The Company generally provides separate projections for expected comparable center NOI growth and lease cancellation income. Comparable centers are generally defined as centers that were owned and open for the entire current and preceding period presented.
	The National Association of Real Estate Investment Trusts (NAREIT) defines Funds from Operations (FFO) as net income (computed in accordance with Generally Accepted Accounting Principles (GAAP)), excluding gains (or losses) from extraordinary items and sales of properties and impairment write-downs of depreciable real estate, plus real estate related depreciation and after adjustments for unconsolidated partnerships and joint ventures. The Company believes that FFO is a useful supplemental measure of operating performance for REITs. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, the Company and most industry investors and analysts have considered presentations of operating results that exclude historical cost depreciation to be useful in evaluating the operating performance of REITs. The Company primarily uses FFO in measuring performance and in formulating corporate goals and compensation.
	The Company may also present adjusted versions of NOI, Beneficial Interest in EBITDA, and FFO when used by management to evaluate operating performance when certain significant items have impacted results that affect comparability with prior or future periods due to the nature or amounts of these items. The Company believes the disclosure of the adjusted items is similarly useful to investors and others to understand management's view on comparability of such measures between periods. For the three and nine month periods ended September 30, 2014, FFO and EBITDA were adjusted for expenses related to the sale of seven centers to an affiliate of Starwood Capital Group (Starwood) completed in October 2014. Specifically, these measures were adjusted for charges related to the discontinuation of hedge accounting on the interest rate swap previously designated to hedge the MacArthur Center (MacArthur) note payable, a restructuring charge and disposition costs incurred related to the sale. In addition, for the nine month period ended September 30, 2014, EBITDA was adjusted for the gain on dispositions of interests in International Plaza, Arizona Mills, and land in Syosset, New York related to the former Oyster Bay project.
	These non-GAAP measures as presented by the Company are not necessarily comparable to similarly titled measures used by other REITs due to the fact that not all REITs use the same definitions. These measures should not be considered alternatives to net income or as an indicator of the Company's operating performance. Additionally, these measures do not represent cash flows from operating, investing, or financing activities as defined by GAAP.

(2)	In October 2014, the Company completed the sale of seven centers to affiliates of Starwood Capital Group.

(3)	Statistics exclude non-comparable centers. In 2014 and 2013, non-comparable centers are Taubman Prestige Outlets Chesterfield and Arizona Mills.

(4)	Based on reports of sales furnished by mall tenants.

(5)	Statistics have been adjusted to exclude the portfolio of seven centers included in the sale to Starwood Capital Group in October 2014.

Taubman Centers/7



TAUBMAN CENTERS, INC.
Table 2 - Income Statement
For the Three Months Ended September 30, 2014 and 2013
(in thousands of dollars)
				2014				2013
				CONSOLIDATED BUSINESSES		UNCONSOLIDATED JOINT VENTURES (1)		CONSOLIDATED BUSINESSES		UNCONSOLIDATED JOINT VENTURES (1)
REVENUES:
		Minimum rents		96,691		48,226		103,501		42,532
		Percentage rents		5,263		2,270		7,021		2,137
		Expense recoveries		63,527		28,517		67,943		25,738
		Management, leasing, and development services		3,135				8,753
		Other		7,428		1,658		6,720		1,452
			Total revenues	176,044		80,671		193,938		71,859

EXPENSES:
		Maintenance, taxes, utilities, and promotion		52,184		20,457		55,375		18,807
		Other operating		18,036		3,611		19,295		3,372
		Management, leasing, and development services		1,539				1,027
		General and administrative		11,369				11,812
		Restructuring charge		3,031
		Interest expense		23,382		18,255		32,515		17,048
		Depreciation and amortization		24,553		11,939		40,982		10,068
			Total expenses	134,094		54,262		161,006		49,295

Nonoperating income (expense)				891		(22	)	(456	)	(1	)
				42,841		26,387		32,476		22,563
Income tax expense				(683	)			(1,453	)
Equity in income of Unconsolidated Joint Ventures				14,479				12,220
Net income				56,637				43,243
Net income attributable to noncontrolling interests:
		Noncontrolling share of income of consolidated joint ventures		(2,643	)			(2,198	)
		Noncontrolling share of income of TRG		(14,057	)			(10,338	)
Distributions to participating securities of TRG				(471	)			(435	)
Preferred stock dividends				(5,784	)			(5,784	)
Net income attributable to Taubman Centers, Inc. common shareowners				33,682				24,488

SUPPLEMENTAL INFORMATION:
		EBITDA - 100%		90,776		56,581		105,973		49,679
		EBITDA - outside partners' share		(5,566	)	(24,819	)	(5,653	)	(21,679	)
		Beneficial interest in EBITDA		85,210		31,762		100,320		28,000
		Beneficial interest expense		(21,273	)	(10,006	)	(30,352	)	(9,415	)
		Beneficial income tax expense - TRG and TCO		(683	)			(1,453	)
		Beneficial income tax expense - TCO		112				(29	)
		Non-real estate depreciation		(888	)			(787	)
		Preferred dividends and distributions		(5,784	)			(5,784	)
		Funds from Operations contribution		56,694		21,756		61,915		18,585

STRAIGHTLINE AND PURCHASE ACCOUNTING ADJUSTMENTS:
		Net straight-line adjustments to rental revenue, recoveries,
			and ground rent expense at TRG %	405		304		1,081		226
		Green Hills purchase accounting adjustments - minimum rents increase		229				186
		Green Hills, El Paseo Village, and Gardens on El Paseo purchase accounting
			adjustments - interest expense reduction	306				858
		Waterside Shops purchase accounting adjustments - interest expense reduction				263				263
		Taubman BHO headquarters purchase accounting adjustment -
			interest expense reduction	183

(1	)	With the exception of the Supplemental Information, amounts include 100% of the Unconsolidated Joint Ventures. Amounts are net of intercompany transactions. The Unconsolidated Joint Ventures are presented at 100% in order to allow for measurement of their performance as a whole, without regard to the Company's ownership interest. In its consolidated financial statements, the Company accounts for its investments in the Unconsolidated Joint Ventures under the equity method. International Plaza's operations were consolidated through the disposition date. Subsequent to the disposition, the Company's remaining 50.1% interest is accounted for under the equity method of accounting within Unconsolidated Joint Ventures. In addition, Arizona Mills' operations were accounted for under equity method accounting through the disposition in January 2014.

Taubman Centers/8



TAUBMAN CENTERS, INC.
Table 3 - Income Statement
For the Nine Months Ended September 30, 2014 and 2013
(in thousands of dollars)
				2014				2013
				CONSOLIDATED BUSINESSES		UNCONSOLIDATED JOINT VENTURES (1)		CONSOLIDATED BUSINESSES		UNCONSOLIDATED JOINT VENTURES (1)
REVENUES:
		Minimum rents		291,113		143,098		309,043		124,679
		Percentage rents		11,019		5,427		13,732		5,763
		Expense recoveries		187,439		83,144		197,549		73,922
		Management, leasing, and development services		8,605				13,954
		Other		22,631		6,521		21,104		4,820
			Total revenues	520,807		238,190		555,382		209,184

EXPENSES:
		Maintenance, taxes, utilities, and promotion		148,955		60,449		154,694		53,993
		Other operating		49,582		13,035		53,950		11,643
		Management, leasing, and development services		4,520				4,172
		General and administrative		34,493				36,676
		Restructuring charge		3,031
		Interest expense		74,946		54,284		99,589		50,976
		Depreciation and amortization		96,521		34,731		116,262		29,326
			Total expenses	412,048		162,499		465,343		145,938

Nonoperating income (expense) (2)				(3,327	)	(25	)	1,831		(1	)
				105,432		75,666		91,870		63,245
Income tax expense				(1,693	)			(2,715	)
Equity in income of Unconsolidated Joint Ventures				41,222				34,047
				144,961				123,202
Gain on dispositions of International Plaza, Arizona Mills, and Oyster Bay, net of tax (3)				476,887
Net income				621,848				123,202
Net income attributable to noncontrolling interests:
		Noncontrolling share of income of consolidated joint ventures		(8,013	)			(6,752	)
		Noncontrolling share of income of TRG		(170,922	)			(29,915	)
Distributions to participating securities of TRG				(1,409	)			(1,313	)
Preferred stock dividends				(17,353	)			(15,148	)
Net income attributable to Taubman Centers, Inc. common shareowners				424,151				70,074

SUPPLEMENTAL INFORMATION:
		EBITDA - 100% (4)		763,519		164,681		307,721		143,547
		EBITDA - outside partners' share		(17,840	)	(72,345	)	(17,068	)	(62,770	)
		Beneficial interest in EBITDA		745,679		92,336		290,653		80,777
		Gain on dispositions of International Plaza, Arizona Mills, and Oyster Bay		(486,620	)
		Beneficial interest expense		(68,687	)	(29,805	)	(93,049	)	(28,192	)
		Beneficial income tax expense - TRG and TCO		(1,693	)			(2,715	)
		Beneficial income tax expense - TCO		258				132
		Non-real estate depreciation		(2,578	)			(2,236	)
		Preferred dividends and distributions		(17,353	)			(15,148	)
		Funds from Operations contribution		169,006		62,531		177,637		52,585

STRAIGHTLINE AND PURCHASE ACCOUNTING ADJUSTMENTS:
		Net straight-line adjustments to rental revenue, recoveries,
			and ground rent expense at TRG %	1,229		843		2,881		451
		Green Hills purchase accounting adjustments - minimum rents increase		620				590
		Green Hills, El Paseo Village, and Gardens on El Paseo purchase accounting
			adjustments - interest expense reduction	917				2,573
		Waterside Shops purchase accounting adjustments - interest expense reduction				788				788
		Taubman BHO headquarters purchase accounting adjustment
			interest expense reduction	425

(1	)	With the exception of the Supplemental Information, amounts include 100% of the Unconsolidated Joint Ventures. Amounts are net of intercompany transactions. The Unconsolidated Joint Ventures are presented at 100% in order to allow for measurement of their performance as a whole, without regard to the Company's ownership interest. In its consolidated financial statements, the Company accounts for its investments in the Unconsolidated Joint Ventures under the equity method. International Plaza's operations were consolidated through the disposition date. Subsequent to the disposition, the Company's remaining 50.1% interest is accounted for under the equity method of accounting within Unconsolidated Joint Ventures. In addition, Arizona Mills' operations were accounted for under equity method accounting through the disposition in January 2014.
(2	)	Nonoperating expense for the nine months ended September 30, 2014 includes $5.5 million in connection with the discontinuation of hedge accounting related to the MacArthur interest rate swap in connection with the Starwood transaction and $1million of disposition costs related to the sale of seven centers to Starwood Capital Group.
(3	)	During the nine months ended September 30, 2014, the gain on dispositions of interests in International Plaza, Arizona Mills and land in Syosset, New York related to the former Oyster Bay project is net of income tax expense of $9.7 million.
(4	)	For the nine months ended September 30, 2014, EBITDA includes the Company's $486.6 million (before tax) gain from the dispositions of interests in International Plaza, Arizona Mills, and Land in Syosset, New York related to the former Oyster Bay project.

Taubman Centers/9



TAUBMAN CENTERS, INC.
Table 4 - Reconciliation of Net Income Attributable to Taubman Centers, Inc. Common Shareowners to Funds from Operations
and Adjusted Funds from Operations
For the Three Months Ended September 30, 2014 and 2013
(in thousands of dollars except as noted; may not add or recalculate due to rounding)

		2014					2013
				Shares	Per Share				Shares	Per Share
		Dollars		/Units	/Unit		Dollars		/Units	/Unit
Net income attributable to TCO common shareowners - Basic		33,682		63,317,680	0.53		24,488		63,753,748	0.38

Add impact of share-based compensation		121		770,062			107		937,161

Net income attributable to TCO common shareowners - Diluted		33,803		64,087,742	0.53		24,595		64,690,909	0.38

Add depreciation of TCO's additional basis		1,617			0.03		1,720			0.03
Add (less) TCO's additional income tax expense		112			0.00		(29	)		(0.00	)

Net income attributable to TCO common shareowners,
	excluding step-up depreciation and additional income tax expense (benefit)	35,532		64,087,742	0.55		26,286		64,690,909	0.41

Add:
	Noncontrolling share of income of TRG	14,057		25,136,102			10,338		25,179,478
	Distributions to participating securities of TRG	471		871,262			435		871,262

Net income attributable to partnership unitholders
	and participating securities	50,060		90,095,106	0.56		37,059		90,741,649	0.41

Add (less) depreciation and amortization:
	Consolidated businesses at 100%	24,553			0.27		40,982			0.45
	Depreciation of TCO's additional basis	(1,617	)		(0.02	)	(1,720	)		(0.02	)
	Noncontrolling partners in consolidated joint ventures	(814	)		(0.01	)	(1,292	)		(0.01	)
	Share of Unconsolidated Joint Ventures	7,277			0.08		6,365			0.07
	Non-real estate depreciation	(888	)		(0.01	)	(787	)		(0.01	)
Less impact of share-based compensation		(121	)		(0.00)		(107	)		(0.00)

Funds from Operations		78,450		90,095,106	0.87		80,500		90,741,649	0.89

TCO's average ownership percentage of TRG		71.6	%				71.7	%

Funds from Operations attributable to TCO,
	excluding additional income tax expense (benefit)	56,157			0.87		57,708			0.89

Add (less) TCO's additional income tax benefit (expense)		(112	)		(0.00	)	29			0.00

Funds from Operations attributable to TCO		56,045			0.87		57,737			0.89

Funds from Operations		78,450		90,095,106	0.87		80,500		90,741,649	0.89

Disposition costs related to the Starwood sale		513			0.01
Restructuring charge		3,031			0.03
Discontinuation of hedge accounting - MacArthur		(162	)		(0.00)

Adjusted Funds from Operations		81,832		90,095,106	0.91		80,500		90,741,649	0.89

TCO's average ownership percentage of TRG		71.6	%				71.7	%

Adjusted Funds from Operations attributable to TCO,
	excluding additional income tax benefit (expense)	58,578			0.91		57,708			0.89

Add (less) TCO's additional income tax benefit (expense)		(112	)		(0.00	)	29			0.00

Adjusted Funds from Operations attributable to TCO		58,466			0.91		57,737			0.89

Taubman Centers/10



TAUBMAN CENTERS, INC.
Table 5 - Reconciliation of Net Income Attributable to Taubman Centers, Inc. Common Shareowners to Funds from Operations
and Adjusted Funds from Operations
For the Nine Months Ended September 30, 2014 and 2013
(in thousands of dollars except as noted; may not add or recalculate due to rounding)

		2014					2013
				Shares	Per Share				Shares	Per Share
		Dollars		/Units	/Unit		Dollars		/Units	/Unit
Net income attributable to TCO common shareowners - Basic		424,151		63,249,400	6.71		70,074		63,653,155	1.10

Add distributions to participating securities of TRG		1,409		871,262
Add impact of share-based compensation		2,742		755,389			352		1,049,493

Net income attributable to TCO common shareowners - Diluted		428,302		64,876,051	6.60		70,426		64,702,648	1.09

Add depreciation of TCO's additional basis		5,057			0.08		5,160			0.08
Add TCO's additional income tax expense		258			0.00		132			0.00

Net income attributable to TCO common shareowners,
	excluding step-up depreciation and additional income tax expense	433,617		64,876,051	6.68		75,718		64,702,648	1.17

Add:
	Noncontrolling share of income of TRG	170,922		25,142,927			29,915		25,250,079
	Distributions to participating securities of TRG						1,313		871,262

Net income attributable to partnership unitholders
	and participating securities	604,539		90,018,978	6.72		106,946		90,823,989	1.18

Add (less) depreciation and amortization:
	Consolidated businesses at 100%	96,521			1.07		116,262			1.28
	Depreciation of TCO's additional basis	(5,057	)		(0.06	)	(5,160	)		(0.06	)
	Noncontrolling partners in consolidated joint ventures	(3,568	)		(0.04	)	(3,776	)		(0.04	)
	Share of Unconsolidated Joint Ventures	21,309			0.24		18,538			0.20
	Non-real estate depreciation	(2,578	)		(0.03	)	(2,236	)		(0.02	)
Less gain on dispositions, net of tax		(476,887	)		(5.30)
Less impact of share-based compensation		(2,742	)		(0.03	)	(352	)		(0.00)

Funds from Operations		231,537		90,018,978	2.57		230,222		90,823,989	2.53

TCO's average ownership percentage of TRG		71.6	%				71.6	%

Funds from Operations attributable to TCO,
	excluding additional income tax expense	165,676			2.57		164,824			2.53

Less TCO's additional income tax expense		(258	)		(0.00)		(132	)		(0.00)

Funds from Operations attributable to TCO		165,418			2.57		164,692			2.53

Funds from Operations		231,537		90,018,978	2.57		230,222		90,823,989	2.53

Disposition costs related to the Starwood sale		954			0.01
Restructuring charge		3,031			0.03
Discontinuation of hedge accounting - MacArthur		5,233			0.06

Adjusted Funds from Operations		240,755		90,018,978	2.67		230,222		90,823,989	2.53

TCO's average ownership percentage of TRG		71.6	%				71.6	%

Adjusted Funds from Operations attributable to TCO,
	excluding additional income tax expense	172,273			2.67		164,824			2.53

Less TCO's additional income tax expense		(258	)		(0.00)		(161	)		(0.00)

Adjusted Funds from Operations attributable to TCO		172,015			2.67		164,692			2.53

Taubman Centers/11



TAUBMAN CENTERS, INC.
Table 6 - Reconciliation of Net Income to Beneficial Interest in EBITDA and Adjusted Beneficial Interest in EBITDA
For the Periods Ended September 30, 2014 and 2013
(in thousands of dollars; amounts attributable to TCO may not recalculate due to rounding)

			Three Months Ended				Year to Date
			2014		2013		2014		2013

Net income			56,637		43,243		621,848		123,202

Add (less) depreciation and amortization:
	Consolidated businesses at 100%		24,553		40,982		96,521		116,262
	Noncontrolling partners in consolidated joint ventures		(814	)	(1,292	)	(3,568	)	(3,776	)
	Share of Unconsolidated Joint Ventures		7,277		6,365		21,309		18,538

Add (less) interest expense and income tax expense:
	Interest expense:
		Consolidated businesses at 100%	23,382		32,515		74,946		99,589
		Noncontrolling partners in consolidated joint ventures	(2,109	)	(2,163	)	(6,259	)	(6,540	)
		Share of Unconsolidated Joint Ventures	10,006		9,415		29,805		28,192
	Share of income tax expense:
		Income tax expense on dispositions of International Plaza, Arizona Mills, and Oyster Bay					9,733
		Other income tax expense	683		1,453		1,693		2,715

Less noncontrolling share of income of consolidated joint ventures			(2,643	)	(2,198	)	(8,013	)	(6,752	)

Beneficial Interest in EBITDA			116,972		128,320		838,015		371,430

TCO's average ownership percentage of TRG			71.6	%	71.7	%	71.6	%	71.6	%

Beneficial Interest in EBITDA attributable to TCO			83,732		91,989		599,493		265,925

Beneficial Interest in EBITDA			116,972		128,320		838,015		371,430

	Disposition costs related to the Starwood sale		513				954
	Restructuring charge		3,031				3,031
	Discontinuation of hedge accounting - MacArthur		(162	)			5,233
	Gain on dispositions of International Plaza, Arizona Mills, and Oyster Bay						(486,620	)

Adjusted Beneficial Interest in EBITDA			120,354		128,320		360,613		371,430

TCO's average ownership percentage of TRG			71.6	%	71.7	%	71.6	%	71.6	%

Adjusted Beneficial Interest in EBITDA attributable to TCO			86,153		91,989		258,036		265,925

Taubman Centers/12



TAUBMAN CENTERS, INC.
Table 7 - Reconciliation of Net Income to Net Operating Income (NOI)
For the Periods Ended September 30, 2014, 2013, and 2012
(in thousands of dollars)
				Three Months Ended						Three Months Ended							Year to Date							Year to Date
				2014			2013			2013			2012				2014				2013			2013			2012
Net income				56,637			43,243			43,243			45,061				621,848				123,202			123,202			108,686

Add (less) depreciation and amortization:
		Consolidated businesses at 100%		24,553			40,982			40,982			36,414				96,521				116,262			116,262			109,083
		Noncontrolling partners in consolidated joint ventures		(814	)		(1,292	)		(1,292	)		(2,888	)			(3,568	)			(3,776	)		(3,776	)		(7,650	)
		Share of Unconsolidated Joint Ventures		7,277			6,365			6,365			5,311				21,309				18,538			18,538			15,786
Add (less) interest expense and income tax expense:
		Interest expense:
			Consolidated businesses at 100%	23,382			32,515			32,515			34,943				74,946				99,589			99,589			109,146
			Noncontrolling partners in consolidated joint ventures	(2,109	)		(2,163	)		(2,163	)		(4,225	)			(6,259	)			(6,540	)		(6,540	)		(12,634	)
			Share of Unconsolidated Joint Ventures	10,006			9,415			9,415			8,765				29,805				28,192			28,192			25,084
		Share of income tax expense:
			Income tax expense on dispositions of International Plaza, Arizona Mills, and Oyster Bay														9,733
			Other income tax expense	683			1,453			1,453			667				1,693				2,715			2,715			1,393
Less noncontrolling share of income of consolidated joint ventures				(2,643	)		(2,198	)		(2,198	)		(2,079	)			(8,013	)			(6,752	)		(6,752	)		(6,788	)

Add EBITDA attributable to outside partners:
		EBITDA attributable to noncontrolling partners in consolidated joint ventures		5,566			5,653			5,653			9,257				17,840				17,068			17,068			27,117
		EBITDA attributable to outside partners in Unconsolidated Joint Ventures		24,819			21,679			21,679			21,536				72,345				62,770			62,770			62,259

EBITDA at 100%				147,357			155,652			155,652			152,762				928,200				451,268			451,268			431,482

Add (less) items excluded from shopping center NOI:
		General and administrative expenses		11,369			11,812			11,812			9,571				34,493				36,676			36,676			28,021
		Management, leasing, and development services, net		(1,596	)		(7,726	)		(7,726	)		(4,069	)			(4,085	)			(9,782	)		(9,782	)		(5,767	)
		Straight-line of rents		(1,195	)		(1,706	)		(1,706	)		(2,055	)			(3,482	)			(4,320	)		(4,320	)		(4,535	)
		Gain on dispositions of International Plaza, Arizona Mills, and Oyster Bay															(486,620	)
		Disposition costs related to the Starwood sale		519													960
		Restructuring charge		3,031													3,031
		Discontinuation of hedge accounting - MacArthur		(171	)												5,507
		Gain on sale of peripheral land																			(863	)		(863	)
		Gain on sale of marketable securities																			(1,323	)		(1,323	)
		Dividend income		(761	)												(1,597	)
		Interest income		(456	)		(43	)		(43	)		(74	)			(764	)			(144	)		(144	)		(270	)
		Other nonoperating expense (income)					500			500							(754	)			500			500
		Non-center specific operating expenses and other		5,628			7,987			7,995			6,357				14,587				18,503			18,781			21,773

NOI - all centers at 100%				163,725			166,476			166,484			162,492				489,476				490,515			490,793			470,704

Less - NOI of non-comparable centers				698		(1)	(6,360	)	(2)	(1,781	)	(3)	(2,487	)	(4	)	(174	)	(5	)	(19,392	)	(2)	(7,306	)	(3)	(5,842	)	(4)

NOI at 100% - comparable centers				164,423			160,116			164,703			160,005				489,302				471,123			483,487			464,862

NOI - growth %				2.7	%					2.9	%						3.9	%						4.0	%

NOI at 100% - comparable centers				164,423			160,116			164,703			160,005				489,302				471,123			483,487			464,862

Lease cancellation income				(1,126	)		(761	)		(741	)		(1,076	)			(7,375	)			(3,027	)		(3,007	)		(3,015	)

NOI at 100% - comparable centers excluding lease cancellation income				163,297			159,355			163,962			158,929				481,927				468,096			480,480			461,847

NOI excluding lease cancellation income - growth %				2.5	%					3.2	%						3.0	%						4.0	%

NOI at 100% excluding lease cancellation income - post-sale portfolio growth % (6)				2.8	%												3.1	%

(1	)	Includes Taubman Prestige Outlets Chesterfield.
(2	)	Includes Arizona Mills and Taubman Prestige Outlets Chesterfield
(3	)	Includes City Creek Center and Taubman Prestige Outlets Chesterfield.
(4	)	Includes City Creek Center.
(5	)	Includes Taubman Prestige Outlets Chesterfield and Arizona Mills for the approximately one-month period prior to its disposition.
(6	)	In addition to non-comparable centers excluded above, excludes NOI of Fairlane Town Center, MacArthur Center, Northlake Mall, The Mall at Partridge Creek, Stony Point Fashion Park, The Mall at Wellington Green, and The Shops at Willow Bend.

Taubman Centers/13



TAUBMAN CENTERS, INC.
Table 8 - Balance Sheets
As of September 30, 2014 and December 31, 2013
(in thousands of dollars)
			As of
			September 30, 2014		December 31, 2013
Consolidated Balance Sheet of Taubman Centers, Inc. (1) :

Assets:
	Properties		3,143,649		4,485,090
	Accumulated depreciation and amortization		(951,736	)	(1,516,982	)
			2,191,913		2,968,108
	Investment in Unconsolidated Joint Ventures		361,729		327,692
	Cash and cash equivalents		45,725		40,993
	Restricted cash		43,258		5,046
	Accounts and notes receivable, net		38,187		73,193
	Accounts receivable from related parties		2,258		1,804
	Deferred charges and other assets		149,042		89,386
	Assets of centers held for sale (2)		780,063
			3,612,175		3,506,222
Liabilities:
	Notes payable		2,015,999		3,058,053
	Accounts payable and accrued liabilities		275,211		292,280
	Distributions in excess of investments in and net income of
	Unconsolidated Joint Ventures		401,809		371,549
	Liabilities of centers held for sale (2)		652,068
			3,345,087		3,721,882
Equity:
	Taubman Centers, Inc. Shareowners' Equity:
		Series B Non-Participating Convertible Preferred Stock	25		25
		Series J Cumulative Redeemable Preferred Stock
		Series K Cumulative Redeemable Preferred Stock
		Common Stock	633		631
		Additional paid-in capital	809,071		796,787
		Accumulated other comprehensive income (loss)	(9,258	)	(8,914	)
		Dividends in excess of net income	(587,291	)	(908,656	)
			213,180		(120,127	)
	Noncontrolling interests:
		Noncontrolling interests in consolidated joint ventures	(17,790	)	(37,191	)
		Noncontrolling interests in partnership equity of TRG	71,698		(58,342	)
			53,908		(95,533	)
			267,088		(215,660	)
			3,612,175		3,506,222

Combined Balance Sheet of Unconsolidated Joint Ventures (1)(3):
Assets:
	Properties		1,517,439		1,305,658
	Accumulated depreciation and amortization		(539,451	)	(478,820	)
			977,988		826,838
	Cash and cash equivalents		28,763		28,782
	Accounts and notes receivable, net		29,399		33,626
	Deferred charges and other assets		31,740		28,095
			1,067,890		917,341
Liabilities:
	Notes payable		1,785,602		1,551,161
	Accounts payable and other liabilities		73,889		70,226
			1,859,491		1,621,387
Accumulated Deficiency in Assets:
	Accumulated deficiency in assets - TRG		(448,523	)	(406,266	)
	Accumulated deficiency in assets - Joint Venture Partners		(333,220	)	(285,904	)
	Accumulated other comprehensive income (loss) - TRG		(4,929	)	(5,938	)
	Accumulated other comprehensive income (loss) - Joint Venture Partners		(4,929	)	(5,938	)
			(791,601	)	(704,046	)
			1,067,890		917,341

(1)	International Plaza was consolidated in the Company's balance sheet as of December 31, 2013 but is an Unconsolidated Joint Venture as of September 30, 2014 as a result of the January 2014 disposition of interests.

(2)	Includes the assets and liabilities of the shopping centers included in the sale to Starwood Capital Group in October 2014.
(3)	Unconsolidated Joint Venture amounts exclude the balances of entities that own interests in Asia projects that are currently under development.

Taubman Centers/14



TAUBMAN CENTERS, INC.
Table 9 - Annual Guidance
(all dollar amounts per common share on a diluted basis; amounts may not add due to rounding)


			Range for Year Ended
			December 31, 2014

Adjusted Funds from Operations per common share			3.58		3.68

Debt extinguishment costs			(0.39	)	(0.39	)

Discontinuation of hedge accounting - MacArthur			(0.08	)	(0.08	)

Restructuring charge			(0.03	)	(0.03	)

Disposition costs related to the Starwood sale			(0.01	)	(0.01	)

Funds from Operations per common share			3.07		3.17

Gain on dispositions, net of tax (1)			11.95		11.95

Real estate depreciation - TRG (2)			(1.50	)	(1.45	)

Distributions to participating securities of TRG			(0.02	)	(0.02	)

Depreciation of TCO's additional basis in TRG			(0.11	)	(0.11	)

Net income attributable to common shareowners, per common share (EPS)			13.40		13.54

(1	)	During the nine months ended September 30, 2014, the Company recognized a gain (net of tax) of $476.9 million from dispositions of interests in International Plaza, Arizona Mills, and land in Syosset, New York related to the former Oyster Bay project. In the fourth quarter, the Company expects to recognize a gain of approximately $600 million, or $6.65 per share, related to the sale of centers to Starwood in October 2014. This represents an approximation of the Company's share of the gain that will be recorded on the sale of the centers. The actual gain recorded on the sale of centers to Starwood will be based on the balance sheets of the disposed centers at closing and be subject to final prorations and adjustments.

(2	)	Effective with the June 2014 announcement of the Starwood sale, the Company ceased recognizing depreciation on the property balances that are classified as held for sale.

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