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

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8-K - 8-K - TAUBMAN CENTERS INC	a2015q38-k.htm

Exhibit 99



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

Taubman Centers, Inc., Issues Strong Third Quarter Results and Raises Guidance


•	Comparable Center Net Operating Income (NOI) Up


•	Mall Tenant Sales Per Square Foot, Average Rent Per Square Foot, Comparable Center Occupancy and Leased Space All Up


•	Short Hills $1 Billion Financing and International Market Place Construction Facility Complete

BLOOMFIELD HILLS, Mich., Oct. 26, 2015 - - Taubman Centers, Inc. (NYSE: TCO) today reported financial results for the third quarter of 2015.



		September 30, 2015 Three Months Ended ⁽¹⁾	September 30, 2014 Three Months Ended	September 30, 2015 Nine Months Ended ⁽¹⁾	September 30, 2014 Nine Months Ended
Net income attributable to common shareholders (EPS) per diluted common share		$0.50	$0.53	$1.34	$6.60 ⁽³⁾
Funds from Operations (FFO) per diluted common share Growth rate		$0.89 2.3%	$0.87	$2.46 (4.3)%	$2.57
Adjusted Funds from Operations (Adjusted FFO) per diluted common share Growth rate		$0.86 ⁽²⁾ (5.5)%	$0.91 ⁽⁴⁾	$2.44 ⁽²⁾ (8.6)%	$2.67 ⁽⁴⁾

(1)	Excludes the operations of the seven centers sold to Starwood Capital Group in October 2014 and Arizona Mills (Tempe, Ariz.), which was sold in January 2014. Includes the operations of The Mall at University Town Center (Sarasota, Fla.), which opened in October 2014, and The Mall of San Juan (San Juan, Puerto Rico), which opened in March 2015.
(2)	Adjusted FFO for the three and nine months ended September 30, 2015 excludes the reversal of certain prior period executive share-based compensation expense due to the announcement of an executive management transition.
(3)	Includes a net gain of $477 million ($5.30 per share) on the sale of a 49.9 percent interest in the entity that owns International Plaza (Tampa, Fla.), as well as investments in Arizona Mills and land in Syosset, New York (Oyster Bay).
(4)	Adjusted FFO for the three and nine months ended September 30, 2014 excludes charges related to the sale of seven centers to Starwood.

“This quarter our strong results were driven by lower operating expenses and increased rents and occupancy,” said Robert S. Taubman, chairman, president and chief executive officer of Taubman Centers. “Results were also positively impacted by the progress we’ve made on our share repurchase program.”

The October 2014 sale of seven centers to Starwood reduced FFO by 13.5 cents during the third quarter in comparison to the prior year.

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Operating Statistics

Comparable center NOI, including lease cancellation income, was up 3.4 percent for the quarter, bringing year-to-date growth to 2.8 percent. Excluding lease cancellation income, comparable center NOI was up 2.8 percent for the quarter, bringing year-to-date growth to 3 percent.

Comparable center mall tenant sales per square foot rose 2.4 percent from the third quarter of 2014. This brings the company's 12-month trailing mall tenant sales per square foot to $805, an increase of 1.9 percent from the 12-months ended September 30, 2014. Year-to-date, sales per square foot were up 2.5 percent.

Average rent per square foot for the quarter was $60.53, up 1.4 percent from $59.68 in the comparable period last year. Year-to-date, average rent per square foot was up 2.3 percent.

Trailing 12-month releasing spreads per square foot for the period ended September 30, 2015 were a robust 21.4 percent.

Ending occupancy in comparable centers was 93.8 percent on September 30, 2015, up 0.7 percent from 93.1 percent on September 30, 2014. Leased space in comparable centers was 97.1 percent on September 30, 2015, up 1.3 percent from 95.8 percent on September 30, 2014.

“Our portfolio of high quality centers continue to produce solid increases in all of our key operating metrics,” added Mr. Taubman.

CFO Transition Announced

In September, the company announced that Lisa A. Payne, vice chairman and chief financial officer, will transition the CFO role to current Treasurer and Executive Vice President, Capital Markets, Simon J. Leopold. Mr. Leopold joined Taubman in 2012 and has since been responsible for Taubman’s capital markets and financing activities, corporate tax and treasury, and real estate acquisitions and dispositions. Ms. Payne will retain her role as vice chairman of the Board until leaving the company in March 2016. Concurrent with the announcement, certain prior period share-based compensation expense for Ms. Payne was reversed. The company has adjusted FFO for this reversal. See Taubman’s Lisa A. Payne to Transition CFO Role to Treasurer and Executive Vice President, Capital Markets, Simon J. Leopold, Effective January 1, 2016 - Sept. 15, 2015

Financing Activity

In August, the previously announced construction loan financing for International Market Place (Waikiki, Honolulu, Hawaii) closed. The $330.9 million loan has a three-year term with two one-year extension options and bears interest at LIBOR plus 1.75 percent. The loan is interest-only during the initial three-year term.

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In September, the company completed the previously announced $1 billion, 12-year, non-recourse financing on The Mall at Short Hills (Short Hills, N.J.). The loan is interest-only for the entire term and bears interest at an all-in fixed rate of 3.56 percent. Proceeds were used to repay the previous $540 million, 5.47 percent fixed rate loan and to pay off the company’s revolving lines of credit. The remaining proceeds are reflected in the company’s cash balance and are being used for general corporate purposes.

Share Repurchase Program

During the quarter ended September 30, 2015, the company purchased 631,282 shares of its common stock at an average price of $68.63 per share. Since the program’s inception in August 2013, the company has purchased 4,221,774 shares of its common stock for $303 million, an average price of $71.80 per share. At September 30, 2015, the company had approximately $147 million available under its share repurchase authorization.

2015 Guidance Increased

The company is increasing its guidance for 2015 FFO per diluted common share to $3.38 to $3.46, up from the previous range of $3.28 to $3.36. The company’s guidance for 2015 Adjusted FFO per diluted share is $3.36 to $3.44. 2015 Adjusted FFO guidance excludes the reversal of certain prior period executive share-based compensation expense due to the announcement of an executive management change. The impact of share repurchases through September 30, 2015 are included in the company’s FFO and Adjusted FFO guidance, but assumptions for future repurchases are excluded.

The company is also increasing its guidance for 2015 EPS to $1.76 to $1.89, up from $1.65 to $1.78.

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 Common Share


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


•	Recoveries Ratio Analysis


•	Balance Sheets


•	Debt Summary


•	Other Debt, Equity and Certain Balance Sheet Information


•	Construction and Redevelopment


•	Capital Spending


•	Operational Statistics

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•	Summary of Key Guidance Measures


•	Owned Centers


•	Major Tenants in Owned Portfolio


•	Anchors in Owned Portfolio


•	Operating Statistics Glossary

Investor Conference Call

The company will host a conference call at 10:00 a.m. EDT on Tuesday, October 27 to discuss its results, business conditions and the company’s outlook for the remainder of 2015. The conference call will be simulcast at www.taubman.com. An online replay will be available shortly after the call and will continue for approximately 90 days.

About Taubman

Taubman Centers is an S&P MidCap 400 Real Estate Investment Trust engaged in the ownership, management and/or leasing of 22 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 four properties in the U.S. and Asia totaling 4.1 million square feet. Founded in 1950, Taubman is headquartered in Bloomfield Hills, Mich. Taubman Asia, founded in 2005, 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:

Ryan Hurren, Taubman, Director, Investor Relations, 248-258-7232

rhurren@taubman.com

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

mmainville@taubman.com

# # #

Taubman Centers/5



TAUBMAN CENTERS, INC.
Table 1 - Summary of Results
For the Periods Ended September 30, 2015 and 2014
(in thousands of dollars, except as indicated)
	Three Months Ended				Year to Date
	2015		2014		2015		2014
Net income (1)	52,629		56,637		145,962		621,848
Noncontrolling share of income of consolidated joint ventures	(2,780)		(2,643)		(8,043)		(8,013)
Noncontrolling share of income of TRG	(13,151)		(14,057)		(35,815)		(170,922)
Distributions to participating securities of TRG	(492)		(471)		(1,477)		(1,409)
Preferred stock dividends	(5,784)		(5,784)		(17,353)		(17,353)
Net income attributable to Taubman Centers, Inc. common shareowners (1)	30,422		33,682		83,274		424,151
Net income per common share - basic (1)	0.50		0.53		1.35		6.71
Net income per common share - diluted (1)	0.50		0.53		1.34		6.60
Beneficial interest in EBITDA - Combined (2)	110,715		116,972		313,355		838,015
Adjusted Beneficial interest in EBITDA - Combined (2)	108,047		120,354		311,366		360,613
Funds from Operations attributable to partnership unitholders and participating securities of TRG (1)(2)	77,614		78,450		218,126		231,537
Funds from Operations attributable to TCO's common shareowners (1)(2)	55,120		56,045		155,029		165,418
Funds from Operations per common share - basic (1)(2)	0.91		0.89		2.51		2.62
Funds from Operations per common share - diluted (1)(2)	0.89		0.87		2.46		2.57
Adjusted Funds from Operations attributable to partnership unitholders and participating securities of TRG (1)(2)	74,946		81,832		216,137		240,755
Adjusted Funds from Operations attributable to TCO's common shareowners (1)(2)	53,232		58,466		153,614		172,015
Adjusted Funds from Operations per common share - basic (1)(2)	0.88		0.92		2.49		2.72
Adjusted Funds from Operations per common share - diluted (1)(2)	0.86		0.91		2.44		2.67
Weighted average number of common shares outstanding - basic	60,713,379		63,317,680		61,778,051		63,249,400
Weighted average number of common shares outstanding - diluted	61,426,115		64,087,742		62,573,957		64,876,051
Common shares outstanding at end of period	60,258,750		63,319,539
Weighted average units - Operating Partnership - basic	85,776,728		88,453,782		86,854,852		88,392,327
Weighted average units - Operating Partnership - diluted	87,360,726		90,095,106		88,522,020		90,018,978
Units outstanding at end of period - Operating Partnership	85,320,909		88,454,989
Ownership percentage of the Operating Partnership at end of period	70.6	%	71.6	%
Number of owned shopping centers at end of period	19		24

Operating Statistics:
Net Operating Income excluding lease cancellation income - growth % (2)(3)	2.8	%	2.8	%	3.0	%	3.1	%
Net Operating Income including lease cancellation income - growth % (2)(3)	3.4	%	3.0	%	2.8	%	4.1	%
Mall tenant sales - all centers (4)	1,197,976		1,121,619		3,577,249		3,368,300
Mall tenant sales - comparable (3)(4)	1,139,106		1,121,619		3,405,080		3,368,300
Ending occupancy - all centers	92.2	%	93.0	%	92.2	%	93.0	%
Ending occupancy - comparable (3)	93.8	%	93.1	%	93.8	%	93.1	%
Leased space - all centers	96.3	%	95.3	%	96.3	%	95.3	%
Leased space - comparable (3)	97.1	%	95.8	%	97.1	%	95.8	%
Average rent per square foot - Consolidated Businesses (3)	62.04		60.75		61.42		58.35
Average rent per square foot - Unconsolidated Joint Ventures (3)	58.43		58.20		58.76		59.90
Average rent per square foot - Combined (3)	60.53		59.68		60.31		58.96

	Twelve Months Trailing
	2015		2014
Operating Statistics:
Mall tenant sales - all centers (4)	5,178,411		4,923,444
Mall tenant sales - comparable (3)(4)	4,944,808		4,923,444
Sales per square foot (3)(4)	805		790
All centers (4):
Mall tenant occupancy costs as a percentage of tenant sales - Consolidated Businesses	14.1	%	13.7	%
Mall tenant occupancy costs as a percentage of tenant sales - Unconsolidated Joint Ventures	13.3	%	13.3	%
Mall tenant occupancy costs as a percentage of tenant sales - Combined	13.7	%	13.6	%
Comparable centers (3)(4):
Mall tenant occupancy costs as a percentage of tenant sales - Consolidated Businesses	14.1	%	13.7	%
Mall tenant occupancy costs as a percentage of tenant sales - Unconsolidated Joint Ventures	13.4	%	13.3	%
Mall tenant occupancy costs as a percentage of tenant sales - Combined	13.8	%	13.6	%

Taubman Centers/6



(1)	Earnings no longer reflect the results of the centers sold to the Starwood Capital Group (Starwood) for periods after the October 2014 disposition date. During the nine month period 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. The effect of the gain on dispositions from the International Plaza, Arizona Mills, and Oyster Bay dispositions on diluted earnings per common share (EPS) was $5.30 per share.

(2)	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. During the three and nine month periods ended September 30, 2015, upon the announcement of an executive management transition, the Company reversed certain prior period share-based compensation expense, for which the Company adjusted FFO and EBITDA. For the three and nine month periods ended September 30, 2014, FFO and EBITDA were adjusted for expenses related to the sale of centers to Starwood Capital Group (Starwood). 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.

(3)	Statistics exclude non-comparable centers for all periods presented. The September 30, 2014 statistics have been restated to include comparable centers to 2015. Sales per square foot exclude spaces greater than or equal to 10,000 square feet.

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

Taubman Centers/7



TAUBMAN CENTERS, INC.
Table 2 - Income Statement
For the Three Months Ended September 30, 2015 and 2014
(in thousands of dollars)
				2015				2014
				CONSOLIDATED BUSINESSES		UNCONSOLIDATED JOINT VENTURES (1)		CONSOLIDATED BUSINESSES (1)		UNCONSOLIDATED JOINT VENTURES (1)
REVENUES:
		Minimum rents		77,484		53,633		96,691		48,226
		Percentage rents		5,032		2,060		5,263		2,270
		Expense recoveries		47,206		32,908		63,527		28,517
		Management, leasing, and development services		3,367				3,135
		Other		6,894		2,399		7,428		1,658
			Total revenues	139,983		91,000		176,044		80,671

EXPENSES:
		Maintenance, taxes, utilities, and promotion		37,230		22,960		52,184		20,457
		Other operating		12,732		4,704		18,036		3,611
		Management, leasing, and development services		1,558				1,539
		General and administrative (2)		8,615				11,369
		Restructuring charge						3,031
		Interest expense		16,145		21,126		23,382		18,255
		Depreciation and amortization		27,156		14,667		24,553		11,939
			Total expenses	103,436		63,457		134,094		54,262

Nonoperating income (expense)				1,010		(1	)	891		(22	)
				37,557		27,542		42,841		26,387
Income tax expense				(584	)			(683	)
Equity in income of Unconsolidated Joint Ventures				15,219				14,479
				52,192				56,637
Gain on dispositions, net of tax (3)				437
Net income				52,629				56,637
Net income attributable to noncontrolling interests:
		Noncontrolling share of income of consolidated joint ventures		(2,780	)			(2,643	)
		Noncontrolling share of income of TRG		(13,151	)			(14,057	)
Distributions to participating securities of TRG				(492	)			(471	)
Preferred stock dividends				(5,784	)			(5,784	)
Net income attributable to Taubman Centers, Inc. common shareowners				30,422				33,682

SUPPLEMENTAL INFORMATION:
		EBITDA - 100%		80,858		63,335		90,776		56,581
		EBITDA - outside partners' share		(5,451	)	(28,027	)	(5,566	)	(24,819	)
		Beneficial interest in EBITDA		75,407		35,308		85,210		31,762
		Beneficial interest expense		(14,439	)	(11,431	)	(21,273	)	(10,006	)
		Beneficial income tax expense - TRG and TCO		(584	)			(683	)
		Beneficial income tax expense (benefit) - TCO		(184	)			112
		Non-real estate depreciation		(679	)			(888	)
		Preferred dividends and distributions		(5,784	)			(5,784	)
		Funds from Operations attributable to partnership unitholders and participating securities of TRG		53,737		23,877		56,694		21,756

STRAIGHTLINE AND PURCHASE ACCOUNTING ADJUSTMENTS:
		Net straight-line adjustments to rental revenue, recoveries,
			and ground rent expense at TRG %	452		533		399		310
		The Mall at Green Hills purchase accounting adjustments - minimum rents increase		91				229
		El Paseo Village and The Gardens on El Paseo purchase accounting
			adjustments - interest expense reduction	306				306
		Waterside Shops purchase accounting adjustments - interest expense reduction				263				263
		U.S. 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 January 2014 disposition date. Subsequent to the disposition, the Company's remaining 50.1% interest is accounted for under the equity method within Unconsolidated Joint Ventures. In addition, Arizona Mills' operations were accounted for under equity method through the disposition in January 2014. The results of the centers sold to Starwood were consolidated through the October 2014 disposition.
(2	)	During the three months ended September 30, 2015, a reversal of $2.7 million of prior period share-based compensation expenses was recognized upon the announcement of an executive management transition.
(3	)	During the three months ended September 30, 2015, an adjustment to the tax on the disposition of interests in International Plaza was recognized, reducing the amount of the tax by $0.4 million.

Taubman Centers/8



TAUBMAN CENTERS, INC.
Table 3 - Income Statement
For the Nine Months Ended September 30, 2015 and 2014
(in thousands of dollars)
				2015				2014
				CONSOLIDATED BUSINESSES		UNCONSOLIDATED JOINT VENTURES (1)		CONSOLIDATED BUSINESSES (1)		UNCONSOLIDATED JOINT VENTURES (1)
REVENUES:
		Minimum rents		228,920		159,207		291,113		143,098
		Percentage rents		9,039		5,510		11,019		5,427
		Expense recoveries		137,138		96,159		187,439		83,144
		Management, leasing, and development services		9,665				8,605
		Other		16,183		9,912		22,631		6,521
			Total revenues	400,945		270,788		520,807		238,190

EXPENSES:
		Maintenance, taxes, utilities, and promotion		103,970		67,231		148,955		60,449
		Other operating		40,630		14,781		49,582		13,035
		Management, leasing, and development services		4,099				4,520
		General and administrative (2)		32,595				34,493
		Restructuring charge						3,031
		Interest expense		44,451		63,148		74,946		54,284
		Depreciation and amortization		77,575		42,536		96,521		34,731
			Total expenses	303,320		187,696		412,048		162,499

Nonoperating income (expense) (3)				3,712		4		(3,327	)	(25	)
				101,337		83,096		105,432		75,666
Income tax expense				(2,110	)			(1,693	)
Equity in income of Unconsolidated Joint Ventures				46,298				41,222
				145,525				144,961
Gain on dispositions, net of tax (4)				437				476,887
Net income				145,962				621,848
Net income attributable to noncontrolling interests:
		Noncontrolling share of income of consolidated joint ventures		(8,043	)			(8,013	)
		Noncontrolling share of income of TRG		(35,815	)			(170,922	)
Distributions to participating securities of TRG				(1,477	)			(1,409	)
Preferred stock dividends				(17,353	)			(17,353	)
Net income attributable to Taubman Centers, Inc. common shareowners				83,274				424,151

SUPPLEMENTAL INFORMATION:
		EBITDA - 100% (5)		223,363		188,780		763,519		164,681
		EBITDA - outside partners' share		(15,733	)	(83,055	)	(17,840	)	(72,345	)
		Beneficial interest in EBITDA (5)		207,630		105,725		745,679		92,336
		Gain on dispositions						(486,620	)
		Beneficial interest expense		(39,357	)	(34,199	)	(68,687	)	(29,805	)
		Beneficial income tax expense - TRG and TCO		(2,110	)			(1,693	)
		Beneficial income tax expense - TCO		104				258
		Non-real estate depreciation		(2,314	)			(2,578	)
		Preferred dividends and distributions		(17,353	)			(17,353	)
		Funds from Operations attributable to partnership unitholders and participating securities of TRG		146,600		71,526		169,006		62,531

STRAIGHTLINE AND PURCHASE ACCOUNTING ADJUSTMENTS:
		Net straight-line adjustments to rental revenue, recoveries,
			and ground rent expense at TRG %	79		1,422		1,206		866
		The Mall at Green Hills purchase accounting adjustments - minimum rents increase		271				620
		El Paseo Village and The Gardens on El Paseo purchase accounting
			adjustments - interest expense reduction	917				917
		Waterside Shops purchase accounting adjustments - interest expense reduction				788				788
		U.S. headquarters purchase accounting adjustment - interest expense reduction		182				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 January 2014 disposition date. Subsequent to the disposition, the Company's remaining 50.1% interest is accounted for under the equity method within Unconsolidated Joint Ventures. In addition, Arizona Mills' operations were accounted for under equity method through the disposition in January 2014. The results of the centers sold to Starwood were consolidated through the October 2014 disposition.
(2	)	During the nine months ended September 30, 2015, a net reversal of $2.0 million of prior period share-based compensation expenses was recognized upon the announcement of an executive management transition.
(3	)	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 and $1 million of disposition costs related to the sale of centers to Starwood.
(4	)	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. During the nine months ended September 30, 2015, an adjustment to the tax on the gain on the disposition of interests in International Plaza was recognized, reducing the amount of the tax by $0.4 million.
(5	)	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, 2015 and 2014
(in thousands of dollars except as noted; may not add or recalculate due to rounding)

			2015					2014
					Shares	Per Share				Shares	Per Share
			Dollars		/Units	/Unit		Dollars		/Units	/Unit
Net income attributable to TCO common shareowners - Basic			30,422		60,713,379	0.50		33,682		63,317,680	0.53

Add impact of share-based compensation			109		712,736			121		770,062

Net income attributable to TCO common shareowners - Diluted			30,531		61,426,115	0.50		33,803		64,087,742	0.53

Add depreciation of TCO's additional basis			1,617			0.03		1,617			0.03
Add (less) TCO's additional income tax expense (benefit)			(184	)		(0.00	)	112			0.00

Net income attributable to TCO common shareowners,
		excluding step-up depreciation and additional income tax expense (benefit)	31,964		61,426,115	0.52		35,532		64,087,742	0.55

Add noncontrolling share of income of TRG			13,151		25,063,349			14,057		25,136,102
Add distributions to participating securities of TRG			492		871,262			471		871,262

Net income attributable to partnership unitholders
		and participating securities	45,607		87,360,726	0.52		50,060		90,095,106	0.56

Add (less) depreciation and amortization:
		Consolidated businesses at 100%	27,156			0.31		24,553			0.27
		Depreciation of TCO's additional basis	(1,617	)		(0.02	)	(1,617	)		(0.02	)
		Noncontrolling partners in consolidated joint ventures	(965	)		(0.01	)	(814	)		(0.01	)
		Share of Unconsolidated Joint Ventures	8,658			0.10		7,277			0.08
		Non-real estate depreciation	(679	)		(0.01	)	(888	)		(0.01	)

Less gain on dispositions, net of tax			(437	)		(0.01	)
Less impact of share-based compensation			(109	)		(0.00	)	(121	)		(0.00	)

Funds from Operations attributable to partnership unitholders
		and participating securities of TRG	77,614		87,360,726	0.89		78,450		90,095,106	0.87

TCO's average ownership percentage of TRG - basic (1)			70.8	%				71.6	%

Funds from Operations attributable to TCO's common shareowners,
		excluding additional income tax benefit (expense) (1)	54,936			0.89		56,157			0.87

Add (less) TCO's additional income tax benefit (expense)			184			0.00		(112	)		(0.00	)

Funds from Operations attributable to TCO's common shareowners (1)			55,120			0.89		56,045			0.87

Funds from Operations attributable to partnership unitholders
		and participating securities of TRG	77,614		87,360,726	0.89		78,450		90,095,106	0.87

Reversal of executive share-based compensation expense			(2,668	)		(0.03	)
Beneficial share of disposition costs related to the Starwood sale								513			0.01
Restructuring charge								3,031			0.03
Beneficial share of discontinuation of hedge accounting - MacArthur								(162	)		(0.00	)

Adjusted Funds from Operations attributable to partnership unitholders
		and participating securities of TRG	74,946		87,360,726	0.86		81,832		90,095,106	0.91

TCO's average ownership percentage of TRG - basic (2)			70.8	%				71.6	%

Adjusted Funds from Operations attributable to TCO's common shareowners,
		excluding additional income tax benefit (expense) (2)	53,048			0.86		58,578			0.91

Add (less) TCO's additional income tax benefit (expense)			184			0.00		(112	)		(0.00	)

Adjusted Funds from Operations attributable to TCO's common shareowners (2)			53,232			0.86		58,466			0.91

(1	)	For the three months ended September 30, 2015, Funds from Operations attributable to TCO's common shareowners was $54,124 using TCO's diluted average ownership percentage of TRG of 69.5%. For the three months ended September 30, 2014, Funds from Operations attributable to TCO's common shareowners was $55,022 using TCO's diluted average ownership percentage of TRG of 70.3%.

(2	)	For the three months ended September 30, 2015, Adjusted Funds from Operations attributable to TCO's common shareowners was $52,270 using TCO's diluted average ownership percentage of TRG of 69.5%. For the three months ended September 30, 2014, Adjusted Funds from Operations attributable to TCO's common shareowners was $57,398 using TCO's diluted average ownership percentage of TRG of 70.3%.

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, 2015 and 2014
(in thousands of dollars except as noted; may not add or recalculate due to rounding)

			2015					2014
					Shares	Per Share				Shares	Per Share
			Dollars		/Units	/Unit		Dollars		/Units	/Unit
Net income attributable to TCO common shareowners - Basic			83,274		61,778,051	1.35		424,151		63,249,400	6.71

Add distributions to participating securities of TRG								1,409		871,262
Add impact of share-based compensation			305		795,906			2,742		755,389

Net income attributable to TCO common shareowners - Diluted			83,579		62,573,957	1.34		428,302		64,876,051	6.60

Add depreciation of TCO's additional basis			4,851			0.08		5,057			0.08
Add TCO's additional income tax expense			104			0.00		258			0.00

Net income attributable to TCO common shareowners,
		excluding step-up depreciation and additional income tax expense	88,534		62,573,957	1.41		433,617		64,876,051	6.68

Add noncontrolling share of income of TRG			35,815		25,076,801			170,922		25,142,927
Add distributions to participating securities of TRG			1,477		871,262

Net income attributable to partnership unitholders
		and participating securities	125,826		88,522,020	1.42		604,539		90,018,978	6.72

Add (less) depreciation and amortization:
		Consolidated businesses at 100%	77,575			0.88		96,521			1.07
		Depreciation of TCO's additional basis	(4,851	)		(0.05	)	(5,057	)		(0.06	)
		Noncontrolling partners in consolidated joint ventures	(2,596	)		(0.03	)	(3,568	)		(0.04	)
		Share of Unconsolidated Joint Ventures	25,228			0.28		21,309			0.24
		Non-real estate depreciation	(2,314	)		(0.03	)	(2,578	)		(0.03	)

Less gain on dispositions, net of tax			(437	)		(0.00	)	(476,887	)		(5.30	)
Less impact of share-based compensation			(305	)		(0.00	)	(2,742	)		(0.03	)

Funds from Operations attributable to partnership unitholders
		and participating securities of TRG	218,126		88,522,020	2.46		231,537		90,018,978	2.57

TCO's average ownership percentage of TRG - basic (1)			71.1	%				71.6	%

Funds from Operations attributable to TCO's common shareowners,
		excluding additional income tax expense (1)	155,133			2.46		165,676			2.57

Less TCO's additional income tax expense			(104	)		(0.00	)	(258	)		(0.00	)

Funds from Operations attributable to TCO's common shareowners (1)			155,029			2.46		165,418			2.57

Funds from Operations attributable to partnership unitholders
		and participating securities of TRG	218,126		88,522,020	2.46		231,537		90,018,978	2.57

Reversal of executive share-based compensation expense			(1,989	)		(0.02	)
Beneficial share of disposition costs related to the Starwood sale								954			0.01
Restructuring charge								3,031			0.03
Beneficial share of discontinuation of hedge accounting - MacArthur								5,233			0.06

Adjusted Funds from Operations attributable to partnership unitholders
		and participating securities of TRG	216,137		88,522,020	2.44		240,755		90,018,978	2.67

TCO's average ownership percentage of TRG - basic (2)			71.1	%				71.6%

Adjusted Funds from Operations attributable to TCO's common shareowners,
		excluding additional income tax expense (2)	153,718			2.44		172,273			2.67

Less TCO's additional income tax expense			(104	)		(0.00	)	(258	)		(0.00	)

Adjusted Funds from Operations attributable to TCO's common shareowners (2)			153,614			2.44		172,015			2.67

(1	)	For the nine months ended September 30, 2015, Funds from Operations attributable to TCO's common shareowners was $152,110 using TCO's diluted average ownership percentage of TRG of 69.8%. For the nine months ended September 30, 2014, Funds from Operations attributable to TCO's common shareowners was $162,421 using TCO's diluted average ownership percentage of TRG of 70.3%.

(2	)	For the nine months ended September 30, 2015, Adjusted Funds from Operations attributable to TCO's common shareowners was $150,722 using TCO's diluted average ownership percentage of TRG of 69.8%. For the nine months ended September 30, 2014, Adjusted Funds from Operations attributable to TCO's common shareowners was $168,900 using TCO's diluted average ownership percentage of TRG of 70.3%.

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, 2015 and 2014
(in thousands of dollars; amounts attributable to TCO may not recalculate due to rounding)

			Three Months Ended				Year to Date
			2015		2014		2015		2014
Net income			52,629		56,637		145,962		621,848

Add (less) depreciation and amortization:
	Consolidated businesses at 100%		27,156		24,553		77,575		96,521
	Noncontrolling partners in consolidated joint ventures		(965	)	(814	)	(2,596	)	(3,568	)
	Share of Unconsolidated Joint Ventures		8,658		7,277		25,228		21,309

Add (less) interest expense and income tax expense (benefit):
	Interest expense:
		Consolidated businesses at 100%	16,145		23,382		44,451		74,946
		Noncontrolling partners in consolidated joint ventures	(1,706	)	(2,109	)	(5,094	)	(6,259	)
		Share of Unconsolidated Joint Ventures	11,431		10,006		34,199		29,805
	Income tax expense (benefit):
		Income tax expense (benefit) on dispositions of International Plaza, Arizona Mills, and Oyster Bay	(437	)			(437	)	9,733
		Other income tax expense	584		683		2,110		1,693

Less noncontrolling share of income of consolidated joint ventures			(2,780	)	(2,643	)	(8,043	)	(8,013	)

Beneficial interest in EBITDA			110,715		116,972		313,355		838,015

TCO's average ownership percentage of TRG			70.8	%	71.6	%	71.1	%	71.6	%

Beneficial interest in EBITDA attributable to TCO			78,365		83,732		222,858		599,493

Beneficial interest in EBITDA			110,715		116,972		313,355		838,015

Add (less):
	Reversal of executive share-based compensation expense		(2,668	)			(1,989	)
	Gain on dispositions								(486,620	)
	Restructuring charge				3,031				3,031
	Beneficial share of disposition costs related to the Starwood sale				513				954
	Beneficial share of discontinuation of hedge accounting - MacArthur				(162	)			5,233

Adjusted Beneficial interest in EBITDA			108,047		120,354		311,366		360,613

TCO's average ownership percentage of TRG			70.8	%	71.6	%	71.1	%	71.6	%

Adjusted Beneficial interest in EBITDA attributable to TCO			76,476		86,153		221,468		258,036

Taubman Centers/12



TAUBMAN CENTERS, INC.
Table 7 - Reconciliation of Net Income to Net Operating Income (NOI)
For the Periods Ended September 30, 2015, 2014, and 2013
(in thousands of dollars)
				Three Months Ended						Three Months Ended						Year to Date						Year to Date
				2015			2014			2014			2013			2015			2014			2014			2013
Net income				52,629			56,637			56,637			43,243			145,962			621,848			621,848			123,202

Add (less) depreciation and amortization:
		Consolidated businesses at 100%		27,156			24,553			24,553			40,982			77,575			96,521			96,521			116,262
		Noncontrolling partners in consolidated joint ventures		(965	)		(814	)		(814	)		(1,292	)		(2,596	)		(3,568	)		(3,568	)		(3,776	)
		Share of Unconsolidated Joint Ventures		8,658			7,277			7,277			6,365			25,228			21,309			21,309			18,538

Add (less) interest expense and income tax expense (benefit):
		Interest expense:
			Consolidated businesses at 100%	16,145			23,382			23,382			32,515			44,451			74,946			74,946			99,589
			Noncontrolling partners in consolidated joint ventures	(1,706	)		(2,109	)		(2,109	)		(2,163	)		(5,094	)		(6,259	)		(6,259	)		(6,540	)
			Share of Unconsolidated Joint Ventures	11,431			10,006			10,006			9,415			34,199			29,805			29,805			28,192
		Income tax expense (benefit):
			Income tax expense (benefit) on dispositions of International Plaza, Arizona Mills, and Oyster Bay	(437	)											(437	)		9,733			9,733
			Other income tax expense	584			683			683			1,453			2,110			1,693			1,693			2,715

Less noncontrolling share of income of consolidated joint ventures				(2,780	)		(2,643	)		(2,643	)		(2,198	)		(8,043	)		(8,013	)		(8,013	)		(6,752	)

Add EBITDA attributable to outside partners:
		EBITDA attributable to noncontrolling partners in consolidated joint ventures		5,451			5,566			5,566			5,653			15,733			17,840			17,840			17,068
		EBITDA attributable to outside partners in Unconsolidated Joint Ventures		28,027			24,819			24,819			21,679			83,055			72,345			72,345			62,770

EBITDA at 100%				144,193			147,357			147,357			155,652			412,143			928,200			928,200			451,268

Add (less) items excluded from shopping center NOI:
		General and administrative expenses		8,615			11,369			11,369			11,812			32,595			34,493			34,493			36,676
		Management, leasing, and development services, net		(1,809	)		(1,596	)		(1,596	)		(7,726	)		(5,566	)		(4,085	)		(4,085	)		(9,782	)
		Straight-line of rents		(1,696	)		(1,195	)		(1,195	)		(1,706	)		(3,794	)		(3,482	)		(3,482	)		(4,320	)
		Gain on dispositions																	(486,620	)		(486,620	)
		Disposition costs related to the Starwood sale					519			519									960			960
		Restructuring charge					3,031			3,031									3,031			3,031
		Discontinuation of hedge accounting - MacArthur					(171	)		(171	)								5,507			5,507
		Gain on sale of peripheral land																							(863	)
		Gain on sale of marketable securities																							(1,323	)
		Dividend income		(915	)		(761	)		(761	)					(2,626	)		(1,597	)		(1,597	)
		Interest income		(377	)		(456	)		(456	)		(43	)		(1,596	)		(764	)		(764	)		(144	)
		Other nonoperating expense (income)		283									500			506			(754	)		(754	)		500
		Non-center specific operating expenses and other		3,934			5,628			5,628			7,987			14,243			14,587			14,587			18,503

NOI - all centers at 100%				152,228			163,725			163,725			166,476			445,905			489,476			489,476			490,515

Less - NOI of non-comparable centers				(5,931	)	(1)	(22,206	)	(2)	(20,608	)	(3)	(27,571	)	(4)	(17,083	)	(1)	(72,182	)	(5)	(67,589	)	(6)	(85,353	)	(4)

NOI at 100% - comparable centers				146,297			141,519			143,117			138,905			428,822			417,294			421,887			405,162

NOI - growth %				3.4	%					3.0	%					2.8	%					4.1	%

NOI at 100% - comparable centers				146,297			141,519			143,117			138,905			428,822			417,294			421,887			405,162

Lease cancellation income				(1,954	)		(1,056	)		(1,056	)		(704	)		(6,357	)		(7,055	)		(7,055	)		(2,704	)

NOI at 100% - comparable centers excluding lease cancellation income				144,343			140,463			142,061			138,201			422,465			410,239			414,832			402,458

NOI excluding lease cancellation income - growth %				2.8	%					2.8	%					3.0	%					3.1	%

(1	)	Includes The Mall of San Juan and The Mall at University Town Center.
(2	)	Includes the portfolio of centers sold to Starwood and an adjustment to reflect the allocation of costs to Starwood centers that are now being allocated to the remainder of the portfolio.
(3	)	Includes the portfolio of centers sold to Starwood and Taubman Prestige Outlets Chesterfield.
(4	)	Includes the portfolio of centers sold to Starwood, Taubman Prestige Outlets Chesterfield, and Arizona Mills.
(5	)	Includes the portfolio of centers sold to Starwood and Arizona Mills for the approximately one-month period prior to its disposition. Includes an adjustment to reflect the allocation of costs to Starwood centers that are now being allocated to the remainder of the portfolio.
(6	)	Includes the portfolio of centers sold to Starwood, Taubman Prestige Outlets Chesterfield, and Arizona Mills for the approximately one-month period prior to its disposition.

Taubman Centers/13



TAUBMAN CENTERS, INC.
Table 8 - Balance Sheets
As of September 30, 2015 and December 31, 2014
(in thousands of dollars)
			As of
			September 30, 2015		December 31, 2014
Consolidated Balance Sheet of Taubman Centers, Inc.:

Assets:
	Properties		3,585,896		3,262,505
	Accumulated depreciation and amortization		(1,033,056	)	(970,045	)
			2,552,840		2,292,460
	Investment in Unconsolidated Joint Ventures		420,889		370,004
	Cash and cash equivalents		263,911		276,423
	Restricted cash		10,798		37,502
	Accounts and notes receivable, net		44,364		49,245
	Accounts receivable from related parties		3,161		832
	Deferred charges and other assets		198,561		188,435
			3,494,524		3,214,901
Liabilities:
	Notes payable		2,594,073		2,025,505
	Accounts payable and accrued liabilities		306,892		292,802
	Distributions in excess of investments in and net income of
	Unconsolidated Joint Ventures		471,129		476,651
			3,372,094		2,794,958
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	603		633
		Additional paid-in capital	649,550		815,961
		Accumulated other comprehensive income (loss)	(32,837	)	(15,068	)
		Dividends in excess of net income	(504,163	)	(483,188	)
			113,178		318,363
	Noncontrolling interests:
		Noncontrolling interests in consolidated joint ventures	(23,277	)	(14,796	)
		Noncontrolling interests in partnership equity of TRG	32,529		116,376
			9,252		101,580
			122,430		419,943
			3,494,524		3,214,901
Combined Balance Sheet of Unconsolidated Joint Ventures (1):
Assets:
	Properties		1,619,256		1,580,926
	Accumulated depreciation and amortization		(581,144	)	(548,646	)
			1,038,112		1,032,280
	Cash and cash equivalents		33,738		49,765
	Accounts and notes receivable, net		33,616		38,788
	Deferred charges and other assets		38,462		33,200
			1,143,928		1,154,033
Liabilities:
	Notes payable (2)		2,004,712		1,989,546
	Accounts payable and other liabilities		73,789		103,161
			2,078,501		2,092,707
Accumulated Deficiency in Assets:
	Accumulated deficiency in assets - TRG		(515,231	)	(520,714	)
	Accumulated deficiency in assets - Joint Venture Partners		(404,557	)	(407,870	)
	Accumulated other comprehensive loss - TRG		(7,396	)	(5,045	)
	Accumulated other comprehensive loss - Joint Venture Partners		(7,389	)	(5,045	)
			(934,573	)	(938,674	)
			1,143,928		1,154,033

(1)	Unconsolidated Joint Venture amounts exclude the balances of entities that own interests in projects that are currently under development.
(2)	As the balances presented exclude those of centers under development, the Notes Payable amount excludes the construction loan outstanding for Hanam Union Square of $52.1 million ($17.9 million at TRG's share) at September 30, 2015.

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, 2015

Adjusted Funds from Operations per common share	3.36		3.44

Reversal of executive share-based compensation expense	0.02		0.02

Funds from Operations per common share	3.38		3.46

Real estate depreciation - TRG	(1.50	)	(1.45	)

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

Depreciation of TCO's additional basis in TRG	(0.10	)	(0.10	)

Net income attributable to common shareowners, per common share (EPS)	1.76		1.89

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