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

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8-K - 8-K - TAUBMAN CENTERS INC	a2017q38-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 Third Quarter Results

- Trailing 12-month Mall Tenant Sales Per Square Foot $802, Up 2.8 Percent

- Fifth Consecutive Quarter of Positive Sales Growth

BLOOMFIELD HILLS, Mich., Nov. 1, 2017 - - Taubman Centers, Inc. (NYSE: TCO) today reported financial results for the third quarter of 2017.



	September 30, 2017 Three Months Ended ⁽¹⁾	September 30, 2016 Three Months Ended	September 30, 2017 Nine Months Ended ⁽¹⁾	September 30, 2016 Nine Months Ended ⁽²⁾
Net income attributable to common shareowners, diluted (in thousands) Growth rate	$4,370 (76.7)%	$18,794	$35,090 (55.2)%	$78,254
Net income attributable to common shareowners (EPS) per diluted common share Growth rate	$0.07 (77.4)%	$0.31	$0.58 (55.0)%	$1.29
Funds from Operations (FFO) per diluted common share Growth rate	$0.77 (18.1)%	$0.94	$2.49 (11.7)%	$2.82
Adjusted Funds from Operations (Adjusted FFO) per diluted common share Growth rate	$0.83 (11.7)%	$0.94	$2.67 3.9%	$2.57
(1) Adjusted FFO for the three and nine month periods ended September 30, 2017 excludes a restructuring charge and costs associated with shareowner activism. In addition, Adjusted FFO for the nine months ended September 30, 2017 excludes a charge recognized in connection with the partial write-off of deferred financing costs related to an amendment of the company’s primary line of credit in February 2017. (2) Adjusted FFO for the nine month period ended September 30, 2016 excludes a $21.7 million ($0.25 per share) lump sum termination payment the company received in the second quarter of 2016 for the termination of the company’s leasing services agreement at The Shops at Crystals (Las Vegas, Nev.).

“Earnings were generally in line with our expectations. Higher rent per square foot and lower general and administrative expenses contributed to our results,” said Robert S. Taubman, chairman, president and chief executive officer of Taubman Centers.

The company’s year-over-year results were impacted by two positive, one-time items that occurred in the third quarter last year, including a post-closing adjustment related to the sale of seven centers in 2014 and a one-time development success fee in Asia. These nonrecurring items contributed $0.08 to FFO and Adjusted FFO per share in the third quarter last year.

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Operating Statistics

Year-to-date total portfolio net operating income (NOI) was up 14.2 percent. For the quarter, total portfolio NOI was up 6.7 percent.

Year-to-date comparable center NOI was up 2.3 percent (up 0.7 percent excluding lease cancellation income). For the quarter, comparable center NOI was down 1.3 percent (down 1.7 percent excluding lease cancellation income). Bad debt expense in the quarter was higher than last year, and impacted the quarterly NOI by 1.4 percent.

The company's 12-month trailing comparable center mall tenant sales per square foot was $802, up 2.8 percent. Comparable center mall tenant sales per square foot increased 1.6 percent in the quarter. Year-to-date, mall tenant sales per square foot were up 2 percent.

The company continues to backfill space created by the elevated level of tenant bankruptcies and store closures that occurred across the industry in late 2016 and in 2017. Leased space in comparable centers was 96.3 percent on September 30, 2017, 2.7 percent greater than in-place occupancy. Leased space in all centers was 95.9 percent, 2.4 percent greater than in-place occupancy and up 1 percent from June 30, 2017.

Ending occupancy in comparable centers was 93.6 percent on September 30, 2017, down 1.4 percent from the prior year. The company expects ending occupancy in comparable centers to reach 96 percent by year-end. Ending occupancy in all centers was 93.5 percent on September 30, 2017, flat to last year, and up 0.8 percent from June 30, 2017.

Average rent per square foot was $60.61 in the quarter, up 0.6 percent from $60.23 in the comparable period last year. Year-to-date, average rent per square foot was up 1 percent.

Trailing 12-month releasing spreads per square foot for the period ended September 30, 2017 were 6.7 percent. As in the second quarter, a small number of leases with average lease terms of less than two-and-a-half years had a significant impact. Without these leases, spreads were over 15 percent.

“As a whole, these operating statistics are solid in an otherwise highly volatile retail environment,” said Mr. Taubman. “We are well positioned with best-in-class assets that continue to enjoy very good demand for space.”

Hurricane Irma

On September 6 and September 9, Hurricane Irma made landfall in Puerto Rico and Florida, respectively. The company’s property in San Juan and five centers in Florida were minimally impacted. Damage was primarily limited to fallen trees, uprooted landscaping and signage. The company’s six centers were closed between four and 11 days following the hurricane, primarily due to power outages. No significant financial impact occurred as a result of Hurricane Irma.

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Hurricane Maria

On September 20, Hurricane Maria made landfall in Puerto Rico. Due to the impact of the hurricane and resulting power outage, The Mall of San Juan was closed for approximately one month. The center has reopened with reduced hours and 55 of approximately 90 tenants are now operating. Restoration efforts for the tenant spaces that were impacted are ongoing, and the company expects more retailers to reopen by the Holiday season. Both Nordstrom and Saks Fifth Avenue sustained significant damage, and the timing of their reopenings is still uncertain. The company maintains substantial insurance to cover hurricane and flood damage, as well as business interruption, with a single deductible of $2 million.

As a result of Hurricane Maria and the substantial impact on the center’s performance for the foreseeable future, The Mall of San Juan has been excluded from the company’s comparable center guidance measures and operating statistics.

2017 Guidance

The company is updating its 2017 EPS and FFO guidance. 2017 EPS is now expected to be in the range of $0.80 to $1.00 per diluted common share, revised from the previous range of $1.03 to $1.23. 2017 FFO is now expected to be in the range of $3.49 to $3.59 per diluted common share, revised from the previous range of $3.53 to $3.63.

The company is reaffirming its previous 2017 Adjusted FFO guidance. Adjusted FFO, which excludes $0.18 per diluted common share of year-to-date adjustments, is expected to be in the range of $3.67 to $3.77 per diluted common share. The company’s 2017 Adjusted FFO is more likely to be in the lower end of the range, as the operations of The Mall of San Juan will be impacted by Hurricane Maria. The company previously assumed the NOI contribution from The Mall of San Juan would be about $3.5 million in the fourth quarter. Due to the substantial impact of the hurricane, the center’s fourth quarter performance will be lower. The Company anticipates that the adverse impact to the operations of the mall will be substantially mitigated by business interruption insurance. However, business interruption insurance proceeds are not likely to be received in the current year.

The company is also reaffirming its previous comparable center NOI guidance. Including lease cancellation income, comparable center NOI is expected to be in the range of 1 to 3 percent for the year. Excluding lease cancellation income, comparable center NOI growth is expected to be in the range of flat to 2 percent.

The company’s guidance does not reflect any future costs that may be incurred related to shareowner activism or certain ongoing restructuring activities.

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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), Net


•	Balance Sheets


•	Debt Summary


•	Other Debt, Equity and Certain Balance Sheet Information


•	Redevelopments and Disposition


•	Capital Spending


•	Operational Statistics


•	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 Thursday, November 2 to discuss these results, business conditions and the company’s outlook for the remainder of 2017. 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 is an S&P MidCap 400 Real Estate Investment Trust engaged in the ownership, management and/or leasing of 27 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. 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.

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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. Forward-looking statements can be identified by words such as “will”, “may”, “could”, “expect”, “anticipate”, “believes”, “intends”, “should”, “plans”, “estimates”, “approximate”, “guidance” and similar expressions in this press release that predict or indicate future events and trends and that do not report historical matters. The forward-looking statements included in this release are made as of the date hereof. Except as required by law, the company assumes 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, uncertainties and other factors. Such factors include, but are not limited to: changes in market rental rates; unscheduled closings or bankruptcies of tenants; relationships with anchor tenants; trends in the retail industry; the liquidity of real estate investments; the company’s ability to comply with debt covenants; the availability and terms of financings; changes in market rates of interest and foreign exchange rates for foreign currencies; changes in value of investments in foreign entities; the ability to hedge interest rate and currency risk; risks related to acquiring, developing, expanding, leasing and managing properties; changes in value of investments in foreign entities; risks related to joint venture properties; insurance costs and coverage;

security breaches that could impact the company’s information technology, infrastructure or personal data; the loss of key management personnel; shareholder activism costs and related diversion of management time; terrorist activities; maintaining the company’s status as a real estate investment trust; changes in the laws of states, localities, and foreign jurisdictions that may increase taxes on the company’s operations; and changes in global, national, regional and/or local economic and geopolitical climates. 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

# # #

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TAUBMAN CENTERS, INC.
Table 1 - Summary of Results
For the Periods Ended September 30, 2017 and 2016
(in thousands of dollars, except as indicated)
	Three Months Ended				Year to Date
	2017		2016		2017		2016
Net income	14,251		35,184		74,673		137,257
Noncontrolling share of income of consolidated joint ventures	(1,230	)	(1,662	)	(4,279	)	(5,813	)
Noncontrolling share of income of TRG	(2,298	)	(8,449	)	(16,302	)	(34,435	)
Distributions to participating securities of TRG	(576	)	(537	)	(1,723	)	(1,573	)
Preferred stock dividends	(5,784	)	(5,784	)	(17,353	)	(17,353	)
Net income attributable to Taubman Centers, Inc. common shareowners	4,363		18,752		35,016		78,083
Net income per common share - basic	0.07		0.31		0.58		1.29
Net income per common share - diluted	0.07		0.31		0.58		1.29
Beneficial interest in EBITDA - Combined (1)	115,054		121,201		362,225		357,572
Adjusted beneficial interest in EBITDA - Combined (1)	120,305		121,201		375,474		335,870
Funds from Operations attributable to partnership unitholders and participating securities of TRG (1)	66,397		81,431		215,505		244,271
Funds from Operations attributable to TCO's common shareowners (1)	47,443		57,556		152,946		172,617
Funds from Operations per common share - basic (1)	0.78		0.95		2.52		2.86
Funds from Operations per common share - diluted (1)	0.77		0.94		2.49		2.82
Adjusted Funds from Operations attributable to partnership unitholders and participating securities of TRG (1)	71,648		81,431		231,981		222,569
Adjusted Funds from Operations attributable to TCO's common shareowners (1)	50,775		57,556		164,330		157,282
Adjusted Funds from Operations per common share - basic (1)	0.84		0.95		2.71		2.61
Adjusted Funds from Operations per common share - diluted (1)	0.83		0.94		2.67		2.57
Weighted average number of common shares outstanding - basic	60,710,184		60,396,902		60,654,026		60,341,863
Weighted average number of common shares outstanding - diluted	60,999,151		60,831,063		61,018,855		60,774,789
Common shares outstanding at end of period	60,712,037		60,405,097
Weighted average units - Operating Partnership - basic	85,667,417		85,450,379		85,622,460		85,400,667
Weighted average units - Operating Partnership - diluted	86,827,646		86,755,801		86,858,551		86,704,855
Units outstanding at end of period - Operating Partnership	85,667,471		85,451,376
Ownership percentage of the Operating Partnership at end of period	70.9	%	70.7	%
Number of owned shopping centers at end of period	24		23

Operating Statistics:
Net Operating Income - total portfolio growth % (1)	6.7	%	10.6	%	14.2	%	8.8	%
Net Operating Income excluding lease cancellation income - growth % (1)(2)	-1.7	%	4.5	%	0.7	%	5.5	%
Net Operating Income including lease cancellation income - growth % (1)(2)	-1.3	%	3.6	%	2.3	%	4.6	%
Average rent per square foot - Consolidated Businesses (3)	63.78		62.83		65.02		64.07
Average rent per square foot - Unconsolidated Joint Ventures (3)	57.26		57.46		58.35		58.02
Average rent per square foot - Combined (3)	60.61		60.23		61.78		61.16
Average rent per square foot growth (3)	0.6	%			1.0	%
Ending occupancy - all centers	93.5	%	93.6	%	93.5	%	93.6	%
Ending occupancy - comparable (3)	93.6	%	95.0	%	93.6	%	95.0	%
Leased space - all centers	95.9	%	95.9	%	95.9	%	95.9	%
Leased space - comparable (3)	96.3	%	96.7	%	96.3	%	96.7	%
Mall tenant sales - all centers (4)	1,475,440		1,319,794		4,349,233		3,815,182
Mall tenant sales - comparable (3)(4)	1,110,111		1,132,953		3,368,564		3,352,811


	12-Months Trailing
	2017		2016
Operating Statistics:
Mall tenant sales - all centers (4)	6,307,665		5,415,921
Mall tenant sales - comparable (3)(4)	4,936,785		4,843,447
Sales per square foot (3)(4)	802		780
All centers (4):
Mall tenant occupancy costs as a percentage of tenant sales - Consolidated Businesses	15.0	%	14.6	%
Mall tenant occupancy costs as a percentage of tenant sales - Unconsolidated Joint Ventures	14.2	%	14.1	%
Mall tenant occupancy costs as a percentage of tenant sales - Combined	14.6	%	14.4	%
Comparable centers (3)(4):
Mall tenant occupancy costs as a percentage of tenant sales - Consolidated Businesses	14.2	%	14.1	%
Mall tenant occupancy costs as a percentage of tenant sales - Unconsolidated Joint Ventures	14.0	%	14.3	%
Mall tenant occupancy costs as a percentage of tenant sales - Combined	14.1	%	14.2	%

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(1)	EBITDA represents earnings before interest, income taxes, and depreciation and amortization of the Operating Partnership's consolidated and unconsolidated businesses. 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 EBITDA and beneficial interest in EBITDA provide useful indicators 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, excluding centers impacted by significant redevelopment activity. In addition, The Mall of San Juan has been excluded from “comparable center” statistics as a result of Hurricane Maria and the expectation that the center’s performance will be impacted for the foreseeable future.
	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, 2017, FFO and EBITDA were adjusted to exclude a restructuring charge and costs incurred associated with shareowner activism. For the nine months ended September 30, 2017, FFO was also adjusted for a charge recognized in connection with the partial write-off of deferred financing costs related to an amendment of the Company's primary unsecured revolving line of credit in February 2017. For the nine months ended September 30, 2017, EBITDA was also adjusted to exclude a gain recognized in connection with the sale of the Valencia Place office tower at Country Club Plaza. For the nine months ended September 30, 2016, FFO and EBITDA were adjusted to exclude the lump sum payment received in May 2016 for the termination of the Company's third party leasing agreement at The Shops at Crystals (Crystals) due to a change in ownership of the center.
	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.
	The Company provides its beneficial interest in certain financial information of its Unconsolidated Joint Ventures. This beneficial information is derived as the Company’s ownership interest in the investee multiplied by the specific financial statement item being presented. Investors are cautioned that deriving the Company’s beneficial interest in this manner may not accurately depict the legal and economic implications of holding a non-controlling interest in the investee.

(2)	Statistics exclude non-comparable centers as defined in the respective periods and have not been subsequently restated for changes in the pools of comparable centers.
(3)	Statistics exclude non-comparable centers for all periods presented. The trailing 12-month September 30, 2016 statistics have been restated to include comparable centers to 2017.

(4)	Based on reports of sales furnished by mall tenants. Sales per square foot exclude spaces greater than or equal to 10,000 square feet.

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TAUBMAN CENTERS, INC.
Table 2 - Income Statement
For the Three Months Ended September 30, 2017 and 2016
(in thousands of dollars)
		2017				2016
		CONSOLIDATED		UNCONSOLIDATED		CONSOLIDATED		UNCONSOLIDATED
		BUSINESSES		JOINT VENTURES (1)		BUSINESSES		JOINT VENTURES (1)
REVENUES:
	Minimum rents	84,487		83,337		81,402		67,297
	Percentage rents	3,600		6,358		6,264		2,807
	Expense recoveries	51,960		48,481		52,151		39,547
	Management, leasing, and development services	1,147				1,399
	Other	12,028		8,230		6,805		4,283
	Total revenues	153,222		146,406		148,021		113,934

EXPENSES:
	Maintenance, taxes, utilities, and promotion	42,351		45,354		39,053		31,974
	Other operating	23,939		11,968		18,592		6,098
	Management, leasing, and development services	524				1,268
	General and administrative	9,482				11,578
	Restructuring charge	1,751
	Costs associated with shareowner activism	3,500
	Interest expense	27,782		32,108		22,129		26,583
	Depreciation and amortization	45,805		32,609		40,637		27,219
	Total expenses	155,134		122,039		133,257		91,874

Nonoperating income (expense)		2,494		340		4,569		(594	)
		582		24,707		19,333		21,466
Income tax benefit (expense)		(54	)	(336	)	460		(315	)
				24,371				21,151
Equity in income of Unconsolidated Joint Ventures		13,723				15,391

Net income		14,251				35,184
Net income attributable to noncontrolling interests:
Noncontrolling share of income of consolidated joint ventures		(1,230	)			(1,662	)
Noncontrolling share of income of TRG		(2,298	)			(8,449	)
Distributions to participating securities of TRG		(576	)			(537	)
Preferred stock dividends		(5,784	)			(5,784	)
Net income attributable to Taubman Centers, Inc. common shareowners		4,363				18,752

SUPPLEMENTAL INFORMATION:
	EBITDA - 100%	74,169		89,424		82,099		75,268
	EBITDA - outside partners' share	(6,178	)	(42,361	)	(5,873	)	(30,293	)
	Beneficial interest in EBITDA	67,991		47,063		76,226		44,975
	Beneficial interest expense	(24,816	)	(16,574	)	(19,261	)	(14,274	)
	Beneficial income tax benefit (expense) - TRG and TCO	(41	)	(120	)	471		(315	)
	Beneficial income tax benefit - TCO	(389	)
	Non-real estate depreciation	(933	)			(607	)
	Preferred dividends and distributions	(5,784	)			(5,784	)
	Funds from Operations attributable to partnership unitholders and participating securities of TRG	36,028		30,369		51,045		30,386

STRAIGHTLINE AND PURCHASE ACCOUNTING ADJUSTMENTS:
	Net straight-line adjustments to rental revenue, recoveries, and ground rent expense at TRG%	(2	)	526		438		849
	Country Club Plaza purchase accounting adjustments - minimum rents increase (decrease) at TRG%			(59	)			163
	The Mall at Green Hills purchase accounting adjustments - minimum rents increase	48				51

(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.

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TAUBMAN CENTERS, INC.
Table 3 - Income Statement
For the Nine Months Ended September 30, 2017 and 2016
(in thousands of dollars)
				2017				2016
				CONSOLIDATED BUSINESSES		UNCONSOLIDATED JOINT VENTURES (1)		CONSOLIDATED BUSINESSES		UNCONSOLIDATED JOINT VENTURES (1)
REVENUES:
		Minimum rents		255,577		251,819		246,073		191,312
		Percentage rents		7,354		16,635		9,960		6,027
		Expense recoveries		154,385		137,921		147,291		112,259
		Management, leasing, and development services (2)		3,439				26,323
		Other		36,226		22,844		16,719		9,747
			Total revenues	456,981		429,219		446,366		319,345

EXPENSES:
		Maintenance, taxes, utilities, and promotion		121,581		115,958		109,908		86,759
		Other operating		65,356		34,867		57,782		14,926
		Management, leasing, and development services		1,698				3,034
		General and administrative		29,649				34,651
		Restructuring charge		4,063
		Costs associated with shareowner activism		12,000
		Interest expense		80,074		97,198		61,845		72,881
		Depreciation and amortization		122,958		97,263		100,099		63,837
			Total expenses	437,379		345,286		367,319		238,403

Nonoperating income, net				8,347		2,551		8,715		512
				27,949		86,484		87,762		81,454
Income tax expense				(375	)	(4,499	)	(284	)	(315	)
						81,985
Gain on disposition, net of tax (3)						3,713
						85,698				81,139
Equity in income of Unconsolidated Joint Ventures				47,099				49,779

Net income				74,673				137,257
Net income attributable to noncontrolling interests:
		Noncontrolling share of income of consolidated joint ventures		(4,279	)			(5,813	)
		Noncontrolling share of income of TRG		(16,302	)			(34,435	)
Distributions to participating securities of TRG				(1,723	)			(1,573	)
Preferred stock dividends				(17,353	)			(17,353	)
Net income attributable to Taubman Centers, Inc. common shareowners				35,016				78,083

SUPPLEMENTAL INFORMATION:
		EBITDA - 100%		230,981		285,389		249,706		218,172
		EBITDA - outside partners' share		(18,880	)	(135,265	)	(17,236	)	(93,070	)
		Beneficial interest in EBITDA		212,101		150,124		232,470		125,102
		Beneficial share of gain on disposition (3)				(2,814	)
		Beneficial interest expense		(71,136	)	(50,204	)	(54,459	)	(39,009	)
		Beneficial income tax expense - TRG and TCO		(288	)	(2,271	)	(265	)	(315	)
		Beneficial income tax benefit - TCO		(287	)			(19	)
		Non-real estate depreciation		(2,367	)			(1,881	)
		Preferred dividends and distributions		(17,353	)			(17,353	)
		Funds from Operations attributable to partnership unitholders and participating securities of TRG		120,670		94,835		158,493		85,778

STRAIGHTLINE AND PURCHASE ACCOUNTING ADJUSTMENTS:
		Net straight-line adjustments to rental revenue, recoveries, and ground rent expense at TRG%		433		1,227		891		2,013
		Country Club Plaza purchase accounting adjustments - minimum rents increase (decrease) at TRG %				(5	)			163
		The Mall at Green Hills purchase accounting adjustments - minimum rents increase		130				167

(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.
(2	)	The 2016 amount includes the $21.7 million lump sum payment received in May 2016 for the termination of the Company's third party leasing agreement at Crystals due to a change in ownership in the center.
(3	)	During the nine months ended September 30, 2017, the joint venture that owns the Valencia Place office tower at Country Club Plaza recognized a $4.4 million gain ($2.8 million at TRG's share) and $0.7 million of income tax expense ($0.7 million at TRG's share) in connection with the sale of the office tower.

Taubman Centers/10



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, 2017 and 2016
(in thousands of dollars except as noted; may not add or recalculate due to rounding)

			2017					2016
					Shares	Per Share				Shares	Per Share
			Dollars		/Units	/Unit		Dollars		/Units	/Unit
Net income attributable to TCO common shareowners - basic			4,363		60,710,184	0.07		18,752		60,396,902	0.31

Add impact of share-based compensation			7		288,967			42		434,161

Net income attributable to TCO common shareowners - diluted			4,370		60,999,151	0.07		18,794		60,831,063	0.31

Add depreciation of TCO's additional basis			1,617			0.03		1,617			0.03
Less TCO's additional income tax benefit			(389	)		(0.01	)

Net income attributable to TCO common shareowners,
		excluding step-up depreciation and additional income tax benefit	5,598		60,999,151	0.09		20,411		60,831,063	0.34

Add noncontrolling share of income of TRG			2,298		24,957,233			8,449		25,053,476
Add distributions to participating securities of TRG			576		871,262			537		871,262

Net income attributable to partnership unitholders
		and participating securities of TRG	8,472		86,827,646	0.09		29,397		86,755,801	0.34

Add (less) depreciation and amortization:
		Consolidated businesses at 100%	45,805			0.53		40,637			0.47
		Depreciation of TCO's additional basis	(1,617	)		(0.02	)	(1,617	)		(0.02	)
		Noncontrolling partners in consolidated joint ventures	(1,969	)		(0.02	)	(1,332	)		(0.02	)
		Share of Unconsolidated Joint Ventures	16,646			0.19		14,995			0.17
		Non-real estate depreciation	(933	)		(0.01	)	(607	)		(0.01	)

Less impact of share-based compensation			(7	)		(0.00	)	(42	)		(0.00	)

Funds from Operations attributable to partnership unitholders
		and participating securities of TRG	66,397		86,827,646	0.76		81,431		86,755,801	0.94

TCO's average ownership percentage of TRG - basic (1)			70.9	%				70.7	%

Funds from Operations attributable to TCO's common shareowners,
		excluding additional income tax benefit (1)	47,054			0.76		57,556			0.94

Add TCO's additional income tax benefit			389			0.00

Funds from Operations attributable to TCO's common shareowners (1)			47,443			0.77		57,556			0.94

Funds from Operations attributable to partnership unitholders
		and participating securities of TRG	66,397		86,827,646	0.76		81,431		86,755,801	0.94

Restructuring charge			1,751			0.02
Costs associated with shareowner activism			3,500			0.04

Adjusted Funds from Operations attributable to partnership unitholders
		and participating securities of TRG	71,648		86,827,646	0.83		81,431		86,755,801	0.94

TCO's average ownership percentage of TRG - basic (2)			70.9	%				70.7	%

Adjusted Funds from Operations attributable to TCO's common shareowners (2)			50,775			0.83		57,556			0.94

(1	)	For the three months ended September 30, 2017, Funds from Operations attributable to TCO's common shareowners was $46,815 using TCO's diluted average ownership percentage of TRG of 69.9%. For the three months ended September 30, 2016, Funds from Operations attributable to TCO's common shareowners was $56,690 using TCO's diluted average ownership percentage of TRG of 69.6%.

(2	)	For the three months ended September 30, 2017, Adjusted Funds from Operations attributable to TCO's common shareowners was $50,097 using TCO's diluted average ownership percentage of TRG of 69.9%. For the three months ended September 30, 2016, Adjusted Funds from Operations attributable to TCO's common shareowners was $56,690 using TCO's diluted average ownership percentage of TRG of 69.6%.

Taubman Centers/11



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, 2017 and 2016
(in thousands of dollars except as noted; may not add or recalculate due to rounding)

			2017					2016
					Shares	Per Share				Shares	Per Share
			Dollars		/Units	/Unit		Dollars		/Units	/Unit
Net income attributable to TCO common shareowners - basic			35,016		60,654,026	0.58		78,083		60,341,863	1.29

Add impact of share-based compensation			74		364,829			171		432,926

Net income attributable to TCO common shareowners - diluted			35,090		61,018,855	0.58		78,254		60,774,789	1.29

Add depreciation of TCO's additional basis			4,851			0.08		4,851			0.08
Less TCO's additional income tax benefit			(287	)		(0.00	)	(19	)		(0.00	)

Net income attributable to TCO common shareowners,
		excluding step-up depreciation and additional income tax benefit	39,654		61,018,855	0.65		83,086		60,774,789	1.37

Add noncontrolling share of income of TRG			16,302		24,968,434			34,435		25,058,804
Add distributions to participating securities of TRG			1,723		871,262			1,573		871,262

Net income attributable to partnership unitholders
		and participating securities of TRG	57,679		86,858,551	0.66		119,094		86,704,855	1.37

Add (less) depreciation and amortization:
		Consolidated businesses at 100%	122,958			1.42		100,099			1.15
		Depreciation of TCO's additional basis	(4,851	)		(0.06	)	(4,851	)		(0.06	)
		Noncontrolling partners in consolidated joint ventures	(5,576	)		(0.06	)	(4,018	)		(0.05	)
		Share of Unconsolidated Joint Ventures	49,819			0.57		35,999			0.42
		Non-real estate depreciation	(2,367	)		(0.03	)	(1,881	)		(0.02	)

Less beneficial gain on disposition, net of tax			(2,083	)		(0.00	)
Less impact of share-based compensation			(74	)		(0.00	)	(171	)		(0.00	)

Funds from Operations attributable to partnership unitholders
		and participating securities of TRG	215,505		86,858,551	2.48		244,271		86,704,855	2.82

TCO's average ownership percentage of TRG - basic (1)			70.8	%				70.7	%

Funds from Operations attributable to TCO's common shareowners,
		excluding additional income tax benefit (1)	152,659			2.48		172,598			2.82

Add TCO's additional income tax benefit			287			0.00		19			0.00

Funds from Operations attributable to TCO's common shareowners (1)			152,946			2.49		172,617			2.82

Funds from Operations attributable to partnership unitholders
		and participating securities of TRG	215,505		86,858,551	2.48		244,271		86,704,855	2.82

Restructuring charge			4,063			0.05
Costs associated with shareowner activism			12,000			0.14
Partial write-off of deferred financing costs			413			0.00
Crystals lump sum payment for termination of leasing agreement								(21,702	)		(0.25	)

Adjusted Funds from Operations attributable to partnership unitholders
		and participating securities of TRG	231,981		86,858,551	2.67		222,569		86,704,855	2.57

TCO's average ownership percentage of TRG - basic (2)			70.8	%				70.7	%

Adjusted Funds from Operations attributable to TCO's common shareowners,
		excluding additional income tax benefit (2)	164,330			2.67		157,263			2.57

Add TCO's additional income tax benefit								19			0.00

Adjusted Funds from Operations attributable to TCO's common shareowners (2)			164,330			2.67		157,282			2.57

(1	)	For the nine months ended September 30, 2017, Funds from Operations attributable to TCO's common shareowners was $150,769 using TCO's diluted average ownership percentage of TRG of 69.8%. For the nine months ended September 30, 2016, Funds from Operations attributable to TCO's common shareowners was $170,032 using TCO's diluted average ownership percentage of TRG of 69.6%.

(2	)	For the nine months ended September 30, 2017, Adjusted Funds from Operations attributable to TCO's common shareowners was $161,987 using TCO's diluted average ownership percentage of TRG of 69.8%. For the nine months ended September 30, 2016, Adjusted Funds from Operations attributable to TCO's common shareowners was $154,193 using TCO's diluted average ownership percentage of TRG of 69.6%.

Taubman Centers/12



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, 2017 and 2016
(in thousands of dollars; amounts attributable to TCO may not recalculate due to rounding)

			Three Months Ended				Year to Date
			2017		2016		2017		2016
Net income			14,251		35,184		74,673		137,257

Add (less) depreciation and amortization:
	Consolidated businesses at 100%		45,805		40,637		122,958		100,099
	Noncontrolling partners in consolidated joint ventures		(1,969	)	(1,332	)	(5,576	)	(4,018	)
	Share of Unconsolidated Joint Ventures		16,646		14,995		49,819		35,999

Add (less) interest expense and income tax expense (benefit):
	Interest expense:
		Consolidated businesses at 100%	27,782		22,129		80,074		61,845
		Noncontrolling partners in consolidated joint ventures	(2,966	)	(2,868	)	(8,938	)	(7,386	)
		Share of Unconsolidated Joint Ventures	16,574		14,274		50,204		39,009
	Share of Income tax expense (benefit):
		Consolidated businesses at 100%	54		(471	)	375		265
		Noncontrolling partners in consolidated joint ventures	(13	)			(87	)
		Share of Unconsolidated Joint Ventures	120		315		2,271		315
		Share of income tax expense on disposition					731

Less noncontrolling share of income of consolidated joint ventures			(1,230	)	(1,662	)	(4,279	)	(5,813	)

Beneficial interest in EBITDA			115,054		121,201		362,225		357,572

TCO's average ownership percentage of TRG - basic			70.9	%	70.7	%	70.8	%	70.7	%

Beneficial interest in EBITDA attributable to TCO			81,536		85,665		256,594		252,651

Beneficial interest in EBITDA			115,054		121,201		362,225		357,572

Add (less):
	Restructuring charge		1,751				4,063
	Costs associated with shareowner activism		3,500				12,000
	Beneficial share of gain on disposition						(2,814	)
	Crystals lump sum payment for termination of leasing agreement								(21,702	)

Adjusted Beneficial interest in EBITDA			120,305		121,201		375,474		335,870

TCO's average ownership percentage of TRG - basic			70.9	%	70.7	%	70.8	%	70.7	%

Adjusted Beneficial interest in EBITDA attributable to TCO			85,257		85,665		265,980		237,318

Taubman Centers/13



TAUBMAN CENTERS, INC.
Table 7 - Reconciliation of Net Income to Net Operating Income (NOI)
For the Periods Ended September 30, 2017, 2016, and 2015
(in thousands of dollars)
			Three Months Ended						Three Months Ended						Year to Date						Year to Date
			2017			2016			2016			2015			2017			2016			2016			2015
Net income			14,251			35,184			35,184			52,629			74,673			137,257			137,257			145,962

Add (less) depreciation and amortization:
	Consolidated businesses at 100%		45,805			40,637			40,637			27,156			122,958			100,099			100,099			77,575
	Noncontrolling partners in consolidated joint ventures		(1,969	)		(1,332	)		(1,332	)		(965	)		(5,576	)		(4,018	)		(4,018	)		(2,596	)
	Share of Unconsolidated Joint Ventures		16,646			14,995			14,995			8,658			49,819			35,999			35,999			25,228

Add (less) interest expense (benefit) and income tax expense (benefit):
	Interest expense:
		Consolidated businesses at 100%	27,782			22,129			22,129			16,145			80,074			61,845			61,845			44,451
		Noncontrolling partners in consolidated joint ventures	(2,966	)		(2,868	)		(2,868	)		(1,706	)		(8,938	)		(7,386	)		(7,386	)		(5,094	)
		Share of Unconsolidated Joint Ventures	16,574			14,274			14,274			11,431			50,204			39,009			39,009			34,199
	Share of income tax expense (benefit):
		Consolidated businesses at 100%	54			(471	)		(471	)		584			375			265			265			2,110
		Noncontrolling partners in consolidated joint ventures	(13	)											(87	)
		Share of Unconsolidated Joint Ventures	120			315			315						2,271			315			315
		Share of income tax expense on disposition													731
		Income tax benefit on dispositions of International Plaza, Arizona Mills, and Oyster Bay										(437	)											(437	)

Less noncontrolling share of income of consolidated joint ventures			(1,230	)		(1,662	)		(1,662	)		(2,780	)		(4,279	)		(5,813	)		(5,813	)		(8,043	)

Add EBITDA attributable to outside partners:
	EBITDA attributable to noncontrolling partners in consolidated joint ventures		6,178			5,873			5,873			5,451			18,880			17,236			17,236			15,733
	EBITDA attributable to outside partners in Unconsolidated Joint Ventures		42,361			30,293			30,293			28,027			135,265			93,070			93,070			83,055

EBITDA at 100%			163,593			157,367			157,367			144,193			516,370			467,878			467,878			412,143

Add (less) items excluded from shopping center NOI:
	General and administrative expenses		9,482			11,578			11,578			8,615			29,649			34,651			34,651			32,595
	Management, leasing, and development services, net		(623	)		(131	)		(131	)		(1,809	)		(1,741	)		(23,289	)	(1)	(23,289	)	(1)	(5,566	)
	Restructuring charge		1,751												4,063
	Costs associated with shareowner activism		3,500												12,000
	Straight-line of rents		(1,669	)		(2,574	)		(2,574	)		(1,696	)		(4,837	)		(5,712	)		(5,712	)		(3,794	)
	Gain on disposition														(4,445	)
	Gains on sales of peripheral land		(945	)		(1,425	)		(1,425	)					(2,613	)		(1,828	)		(1,828	)
	Dividend income		(1,062	)		(974	)		(974	)		(915	)		(3,128	)		(2,862	)		(2,862	)		(2,626	)
	Interest income		(772	)		(1,907	)		(1,907	)		(377	)		(5,049	)		(4,179	)		(4,179	)		(1,596	)
	Other nonoperating expense (income)		(55	)		331			331			283			(108	)		(358	)		(358	)		506
	Unallocated operating expenses and other		10,437			9,826			9,826			7,269			26,813			32,002			32,002			24,332

NOI at 100% - total portfolio			183,637			172,091			172,091			155,563			566,974			496,303			496,303			455,994

Less NOI of non-comparable centers			(35,500	)	(2)	(21,993	)	(3)	(21,993	)	(3)	(10,669	)	(4)	(112,562	)	(2)	(52,245	)	(3)	(52,245	)	(3)	(31,624	)	(4)

NOI at 100% - comparable centers			148,137			150,098			150,098			144,894			454,412			444,058			444,058			424,370

NOI - growth %			(1.3	)%					3.6	%					2.3	%					4.6	%

NOI at 100% - comparable centers			148,137			150,098			150,098			144,894			454,412			444,058			444,058			424,370

Lease cancellation income			(1,204	)		(649	)		(649	)		(1,943	)		(9,970	)		(2,875	)		(2,875	)		(6,198	)

NOI at 100% - comparable centers excluding lease cancellation income			146,933			149,449			149,449			142,951			444,442			441,183			441,183			418,172

NOI at 100% excluding lease cancellation income - growth %			-1.7	%					4.5	%					0.7	%					5.5	%

(1)	Amount includes the lump sum payment of $21.7 million received in May 2016 in connection with the termination of the Company's third party leasing agreement at Crystals due to a change in ownership of the center.
(2)	Includes Beverly Center, CityOn.Xi'an, CityOn.Zhengzhou, Country Club Plaza, International Market Place, The Mall of San Juan, and Starfield Hanam.
(3)	Includes Beverly Center, CityOn.Xi'an, Country Club Plaza, International Market Place, The Mall of San Juan, Starfield Hanam, and certain post-closing adjustments relating to the portfolio of centers sold to Starwood.
(4)	Includes Beverly Center and The Mall of San Juan.

Taubman Centers/14



TAUBMAN CENTERS, INC.
Table 8 - Balance Sheets
As of September 30, 2017 and December 31, 2016
(in thousands of dollars)
			As of
			September 30, 2017		December 31, 2016
Consolidated Balance Sheet of Taubman Centers, Inc.:

Assets:
	Properties		4,384,058		4,173,954
	Accumulated depreciation and amortization		(1,245,581	)	(1,147,390	)
			3,138,477		3,026,564
	Investment in Unconsolidated Joint Ventures		563,012		604,808
	Cash and cash equivalents		37,796		40,603
	Restricted cash		3,660		932
	Accounts and notes receivable, net		68,727		60,174
	Accounts receivable from related parties		2,591		2,103
	Deferred charges and other assets		293,695		275,728
			4,107,958		4,010,912
Liabilities:
	Notes payable, net		3,438,307		3,255,512
	Accounts payable and accrued liabilities		315,136		336,536
	Distributions in excess of investments in and net income of
	Unconsolidated Joint Ventures		503,291		480,863
			4,256,734		4,072,911

Redeemable noncontrolling interest			9,150		8,704

Equity (Deficit):
	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	607		604
		Additional paid-in capital	666,836		657,281
		Accumulated other comprehensive income (loss)	(24,051	)	(35,916	)
		Dividends in excess of net income	(628,965	)	(549,914	)
			14,452		72,080
	Noncontrolling interests:
		Noncontrolling interests in consolidated joint ventures	(159,561	)	(155,919	)
		Noncontrolling interests in partnership equity of TRG	(12,817	)	13,136
			(172,378	)	(142,783	)
			(157,926	)	(70,703	)
			4,107,958		4,010,912



Combined Balance Sheet of Unconsolidated Joint Ventures (1):
Assets:
	Properties		3,693,394		3,371,216
	Accumulated depreciation and amortization		(733,742	)	(661,611	)
			2,959,652		2,709,605
	Cash and cash equivalents		120,860		83,882
	Accounts and notes receivable, net		115,665		87,612
	Deferred charges and other assets		120,857		67,167
			3,317,034		2,948,266
Liabilities:
	Notes payable, net (2)		2,829,847		2,706,628
	Accounts payable and other liabilities		533,800		359,814
			3,363,647		3,066,442
Accumulated deficiency in assets:
	Accumulated deficiency in assets - TRG		(85,912	)	(145,679	)
	Accumulated deficiency in assets - Joint Venture Partners		71,652		81,217
	Accumulated other comprehensive loss - TRG		(12,490	)	(20,547	)
	Accumulated other comprehensive loss - Joint Venture Partners		(19,863	)	(33,167	)
			(46,613	)	(118,176	)
			3,317,034		2,948,266

(1)	As of December 31, 2016, Unconsolidated Joint Venture amounts exclude the balances of CityOn.Zhengzhou, which opened in March 2017.
(2)	The December 31, 2016 balance excludes the construction financing outstanding for CityOn.Zhengzhou of $70.5 million ($34.5 million at TRG's share).

Taubman Centers/15



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 the Year Ended
			December 31, 2017

Adjusted Funds from Operations per common share			3.67		3.77

Restructuring charge (1)			(0.05	)	(0.05	)

Costs associated with shareowner activism (1)			(0.14	)	(0.14	)

Partial write-off of deferred financing costs			(0.00	)	(0.00	)

Funds from Operations per common share			3.49		3.59

Gain on disposition, net of tax			0.02		0.02

Real estate depreciation - TRG			(2.57	)	(2.46	)

Distributions to participating securities of TRG			(0.03	)	(0.03	)

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

Net income attributable to common shareowners, per common share (EPS)			0.80		1.00

(1	)	Amount represents actual expense recognized through the third quarter of 2017. Amount does not include future assumptions of costs to be incurred.

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