*DJ Taubman Centers 2Q Loss/Shr 55c >TCO

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August 10, 2020 17:00 ET (21:00 GMT)

*DJ Taubman Centers 2Q Loss $41.8M >TCO

(MORE TO FOLLOW) Dow Jones Newswires (212-416-2800)

August 10, 2020 17:00 ET (21:00 GMT)

Press Release: Taubman Centers, Inc. Issues Second Quarter Results

Taubman Centers, Inc. Issues Second Quarter Results

- Earnings Lower Due to Impact of COVID-19 Pandemic

- Amended $1.1 Billion Revolving Line of Credit Facility and Unsecured Term Loans to Provide Financial Flexibility Through the Pandemic

- Starfield Anseong, Taubman Asia's Fourth Investment, to Open on September 25(th) nearly 100 Percent Leased

- Asia Sales Rebound Following COVID-19 Closures

BLOOMFIELD HILLS, Mich.--(BUSINESS WIRE)--August 10, 2020--

Taubman Centers, Inc. (NYSE: TCO) today reported financial results for the second quarter of 2020.

June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Three Months Three Months Six Months Six Months Ended Ended Ended Ended
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Net income (loss) attributable to common shareowners, diluted (in thousands) ($34,069)(1) $6,266 ($14,197)(1) $21,384
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Net income (loss) attributable to common shareowners (EPS) per diluted common share ($0.55)(1) $0.10 ($0.23)(1) $0.35
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Funds from Operations (FFO) per diluted common share $0.29 $0.78 $1.08 $1.71
Growth rate (62.8)% (36.8)%
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Adjusted FFO (AFFO) per diluted common share $0.41(2) $0.94(3) $1.29(2) $1.88(3)
Growth rate (56.4)% (31.4)%
--------------- ------------- -------------- -------------- -------------- (1) Net income (loss) and EPS for the three and six-month periods ended June 30, 2020 were lower primarily due to disruption associated with the COVID-19 pandemic, including significant uncollectible tenant revenues. In addition, depreciation expense was higher due to the accelerated amortization of an allowance in connection with the upcoming closing of an anchor store. EPS for the six-month period ended June 30, 2020 included gains totaling approximately $0.28 per diluted common share related to the sale of 50 percent of our interest in CityOn.Xi'an. (2) AFFO for the three and six-month periods ended June 30, 2020 excludes costs related to the Simon Property Group, Inc. transaction and the fluctuation in the fair value of equity securities. AFFO for the six-month period ended June 30, 2020 also excludes restructuring charges, deferred income tax expense incurred related to the sale of CityOn.Xi'an, an adjustment of the promote fee (net of tax) related to Starfield Hanam recorded last year and costs associated with the Taubman Asia President transition. (3) AFFO for the three and six-month periods ended June 30, 2019 excludes restructuring charges, costs incurred related to the Blackstone transactions and costs associated with shareholder activism. AFFO for the six-month period ended June 30, 2019 also excludes the fluctuation in the fair value of equity securities.
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For the quarter ended June 30, 2020, AFFO per diluted share was $0.41. Disruption related to the COVID-19 pandemic, including widespread center closures for most of the quarter, significantly impacted results.

The company recognized uncollectible tenant revenues of $32.6 million at our beneficial interest, or $0.37 per diluted share of AFFO, in the second quarter, primarily due to elevated tenant bankruptcies and nonpayments during the center closures. These closures negatively impacted sales-based rent and lease cancellation income and resulted in the write-off of straight-line receivables. Together these items reduced AFFO by an additional $0.13 per diluted share. The company's second quarter 2019 AFFO also included $0.05 per diluted share of insurance proceeds related to the business interruption claim at The Mall of San Juan (San Juan, Puerto Rico).

In aggregate, the above items account for a $0.55 year-over-year variance in second quarter AFFO.

"As we've reopened centers, rent collections have steadily improved. We're optimistic this trend will continue as tenants focus their operations on the best retail assets in each market," said Robert S. Taubman, chairman, president and chief executive officer of Taubman Centers.

Operating Statistics

Comparable center NOI (comp center NOI) at our beneficial interest, excluding lease cancellation income, was down 25.3 percent in the quarter and down 13.3 percent year-to-date, using constant currency exchange rates. Higher year-over-year uncollectible rental revenues impacted comp center NOI by about 20 percent in the quarter and about 10 percent for the year.

In light of the U.S. center closures, mall tenant sales per square foot, normally a key metric, is not meaningful in the quarter. Trailing 12-month U.S. sales per square foot were $866. In Asia, sales per square foot were up 4.3 percent in the second quarter and were flat year-to-date.

Average rent per square foot for the quarter in U.S. comparable centers was $60.35, down 5.9 percent. Year-to-date average rent per square foot in U.S. comparable centers was $61.14, down 4 percent. Lower sales-based rent, a result of center closures and the overall effects of the pandemic, as well as lower year-over-year rents from Forever 21, collectively impacted average rent per square foot by 4.7 percent in the second quarter and 3.8 percent year-to-date.

Ending occupancy in U.S. comparable centers was 91.5 percent on June 30, 2020, down 0.3 percent compared from June 30, 2019.

Leased space in U.S. comparable centers was 93.8 percent on June 30, 2020, down 1.1 percent from June 30, 2019.

Financing Activity

In late March, the company borrowed $350 million on its $1.1 billion primary revolving line of credit, as a precautionary measure to increase liquidity and financial flexibility due to the uncertainty caused by the COVID-19 pandemic. In late June, the company repaid $100 million, which reduced the outstanding balance on the line of credit to $870 million as of June 30, 2020.

As of June 30, 2020, the company had a consolidated cash balance of $241 million and $119 million available on its lines of credit.

In early August, the company amended its primary $1.1 billion revolving line of credit and unsecured term loan agreements. To ensure appropriate financial flexibility through the pandemic, the amended loan agreement waives compliance with quarterly financial covenants beginning in the third quarter of 2020 through the second quarter of 2021 and replaces them with a minimum liquidity requirement. The company was in full compliance with respect to all covenants as of the second quarter.

Other key features of the amended agreements during the waiver period include:

-- Flexibility to complete planned capital spending, including tenant allowances; -- Continued ability to distribute taxable income in accordance with our partnership agreement and REIT qualification requirements; -- Ability to continue dividend payments on Series J Cumulative Preferred Shares (NYSE: TCO PR J) and Series K Cumulative Preferred Shares (NYSE: TCO PR K);

"We're pleased to have completed this amendment, which provides financial flexibility while our portfolio continues to rebound from the pandemic," said Simon J. Leopold, executive vice president and chief financial officer. "We greatly appreciate the strong support we have received from our banking partners over the years and particularly during this unprecedented time."

In August, the company extended the maturity date on the $150 million loan for The Mall at Green Hills (Nashville, Tenn.) for one year to December 1, 2021. On December 1, 2020, the loan will bear interest at a variable rate equal to the greater of LIBOR plus 2.75% or 3.25%.

The construction facilities at Starfield Hanam (Hanam, South Korea) mature in November 2020. The company expects to complete the refinancing at a lower interest rate in the third quarter of 2020. This financing is expected to provide excess proceeds of approximately $35 million at our beneficial interest and combined with the release of additional reserves will allow us to repatriate $58 million at our beneficial interest in the third quarter.

These activities address all the company's debt maturities occurring in 2020.

Starfield Anseong

On September 25(th) , Starfield Anseong (Gyeonggi Province, South Korea) will celebrate its grand opening, marking Taubman Asia's fourth investment and second joint venture with Shinsegae Group. This new one million square foot shopping mall will be the first modern shopping, dining and entertainment destination to serve Anseong, a high-growth city in Greater Seoul.

Starfield Anseong will feature about 280 tenants, including prominent international brands like Zara, Nike, Uniqlo, H&M, Vans, COS, Guess, Adidas, BMW and many others. The center will be anchored by E-Mart Traders, ElectroMart, Toy Kingdom and Hanssem, as well as several successful entertainment concepts, including Aquafield, Sports Monster and Megabox, an upscale cinema.

The center is opening ahead of schedule and in advance of Chuseok, an important shopping period in South Korea. We expect to be over 90 percent occupied and nearly 100 percent leased at opening.

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August 10, 2020 17:00 ET (21:00 GMT)