Taubman Centers Inc. (TCO, Financial) filed Quarterly Report for the period ended 2010-09-30.
Taubman Centers Inc. has a market cap of $2.68 billion; its shares were traded at around $49.67 with and P/S ratio of 4.1. The dividend yield of Taubman Centers Inc. stocks is 3.3%. Taubman Centers Inc. had an annual average earning growth of 5.4% over the past 10 years. GuruFocus rated Taubman Centers Inc. the business predictability rank of 4.5-star.TCO is in the portfolios of Chris Davis of Davis Selected Advisers, Bruce Kovner of Caxton Associates, Steven Cohen of SAC Capital Advisors, Jeremy Grantham of GMO LLC, Pioneer Investments.
Our mall tenant sales per square foot statistics have shown improvement since July 2009 and we ended fourth quarter 2009 with a 3.8% increase over fourth quarter 2008. Our mall tenants reported a 13.2% increase in sales per square foot in the third quarter of 2010 from the same period in 2009. For the nine month period ended September 30, 2010, sales per square foot increased 12.1% over 2009. For the twelve month period ended September 30, 2010, mall tenant sales were $539 per square foot. With a strong fourth quarter, we will be very close to our 2007 peak productivity of $555 per square foot by year end. Tenant sales and sales per square foot information are operating statistics used in measuring the productivity of the portfolio and are based on reports of sales furnished by mall tenants. Sales are the most important measure of a portfolio s overall strength and the best predictor of the leasing environment ahead. Over the long term, the level of mall tenant sales is the single most important determinant of revenues of the shopping centers because mall tenants provide approximately 90% of these revenues and because mall tenant sales determine the amount of rent, percentage rent, and recoverable expenses (together, total occupancy costs) that mall tenants can afford to pay. However, levels of mall tenant sales can be considerably more volatile in the short run than total occupancy costs, and may be impacted significantly, either positively or negatively, by the success or lack of success of a small number of tenants or even a single tenant.
In the third quarter of 2010, ending occupancy was 88.6% compared to 88.7% in the third quarter of 2009. We continue to expect to end the year at least even with 2009 occupancy. Temporary tenants, defined as those with lease terms less than 12 months, are not included in occupancy or leased space statistics. Temporary tenant leasing continues to be strong and as of September 30, 2010, approximately 4.1% of mall tenant space was occupied by temporary tenants, compared to 3.1% in the third quarter of 2009. Temporary leasing is likely to approach 5% by year end. This demonstrates our ability to quickly mobilize and fill spaces as they become available, often before permanent tenants start construction in the first and second quarter. Temporary leasing is generally done with center-based agents who have been very creative in finding local and regional retailers with innovative uses for our space. This provides us with more income and greater convenience for our shoppers by filling merchandise voids. In addition, the most successful temporary concepts often evolve into permanent tenants. See “Seasonality” for occupancy and leased space statistics.
Leased space was 91.7% at September 30, 2010, up 0.6% from September 30, 2009. The difference between leased space and occupancy is that leased space includes spaces where leases have been signed but the tenants are not yet open. Neither statistic includes temporary tenants. We view occupancy as more relevant to operating results as it represents those spaces upon which we are currently collecting rent from permanent tenants. Finally, the spread between leased space and occupied space, at 3.1% this quarter, is slightly above our history of 2% to 3% in the third quarter.
Average rent per square foot across our portfolio, including both consolidated and unconsolidated properties, was up 0.1% for this quarter. We expect total average rent per square foot for the year to be down about 1.5% due to the annualization of rent relief granted in 2009. This was the result of concerted efforts to keep tenants open in a difficult environment. The spread between opening and closing rents may not be indicative of future periods, as this statistic is not computed on comparable tenant spaces, and can vary significantly from period to period depending on the total amount, location, and average size of tenant space opening and closing in the period. We continue to believe that our opening rents will improve during the remainder of 2010 and expect to end the year up as much as 5% above the 2009 amount of $46.63. While this statistic is very sensitive to the final leasing of the year, the impact on 2010 reported earnings will be nominal.
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Taubman Centers Inc. has a market cap of $2.68 billion; its shares were traded at around $49.67 with and P/S ratio of 4.1. The dividend yield of Taubman Centers Inc. stocks is 3.3%. Taubman Centers Inc. had an annual average earning growth of 5.4% over the past 10 years. GuruFocus rated Taubman Centers Inc. the business predictability rank of 4.5-star.TCO is in the portfolios of Chris Davis of Davis Selected Advisers, Bruce Kovner of Caxton Associates, Steven Cohen of SAC Capital Advisors, Jeremy Grantham of GMO LLC, Pioneer Investments.
Highlight of Business Operations:
We have begun to see positive signs of stabilization in the economy and capital markets although the impacts of the recent recession continue. During the nine months ended September 30, 2010, only 0.7% of tenants sought the protection of the bankruptcy laws, compared to 3.1% of tenants in the comparable period in 2009. We believe this is indicative of the improved health of retailers as well as the proactive way landlords worked with retailers in trouble last year so that they could stay open, effectively helping them restructure outside of bankruptcy. The retail environment has shown improvement and retailers are becoming more optimistic with their expansion plans and capital allocation decisions. However, retailers are still sensitive to occupancy costs and negotiations continue to be challenging.Our mall tenant sales per square foot statistics have shown improvement since July 2009 and we ended fourth quarter 2009 with a 3.8% increase over fourth quarter 2008. Our mall tenants reported a 13.2% increase in sales per square foot in the third quarter of 2010 from the same period in 2009. For the nine month period ended September 30, 2010, sales per square foot increased 12.1% over 2009. For the twelve month period ended September 30, 2010, mall tenant sales were $539 per square foot. With a strong fourth quarter, we will be very close to our 2007 peak productivity of $555 per square foot by year end. Tenant sales and sales per square foot information are operating statistics used in measuring the productivity of the portfolio and are based on reports of sales furnished by mall tenants. Sales are the most important measure of a portfolio s overall strength and the best predictor of the leasing environment ahead. Over the long term, the level of mall tenant sales is the single most important determinant of revenues of the shopping centers because mall tenants provide approximately 90% of these revenues and because mall tenant sales determine the amount of rent, percentage rent, and recoverable expenses (together, total occupancy costs) that mall tenants can afford to pay. However, levels of mall tenant sales can be considerably more volatile in the short run than total occupancy costs, and may be impacted significantly, either positively or negatively, by the success or lack of success of a small number of tenants or even a single tenant.
In the third quarter of 2010, ending occupancy was 88.6% compared to 88.7% in the third quarter of 2009. We continue to expect to end the year at least even with 2009 occupancy. Temporary tenants, defined as those with lease terms less than 12 months, are not included in occupancy or leased space statistics. Temporary tenant leasing continues to be strong and as of September 30, 2010, approximately 4.1% of mall tenant space was occupied by temporary tenants, compared to 3.1% in the third quarter of 2009. Temporary leasing is likely to approach 5% by year end. This demonstrates our ability to quickly mobilize and fill spaces as they become available, often before permanent tenants start construction in the first and second quarter. Temporary leasing is generally done with center-based agents who have been very creative in finding local and regional retailers with innovative uses for our space. This provides us with more income and greater convenience for our shoppers by filling merchandise voids. In addition, the most successful temporary concepts often evolve into permanent tenants. See “Seasonality” for occupancy and leased space statistics.
Leased space was 91.7% at September 30, 2010, up 0.6% from September 30, 2009. The difference between leased space and occupancy is that leased space includes spaces where leases have been signed but the tenants are not yet open. Neither statistic includes temporary tenants. We view occupancy as more relevant to operating results as it represents those spaces upon which we are currently collecting rent from permanent tenants. Finally, the spread between leased space and occupied space, at 3.1% this quarter, is slightly above our history of 2% to 3% in the third quarter.
Average rent per square foot across our portfolio, including both consolidated and unconsolidated properties, was up 0.1% for this quarter. We expect total average rent per square foot for the year to be down about 1.5% due to the annualization of rent relief granted in 2009. This was the result of concerted efforts to keep tenants open in a difficult environment. The spread between opening and closing rents may not be indicative of future periods, as this statistic is not computed on comparable tenant spaces, and can vary significantly from period to period depending on the total amount, location, and average size of tenant space opening and closing in the period. We continue to believe that our opening rents will improve during the remainder of 2010 and expect to end the year up as much as 5% above the 2009 amount of $46.63. While this statistic is very sensitive to the final leasing of the year, the impact on 2010 reported earnings will be nominal.
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