Taubman Centers, Inc. Investor Presentation
April 2017 Taubman Centers, Inc. (NYSE: TCO) A real estate company founded in 1950, with 67 years in operation First publicly traded UPREIT – IPO 1992 Total market capitalization over $10 billion Joined the S&P 400 MidCap Index in January 2011
We own, operate and develop the best retail assets Our portfolio of malls is the most productive in the U.S. publicly held mall sector
Currently own and/or operate 27 retail assets
2 Fair Oaks, Va. The Mall at Millenia, Fla. The Mall at Short Hills, N.J. Beverly Center, Calif.
Beverly Center, Calif. Cherry Creek Shopping Center, Colo. City Creek Center, Utah Dolphin Mall, Fla. We Own, Operate and Develop the Best Retail Assets
The Gardens on El Paseo, Calif. Great Lakes Crossing Outlets, Mich. Starfield Hanam, South Korea The Mall of San Juan, Puerto Rico
International Plaza, Fla. The Mall of San Juan, Puerto Rico Waterside Shops, Fla. Westfarms, Conn. We Have the Industry's Premier Portfolio
With Five Key Success Factors that Drive Productivity
We Strategically Enhance Our Portfolio through: U.S. Development, Taubman Asia, Redevelopment, Acquisitions & Dispositions
While Emphasizing a Strong Balance Sheet
To Create Significant Shareholder Value
4 We Operate the Best Collection of Retail Assets Industry’s Premier Portfolio
South 24 China Korea 10 17 4 18 21 3 16 19 5 8 Macau 2 Asia 6 25 20 Properties 1 9 11
12 27
Owned Properties 13 14 1 Beverly Center 10 Great Lakes Crossing Outlets 18 Starfield Hanam Los Angeles, Calif. Auburn Hills, Mich. Hanam, South Korea 22 7 2 Cherry Creek Shopping Center 11 The Mall at Green Hills 19 Sunvalley Shopping Center 23 Denver, Colo. Nashville, Tenn. Concord, Calif. 26 3 CityOn.Xi’an 12 International Market Place 20 Taubman Prestige 15 Xi’an, China Waikiki, Honolulu, Hawaii Outlets Chesterfield Managed/Leased Centers – Chesterfield, Mo. 4 CityOn.Zhengzhou 13 International Plaza No Ownership Zhengzhou, China Tampa, Fla. 21 Twelve Oaks Mall Novi, Mich. 5 City Creek Center 14 The Mall at Millenia 25 The Boulevard at Studio City Salt Lake City, Utah Orlando, Fla. 22 The Mall at University Macau, China 6 Country Club Plaza 15 The Mall of San Juan Town Center Sarasota, Fla. 26 Miami Worldcenter Kansas City, Mo. San Juan, Puerto Rico Miami, Fla. 7 Dolphin Mall 16 The Mall at Short Hills 23 Waterside Shops Naples, Fla. 27 The Shops at Belmond Miami, Fla. Short Hills, N.J. Charleston Place 8 Fair Oaks 17 Stamford Town Center 24 Westfarms Charleston, S.C. Fairfax, Va. Stamford, Conn. West Hartford, Conn. 9 The Gardens on El Paseo Palm Desert, Calif. 5 Industry’s Premier Portfolio
The Best Assets Have Significantly Greater Value US Mall Distribution by Quality 156 133 108 94 104 100 92 89 67 72 37
A++ A+ A A- B+ B B- C+ C C- D Taubman’s portfolio of 19 assets(1) average between A+ and A quality. “A” quality malls represent less than 30% of all U.S. malls, but 75% of all value
2% 1%
22% 22% 19% 12% 9% 7% 3% 1% <1%
Percent of Industry Value
B quality malls, which represent 37% of all malls, account for 19% of value A++ quality malls, which A B CD represent 3.5% of all malls, C quality malls, which represent 28% of account for 22% of all value all malls, account for 4% of value D quality malls, which represent 7% of malls, account for 0.2% of value Source: Green Street Advisors. (2016) Upscale Shopping Centers Nudge Out Down-Market Malls. The Wall Street Journal Grades are based on sales per square foot. Mall value is based on sales productivity, size, quality and other factors. Note: (1) Excludes The Mall of San Juan, CityOn.Xi’an, International Market Place, Starfield Hanam and CityOn.Zhengzhou, as the Green Street study included only stabilized assets in their analysis. 6 Industry’s Premier Portfolio
The Best Assets Are the Most Productive
Highest Portfolio Sales Highest Average Rent Per Square Foot(1) Per Square Foot(2) (December 31, 2016) (December 31, 2016)
TCO $792 TCO $61.07
MAC $630 PEI $56.99 SPG $614
GGP $581 MAC $54.87
PEI $464 SPG $51.59
SKT $387 CBL $32.82 CBL $376
WPG $368 WPG $27.69
$0 $200 $400 $600 $800 $1,000 $0 $10 $20 $30 $40 $50 $60 $70
Source: Company Filings and Supplementals, Company Quarterly Earnings Conference Calls, Taubman Analysis Note: (1) Typically excludes all non-comparable centers, anchors, temporary tenants and 10,000+ sf tenants (2) GGP and Tanger are excluded as they do not report Avg. Rent Per Square Foot on a comparable basis Ticker Identification: TCO – Taubman Centers, Inc., MAC – The Macerich Company, SPG – Simon Property Group, Inc., GGP – GGP Inc., PEI – Pennsylvania Real Estate Investment Trust, SKT – Tanger Factory Outlet Centers, Inc., CBL – CBL & Associates Properties, Inc., WPG – WP Glimcher Inc.
7 We Have the Industry's Premier Portfolio
With Five Key Success Factors that Drive Productivity
We Strategically Enhance Our Portfolio through: U.S. Development, Taubman Asia, Redevelopment, Acquisitions & Dispositions
While Emphasizing a Strong Balance Sheet
To Create Significant Shareholder Value
8 Productivity
Five Key Success Factors
The best retail assets have five key success factors that drive productivity, ultimately resulting in NOI and FFO growth.
Omnichannel Complementary Premier In-Line Best Demographics Tenants Best Locations High Quality Anchors & Department Stores
Best Retail Assets
Sales Productivity & Rent Growth
NOI FFO Growth Growth
9 Productivity
We Have the Best Locations
Highest Concentration of Asset Value in Top U.S. 50 Markets 100%
90%
80%
70%
60%
50% 94% 40% 79% 77%
30% 59% 56% 49% 20%
10% 26%
0% TCO MAC SPG GGP PEI WPG CBL
Source: Green Street Advisors. U.S. Mall Outlook 2017, Mall REIT Asset Value Concentration by Market. Leading retailers and emerging concepts choose to showcase their brand in the best markets and highest quality assets
10 Productivity
With Industry-Leading Demographics
U.S. Mall REIT Demographics – 15 Mile Radius
Median Household Income Average Household Income TCO $62,408 TCO 86,901 SPG $61,023 SPG 82,738 MAC $59,706 MAC 80,605 PEI $57,555 GGP 77,050 GGP $57,149 PEI 76,060 WPG $52,332 WPG 69,963 CBL $51,560 CBL 68,485
$40,000 $60,000 $80,000 $0 $20,000 $40,000 $60,000 $80,000 $100,000
Population % of Household Earnings > $100K
MAC 1,989,191 TCO 28.2% TCO 1,650,897 SPG 27.1% SPG 1,432,391 MAC 25.9% GGP 1,173,290 GGP 24.2% PEI 1,002,676 PEI 24.0% WPG 802,629 WPG 20.4% CBL 470,403 CBL 19.9% 0 500,000 1,000,000 1,500,000 2,000,000 15.0% 20.0% 25.0% 30.0% Source: Evercore ISI Research Reports dated March 16, 2016. © Copyright 2016. Evercore Group L.L.C. All rights reserved. 11 Productivity Complementing Our Retailer’s Omnichannel Strategy
Successful retailers understand that a combination of both physical and digital channels best meets their customer needs Physical locations are an Physical important distribution channel that reduce order Locations Retailer’s fulfillment and customer Omnichannel acquisition costs, while Strategy improving website traffic eCommerce and brand recognition Taubman’s “A” quality portfolio complements retailer's omnichannel strategy by positioning their brand among high- end, productive retailers in the best markets
12 Productivity
Attracting the Premier Brands
Brands that have chosen a Taubman “Online” retailers that Center as their first U.S. Mall location are now tenants in Taubman Centers
13 Productivity Superior Collection of Brands - Attracting both Customers & Retailers to our Centers
Beverly Center
Cherry Creek Shopping Center
City Creek Center
Country Club Plaza
Dolphin Mall
Fair Oaks
The Gardens on El Paseo
Great Lakes Crossing Outlets
The Mall at Green Hills
International Market Place
International Plaza
The Mall at Millenia
The Mall of San Juan
The Mall at Short Hills
Stamford Town Center
Sunvalley
Taubman Prestige Outlets Chesterfield
Twelve Oaks Mall
The Mall at University Town Center
Waterside Shops
Westfarms Note: Excludes Taubman Asia 14 Productivity Evolution of Taubman’s Retailer Mix
◼ Over the last 10 years customer preferences and shopping behaviors have changed ◼ Taubman’s high-productivity portfolio has also evolved, with certain categories occupying a greater percentage of leasable area, resulting in a more productive portfolio
Change in GLA by Category 2016 vs. 2006 Unisex Apparel, 5.4%
Restaurants (Table Served), 2.4%
Women's Specialty, 1.3%
Toys, Hobbies & Pets, 1.1%
Junior Apparel, 0.6%
Beauty & Health, 0.3%
Service Stores, 0.3% Taubman Portfolio Sales Productivity Food Specialty, 0.2% (adjusted for inflation) Home Furnishings, -0.7% 900 $792 Electronics, -0.7% 800
Theaters, -0.9% 700 $654 Family/Childrens Shoes, -1.5% 600 Children's Apparel, -1.5% 500 Women's Apparel, -1.7% 2006 2016 Gifts, Flowers, Luggage & Stationary, -2.2%
-3% -2% -1% 0% 1% 2% 3% 4% 5% 6% 15 Productivity Evolution of Taubman’s Retailer Mix
◼ New high-productivity retailers have naturally taken greater space throughout our portfolio, while formerly prominent tenants have decreased their footprint over the last 10 years
◼ The below table highlights significant changes within our “Top 25 Tenants” over the last 10 years ◼ The evolution of Taubman’s tenant mix has contributed to our sales growth over the last decade 2016 Top 25 Tenant GLA (Sqft.) 2016 vs. 2006 2006 Top 25 Tenant GLA (Sqft.) 2016 vs. 2006
+301,000 -151,000
+79,000 -111,000
+75,000 -103,000
+69,000 -82,000
+26,000 -59,000
Total +550,000 Total -506,000
Tenant Sales per Square Foot (2006 through 2016) 4.1% 800 CAGR
700
600 Foot ($) Foot
500
Tenant per Sales Square 400 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 16 Productivity
Unparalleled Anchor Quality
Greatest Exposure to Superior-Drawing Fashion Anchors TCO CBL GGP MAC PEI SPG WPG Total 15 41 101 41 22 111 34 365 9 2 25 13 3 28 4 84 4 0 10 2 0 10 0 26 5 3 4 1 0 6 1 20 3 0 4 2 1 11 0 21 3 0 9 3 1 9 0 25 0 0 1 0 0 2 0 3 Better Fashion Anchors 39 46 154 62 27 177 39 544 Total Traditional Dept. Stores 49 259 386 138 83 387 176 1478 79.6% 17.8% 39.9% 44.9% 32.5% 45.7% 22.2% 36.8%
Anchors are a critical factor in assessing mall quality Strong anchors attract both retailers and customers Taubman’s portfolio is well-positioned; containing the largest concentration of high quality anchors
Source: BofA Merrill Lynch Global Research, “Assessing the Mall Industry VI”, May 19, 2016. Note: Analysis excludes SKT, as they operate premium outlet centers. Analysis includes Macy’s Men’s Store and Macy’s Furniture Gallery. 17 Productivity
The Best Assets Deliver Superior Performance
(1) Adjusted AdjustedFunds from Funds Operations from Core NOI Growth Per Diluted Share(1) (1) 8% Operations Per Diluted Share $4.00 30
$3.65 $3.67 December 31) of ownedcenters (as Number of 7% $3.58 $3.42(4) $3.50 $3.34 Taubman 25 6% Peer Average $3.00 5% 20 $2.50 Taubman 5-Yr. Avg. = 4.1%(2) 4% $2.00 15 Peer 5-Yr. Avg. = 3.0%(3) 3% $1.50 10 2% $1.00 5 1% $0.50
0% $0.00 0 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 2017 NOI Growth Guidance(2): About 3.5% 2017 AFFO Guidance: $3.67 - $3.82 Number of owned centers (as of December 31)
Note: (1) See appendix regarding reconciliations to the most comparable GAAP measures. (2) Excludes lease cancellation income and non-comparable centers. (3) Simple average calculated using NOI’s of Taubman Peers (SPG, PEI, MAC, WPG, GGP and CBL). (4) Excludes the portfolio of seven centers sold to Starwood Capital Group in October 2014, which contributed $0.48 to adjusted funds from operations in 2014.
Source: Company Filings and Supplementals, Taubman SEC Filings, Taubman analysis 18 We Have the Industry's Premier Portfolio
With Five Key Success Factors that Drive Productivity
We Strategically Enhance Our Portfolio through: U.S. Development, Taubman Asia, Redevelopment, Acquisitions & Dispositions
While Emphasizing a Strong Balance Sheet
To Create Significant Shareholder Value
19 Growth – Development
The Development Decision
The Five “Gates”
Investment returns Identify Anchor/Tenant Sufficient specialty Entitle site greater than Allocate market/site interest in site store opportunity hurdle rate Capital
Development Project Example Hurdle Rates: Levered IRRs $400M Cost $400M Cost $400M Cost Taubman weighted ≈ 5.5% average cost of capital(1) 6.0% Yield 7.0% Yield 8.0% Yield
(2) Hurdle Rates $24M Annual NOI $28M Annual NOI $32M Annual NOI Acquisitions ≈ 8-10% 5% Cap Rate 5% Cap Rate 5% Cap Rate U.S. ≈ 10% development projects South Korea $480M Asset Value $560M Asset Value $640M Asset Value ≈ 12% development projects China $80M $160M Value $240M Value ≈ 15% development projects Value Creation Creation Creation
Notes: (1) Assumes a 65/35 equity/debt balance sheet mix (2) Hurdle Rate is based on a 10-Year Levered After-tax IRR 20 Growth – Development
Development – Value Creation
Taubman Developments (1992-2016) Our U.S. developments have created 9,000 Total Value ≈ $8.7B ◼ immense value(1) 8,000 . Nearly $5 billion of net value has been created 7,000 on a total capital investment of about $4 billion 6,000 . The levered and unlevered IRR’s on all 5,000 Unrealized development spending since 1992 would be 18% and 12%, respectively 4,000 Total Investment ≈ $3.8B Solid development returns on the eight Through 2016 Through 3,000 ◼ assets that we have sold since 1992 Investment in Investment $MM 2,000 . At the sale price, the leveraged IRR was 14% 1,000 Realized . On an unlevered basis, the IRR was 10% 0 1992 - 2016 Value ◼ The eight assets developed since 1992 that remain in our portfolio have delivered robust Investment Project Status Year Open in $MM returns Arizona Mills SOLD 1997 175 . The 50% leveraged IRR is approximately 18%, Tuttle Crossing SOLD 1997 138 assuming a conservative terminal cap rate Great Lakes Crossing 1998 252 of 4.5% MacArthur Center SOLD 1999 164 . On an unlevered basis, the IRR would be Dolphin Mall 2001 382 approximately 14% The Shops at Willow Bend SOLD 2001 276 International Plaza 2001 372 1) Development Analysis Assumptions: The Mall at Wellington Green SOLD 2001 215 i. Excludes non-stabilized assets delivered in 2016/2017. The Mall at Millenia 2002 200 ii. Two non-stabilized assets valued at cost (Taubman Prestige Outlets of Chesterfield and Mall of San Juan) Stony Point Fashion Park SOLD 2003 116 iii. Assumes 50% leverage, a conservative terminal cap rate of 4.5% Northlake Mall SOLD 2005 176 for the six development assets that remain in our portfolio, The Mall at Partridge Creek SOLD 2007 148 iv. Analysis includes all pre-development and impairment charges over Oyster Bay and Sarasota(2) 126 the period. v. Terminal values are based on sale prices of the centers sold to City Creek Center 2012 77 Starwood and 2017 projected NOI for remaining centers. Taubman Prestige Outlets Chesterfield 2013 129 2) Represents the impairment charges recognized in 2008 on Oyster Bay, The Mall at University Town Center 2014 317 which was later sold in 2014 and Sarasota was later developed and The Mall of San Juan 2015 551 opened in 2014, as The Mall at University Town Center. 3) Represents an impairment charge recognized in 2015 related to the Miami(3) 12 Miami enclosed mall project, which was slated to be part of a mixed-use, Total Investment 3,826 urban development. Source: Taubman analysis, Company Filings 21 Growth – Development Development – Cap Rate Compression is Only a Portion of Value Creation
Our existing portfolio has generated double digit returns regardless of fluctuations in prevailing market cap rates over time
Implied Unlevered IRR: 13.1% 13.9% 14.9% 16.0% 17.5%
$7.3B Unrealized
$6.0B
$5.2B $4.2B Realized $4.6B $4.2B $2.9B $2.1B $1.5B $1.1B $3.1B
Legend Implied Value Value Creation: 2001 – 2015 Developments(1)
Cumulative 8% Cap Rate 7% Cap Rate 6% Cap Rate 5% Cap Rate 4% Cap Rate Development Costs on Existing on Existing on Existing on Existing on Existing Portfolio Portfolio Portfolio Portfolio Portfolio Notes: (1) Illustrative values above based on 2001-2015 development portfolio: Dolphin Mall, The Shops at Willow Bend, International Plaza, The Mall at Wellington Green, The Mall at Millennia, Stony Point Fashion Park, Northlake Mall, The Mall at Partridge Creek, City Creek Center, Taubman Prestige Outlets Chesterfield, The Mall at University Town Center and The Mall of San Juan, as well as impairment charges related to Oyster Bay/Sarasota and Miami. (2) Value created includes recognized proceeds from the five assets sold to Starwood in 2014 that were developed between 2001 through 2015. Source: Taubman analysis, Green Street Advisors 22 Growth – U.S. Development International Market Place Waikiki, Honolulu, Hawaii
Taubman has revitalized the iconic International Market Place, located on the 50-yard line of Kalakaua Avenue in the heart of the Waikiki Tourist District The open-air design features a Grand Lanai, serving unique chef-driven dining options, as well as the only full-line Saks Fifth Avenue in Hawaii
23 Growth – U.S. Development International Market Place – Overview Waikiki, Honolulu, Hawaii
th ◼ Kalakaua Avenue commands the 5 highest Opened: August 25, 2016 rents in North America after Fifth Avenue in New York, Michigan Avenue in Chicago, Rodeo Drive Ownership: 93.5% in Los Angeles and Union Square in San Francisco Size / Mall GLA (sq. ft.): 344,000 / 264,000 ◼ Over 30,000 hotel rooms, 80% of all hotel rooms on the island, are within walking distance (1 Anchor: Saks Fifth Avenue mile)
◼ 55,000 people – on average – pass by the property every day
Source: Colliers, Hawaii Visitors & Convention Bureau
24 Growth – U.S. Development International Market Place – Tourism Waikiki, Honolulu, Hawaii
Tourism spending and local affluence converge to create an extraordinary retail opportunity ◼In 2016, $7.3 billion was spent by over 5.4 million tourists in Oahu ◼Over 30,000 hotel rooms are within walking distance of International Market Place ◼The average tourist length of stay on the island of Oahu is 7 days watch Waikiki (our submarket) accounts for International ◼ Market Place over 80% of the lodging video ◼The majority of Oahu’s high income households are within 10 miles ◼Household income growth for incomes greater than $100,000 and $200,000 is the strongest of the top 7 MSAs in the U.S. In Oahu, 120,000 households earn ◼ The island of Oahu welcomes greater than $100,000 annually non-stop flights from the U.S. mainland, Australia and Asia. ◼Oahu has over 1 million residents More than 5 million people visit every year.
25 CityOn.Xi’an Terracotta Warriors CityOn.Xi’an CityOn.Zhengzhou Grand Opening near Xi’an
Taubman Asia – Extending Our Expertise to Strong Growth Markets in China and South Korea
Shaolin Temple Shinsegae, our partner, Seoul - 2nd largest metro Starfield Hanam near Zhengzhou Korea’s premier retailer in the world 26 Growth – Taubman Asia
Taubman Asia - Strategy
Strategy – “Own, Develop and Manage Why Asia? Centers of International Quality”
Identify our ◼ Second-tier cities in China; South Korea 1 Additional Growth preferred markets ◼ Exposure to rapidly growing GDP ✔ Now operating with a tested, comprehensive ◼ ◼ Augments our U.S. Build a team Taubman Asia team with employees and skills in development all disciplines 2 Utilize Our Expertise ✔ ◼ Wangfujing, one of the oldest and largest ◼ Leasing / retailer Select strategic department store chains in China relationships partners ◼ Shinsegae, one of South Korea’s largest retailers operating multiple retail platforms ◼ Design / development expertise ✔ Maintained targeted yields and costs in China Operational / marketing Develop and ◼ ◼ execute the right ◼ Lowered costs and raised yields in South Korea skills ◼ Exceptional leasing execution with CityOn.Xian shopping center 95% leased at opening and both Starfield Hanam 3 Generational Opportunity concept and CityOn.Zhengzhou 100% leased at opening ◼ Demand for high-quality ✔ retail is early to mid-cycle Grand Opening of Significant deal flow ◼ CityOn.Xi’an opened April 2016 ◼ our first Taubman Starfield Hanam opened September 2016 Diversifies longer-term ◼ ◼ Asia developments ◼ CityOn.Zhengzhou opened March 2017 growth investment opportunities ✔ Use established platform to ◼ Leverage our successful developments to yield gradually expand lucrative future opportunities our business 27 Growth – Taubman Asia CityOn.Xi’an Xi’an, China
Nearly one million square feet of world-class retail space filled with the best international and Chinese brands; part of nearly 5 million square foot mixed-use project including two residential towers, two office buildings, and two hotels Located in the heart of Xi’an’s new central business district and administrative center, this asset will serve one of the fastest growing, most populated, educated, culturally and politically important cities in China
28 Growth – Taubman Asia CityOn.Xi’an – Overview Xi’an, China
Retail component of Saigao City Plaza in Xi’an’s New Central Business District
Opened: April 28, 2016 Office Tower Ownership: 50% 3-Star Hotel & 5-Star Office Office Size / Mall GLA (sq. ft.): 995,000 / 693,000 Hotel Residential #1
Partner / Anchor: Wangfujing Group Co., Ltd. Residential #2 Leasing: Fully occupied
Metro Lines 2 & 4
29 Growth – Taubman Asia CityOn.Xi’an – Urban Densification & Tourism Xi’an, China
Urban densification and a strategic location drive traffic and spending to our Terracotta center Warriors ◼ Xi’an is approaching 9 million inhabitants and expecting to exceed 10 million by 2020 ◼ 1.5 million residents live within 4 miles of our center (approximately the same as the population of Phoenix, AZ) ◼ The center is connected to the city’s primary subway line Xi’an’s economy continues to grow ◼ watch rapidly CityOn.Xi’an . Retail spending 5-year CAGR is above video 13% . GDP 5-year CAGR is above 9% ◼ Disposable income is the highest in Western China Extraordinary tourism opportunity ◼ The world-famous Terracotta Warriors attracted 136 million visitors in 2015 ◼ CityOn.Xi’an is strategically located between the airport (25 minutes west) and the Terracotta site (30 minutes east) 30 Growth – Taubman Asia CityOn.Zhengzhou Zhengzhou, China
◼ Opened in March 2017, CityOn.Zhengzhou now offers nearly 200 of today’s most in- demand retailers, restaurants and entertainment venues to the 9.5 million residents of Zhengzhou
◼ CityOn.Zhengzhou is Taubman’s second one million square foot shopping mall in China and it sets a new standard for retail in the heart of one of the fastest- growing markets in China
31 Growth – Taubman Asia CityOn.Zhengzhou – Overview Zhengzhou, China
Opened: March 16, 2017 Our site is located in the 49% Ownership: Zhengdong New District, directly in Size / Mall GLA (sq. ft.): about 1,000,000 the path of growth, near the Central Partner / Anchor: Wangfujing Group Co., Ltd. Business District, government Leasing: 100% leased and 93% occupied at opening center and traditional city center
Dragon Lake Phase II of Zhengdong New Area Dongfeng Rd. (under development)
Nongye Rd. Expressway (opened 2016)
Traditional City Center Line 5 Metro Station Zhengdong CBD Current path of growth (under construction) Henan Zhengzhou International Henan Provincial Art Center Convention Center Government
Jinshui Rd. Expressway (under construction 2016) 32 Growth – Taubman Asia CityOn.Zhengzhou – Strong Demographics Zhengzhou, China
Best-in-class retail destination at the crossroads of a growing population and an expanding economy
◼ Strong GDP growth – 10% Average Growth Rate over last 5 years ◼ Strong Retail Sales growth – 13% Average Growth Rate over last 5 years
Zhengzhou GDP & Growth Rate Zhengzhou Retail Sales & Growth Rate (2012-2016, in US$ Billions, %) (2012-2016, in US$ Billions, %)
$120 $112 $51 $50 $102 $46 $100 $93 $87 $41 $40 $78 $36 $80 Zhen $32 $30 $60
$20 $40
$20 $10
$0 $0 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016
Source: Zhengzhou GDP Yearbook, prepared by local government. Amounts are based in RMB and converted to USD at an exchange rate of 0.14 RMB to 1 USD (3/10/17).
33 Growth – Taubman Asia Starfield Hanam Hanam, Greater Seoul, South Korea
Taubman, along with Shinsegae – one of South Korea's largest retailers – have developed the first western- style mall in Korea Strategically located in the rapidly developing suburb and vacation area of East Seoul
34 Growth – Taubman Asia Starfield Hanam – Overview Hanam, Greater Seoul, South Korea
Opened: September 9, 2016 watch 34.3% Our site is located in Ownership: Starfield Hanam the heart of the Size / Mall GLA (sq. ft.): 1,710,000 / 1,225,000 video rapidly-growing Partner / Anchor: Shinsegae Group community and Major Tenants: Shinsegae Group (485,000 sq. ft.) Traders (185,000 sq. ft.), popular resort area of Aquafield (140,000 sq. ft.), Megabox Cinema (63,000 sq. ft.), Sports East Seoul Monster (55,000 sq. ft.) Leasing: Fully occupied with nearly 300 retailers
35 Growth – Taubman Asia Starfield Hanam – Retail Opportunity Hanam, Greater Seoul, South Korea
Creating Korea’s first super regional Lack of Retail Supply mall in a growing market that is dramatically under-retailed Shopping Center and ◼ Seocho-gu, the nation’s highest income area, is within a 45-minute Department Store Disposable drive GLA / Capita Income / GLA SF/People $/SF ◼ Our primary trade area includes Gangnam-gu and Songpa-gu, which 25 $6,000 23.5 have the 2nd and 3rd highest $5,455 levels in the $5,000 income/expenditure 20 nation, both accessible within a 30- minute drive $4,000 15 ◼ Greater Seoul has half of Korea’s population at 25 million, and is the $3,000 2nd largest metro in the world; 10 Seoul City has 10 million, the $2,000 densest among developed $1,457 5 economies, with 45,000 people per $1,000 square mile 2.2 0 $0 ◼ Greater Seoul has half of Korea’s GDP at $774 billion, and is the 4th Korea US Korea US wealthiest metro in the world; Seoul City is approximately 20% Korea’s GDP at $340 billion Retail Sales Seoul Area (sf) Sales psf ◼ Seoul is home to all of the 13 ($ Million) Korean-based Fortune 500 Class A Retail Companies, including Samsung, SK 15,019,515 $ 16,441 $ 1,095 Holdings, Woori Bank, LG, Hyundai, Properties and Posco. Source: ICSC (2015) Thomson Consulting (2013)
36 Growth – Redevelopment
Redevelopments – Recently Completed
Reinvesting in assets can be one of the most productive uses of capital, particularly in our high-quality portfolio In an environment of consolidation with dominant “A” malls becoming even more valuable, solidifying our position in a center’s market is paramount
Additional GLA 91,000 sq ft Additional GLA 36,000 sq ft Additional GLA 32,000 sq ft New wing featuring Restoration Added Restoration Hardware’s Added five restaurants, a state- Hardware’s new design gallery first flagship next generation of-the-art parking deck and and greater restaurant space design gallery in Florida valet entrance
37 Growth – Redevelopment
Redevelopments – Current
Beverly Center – Los Angeles, CA ◼ Transformative opportunity for comprehensive renovation, touching every aspect, of a key strategic asset in the Taubman portfolio ◼ Complete re-envisioning of the interiors, exteriors and parking deck with a design by world renowned architect, Massimiliano Fuksas ◼ Featuring a significant expansion of food offerings, including street-level restaurants and a multi-concept gourmet food hall on level 8 ◼ Resulting in LA’s most exciting enclosed, urban shopping and dining experience and following the renovation, we expect it will become one of the top ten assets in the country (1) ◼ Projected Returns : . 3.0% to 4.0% at stabilization in 2020 open . 10-year Unlevered IRR in excess of 10.0%, Beverly Center terminal year 2025 presentation ◼ Targeted Completion Date: Holiday 2018 (2) ◼ Cost: $500 million The Mall at Green Hills – Nashville, TN ◼ Adding 170,000 sq ft of mall tenant area, including a new Dillard’s store, to be completed in 2019 ◼ Projected Return at Stabilization: 6.5% to 7.5% ◼ Cost: $200 million
Note: (1) Projected returns are calculated using the cash flow differential between two scenarios; a full renovation (described above) and a non-renovation scenario; detail provided in Appendix on slide 56. (2) Approximately 20 percent of the cost relates to deferred and prospective customary capital upgrades and improvements. 38 Growth – Acquisitions
Selective Acquisition – Country Club Plaza
ACQUISITION STRATEGY
Highest Quality ✔ Dominant Asset Marquee retail and office property in Kansas City, MO ✔ Below-market rents present growth opportunity Great Market ✔ Significant expansion and redevelopment opportunity Strategic partnership with The Macerich Company ✔ Growth Opportunity Leveraging tenant relationships to increase sales to the Strategic to Existing Portfolio top one-third of our portfolio ✔ • Adds unique retailers to our portfolio • Strategic Partnership Region’s premier tenant line-up with over 25 restaurants
39 Dispositions
Strategic Dispositions
DISPOSITION STRATEGY Seven Asset Portfolio Sale ◼ Our strategy is to recycle capital for growth, minimizing our need to raise equity ◼ Our growth has been self-funded . Following the Starwood transaction (right), we owned 18 centers, 1 less than when we went public in 1992 . On a net basis, we had issued only $50(1) million of common equity since the IPO . Nonetheless, our market capitalization has increased about five times since the IPO, about 25 years ago (1) Excludes equity compensation issuances Price: $1.403 billion Cap Rate: 6.6% Date: Oct. 16, 2014 History of Recycling Capital for Growth (Market Capitalization since 1992 IPO) Result: 1. Improved portfolio metrics, 12,000 demographics and operating statistics 10,000 Total Market 8,000 Capitalization 2. Balance sheet strengthened 6,000 3. Liquidity to fund development and 4,000 Equity Market redevelopment pipelines, underscoring Dollars in $MM 2,000 Capitalization our strategy 0 1992 1997 2002 2007 2012 2016
40 We Have the Industry's Premier Portfolio
With Five Key Success Factors that Drive Productivity
We Strategically Enhance Our Portfolio through: U.S. Development, Taubman Asia, Redevelopment, Acquisitions & Dispositions
While Emphasizing a Strong Balance Sheet
To Create Significant Shareholder Value
41 Conservative Balance Sheet
Taubman’s Balance Sheet Philosophy
$ $ $ Use construction financing where available and place Closely manage liquidity to nonrecourse permanent ensure significant availability Recycle capital through non- financing on new assets on our line of credit for use if core asset sales and excess upon stabilization opportunities arise refinancing proceeds
$ $ $ $ $ Opportunistically access public and private capital Carefully manage debt Minimize exposure to markets when pricing is maturities interest rate fluctuations advantageous
42 Conservative Balance Sheet
Strong Balance Sheet with Flexibility
Balance Sheet Composition (as of 12/31/2016) Recent Transactions Amended and Restated $1.1B Line of Credit, 8% with additional $300M Term Loan in February Common Stock and Operating 2017 7% Partnership Equity ($6.3B) ◼ Provides greater financial flexibility at favorable Preferred Stock ($0.4B) terms
◼ The Company’s $1.1B Line of Credit has been Fixed Rate Debt ($2.7B) extended to February 2021 25% 57% Floating Rate Debt Includes two six-month extension options Swapped to Fixed Rate ◼ ($0.7B) ◼ Variable interest rate based on overall leverage ratio (LIBOR + 1.45% at closing) Floating Rate Debt ($0.9B) 3% ◼ New $300M unsecured term loan is interest only and has a 5-year term
◼ Variable interest rate based on overall Coverage Ratios leverage ratio (LIBOR + 1.6% at closing) (as of 12/31/2016) Proceeds were used to pay off lines of credit 5.0 ◼ Interest Only ◼ Following the transaction we had $21M of excess 4.0 proceeds and $1.165B of availability on lines of credit
3.0 Refinancing impact over the last two years 2.0 Fixed Charges ◼ Lowered our weighed average interest rate by over 1.0 50 bps to 3.43% ◼ Extended our weighted average maturity from five to 0.0 seven years 2011 2012 2013 2014 2015 2016 ◼ Extended the weighted average maturity of fixed rate debt from five to nine years Source: Company Quarterly Supplementals, Taubman analysis
43 Conservative Balance Sheet
Low Cost and Long-Term Financing
We have extremely attractive, stable, high-quality assets that allow for financing at the best rates with extended maturities Most efficient debt pricing Cost of capital advantage
Lowest Cost and Longest Term Debt in the U.S. Mall REIT Sector 5.0% (as of 12/31/2016) CBL 4.5% PEI
4.0% GGP WPG SPG 3.5% MAC TCO Interest Rate 3.43% Weighted Average 3.0% 4.0 4.5 5.0 5.5 6.0 6.5 7.0 Weighted Average Debt Maturity Debt Maturities by Year (as of 12/31/2016, in millions at our share)1 $3,000 $2,438 $2,500
$2,000
$1,500 $932 $1,000 $578 Dollars $MM in $500 $241 $41 $146 $0 2017 2018 2019 2020 2021 Thereafter Note: (1) Maturities assume that all extension options have been exercised and no pay downs are required upon extension. Source: Company Quarterly Supplementals, Taubman analysis 44 We Have the Industry's Premier Portfolio
With Five Key Success Factors that Drive Productivity
We Strategically Enhance Our Portfolio through: U.S. Development, Taubman Asia, Redevelopment, Acquisitions & Dispositions
While Emphasizing a Strong Balance Sheet
To Create Significant Shareholder Value
45 Significant Shareholder Value Significant NOI Growth Combined with a Deleveraging Plan Create an Investment Opportunity
NOI Growth Outlook Superior NOI Growth by 2019(1)
◼ We remain on track to achieve $150M- $160M of additional NOI in 2019 above 2016 (at our share) 2019 . Development Projects(2) to add approximately $80M of NOI . Core Center Growth is expected to add about $50M of NOI . Redevelopment Projects (3) are expected to add about $20M to $30M of NOI Notes: (1) Assumptions current as of February 10, 2017, the date of Taubman’s Q4 2016 Earnings Conference Call. (2) Development projects for the purpose of this analysis 2016 include International Market Place, CityOn.Xi’an, CityOn. Zhengzhou and Starfield Hanam. (3) Redevelopment projects include expected returns on current and anticipated projects.
Deleveraging Plan Deleveraging Plan 9.00 Forward-Looking Debt to EBITDA Outlook 8.50 ◼ Debt to EBITDA Ratio will naturally decrease as additional NOI comes 8.00 online (see left) 7.50 . Target We plan to return to our target debt to 7.00 Range EBITDA range of 6x-8x, on a forward 6.50 basis, as NOI is added between today 6.00 and 2019 5.50 2016 2017 Target 2018 Target 2019 Target
46 Significant Shareholder Value
History of Strong Shareholder Returns
Shareholder Returns(1) Dividend Payout Per Share(2) 300 $2.38 $2.26 $2.16 250 S&P 400 Midcap $2.00 Index $1.85 Taubman $1.76 $1.66 $1.66 $1.68 200 S&P 500 Index $1.54 MSCI US REIT Index 150 FTSE NAREIT Equity REIT Index 100
50
Cumulative Total Return Since Dec. 31, 2006 31, Dec. Since Return Total Cumulative 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Over the 10-year period ended December 31, 2016, Taubman The company has never reduced its dividend since Centers’ compounded annual total shareholder return was 8.2%. the IPO in 1992. Taubman Centers’ 10-year performance compares favorably not In 2009, Taubman Centers was the only mall REIT only to the MSCI REIT Index (5.0%) and FTSE NAREIT Equity among our peers(3) not to reduce its dividend – we Retail (3.7%) indexes, but also to the S&P 500 Index (6.9%). also maintained an all-cash dividend throughout the year.
Note: (1) This graph sets forth the cumulative total returns on a $100 investment in of our Common Stock, the MSCI US REIT Index, the FTSE NAREIT Equity Retail Index, the S&P 500 Index and the S&P 400 MidCap Index for the period December 31, 2006 through December 31, 2016 (assuming in all cases, the reinvestment of dividends). (2) 2010 excludes special dividend of $0.1834 per share paid in December 2010. 2014 excludes special dividend of $4.75 per share paid in December 2014. (3) Peer group includes CBL, MAC, PEI, GGP, and SPG.
Source: Company SEC Filings, Taubman analysis 47 Significant Shareholder Value
Best Performing REITs Over the Last 20 Years
Top 10 REITs 20 Year Total Return (as of December 31, 2016) Compounded Ticker Total Return Annual Return
Equity Lifestyle Properties ELS 1,945% 16.3%
Corporate Office Properties OFC 1,883% 16.0%
Essex Property Trust ESS 1,807% 15.9%
Realty Income Corporation O 1,599% 15.2%
Tanger Factory Outlets SKT 1,571% 15.1%
Taubman Centers TCO 1,517% 14.9%
Simon Property Group SPG 1,414% 14.6%
Public Storage PSA 1,374% 14.4%
Federal Realty Trust FRT 1,269% 14.0%
Universal Health UHT 1,251% 13.9%
Source: KeyBanc Capital Markets, “The Leaderboard” as of December 31, 2016, Taubman analysis 48 Significant Shareholder Value
Our Points of Difference
As of year-end 2016, we had grown Market Capitalization since 1992 IPO 12,000 Total our total market capitalization from Market $2.2 billion at our IPO to $11.1 Cap 10,000 billion, while owning relatively the 8,000 same number of assets and issuing Equity only $50 million of common equity 6,000 Market Cap on a net basis 4,000 Dollars in Dollars $MM Our equity market cap of $1.3 billion 2,000 at IPO in1992, has grown to $6.3 billion as of year-end 2016, 0 1992 1997 2002 2007 2012 2016 representing an increase of 4.6x Our portfolio is large enough to Intensively Managed Portfolio provide important economies of Number of centers owned at IPO (1992) 19 scale and solidify our relationships Centers developed 20 with the world’s best retailers Centers acquired 11 Yet not so large that we cannot Centers sold/exchanged (26) maximize the potential of every Number of centers owned today 24 property Number of centers leased/managed today 3 Total 27 Since 2008 we have developed, renovated, or expanded over 75% of our assets
49 We Have the Industry's Premier Portfolio
With Five Key Success Factors Drive Productivity
We Strategically Enhance Our Portfolio through: U.S. Development, Taubman Asia, Redevelopment, Acquisitions & Dispositions
While Emphasizing a Strong Balance Sheet
To Create Significant Shareholder Value
50
Taubman Realty Group (TRG – Operating Partnership) Appendix Current Ownership and Voting Structure
What are the Series B Preferred Shares?
◼ The Series B preferred shares are a class of voting shares that give the Taubman Family and Other Unit- Holders (outside the TCO entity) Taubman Centers, Inc. Taubman Family & Other Unit- the ability to vote commensurate Public REIT (NYSE : TCO) Holders with their economic interest in the partnership and ensure “one share, one unit, one vote” When and why were the Economic Ownership(1): 70.7% 29.3% Series B Preferred (2) 29.3% Voting Interest : 70.7% Shares Created?
◼ They were created in 1998 as a result of a restructuring of the The Taubman Realty Group Limited Partnership (TRG) operating partnership to allow the operating partnership’s unit Operating Partnership holders voting interests commensurate with their economic interest, in exchange for the governance rights they were forfeiting in the operating partnership as part of the 1998 restructuring 21 U.S. Operating Centers (12 Consolidated & 9 Unconsolidated Joint Ventures) Notes: (1) TCO’s sole asset is an approximate 71% 3 Asian Operating Centers (3 Unconsolidated Joint Ventures) interest in the operating partnership. The The Taubman Company LLC (Property Manager & Leasing Agent) remaining 29% interest in the operating partnership is held by members of Taubman family and other unit holders. More Information? (2) Members of the Taubman family and other unit holders of the operating partnership have ◼ Please see this link to our “FAQs” section of our investor website for greater voting rights commensurate with their detail: Investor FAQs economic interest in the operating partnership through ownership of TCO Series B Preferred Shares. 52 Taubman Realty Group (TRG – Operating Partnership) Appendix Historical Ownership and Voting Structure
The 1998 Restructuring ◼ In the company’s 1998 restructuring, GM Pension Trusts (GMPT) exchanged its 37.2% partnership interest in the operating partnership for ten mall properties. ◼ Before this restructuring, the operating partnership was 39.4% owned by TCO, 37.2% owned by GMPT, and 23.4% owned by the other unit holders (including members of the Taubman family). ◼ After the exchange by GMPT, the economic interests in the operating partnership of all the remaining investors increased pro rata, as in any share repurchase. Consequently, TCO’s interest in the operating partnership increased from 39.4% to 62.7%, and the unit holders' interest in the operating partnership increased from 23.4% to 37.3%. ◼ Also as part of the 1998 restructuring, the company’s Partnership Committee – which previously controlled the operating partnership (TRG) – was dissolved, and governance moved from the Partnership Committee to the board of directors of TCO. ◼ The five independent Partnership Committee members representing TCO and the four Partnership Committee members representing the operating partnership’s unit holders became the nine members of TCO’s board of directors. Pre-1998 Restructuring Post-1998 Restructuring Current Structure
Taubman Taubman Family & Unit Taubman Family & Unit Holders Family & TCO Public Holders(1) 23.4% Unit Holders TCO Public Shareholders 29.3% TCO Public 39.4% 37.3% Shareholders Shareholders 62.7% 70.7% GM Pension
Economic Interest Economic Trust 37.2%
Taubman Family & Taubman Taubman Unit TCO Public Family & Unit Family & Unit Shareholders Holders Holders TCO Public Holders TCO Public 38.5% 30.8% 37.3% Shareholders 29.3% Shareholders 62.7% 70.7% GM
Voting Interest Voting Pension Trust 30.8%
(1) As of the most recent proxy, filed April 20, 2017, the Taubman Family has a 30.7% voting interest due to a combination of common shares and partnership units. 53 Appendix
Superior Sales Productivity
Sales Per Square Foot vs. ICSC Mall Index $900 $819 $792 $785 $792 $800 $708 $700 $641
$555 $564 + 70% $600 $529 $533 $502 $500 +30% $468 $474 $474 $400 $448 $467 $406 $412 $412 $390 $386 $300 $365
$200
$100
$0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Taubman ICSC Regional and Super-Regional Mall Index *
◼ History of outperformance (see above) . Over the last 10 years, Taubman centers are consistently more productive than the average U.S. Regional or Super-Regional Mall
◼ High quality bifurcation . The productivity gap between high-quality retail assets and the average or lower-quality retail assets has increased over the last 10 years
* The ICSC Index includes over 500 Regional and Super-Regional Malls. Sales per square foot information is self-reported data provided by participating companies. 54 Appendix
Asia Development Returns
16 Expected Development Yields China Development 14 Initial yields are expected to be Sales are expected to grow at a around 4% to 4.5% in China and faster pace in China, providing a about 4.5% to 5% in South Korea th th 12 10% return around the 7 or 8 year
South Korea 1 10 Development Tax -
8 South Korea China Development Development Cash Return Cash Lease structure(1) Significant amount of % Significant amount of %
on - 6 rent marks leases to rent marks leases to - market market
Unlevered After Unlevered Lease term(1) 3-5 year initial roll 5-7 year initial roll Cash 4 CAM/Service Charge(1) Fixed service charge Fixed service charge
All three projects will stabilize in 2019. Anchor Rent/CAM(1) Standard Standard 2 We expect returns of 6% to 6.5% in Targeted Occupancy Slightly less than U.S. Slightly higher than U.S. China and about 8% in South Korea Cost(1) (17% target) (17% target) 0 1 2 3 4 5 6 7 8 9 10 Year from Opening
Note: (1) Anticipated lease structure and terms, sales growth, and after-tax returns for centers under development exclude the impact of foreign currency fluctuations and are subject to adjustment as a result of factors inherent in the development process, some of which may not be under the direct control of the company. Refer to the company’s filings with the Securities and Exchange Commission on Form 10-K and Form 10-Q for other risk factors. 55 Appendix Redevelopments – Beverly Center – Financial Review
Net Operating Income (NOI) Comparison - ProForma
Full Renovation Scenario 2015 NOI
Base Case, Return of 3 to 4 percent at stabilization in 2020 Non-Renovation Scenario Net Operating (NOI) Income Net Operating
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Unlevered IRR (10-year): In excess of 10 percent
Assumptions
◼ Stabilized returns (see above) . Projected returns are calculated using the cash flow differential between two scenarios; a full renovation and a non-renovation scenario.
◼ Internal Rate of Return (see above) . 10-year, unlevered IRR in 2015 based on an exit cap rate that is 100-150 basis points better under the full renovation scenario compared to the non-renovation scenario.
◼ Other . Net Asset Value: Renovation will create $50 to $100 million of incremental net asset value in 2025. . Sales: Projection assumes Beverly Center only recaptures its lost market share and then increases at a market growth rate (upside possible). 56 Appendix
Our Portfolio
Beverly Center Los Angeles, Calif. Click for Center Anchors: Bloomingdale’s, Macy’s GLA: 799,000 sq. ft. Fact Sheet Ownership: 100%
Cherry Creek Shopping Center Denver, Colo. Click for Center Anchors: Macy’s, Neiman Marcus, Nordstrom GLA: 1,032,000 sq. ft. Fact Sheet Ownership: 50%
CityOn.Xi’an Xi’an, China Click for Center Anchors: Wangfujing Department Store GLA: 995,000 sq. ft. Fact Sheet Ownership: 50%
CityOn.Zhengzhou Zhengzhou, China Click for Center Anchors: Wangfujing Department Store GLA: 1,000,000 sq. ft.(approx.) Fact Sheet Ownership: 49%
City Creek Center Salt Lake City, Utah Click for Center Anchors: Macy’s, Nordstrom GLA: 622,000 sq. ft. Fact Sheet Ownership: 100%
57 Appendix
Our Portfolio
Country Club Plaza Kansas City, Mo. Click for Mixed-Use Retail and Office GLA Retail: 784,000 sq. ft. Center GLA Office: 420,000 sq. ft. Fact Sheet Ownership: 50%
Miami, Fla. Dolphin Mall Click for Anchors: Neiman Marcus-Last Call, Saks Off 5th, Bass Pro Shops GLA: 1,431,000 sq. ft. Center Outdoor World, Dave & Buster’s, Burlington, Marshall’s, Cobb Ownership: 100% Fact Sheet Theatres, Bloomingdale’s Outlet, Polo Ralph Lauren Factory Store
Fair Oaks Fairfax, Va. Click for Center Anchors: Macy’s (two locations), JCPenney, Lord & Taylor, Sears GLA: 1,559,000 sq. ft. Fact Sheet Ownership: 50%
The Gardens on El Paseo Palm Desert, Calif. Click for Center Anchors: Saks Fifth Avenue GLA: 236,000 sq. ft. Fact Sheet Ownership: 100%
Great Lakes Crossing Outlets Auburn Hills, Mich. Click for Anchors: Neiman Marcus-Last Call, Bass Pro Shops Outdoor GLA: 1,355,000 sq. ft. Center World, AMC Theatres, Saks Off 5th, Lord & Taylor Outlet, Burlington Ownership: 100% Fact Sheet Coat Factory, Legoland, Sea Life
58 Appendix
Our Portfolio
The Mall at Green Hills Nashville, Tenn. Click for Center Anchors: Nordstrom, Macy’s, Dillard’s GLA: 851,000 sq. ft. Fact Sheet Ownership: 100%
International Market Place Waikiki, Honolulu, Hawaii Click for Center Anchors: Saks Fifth Avenue GLA: 344,000 sq. ft. Fact Sheet Ownership: 93.5%
International Plaza Tampa, Fla. Click for Center Anchors: Neiman Marcus, Nordstrom, Dillard’s, Lifetime Athletic GLA: 1,251,000 sq. ft. Fact Sheet Ownership: 50%
The Mall at Millenia Orlando, Fla. Click for Center Anchors: Neiman Marcus, Bloomingdale’s, Macy’s GLA: 1,122,000 sq. ft. Fact Sheet Ownership: 50%
The Mall of San Juan San Juan, Puerto Rico Click for Center Anchors: Saks Fifth Avenue, Nordstrom GLA: 627,000 sq. ft. Fact Sheet Ownership: 95%
59 Appendix
Our Portfolio
The Mall at Short Hills Short Hills, N.J. Click for Center Anchors: Neiman Marcus, Nordstrom, Bloomingdale’s, Macy’s GLA: 1,453,000 sq. ft. Fact Sheet Ownership: 100%
Stamford Town Center Stamford, Conn. Click for Center Anchors: Macy’s, Saks Off 5th GLA: 762,000 sq. ft. Fact Sheet Ownership: 50%
Starfield Hanam Hanam, South Korea Click for Center Anchors: Shinsegae Department Store GLA: 1,710,000 sq. ft. Fact Sheet Ownership: 34.3%
Sunvalley Concord, Calif. Click for Center Anchors: JCPenney, Macy’s (two locations), Sears GLA: 1,320,000 sq. ft. Fact Sheet Ownership: 50%
Taubman Prestige Outlets Chesterfield Chesterfield, Mo. Click for Center Anchors: Restoration Hardware Outlet, Polo Ralph Lauren Factory GLA: 302,000 sq. ft. Fact Sheet Store Ownership: 100%
60 Appendix
Our Portfolio
Twelve Oaks Mall Novi, Mich. Click for Center Anchors: Nordstrom, Macy’s, Lord & Taylor, JCPenney, Sears GLA: 1,518,000 sq. ft. Fact Sheet Ownership: 100%
The Mall at University Town Center Sarasota, Fla. Click for Center Anchors: Saks Fifth Avenue, Dillard’s, Macy’s GLA: 862,000 sq. ft. Fact Sheet Ownership: 50%
Waterside Shops Naples, Fla. Click for Center Anchors: Saks Fifth Avenue, Nordstrom GLA: 341,000 sq. ft. Fact Sheet Ownership: 50%
Westfarms West Hartford, Conn. Click for Center Anchors: Nordstrom, Macy’s (two locations), Lord & GLA: 1,271,000 sq. ft. Fact Sheet Taylor, JCPenney Ownership: 79%
61 Appendix
Trading Information
The Company's common stock and two issuances of preferred stock are traded on the New York Stock Exchange.
Symbol Common Stock TCO Series J Cumulative Redeemable Preferred Stock TCO PR J Series K Cumulative Redeemable Preferred Stock TCO PR K
Market Quotation per Common Share Common Stock Dividends Quarters-Ended High Low Declared and Paid March 31, 2016 77.24 66.67 0.595 June 30, 2016 74.20 68.21 0.595 September 30, 2016 81.63 73.64 0.595 December 31, 2016 75.21 69.69 0.595 March 31, 2015 84.70 72.05 0.565 June 30, 2015 77.25 69.50 0.565 September 30, 2015 75.97 67.14 0.565 December 31, 2015 78.75 70.26 0.565
62 Appendix
Analyst Coverage
Company Analyst Email Address
Bank of America Securities-Merrill Lynch Craig Schmidt [email protected] Boenning & Scattergood, Inc. Floris van Dijkum [email protected] BTIG James Sullivan [email protected] Citigroup Global Markets, Inc. Christy McElroy [email protected] Credit Suisse Securities LLC Ian Weissman [email protected] Deutsche Bank Securities, Inc. Vincent Chao [email protected] Evercore ISI Steve Sakwa [email protected] Goldman Sachs & Co. Andrew Rosivach [email protected] Green Street Advisors, Inc. Daniel Busch [email protected] Jefferies, LLC Omotayo Okusanya [email protected] J.P. Morgan Securities Michael Mueller [email protected] Keybanc Capital Markets, Inc. Todd Thomas [email protected] Mizuho Securities USA Inc. Haendel St. Juste [email protected] Morgan Stanley Richard Hill [email protected] Oppenheimer & Co. Steve Manaker [email protected] Raymond James Collin Mings [email protected] Sandler O'Neill & Partners, L.P. Alexander Goldfarb [email protected] UBS Securities, LLC Jeremy Metz [email protected]
Taubman Centers, Inc. is followed by the analysts listed above. The Company believes the list to be complete, but can provide no assurances. Please note that any opinions, estimates, or forecasts regarding the Company's performance made by these analysts are independent of the Company and do not represent opinions, forecasts, or predictions of its management. The Company does not, by its reference above or distribution, imply its endorsement of or concurrence with such information, conclusions, or recommendations. 63 2017 Guidance1,2 Appendix Summary of Key Guidance Measures
2016 Actual 2017 Guidance Earnings Per Share $1.77 $1.20 - $1.45 Adjusted FFO per share $3.58 $3.67 - $3.82 Core NOI Growth (100%), excluding lease cancellation income2 3.9% About 3.5% Ending occupancy, including temporary tenants (comp centers)3 94.3% Around 96.0% Rent PSF (Combined, comp centers) 3 $60.01 Up About 1% Net revenue from management, leasing, and development, our share $24.0 million4 About $1 million Domestic and non-U.S. pre-development expense $5.0 million $6 - $7 million Domestic and non-U.S. general and administrative expense, $12.0 million About $10 -$11 quarterly run rate (avg.) million Lease cancellation income, our share $4.6 million About $5-$6 million Interest expense, 100% (Combined) $189.5 million $250 - $255 million Interest expense, at our share (Combined) $130.6 million $170 - $175 million (1) Guidance is current as of February 9, 2017, see Taubman Centers, Inc. Issues Fourth Quarter and Full Year 2016 Results and Introduces 2017 Guidance. (2) The year ended December 31, 2016 NOI growth percentage reflects the comparable centers that were owned and open, excluding centers impacted by significant redevelopment activity, for the entire two year period ending December 31, 2016. (3) The year ended December 31, 2016 statistics have been restated to include comparable centers to 2017. (4) Amount includes $21.7 million lump sum payment received May 2016 for the termination of the Company’s third party agreement at Crystals due to a change in ownership in the center. (5) See slides 65, 66 and 67 regarding reconciliations to the most comparable GAAP measures. 64 Appendix Reconciliation of Net Income Attributable to Common Shareowners to Funds from Operations1
Year Ended Range for Year Ended December 31, 2016 December 31, 2017(2) Adjusted Funds from Operations per common share 3.58 3.67 3.82 Crystals lump sum payment for termination of leasing 0.25 agreement Costs associated with shareowner activism (0.03) Gain on SPG common stock conversion, net of tax 0.13 Funds from Operations per common share 3.91 3.67 3.82 Depreciation – TRG (2.03) (2.34) (2.23) Distributions to participating securities of TRG (0.02) (0.03) (0.03) Depreciation of TCO's additional basis in TRG (0.11) (0.11) (0.11) Net income attributable to common shareowners, per common share (EPS) 1.77 1.20 1.45
(1) All dollar amounts per common share on a diluted basis; amounts may not add due to rounding. (2) Guidance is current as of February 9, 2017, see Taubman Centers, Inc. Issues Fourth Quarter and Full Year 2016 Results and Introduces 2017 Guidance.
65 Appendix
Reconciliation of Net Income to Net Operating Income1
66 Reconciliation of Net Income to FFO and Appendix Adjusted FFO per Share
67 Appendix
Forward-Looking Language and Non-GAAP Measures
For ease of use, references in this presentation 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 presentation 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, 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, 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; 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.
This presentation may also include disclosures regarding, but not limited to, estimated future earnings assumptions and estimated project costs and stabilized returns for centers under development and redevelopment which are subject to adjustment as a result of certain factors that may not be under the direct control of the company. Refer to the company's filings with the Securities and Exchange Commission on Form 10-K and Form 10-Q for other risk factors.
This presentation includes non-GAAP financial measures as defined by S.E.C. Regulation G. Definitions, discussion and reconciliations of non- GAAP financial measures to the comparable GAAP financial measure are disclosed in the Company's most recent Annual Report on Form 10-K and the Company's Annual Report, included on the Company's website.
Non-GAAP measures referenced in this presentation may include estimates of future EBITDA, NOI, and/or FFO performance of our investment properties. Such forward-looking non-GAAP measures may differ significantly from the corresponding GAAP measure, net income, due to depreciation and amortization, tax expense, and/or interest expense, some or all of which management has not quantified for the future periods.
68