Taubman Centers, Inc. Investor Presentation
Spring 2018 Taubman Centers, Inc. (NYSE: TCO) A real estate company founded in 1950, with 68 years in operation First publicly traded UPREIT – IPO 1992 Total market capitalization of $10.7 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. Country Club Plaza, Mo.
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 at University Town Center, Fla. 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 169 140 111 117 119 116 94 99 58 37 44
A++ A+ A A- B+ B B- C+ C C- D Taubman’s portfolio of 21 assets(1) average between A+ and A quality. Roughly 78% of mall asset value is held in ‘A’ malls
23% 20% 21% 14% 10% 7% 3%3%
Percent of Industry Value
B quality malls, which represent 39% of all malls, account for 20% of value A++ quality malls, which A B CD represent 3.4% of all malls, C quality malls, which represent 30% of account for 23% of all value all malls, account for 3% of value D quality malls, which represent 4% of malls, account for less than 0.1% of value
Source: Green Street Advisors. (2018) Annual Grade Review. Grades are based on merchandise mix, productivity, location, condition/appeal and other factors. Note: (1) Excludes Taubman Asia assets, as the Green Street only includes U.S. assets in their database. 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, 2017) (December 31, 2017)
TCO $810 TCO $61.66 MAC $660
SPG $628 MAC $56.97
GGP $587 SPG $53.11 PEI $475
SKT $387 CBL $32.42
CBL $372 WPG $27.83 WPG $365
$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, PEI and SKT 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% 89% 40% 82% 80%
30% 63% 60% 47% 20%
10% 25%
0% TCO MAC SPG GGP PEI WPG CBL
Source: Green Street Advisors. U.S. Mall Outlook 2018, 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 $62,349 TCO 87,236 SPG $62,218 SPG 84,226 PEI $60,510 MAC 82,144 MAC $60,016 PEI 80,972 GGP $57,878 GGP 78,890 WPG $55,739 WPG 74,708 CBL $52,517 CBL 70,451
$45,000 $50,000 $55,000 $60,000 $65,000 $0 $20,000 $40,000 $60,000 $80,000 $100,000
Population % of Household Earnings > $100K
MAC 2,346,319 TCO 28.4% TCO 1,580,160 SPG 27.9% PEI 1,363,384 MAC 26.6% SPG 1,286,477 PEI 26.4% GGP 1,228,302 GGP 25.1% WPG 859,917 WPG 23.1% CBL 490,878 CBL 21.1% 0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 15.0% 20.0% 25.0% 30.0% Source: Evercore ISI Research Reports dated April 11, 2017. © Copyright 2017. 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
◼ 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 evolution of Taubman’s tenant mix has contributed to our sales growth over the last decade ◼ The below table highlights a sample of significant changes within our tenant base over the last 10 years
Change in GLA (Sqft.) Change in GLA (Sqft.) Tenant Tenant 2017 vs. 2007 2017 vs. 2007 -165,000 +298,000
-131,000 +134,000
-86,000 +57,000
-63,000 +56,000
-48,000 +34,000
Tenant Sales per Square Foot (2007 through 2017) 800 3.9% CAGR 700
600 Foot ($) Foot
500
Tenant per Sales Square 400 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 15 Productivity
Strong Tenant Demand for Space
Recent Store Closures New Concepts Recently Added to TCO’s Portfolio
Food
• We received approximately 360,000 sqft. back from tenants through bankruptcies or store closures between October 2016 and October Emerging Brands 2017 • Of that, about 300,000 square feet has been backfilled(1)(2) • Leased space in our comparable centers is 96.0%(3) • Expect occupancy in our comparable centers to be around 95% at year-end (1) As of January 30, 2018 (2) Includes spaces that have be re-leased or original tenant has retained occupancy (3) As of December 31, 2017 16 Productivity
Unparalleled Anchor Quality
Greatest Exposure to Superior-Drawing Fashion Anchors TCO CBL GGP MAC PEI SPG WPG Total 15 34 88 39 19 110 32 337 9 2 25 13 1 28 4 82 4 0 10 2 0 11 0 27 4 0 4 1 0 6 1 16 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 38 36 141 60 22 177 37 511 Total Traditional Dept. Stores 49 243 375 131 76 386 205 1,465 77.6% 14.8% 37.6% 45.8% 28.9% 45.9% 18.0% 34.9%
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, “1Q17 Quarterly: Retail REITs continue to underperform given tenant concerns”, May 19, 2017. Note: Analysis excludes SKT, as they operate premium outlet centers. Analysis includes Macy’s Men’s Store and Macy’s Furniture Gallery. 17 Productivity
Taubman’s Assets Deliver Superior Performance
Adjusted AdjustedFunds from Funds Operations from Total Portfolio NOI(1) OperationsPer Diluted Per Share Diluted(1) Share(1) $800 $777 $4.00 30 $704 $3.65 $3.67 $3.70 December 31) of ownedcenters (as Number of $685 $3.58 $700 $661 $661 $3.42(3) $3.50 $3.34 $622(3) $2.84 $2.86 25 $590 $588 $591 $3.08 $3.06 $600 $585 $3.00
$500 20 $2.50
$400 $2.00 15
$300 $1.50 10
$200 $1.00
5 $100 $0.50
$0 $0.00 0
Note: (1) See appendix regarding reconciliations to the most comparable GAAP measures. (2) Guidance is current as of February 8, 2018, see Taubman Centers, Inc. Issues Fourth Quarter and Full Year 2017 Results and Introduces 2018 Guidance. (3) Excludes the portfolio of seven centers sold to Starwood Capital Group in October 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 & Taubman Asia Value Creation Opportunity
About $1.2 billion (at share) has been invested on the below ground up developments which have opened within the last two years. The company expects these assets to generate significant NOI & NAV growth as they stabilize.
Opened: March 2017 Opened: April 2016 Opened: August 2016
Opened: September 2016 Opened: March 2017
20 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-imagination 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 35. (2) Approximately 20 percent of the cost relates to deferred and prospective customary capital upgrades and improvements. 21 Growth – Acquisitions
Selective Acquisition – Country Club Plaza
ACQUISITION STRATEGY
Highest Quality Acquired a 50% interest in the center in March 2016 for $330 ✔ million Dominant Asset Marquee retail and office property in Kansas City, MO ✔ Below-market rents present growth opportunity Great Market ✔ Significant expansion and redevelopment opportunity Growth Opportunity Strategic partnership with The Macerich Company ✔ Leveraging tenant relationships to increase sales to the top one- Strategic to Existing Portfolio third of our portfolio ✔ • Adds unique retailers to our portfolio • Strategic Partnership Region’s premier tenant line-up with over 25 restaurants Update: In February 2018, Nordstrom announced plans to relocate their store in Kansas City Market to the Plaza
22 Dispositions
Strategic Dispositions
DISPOSITION STRATEGY ◼ Our strategy is to recycle capital for growth, minimizing Seven Asset Portfolio Sale 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 approximately 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 2017
23 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
24 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
25 Conservative Balance Sheet
Strong Balance Sheet with Flexibility
Balance Sheet Composition (as of 12/31/2017) Recent Transactions Financed Twelve Oaks Mall in 12% Novi, Michigan Common Stock and Operating Partnership Equity ($5.6B) 7% ◼ Reduces the Company’s floating rate Preferred Stock ($0.4B) exposure and extends the weighted average debt maturity Fixed Rate Debt ($2.7B) 52% ◼ The new 10-year, $300M non-recourse Floating Rate Debt loan has a fixed interest rate of 4.85%, Swapped to Fixed Rate with a 30-year amortization period 26% ($0.7B) Floating Rate Debt ($1.3B) ◼ Twelve Oaks Mall was previously unencumbered 3% ◼ This transaction closed on February 28, 2018 Coverage Ratios (as of 12/31/2017) ◼ Proceeds will be used towards the 5.0 retirement of the $475M unsecured Interest Only term loan maturing in February 2019 4.0
3.0
2.0 Fixed Charges
1.0
0.0 2012 2013 2014 2015 2016 2017
Source: Company Quarterly Supplementals, Taubman analysis
26 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 Efficient debt pricing Cost of capital advantage
Low-Cost and Long-Term Debt in context of U.S. Mall REIT Sector 5.0% (as of 12/31/2017) CBL 4.5% PEI GGP WPG 4.0%
3.5% MAC SPG Interest Rate TCO Weighted Average 3.0% 4.5 5.0 5.5 6.0 6.5 7.0 Weighted Average Debt Maturity Debt Maturities by Year (as of 12/31/2017, in millions at our share)1 $2,500 $2,142 $2,000
$1,500 $1,096 $1,000 $499 $570
Dollars $MM in $500 $168 $247 $0 2018 2019 2020 2021 2022 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 27 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
28 Significant Shareholder Value Significant NOI Growth Combined with a Deleveraging Plan Create an Investment Opportunity
NOI Growth Outlook Superior NOI Growth by 2020(1) ◼We expect to add approximately $150M of additional NOI in 2020 above 2016 (at our share) 2020 . Development Projects(2) to add approximately $70M to $75M 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 9, 2018, the date of Taubman’s Q4 2017 Earnings Conference Call. 2016 (2) Development projects for the purpose of this analysis include International Market Place, CityOn.Xi’an, CityOn. Zhengzhou and Starfield Hanam. (3) Redevelopment. projects for the purpose of this analysis include Beverly Center, The Mall at Green Hills, the former Saks Fifth Avenue location at Short Hills Mall, as well as the former Sport’s Authority locations at Cherry Creek Shopping Center, Dolphin Mall and Great Lakes Crossing.
29 Significant Shareholder Value
History of Strong Shareholder Returns
(1) (2) 300 Shareholder Returns Dividend Payout Per Share
S&P 400 Midcap $2.50 250 Index $2.38 $2.26 S&P 500 Index $2.16 Taubman $2.00 200 $1.85 MSCI US REIT $1.76 Index $1.66 $1.66 $1.68 FTSE NAREIT 150 Equity REIT Index
100
50
Cumulative Total Return Since Dec. 31, 2006 31, Dec. Since Return Total Cumulative 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Over the 10-year period ended December 31, 2017, Taubman The company has never reduced its dividend since Centers’ compounded annual total shareholder return was 7.4%. the IPO in 1992. Taubman Centers’ 10-year performance is comparable to the In 2009, Taubman Centers was the only mall REIT MSCI REIT Index (7.4%) and exceeds FTSE NAREIT Equity Retail among our peers(3) not to reduce its dividend – we (5.0%) index. 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, 2007 through December 31, 2017 (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 30 Significant Shareholder Value
Best Performing REITs Over the Last 20 Years
Top 10 REITs 20 Year Total Return (as of December 31, 2017) Compounded Ticker Total Return Annual Return
Equity Lifestyle Properties ELS 1,951% 16.3%
Essex Property Trust ESS 1,498% 14.9%
Realty Income Corporation O 1,436% 14.6%
EPR Properties EPR 1,415% 14.6%
Public Storage PSA 1,341% 14.3%
Taubman Centers TCO 1,277% 14.0%
Universal Health UHT 1,253% 13.9%
Simon Property Group SPG 1,234% 13.8%
Federal Realty Trust FRT 1,197% 13.7%
Monmouth Real Estate MNR 1,128% 13.4% Investment Corporation
Source: KeyBanc Capital Markets, “The Leaderboard” as of December 31, 2017, Taubman analysis 31 Significant Shareholder Value
Our Points of Difference
As of year-end 2017, we had grown Market Capitalization since 1992 IPO our total market capitalization from $2.2 billion at our IPO to $10.7 12,000 billion, while owning relatively the 10,000 same number of assets and issuing 8,000 only $50 million of common equity
6,000 on a net basis 4,000 Our equity market cap of $1.3 billion 2,000 at IPO in 1992 has grown to $5.6 billion as of year-end 2017, 0 1992 1997 2002 2007 2012 2017 representing an increase of 4.3x 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 80% of our assets
32 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
33
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). 35 Appendix
Our Portfolio
Beverly Center Los Angeles, Calif. Click for Center Anchors: Bloomingdale’s, Macy’s GLA: 793,000 sq. ft. Fact Sheet Ownership: 100%
Cherry Creek Shopping Center Denver, Colo. Click for Center Anchors: Macy’s, Neiman Marcus, Nordstrom GLA: 1,025,000 sq. ft. Fact Sheet Ownership: 50%
CityOn.Xi’an Xi’an, China Click for Center Anchors: Wangfujing Department Store GLA: 996,000 sq. ft. Fact Sheet Ownership: 50%
CityOn.Zhengzhou Zhengzhou, China Click for Center Anchors: G-Super, Wangfujing Department Store GLA: 917,000 sq. ft. 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%
36 Appendix
Our Portfolio
Country Club Plaza Kansas City, Mo. Click for Mixed-Use Retail and Office GLA Retail: 781,000 sq. ft. Center GLA Office: 220,000 sq. ft. Fact Sheet Ownership: 50%
Miami, Fla. Dolphin Mall Click for Anchors: Neiman Marcus-Last Call, Saks Off 5th, Bass Pro Shops GLA: 1,429,000 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: Bass Pro Shops Outdoor World, AMC Theatres, Saks Off GLA: 1,355,000 sq. ft. Center 5th, Lord & Taylor Outlet, Burlington Coat Factory, Round 1 Bowling Ownership: 100% Fact Sheet and Amusement, Legoland, Sea Life
37 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: 343,000 sq. ft. Fact Sheet Ownership: 93.5%
International Plaza Tampa, Fla. Click for Center Anchors: Neiman Marcus, Nordstrom, Dillard’s, Life Time Athletic GLA: 1,253,000 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: 626,000 sq. ft. Fact Sheet Ownership: 95%
38 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: 761,000 sq. ft. Fact Sheet Ownership: 50%
Starfield Hanam Hanam, South Korea Click for Center Anchors: Shinsegae Department Store, PK Market, Traders GLA: 1,701,000 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: 299,000 sq. ft. Fact Sheet Store Ownership: 100%
39 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: 861,000 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%
40 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, 2017 76.17 64.08 0.625 June 30, 2017 66.64 57.77 0.625 September 30, 2017 61.90 49.14 0.625 December 31, 2017 65.71 46.30 0.625 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
41 Appendix
Analyst Coverage
Company Analyst Email Address Bank of America Securities-Merrill Lynch Craig Schmidt [email protected] BMO Capital Markets Jeremy Metz [email protected] Boenning & Scattergood, Inc. Floris van Dijkum [email protected] BTIG James Sullivan [email protected] Citigroup Global Markets, Inc. Christy McElroy [email protected] Deutsche Bank Securities, Inc. Vincent Chao [email protected] Evercore ISI Steve Sakwa [email protected] Goldman Sachs & Co. Caitlin Burrows [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] Raymond James Collin Mings [email protected] Sandler O'Neill & Partners, L.P. Alexander Goldfarb [email protected] UBS Securities, LLC Nick Yulico [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. 42 2018 Guidance Appendix Summary of Key Guidance Measures
2017 Actual 2018 Guidance(1),(4) Earnings Per Share $0.91 $1.15 - $1.39 Adjusted FFO per share $3.70 $3.72 - $3.86 NOI Growth – Comparable Centers, at 100% 1.7%(2) 2% - 3% 0.7%(3) Ending occupancy, including temporary tenants (comp centers) 95.3% Around 95.0% Domestic and non-U.S. general and administrative expense, $10 million (avg.) $9 -$10 million quarterly run rate Lease cancellation income, our share $12.1 million About $14 million Interest Expense, 100% (Combined) $238.9 million $260 - $265 million Interest Expense, at our share (Combined) $163.9 million $185 - $190 million
(1) Guidance is current as of February 8, 2018, see Taubman Centers, Inc. Issues Fourth Quarter and Full Year 2017 Results and Introduces 2018 Guidance – February 8, 2018.” (2) Represents NOI growth including lease cancellation income for the comparable centers that were owned and open, excluding centers impacted by significant redevelopment activity, during the entire two year period ending December 31, 2017. 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. (3) Represents NOI growth excluding lease cancellation income for the comparable centers that were owned and open, excluding centers impacted by significant redevelopment activity, during the entire two year period ending December 31, 2017. 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. (4) See slides 46, 47 and 48 regarding reconciliations to the most comparable GAAP measures.
43 Appendix Reconciliation of Net Income Attributable to Common Shareowners to Funds from Operations1
Year Ended Range for Year Ended December 31, 2017 December 31, 2018(2) Adjusted Funds from Operations per common share 3.70 3.72 3.86 Crystals lump sum payment for termination of leasing agreement Restructuring charge(3) (0.16) Costs associated with shareowner activism(3) (0.17) Gain on SPG common stock conversion, net of tax 0.13 Partial write-off of deferred financing costs (0.00) Funds from Operations per common share 3.51 3.72 3.86 Gain on disposition, net of tax 0.02 Depreciation – TRG (2.50) (2.43) (2.33) Distributions to participating securities of TRG (0.01) (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) 0.91 1.15 1.39
(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 8, 2018, see “Taubman Centers, Inc. Issues Fourth Quarter and Full Year 2017 Results and Introduces 2018 Guidance – February 8, 2018.”
44 Appendix
Reconciliation of Net Income to Net Operating Income(1)
(1) 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 straightline adjustments of minimum rent) less maintenance, taxes, utilities, promotion, ground rent (including straightline 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 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.
45 Reconciliation of Net Income to FFO and Appendix Adjusted FFO per Share(1)
(1) Refer to the Form 10-K for a definition of FFO and the company’s uses of these measures. The company presents adjusted versions of 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 (1) Refer to the Form 10-K for a definition of FFO and the measurescompany’s between periods. uses of these measures. The company presents adjusted versions of 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.
46 Appendix
Forward-Looking Language and Non-GAAP Measures
For ease of use, references in this document 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 document 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 or the date otherwise specified herein. 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; challenges with department stores; changes in consumer shopping behavior; 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; competitors gaining economies of scale through M&A and consolidation activity; 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; costs associated with response to technology breaches; the loss of key management personnel; shareholder activism costs and related diversion of management time; labor discord, war, terrorism; 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; changes in global, national, regional and/or local economic and geopolitical climates; changes in and/or difficulties in operating in foreign political environments; difficulties in operating with foreign vendors and joint venture and business partners; and difficulties of complying with a wide variety of foreign laws including laws affecting funding and use of cash, corporate governance, property ownership restrictions, development activities, operations, anti-corruption, taxes, and litigation; changes in and/or requirements of complying with applicable laws and regulations in the U.S. that affect foreign operations, including the U.S. Foreign Corrupt Practices Act; differing lending practices, including lower loan-to-value ratios and increased difficulty in obtaining construction loans or timing thereof; lower initial investment returns than those generally experienced in the U.S.; and differences in cultures including adapting practices and strategies that have been successful in the U.S. mall business to retail needs and expectations in new markets. 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.
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