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Taubman Centers (TCO) Q3 FFO & Revenues Beat, Up Y/Y
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Retail real estate investment trust (“REIT”) Taubman Centers Inc.’s third-quarter 2016 funds from operations (“FFO”) per share of 94 cents beat the Zacks Consensus Estimate of 89 cents.
Also, the figure was up 5.6% from 89 cents earned a year ago. Results were driven by higher rents and contributions from its new centers.
Revenues came in at $148.0 million, beating the Zacks Consensus Estimate of $146 million and improving from around $140 million in the year-ago quarter.
Quarter In Detail
Comparable center NOI, excluding lease cancellation income, rose 4.5% year over year; while average rent per square foot was $60.23, up 1.3% year over year. For the period ended Sep 30, 2016, trailing 12-month releasing spreads per square foot were 21.3%.
Comparable center mall tenant sales per square foot expanded 0.4% from a year ago. However, year to date, mall tenant sales per square foot were down 1.1%. As of Sep 30, 2016, the comparable centers’ portfolio was 96.7% leased, denoting a 0.6% year-over-year decline; while ending occupancy was 95%, up 1% year over year.
Liquidity
Taubman Centers exited third-quarter 2016 with cash and cash equivalents of $59.7 million, down from $206.6 million recorded at year-end 2015.
Guidance
Taubman Centers has revised its guidance for 2016. The company now projects 2016 FFO per share in the range of $3.78–$3.88 against the prior outlook of $3.75–$3.90. Further, adjusted FFO per share outlook, is revised to $3.53–$3.63 from the prior guided range of $3.50–$3.65. The Zacks Consensus Estimate is currently pegged at $3.84.
Note that, adjusted FFO excludes the one-time $21.7 million payment the company got in second-quarter 2016 for the termination of its leasing services agreement at The Shops at Crystals.
Further, for 2017, the company guided consolidated and unconsolidated interest expense, at 100%, to be $250–$255 million and at beneficial share, the same is anticipated to be $170–$175 million. Moreover, the company expects its share of net operating income from its three new centers (CityOn.Xian – Xi’an, China, International Market Place, and Starfield Hanam) and CityOn.Zhengzhou (slated to open on Mar 16, 2017) in the band of $40–$45 million.
Our Viewpoint
Taubman Centers is expected to grow on the back of a solid retail portfolio and a strong tenant base, going forward. Yet, stiff competition and growing online sales remain as concerns.
Investors interested in the retail REIT industry may consider stocks like Realty Income Corp. (O - Free Report) , STORE Capital Corp. and Washington Prime Group Inc. . Each of these stocks carries a Zacks Rank #2 (Buy).
Note: All EPS numbers presented in this write-up represent funds from operations (“FFO”) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
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Taubman Centers (TCO) Q3 FFO & Revenues Beat, Up Y/Y
Retail real estate investment trust (“REIT”) Taubman Centers Inc.’s third-quarter 2016 funds from operations (“FFO”) per share of 94 cents beat the Zacks Consensus Estimate of 89 cents.
Also, the figure was up 5.6% from 89 cents earned a year ago. Results were driven by higher rents and contributions from its new centers.
Revenues came in at $148.0 million, beating the Zacks Consensus Estimate of $146 million and improving from around $140 million in the year-ago quarter.
Quarter In Detail
Comparable center NOI, excluding lease cancellation income, rose 4.5% year over year; while average rent per square foot was $60.23, up 1.3% year over year. For the period ended Sep 30, 2016, trailing 12-month releasing spreads per square foot were 21.3%.
Comparable center mall tenant sales per square foot expanded 0.4% from a year ago. However, year to date, mall tenant sales per square foot were down 1.1%. As of Sep 30, 2016, the comparable centers’ portfolio was 96.7% leased, denoting a 0.6% year-over-year decline; while ending occupancy was 95%, up 1% year over year.
Liquidity
Taubman Centers exited third-quarter 2016 with cash and cash equivalents of $59.7 million, down from $206.6 million recorded at year-end 2015.
Guidance
Taubman Centers has revised its guidance for 2016. The company now projects 2016 FFO per share in the range of $3.78–$3.88 against the prior outlook of $3.75–$3.90. Further, adjusted FFO per share outlook, is revised to $3.53–$3.63 from the prior guided range of $3.50–$3.65. The Zacks Consensus Estimate is currently pegged at $3.84.
Note that, adjusted FFO excludes the one-time $21.7 million payment the company got in second-quarter 2016 for the termination of its leasing services agreement at The Shops at Crystals.
Further, for 2017, the company guided consolidated and unconsolidated interest expense, at 100%, to be $250–$255 million and at beneficial share, the same is anticipated to be $170–$175 million. Moreover, the company expects its share of net operating income from its three new centers (CityOn.Xian – Xi’an, China, International Market Place, and Starfield Hanam) and CityOn.Zhengzhou (slated to open on Mar 16, 2017) in the band of $40–$45 million.
Our Viewpoint
Taubman Centers is expected to grow on the back of a solid retail portfolio and a strong tenant base, going forward. Yet, stiff competition and growing online sales remain as concerns.
Currently, Taubman Centers has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Investors interested in the retail REIT industry may consider stocks like Realty Income Corp. (O - Free Report) , STORE Capital Corp. and Washington Prime Group Inc. . Each of these stocks carries a Zacks Rank #2 (Buy).
Note: All EPS numbers presented in this write-up represent funds from operations (“FFO”) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>