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Taubman Centers (TCO) Q4 FFO Lags Estimates, Revenues Up
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Retail real estate investment trust (“REIT”), Taubman Centers Inc.’s fourth-quarter 2016 adjusted funds from operations (“FFO”) per share of $1.01 missed the Zacks Consensus Estimate of $1.03.
The company experienced a decline in lease and occupancy as well as comparable center net operating income (excluding lease cancellation income) in the quarter under review.
However, the results compared favorably with the year-ago quarter tally of 98 cents, depicting growth of 3.1%.
Revenues came in at $166.2 million, beating the Zacks Consensus Estimate of $160.3 million and improving 6.4% from around $156.2 million in the prior-year quarter.
For full-year 2016, Taubman’s adjusted FFO per share were $3.58, reflecting growth of 4.7% from the year-ago figure of $3.42. Revenues of $612.6 million also grew 9.9% year over year.
Quarter in Detail
Comparable center NOI, excluding lease cancellation income, edged down 0.1% year over year; while average rent per square foot was $60.97, up 2% from year over year. For the period ended Dec 31, 2016, the trailing 12-month releasing spreads per square foot were 18.8%.
For the fourth quarter, mall tenant sales per square foot were up 5%. Further, comparable mall tenant sales per square foot of $792 for 2016 denoted growth of about 1% and reflected solid growth in the fourth quarter.
However, as of Dec 31, 2016, the comparable centers’ portfolio was 96.1% leased, denoting a 0.8% decline from 96.9% on Dec 31, 2015. Further, ending occupancy in comparable centers was 94.7% on Dec 31, 2016, reflecting a decline of 0.5% from 95.2% on Dec 31, 2015. Notably, the closing of three Sports Authority spaces, which aggregated 130,000 square feet and denoted around 1.3% of comparable center space, adversely affected the leasing and occupancy figures.
Liquidity
Taubman Centers exited fourth-quarter 2016 with cash and cash equivalents of $40.6 million, down from $206.6 million recorded at year-end 2015.
Guidance
Taubman Centers introduced its guidance for 2017. The company projects 2017 FFO per share in the range of $3.67–$3.82. The Zacks Consensus Estimate is currently pegged at $3.89.
The full-year FFO per share guidance is backed by assumptions of comparable center NOI growth, excluding lease cancellation income, of about 3.5% for the year.
Our Viewpoint
We are discouraged with the FFO per share miss at Taubman Centers in the fourth quarter. Notably, dwindling mall traffic and store closures amid aggressive growth in online sales have kept the retail REITs on tenterhooks. This has emerged as a pressing concern for Taubman, as the trend has been curtailing demand for the retail real estate space, considerably. Rate hike have added to its woes. However, the company’s solid retail portfolio, high-quality retailers and diligent restructuring initiatives are likely to support the bottom line.
Currently, Taubman Centers has a Zacks Rank #4 (Sell).
We now look forward to the earnings releases of other retail REITs like DDR Corp. , Federal Realty Investment Trust (FRT - Free Report) and Realty Income Corporation (O - Free Report) which are expected to report in the upcoming weeks.
Note: 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. All EPS numbers presented in this write up represent FFO per share.
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Taubman Centers (TCO) Q4 FFO Lags Estimates, Revenues Up
Retail real estate investment trust (“REIT”), Taubman Centers Inc.’s fourth-quarter 2016 adjusted funds from operations (“FFO”) per share of $1.01 missed the Zacks Consensus Estimate of $1.03.
The company experienced a decline in lease and occupancy as well as comparable center net operating income (excluding lease cancellation income) in the quarter under review.
However, the results compared favorably with the year-ago quarter tally of 98 cents, depicting growth of 3.1%.
Revenues came in at $166.2 million, beating the Zacks Consensus Estimate of $160.3 million and improving 6.4% from around $156.2 million in the prior-year quarter.
For full-year 2016, Taubman’s adjusted FFO per share were $3.58, reflecting growth of 4.7% from the year-ago figure of $3.42. Revenues of $612.6 million also grew 9.9% year over year.
Quarter in Detail
Comparable center NOI, excluding lease cancellation income, edged down 0.1% year over year; while average rent per square foot was $60.97, up 2% from year over year. For the period ended Dec 31, 2016, the trailing 12-month releasing spreads per square foot were 18.8%.
For the fourth quarter, mall tenant sales per square foot were up 5%. Further, comparable mall tenant sales per square foot of $792 for 2016 denoted growth of about 1% and reflected solid growth in the fourth quarter.
However, as of Dec 31, 2016, the comparable centers’ portfolio was 96.1% leased, denoting a 0.8% decline from 96.9% on Dec 31, 2015. Further, ending occupancy in comparable centers was 94.7% on Dec 31, 2016, reflecting a decline of 0.5% from 95.2% on Dec 31, 2015. Notably, the closing of three Sports Authority spaces, which aggregated 130,000 square feet and denoted around 1.3% of comparable center space, adversely affected the leasing and occupancy figures.
Liquidity
Taubman Centers exited fourth-quarter 2016 with cash and cash equivalents of $40.6 million, down from $206.6 million recorded at year-end 2015.
Guidance
Taubman Centers introduced its guidance for 2017. The company projects 2017 FFO per share in the range of $3.67–$3.82. The Zacks Consensus Estimate is currently pegged at $3.89.
The full-year FFO per share guidance is backed by assumptions of comparable center NOI growth, excluding lease cancellation income, of about 3.5% for the year.
Our Viewpoint
We are discouraged with the FFO per share miss at Taubman Centers in the fourth quarter. Notably, dwindling mall traffic and store closures amid aggressive growth in online sales have kept the retail REITs on tenterhooks. This has emerged as a pressing concern for Taubman, as the trend has been curtailing demand for the retail real estate space, considerably. Rate hike have added to its woes. However, the company’s solid retail portfolio, high-quality retailers and diligent restructuring initiatives are likely to support the bottom line.
Currently, Taubman Centers has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Taubman Centers, Inc. Price, Consensus and EPS Surprise
Taubman Centers, Inc. Price, Consensus and EPS Surprise | Taubman Centers, Inc. Quote
We now look forward to the earnings releases of other retail REITs like DDR Corp. , Federal Realty Investment Trust (FRT - Free Report) and Realty Income Corporation (O - Free Report) which are expected to report in the upcoming weeks.
Note: 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. All EPS numbers presented in this write up represent FFO per share.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>