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BLOOMFIELD HILLS, MI—Following a strong third-quarter performance marked by increasing FFO, Taubman Centers raised its forecast for the year. The locally-based REIT also reported strong sales and an increase in occupancies at its shopping malls in a conference call announcing quarterly results.
Third quarter FFO increased 23.9 percent per share, to 57 cents from 46 cents at the end of third quarter 2005, according to Taubman. The company also increased its 2006 full-year outlook to a range of $2.46 to $2.51 per share.
"This is primarily due to our strong results this quarter and the increase in lease cancellation income," said Robert Taubman, chairman and chief executive officer of Taubman Centers. Factors contributing to the company's performance include increasing rents and recoveries and last year's opening of Norhlake Mall in Charlotte, NC, according to the company.
Sales per sf at Taubman's 23 malls were up 7.7 percent for the quarter and 7.2 percent for the year. "We have been running substantially ahead of our peers throughout the year and expect these numbers to again compare favorably to the rest of the industry," Robert Taubman said. "Even more important, these numbers indicate that despite daily news reports of a softening economy, the consumer, which is about 70 percent of the economy, is shopping at dominant regional malls."
He added that the sales activity, which has been strong across all categories, should indicate a strong fourth quarter. "Consumers continue to spend money, and I would be very surprised if we did not have a strong holiday season in the 4 to 5%range."
Robert Taubman also anticipates that the positive sales performance will continue to bolster occupancy rates across the portfolio. Occupancy rates at Taubman's malls are up to 89.5 percent from 88.9 percent in third quarter 2005, he said. Meanwhile, leased space was up to 92.4 percent from 91.2 percent in third quarter 2005, according to the company. "We believe that the strong sales that we've had three years in a row in our assets is now starting to show itself—not just in rents but also in occupancy," he said. "It bodes very, very well for increased occupancy over time."
The company continues to make progress on a number of projects, including the Pier Shops at Caesars (Atlantic City), which opened in June and is expected to have 80 tenants by year-end; the Mall at Partridge Creek (Clinton Township, MI), which is opening October 2007; and Nordstrom projects at Twelve Oaks Mall (Novi, MI) and Cherry Creek Shopping Center (Denver). Robert Taubman added that the company has been working as a consultant on the City Creek Center Redevelopment in Salt Lake City. The massive mixed-use project, with 900,000 sf of retail, four residential towers, 1.4 million sf of office space and 5,300 underground parking spaces, is scheduled for delivery in spring 2011. Taubman plans to develop, manage, and lease the retail portion of the project.
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