Michigan
|
|
|
|
|
|
|
38-2033632
|
|
(State or other jurisdiction of
incorporation or organization)
|
|
|
|
|
|
|
(I.R.S. Employer Identification No.)
|
|
200 East Long Lake Road,
|
Suite 300,
|
Bloomfield Hills,
|
Michigan
|
,
|
USA
|
48304-2324
|
||
(Address of principal executive offices)
|
|
|
|
|
(Zip code)
|
|||
|
|
|
(248)
|
258-6800
|
|
|
||
(Registrant's telephone number, including area code)
|
|
|
|
|
|
|
|
Trading
|
Name of each exchange
|
Title of each class
|
Symbol
|
on which registered
|
Common Stock,
$0.01 Par Value |
TCO
|
New York Stock Exchange
|
|
|
|
|
|
|
6.5% Series J Cumulative
Redeemable Preferred Stock, No Par Value |
TCO PR J
|
New York Stock Exchange
|
|
|
|
|
|
|
|
|
|
6.25% Series K Cumulative
Redeemable Preferred Stock, No Par Value |
TCO PR K
|
New York Stock Exchange
|
|
|
|
|
|
|
March 31,
2020 |
|
December 31,
2019 |
||||
Assets:
|
|
|
|
||||
Properties
|
$
|
4,737,571
|
|
|
$
|
4,731,061
|
|
Accumulated depreciation and amortization
|
(1,553,697
|
)
|
|
(1,514,992
|
)
|
||
|
$
|
3,183,874
|
|
|
$
|
3,216,069
|
|
Investment in Unconsolidated Joint Ventures (UJVs) (Notes 2 and 4)
|
788,844
|
|
|
831,995
|
|
||
Cash and cash equivalents (Note 13)
|
395,070
|
|
|
102,762
|
|
||
Restricted cash (Note 13)
|
664
|
|
|
656
|
|
||
Accounts and notes receivable
|
90,927
|
|
|
95,416
|
|
||
Accounts receivable from related parties
|
1,491
|
|
|
2,112
|
|
||
Operating lease right-of-use assets
|
173,698
|
|
|
173,796
|
|
||
Deferred charges and other assets
|
92,442
|
|
|
92,659
|
|
||
Total Assets
|
$
|
4,727,010
|
|
|
$
|
4,515,465
|
|
|
|
|
|
||||
Liabilities:
|
|
|
|
||||
Notes payable, net (Note 5)
|
$
|
4,003,126
|
|
|
$
|
3,710,327
|
|
Accounts payable and accrued liabilities
|
252,960
|
|
|
268,714
|
|
||
Operating lease liabilities
|
241,206
|
|
|
240,777
|
|
||
Distributions in excess of investments in and net income of UJVs (Note 4)
|
471,382
|
|
|
473,053
|
|
||
Total Liabilities
|
$
|
4,968,674
|
|
|
$
|
4,692,871
|
|
Commitments and contingencies (Notes 5, 6, 7, 8, and 9)
|
|
|
|
|
|
||
|
|
|
|
||||
Redeemable noncontrolling interests (Note 6)
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||||
Equity (Deficit):
|
|
|
|
|
|
||
Taubman Centers, Inc. Shareholders’ Equity:
|
|
|
|
|
|
||
Series B Non-Participating Convertible Preferred Stock, $0.001 par and liquidation value, 40,000,000 shares authorized, 26,311,117 and 26,398,473 shares issued and outstanding at March 31, 2020 and December 31, 2019
|
$
|
26
|
|
|
$
|
26
|
|
Series J Cumulative Redeemable Preferred Stock, 7,700,000 shares authorized, no par, $192.5 million liquidation preference, 7,700,000 shares issued and outstanding at both March 31, 2020 and December 31, 2019
|
|
|
|
||||
Series K Cumulative Redeemable Preferred Stock, 6,800,000 shares authorized, no par, $170.0 million liquidation preference, 6,800,000 shares issued and outstanding at both March 31, 2020 and December 31, 2019
|
|
|
|
||||
Common Stock, $0.01 par value, 250,000,000 shares authorized, 61,375,291 and 61,228,579 shares issued and outstanding at March 31, 2020 and December 31, 2019
|
614
|
|
|
612
|
|
||
Additional paid-in capital
|
742,409
|
|
|
741,026
|
|
||
Accumulated other comprehensive income (loss) (Note 12)
|
(61,502
|
)
|
|
(39,003
|
)
|
||
Dividends in excess of net income (Note 7)
|
(738,223
|
)
|
|
(712,884
|
)
|
||
|
$
|
(56,676
|
)
|
|
$
|
(10,223
|
)
|
Noncontrolling interests (Note 6)
|
(184,988
|
)
|
|
(167,183
|
)
|
||
|
$
|
(241,664
|
)
|
|
$
|
(177,406
|
)
|
Total Liabilities and Equity
|
$
|
4,727,010
|
|
|
$
|
4,515,465
|
|
|
Three Months Ended March 31
|
||||||
|
2020
|
|
2019
|
||||
Revenues:
|
|
|
|
||||
Rental revenues
|
$
|
142,658
|
|
|
$
|
144,289
|
|
Overage rents
|
4,217
|
|
|
3,141
|
|
||
Management, leasing, and development services
|
566
|
|
|
1,216
|
|
||
Other
|
12,018
|
|
|
11,562
|
|
||
|
$
|
159,459
|
|
|
$
|
160,208
|
|
Expenses:
|
|
|
|
||||
Maintenance, taxes, utilities, and promotion
|
$
|
38,751
|
|
|
$
|
38,538
|
|
Other operating
|
18,142
|
|
|
19,225
|
|
||
Management, leasing, and development services
|
493
|
|
|
531
|
|
||
General and administrative
|
8,016
|
|
|
8,576
|
|
||
Restructuring charges (Note 1)
|
362
|
|
|
625
|
|
||
Simon Property Group, Inc. transaction costs (Note 1)
|
6,385
|
|
|
|
|||
Costs associated with shareholder activism (Note 1)
|
|
|
|
4,000
|
|
||
Interest expense
|
34,849
|
|
|
36,885
|
|
||
Depreciation and amortization
|
51,696
|
|
|
44,956
|
|
||
|
$
|
158,694
|
|
|
$
|
153,336
|
|
Nonoperating income, net (Notes 9 and 11)
|
548
|
|
|
8,733
|
|
||
Income before income tax expense, equity in income of UJVs, gains on partial dispositions of ownership interests in UJVs, net of tax, and gains on remeasurements of ownership interests in UJVs
|
$
|
1,313
|
|
|
$
|
15,605
|
|
Income tax expense (Note 3)
|
(756
|
)
|
|
(539
|
)
|
||
Equity in income of UJVs (Note 4)
|
11,284
|
|
|
14,672
|
|
||
Income before gains on partial dispositions of ownership interests in UJVs, net of tax, and gains on remeasurements of ownership interests in UJVs
|
$
|
11,841
|
|
|
$
|
29,738
|
|
Gains on partial dispositions of ownership interests in UJVs (Note 2)
|
10,914
|
|
|
|
|||
Gains on remeasurements of ownership interests in UJVs (Note 2)
|
13,729
|
|
|
|
|||
Net income
|
$
|
36,484
|
|
|
$
|
29,738
|
|
Net income attributable to noncontrolling interests (Note 6)
|
(10,233
|
)
|
|
(8,230
|
)
|
||
Net income attributable to Taubman Centers, Inc.
|
$
|
26,251
|
|
|
$
|
21,508
|
|
Distributions to participating securities of TRG (Note 8)
|
(595
|
)
|
|
(627
|
)
|
||
Preferred stock dividends
|
(5,784
|
)
|
|
(5,784
|
)
|
||
Net income attributable to Taubman Centers, Inc. common shareholders
|
$
|
19,872
|
|
|
$
|
15,097
|
|
|
|
|
|
||||
Net income
|
$
|
36,484
|
|
|
$
|
29,738
|
|
Other comprehensive income (loss) (Note 12):
|
|
|
|
||||
Unrealized loss on interest rate instruments
|
(17,919
|
)
|
|
(4,888
|
)
|
||
Cumulative translation adjustment
|
(18,975
|
)
|
|
3,318
|
|
||
Reclassification adjustment for amounts recognized in net income
|
768
|
|
|
(1,423
|
)
|
||
|
$
|
(36,126
|
)
|
|
$
|
(2,993
|
)
|
Comprehensive income
|
$
|
358
|
|
|
$
|
26,745
|
|
Comprehensive income attributable to noncontrolling interests
|
(588
|
)
|
|
(7,364
|
)
|
||
Comprehensive (loss) income attributable to Taubman Centers, Inc.
|
$
|
(230
|
)
|
|
$
|
19,381
|
|
|
|
|
|
||||
Basic earnings per common share (Note 10)
|
$
|
0.32
|
|
|
$
|
0.25
|
|
|
|
|
|
||||
Diluted earnings per common share (Note 10)
|
$
|
0.32
|
|
|
$
|
0.25
|
|
|
|
|
|
||||
Weighted average number of common shares outstanding – basic
|
61,249,637
|
|
|
61,124,016
|
|
|
Taubman Centers, Inc. Shareholders’ Equity
|
|
|
|
|
||||||||||||||||||||||||||||
|
Preferred Stock
|
|
Common Stock
|
|
Paid-In Capital
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Dividends in Excess of Net Income
|
|
Non-Redeemable Noncontrolling Interests
|
|
Total Equity (Deficit)
|
||||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|||||||||||||||||||||
Balance, January 1, 2019
|
39,362,994
|
|
|
$
|
25
|
|
|
61,069,108
|
|
|
$
|
611
|
|
|
$
|
676,097
|
|
|
$
|
(25,376
|
)
|
|
$
|
(744,230
|
)
|
|
$
|
(215,024
|
)
|
|
$
|
(307,897
|
)
|
Issuance of common stock pursuant to Continuing Offer (Notes 8 and 9)
|
(7,300
|
)
|
|
|
|
7,300
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|||||||||||||
Share-based compensation under employee and director benefit plans (Note 8)
|
|
|
|
|
85,131
|
|
|
1
|
|
|
1,829
|
|
|
|
|
|
|
|
|
1,830
|
|
||||||||||||
Adjustments of noncontrolling interests (Note 6)
|
|
|
|
|
|
|
|
|
(171
|
)
|
|
2
|
|
|
|
|
76
|
|
|
(93
|
)
|
||||||||||||
Dividends and distributions (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
(47,694
|
)
|
|
(17,194
|
)
|
|
(64,888
|
)
|
|||||||||||||
Adjustments of equity pursuant to adoption of ASC 842 (Note 1)
|
|
|
|
|
|
|
|
|
|
|
|
|
3,156
|
|
|
1,763
|
|
|
4,919
|
|
|||||||||||||
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
(362
|
)
|
|
|
|
(362
|
)
|
||||||||||||||
Net income (excludes $93 of net loss attributable to redeemable noncontrolling interest) (Note 6)
|
|
|
|
|
|
|
|
|
|
|
|
|
21,508
|
|
|
8,323
|
|
|
29,831
|
|
|||||||||||||
Other comprehensive income (loss) (Note 12):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Unrealized loss on interest rate instruments
|
|
|
|
|
|
|
|
|
|
|
(3,475
|
)
|
|
|
|
(1,413
|
)
|
|
(4,888
|
)
|
|||||||||||||
Cumulative translation adjustment
|
|
|
|
|
|
|
|
|
|
|
2,359
|
|
|
|
|
959
|
|
|
3,318
|
|
|||||||||||||
Reclassification adjustment for amounts recognized in net income
|
|
|
|
|
|
|
|
|
|
|
(1,011
|
)
|
|
|
|
(412
|
)
|
|
(1,423
|
)
|
|||||||||||||
Balance, March 31, 2019
|
39,355,694
|
|
|
$
|
25
|
|
|
61,161,539
|
|
|
$
|
612
|
|
|
$
|
677,755
|
|
|
$
|
(27,501
|
)
|
|
$
|
(767,622
|
)
|
|
$
|
(222,922
|
)
|
|
$
|
(339,653
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Balance, January 1, 2020
|
40,898,473
|
|
|
$
|
26
|
|
|
61,228,579
|
|
|
$
|
612
|
|
|
$
|
741,026
|
|
|
$
|
(39,003
|
)
|
|
$
|
(712,884
|
)
|
|
$
|
(167,183
|
)
|
|
$
|
(177,406
|
)
|
Issuance of common stock pursuant to Continuing Offer (Notes 8 and 9)
|
(106,312
|
)
|
|
|
|
106,319
|
|
|
1
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
—
|
|
|||||||||||
Share-based compensation under employee and director benefit plans (Note 8)
|
18,956
|
|
|
|
|
40,393
|
|
|
1
|
|
|
1,456
|
|
|
|
|
|
|
|
|
1,457
|
|
|||||||||||
Adjustments of noncontrolling interests (Note 6)
|
|
|
|
|
|
|
|
|
(72
|
)
|
|
(17
|
)
|
|
|
|
89
|
|
|
—
|
|
||||||||||||
Dividends and distributions (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
(47,736
|
)
|
|
(18,482
|
)
|
|
(66,218
|
)
|
|||||||||||||
Partial dispositions of ownership interests in UJVs (Note 2)
|
|
|
|
|
|
|
|
|
|
|
3,999
|
|
|
(3,999
|
)
|
|
|
|
—
|
|
|||||||||||||
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
145
|
|
|
|
|
145
|
|
||||||||||||||
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
26,251
|
|
|
10,233
|
|
|
36,484
|
|
|||||||||||||
Other comprehensive income (loss) (Note 12):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Unrealized loss on interest rate instruments
|
|
|
|
|
|
|
|
|
|
|
(12,539
|
)
|
|
|
|
(5,380
|
)
|
|
(17,919
|
)
|
|||||||||||||
Cumulative translation adjustment
|
|
|
|
|
|
|
|
|
|
|
(14,479
|
)
|
|
|
|
(4,496
|
)
|
|
(18,975
|
)
|
|||||||||||||
Reclassification adjustment for amounts recognized in net income
|
|
|
|
|
|
|
|
|
|
|
537
|
|
|
|
|
231
|
|
|
768
|
|
|||||||||||||
Balance, March 31, 2020
|
40,811,117
|
|
|
$
|
26
|
|
|
61,375,291
|
|
|
$
|
614
|
|
|
$
|
742,409
|
|
|
$
|
(61,502
|
)
|
|
$
|
(738,223
|
)
|
|
$
|
(184,988
|
)
|
|
$
|
(241,664
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
(1) We declared cash dividends of $0.675 per common share, $0.40625 per share of Series J cumulative redeemable preferred stock, and $0.390625 per share of Series K cumulative redeemable preferred stock for both the three months ended March 31, 2020 and 2019.
|
|
Three Months Ended March 31
|
||||||
|
2020
|
|
2019
|
||||
Cash Flows From Operating Activities:
|
|
|
|
||||
Net income
|
$
|
36,484
|
|
|
$
|
29,738
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||
Depreciation and amortization
|
51,696
|
|
|
44,956
|
|
||
Gains on partial dispositions of ownership interests in UJVs, net of tax (Note 2)
|
(10,914
|
)
|
|
|
|||
Gains on remeasurements of ownership interests in UJVs (Note 2)
|
(13,729
|
)
|
|
|
|||
Fluctuation in fair value of equity securities (Note 11)
|
|
|
|
(3,346
|
)
|
||
Income (loss) from UJVs net of distributions
|
6,551
|
|
|
(1,684
|
)
|
||
Non-cash operating lease expense
|
528
|
|
|
509
|
|
||
Other
|
3,108
|
|
|
3,499
|
|
||
Decrease in cash attributable to changes in assets and liabilities:
|
|
|
|
|
|
||
Receivables, deferred charges, and other assets
|
(5,923
|
)
|
|
(3,084
|
)
|
||
Accounts payable and accrued liabilities
|
(23,855
|
)
|
|
(27,420
|
)
|
||
Net Cash Provided By Operating Activities
|
$
|
43,946
|
|
|
$
|
43,168
|
|
|
|
|
|
|
|
||
Cash Flows From Investing Activities:
|
|
|
|
|
|
||
Additions to properties
|
$
|
(24,165
|
)
|
|
$
|
(47,006
|
)
|
Partial reimbursement of Saks anchor allowance at The Mall of San Juan
|
3,000
|
|
|
|
|||
Proceeds from partial dispositions of ownership interests in UJVs (Note 2)
|
48,311
|
|
|
|
|||
Proceeds from sale of equity securities (Note 11)
|
|
|
|
52,077
|
|
||
Contributions to UJVs (Note 2)
|
(923
|
)
|
|
(16,900
|
)
|
||
Distributions from UJVs (less than) in excess of income
|
(2,827
|
)
|
|
8,418
|
|
||
Other
|
24
|
|
|
23
|
|
||
Net Cash Provided By (Used In) Investing Activities
|
$
|
23,420
|
|
|
$
|
(3,388
|
)
|
|
|
|
|
|
|
||
Cash Flows From Financing Activities:
|
|
|
|
|
|
||
Proceeds from revolving lines of credit, net (Note 5)
|
$
|
295,000
|
|
|
$
|
18,475
|
|
Debt payments
|
(2,998
|
)
|
|
(2,871
|
)
|
||
Issuance of common stock and/or TRG Units in connection with incentive plans
|
(608
|
)
|
|
(581
|
)
|
||
Distributions to noncontrolling interests
|
(18,482
|
)
|
|
(17,194
|
)
|
||
Distributions to participating securities of TRG
|
(595
|
)
|
|
(627
|
)
|
||
Cash dividends to preferred shareholders
|
(5,784
|
)
|
|
(5,784
|
)
|
||
Cash dividends to common shareholders
|
(41,357
|
)
|
|
(41,283
|
)
|
||
Net Cash Provided By (Used In) Financing Activities
|
$
|
225,176
|
|
|
$
|
(49,865
|
)
|
|
|
|
|
|
|
||
Effect of exchange rate fluctuations on cash, cash equivalents, and restricted cash (Note 13)
|
$
|
(226
|
)
|
|
$
|
2,601
|
|
|
|
|
|
||||
Net Increase (Decrease) In Cash, Cash Equivalents, and Restricted Cash
|
292,316
|
|
|
(7,484
|
)
|
||
|
|
|
|
|
|
||
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period (Note 13)
|
103,418
|
|
|
142,929
|
|
||
|
|
|
|
|
|
||
Cash, Cash Equivalents, and Restricted Cash at End of Period (Note 13)
|
$
|
395,734
|
|
|
$
|
135,445
|
|
•
|
reduced global economic activity severely impacts our tenants' businesses, financial condition, and liquidity and may cause tenants to be unable to fully meet their obligations to us or to otherwise seek modifications of such obligations, resulting in increases in uncollectible receivables and reductions in rental revenues;
|
•
|
the negative financial impact could affect our future compliance with financial covenants of our $1.1 billion primary unsecured revolving line of credit, unsecured term loans, or other debt agreements and our ability to fund debt service; and
|
•
|
weaker economic conditions could result in lower fair values of assets and cause us to recognize impairment charges for our consolidated centers or other than temporary impairment of our Investments in UJVs.
|
2020
|
$
|
339,089
|
|
2021
|
414,455
|
|
|
2022
|
367,229
|
|
|
2023
|
333,914
|
|
|
2024
|
309,713
|
|
|
Thereafter
|
832,715
|
|
|
Three Months Ended March 31
|
||||||
|
2020
|
|
2019
|
||||
Shopping center and other operational revenues
|
$
|
12,018
|
|
|
11,562
|
|
|
Management, leasing, and development services
|
566
|
|
|
1,216
|
|
||
Total revenue from contracts with customers
|
$
|
12,584
|
|
|
$
|
12,778
|
|
|
Three Months Ended March 31
|
||||||
|
2020
|
|
2019
|
||||
Federal current
|
$
|
57
|
|
|
$
|
—
|
|
Federal deferred
|
(1,099
|
)
|
|
193
|
|
||
Foreign current
|
688
|
|
|
120
|
|
||
Foreign deferred
|
1,037
|
|
(1)
|
115
|
|
||
State current
|
9
|
|
|
19
|
|
||
State deferred
|
64
|
|
|
92
|
|
||
Total income tax expense
|
$
|
756
|
|
|
$
|
539
|
|
(1)
|
During the three months ended March 31, 2020, we recognized $1.1 million of foreign deferred tax expense (10% tax rate) as we are no longer able to assert indefinite reinvestment in CityOn.Xi'an due to the sale of 50% of our interest to funds managed by Blackstone (Note 2). The tax expense is related to an excess of the Investment in the UJV under GAAP accounting over the tax basis of our investment.
|
|
2020
|
|
2019
|
|
||||
Deferred tax assets:
|
|
|
|
|
||||
Federal
|
$
|
2,310
|
|
(1)
|
$
|
4,385
|
|
(2)
|
Foreign
|
2,111
|
|
|
2,020
|
|
|
||
State
|
1,323
|
|
|
1,388
|
|
|
||
Total deferred tax assets
|
$
|
5,744
|
|
|
$
|
7,793
|
|
|
Valuation allowances
|
(2,772
|
)
|
(3)
|
(2,761
|
)
|
(4)
|
||
Net deferred tax assets
|
$
|
2,972
|
|
|
$
|
5,032
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|||
Foreign (5)
|
$
|
5,939
|
|
|
$
|
4,449
|
|
|
Total deferred tax liabilities
|
$
|
5,939
|
|
|
$
|
4,449
|
|
|
(1)
|
Includes a $3.0 million Federal investment tax credit carryforward.
|
(2)
|
Includes a $4.4 million Federal investment tax credit carryforward.
|
(3)
|
Includes a $1.7 million valuation allowance against Foreign deferred tax assets, and a $1.1 million valuation allowance against State deferred tax assets.
|
(4)
|
Includes a $1.7 million valuation allowance against Foreign deferred tax assets, and a $1.1 million valuation allowance against State deferred tax assets.
|
(5)
|
The foreign deferred tax liability relates to shareholder level withholding taxes from Korea and China on undistributed profits and an excess of the Investments in the UJVs under GAAP accounting over the tax basis of our investments.
|
Shopping Center
|
|
Ownership as of
March 31, 2020 and
December 31, 2019
|
CityOn.Xi'an (1)
|
|
25% / 50%
|
CityOn.Zhengzhou
|
|
24.5
|
Country Club Plaza
|
|
50
|
Fair Oaks Mall
|
|
50
|
The Gardens Mall
|
|
48.5
|
International Plaza
|
|
50.1
|
The Mall at Millenia
|
|
50
|
Stamford Town Center
|
|
50
|
Starfield Anseong (under development)
|
|
Note 2
|
Starfield Hanam
|
|
17.15
|
Sunvalley
|
|
50
|
The Mall at University Town Center
|
|
50
|
Waterside Shops
|
|
50
|
Westfarms
|
|
79
|
(1)
|
In February 2020, we completed the sale of 50% of our interest in CityOn.Xian (Note 2).
|
|
March 31,
2020 |
|
December 31,
2019 |
||||
Assets:
|
|
|
|
||||
Properties
|
$
|
3,754,320
|
|
|
$
|
3,816,923
|
|
Accumulated depreciation and amortization
|
(955,165
|
)
|
|
(942,840
|
)
|
||
|
$
|
2,799,155
|
|
|
$
|
2,874,083
|
|
Cash and cash equivalents
|
185,127
|
|
|
201,501
|
|
||
Accounts and notes receivable
|
96,385
|
|
|
122,569
|
|
||
Operating lease right-of-use assets
|
12,540
|
|
|
11,521
|
|
||
Deferred charges and other assets
|
176,266
|
|
|
178,708
|
|
||
|
$
|
3,269,473
|
|
|
$
|
3,388,382
|
|
|
|
|
|
||||
Liabilities and accumulated equity (deficiency) in assets:
|
|
|
|
|
|
||
Notes payable, net (1)
|
$
|
3,016,036
|
|
|
$
|
3,049,737
|
|
Accounts payable and other liabilities
|
293,143
|
|
|
341,263
|
|
||
Operating lease liabilities
|
14,292
|
|
|
13,274
|
|
||
TRG's accumulated deficiency in assets
|
(254,202
|
)
|
|
(212,380
|
)
|
||
UJV Partners' accumulated equity in assets
|
200,204
|
|
|
196,488
|
|
||
|
$
|
3,269,473
|
|
|
$
|
3,388,382
|
|
|
|
|
|
||||
TRG's accumulated deficiency in assets (above)
|
$
|
(254,202
|
)
|
|
$
|
(212,380
|
)
|
TRG's investment in Starfield Anseong (Note 2) and advances to CityOn.Zhengzhou
|
197,414
|
|
|
209,024
|
|
||
TRG basis adjustments, including elimination of intercompany profit
|
341,976
|
|
|
329,673
|
|
||
TCO's additional basis
|
32,274
|
|
|
32,625
|
|
||
Net investment in UJVs
|
$
|
317,462
|
|
|
$
|
358,942
|
|
Distributions in excess of investments in and net income of UJVs
|
471,382
|
|
|
473,053
|
|
||
Investment in UJVs
|
$
|
788,844
|
|
|
$
|
831,995
|
|
|
Three Months Ended March 31
|
||||||
|
2020
|
|
2019
|
||||
Revenues
|
$
|
147,983
|
|
|
$
|
142,641
|
|
Maintenance, taxes, utilities, promotion, and other operating expenses
|
$
|
54,362
|
|
|
$
|
47,875
|
|
Interest expense
|
35,185
|
|
|
32,498
|
|
||
Depreciation and amortization
|
31,260
|
|
|
32,971
|
|
||
Total operating costs
|
$
|
120,807
|
|
|
$
|
113,344
|
|
Nonoperating income, net
|
542
|
|
|
401
|
|
||
Income tax expense
|
(2,100
|
)
|
|
(1,679
|
)
|
||
Net income
|
$
|
25,618
|
|
|
$
|
28,019
|
|
|
|
|
|
||||
Net income attributable to TRG
|
$
|
12,411
|
|
|
$
|
14,293
|
|
Realized intercompany profit, net of depreciation on TRG’s basis adjustments
|
(776
|
)
|
|
866
|
|
||
Depreciation of TCO's additional basis
|
(351
|
)
|
|
(487
|
)
|
||
Equity in income of UJVs
|
$
|
11,284
|
|
|
$
|
14,672
|
|
|
|
|
|
||||
Beneficial interest in UJVs’ operations:
|
|
|
|
|
|
||
Revenues less maintenance, taxes, utilities, promotion, and other operating expenses
|
$
|
44,393
|
|
|
$
|
49,417
|
|
Interest expense
|
(16,415
|
)
|
|
(16,776
|
)
|
||
Depreciation and amortization
|
(16,397
|
)
|
|
(17,192
|
)
|
||
Income tax expense
|
(297
|
)
|
|
(777
|
)
|
||
Equity in income of UJVs
|
$
|
11,284
|
|
|
$
|
14,672
|
|
|
At 100%
|
|
At Beneficial Interest
|
|
||||||||||||
|
Consolidated Subsidiaries
|
|
UJVs
|
|
Consolidated Subsidiaries
|
|
UJVs
|
|
||||||||
Debt as of:
|
|
|
|
|
|
|
|
|
||||||||
March 31, 2020
|
$
|
4,003,126
|
|
|
$
|
3,060,022
|
|
|
$
|
3,712,400
|
|
|
$
|
1,481,496
|
|
|
December 31, 2019
|
3,710,327
|
|
|
3,049,737
|
|
|
3,419,625
|
|
|
1,508,506
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Capitalized interest:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Three Months Ended March 31, 2020
|
$
|
1,707
|
|
(1)
|
$
|
276
|
|
(2)
|
$
|
1,676
|
|
(1)
|
$
|
177
|
|
(2)
|
Three Months Ended March 31, 2019
|
2,057
|
|
(1)
|
33
|
|
|
2,053
|
|
(1)
|
18
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Interest expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Three Months Ended March 31, 2020
|
$
|
34,849
|
|
|
$
|
34,657
|
|
|
$
|
32,053
|
|
|
$
|
16,415
|
|
|
Three Months Ended March 31, 2019
|
36,885
|
|
|
32,498
|
|
|
33,860
|
|
|
16,776
|
|
|
(1)
|
We capitalize interest costs incurred in funding our equity contributions to development projects accounted for as UJVs. The capitalized interest cost is included at our basis in our investment in UJVs. Such capitalized interest reduces interest expense on our Consolidated Statement of Operations and Comprehensive Income (Loss) and in the table above is included within Consolidated Subsidiaries.
|
(2)
|
Capitalized interest on the Asia UJV construction financing is presented at the Company's beneficial interest in both the UJVs (at 100%) and UJVs (at Beneficial Interest Columns).
|
|
Three Months Ended March 31
|
||||||
|
2020
|
|
2019
|
||||
Balance, January 1
|
$
|
—
|
|
|
$
|
7,800
|
|
Allocation of net loss
|
|
|
(93
|
)
|
|||
Adjustments of redeemable noncontrolling interest
|
|
|
93
|
|
|||
Balance, March 31
|
$
|
—
|
|
|
$
|
7,800
|
|
|
2020
|
|
2019
|
||||
Non-redeemable noncontrolling interests:
|
|
|
|
||||
Noncontrolling interests in consolidated joint ventures
|
$
|
(152,970
|
)
|
|
$
|
(153,343
|
)
|
Noncontrolling interests in partnership equity of TRG
|
(32,018
|
)
|
|
(13,840
|
)
|
||
|
$
|
(184,988
|
)
|
|
$
|
(167,183
|
)
|
|
Three Months Ended March 31
|
||||||
|
2020
|
|
2019
|
||||
Net income (loss) attributable to noncontrolling interests:
|
|
|
|
||||
Non-redeemable noncontrolling interests:
|
|
|
|
||||
Noncontrolling share of income of consolidated joint ventures
|
$
|
1,023
|
|
|
$
|
1,522
|
|
Noncontrolling share of income of TRG
|
9,210
|
|
|
6,801
|
|
||
|
$
|
10,233
|
|
|
$
|
8,323
|
|
Redeemable noncontrolling interest:
|
|
|
|
(93
|
)
|
||
|
$
|
10,233
|
|
|
$
|
8,230
|
|
|
Three Months Ended March 31
|
||||||
|
2020
|
|
2019
|
||||
Net income attributable to TCO common shareholders
|
$
|
19,872
|
|
|
$
|
15,097
|
|
Transfers (to) from the noncontrolling interest:
|
|
|
|
|
|
||
Increase (decrease) in TCO’s paid-in capital for adjustments of noncontrolling interest (1)
|
(72
|
)
|
|
(171
|
)
|
||
Net transfers (to) from noncontrolling interests
|
(72
|
)
|
|
(171
|
)
|
||
Change from net income attributable to TCO and transfers (to) from noncontrolling interests
|
$
|
19,800
|
|
|
$
|
14,926
|
|
(1)
|
In 2020 and 2019, adjustments of the noncontrolling interest were made as a result of changes in our ownership of TRG in connection with our share-based compensation under employee and director benefit plans (Note 8) and issuances of common stock pursuant to the Continuing Offer (Note 9). In 2019, adjustments of noncontrolling interest were made in connection with the accounting for the Former Asia President's redeemable ownership interest.
|
Instrument Type
|
|
Ownership
|
|
Notional Amount
|
|
Swap
Rate
|
|
Credit Spread on Loan
|
|
Total Swapped Rate on Loan
|
|
Maturity
Date
|
||||
Consolidated Subsidiaries:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receive variable (LIBOR) /pay-fixed swap (1)
|
|
100%
|
|
100,000
|
|
2.14%
|
|
1.55%
|
(1)
|
3.69%
|
(1)
|
February 2022
|
||||
Receive variable (LIBOR) /pay-fixed swap (1)
|
|
100%
|
|
100,000
|
|
2.14%
|
|
1.55%
|
(1)
|
3.69%
|
(1)
|
February 2022
|
||||
Receive variable (LIBOR) /pay-fixed swap (1)
|
|
100%
|
|
50,000
|
|
2.14%
|
|
1.55%
|
(1)
|
3.69%
|
(1)
|
February 2022
|
||||
Receive variable (LIBOR) /pay-fixed swap (1)
|
|
100%
|
|
50,000
|
|
2.14%
|
|
1.55%
|
/
|
1.38%
|
(1)
|
3.69%
|
/
|
3.51%
|
(1)
|
February 2022
|
Receive variable (LIBOR) /pay-fixed swap (2)
|
|
100%
|
|
125,000
|
|
3.02%
|
|
1.60%
|
(2)
|
4.62%
|
(2)
|
March 2023
|
||||
Receive variable (LIBOR) /pay-fixed swap (2)
|
|
100%
|
|
75,000
|
|
3.02%
|
|
1.60%
|
(2)
|
4.62%
|
(2)
|
March 2023
|
||||
Receive variable (LIBOR) /pay-fixed swap (2)
|
|
100%
|
|
50,000
|
|
3.02%
|
|
1.60%
|
(2)
|
4.62%
|
(2)
|
March 2023
|
||||
Receive variable (LIBOR) /pay-fixed swap (3)
|
|
100%
|
|
12,000
|
|
2.09%
|
|
1.40%
|
|
3.49%
|
|
March 2024
|
||||
UJVs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receive variable (LIBOR) /pay-fixed swap (4)
|
|
50.1%
|
|
157,666
|
|
1.83%
|
|
1.75%
|
|
3.58%
|
|
December 2021
|
||||
Receive variable (LIBOR) USD/pay-fixed Korean Won (KRW) cross-currency interest rate swap (5)
|
|
17.15%
|
|
52,065 USD / 60,500,000 KRW
|
|
1.52%
|
|
1.60%
|
|
3.12%
|
|
September 2020
|
(1)
|
The hedged forecasted transaction for each of these swaps is the first previously unhedged one-month LIBOR-indexed interest payment accrued and made each month on a debt principal amount equal to the swap notional amount, regardless of the specific debt agreement from which they may flow. We are currently using these swaps to manage interest rate risk on the $275 million unsecured term loan and $25 million on the $1.1 billion primary unsecured revolving line of credit. The credit spread on these loans can vary within a range of 1.15% to 1.80% on the $275 million unsecured term loan and 1.05% to 1.60% on the $1.1 billion unsecured revolving line of credit, depending on our total leverage ratio at the measurement date, resulting in an effective rate in the range of 3.29% to 3.94% on the $275 million unsecured term loan and 3.19% to 3.74% on $25 million of the $1.1 billion primary unsecured revolving line of credit during the remaining swap period.
|
(2)
|
The hedged forecasted transaction for each of these swaps is the first previously unhedged one-month LIBOR-indexed interest payment accrued and made each month on a debt principal amount equal to the swap notional amount, regardless of the specific debt agreement from which they may flow beginning with the March 2019 effective date of these swaps. We are currently using these swaps to manage interest rate risk on the $250 million unsecured term loan. The credit spread on this loan can vary within a range of 1.25% to 1.90%, depending on our total leverage ratio at the measurement date, resulting in an effective rate in the range of 4.27% to 4.92% during the swap period.
|
(3)
|
The notional amount on this swap is equal to the outstanding principal balance of the floating rate loan on the U.S. headquarters building.
|
(4)
|
The notional amount on this swap is equal to the outstanding principal balance of the floating rate loan on International Plaza.
|
(5)
|
The notional amount on this swap is equal to the outstanding principal balance of the U.S. dollar construction loan for Starfield Hanam. There is a cross-currency interest rate swap to fix the interest rate on the loan and swap the related principal and interest payments from U.S. dollars to KRW in order to reduce the impact of fluctuations in interest rates and exchange rates on the cash flows of the joint venture. The currency swap exchange rate is 1,162.0.
|
|
Amount of Gain or (Loss) Recognized in OCI on Derivative
|
|
Location of Gain or (Loss) Reclassified from AOCI into Income
|
|
Amount of Gain or (Loss) Reclassified from AOCI into Income
|
||||||||||||
|
Three Months Ended March 31
|
|
|
|
Three Months Ended March 31
|
||||||||||||
|
2020
|
|
2019
|
|
|
|
2020
|
|
2019
|
||||||||
Derivatives in cash flow hedging relationships:
|
|
|
|
|
|
|
|
|
|
||||||||
Interest rate contracts – consolidated subsidiaries
|
$
|
(15,545
|
)
|
|
$
|
(5,716
|
)
|
|
Interest Expense
|
|
$
|
(1,211
|
)
|
|
$
|
838
|
|
Interest rate contracts – UJVs
|
(1,564
|
)
|
|
(625
|
)
|
|
Equity in Income of UJVs
|
|
(31
|
)
|
|
137
|
|
||||
Cross-currency interest rate contract – UJV
|
(42
|
)
|
|
30
|
|
|
Equity in Income of UJVs
|
|
474
|
|
|
448
|
|
||||
Total derivatives in cash flow hedging relationships
|
$
|
(17,151
|
)
|
|
$
|
(6,311
|
)
|
|
|
|
$
|
(768
|
)
|
|
$
|
1,423
|
|
|
|
|
Fair Value
|
||||||
|
Consolidated Balance Sheet Location
|
|
March 31,
2020 |
|
December 31,
2019 |
||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
||||
Asset derivatives:
|
|
|
|
|
|
||||
Cross-currency interest rate contract - UJV
|
Investment in UJVs
|
|
$
|
343
|
|
|
|
|
|
Total assets designated as hedging instruments
|
|
|
$
|
343
|
|
|
$
|
—
|
|
|
|
|
|
|
|
||||
Liability derivatives:
|
|
|
|
|
|
|
|||
Interest rate contracts – consolidated subsidiaries
|
Accounts Payable and Accrued Liabilities
|
|
$
|
(30,965
|
)
|
|
$
|
(15,419
|
)
|
Interest rate contract – UJV
|
Investment in UJVs
|
|
(1,975
|
)
|
|
(412
|
)
|
||
Cross-currency interest rate contract – UJV
|
Investment in UJVs
|
|
|
|
|
(91
|
)
|
||
Total liabilities designated as hedging instruments
|
|
|
$
|
(32,940
|
)
|
|
$
|
(15,922
|
)
|
|
Number of Restricted TRG Profits Units
|
|
Weighted Average Grant-Date Fair Value
|
|||
Outstanding at January 1, 2020
|
22,411
|
|
|
$
|
54.73
|
|
Units recovered and cancelled (1)
|
(58
|
)
|
|
57.84
|
|
|
Vested and converted (2)
|
(14,199
|
)
|
|
57.84
|
|
|
Outstanding at March 31, 2020
|
8,154
|
|
|
$
|
49.29
|
|
(1)
|
This reflects the recovery and cancellation of previously granted Restricted TRG Profits Units, which vested on March 1, 2020, as a result of the actual cash distributions made during the vesting period.
|
(2)
|
This represents the conversion of Restricted TRG Profits Units to TRG Units, which vested on March 1, 2020, and had previously satisfied certain tax–driven requirements.
|
|
Number of relative TSR Performance-based TRG Profits Units
|
|
Weighted Average Grant-Date Fair Value
|
|||
Outstanding at January 1, 2020
|
50,420
|
|
|
$
|
22.81
|
|
Units recovered and cancelled (1)
|
(27,318
|
)
|
|
23.14
|
|
|
Vested and converted (2)
|
(4,757
|
)
|
|
23.14
|
|
|
Outstanding at March 31, 2020
|
18,345
|
|
|
$
|
22.22
|
|
(1)
|
This reflects the recovery and cancellation of previously granted (300% of target grant amount) Relative TSR Performance-based TRG Profits Units, which vested on March 1, 2020, as a result of the performance payout ratio of 17% and the actual cash distributions made during the vesting period. That is, despite the completion of applicable employee service requirements, the number of Relative TSR Performance-based TRG Profits Units ultimately considered earned is determined by the extent to which the TSR market performance measure was achieved during the performance period.
|
(2)
|
This represents the conversion of Restricted TRG Profits Units to TRG Units, which vested on March 1, 2020, and had previously satisfied certain tax–driven requirements.
|
|
Number of NOI Performance-based TRG Profits Units
|
|
Weighted Average Grant-Date Fair Value
|
|||
Outstanding at January 1, 2020
|
50,420
|
|
|
$
|
2.99
|
|
Units recovered and cancelled (1)
|
(32,075
|
)
|
|
—
|
|
|
Outstanding at March 31, 2020
|
18,345
|
|
|
$
|
8.21
|
|
(1)
|
This reflects the recovery and cancellation of previously granted (300% of target grant amount) NOI Performance-based TRG Profits Units, which vested on March 1, 2020, as a result of the performance payout ratio of 0%. That is, despite the completions of applicable employee service requirements, the number of NOI Performance-based TRG Profits Units ultimately considered earned is determined by the extent to which the NOI performance measure was achieved during the performance period.
|
|
Number of TSR PSU
|
|
Weighted Average Grant-Date Fair Value
|
|||
Outstanding at January 1, 2020
|
29,375
|
|
|
$
|
82.95
|
|
Vested (1)
|
(2,492
|
)
|
|
79.60
|
|
|
Outstanding at March 31, 2020
|
26,883
|
|
|
$
|
83.26
|
|
(1)
|
Based on our market performance relative to that of a peer group, the actual number of shares of common stock issued upon vesting on March 1, 2020 was 1,297 shares for the TSR PSU three-year grants. The shares of common stock were issued at 0.52x. That is, despite the completion of the applicable employee service requirements, the number of shares ultimately considered earned is determined by the extent to which the TSR market performance measure was achieved during the performance period.
|
|
Number of NOI PSU
|
|
Weighted Average Grant-Date Fair Value
|
|||
Outstanding at January 1, 2020
|
29,375
|
|
|
$
|
40.95
|
|
Granted
|
31,318
|
|
|
43.24
|
|
|
Vested (1)
|
(2,492
|
)
|
|
—
|
|
|
Outstanding at March 31, 2020
|
58,201
|
|
|
$
|
43.94
|
|
(1)
|
The actual number of shares of common stock issued upon vesting on March 1, 2020 was zero. That is, despite the completion of applicable employee service requirements, the number of shares ultimately considered earned is determined by the extent to which NOI was achieved during the performance period.
|
|
Number of RSU
|
|
Weighted Average Grant-Date Fair Value
|
|||
Outstanding at January 1, 2020
|
179,846
|
|
|
$
|
57.73
|
|
Vested
|
(41,974
|
)
|
|
67.05
|
|
|
Granted
|
84,352
|
|
|
47.07
|
|
|
Forfeited
|
(1,681
|
)
|
|
56.55
|
|
|
Outstanding at March 31, 2020
|
220,543
|
|
|
$
|
51.89
|
|
Proceeds Description
|
Consolidated Statement of Operations and Comprehensive Income (Loss) Location
|
|
Three Months Ended
March 31, 2019 |
||
|
|||||
|
|
|
(in thousands)
|
||
Business interruption insurance recoveries
|
Nonoperating Income, Net
|
|
$
|
4,043
|
|
Expense reimbursement insurance recoveries
|
Nonoperating Income, Net
|
|
3
|
|
|
Three Months Ended March 31
|
||||||
|
2020
|
|
2019
|
||||
Net income attributable to TCO common shareholders (Numerator):
|
|
|
|
||||
Basic
|
$
|
19,872
|
|
|
$
|
15,097
|
|
Impact of additional ownership of TRG
|
24
|
|
|
21
|
|
||
Diluted
|
$
|
19,896
|
|
|
$
|
15,118
|
|
|
|
|
|
||||
Shares (Denominator) – basic
|
61,249,637
|
|
|
61,124,016
|
|
||
Effect of dilutive securities
|
224,453
|
|
|
275,092
|
|
||
Shares (Denominator) – diluted
|
61,474,090
|
|
|
61,399,108
|
|
||
|
|
|
|
||||
Earnings per common share – basic
|
$
|
0.32
|
|
|
$
|
0.25
|
|
Earnings per common share – diluted
|
$
|
0.32
|
|
|
$
|
0.25
|
|
|
Three Months Ended March 31
|
||||
|
2020
|
|
2019
|
||
Weighted average noncontrolling TRG Units outstanding
|
3,543,624
|
|
|
4,149,066
|
|
Unissued TRG Units under unit option deferral elections
|
871,262
|
|
|
871,262
|
|
|
|
Fair Value Measurements as of March 31, 2020 Using
|
|
Fair Value Measurements as of
December 31, 2019 Using
|
||||||||||||
Description
|
|
Quoted Prices in Active Markets for Identical Assets
(Level 1) |
|
Significant Other Observable Inputs
(Level 2) |
|
Quoted Prices in Active Markets for Identical Assets
(Level 1) |
|
Significant Other Observable Inputs
(Level 2) |
||||||||
Insurance deposit
|
|
$
|
11,239
|
|
|
|
|
|
$
|
11,213
|
|
|
|
|
||
Total assets
|
|
$
|
11,239
|
|
|
$
|
—
|
|
|
$
|
11,213
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
||||||||
Derivative interest rate contracts (Note 7)
|
|
|
|
|
$
|
(30,965
|
)
|
|
|
|
|
$
|
(15,419
|
)
|
||
Total liabilities
|
|
|
|
|
$
|
(30,965
|
)
|
|
|
|
|
$
|
(15,419
|
)
|
|
2020
|
|
2019
|
||||||||||||
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
||||||||
Notes payable, net
|
$
|
4,003,126
|
|
|
$
|
4,215,162
|
|
|
$
|
3,710,327
|
|
|
$
|
3,753,531
|
|
|
TCO AOCI
|
|
Noncontrolling Interests AOCI
|
||||||||||||||||||||
|
Cumulative translation adjustment
|
|
Unrealized gains (losses) on interest rate instruments and other
|
|
Total
|
|
Cumulative translation adjustment
|
|
Unrealized gains (losses) on interest rate instruments and other
|
|
Total
|
||||||||||||
January 1, 2020
|
$
|
(18,953
|
)
|
|
$
|
(20,050
|
)
|
|
$
|
(39,003
|
)
|
|
$
|
(8,176
|
)
|
|
$
|
4,197
|
|
|
$
|
(3,979
|
)
|
Other comprehensive income (loss) before reclassifications
|
(14,479
|
)
|
|
(12,539
|
)
|
|
(27,018
|
)
|
|
(4,496
|
)
|
|
(5,380
|
)
|
|
(9,876
|
)
|
||||||
Amounts reclassified from AOCI
|
|
|
537
|
|
|
537
|
|
|
|
|
231
|
|
|
231
|
|
||||||||
Net current period other comprehensive income (loss)
|
$
|
(14,479
|
)
|
|
$
|
(12,002
|
)
|
|
$
|
(26,481
|
)
|
|
$
|
(4,496
|
)
|
|
$
|
(5,149
|
)
|
|
$
|
(9,645
|
)
|
Partial disposition of ownership interest in UJV
|
3,999
|
|
|
|
|
|
3,999
|
|
|
|
|
|
|
|
—
|
|
|||||||
Adjustments due to changes in ownership
|
(33
|
)
|
|
16
|
|
|
(17
|
)
|
|
33
|
|
|
(16
|
)
|
|
17
|
|
||||||
March 31, 2020
|
$
|
(29,466
|
)
|
|
$
|
(32,036
|
)
|
|
$
|
(61,502
|
)
|
|
$
|
(12,639
|
)
|
|
$
|
(968
|
)
|
|
$
|
(13,607
|
)
|
|
TCO AOCI
|
|
Noncontrolling Interests AOCI
|
||||||||||||||||||||
|
Cumulative translation adjustment
|
|
Unrealized gains (losses) on interest rate instruments and other
|
|
Total
|
|
Cumulative translation adjustment
|
|
Unrealized gains (losses) on interest rate instruments and other
|
|
Total
|
||||||||||||
January 1, 2019
|
$
|
(16,128
|
)
|
|
$
|
(9,248
|
)
|
|
$
|
(25,376
|
)
|
|
$
|
(6,569
|
)
|
|
$
|
8,363
|
|
|
$
|
1,794
|
|
Other comprehensive income (loss) before reclassifications
|
2,359
|
|
|
(3,475
|
)
|
|
(1,116
|
)
|
|
959
|
|
|
(1,413
|
)
|
|
(454
|
)
|
||||||
Amounts reclassified from AOCI
|
|
|
(1,011
|
)
|
|
(1,011
|
)
|
|
|
|
|
(412
|
)
|
|
(412
|
)
|
|||||||
Net current period other comprehensive income (loss)
|
$
|
2,359
|
|
|
$
|
(4,486
|
)
|
|
$
|
(2,127
|
)
|
|
$
|
959
|
|
|
$
|
(1,825
|
)
|
|
$
|
(866
|
)
|
Adjustments due to changes in ownership
|
(9
|
)
|
|
11
|
|
|
2
|
|
|
9
|
|
|
(11
|
)
|
|
(2
|
)
|
||||||
March 31, 2019
|
$
|
(13,778
|
)
|
|
$
|
(13,723
|
)
|
|
$
|
(27,501
|
)
|
|
$
|
(5,601
|
)
|
|
$
|
6,527
|
|
|
$
|
926
|
|
Details about AOCI Components
|
|
Amounts reclassified from AOCI
|
|
Affected line item on our Consolidated Statement of Operations and Comprehensive Income (Loss)
|
||
Losses (gains) on interest rate instruments and other:
|
|
|
|
|
||
Realized loss on interest rate contracts - consolidated subsidiaries
|
|
$
|
1,211
|
|
|
Interest Expense
|
Realized loss on interest rate contracts - UJVs
|
|
31
|
|
|
Equity in Income of UJVs
|
|
Realized gain on cross-currency interest rate contract - UJV
|
|
(474
|
)
|
|
Equity in Income of UJVs
|
|
Total reclassifications for the period
|
|
$
|
768
|
|
|
|
Details about AOCI Components
|
|
Amounts reclassified from AOCI
|
|
Affected line item on our Consolidated Statement of Operations and Comprehensive Income (Loss)
|
||
Gains on interest rate instruments and other:
|
|
|
|
|
||
Realized gain on interest rate contracts - consolidated subsidiaries
|
|
$
|
(838
|
)
|
|
Interest Expense
|
Realized gain on interest rate contracts - UJVs
|
|
(137
|
)
|
|
Equity in Income of UJVs
|
|
Realized gain on cross-currency interest rate contract - UJV
|
|
(448
|
)
|
|
Equity in Income of UJVs
|
|
Total reclassifications for the period
|
|
$
|
(1,423
|
)
|
|
|
|
March 31,
2020 |
|
December 31,
2019 |
||||
Cash and cash equivalents
|
$
|
395,070
|
|
|
$
|
102,762
|
|
Restricted cash
|
664
|
|
|
656
|
|
||
Total Cash, Cash Equivalents, and Restricted Cash shown on our Consolidated Statement of Cash Flows
|
$
|
395,734
|
|
|
$
|
103,418
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
Trailing 12-Months Ended March 31 (1)
|
||||
|
2020
|
|
2019
|
||
U.S. Consolidated Businesses
|
14.0
|
%
|
|
13.8
|
%
|
U.S. UJVs
|
12.2
|
|
|
12.0
|
|
Combined U.S. Centers
|
13.1
|
|
|
13.0
|
|
(1)
|
Based on reports of sales furnished by mall tenants of all U.S. centers reported during that period.
|
|
2020 (1)
|
|
2019 (1)
|
||
Ending occupancy - all U.S. centers
|
90.9
|
%
|
|
92.2
|
%
|
Ending occupancy - U.S. comparable centers
|
91.9
|
|
|
93.0
|
|
Leased space - all U.S. centers
|
93.4
|
|
|
94.8
|
|
Leased space - U.S. comparable centers
|
94.6
|
|
|
95.5
|
|
|
Three Months Ended March 31
|
||||||
|
2020
|
|
2019
|
||||
Average rent per square foot - all U.S. comparable centers: (1)
|
|
|
|
||||
U.S. Consolidated Businesses
|
$
|
70.47
|
|
|
$
|
71.13
|
|
U.S. UJVs
|
53.65
|
|
|
55.69
|
|
||
Combined U.S. Centers
|
62.12
|
|
|
63.41
|
|
(1)
|
Statistics exclude non-comparable centers and Asia centers.
|
|
Trailing 12-Months Ended March 31 (1) (2)
|
||||||
|
2020
|
|
2019
|
||||
Opening base rent per square foot:
|
|
|
|
||||
U.S. Consolidated Businesses
|
$
|
57.59
|
|
|
$
|
66.21
|
|
U.S. UJVs
|
48.04
|
|
|
47.54
|
|
||
Combined U.S. Centers
|
53.77
|
|
|
58.55
|
|
||
Square feet of GLA opened:
|
|
|
|
||||
U.S. Consolidated Businesses
|
588,694
|
|
|
590,038
|
|
||
U.S. UJVs
|
391,543
|
|
|
410,702
|
|
||
Combined U.S. Centers
|
980,237
|
|
|
1,000,740
|
|
||
Closing base rent per square foot:
|
|
|
|
||||
U.S. Consolidated Businesses
|
$
|
65.17
|
|
|
$
|
61.17
|
|
U.S. UJVs
|
52.25
|
|
|
50.15
|
|
||
Combined U.S. Centers
|
59.46
|
|
|
56.21
|
|
||
Square feet of GLA closed:
|
|
|
|
||||
U.S. Consolidated Businesses
|
523,139
|
|
|
513,404
|
|
||
U.S. UJVs
|
414,893
|
|
|
420,343
|
|
||
Combined U.S. Centers
|
938,032
|
|
|
933,747
|
|
||
Releasing spread per square foot:
|
|
|
|
||||
U.S. Consolidated Businesses
|
$
|
(7.58
|
)
|
|
$
|
5.04
|
|
U.S. UJVs
|
(4.21
|
)
|
|
(2.61
|
)
|
||
Combined U.S. Centers
|
(5.69
|
)
|
|
2.34
|
|
||
Releasing spread per square foot growth:
|
|
|
|
||||
U.S. Consolidated Businesses
|
(11.6
|
)%
|
|
8.2
|
%
|
||
U.S. UJVs
|
(8.1
|
)%
|
|
(5.2
|
)%
|
||
Combined U.S. Centers
|
(9.6
|
)%
|
|
4.2
|
%
|
(1)
|
Statistics exclude non-comparable centers and Asia centers.
|
(2)
|
Opening and closing statistics exclude spaces greater than or equal to 10,000 square feet.
|
Proceeds Description
|
Consolidated Statement of Operations and Comprehensive Income (Loss) Location
|
|
Three Months Ended
March 31, 2019 |
||
|
|||||
|
|
|
(in thousands)
|
||
Business interruption insurance recoveries
|
Nonoperating Income, Net
|
|
$
|
4,043
|
|
Expense reimbursement insurance recoveries
|
Nonoperating Income, Net
|
|
3
|
|
•
|
the decrease in rental revenues was primarily attributable to the restructuring of our leases with Forever 21 due to their bankruptcy filing in 2019, which resulted in an increase in uncollectible tenant revenues, a decrease in rent per square foot, and a decrease in property tax, common area maintenance, and electric expense recoveries. These decreases were partially offset by an increase in lease cancellation income and occupancy; and
|
•
|
the increase in overage rents was primarily attributable to increases in sales related to specific tenants that pay overage rents.
|
•
|
the decrease in other operating expense was primarily due to decreased operating expenses in Asia, as well as decreased food and beverage expenses of our restaurant joint venture due to the closing of the two restaurants at Beverly Center in December 2019;
|
•
|
transaction costs incurred in 2020 related to Simon's pending acquisition of TCO, including transaction related advisory, diligence, legal, and tax fees;
|
•
|
a decrease in costs associated with shareholder activism, which were incurred in 2019, but not in 2020;
|
•
|
the decrease in interest expense was attributable to proceeds received from the Blackstone Transactions; and
|
•
|
the increase in depreciation expense was primarily attributable to new assets being placed into service at Beverly Center and The Mall at Green Hills in connection with our redevelopment projects at the centers.
|
|
Three Months Ended March 31, 2020
|
Comparable Center NOI Growth:
|
|
Excluding lease cancellation income - at beneficial interest
|
(1.7)%
|
Excluding lease cancellation income using constant currency exchange rates - at beneficial interest
|
(1.5)%
|
Excluding lease cancellation income - at 100%
|
(3.4)%
|
Excluding lease cancellation income using constant currency exchange rates - at 100%
|
(2.7)%
|
Including lease cancellation income - at beneficial interest
|
(0.5)%
|
Including lease cancellation income using constant currency exchange rates - at beneficial interest
|
(0.4)%
|
Including lease cancellation income - at 100%
|
(2.5)%
|
Including lease cancellation income using constant currency exchange rates - at 100%
|
(1.9)%
|
|
|
|
|
Total Portfolio NOI Growth:
|
|
Excluding lease cancellation income - at beneficial interest
|
(3.8)%
|
|
Amount
|
|
Interest Rate Including Spread
|
|
|||
|
(in millions)
|
|
|
|
|||
Fixed rate debt
|
$
|
3,229.4
|
|
|
3.98
|
%
|
(1) (2)
|
|
|
|
|
|
|||
Floating rate debt swapped to fixed rate:
|
|
|
|
|
|||
Swap maturing in September 2020
|
8.9
|
|
|
3.12
|
%
|
|
|
Swap maturing in December 2021
|
79.0
|
|
|
3.58
|
%
|
|
|
Swaps maturing in February 2022
|
275.0
|
|
|
3.69
|
%
|
|
|
Swap maturing in February 2022
|
25.0
|
|
|
3.51
|
%
|
|
|
Swaps maturing in March 2023
|
250.0
|
|
|
4.62
|
%
|
|
|
Swap maturing in March 2024
|
12.0
|
|
|
3.49
|
%
|
|
|
|
$
|
649.9
|
|
|
4.01
|
%
|
(1)
|
|
|
|
|
|
|||
Floating month to month
|
1,328.8
|
|
(3)
|
2.93
|
%
|
(1) (3)
|
|
Total floating rate debt
|
$
|
1,978.7
|
|
|
3.29
|
%
|
(1)
|
|
|
|
|
|
|||
Total beneficial interest in debt
|
$
|
5,208.0
|
|
|
3.72
|
%
|
(1)
|
|
|
|
|
|
|||
Total beneficial interest in deferred financing costs, net
|
$
|
(14.1
|
)
|
|
|
|
|
|
|
|
|
|
|||
Net beneficial interest in debt
|
$
|
5,193.9
|
|
|
|
|
|
|
|
|
|
|
|||
Amortization of deferred financing costs (4)
|
|
|
|
0.17
|
%
|
|
|
Average all-in rate
|
|
|
|
3.89
|
%
|
|
(1)
|
Represents weighted average interest rate before amortization of deferred financing costs.
|
(2)
|
Includes non-cash amortization of debt premium related to acquisition.
|
(3)
|
The LIBOR rate is capped at 3.0% until December 2020, resulting in a maximum interest rate of 4.45%, on $150 million of this debt.
|
(4)
|
Deferred financing costs include debt issuance costs including amortization of deferred financing costs from revolving lines of credit and other fees not listed above.
|
(5)
|
Amounts in table may not add due to rounding.
|
|
2020 (1)
|
||||||||||||||
|
Consolidated Businesses
|
|
Beneficial Interest in Consolidated Businesses
|
|
UJVs
|
|
Beneficial Interest in UJVs
|
||||||||
|
(in millions)
|
||||||||||||||
New development projects - Asia (2)
|
|
|
|
|
(3)
|
|
$
|
1.7
|
|
||||||
Existing centers:
|
|
|
|
|
|
|
|
||||||||
Projects with incremental GLA or anchor replacement (4)
|
$
|
4.2
|
|
|
$
|
4.2
|
|
|
$
|
(5.0
|
)
|
|
(2.5
|
)
|
|
Projects with no incremental GLA and other (5)
|
3.1
|
|
|
3.0
|
|
|
2.7
|
|
|
1.6
|
|
||||
Mall tenant allowances
|
7.8
|
|
|
7.7
|
|
|
(0.7
|
)
|
|
(1.3
|
)
|
||||
Asset replacement costs recoverable from tenants
|
2.0
|
|
|
2.0
|
|
|
1.5
|
|
|
0.8
|
|
||||
Corporate office improvements, technology, equipment, and other
|
0.1
|
|
|
0.1
|
|
|
|
|
|
||||||
Total
|
$
|
17.1
|
|
|
$
|
16.8
|
|
|
$
|
(1.5
|
)
|
|
$
|
0.3
|
|
(1)
|
Costs are net of intercompany profits and are computed on an accrual basis.
|
(2)
|
Asia balances exclude net fluctuations of total project costs due to changes in exchange rates during the period.
|
(3)
|
Asia spending for Starfield Anseong is only included at our beneficial interest in the UJVs at beneficial interest column until development is completed.
|
(4)
|
Includes costs related to The Mall at Green Hills redevelopment for certain amounts to be incurred subsequent to the project's completion, including construction on certain tenant spaces, and an adjustment to costs incurred for the Country Club Plaza Nordstrom project related to an over accrual of costs in 2019.
|
(5)
|
Includes costs related to the Beverly Center related to the ongoing redevelopment and tenant replacement activity.
|
(6)
|
Amounts in this table may not add due to rounding.
|
|
Three Months Ended March 31
|
||||||||||||||||||||
|
2020
|
|
2019
|
||||||||||||||||||
|
Dollars in millions
|
|
Diluted Shares/ Units
|
|
Per Share/ Unit
|
|
Dollars in millions
|
|
Diluted Shares/ Units
|
|
Per Share/ Unit
|
||||||||||
Net income attributable to TCO common shareholders - basic
|
$
|
19.9
|
|
|
61,249,637
|
|
|
$
|
0.32
|
|
|
$
|
15.1
|
|
|
61,124,016
|
|
|
$
|
0.25
|
|
Add impact of share-based compensation
|
—
|
|
|
224,453
|
|
|
|
|
—
|
|
|
275,092
|
|
|
|
||||||
Net income attributable to TCO common shareholders - diluted
|
$
|
19.9
|
|
|
61,474,090
|
|
|
$
|
0.32
|
|
|
$
|
15.1
|
|
|
61,399,108
|
|
|
$
|
0.25
|
|
Add depreciation of TCO's additional basis
|
1.5
|
|
|
|
|
0.02
|
|
|
1.6
|
|
|
|
|
0.03
|
|
||||||
Net income attributable to TCO common shareholders, excluding step-up depreciation
|
$
|
21.4
|
|
|
61,474,090
|
|
|
$
|
0.35
|
|
|
$
|
16.7
|
|
|
61,399,108
|
|
|
$
|
0.27
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Noncontrolling share of income of TRG
|
9.2
|
|
|
26,418,110
|
|
|
|
|
6.8
|
|
|
24,875,564
|
|
|
|
||||||
Distributions to participating securities of TRG
|
0.6
|
|
|
871,262
|
|
|
|
|
0.6
|
|
|
871,262
|
|
|
|
||||||
Net income attributable to partnership unitholders and participating securities of TRG
|
$
|
31.2
|
|
|
88,763,462
|
|
|
$
|
0.35
|
|
|
$
|
24.2
|
|
|
87,145,934
|
|
|
$
|
0.28
|
|
Add (less) depreciation and amortization (1):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Consolidated businesses at 100%
|
51.7
|
|
|
|
|
0.58
|
|
|
45.0
|
|
|
|
|
0.52
|
|
||||||
Depreciation of TCO’s additional basis
|
(1.5
|
)
|
|
|
|
(0.02
|
)
|
|
(1.6
|
)
|
|
|
|
(0.02
|
)
|
||||||
Noncontrolling partners in consolidated joint ventures
|
(2.0
|
)
|
|
|
|
(0.02
|
)
|
|
(2.2
|
)
|
|
|
|
(0.03
|
)
|
||||||
Share of UJVs
|
16.4
|
|
|
|
|
0.18
|
|
|
17.2
|
|
|
|
|
0.20
|
|
||||||
Non-real estate depreciation
|
(1.2
|
)
|
|
|
|
(0.01
|
)
|
|
(1.1
|
)
|
|
|
|
(0.01
|
)
|
||||||
Less gains on partial dispositions of ownership interests in UJVs, net of tax
|
(10.9
|
)
|
|
|
|
(0.12
|
)
|
|
|
|
|
|
|
||||||||
Less gains on remeasurements of ownership interests in UJVs
|
(13.7
|
)
|
|
|
|
(0.15
|
)
|
|
|
|
|
|
|
||||||||
Less impact of share-based compensation
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
||||||
Funds from Operations attributable to partnership unitholders and participating securities of TRG
|
$
|
70.0
|
|
|
88,763,462
|
|
|
$
|
0.79
|
|
|
$
|
81.3
|
|
|
87,145,934
|
|
|
$
|
0.93
|
|
TCO's average ownership percentage of TRG - basic
|
69.9
|
%
|
|
|
|
|
|
71.1
|
%
|
|
|
|
|
||||||||
Funds from Operations attributable to TCO's common shareholders
|
$
|
48.9
|
|
|
|
|
$
|
0.79
|
|
|
$
|
57.8
|
|
|
|
|
$
|
0.93
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Funds from Operations attributable to partnership unitholders and participating securities of TRG
|
$
|
70.0
|
|
|
88,763,462
|
|
|
$
|
0.79
|
|
|
$
|
81.3
|
|
|
87,145,934
|
|
|
$
|
0.93
|
|
Restructuring charges
|
0.4
|
|
|
|
|
—
|
|
|
0.6
|
|
|
|
|
0.01
|
|
||||||
Costs related to Blackstone transactions (2)
|
1.1
|
|
|
|
|
0.01
|
|
|
|
|
|
|
|
||||||||
Taubman Asia President transition costs
|
0.2
|
|
|
|
|
—
|
|
|
|
|
|
|
|
||||||||
Promote fee adjustment, net of tax - Starfield Hanam (3)
|
0.3
|
|
|
|
|
—
|
|
|
|
|
|
|
|
||||||||
Simon Property Group, Inc. transaction costs
|
6.4
|
|
|
|
|
0.07
|
|
|
|
|
|
|
|
||||||||
Costs associated with shareholder activism
|
|
|
|
|
|
|
|
4.0
|
|
|
|
|
0.05
|
|
|||||||
Fluctuation in fair value of equity securities
|
|
|
|
|
|
|
|
(3.3
|
)
|
|
|
|
(0.04
|
)
|
|||||||
Adjusted Funds from Operations attributable to partnership unitholders and participating securities of TRG
|
$
|
78.3
|
|
|
88,763,462
|
|
|
0.88
|
|
|
$
|
82.6
|
|
|
87,145,934
|
|
|
$
|
0.95
|
|
|
TCO's average ownership percentage of TRG - basic
|
69.9
|
%
|
|
|
|
|
|
71.1
|
%
|
|
|
|
|
||||||||
Adjusted Funds from Operations attributable to TCO's common shareholders
|
$
|
54.7
|
|
|
|
|
$
|
0.88
|
|
|
$
|
58.7
|
|
|
|
|
$
|
0.95
|
|
(1)
|
Depreciation includes $6.8 million and $5.5 million of mall tenant allowance amortization for the three months ended March 31, 2020 and 2019, respectively.
|
(2)
|
Represents $1.1 million of deferred income tax expense related to the Blackstone Transactions, which has been recorded within Income Tax Expense in our Consolidated Statement of Operations and Comprehensive Income (Loss).
|
(3)
|
Includes a reduction of $0.3 million of promote fee income related to the previously recognized promote fee, net of tax, for Starfield Hanam, which has been recorded within Equity in Income of UJVs in our Statement of Operations and Comprehensive Income (Loss).
|
(4)
|
Amounts in this table may not recalculate due to rounding.
|
|
Three Months Ended March 31
|
||||||||
|
(in millions)
|
||||||||
|
2020
|
|
2019
|
|
Growth %
|
||||
Net income
|
$
|
36.5
|
|
|
$
|
29.7
|
|
|
|
|
|
|
|
|
|
||||
Add (less) depreciation and amortization:
|
|
|
|
|
|
||||
Consolidated businesses at 100%
|
51.7
|
|
|
45.0
|
|
|
|
||
Noncontrolling partners in consolidated joint ventures
|
(2.0
|
)
|
|
(2.2
|
)
|
|
|
||
Share of UJVs
|
16.4
|
|
|
17.2
|
|
|
|
||
|
|
|
|
|
|
||||
Add (less) interest expense and income tax expense:
|
|
|
|
|
|
||||
Interest expense:
|
|
|
|
|
|
||||
Consolidated businesses at 100%
|
34.8
|
|
|
36.9
|
|
|
|
||
Noncontrolling partners in consolidated joint ventures
|
(2.8
|
)
|
|
(3.0
|
)
|
|
|
||
Share of UJVs
|
16.4
|
|
|
16.8
|
|
|
|
||
Income tax expense:
|
|
|
|
|
|
||||
Consolidated businesses at 100%
|
0.8
|
|
|
0.5
|
|
|
|
||
Noncontrolling partners in consolidated joint ventures
|
|
|
(0.1
|
)
|
|
|
|||
Share of UJVs
|
0.3
|
|
|
0.8
|
|
|
|
||
Share of income tax expense on disposition
|
1.5
|
|
|
|
|
|
|||
|
|
|
|
|
|
||||
Less noncontrolling share of income of consolidated joint ventures
|
(1.0
|
)
|
|
(1.4
|
)
|
|
|
||
|
|
|
|
|
|
||||
Add EBITDA attributable to outside partners:
|
|
|
|
|
|
||||
EBITDA attributable to noncontrolling partners in consolidated joint ventures
|
5.8
|
|
|
6.7
|
|
|
|
||
EBITDA attributable to outside partners in UJVs
|
51.3
|
|
|
47.1
|
|
|
|
||
|
|
|
|
|
|
||||
EBITDA at 100%
|
$
|
209.7
|
|
|
$
|
194.0
|
|
|
|
|
|
|
|
|
|
||||
Add (less) items excluded from shopping center NOI:
|
|
|
|
|
|
||||
General and administrative expenses
|
8.0
|
|
|
8.6
|
|
|
|
||
Management, leasing, and development services, net
|
(0.1
|
)
|
|
(0.7
|
)
|
|
|
||
Restructuring charges
|
0.4
|
|
|
0.6
|
|
|
|
||
Costs associated with shareholder activism
|
|
|
4.0
|
|
|
|
|||
Straight-line of rents
|
(1.0
|
)
|
|
(2.9
|
)
|
|
|
||
Nonoperating income, net
|
(0.9
|
)
|
|
(9.1
|
)
|
|
|
||
Simon Property Group, Inc. transaction costs
|
6.4
|
|
|
|
|
|
|||
Gains on partial dispositions of ownership interests in UJVs
|
(12.4
|
)
|
|
|
|
|
|||
Gains on remeasurements of ownership interests in UJVs
|
(13.7
|
)
|
|
|
|
|
|||
Unallocated operating expenses and other
|
5.0
|
|
|
7.7
|
|
|
|
||
NOI at 100% - total portfolio
|
$
|
201.3
|
|
|
$
|
202.2
|
|
|
|
Less - NOI of non-comparable centers (1)
|
(18.1
|
)
|
|
(14.3
|
)
|
|
|
||
NOI at 100% - comparable centers
|
$
|
183.2
|
|
|
$
|
188.0
|
|
|
(2.5)%
|
Foreign currency exchange rate fluctuation adjustment
|
1.1
|
|
|
|
|
|
|||
NOI at 100% - comparable centers including lease cancellation income at constant currency
|
$
|
184.4
|
|
|
$
|
188.0
|
|
|
(1.9)%
|
|
|
|
|
|
|
||||
NOI at 100% - comparable centers
|
$
|
183.2
|
|
|
$
|
188.0
|
|
|
|
Lease cancellation income - comparable centers
|
(2.1
|
)
|
|
(0.5
|
)
|
|
|
||
NOI at 100% - comparable centers excluding lease cancellation income (2)
|
$
|
181.2
|
|
|
$
|
187.5
|
|
|
(3.4)%
|
Foreign currency exchange rate fluctuation adjustment
|
1.1
|
|
|
|
|
|
|||
NOI at 100% - comparable centers excluding lease cancellation income at constant currency
|
$
|
182.3
|
|
|
$
|
187.5
|
|
|
(2.7)%
|
|
|
|
|
|
|
||||
NOI at 100% - comparable centers
|
$
|
183.2
|
|
|
$
|
188.0
|
|
|
|
Less NOI of comparable centers attributable to noncontrolling partners in consolidated joint ventures and outside partners in UJVs
|
(53.9
|
)
|
|
(57.9
|
)
|
|
|
||
Beneficial interest in NOI - comparable centers including lease cancellation income
|
129.4
|
|
|
130.1
|
|
|
(0.5)%
|
||
Beneficial interest in foreign currency exchange rate fluctuation adjustment
|
0.2
|
|
|
|
|
|
|||
Beneficial interest in NOI - comparable centers including lease cancellation income at constant currency
|
$
|
129.6
|
|
|
$
|
130.1
|
|
|
(0.4)%
|
|
|
|
|
|
|
||||
NOI at 100% - comparable centers excluding lease cancellation income (2)
|
$
|
181.2
|
|
|
$
|
187.5
|
|
|
|
Less NOI of comparable centers excluding lease cancellation income attributable to noncontrolling partners in consolidated joint ventures and outside partners in UJVs
|
(53.7
|
)
|
|
(57.8
|
)
|
|
|
||
Beneficial interest in NOI - comparable centers excluding lease cancellation income
|
127.5
|
|
|
129.7
|
|
|
(1.7)%
|
||
Beneficial interest in foreign currency exchange rate fluctuation adjustment
|
0.2
|
|
|
|
|
|
|
||
Beneficial interest in NOI - comparable centers excluding lease cancellation income at constant currency
|
$
|
127.7
|
|
|
$
|
129.7
|
|
|
(1.5)%
|
|
|
|
|
|
|
||||
NOI at 100% - total portfolio
|
$
|
201.3
|
|
|
$
|
202.2
|
|
|
|
Less lease cancellation income - total portfolio
|
(2.5
|
)
|
|
(0.6
|
)
|
|
|
||
Less NOI attributable to noncontrolling partners in consolidated joint ventures and outside partners in UJVs excluding lease cancellation income - total portfolio
|
(57.3
|
)
|
|
(54.6
|
)
|
|
|
||
Beneficial interest in NOI - total portfolio excluding lease cancellation income
|
$
|
141.6
|
|
|
$
|
147.1
|
|
|
(3.8)%
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1 A.
|
Risk Factors
|
•
|
certain states and cities where our businesses operate have reacted by instituting shelter in place rules, social distancing rules and guidelines, restrictions on travel and public gatherings, and restrictions on the types of business that may continue to operate, all of which resulted in the temporary closure of all but two U.S. shopping centers effective at the close of business on March 19. The other two centers closed soon thereafter. We are unable to predict when these restrictions will be lifted or when our centers will be able to reopen;
|
•
|
the COVID-19 pandemic has resulted in significantly reduced global economic activity, which has severely impacted our tenants' businesses, financial condition, and liquidity and may cause tenants to be unable to fully meet their obligations to us or to otherwise seek modifications of such obligations, resulting in increases in uncollectible receivables and reductions in rental revenues;
|
•
|
our tenants could be severely affected by the COVID-19 pandemic, which could lead to reduced credit quality, increased bankruptcies, early terminations, reduced lease renewals, decreased sales performance, the closing of our tenants and anchors or increased rationalization of square footage. Certain of our lease agreements include co-tenancy and/or sales-based kick-out provisions which allow a tenant to pay a reduced rent amount and, in certain instances, terminate the lease, if we fail to maintain certain occupancy levels or retain specified named anchors, or if the tenant does not achieve certain specified sales targets. To the extent our occupancy levels decline significantly or we lose anchors, this may cause additional lease terminations. Further, replacing mall tenants at attractive lease terms or at all could be difficult in a recession economy, which could lead to excess space in our centers and an oversupply of space in the industry;
|
•
|
portions of our rental revenues are based on tenant sales, which have been and could continue to be materially adversely affected by COVID-19 due to store closures in the near term, and potentially in the long-term to the extent it significantly and adversely impacts mall traffic and consumer behavior, as well as the desirability of shopping, dining and entertaining at malls (particular our large, enclosed malls) compared to other alternatives. Further, reduced economic activity could lead to a prolonged economic recession, which could negatively impact consumer discretionary spending, which could directly impact our sales based on rental revenues and mall traffic, as well as tenants’ long-term viability and appetite to remain in our centers at rent levels desirable to us or at all;
|
•
|
global commerce, travel, and tourism have been and may continue to be adversely impacted by the COVID-19 pandemic, which could lead to limited trade and population movement (which would adversely impact our centers that significantly benefit from tourism), issues with the movement of goods through the supply chain, and other impacts to business and consumer demand that may diminish the demand for our tenants’ products and services, which may reduce demand and rents for our properties;
|
•
|
the future growth of our portfolio could be materially adversely affected by the COVID-19 pandemic due to the factors mentioned elsewhere in this risk factor, which could impede us from pursuing an overall strategy of creating value through development, redevelopment, acquisition, or internal growth and recycling capital using long-term fixed rate financing on the centers upon stabilization;
|
•
|
the potential negative impact on the health of our employees, particularly if a significant number of them are impacted, could affect our ability to ensure business continuity during the period of disruption related to the pandemic. The outbreak is forcing many of our on-site and management office employees to work remotely, which may adversely impact our ability to effectively manage our business and introduce operational risk, including an increased vulnerability to potential cyber security attacks;
|
•
|
the negative financial impact of the COVID-19 pandemic could affect our future compliance with financial covenants of our $1.1 billion primary unsecured revolving line of credit, unsecured term loans, or other debt agreements and our ability to fund debt service. Failure to meet certain of these financial covenants or failure to pay our debt service could cause an event of default under and/or accelerate some or all of such indebtedness which could have a material adverse effect on our business, results of operations, financial condition and liquidity. Further, the availability of our $1.1 billion primary unsecured revolving line of credit could be reduced in the future if the values of the assets in our unencumbered asset pool decrease as a result of effects from the COVID-19 pandemic. As a result of the additional $350 million borrowing made as a precautionary measure to increase liquidity and preserve financial flexibility due to uncertainty resulting from the COVID-19 pandemic, we have increased leverage higher than our historical average and will incur interest expense on our borrowings, as well as increase our vulnerability to future economic and industry conditions;
|
•
|
the financial markets and our stock price also have been adversely impacted by the COVID-19 pandemic, and the negative financial impact of the COVID-19 pandemic could result in difficulty accessing debt or equity capital on attractive terms, or at all, to fund business operations or address maturing liabilities on a timely basis and our tenants' ability to fund their business operations and meet their obligations to us;
|
•
|
unanticipated costs and operating expenses and decreased revenue related to compliance with regulations, such as additional expenses related to staff working remotely, requirements to provide employees with additional mandatory paid time off and increased expenses related to sanitation and protective measures performed at each of our centers, as well as additional expenses incurred to protect the welfare of our employees, such as expanded access to health services;
|
•
|
as a result of the uncertainty of the impact of the COVID-19 pandemic on our business and cash flows, our ability to pay dividends on our stock could be limited in the future. The decision to declare and pay dividends on our common stock in the future, as well as the timing, amount, and composition of any such future dividends, will be at the sole discretion of our Board of Directors and will depend on our earnings, FFO, liquidity, financial condition, capital requirements, contractual prohibitions, or other limitations under our indebtedness and preferred shares, the annual dividend requirements under the REIT provisions of the Code, state law and such other factors as our Board of Directors deems relevant; and
|
•
|
weaker economic conditions could result in lower fair values of assets and cause us to recognize impairment charges for our consolidated centers or other than temporary impairment of our Investments in UJVs.
|
|
|
TAUBMAN CENTERS, INC.
|
Date:
|
May 5, 2020
|
By: /s/ Simon J. Leopold
|
|
|
Simon J. Leopold
|
|
|
Executive Vice President, Chief Financial Officer, and Treasurer (Principal Financial Officer and Principal Accounting Officer)
|
Grant ID:
|
RSUs Granted
|
[ ]
|
[ ]
|
|
|
A.
|
The Participant’s surviving spouse.
|
B.
|
The Participant’s children, except that if any of such Participant’s children predecease the Participant but leave issue surviving, then such issue shall take, by right of representation, the share their parent would have taken if living. The term “children” shall include natural or adopted children but shall not include a child (or children) whom the Participant has placed for adoption or foster care.
|
C.
|
The Participant’s estate.
|
Grant ID:
|
PSUs Granted
|
[ ]
|
[ ] (subject to Addendum I rules)
|
A.
|
The Participant’s surviving spouse.
|
B.
|
The Participant’s children, except that if any of such Participant’s children predecease the Participant but leave issue surviving, then such issue shall take, by right of representation, the share their parent would have taken if living. The term “children” shall include natural or adopted children but shall not include a child (or children) whom the Participant has placed for adoption or foster care.
|
C.
|
The Participant’s estate.
|
Grant ID:
|
RSUs Granted
|
[ ]
|
[ ]
|
|
|
A.
|
The Participant’s surviving spouse.
|
B.
|
The Participant’s children, except that if any of such Participant’s children predecease the Participant but leave issue surviving, then such issue shall take, by right of representation, the share their parent would have taken if living. The term “children” shall include natural or adopted children but shall not include a child (or children) whom the Participant has placed for adoption or foster care.
|
C.
|
The Participant’s estate.
|
Grant ID:
|
PSUs Granted
|
[ ]
|
[ ] (subject to Addendum I rules)
|
A.
|
The Participant’s surviving spouse.
|
B.
|
The Participant’s children, except that if any of such Participant’s children predecease the Participant but leave issue surviving, then such issue shall take, by right of representation, the share their parent would have taken if living. The term “children” shall include natural or adopted children but shall not include a child (or children) whom the Participant has placed for adoption or foster care.
|
C.
|
The Participant’s estate.
|
Plan Name:
|
Taubman Severance Plan for Senior Level Management
|
Plan Number:
|
520
|
Plan Sponsor:
|
The Taubman Company LLC
|
Employer Identification Number:
|
38-3081510
|
Plan Year:
|
January 1 through December 31
|
Plan Administrator:
|
The Taubman Company LLC
|
Agent for Service of Legal Process:
|
The Taubman Company LLC
|
Type of Plan:
|
Severance plan; employee welfare benefit plan
|
Plan Costs:
|
The cost of the Plan is paid by the Company
|
•
|
They may examine (without charge) all Plan documents, including any amendments and copies of all documents filed with the U.S. Department of Labor, such as the Plan’s annual report (Internal Revenue Service Form 5500), if applicable. These documents are available for review in the Company’s Human Resources Department.
|
•
|
They may obtain copies of all Plan documents and other Plan information upon written request to the Plan Administrator. A reasonable charge may be made for such copies.
|
•
|
In addition to creating rights for Eligible Individuals, ERISA imposes duties upon the people who are responsible for the operation of the Plan. The people who operate the Plan (called “fiduciaries”) have a duty to do so prudently and in the interests of Eligible Individuals. No one, including the Company or any other person, may fire or otherwise discriminate against an Eligible Individual in any way to prevent them from obtaining a benefit under the Plan or exercising rights under ERISA. If an Eligible Individual’s claim for a severance benefit is denied, in whole or in part, they must receive a written explanation of the reason for the denial. An Eligible Individual has the right to have the denial of their claim reviewed. (The claim review procedure is explained above.)
|
•
|
Under ERISA, there are steps Eligible Individuals can take to enforce the above rights. For instance, if an Eligible Individual requests materials and does not receive them within 30 days, they may file suit in a federal court. In such a case, the court may require the Administrator to provide the materials and to pay the Eligible Individual up to $110 a day until they receive the materials, unless the materials were not sent because of reasons beyond the control of the Plan Administrator. If an Eligible Individual has a claim which is denied or ignored, in whole or in part, he or she may file suit in a state or federal court. If it should happen that an Eligible Individual is discriminated against for asserting their rights, he or she may seek assistance from the U.S. Department of Labor, or may file suit in a federal court.
|
•
|
In any case, the court will decide who will pay court costs and legal fees. If the Eligible Individual is successful, the court may order the person sued to pay these costs and fees. If the Eligible Individual loses, the court may order the Eligible Individual to pay these costs and fees, for example, if it finds that the claim is frivolous.
|
•
|
If an Eligible Individual has any questions regarding the Plan, please contact the Plan Administrator. If an Eligible Individual has any questions about this statement or about their rights under ERISA, they may contact the nearest area office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in the telephone directory, or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue, NW Washington, DC 20210. An Eligible Individual may also obtain certain publications about their rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration.
|
By:
|
/s/ Holly A. Kinnear
|
Name:
|
Holly A. Kinnear
|
Title:
|
SVP and CHRO
|
By:
|
/s/ Chris Heaphy
|
Name:
|
Chris Heaphy
|
Title:
|
Authorized Signatory
|
2.
|
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
May 5, 2020
|
/s/ Robert S. Taubman
|
|
|
Robert S. Taubman
|
|
|
Chairman of the Board of Directors, President, and Chief Executive Officer
|
2.
|
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
May 5, 2020
|
/s/ Simon J. Leopold
|
|
|
Simon J. Leopold
|
|
|
Executive Vice President, Chief Financial Officer, and Treasurer (Principal Financial Officer and Principal Accounting Officer)
|
(i)
|
The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(ii)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
|
/s/ Robert S. Taubman
|
Date:
|
May 5, 2020
|
Robert S. Taubman
|
|
|
Chairman of the Board of Directors, President, and Chief Executive Officer
|
|
|
(i)
|
The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(ii)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
|
/s/ Simon J. Leopold
|
Date:
|
May 5, 2020
|
Simon J. Leopold
|
|
|
Executive Vice President, Chief Financial Officer, and Treasurer (Principal Financial Officer and Principal Accounting Officer)
|
|
|