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
|
|
|
|
|
|
|
September 30,
2020 |
|
December 31,
2019 |
||||
Assets:
|
|
|
|
||||
Properties
|
$
|
4,725,672
|
|
|
$
|
4,731,061
|
|
Accumulated depreciation and amortization
|
(1,625,433
|
)
|
|
(1,514,992
|
)
|
||
|
$
|
3,100,239
|
|
|
$
|
3,216,069
|
|
Investment in Unconsolidated Joint Ventures (UJVs) (Notes 2 and 4)
|
787,951
|
|
|
831,995
|
|
||
Cash and cash equivalents (Note 13)
|
256,512
|
|
|
102,762
|
|
||
Restricted cash (Note 13)
|
632
|
|
|
656
|
|
||
Accounts and notes receivable (Note 1)
|
172,525
|
|
|
95,416
|
|
||
Accounts receivable from related parties
|
4,065
|
|
|
2,112
|
|
||
Operating lease right-of-use assets
|
172,050
|
|
|
173,796
|
|
||
Deferred charges and other assets
|
85,616
|
|
|
92,659
|
|
||
Total Assets
|
$
|
4,579,590
|
|
|
$
|
4,515,465
|
|
|
|
|
|
||||
Liabilities:
|
|
|
|
||||
Notes payable, net (Note 5)
|
$
|
3,897,515
|
|
|
$
|
3,710,327
|
|
Accounts payable and accrued liabilities
|
278,055
|
|
|
268,714
|
|
||
Operating lease liabilities
|
240,611
|
|
|
240,777
|
|
||
Distributions in excess of investments in and net income of UJVs (Note 4)
|
461,360
|
|
|
473,053
|
|
||
Total Liabilities
|
$
|
4,877,541
|
|
|
$
|
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, 25,979,064 and 26,398,473 shares issued and outstanding at September 30, 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 September 30, 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 September 30, 2020 and December 31, 2019
|
|
|
|
||||
Common Stock, $0.01 par value, 250,000,000 shares authorized, 61,723,103 and 61,228,579 shares issued and outstanding at September 30, 2020 and December 31, 2019
|
617
|
|
|
612
|
|
||
Additional paid-in capital
|
746,728
|
|
|
741,026
|
|
||
Accumulated other comprehensive income (loss) (Note 12)
|
(41,445
|
)
|
|
(39,003
|
)
|
||
Dividends in excess of net income (Note 7)
|
(802,672
|
)
|
|
(712,884
|
)
|
||
|
$
|
(96,746
|
)
|
|
$
|
(10,223
|
)
|
Noncontrolling interests (Note 6)
|
(201,205
|
)
|
|
(167,183
|
)
|
||
|
$
|
(297,951
|
)
|
|
$
|
(177,406
|
)
|
Total Liabilities and Equity
|
$
|
4,579,590
|
|
|
$
|
4,515,465
|
|
|
Three Months Ended September 30
|
|
Nine Months Ended September 30
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|||||||
Rental revenues (Note 1)
|
$
|
122,817
|
|
|
$
|
141,213
|
|
|
$
|
377,693
|
|
|
$
|
432,508
|
|
Overage rents
|
540
|
|
|
3,865
|
|
|
5,506
|
|
|
8,719
|
|
||||
Management, leasing, and development services
|
440
|
|
|
1,927
|
|
|
1,830
|
|
|
4,035
|
|
||||
Other (Note 1)
|
7,201
|
|
|
15,501
|
|
|
23,963
|
|
|
39,056
|
|
||||
|
$
|
130,998
|
|
|
$
|
162,506
|
|
|
$
|
408,992
|
|
|
$
|
484,318
|
|
Expenses:
|
|
|
|
|
|
|
|
||||||||
Maintenance, taxes, utilities, and promotion
|
$
|
37,053
|
|
|
$
|
40,786
|
|
|
$
|
110,315
|
|
|
$
|
118,506
|
|
Other operating
|
13,289
|
|
|
19,753
|
|
|
44,223
|
|
|
60,210
|
|
||||
Management, leasing, and development services
|
435
|
|
|
1,895
|
|
|
1,587
|
|
|
2,917
|
|
||||
General and administrative
|
7,048
|
|
|
9,632
|
|
|
22,587
|
|
|
26,762
|
|
||||
Restructuring charges (Note 1)
|
2,395
|
|
|
876
|
|
|
2,757
|
|
|
1,585
|
|
||||
Simon Property Group, Inc. transaction costs (Note 1)
|
17,060
|
|
|
|
|
32,505
|
|
|
|
||||||
Costs associated with shareholder activism (Note 1)
|
|
|
675
|
|
|
|
|
16,675
|
|
||||||
Interest expense
|
33,052
|
|
|
37,695
|
|
|
101,254
|
|
|
112,590
|
|
||||
Depreciation and amortization
|
49,235
|
|
|
47,849
|
|
|
162,769
|
|
|
137,064
|
|
||||
|
$
|
159,567
|
|
|
$
|
159,161
|
|
|
$
|
477,997
|
|
|
$
|
476,309
|
|
Nonoperating income, net (Notes 9 and 11)
|
1,694
|
|
|
11,108
|
|
|
1,332
|
|
|
26,468
|
|
||||
Income (loss) before income tax expense, equity in income (loss) of UJVs, gains on partial dispositions of ownership interests in UJVs, net of tax, and gains on remeasurements of ownership interests in UJVs
|
$
|
(26,875
|
)
|
|
$
|
14,453
|
|
|
$
|
(67,673
|
)
|
|
$
|
34,477
|
|
Income tax expense (Note 3)
|
(37
|
)
|
|
(2,021
|
)
|
|
(545
|
)
|
|
(4,924
|
)
|
||||
Equity in income (loss) of UJVs (Note 4)
|
(9,736
|
)
|
|
20,252
|
|
|
836
|
|
|
49,746
|
|
||||
Income (loss) before gains on partial dispositions of ownership interests in UJVs, net of tax, and gains on remeasurements of ownership interests in UJVs
|
$
|
(36,648
|
)
|
|
$
|
32,684
|
|
|
$
|
(67,382
|
)
|
|
$
|
79,299
|
|
Gains on partial dispositions of ownership interests in UJVs, net of tax (Note 2)
|
—
|
|
|
138,696
|
|
|
11,277
|
|
|
138,696
|
|
||||
Gains on remeasurements of ownership interests in UJVs (Note 2)
|
—
|
|
|
145,010
|
|
|
14,146
|
|
|
145,010
|
|
||||
Net income (loss)
|
$
|
(36,648
|
)
|
|
$
|
316,390
|
|
|
$
|
(41,959
|
)
|
|
$
|
363,005
|
|
Net (income) loss attributable to noncontrolling interests (Note 6)
|
12,360
|
|
|
(94,648
|
)
|
|
15,638
|
|
|
(107,118
|
)
|
||||
Net income (loss) attributable to Taubman Centers, Inc.
|
$
|
(24,288
|
)
|
|
$
|
221,742
|
|
|
$
|
(26,321
|
)
|
|
$
|
255,887
|
|
Distributions to participating securities of TRG (Notes 1 and 8)
|
|
|
(597
|
)
|
|
(595
|
)
|
|
(1,817
|
)
|
|||||
Preferred stock dividends
|
(5,784
|
)
|
|
(5,784
|
)
|
|
(17,353
|
)
|
|
(17,353
|
)
|
||||
Net income (loss) attributable to Taubman Centers, Inc. common shareholders
|
$
|
(30,072
|
)
|
|
$
|
215,361
|
|
|
$
|
(44,269
|
)
|
|
$
|
236,717
|
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
(36,648
|
)
|
|
$
|
316,390
|
|
|
$
|
(41,959
|
)
|
|
$
|
363,005
|
|
Other comprehensive income (loss) (Note 12):
|
|
|
|
|
|
|
|
||||||||
Unrealized loss on interest rate instruments
|
(38
|
)
|
|
(1,864
|
)
|
|
(20,149
|
)
|
|
(16,285
|
)
|
||||
Cumulative translation adjustment
|
14,521
|
|
|
(9,952
|
)
|
|
4,901
|
|
|
(20,463
|
)
|
||||
Reclassification adjustment for amounts recognized in net income (loss)
|
3,819
|
|
|
(396
|
)
|
|
7,873
|
|
|
(2,242
|
)
|
||||
|
$
|
18,302
|
|
|
$
|
(12,212
|
)
|
|
$
|
(7,375
|
)
|
|
$
|
(38,990
|
)
|
Comprehensive income (loss)
|
$
|
(18,346
|
)
|
|
$
|
304,178
|
|
|
$
|
(49,334
|
)
|
|
$
|
324,015
|
|
Comprehensive (income) loss attributable to noncontrolling interests
|
6,912
|
|
|
(93,435
|
)
|
|
16,639
|
|
|
(97,829
|
)
|
||||
Comprehensive income (loss) attributable to Taubman Centers, Inc.
|
$
|
(11,434
|
)
|
|
$
|
210,743
|
|
|
$
|
(32,695
|
)
|
|
$
|
226,186
|
|
|
|
|
|
|
|
|
|
||||||||
Basic earnings (loss) per common share (Note 10)
|
$
|
(0.49
|
)
|
|
$
|
3.52
|
|
|
$
|
(0.72
|
)
|
|
$
|
3.87
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings (loss) per common share (Note 10)
|
$
|
(0.49
|
)
|
|
$
|
3.48
|
|
|
$
|
(0.72
|
)
|
|
$
|
3.84
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average number of common shares outstanding – basic
|
61,696,565
|
|
|
61,211,249
|
|
|
61,512,816
|
|
|
61,169,279
|
|
|
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, July 1, 2020
|
40,579,064
|
|
|
$
|
26
|
|
|
61,615,362
|
|
|
$
|
616
|
|
|
$
|
745,326
|
|
|
$
|
(54,283
|
)
|
|
$
|
(772,700
|
)
|
|
$
|
(193,794
|
)
|
|
$
|
(274,809
|
)
|
Issuance of common stock pursuant to Continuing Offer (Notes 8 and 9)
|
(100,000
|
)
|
|
|
|
100,007
|
|
|
1
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
—
|
|
|||||||||||
Share-based compensation under employee and director benefit plans (Note 8)
|
|
|
|
|
7,734
|
|
|
|
|
1,539
|
|
|
|
|
|
|
|
|
1,539
|
|
|||||||||||||
Adjustments of noncontrolling interests (Note 6)
|
|
|
|
|
|
|
|
|
(136
|
)
|
|
(16
|
)
|
|
|
|
152
|
|
|
—
|
|
||||||||||||
Dividends and distributions (Note 1) (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,785
|
)
|
|
(651
|
)
|
|
(6,436
|
)
|
|||||||||||||
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
101
|
|
|
|
|
101
|
|
||||||||||||||
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
(24,288
|
)
|
|
(12,360
|
)
|
|
(36,648
|
)
|
|||||||||||||
Other comprehensive income (loss) (Note 12):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Unrealized gain (loss) on interest rate instruments
|
|
|
|
|
|
|
|
|
|
|
(49
|
)
|
|
|
|
11
|
|
|
(38
|
)
|
|||||||||||||
Cumulative translation adjustment
|
|
|
|
|
|
|
|
|
|
|
10,212
|
|
|
|
|
4,309
|
|
|
14,521
|
|
|||||||||||||
Reclassification adjustment for amounts recognized in net loss
|
|
|
|
|
|
|
|
|
|
|
2,691
|
|
|
|
|
1,128
|
|
|
3,819
|
|
|||||||||||||
Balance, September 30, 2020
|
40,479,064
|
|
|
$
|
26
|
|
|
61,723,103
|
|
|
$
|
617
|
|
|
$
|
746,728
|
|
|
$
|
(41,445
|
)
|
|
$
|
(802,672
|
)
|
|
$
|
(201,205
|
)
|
|
$
|
(297,951
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Balance, July 1, 2019
|
40,913,117
|
|
|
$
|
26
|
|
|
61,208,580
|
|
|
$
|
612
|
|
|
$
|
739,046
|
|
|
$
|
(44,154
|
)
|
|
$
|
(802,809
|
)
|
|
$
|
(222,673
|
)
|
|
$
|
(329,952
|
)
|
Issuance of common stock pursuant to Continuing Offer (Notes 8 and 9)
|
|
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|||||||||||
Share-based compensation under employee and director benefit plans (Note 8)
|
|
|
|
|
|
4,593
|
|
|
|
|
|
3,077
|
|
|
|
|
|
|
|
|
3,077
|
|
|||||||||||
Adjustments of noncontrolling interests (Note 6)
|
|
|
|
|
|
|
|
|
(1,809
|
)
|
|
|
|
|
|
|
1,809
|
|
|
—
|
|
||||||||||||
Dividends and distributions (excludes $6,000 of distributions attributable to redeemable noncontrolling interest) (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
(47,700
|
)
|
|
(18,489
|
)
|
|
(66,189
|
)
|
|||||||||||||
Partial disposition of ownership interest in UJV (Note 2)
|
|
|
|
|
|
|
|
|
|
|
8,185
|
|
|
(8,185
|
)
|
|
|
|
—
|
|
|||||||||||||
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
(103
|
)
|
|
|
|
(103
|
)
|
||||||||||||||
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
221,742
|
|
|
94,648
|
|
|
316,390
|
|
|||||||||||||
Other comprehensive income (loss) (Note 12):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Unrealized loss on interest rate instruments
|
|
|
|
|
|
|
|
|
|
|
(1,303
|
)
|
|
|
|
(561
|
)
|
|
(1,864
|
)
|
|||||||||||||
Cumulative translation adjustment
|
|
|
|
|
|
|
|
|
|
|
(9,419
|
)
|
|
|
|
(533
|
)
|
|
(9,952
|
)
|
|||||||||||||
Reclassification adjustment for amounts recognized in net income
|
|
|
|
|
|
|
|
|
|
|
(276
|
)
|
|
|
|
(120
|
)
|
|
(396
|
)
|
|||||||||||||
Balance, September 30, 2019
|
40,913,117
|
|
|
$
|
26
|
|
|
61,213,170
|
|
|
$
|
612
|
|
|
$
|
740,314
|
|
|
$
|
(46,967
|
)
|
|
$
|
(637,055
|
)
|
|
$
|
(145,919
|
)
|
|
$
|
(88,989
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
(1) We declared cash dividends of $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 September 30, 2020 and 2019. We declared a cash dividend of $0.675 per common share for the three months ended September 30, 2019. We did not declare a dividend on our common stock for the three months ended September 30, 2020.
|
|
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, 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)
|
(438,365
|
)
|
|
|
|
438,395
|
|
|
4
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
—
|
|
|||||||||||
Share-based compensation under employee and director benefit plans (Note 8)
|
18,956
|
|
|
|
|
56,129
|
|
|
1
|
|
|
6,090
|
|
|
|
|
|
|
|
|
6,091
|
|
|||||||||||
Adjustments of noncontrolling interests (Note 6)
|
|
|
|
|
|
|
|
|
(384
|
)
|
|
(67
|
)
|
|
|
|
451
|
|
|
—
|
|
||||||||||||
Contributions from noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,950
|
|
|
1,950
|
|
||||||||||||||
Dividends and distributions (Note 1) (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
(59,305
|
)
|
|
(19,784
|
)
|
|
(79,089
|
)
|
|||||||||||||
Partial dispositions of ownership interests in UJVs (Note 2)
|
|
|
|
|
|
|
|
|
|
|
3,999
|
|
|
(3,999
|
)
|
|
|
|
—
|
|
|||||||||||||
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
(163
|
)
|
|
|
|
(163
|
)
|
||||||||||||||
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
(26,321
|
)
|
|
(15,638
|
)
|
|
(41,959
|
)
|
|||||||||||||
Other comprehensive income (loss) (Note 12):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Unrealized loss on interest rate instruments
|
|
|
|
|
|
|
|
|
|
|
(14,177
|
)
|
|
|
|
(5,972
|
)
|
|
(20,149
|
)
|
|||||||||||||
Cumulative translation adjustment
|
|
|
|
|
|
|
|
|
|
|
2,264
|
|
|
|
|
2,637
|
|
|
4,901
|
|
|||||||||||||
Reclassification adjustment for amounts recognized in net loss
|
|
|
|
|
|
|
|
|
|
|
5,539
|
|
|
|
|
2,334
|
|
|
7,873
|
|
|||||||||||||
Balance, September 30, 2020
|
40,479,064
|
|
|
$
|
26
|
|
|
61,723,103
|
|
|
$
|
617
|
|
|
$
|
746,728
|
|
|
$
|
(41,445
|
)
|
|
$
|
(802,672
|
)
|
|
$
|
(201,205
|
)
|
|
$
|
(297,951
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
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)
|
(41,060
|
)
|
|
|
|
45,511
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|||||||||||||
Issuance of equity for acquisition of interest in UJV (Note 2)
|
1,500,000
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
79,319
|
|
|
79,320
|
|
||||||||||||
Share-based compensation under employee and director benefit plans (Note 8)
|
91,183
|
|
|
|
|
98,551
|
|
|
1
|
|
|
6,726
|
|
|
|
|
|
|
|
|
6,727
|
|
|||||||||||
Former Taubman Asia President redeemable equity adjustment (Note 6)
|
|
|
|
|
|
|
|
|
1,800
|
|
|
|
|
|
|
|
|
1,800
|
|
||||||||||||||
Adjustments of noncontrolling interests (Note 6)
|
|
|
|
|
|
|
|
|
55,691
|
|
|
(76
|
)
|
|
|
|
(55,852
|
)
|
|
(237
|
)
|
||||||||||||
Dividends and distributions (excludes $6,000 of distributions attributable to redeemable noncontrolling interests) (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
(143,067
|
)
|
|
(54,190
|
)
|
|
(197,257
|
)
|
|||||||||||||
Partial disposition of ownership interest in UJV (Note 2)
|
|
|
|
|
|
|
|
|
|
|
8,185
|
|
|
(8,185
|
)
|
|
|
|
—
|
|
|||||||||||||
Adjustments of equity pursuant to adoption of ASC 842 (Note 1)
|
|
|
|
|
|
|
|
|
|
|
|
|
3,156
|
|
|
1,763
|
|
|
4,919
|
|
|||||||||||||
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
(616
|
)
|
|
|
|
(616
|
)
|
||||||||||||||
Net income (excludes $237 of net loss attributable to redeemable noncontrolling interest) (Note 6)
|
|
|
|
|
|
|
|
|
|
|
|
|
255,887
|
|
|
107,355
|
|
|
363,242
|
|
|||||||||||||
Other comprehensive income (loss) (Note 12):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Unrealized loss on interest rate instruments
|
|
|
|
|
|
|
|
|
|
|
(11,375
|
)
|
|
|
|
(4,910
|
)
|
|
(16,285
|
)
|
|||||||||||||
Cumulative translation adjustment
|
|
|
|
|
|
|
|
|
|
|
(16,760
|
)
|
|
|
|
(3,703
|
)
|
|
(20,463
|
)
|
|||||||||||||
Reclassification adjustment for amounts recognized in net income
|
|
|
|
|
|
|
|
|
|
|
(1,565
|
)
|
|
|
|
(677
|
)
|
|
(2,242
|
)
|
|||||||||||||
Balance, September 30, 2019
|
40,913,117
|
|
|
$
|
26
|
|
|
61,213,170
|
|
|
$
|
612
|
|
|
$
|
740,314
|
|
|
$
|
(46,967
|
)
|
|
$
|
(637,055
|
)
|
|
$
|
(145,919
|
)
|
|
$
|
(88,989
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
(1) We declared cash dividends of $1.21875 per share of Series J Cumulative Redeemable Preferred Stock and $1.171875 per share of Series K Cumulative Redeemable Preferred Stock for both the nine months ended September 30, 2020 and 2019. We declared cash dividends of $0.675 and $2.025 per common share for the nine months ended September 30, 2020 and 2019, respectively. We did not declare a dividend on our common stock for either the three months ended September 30, 2020 or June 30, 2020.
|
|
Nine Months Ended September 30
|
||||||
|
2020
|
|
2019
|
||||
Cash Flows From Operating Activities:
|
|
|
|
||||
Net income (loss)
|
$
|
(41,959
|
)
|
|
$
|
363,005
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
||
Depreciation and amortization
|
162,769
|
|
|
137,064
|
|
||
Gains on partial dispositions of ownership interests in UJVs, net of tax (Note 2)
|
(11,277
|
)
|
|
(138,696
|
)
|
||
Gains on remeasurements of ownership interests in UJVs (Note 2)
|
(14,146
|
)
|
|
(145,010
|
)
|
||
Gain on Saks settlement - The Mall of San Juan (Note 9)
|
|
|
(10,095
|
)
|
|||
Fluctuation in fair value of equity securities (Note 11)
|
933
|
|
|
(3,346
|
)
|
||
Income from UJVs net of distributions
|
17,284
|
|
|
3,304
|
|
||
Non-cash operating lease expense
|
1,580
|
|
|
1,527
|
|
||
Other
|
10,201
|
|
|
9,826
|
|
||
Increase (decrease) in cash attributable to changes in assets and liabilities:
|
|
|
|
|
|
||
Receivables, deferred charges, and other assets (Note 1)
|
(85,292
|
)
|
|
(13,553
|
)
|
||
Accounts payable and accrued liabilities
|
9,652
|
|
|
9,661
|
|
||
Net Cash Provided By Operating Activities
|
$
|
49,745
|
|
|
$
|
213,687
|
|
|
|
|
|
|
|
||
Cash Flows From Investing Activities:
|
|
|
|
|
|
||
Additions to properties
|
$
|
(50,394
|
)
|
|
$
|
(158,740
|
)
|
Partial reimbursement of Saks anchor allowance at The Mall of San Juan (Note 9)
|
3,000
|
|
|
20,000
|
|
||
Proceeds from partial dispositions of ownership interests in UJVs (Note 2)
|
48,673
|
|
|
235,745
|
|
||
Proceeds from sale of equity securities (Note 11)
|
|
|
|
52,077
|
|
||
Insurance proceeds for capital items at The Mall of San Juan (Note 9)
|
|
|
948
|
|
|||
Contributions to UJVs (Note 2)
|
(8,275
|
)
|
|
(47,849
|
)
|
||
Distributions from UJVs (less than) in excess of income
|
5,673
|
|
|
8,117
|
|
||
Other
|
72
|
|
|
69
|
|
||
Net Cash Provided By (Used In) Investing Activities
|
$
|
(1,251
|
)
|
|
$
|
110,367
|
|
|
|
|
|
|
|
||
Cash Flows From Financing Activities:
|
|
|
|
|
|
||
Proceeds from (payments to) revolving lines of credit, net (Note 5)
|
$
|
195,000
|
|
|
$
|
(189,700
|
)
|
Debt payments
|
(8,961
|
)
|
|
(8,430
|
)
|
||
Debt issuance costs
|
(3,304
|
)
|
|
|
|
||
Issuance of common stock and/or TRG Units in connection with incentive plans
|
(720
|
)
|
|
(706
|
)
|
||
Contributions from noncontrolling interests
|
1,950
|
|
|
|
|||
Distributions to noncontrolling interests (Note 1)
|
(19,784
|
)
|
|
(60,190
|
)
|
||
Distributions to participating securities of TRG (Note 1)
|
(595
|
)
|
|
(1,817
|
)
|
||
Cash dividends to preferred shareholders
|
(17,353
|
)
|
|
(17,353
|
)
|
||
Cash dividends to common shareholders (Note 1)
|
(41,357
|
)
|
|
(123,897
|
)
|
||
Net Cash Provided By (Used In) Financing Activities
|
$
|
104,876
|
|
|
$
|
(402,093
|
)
|
|
|
|
|
|
|
||
Effect of exchange rate fluctuations on cash, cash equivalents, and restricted cash (Note 13)
|
$
|
356
|
|
|
$
|
(1,656
|
)
|
|
|
|
|
||||
Net Increase (Decrease) In Cash, Cash Equivalents, and Restricted Cash
|
153,726
|
|
|
(79,695
|
)
|
||
|
|
|
|
|
|
||
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)
|
$
|
257,144
|
|
|
$
|
63,234
|
|
•
|
reduced global economic activity has impacted certain of our tenants' businesses, financial performance, and liquidity and has caused, and could continue to cause, certain tenants to be unable to fully meet their obligations to us or to otherwise seek modifications of such obligations, resulting in increases in uncollectible tenant receivables, deferrals, and abatements;
|
•
|
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, and other debt agreements and our ability to fund debt service. In August 2020, we entered into amendments to waive all of our existing financial covenants related to our primary unsecured revolving line of credit, $275 million unsecured term loan, and $250 million unsecured term loan for the quarter ending September 30, 2020 through and including the quarter ending June 30, 2021. The financial covenants for our loan on International Market Place mirror the requirements under our primary unsecured revolving line of credit so therefore, the waiver of our financial covenants also applies to the International Market Place loan (Note 5); 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. See Note 4 for the additional impairment recognized during the three months ended September 30, 2020 for the sale of Stamford Town Center.
|
2020
|
$
|
105,480
|
|
2021
|
388,639
|
|
|
2022
|
344,731
|
|
|
2023
|
312,900
|
|
|
2024
|
290,987
|
|
|
Thereafter
|
797,895
|
|
|
Three Months Ended September 30
|
|
Nine Months Ended September 30
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Shopping center and other operational revenues
|
$
|
7,201
|
|
|
15,501
|
|
|
$
|
23,963
|
|
|
39,056
|
|
||
Management, leasing, and development services
|
440
|
|
|
1,927
|
|
|
1,830
|
|
|
4,035
|
|
||||
Total revenue from contracts with customers
|
$
|
7,641
|
|
|
$
|
17,428
|
|
|
$
|
25,793
|
|
|
$
|
43,091
|
|
|
Three Months Ended September 30
|
|
Nine Months Ended September 30
|
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
||||||||
Federal current
|
$
|
—
|
|
|
(78
|
)
|
|
$
|
—
|
|
|
$
|
38
|
|
|
|
Federal deferred
|
(186
|
)
|
|
681
|
|
|
(2,112
|
)
|
|
1,302
|
|
|
||||
Foreign current
|
253
|
|
|
1,191
|
|
(1)
|
1,355
|
|
|
1,787
|
|
(1)
|
||||
Foreign deferred
|
(55
|
)
|
|
157
|
|
|
1,181
|
|
(2)
|
1,592
|
|
(2)
|
||||
State current
|
22
|
|
|
3
|
|
|
38
|
|
|
44
|
|
|
||||
State deferred
|
3
|
|
|
67
|
|
|
83
|
|
|
161
|
|
|
||||
Total income tax expense (benefit)
|
$
|
37
|
|
|
$
|
2,021
|
|
|
$
|
545
|
|
|
$
|
4,924
|
|
|
(1)
|
During the three and nine months ended September 30, 2019, we recognized $0.9 million of income tax expense related to a promote fee paid by our previous institutional partner in Starfield Hanam (Note 4).
|
(2)
|
Due to the sale of 50% of our interests to funds managed by Blackstone (Note 2), we are no longer able to assert indefinite reinvestment in CityOn.Xi'an and CityOn.Zhengzhou. The foreign deferred tax expense (10% tax rate) is related to an excess of the Investment in the UJVs under GAAP accounting over the tax basis of our investments. During the nine months ended September 30, 2020, we recognized $1.3 million of foreign deferred tax expense and recognized $1.7 million of foreign deferred tax expense for the nine months ended September 30, 2019.
|
|
2020
|
|
2019
|
|
||||
Deferred tax assets:
|
|
|
|
|
||||
Federal
|
$
|
1,951
|
|
(1)
|
$
|
4,385
|
|
(2)
|
Foreign
|
2,341
|
|
|
2,020
|
|
|
||
State
|
1,656
|
|
|
1,388
|
|
|
||
Total deferred tax assets
|
$
|
5,948
|
|
|
$
|
7,793
|
|
|
Valuation allowances
|
(3,212
|
)
|
(3)
|
(2,761
|
)
|
(4)
|
||
Net deferred tax assets
|
$
|
2,736
|
|
|
$
|
5,032
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|||
Foreign (5)
|
$
|
5,497
|
|
|
$
|
4,449
|
|
|
Total deferred tax liabilities
|
$
|
5,497
|
|
|
$
|
4,449
|
|
|
(1)
|
The Federal deferred tax asset is net of Federal deferred tax liabilities and includes a $2.8 million Federal investment tax credit carryforward.
|
(2)
|
Includes a $4.4 million Federal investment tax credit carryforward.
|
(3)
|
Includes a $1.8 million valuation allowance against Foreign deferred tax assets, and a $1.4 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
September 30, 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 (2)
|
|
50
|
Starfield Anseong (3)
|
|
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).
|
(2)
|
In October 2020, we disposed of our 50% interest in Stamford Town Center (Note 2).
|
(3)
|
Starfield Anseong opened in October 2020 (Note 2).
|
|
September 30,
2020 |
|
December 31,
2019 |
||||
Assets:
|
|
|
|
||||
Properties
|
$
|
3,821,579
|
|
|
$
|
3,816,923
|
|
Accumulated depreciation and amortization
|
(1,018,816
|
)
|
|
(942,840
|
)
|
||
|
$
|
2,802,763
|
|
|
$
|
2,874,083
|
|
Cash and cash equivalents
|
170,994
|
|
|
201,501
|
|
||
Accounts and notes receivable
|
154,476
|
|
|
122,569
|
|
||
Operating lease right-of-use assets
|
13,296
|
|
|
11,521
|
|
||
Deferred charges and other assets
|
149,804
|
|
|
178,708
|
|
||
|
$
|
3,291,333
|
|
|
$
|
3,388,382
|
|
|
|
|
|
||||
Liabilities and accumulated equity (deficiency) in assets:
|
|
|
|
|
|
||
Notes payable, net (1)
|
$
|
3,051,345
|
|
|
$
|
3,049,737
|
|
Accounts payable and other liabilities
|
265,663
|
|
|
341,263
|
|
||
Operating lease liabilities
|
15,043
|
|
|
13,274
|
|
||
TRG's accumulated deficiency in assets
|
(257,933
|
)
|
|
(212,380
|
)
|
||
UJV Partners' accumulated equity in assets
|
217,215
|
|
|
196,488
|
|
||
|
$
|
3,291,333
|
|
|
$
|
3,388,382
|
|
|
|
|
|
||||
TRG's accumulated deficiency in assets (above)
|
$
|
(257,933
|
)
|
|
$
|
(212,380
|
)
|
TRG's investment in Starfield Anseong (Note 2) and advances to CityOn.Zhengzhou
|
215,784
|
|
|
209,024
|
|
||
TRG basis adjustments, including elimination of intercompany profit
|
337,167
|
|
|
329,673
|
|
||
TCO's additional basis
|
31,573
|
|
|
32,625
|
|
||
Net investment in UJVs
|
$
|
326,591
|
|
|
$
|
358,942
|
|
Distributions in excess of investments in and net income of UJVs
|
461,360
|
|
|
473,053
|
|
||
Investment in UJVs
|
$
|
787,951
|
|
|
$
|
831,995
|
|
|
Three Months Ended September 30
|
|
Nine Months Ended September 30
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Revenues
|
$
|
134,084
|
|
|
$
|
153,749
|
|
|
$
|
402,503
|
|
|
$
|
450,775
|
|
Maintenance, taxes, utilities, promotion, and other operating expenses
|
$
|
50,799
|
|
|
$
|
54,441
|
|
|
$
|
156,323
|
|
|
$
|
158,851
|
|
Impairment charge
|
39,646
|
|
|
|
|
39,646
|
|
|
|
||||||
Interest expense
|
35,456
|
|
|
35,926
|
|
|
105,686
|
|
|
104,637
|
|
||||
Depreciation and amortization
|
31,932
|
|
|
31,861
|
|
|
93,662
|
|
|
98,501
|
|
||||
Total operating costs
|
$
|
157,833
|
|
|
$
|
122,228
|
|
|
$
|
395,317
|
|
|
$
|
361,989
|
|
Nonoperating income, net (1)
|
12,143
|
|
|
837
|
|
|
13,285
|
|
|
2,161
|
|
||||
Income tax expense
|
(2,184
|
)
|
|
(2,023
|
)
|
|
(6,451
|
)
|
|
(5,669
|
)
|
||||
Net income (loss)
|
$
|
(13,790
|
)
|
|
$
|
30,335
|
|
|
$
|
14,020
|
|
|
$
|
85,278
|
|
|
|
|
|
|
|
|
|
||||||||
Net income attributable to TRG
|
$
|
(7,155
|
)
|
|
$
|
15,545
|
|
|
$
|
6,477
|
|
|
$
|
43,993
|
|
Realized intercompany profit, net of depreciation on TRG’s basis adjustments
|
(2,229
|
)
|
|
5,195
|
|
|
(4,588
|
)
|
|
7,213
|
|
||||
Depreciation of TCO's additional basis
|
(352
|
)
|
|
(488
|
)
|
|
(1,053
|
)
|
|
(1,460
|
)
|
||||
Equity in income (loss) of UJVs
|
$
|
(9,736
|
)
|
|
$
|
20,252
|
|
|
$
|
836
|
|
|
$
|
49,746
|
|
|
|
|
|
|
|
|
|
||||||||
Beneficial interest in UJVs’ operations:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenues less maintenance, taxes, utilities, promotion, and other operating expenses
|
$
|
23,548
|
|
|
$
|
56,703
|
|
|
$
|
98,942
|
|
|
$
|
158,813
|
|
Impairment charge
|
(19,834
|
)
|
|
|
|
(19,834
|
)
|
|
|
||||||
Interest expense
|
(16,127
|
)
|
|
(17,798
|
)
|
|
(48,487
|
)
|
|
(52,579
|
)
|
||||
Depreciation and amortization
|
3,610
|
|
|
(17,662
|
)
|
|
(28,423
|
)
|
|
(53,808
|
)
|
||||
Income tax expense
|
(933
|
)
|
|
(991
|
)
|
|
(1,362
|
)
|
|
(2,680
|
)
|
||||
Equity in income (loss) of UJVs
|
$
|
(9,736
|
)
|
|
$
|
20,252
|
|
|
$
|
836
|
|
|
$
|
49,746
|
|
(1)
|
In addition to the disposition of 50% of our ownership interest in Starfield Hanam, in September 2019, Blackstone also purchased the 14.7% interest in Starfield Hanam that was previously owned by our institutional joint venture partner. Our previous partnership agreement provided for a promote fee due to Taubman Asia upon the institutional partner's exit from the partnership based on performance measures under the prior agreement, which resulted in the recognition of a $4.8 million promote fee during the three and nine months ended September 30, 2019. During the three and nine months ended September 30, 2020, reductions of the previously recognized promote fee of $0.3 million and $0.6 million, respectively, were recognized.
|
|
At 100%
|
|
At Beneficial Interest
|
|
||||||||||||
|
Consolidated Subsidiaries
|
|
UJVs
|
|
Consolidated Subsidiaries
|
|
UJVs
|
|
||||||||
Debt as of:
|
|
|
|
|
|
|
|
|
||||||||
September 30, 2020
|
$
|
3,897,515
|
|
|
$
|
3,288,418
|
|
|
$
|
3,606,741
|
|
|
$
|
1,581,599
|
|
|
December 31, 2019
|
3,710,327
|
|
|
3,049,737
|
|
|
3,419,625
|
|
|
1,508,506
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Capitalized interest:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Nine Months Ended September 30, 2020
|
$
|
4,784
|
|
(1)
|
$
|
1,405
|
|
(2)
|
$
|
4,685
|
|
(1)
|
$
|
1,165
|
|
(2)
|
Nine Months Ended September 30, 2019
|
6,138
|
|
(1)
|
189
|
|
|
6,120
|
|
(1)
|
112
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Interest expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Nine Months Ended September 30, 2020
|
$
|
101,254
|
|
|
$
|
104,101
|
|
|
$
|
92,977
|
|
|
$
|
48,487
|
|
|
Nine Months Ended September 30, 2019
|
112,590
|
|
|
104,637
|
|
|
103,692
|
|
|
52,579
|
|
|
(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 our beneficial interest in both the UJVs (at 100%) and UJVs (at Beneficial Interest Columns).
|
|
Three Months Ended September 30
|
|
Nine Months Ended September 30
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Beginning Balance
|
$
|
—
|
|
|
$
|
6,000
|
|
|
$
|
—
|
|
|
$
|
7,800
|
|
Distributions
|
|
|
(6,000
|
)
|
|
|
|
(6,000
|
)
|
||||||
Allocation of net loss
|
|
|
|
|
|
|
|
(237
|
)
|
||||||
Former Taubman Asia President adjustment of redeemable equity
|
|
|
|
|
|
|
(1,800
|
)
|
|||||||
Adjustments of redeemable noncontrolling interest
|
|
|
|
|
|
|
|
237
|
|
||||||
Ending Balance
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
2020
|
|
2019
|
||||
Non-redeemable noncontrolling interests:
|
|
|
|
||||
Noncontrolling interests in consolidated joint ventures
|
$
|
(152,330
|
)
|
|
$
|
(153,343
|
)
|
Noncontrolling interests in partnership equity of TRG
|
(48,875
|
)
|
|
(13,840
|
)
|
||
|
$
|
(201,205
|
)
|
|
$
|
(167,183
|
)
|
|
Three Months Ended September 30
|
||||||
|
2020
|
|
2019
|
||||
Net income (loss) attributable to noncontrolling interests:
|
|
|
|
||||
Non-redeemable noncontrolling interests:
|
|
|
|
||||
Noncontrolling share of income (loss) of consolidated joint ventures
|
$
|
(308
|
)
|
|
$
|
958
|
|
Noncontrolling share of income (loss) of TRG
|
(12,052
|
)
|
|
93,690
|
|
||
|
$
|
(12,360
|
)
|
|
$
|
94,648
|
|
|
Nine Months Ended September 30
|
||||||
|
2020
|
|
2019
|
||||
Net income (loss) attributable to noncontrolling interests:
|
|
|
|
||||
Non-redeemable noncontrolling interests:
|
|
|
|
||||
Noncontrolling share of income of consolidated joint ventures
|
1,015
|
|
|
$
|
3,456
|
|
|
Noncontrolling share of income (loss) of TRG
|
(16,653
|
)
|
|
103,899
|
|
||
|
$
|
(15,638
|
)
|
|
$
|
107,355
|
|
Redeemable noncontrolling interest:
|
|
|
|
(237
|
)
|
||
|
$
|
(15,638
|
)
|
|
$
|
107,118
|
|
|
Nine Months Ended September 30
|
||||||
|
2020
|
|
2019
|
||||
Net income (loss) attributable to TCO common shareholders
|
$
|
(44,269
|
)
|
|
$
|
236,717
|
|
Transfers (to) from the noncontrolling interest:
|
|
|
|
|
|
||
Increase (decrease) in TCO’s paid-in capital for adjustments of noncontrolling interest (1)
|
(384
|
)
|
|
55,691
|
|
||
Net transfers (to) from noncontrolling interests
|
(384
|
)
|
|
55,691
|
|
||
Change from net income (loss) attributable to TCO and transfers (to) from noncontrolling interests
|
$
|
(44,653
|
)
|
|
$
|
292,408
|
|
(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 Taubman Asia President's redeemable ownership interest and issuance of TRG Units for the acquisition of The Gardens Mall (Note 2).
|
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%
|
|
1.80%
|
(1)
|
3.94%
|
(1)
|
February 2022
|
||||
Receive variable (LIBOR) /pay-fixed swap (1)
|
|
100%
|
|
100,000
|
|
2.14%
|
|
1.80%
|
(1)
|
3.94%
|
(1)
|
February 2022
|
||||
Receive variable (LIBOR) /pay-fixed swap (1)
|
|
100%
|
|
50,000
|
|
2.14%
|
|
1.80%
|
(1)
|
3.94%
|
(1)
|
February 2022
|
||||
Receive variable (LIBOR) /pay-fixed swap (1)
|
|
100%
|
|
50,000
|
|
2.14%
|
|
1.60%
|
/
|
1.80%
|
(1)
|
3.74%
|
/
|
3.94%
|
(1)
|
February 2022
|
Receive variable (LIBOR) /pay-fixed swap (2)
|
|
100%
|
|
125,000
|
|
3.02%
|
|
1.90%
|
(2)
|
4.92%
|
(2)
|
March 2023
|
||||
Receive variable (LIBOR) /pay-fixed swap (2)
|
|
100%
|
|
75,000
|
|
3.02%
|
|
1.90%
|
(2)
|
4.92%
|
(2)
|
March 2023
|
||||
Receive variable (LIBOR) /pay-fixed swap (2)
|
|
100%
|
|
50,000
|
|
3.02%
|
|
1.90%
|
(2)
|
4.92%
|
(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%
|
|
155,791
|
|
1.83%
|
|
1.75%
|
|
3.58%
|
|
December 2021
|
(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. In August 2020, we entered into amendments to waive all of our existing financial covenants related to our primary unsecured revolving line of credit and $275 million unsecured term loan for the covenant waiver period. Through the covenant compliance date, our primary unsecured revolving line of credit bears interest at the maximum total leverage ratio level of LIBOR, subject to 0.5% floor on the unhedged balance, plus 1.60%, and our $275 million unsecured term loan bears interest at the maximum total leverage ratio level of LIBOR plus 1.80%.
|
(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. In August 2020, we entered into amendments to waive all of our existing financial covenants related to our $250 million unsecured term loan for the covenant waiver period. Through the covenant compliance date, our $250 million unsecured term loan bears interest at the maximum total leverage ratio level of LIBOR plus 1.90%.
|
(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.
|
|
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 September 30
|
|
|
|
Three Months Ended September 30
|
||||||||||||
|
2020
|
|
2019
|
|
|
|
2020
|
|
2019
|
||||||||
Derivatives in cash flow hedging relationships:
|
|
|
|
|
|
|
|
|
|
||||||||
Interest rate contracts – consolidated subsidiaries
|
$
|
3,431
|
|
|
$
|
(2,059
|
)
|
|
Interest Expense
|
|
$
|
(3,399
|
)
|
|
$
|
(400
|
)
|
Interest rate contracts – UJVs
|
334
|
|
|
(253
|
)
|
|
Equity in Income (Loss) of UJVs
|
|
(333
|
)
|
|
85
|
|
||||
Cross-currency interest rate contract – UJV
|
16
|
|
|
52
|
|
|
Equity in Income (Loss) of UJVs
|
|
(87
|
)
|
|
711
|
|
||||
Total derivatives in cash flow hedging relationships
|
$
|
3,781
|
|
|
$
|
(2,260
|
)
|
|
|
|
$
|
(3,819
|
)
|
|
$
|
396
|
|
|
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
|
||||||||||||
|
Nine Months Ended September 30
|
|
|
|
Nine Months Ended September 30
|
||||||||||||
|
2020
|
|
2019
|
|
|
|
2020
|
|
2019
|
||||||||
Derivatives in cash flow hedging relationships:
|
|
|
|
|
|
|
|
|
|
||||||||
Interest rate contracts – consolidated subsidiaries
|
$
|
(11,192
|
)
|
|
$
|
(16,583
|
)
|
|
Interest Expense
|
|
$
|
(7,479
|
)
|
|
$
|
366
|
|
Interest rate contracts – UJVs
|
(1,106
|
)
|
|
(1,953
|
)
|
|
Equity in Income (Loss) of UJVs
|
|
(627
|
)
|
|
354
|
|
||||
Cross-currency interest rate contract – UJV
|
22
|
|
|
9
|
|
|
Equity in Income (Loss) of UJVs
|
|
233
|
|
|
1,522
|
|
||||
Total derivatives in cash flow hedging relationships
|
$
|
(12,276
|
)
|
|
$
|
(18,527
|
)
|
|
|
|
$
|
(7,873
|
)
|
|
$
|
2,242
|
|
|
|
|
Fair Value
|
||||||
|
Consolidated Balance Sheet Location
|
|
September 30,
2020 |
|
December 31,
2019 |
||||
Liability derivatives:
|
|
|
|
|
|
|
|||
Interest rate contracts – consolidated subsidiaries
|
Accounts Payable and Accrued Liabilities
|
|
$
|
(26,611
|
)
|
|
$
|
(15,419
|
)
|
Interest rate contract – UJV
|
Investment in UJVs
|
|
(1,518
|
)
|
|
(412
|
)
|
||
Cross-currency interest rate contract – UJV
|
Investment in UJVs
|
|
|
|
|
(91
|
)
|
||
Total liabilities designated as hedging instruments
|
|
|
$
|
(28,129
|
)
|
|
$
|
(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 September 30, 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 September 30, 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 September 30, 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 September 30, 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 September 30, 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
|
|
Granted
|
84,352
|
|
|
47.07
|
|
|
Vested
|
(52,723
|
)
|
|
64.22
|
|
|
Forfeited
|
(5,398
|
)
|
|
53.98
|
|
|
Outstanding at September 30, 2020
|
206,077
|
|
|
$
|
51.81
|
|
Proceeds Description
|
Consolidated Statement of Operations and Comprehensive Income (Loss) Location
|
|
Nine Months
Ended
September 30, 2019 |
|
|||
|
|
|
(in thousands)
|
|
|||
Business interruption insurance recoveries
|
Nonoperating Income, Net
|
|
$
|
8,574
|
|
|
|
Revenue reduction related to business interruption (1)
|
Reduction of Rental Revenues
|
|
(1,202
|
)
|
|
||
Expense reimbursement insurance recoveries
|
Nonoperating Income, Net
|
|
185
|
|
|
||
Reimbursement for capital items damaged in hurricane in 2017
|
Reversal of previously recognized Depreciation Expense
|
|
2,000
|
|
(2)
|
||
Gain on insurance recoveries
|
Nonoperating Income, Net
|
|
1,418
|
|
|
(1)
|
Represents amounts recognized in prior periods that were credited back to tenants upon receipt of business interruption claim proceeds.
|
(2)
|
Represents reduction of depreciation expense recorded in June 2019 for proceeds received in final settlement of insurance claim, which offset the original deductible expensed in 2017.
|
|
Three Months Ended September 30
|
|
Nine Months Ended September 30
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Net income (loss) attributable to TCO common shareholders (Numerator):
|
|
|
|
|
|
|
|
|
|||||||
Basic
|
$
|
(30,072
|
)
|
|
$
|
215,361
|
|
|
$
|
(44,269
|
)
|
|
$
|
236,717
|
|
Impact of additional ownership of TRG
|
|
|
|
1,512
|
|
|
|
|
|
2,506
|
|
||||
Diluted
|
$
|
(30,072
|
)
|
|
$
|
216,873
|
|
|
$
|
(44,269
|
)
|
|
$
|
239,223
|
|
|
|
|
|
|
|
|
|
||||||||
Shares (Denominator) – basic
|
61,696,565
|
|
|
61,211,249
|
|
|
61,512,816
|
|
|
61,169,279
|
|
||||
Effect of dilutive securities
|
|
|
|
1,034,165
|
|
|
|
|
|
1,063,217
|
|
||||
Shares (Denominator) – diluted
|
61,696,565
|
|
|
62,245,414
|
|
|
61,512,816
|
|
|
62,232,496
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Earnings (loss) per common share – basic
|
$
|
(0.49
|
)
|
|
$
|
3.52
|
|
|
$
|
(0.72
|
)
|
|
$
|
3.87
|
|
Earnings (loss) per common share – diluted
|
$
|
(0.49
|
)
|
|
$
|
3.48
|
|
|
$
|
(0.72
|
)
|
|
$
|
3.84
|
|
|
Three Months Ended September 30
|
|
Nine Months Ended September 30
|
||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||
Weighted average noncontrolling TRG Units outstanding
|
3,211,571
|
|
|
5,977,536
|
|
|
3,355,589
|
|
|
5,388,947
|
|
Unissued TRG Units under unit option deferral elections
|
871,262
|
|
|
|
|
|
871,262
|
|
|
|
|
Unvested TSR PSU, NOI PSU, Restricted and Performance-based TRG Profits Units, RSU and deferred shares under the Non-Employee Directors’ Deferred Compensation Plan
|
289,116
|
|
|
|
|
239,556
|
|
|
|
|
|
Fair Value Measurements as of September 30, 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
|
|
$
|
11,187
|
|
|
|
|
|
$
|
11,213
|
|
|
|
|
||
Total assets
|
|
$
|
11,187
|
|
|
$
|
—
|
|
|
$
|
11,213
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
||||||||
Derivative interest rate contracts (Note 7)
|
|
|
|
|
$
|
(26,611
|
)
|
|
|
|
|
$
|
(15,419
|
)
|
||
Total liabilities
|
|
|
|
|
$
|
(26,611
|
)
|
|
|
|
|
$
|
(15,419
|
)
|
|
2020
|
|
2019
|
||||||||||||
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
||||||||
Notes payable, net
|
$
|
3,897,515
|
|
|
$
|
4,120,266
|
|
|
$
|
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
|
2,264
|
|
|
(14,177
|
)
|
|
(11,913
|
)
|
|
2,637
|
|
|
(5,972
|
)
|
|
(3,335
|
)
|
||||||
Amounts reclassified from AOCI
|
|
|
5,539
|
|
|
5,539
|
|
|
|
|
2,334
|
|
|
2,334
|
|
||||||||
Net current period other comprehensive income (loss)
|
$
|
2,264
|
|
|
$
|
(8,638
|
)
|
|
$
|
(6,374
|
)
|
|
$
|
2,637
|
|
|
$
|
(3,638
|
)
|
|
$
|
(1,001
|
)
|
Partial disposition of ownership interest in UJV
|
3,999
|
|
|
|
|
|
3,999
|
|
|
|
|
|
|
|
—
|
|
|||||||
Adjustments due to changes in ownership
|
(137
|
)
|
|
70
|
|
|
(67
|
)
|
|
137
|
|
|
(70
|
)
|
|
67
|
|
||||||
September 30, 2020
|
$
|
(12,827
|
)
|
|
$
|
(28,618
|
)
|
|
$
|
(41,445
|
)
|
|
$
|
(5,402
|
)
|
|
$
|
489
|
|
|
$
|
(4,913
|
)
|
|
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
|
(16,760
|
)
|
|
(11,375
|
)
|
|
(28,135
|
)
|
|
(3,703
|
)
|
|
(4,910
|
)
|
|
(8,613
|
)
|
||||||
Amounts reclassified from AOCI
|
|
|
(1,565
|
)
|
|
(1,565
|
)
|
|
|
|
|
(677
|
)
|
|
(677
|
)
|
|||||||
Net current period other comprehensive income (loss)
|
$
|
(16,760
|
)
|
|
$
|
(12,940
|
)
|
|
$
|
(29,700
|
)
|
|
$
|
(3,703
|
)
|
|
$
|
(5,587
|
)
|
|
$
|
(9,290
|
)
|
Partial disposition of ownership interest in UJV
|
8,185
|
|
|
|
|
$
|
8,185
|
|
|
|
|
|
|
$
|
—
|
|
|||||||
Adjustments due to changes in ownership
|
274
|
|
|
(350
|
)
|
|
(76
|
)
|
|
(274
|
)
|
|
350
|
|
|
76
|
|
||||||
September 30, 2019
|
$
|
(24,429
|
)
|
|
$
|
(22,538
|
)
|
|
$
|
(46,967
|
)
|
|
$
|
(10,546
|
)
|
|
$
|
3,126
|
|
|
$
|
(7,420
|
)
|
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
|
|
$
|
7,479
|
|
|
Interest Expense
|
Realized loss on interest rate contracts - UJVs
|
|
627
|
|
|
Equity in Income (Loss) of UJVs
|
|
Realized gain on cross-currency interest rate contract - UJV
|
|
(233
|
)
|
|
Equity in Income (Loss) of UJVs
|
|
Total reclassifications for the period
|
|
$
|
7,873
|
|
|
|
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
|
|
$
|
(366
|
)
|
|
Interest Expense
|
Realized gain on interest rate contracts - UJVs
|
|
(354
|
)
|
|
Equity in Income (Loss) of UJVs
|
|
Realized gain on cross-currency interest rate contract - UJV
|
|
(1,522
|
)
|
|
Equity in Income (Loss) of UJVs
|
|
Total reclassifications for the period
|
|
$
|
(2,242
|
)
|
|
|
|
September 30,
2020 |
|
December 31,
2019 |
||||
Cash and cash equivalents
|
$
|
256,512
|
|
|
$
|
102,762
|
|
Restricted cash
|
632
|
|
|
656
|
|
||
Total Cash, Cash Equivalents, and Restricted Cash shown on our Consolidated Statement of Cash Flows
|
$
|
257,144
|
|
|
$
|
103,418
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
Trailing 12-Months Ended September 30 (1)
|
||||
|
2020
|
|
2019
|
||
U.S. Consolidated Businesses
|
19.0
|
%
|
|
13.2
|
%
|
U.S. UJVs
|
15.6
|
|
|
11.7
|
|
Combined U.S. Centers
|
17.3
|
|
|
12.5
|
|
(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
|
88.5
|
%
|
|
91.7
|
%
|
Ending occupancy - U.S. comparable centers
|
89.9
|
|
|
92.6
|
|
Leased space - all U.S. centers
|
91.1
|
|
|
94.7
|
|
Leased space - U.S. comparable centers
|
92.6
|
|
|
95.6
|
|
|
Three Months Ended
September 30
|
|
Nine Months Ended
September 30
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Average rent per square foot - all U.S. comparable centers: (1)
|
|
|
|
|
|
|
|
||||||||
U.S. Consolidated Businesses
|
$
|
65.24
|
|
|
$
|
70.52
|
|
|
$
|
68.45
|
|
|
$
|
70.97
|
|
U.S. UJVs
|
53.23
|
|
|
56.03
|
|
|
52.44
|
|
|
55.91
|
|
||||
Combined U.S. Centers
|
59.28
|
|
|
63.36
|
|
|
60.52
|
|
|
63.48
|
|
(1)
|
Statistics exclude non-comparable centers and Asia centers.
|
|
Trailing 12-Months Ended September 30 (1) (2)
|
||||||
|
2020
|
|
2019
|
||||
Opening base rent per square foot:
|
|
|
|
||||
U.S. Consolidated Businesses
|
$
|
61.07
|
|
|
$
|
57.66
|
|
U.S. UJVs
|
48.23
|
|
|
46.29
|
|
||
Combined U.S. Centers
|
55.96
|
|
|
52.82
|
|
||
Square feet of GLA opened:
|
|
|
|
||||
U.S. Consolidated Businesses
|
411,816
|
|
|
634,236
|
|
||
U.S. UJVs
|
272,127
|
|
|
470,083
|
|
||
Combined U.S. Centers
|
683,943
|
|
|
1,105,319
|
|
||
Closing base rent per square foot:
|
|
|
|
||||
U.S. Consolidated Businesses
|
$
|
70.97
|
|
|
$
|
56.55
|
|
U.S. UJVs
|
52.76
|
|
|
54.09
|
|
||
Combined U.S. Centers
|
63.43
|
|
|
55.42
|
|
||
Square feet of GLA closed:
|
|
|
|
||||
U.S. Consolidated Businesses
|
539,284
|
|
|
536,929
|
|
||
U.S. UJVs
|
380,819
|
|
|
455,184
|
|
||
Combined U.S. Centers
|
920,103
|
|
|
992,113
|
|
||
Releasing spread per square foot:
|
|
|
|
||||
U.S. Consolidated Businesses
|
$
|
(9.90
|
)
|
|
$
|
1.11
|
|
U.S. UJVs
|
(4.53
|
)
|
|
(7.80
|
)
|
||
Combined U.S. Centers
|
(7.47
|
)
|
|
(2.60
|
)
|
||
Releasing spread per square foot growth:
|
|
|
|
||||
U.S. Consolidated Businesses
|
(13.9
|
)%
|
|
2.0
|
%
|
||
U.S. UJVs
|
(8.6
|
)%
|
|
(14.4
|
)%
|
||
Combined U.S. Centers
|
(11.8
|
)%
|
|
(4.7
|
)%
|
(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
|
|
Nine Months
Ended
September 30, 2019 |
|
|||
|
|
|
(in thousands)
|
|
|||
Business interruption insurance recoveries
|
Nonoperating Income, Net
|
|
$
|
8,574
|
|
|
|
Revenue reduction related to business interruption (1)
|
Reduction of Rental Revenues
|
|
(1,202
|
)
|
|
||
Expense reimbursement insurance recoveries
|
Nonoperating Income, Net
|
|
185
|
|
|
||
Reimbursement for capital items damaged in hurricane in 2017
|
Reversal of previously recognized Depreciation Expense
|
|
2,000
|
|
(2)
|
||
Gain on insurance recoveries
|
Nonoperating Income, Net
|
|
1,418
|
|
|
•
|
the decrease in rental revenues was primarily attributable to the following:
|
◦
|
an increase in uncollectible tenant revenues related to our assessment of collectibility, which was impacted by the COVID-19 pandemic;
|
◦
|
the restructuring of our leases with Forever 21 due to their bankruptcy filing in 2019;
|
◦
|
a decrease in average rent per square foot, which was partially due to the aforementioned restructuring of our leases with Forever 21 as well as reduced sales-based rents recognized related to the tenant and center closures in 2020 and reduced rents due to abatement deals negotiated in 2020 as a result of the COVID-19 pandemic;
|
◦
|
a decrease in the occupancy of our centers;
|
◦
|
a decrease in common area maintenance and property tax expense recoveries;
|
•
|
the decrease in rental revenues was partially offset by an increase in lease cancellation income;
|
•
|
the decrease in overage rents was primarily attributable to lower sales at our centers in 2020 as a result of the COVID-19 pandemic;
|
•
|
decreases in management, leasing, and development services revenue related to our third party service agreements in Asia in 2019; and
|
•
|
the decrease in other income was primarily due to decreased food and beverage revenues of our restaurant joint venture due to the closing of the two restaurants at Beverly Center in December 2019 and the impact of the COVID-19 pandemic on our restaurants at International Market Place. Parking revenues also decreased due to reduced traffic at our centers as a result of the COVID-19 pandemic.
|
•
|
the decrease in maintenance, taxes, utilities, and promotion expense was primarily attributable to decreased common area maintenance and promotional expenses, which were reduced as a part of our liquidity enhancement initiatives in response to the COVID-19 pandemic;
|
•
|
the decrease in other operating expense was primarily due to decreased food and beverage expenses of our restaurant joint venture due to the closing of the two restaurants at Beverly Center in December 2019 and the impact of the COVID-19 pandemic on our restaurants at International Market Place, as well as reduced operating expenses as a part of our liquidity enhancement initiatives in response to the COVID-19 pandemic;
|
•
|
the decrease in management, leasing, and development expenses related to our third party service agreements in Asia in 2019;
|
•
|
the decrease in general and administrative expenses is primarily due to decreased professional fees and overhead expenses, including reduced travel expenses as a result of the COVID-19 pandemic;
|
•
|
the increase in restructuring charges is primarily due to charges incurred in 2020 to align our workforce to effectively meet the needs of the business and focus on our most critical business priorities;
|
•
|
costs incurred in 2020 related to the Simon transaction, including transaction related advisory, diligence, legal, and tax fees;
|
•
|
the decrease in interest expense was primarily attributable to a decrease in rates and proceeds received from the Blackstone Transactions, which were used to pay down our revolving lines of credit. The decrease was partially offset by an increase in borrowings, primarily related to the $350 million borrowing made in March 2020, offset by the $100 million repayment in June 2020; and
|
•
|
the increase in depreciation expense was primarily attributable to shortened depreciable lives of tenant allowances in connection with early terminations in 2020.
|
|
Three Months Ended September 30, 2020
|
Comparable Center NOI Growth:
|
|
Excluding lease cancellation income - at beneficial interest
|
(29.0)%
|
Excluding lease cancellation income using constant currency exchange rates - at beneficial interest
|
(29.0)%
|
Excluding lease cancellation income - at 100%
|
(27.2)%
|
Excluding lease cancellation income using constant currency exchange rates - at 100%
|
(27.2)%
|
Including lease cancellation income - at beneficial interest
|
(18.3)%
|
Including lease cancellation income using constant currency exchange rates - at beneficial interest
|
(18.3)%
|
Including lease cancellation income - at 100%
|
(16.9)%
|
Including lease cancellation income using constant currency exchange rates - at 100%
|
(16.9)%
|
|
|
|
|
Total Portfolio NOI Growth:
|
|
Excluding lease cancellation income - at beneficial interest
|
(33.9)%
|
•
|
the decrease in rental revenues was primarily attributable to the following:
|
◦
|
an increase in uncollectible tenant revenues related to our assessment of collectibility, which was impacted by the COVID-19 pandemic;
|
◦
|
the write-off of straight-line receivables associated with tenants deemed uncollectible;
|
◦
|
the restructuring of our leases with Forever 21 due to their bankruptcy filing in 2019;
|
◦
|
a decrease in average rent per square foot, which was partially due to the aforementioned restructuring of our leases with Forever 21 as well as reduced sales-based rents recognized related to the tenant and center closures in 2020 and reduced rents due to abatement deals negotiated in 2020 as a result of the COVID-19 pandemic;
|
◦
|
a decrease in common area maintenance and property tax expense recoveries;
|
•
|
the decrease in rental revenues was partially offset by an increase in lease cancellation income;
|
•
|
the decrease in overage rents was primarily attributable to lower sales at our centers in 2020 as a result of the COVID-19 pandemic;
|
•
|
decreases in management, leasing, and development services revenue related to our third party service agreements in Asia in 2019; and
|
•
|
the decrease in other income was primarily due to decreased food and beverage revenues of our restaurant joint venture due to the closing of the two restaurants at Beverly Center in December 2019 and the impact of the COVID-19 pandemic on our restaurants at International Market Place. Parking revenues also decreased due to reduced traffic at our centers as a result of the COVID-19 pandemic.
|
•
|
the decrease in maintenance, taxes, utilities, and promotion expense was primarily attributable to decreased common area maintenance, electric, and promotional expenses, which were reduced as a part of our liquidity enhancement initiatives in response to the COVID-19 pandemic and due to the closures of our tenants and centers;
|
•
|
the decrease in other operating expense was primarily due to decreased food and beverage expenses of our restaurant joint venture due to the closing of the two restaurants at Beverly Center in December 2019 and the impact of the COVID-19 pandemic on our restaurants at International Market Place, as well as decreased operating expenses in Asia and reduced operating expenses as a part of our liquidity enhancement initiatives in response to the COVID-19 pandemic;
|
•
|
the decrease in management, leasing, and development expenses related to our third party service agreements in Asia in 2019;
|
•
|
the decrease in general and administrative expenses is primarily due to decreased professional fees and overhead expenses, including reduced travel expenses as a result of the COVID-19 pandemic;
|
•
|
the increase in restructuring charges is primarily due to charges incurred in 2020 to align our workforce to effectively meet the needs of the business and focus on our most critical business priorities;
|
•
|
costs incurred in 2020 related to the Simon transaction, 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 primarily attributable to a decrease in rates and proceeds received from the Blackstone Transactions, which were used to pay down our revolving lines of credit. The decrease was partially offset by an increase in borrowings, primarily related to the $350 million borrowing made in March 2020, offset by the $100 million repayment in June 2020; and
|
•
|
the increase in depreciation expense was primarily attributable to the accelerated amortization of an allowance in connection with the closure of an anchor store at a U.S. property in 2020. The increase in depreciation expense was also partially attributable to shortened depreciable lives of tenant allowances in connection with early terminations in 2020 and new assets being placed into service at Beverly Center and The Mall at Green Hills in connection with our redevelopment projects at the centers.
|
|
Nine Months Ended September 30, 2020
|
Comparable Center NOI Growth:
|
|
Excluding lease cancellation income - at beneficial interest
|
(18.7)%
|
Excluding lease cancellation income using constant currency exchange rates - at beneficial interest
|
(18.5)%
|
Excluding lease cancellation income - at 100%
|
(18.3)%
|
Excluding lease cancellation income using constant currency exchange rates - at 100%
|
(17.9)%
|
Including lease cancellation income - at beneficial interest
|
(14.5)%
|
Including lease cancellation income using constant currency exchange rates - at beneficial interest
|
(14.4)%
|
Including lease cancellation income - at 100%
|
(14.4)%
|
Including lease cancellation income using constant currency exchange rates - at 100%
|
(14.0)%
|
|
|
|
|
Total Portfolio NOI Growth:
|
|
Excluding lease cancellation income - at beneficial interest
|
(22.8)%
|
|
Amount
|
|
Interest Rate Including Spread
|
|
|||
|
(in millions)
|
|
|
|
|||
Fixed rate debt
|
$
|
3,334.4
|
|
|
3.93
|
%
|
(1) (2)
|
|
|
|
|
|
|||
Floating rate debt swapped to fixed rate:
|
|
|
|
|
|||
Swap maturing in December 2021
|
78.1
|
|
|
3.58
|
%
|
|
|
Swaps maturing in February 2022
|
275.0
|
|
|
3.94
|
%
|
|
|
Swap maturing in February 2022
|
25.0
|
|
|
3.74
|
%
|
|
|
Swaps maturing in March 2023
|
250.0
|
|
|
4.92
|
%
|
|
|
Swap maturing in March 2024
|
12.0
|
|
|
3.49
|
%
|
|
|
|
$
|
640.1
|
|
|
4.26
|
%
|
(1)
|
|
|
|
|
|
|||
Floating month to month
|
1,228.8
|
|
(3)
|
2.08
|
%
|
(1) (3)
|
|
Total floating rate debt
|
$
|
1,868.8
|
|
|
2.83
|
%
|
(1)
|
|
|
|
|
|
|||
Total beneficial interest in debt
|
$
|
5,203.2
|
|
|
3.54
|
%
|
(1)
|
|
|
|
|
|
|||
Total beneficial interest in deferred financing costs, net
|
$
|
(14.9
|
)
|
|
|
|
|
|
|
|
|
|
|||
Net beneficial interest in debt
|
$
|
5,188.3
|
|
|
|
|
|
|
|
|
|
|
|||
Amortization of deferred financing costs (4)
|
|
|
|
0.20
|
%
|
|
|
Average all-in rate
|
|
|
|
3.74
|
%
|
|
(1)
|
Represents weighted average interest rate before amortization of deferred financing costs.
|
(2)
|
Includes non-cash amortization of debt premium related to acquisition.
|
(3)
|
As of September 30, 2020, the LIBOR rate was capped at 3.0% on $150 million of this debt related to our loan for The Mall at Green Hills. In August 2020, we extended the maturity date of this loan to December 2021. The LIBOR rate is capped at 3.0% through November 2020 and 2.0% from December 2020 to maturity.
|
(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)
|
|
$
|
121.9
|
|
||||||
Existing centers:
|
|
|
|
|
|
|
|
||||||||
Projects with incremental GLA or anchor replacement (4)
|
$
|
12.0
|
|
|
$
|
12.0
|
|
|
$
|
2.3
|
|
|
1.2
|
|
|
Projects with no incremental GLA and other (5)
|
8.2
|
|
|
7.5
|
|
|
8.1
|
|
|
4.9
|
|
||||
Mall tenant allowances
|
12.4
|
|
|
11.4
|
|
|
1.0
|
|
|
(0.3
|
)
|
||||
Asset replacement costs recoverable from tenants
|
6.0
|
|
|
5.8
|
|
|
5.4
|
|
|
2.6
|
|
||||
Corporate office improvements, technology, equipment, and other
|
0.9
|
|
|
0.9
|
|
|
|
|
|
||||||
Total
|
$
|
39.4
|
|
|
$
|
37.6
|
|
|
$
|
16.8
|
|
|
$
|
130.2
|
|
(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 costs incurred for the Country Club Plaza Nordstrom project, net of an adjustment 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 September 30
|
||||||||||||||||||||
|
2020
|
|
2019
|
||||||||||||||||||
|
Dollars in
|
|
Shares
|
|
Per Share
|
|
Dollars in
|
|
Shares
|
|
Per Share
|
||||||||||
|
millions
|
|
/Units
|
|
/Unit
|
|
millions
|
|
/Units
|
|
/Unit
|
||||||||||
Net income (loss) attributable to TCO common shareholders - basic
|
$
|
(30.1
|
)
|
|
61,696,565
|
|
|
$
|
(0.49
|
)
|
|
$
|
215.4
|
|
|
61,211,249
|
|
|
$
|
3.52
|
|
Add distributions to participating securities of TRG
|
|
|
|
|
|
|
0.6
|
|
|
871,262
|
|
|
|
||||||||
Add impact of share-based compensation
|
|
|
|
|
|
|
0.9
|
|
|
162,903
|
|
|
|
||||||||
Net income (loss) attributable to TCO common shareholders - diluted
|
$
|
(30.1
|
)
|
|
61,696,565
|
|
|
$
|
(0.49
|
)
|
|
$
|
216.9
|
|
|
62,245,414
|
|
|
$
|
3.48
|
|
Add TCO's additional income tax expense
|
—
|
|
|
|
|
—
|
|
|
|
|
|
|
|
||||||||
Add depreciation of TCO's additional basis
|
1.5
|
|
|
|
|
0.02
|
|
|
1.6
|
|
|
|
|
0.03
|
|
||||||
Net income (loss) attributable to TCO common shareholders,
excluding step-up depreciation and additional income tax expense |
$
|
(28.6
|
)
|
|
61,696,565
|
|
|
$
|
(0.46
|
)
|
|
$
|
218.5
|
|
|
62,245,414
|
|
|
$
|
3.51
|
|
Add noncontrolling share of income (loss) of TRG
|
(12.1
|
)
|
|
26,306,431
|
|
|
|
|
93.7
|
|
|
26,430,716
|
|
|
|
||||||
Add distributions to participating securities of TRG
|
|
|
871,262
|
|
|
|
|
|
|
|
|
|
|||||||||
Net income (loss) attributable to partnership unitholders and
participating securities of TRG |
$
|
(40.6
|
)
|
|
88,874,258
|
|
|
$
|
(0.46
|
)
|
|
$
|
312.2
|
|
|
88,676,130
|
|
|
$
|
3.52
|
|
Add (less) depreciation and amortization (1):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Consolidated businesses at 100%
|
49.2
|
|
|
|
|
0.55
|
|
|
47.8
|
|
|
|
|
0.54
|
|
||||||
Depreciation of TCO's additional basis
|
(1.5
|
)
|
|
|
|
(0.02
|
)
|
|
(1.6
|
)
|
|
|
|
(0.02
|
)
|
||||||
Noncontrolling partners in consolidated joint ventures
|
(2.0
|
)
|
|
|
|
(0.02
|
)
|
|
(1.8
|
)
|
|
|
|
(0.02
|
)
|
||||||
Share of UJVs
|
16.2
|
|
|
|
|
0.18
|
|
|
17.7
|
|
|
|
|
0.20
|
|
||||||
Non-real estate depreciation
|
(1.1
|
)
|
|
|
|
(0.01
|
)
|
|
(1.2
|
)
|
|
|
|
(0.01
|
)
|
||||||
Less gain on transfer of building and improvements
|
(5.6
|
)
|
|
|
|
(0.06
|
)
|
|
(10.1
|
)
|
|
|
|
(0.11
|
)
|
||||||
Add beneficial share of impairment charge
|
19.8
|
|
|
|
|
0.22
|
|
|
|
|
|
|
|
||||||||
Less gain on partial disposition of ownership interest in UJV
|
|
|
|
|
|
|
(138.7
|
)
|
|
|
|
(1.56
|
)
|
||||||||
Less gain on remeasurement of ownership interest in UJV
|
|
|
|
|
|
|
(145.0
|
)
|
|
|
|
(1.64
|
)
|
||||||||
Less impact of share-based compensation
|
|
|
|
|
|
|
(0.9
|
)
|
|
|
|
(0.01
|
)
|
||||||||
Funds from Operations attributable to partnership unitholders
and participating securities of TRG |
$
|
34.5
|
|
|
88,874,258
|
|
|
$
|
0.39
|
|
|
$
|
78.4
|
|
|
88,676,130
|
|
|
$
|
0.88
|
|
TCO's average ownership percentage of TRG - basic
|
70.3
|
%
|
|
|
|
|
|
69.8
|
%
|
|
|
|
|
||||||||
Funds from Operations attributable to TCO's common shareholders, excluding additional income tax expense
|
$
|
24.2
|
|
|
|
|
$
|
0.39
|
|
|
$
|
54.7
|
|
|
|
|
$
|
0.88
|
|
||
Less TCO's additional income tax expense
|
—
|
|
|
|
|
—
|
|
|
|
|
|
|
|
||||||||
Funds from Operations attributable to TCO's common shareholders
|
$
|
24.2
|
|
|
|
|
$
|
0.39
|
|
|
$
|
54.7
|
|
|
|
|
$
|
0.88
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Funds from Operations attributable to partnership unitholders
and participating securities of TRG |
$
|
34.5
|
|
|
88,874,258
|
|
|
$
|
0.39
|
|
|
$
|
78.4
|
|
|
88,676,130
|
|
|
$
|
0.88
|
|
Simon transaction costs
|
17.1
|
|
|
|
|
0.19
|
|
|
|
|
|
|
|
||||||||
Costs associated with shareholder activism
|
|
|
|
|
|
|
0.7
|
|
|
|
|
0.01
|
|
||||||||
Restructuring charges
|
2.4
|
|
|
|
|
0.03
|
|
|
0.9
|
|
|
|
|
0.01
|
|
||||||
Promote fee, net of tax - Starfield Hanam (2)
|
0.3
|
|
|
|
|
—
|
|
|
(4.0
|
)
|
|
|
|
(0.04
|
)
|
||||||
Fluctuation in fair value of equity securities
|
(0.6
|
)
|
|
|
|
(0.01
|
)
|
|
|
|
|
|
|
||||||||
Adjusted Funds from Operations attributable to partnership unitholders
and participating securities of TRG |
$
|
53.6
|
|
|
88,874,258
|
|
|
$
|
0.60
|
|
|
$
|
76.0
|
|
|
88,676,130
|
|
|
$
|
0.86
|
|
TCO's average ownership percentage of TRG - basic
|
70.3
|
%
|
|
|
|
|
|
69.8
|
%
|
|
|
|
|
||||||||
Adjusted Funds from Operations attributable to TCO's common shareholders, excluding additional income tax expense
|
$
|
37.7
|
|
|
|
|
$
|
0.60
|
|
|
$
|
53.1
|
|
|
|
|
$
|
0.86
|
|
||
Less TCO's additional income tax expense
|
—
|
|
|
|
|
—
|
|
|
|
|
|
|
|
||||||||
Adjusted Funds from Operations attributable to TCO's common shareholders
|
$
|
37.7
|
|
|
|
|
$
|
0.60
|
|
|
$
|
53.1
|
|
|
|
|
$
|
0.86
|
|
(1)
|
Depreciation includes $5.2 million and $6.4 million of mall tenant allowance amortization for the three months ended September 30, 2020 and 2019, respectively.
|
(2)
|
Includes a reduction of $0.3 million of promote fee income related to the previously recognized promote fee, net of tax, for Starfield Hanam, for the three months ended September 30, 2020 and $4.8 million of promote fee income related to Starfield Hanam less $0.9 million of income tax expense, for the three months ended September 30, 2019. The promote fee (and related adjustment) and income tax expense were recorded within Equity in Income (Loss) of UJVs and Income Tax Expense, respectively, in our Consolidated Statement of Operations and Comprehensive Income (Loss).
|
(3)
|
Amounts in this table may not recalculate due to rounding.
|
|
Nine Months Ended September 30, 2020
|
||||||||||||||||||||
|
2020
|
|
2019
|
||||||||||||||||||
|
Dollars in
|
|
Shares
|
|
Per Share
|
|
Dollars in
|
|
Shares
|
|
Per Share
|
||||||||||
|
millions
|
|
/Units
|
|
/Unit
|
|
millions
|
|
/Units
|
|
/Unit
|
||||||||||
Net income (loss) attributable to TCO common shareholders - basic
|
$
|
(44.3
|
)
|
|
61,512,816
|
|
|
(0.72
|
)
|
|
$
|
236.7
|
|
|
61,169,279
|
|
|
$
|
3.87
|
|
|
Add distributions to participating securities of TRG
|
|
|
|
|
|
|
1.8
|
|
|
871,262
|
|
|
|
||||||||
Add impact of share-based compensation
|
|
|
|
|
|
|
0.7
|
|
|
191,955
|
|
|
|
||||||||
Net income (loss) attributable to TCO common shareholders - diluted
|
$
|
(44.3
|
)
|
|
61,512,816
|
|
|
$
|
(0.72
|
)
|
|
$
|
239.2
|
|
|
62,232,496
|
|
|
$
|
3.84
|
|
Add TCO's additional income tax expense
|
—
|
|
|
|
|
—
|
|
|
|
|
|
|
|
||||||||
Add depreciation of TCO's additional basis
|
4.4
|
|
|
|
|
0.07
|
|
|
4.9
|
|
|
|
|
0.08
|
|
||||||
Net income (loss) attributable to TCO common shareholders,
excluding step-up depreciation and additional income tax expense |
$
|
(39.8
|
)
|
|
61,512,816
|
|
|
$
|
(0.65
|
)
|
|
$
|
244.1
|
|
|
62,232,496
|
|
|
$
|
3.92
|
|
Add noncontrolling share of income (loss) of TRG
|
(16.7
|
)
|
|
26,423,134
|
|
|
|
|
103.9
|
|
|
25,928,316
|
|
|
|
||||||
Add distributions to participating securities of TRG
|
0.6
|
|
|
871,262
|
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) attributable to partnership unitholders and
participating securities of TRG |
$
|
(55.9
|
)
|
|
88,807,212
|
|
|
$
|
(0.63
|
)
|
|
$
|
348.0
|
|
|
88,160,812
|
|
|
$
|
3.95
|
|
Add (less) depreciation and amortization (1):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Consolidated businesses at 100%
|
162.8
|
|
|
|
|
1.83
|
|
|
137.1
|
|
|
|
|
1.55
|
|
||||||
Depreciation of TCO's additional basis
|
(4.4
|
)
|
|
|
|
(0.05
|
)
|
|
(4.9
|
)
|
|
|
|
(0.06
|
)
|
||||||
Noncontrolling partners in consolidated joint ventures
|
(5.8
|
)
|
|
|
|
(0.07
|
)
|
|
(6.2
|
)
|
|
|
|
(0.07
|
)
|
||||||
Share of UJVs
|
48.3
|
|
|
|
|
0.54
|
|
|
53.8
|
|
|
|
|
0.61
|
|
||||||
Non-real estate depreciation
|
(3.3
|
)
|
|
|
|
(0.03
|
)
|
|
(3.4
|
)
|
|
|
|
(0.04
|
)
|
||||||
Less gain on insurance recoveries - The Mall of San Juan
|
|
|
|
|
|
|
(1.4
|
)
|
|
|
|
(0.02
|
)
|
||||||||
Less gain on transfer of building and improvements
|
(5.6
|
)
|
|
|
|
(0.06
|
)
|
|
(10.1
|
)
|
|
|
|
(0.11
|
)
|
||||||
Add beneficial share of impairment charge
|
19.8
|
|
|
|
|
0.22
|
|
|
|
|
|
|
|
||||||||
Less gains on partial dispositions of ownership interests in UJVs, net of tax
|
(11.3
|
)
|
|
|
|
(0.13
|
)
|
|
(138.7
|
)
|
|
|
|
(1.57
|
)
|
||||||
Less gains on remeasurements of ownership interests in UJVs
|
(14.1
|
)
|
|
|
|
(0.16
|
)
|
|
(145.0
|
)
|
|
|
|
(1.64
|
)
|
||||||
Less impact of share-based compensation
|
|
|
|
|
|
|
(0.7
|
)
|
|
|
|
(0.01
|
)
|
||||||||
Funds from Operations attributable to partnership unitholders
and participating securities of TRG |
$
|
130.4
|
|
|
88,807,212
|
|
|
$
|
1.47
|
|
|
$
|
228.5
|
|
|
88,160,812
|
|
|
$
|
2.59
|
|
TCO's average ownership percentage of TRG - basic
|
70.1
|
%
|
|
|
|
|
|
70.2
|
%
|
|
|
|
|
||||||||
Funds from Operations attributable to TCO's common shareholders, excluding additional income tax expense
|
$
|
91.3
|
|
|
|
|
$
|
1.47
|
|
|
$
|
160.5
|
|
|
|
|
$
|
2.59
|
|
||
Less TCO's additional income tax expense
|
—
|
|
|
|
|
—
|
|
|
|
|
|
|
|
||||||||
Funds from Operations attributable to TCO's common shareholders
|
$
|
91.3
|
|
|
|
|
$
|
1.47
|
|
|
$
|
160.5
|
|
|
|
|
$
|
2.59
|
|
||
Funds from Operations attributable to partnership unitholders and
participating securities of TRG |
$
|
130.4
|
|
|
88,807,212
|
|
|
$
|
1.47
|
|
|
$
|
228.5
|
|
|
88,160,812
|
|
|
$
|
2.59
|
|
Simon transaction costs
|
32.5
|
|
|
|
|
0.37
|
|
|
|
|
|
|
|
||||||||
Costs associated with shareholder activism
|
|
|
|
|
|
|
16.7
|
|
|
|
|
0.19
|
|
||||||||
Restructuring charges
|
2.8
|
|
|
|
|
0.03
|
|
|
1.6
|
|
|
|
|
0.02
|
|
||||||
Costs related to Blackstone Transactions (2)
|
1.1
|
|
|
|
|
0.01
|
|
|
2.1
|
|
|
|
|
0.02
|
|
||||||
Taubman Asia President transition costs
|
0.2
|
|
|
|
|
—
|
|
|
|
|
|
|
|
||||||||
Promote fee, net of tax - Starfield Hanam (3)
|
0.6
|
|
|
|
|
0.01
|
|
|
(4.0
|
)
|
|
|
|
(0.04
|
)
|
||||||
Fluctuation in fair value of equity securities
|
0.9
|
|
|
|
|
0.01
|
|
|
(3.3
|
)
|
|
|
|
(0.04
|
)
|
||||||
Adjusted Funds from Operations attributable to partnership unitholders
and participating securities of TRG |
$
|
168.5
|
|
|
88,807,212
|
|
|
$
|
1.90
|
|
|
$
|
241.5
|
|
|
88,160,812
|
|
|
$
|
2.74
|
|
TCO's average ownership percentage of TRG - basic
|
70.1
|
%
|
|
|
|
|
|
70.2
|
%
|
|
|
|
|
||||||||
Adjusted Funds from Operations attributable to TCO's common shareholders, excluding additional income tax expense
|
$
|
118.1
|
|
|
|
|
$
|
1.90
|
|
|
$
|
169.6
|
|
|
|
|
$
|
2.74
|
|
||
Less TCO's additional income tax expense
|
—
|
|
|
|
|
—
|
|
|
|
|
|
|
|
||||||||
Adjusted Funds from Operations attributable to TCO's common shareholders
|
$
|
118.1
|
|
|
|
|
$
|
1.90
|
|
|
$
|
169.6
|
|
|
|
|
$
|
2.74
|
|
(1)
|
Depreciation includes $18.6 million and $17.7 million of mall tenant allowance amortization for the nine months ended September 30, 2020 and 2019, respectively.
|
(2)
|
Includes $1.1 million of deferred income tax expense related to the Blackstone Transactions for the nine months ended September 30, 2020, which has been recorded within Income Tax Expense in our Statement of Operations and Comprehensive Income (Loss). Also, includes $1.6 million of deferred income tax expense and $0.5 million of disposition costs related to the Blackstone Transactions for the nine months ended September 30, 2019, which have been recorded within Income Tax Expense and Nonoperating Income, Net, respectively, in our Statement of Operations and Comprehensive Income (Loss).
|
(3)
|
Includes reductions of $0.6 million of promote fee income related to the previously recognized promote fee, net of tax, for Starfield Hanam, for the nine months ended September 30, 2020 and $4.8 million of promote fee income related to Starfield Hanam less $0.9 million of income tax expense, for the nine months ended September 30, 2019. The promote fee (and related adjustments) and income tax expense were recorded within Equity in Income (Loss) of UJVs and Income Tax Expense, respectively, in our Consolidated Statement of Operations and Comprehensive Income (Loss).
|
(4)
|
Amounts in this table may not recalculate due to rounding.
|
|
Three Months Ended September 30
|
||||||||
|
(in millions)
|
||||||||
|
2020
|
|
2019
|
|
Growth %
|
||||
Net income (loss)
|
$
|
(36.6
|
)
|
|
$
|
316.4
|
|
|
|
Add (less) depreciation and amortization:
|
|
|
|
|
|
||||
Consolidated businesses at 100%
|
49.2
|
|
|
47.8
|
|
|
|
||
Noncontrolling partners in consolidated joint ventures
|
(2.0
|
)
|
|
(1.8
|
)
|
|
|
||
Share of UJVs
|
16.2
|
|
|
17.7
|
|
|
|
||
Add (less) interest expense and income tax expense:
|
|
|
|
|
|
||||
Interest expense:
|
|
|
|
|
|
||||
Consolidated businesses at 100%
|
33.1
|
|
|
37.7
|
|
|
|
||
Noncontrolling partners in consolidated joint ventures
|
(2.7
|
)
|
|
(2.8
|
)
|
|
|
||
Share of UJVs
|
16.1
|
|
|
17.8
|
|
|
|
||
Income tax expense:
|
|
|
|
|
|
||||
Consolidated businesses at 100%
|
—
|
|
|
2.0
|
|
|
|
||
Share of UJVs
|
0.9
|
|
|
1.0
|
|
|
|
||
Less noncontrolling share of loss (income) of consolidated joint ventures
|
0.3
|
|
|
(1.0
|
)
|
|
|
||
Add EBITDA attributable to outside partners:
|
|
|
|
|
|
||||
EBITDA attributable to noncontrolling partners in consolidated joint ventures
|
4.4
|
|
|
5.6
|
|
|
|
||
EBITDA attributable to outside partners in UJVs
|
32.2
|
|
|
50.4
|
|
|
|
||
EBITDA at 100%
|
$
|
111.1
|
|
|
$
|
490.8
|
|
|
|
Add (less) items excluded from shopping center NOI:
|
|
|
|
|
|
||||
General and administrative expenses
|
7.0
|
|
|
9.6
|
|
|
|
||
Management, leasing, and development services, net
|
—
|
|
|
—
|
|
|
|
||
Simon transaction costs
|
17.1
|
|
|
|
|
|
|||
Restructuring charges
|
2.4
|
|
|
0.9
|
|
|
|
||
Costs associated with shareholder activism
|
|
|
0.7
|
|
|
|
|||
Straight-line of rents
|
1.7
|
|
|
(0.8
|
)
|
|
|
||
Nonoperating income, net
|
(13.5
|
)
|
|
(16.8
|
)
|
|
|
||
Gain on partial disposition of ownership interest in UJV
|
|
|
(138.7
|
)
|
|
|
|||
Gain on remeasurement of ownership interest in UJV
|
|
|
(145.0
|
)
|
|
|
|||
Impairment charge
|
39.7
|
|
|
|
|
|
|||
Unallocated operating expenses and other
|
3.9
|
|
|
6.7
|
|
|
|
||
NOI at 100% - total portfolio
|
$
|
169.3
|
|
|
$
|
207.4
|
|
|
|
Less - NOI of non-comparable centers (1)
|
(14.7
|
)
|
|
(21.3
|
)
|
|
|
||
NOI at 100% - comparable centers
|
$
|
154.6
|
|
|
$
|
186.1
|
|
|
(16.9)%
|
Foreign currency exchange rate fluctuation adjustment
|
(0.1
|
)
|
|
|
|
|
|||
NOI at 100% - comparable centers including lease cancellation income at constant currency
|
$
|
154.6
|
|
|
$
|
186.1
|
|
|
(16.9)%
|
|
|
|
|
|
|
||||
NOI at 100% - comparable centers
|
$
|
154.6
|
|
|
$
|
186.1
|
|
|
|
Less lease cancellation income - comparable centers
|
(19.8
|
)
|
|
(1.0
|
)
|
|
|
||
NOI at 100% - comparable centers excluding lease cancellation income (2)
|
$
|
134.8
|
|
|
$
|
185.1
|
|
|
(27.2)%
|
Foreign currency exchange rate fluctuation adjustment
|
(0.1
|
)
|
|
|
|
|
|||
NOI at 100% - comparable centers excluding lease cancellation income at constant currency
|
$
|
134.7
|
|
|
$
|
185.1
|
|
|
(27.2)%
|
|
|
|
|
|
|
||||
NOI at 100% - comparable centers
|
$
|
154.6
|
|
|
$
|
186.1
|
|
|
|
Less NOI of comparable centers attributable to noncontrolling partners in consolidated joint ventures and outside partners in UJVs (3)
|
(48.8
|
)
|
|
(56.6
|
)
|
|
|
||
Beneficial interest in NOI - comparable centers including lease cancellation income
|
105.8
|
|
|
129.5
|
|
|
(18.3)%
|
||
Beneficial interest in foreign currency exchange rate fluctuation adjustment
|
—
|
|
|
|
|
|
|||
Beneficial interest in NOI - comparable centers including lease cancellation income at constant currency
|
$
|
105.8
|
|
|
$
|
129.5
|
|
|
(18.3)%
|
|
|
|
|
|
|
||||
NOI at 100% - comparable centers excluding lease cancellation income (2)
|
$
|
134.8
|
|
|
$
|
185.1
|
|
|
|
Less NOI of comparable centers excluding lease cancellation income attributable to noncontrolling partners in consolidated joint ventures and outside partners in UJVs (3)
|
(43.4
|
)
|
|
(56.3
|
)
|
|
|
||
Beneficial interest in NOI - comparable centers excluding lease cancellation income
|
91.4
|
|
|
128.8
|
|
|
(29.0)%
|
||
Beneficial interest in foreign currency exchange rate fluctuation adjustment
|
—
|
|
|
|
|
|
|||
Beneficial interest in NOI - comparable centers excluding lease cancellation income at constant currency
|
$
|
91.4
|
|
|
$
|
128.8
|
|
|
(29.0)%
|
|
|
|
|
|
|
||||
NOI at 100% - total portfolio
|
$
|
169.3
|
|
|
$
|
207.4
|
|
|
|
Less lease cancellation income - total portfolio
|
(26.0
|
)
|
|
(2.4
|
)
|
|
|
||
Less NOI attributable to noncontrolling partners in consolidated joint ventures and outside partners in UJVs excluding lease cancellation income - total portfolio
|
(45.2
|
)
|
|
(56.4
|
)
|
|
|
||
Beneficial interest in NOI - total portfolio excluding lease cancellation income
|
$
|
98.2
|
|
|
$
|
148.6
|
|
|
(33.9)%
|
|
Nine Months Ended September 30, 2020
|
||||||||
|
(in millions)
|
||||||||
|
2020
|
|
2019
|
|
Growth %
|
||||
Net income (loss)
|
$
|
(42.0
|
)
|
|
$
|
363.0
|
|
|
|
Add (less) depreciation and amortization:
|
|
|
|
|
|
||||
Consolidated businesses at 100%
|
162.8
|
|
|
137.1
|
|
|
|
||
Noncontrolling partners in consolidated joint ventures
|
(5.8
|
)
|
|
(6.2
|
)
|
|
|
||
Share of UJVs
|
48.3
|
|
|
53.8
|
|
|
|
||
Add (less) interest expense and income tax expense:
|
|
|
|
|
|
||||
Interest expense:
|
|
|
|
|
|
||||
Consolidated businesses at 100%
|
101.3
|
|
|
112.6
|
|
|
|
||
Noncontrolling partners in consolidated joint ventures
|
(8.3
|
)
|
|
(8.9
|
)
|
|
|
||
Share of UJVs
|
48.5
|
|
|
52.6
|
|
|
|
||
Income tax expense:
|
|
|
|
|
|
||||
Consolidated businesses at 100%
|
0.5
|
|
|
4.9
|
|
|
|
||
Noncontrolling partners in consolidated joint ventures
|
|
|
(0.2
|
)
|
|
|
|||
Share of UJVs
|
1.4
|
|
|
2.7
|
|
|
|
||
Share of income tax expense on disposition of ownership interests
|
1.5
|
|
|
|
|
|
|||
Less noncontrolling share of income of consolidated joint ventures
|
(1.0
|
)
|
|
(3.2
|
)
|
|
|
||
Add EBITDA attributable to outside partners:
|
|
|
|
|
|
||||
EBITDA attributable to noncontrolling partners in consolidated joint ventures
|
15.1
|
|
|
18.5
|
|
|
|
||
EBITDA attributable to outside partners in UJVs
|
123.0
|
|
|
146.6
|
|
|
|
||
EBITDA at 100%
|
$
|
445.2
|
|
|
$
|
873.3
|
|
|
|
Add (less) items excluded from shopping center NOI:
|
|
|
|
|
|
||||
General and administrative expenses
|
22.6
|
|
|
26.8
|
|
|
|
||
Management, leasing, and development services, net
|
(0.2
|
)
|
|
(1.1
|
)
|
|
|
||
Simon transaction costs
|
32.5
|
|
|
|
|
|
|||
Restructuring charges
|
2.8
|
|
|
1.6
|
|
|
|
||
Costs associated with shareholder activism
|
|
|
16.7
|
|
|
|
|||
Straight-line of rents
|
4.7
|
|
|
(6.0
|
)
|
|
|
||
Nonoperating income, net
|
(14.0
|
)
|
|
(33.4
|
)
|
|
|
||
Gains on partial dispositions of ownership interests in UJVs
|
(12.8
|
)
|
|
(138.7
|
)
|
|
|
||
Gains on remeasurements of ownership interests in UJVs
|
(14.1
|
)
|
|
(145.0
|
)
|
|
|
||
Impairment charge
|
39.7
|
|
|
|
|
|
|||
Unallocated operating expenses and other
|
13.8
|
|
|
22.9
|
|
|
|
||
NOI at 100% - total portfolio
|
$
|
520.2
|
|
|
$
|
616.9
|
|
|
|
Less - NOI of non-comparable centers (1)
|
(41.4
|
)
|
|
(57.6
|
)
|
|
|
||
NOI at 100% - comparable centers
|
$
|
478.7
|
|
|
$
|
559.3
|
|
|
(14.4)%
|
Foreign currency exchange rate fluctuation adjustment
|
2.1
|
|
|
|
|
|
|||
NOI at 100% - comparable centers including lease cancellation income at constant currency
|
$
|
480.8
|
|
|
$
|
559.3
|
|
|
(14.0)%
|
|
|
|
|
|
|
||||
NOI at 100% - comparable centers
|
$
|
478.7
|
|
|
$
|
559.3
|
|
|
|
Less lease cancellation income - comparable centers
|
(26.9
|
)
|
|
(6.5
|
)
|
|
|
||
NOI at 100% - comparable centers excluding lease cancellation income (2)
|
$
|
451.8
|
|
|
$
|
552.8
|
|
|
(18.3)%
|
Foreign currency exchange rate fluctuation adjustment
|
2.1
|
|
|
|
|
|
|||
NOI at 100% - comparable centers excluding lease cancellation income at constant currency
|
$
|
453.9
|
|
|
$
|
552.8
|
|
|
(17.9)%
|
|
|
|
|
|
|
||||
NOI at 100% - comparable centers
|
$
|
478.7
|
|
|
$
|
559.3
|
|
|
|
Less NOI of comparable centers attributable to noncontrolling partners in consolidated joint ventures and outside partners in UJVs (3)
|
(145.4
|
)
|
|
(169.2
|
)
|
|
|
||
Beneficial interest in NOI - comparable centers including lease cancellation income
|
333.4
|
|
|
390.1
|
|
|
(14.5)%
|
||
Beneficial interest in foreign currency exchange rate fluctuation adjustment
|
0.4
|
|
|
|
|
|
|||
Beneficial interest in NOI - comparable centers including lease cancellation income at constant currency
|
$
|
333.8
|
|
|
$
|
390.1
|
|
|
(14.4)%
|
|
|
|
|
|
|
||||
NOI at 100% - comparable centers excluding lease cancellation income (2)
|
$
|
451.8
|
|
|
$
|
552.8
|
|
|
|
Less NOI of comparable centers excluding lease cancellation income attributable to noncontrolling partners in consolidated joint ventures and outside partners in UJVs (3)
|
(138.6
|
)
|
|
(167.8
|
)
|
|
|
||
Beneficial interest in NOI - comparable centers excluding lease cancellation income
|
313.2
|
|
|
385.0
|
|
|
(18.7)%
|
||
Beneficial interest in foreign currency exchange rate fluctuation adjustment
|
0.4
|
|
|
|
|
|
|||
Beneficial interest in NOI - comparable centers excluding lease cancellation income at constant currency
|
$
|
313.6
|
|
|
$
|
385.0
|
|
|
(18.5)%
|
|
|
|
|
|
|
||||
NOI at 100% - total portfolio
|
$
|
520.2
|
|
|
$
|
616.9
|
|
|
|
Less lease cancellation income - total portfolio
|
(33.7
|
)
|
|
(10.4
|
)
|
|
|
||
Less NOI attributable to noncontrolling partners in consolidated joint ventures and outside partners in UJVs excluding lease cancellation income - total portfolio
|
(146.0
|
)
|
|
(165.3
|
)
|
|
|
||
Beneficial interest in NOI - total portfolio excluding lease cancellation income
|
$
|
340.5
|
|
|
$
|
441.2
|
|
|
(22.8)%
|
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 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 most of our U.S. shopping centers in mid-March 2020. As of June 30, 2020, all U.S. properties and nearly 85% of stores had reopened. However, in mid-July 2020, two of our centers in California were ordered to temporarily close again amid rising cases of COVID-19. In late August, International Market Place in Hawaii was also ordered to temporarily close, but reopened in late September. In early September and October, our two centers in California reopened and currently all of our U.S. centers remain open. As of November 2, 2020, nearly 94% of our U.S. tenants had reopened with traffic, sales and tenant collections improving each month since May. Also, although all of our centers have reopened, there are still various restrictions in place that limit our centers and tenants from operating at the levels they did prior to the COVID-19 pandemic. If the U.S. continues to see prolonged or increased cases of COVID-19 infection, the risk of government mandated restrictions may rise, which could require centers to close, but we are unable to predict such potential restrictions;
|
•
|
the COVID-19 pandemic has resulted in reduced global economic activity, which has impacted certain of our tenants' businesses, financial performance, and liquidity and has caused, and could continue to cause, certain tenants to be unable to fully meet their obligations to us or to otherwise seek modifications of such obligations, resulting in increases in uncollectible tenant receivables, deferrals, and abatements. We have experienced and may continue to experience a reduction in rent collections for an indeterminate period of time. While we have agreed to certain lease concessions, discussions with our tenants remain ongoing and may result in further rent deferrals or rent abatements, as we deem appropriate on an individual basis based on each tenant’s unique financial and operating situation. Refer to "Note 1 - Interim Financial Statements - Risks and Uncertainties Related to COVID-19 Pandemic" and "Note 14 - New Accounting Pronouncements and Impending LIBOR Transition - New Accounting Pronouncements" to our consolidated financial statements for discussion related to our accounting for uncollectible tenant revenues, rent deferrals, and abatements related to the COVID-19 pandemic. Tenants could also file lawsuits against us arguing that they are not obligated to pay their rent during our center closures;
|
•
|
many of our tenants and anchors have been, and may continue to be, affected by the COVID-19 pandemic, which has led to, and could continue to lead to, reduced credit quality, increased bankruptcies, early terminations, reduced lease renewals, reduced negotiated rents in new leases, 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 or maintaining 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. Prior to the COVID-19 pandemic, the U.S. shopping center industry already had been facing challenges and turbulence in recent years as it continued to evolve rapidly. In 2019, bankruptcies included Forever 21, one of our largest mall tenants, who accounted for 3.6% of Mall gross leasable area (GLA) as of September 30, 2020. During the nine months ended September 30, 2020, 5.9% of the total number of tenant leases filed for bankruptcy, which accounted for 6.2% of Mall GLA. Additionally, while excluded from the preceding statistics, during the nine months ended September 30, 2020, department stores JCPenney, Neiman Marcus, and Lord & Taylor, as well as other major tenants at our value and outlet centers, filed for bankruptcy. As of September 30, 2020, JCPenney, Neiman Marcus, Lord & Taylor, and other major tenants that filed for bankruptcy at our value and outlet centers accounted for an aggregate of 15 anchor or major locations in our centers. The impact of the COVID-19 pandemic has impeded and may continue to impede the recovery of the U.S. shopping center and retail industries;
|
•
|
portions of our rental revenues are based on tenant sales, which have been and could continue to be affected by the COVID-19 pandemic 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 (particularly our large, enclosed malls) compared to other alternatives. Consumer traffic is likely to be reduced until COVID-19 infection rates are significantly reduced, the population susceptible to COVID-19 infection is reduced, a vaccination which prevents or reduces the severity of the COVID-19 pandemic becomes widely available, or a cure or treatment is developed and becomes widely available;
|
•
|
we are in a competitive business and our centers compete with other forms of retailing such as online retail, as well as other retail properties such as single user freestanding wholesale clubs and discount shopping stores. Also, many of our tenants are omni-channel retailers who also sell their products through various means and channels, including via the internet. Our revenues are currently predominantly reliant on consumer demand for shopping at physical shopping malls, and we could be adversely affected if we are unable to adapt to such new technologies and relationships on a timely basis. The increased popularity of digital and mobile technologies has advanced the transition of a percentage of market share from shopping at physical stores to online shopping, and the ongoing COVID-19 pandemic and restrictions intended to slow the rate of infections has increased the utilization of e-commerce and may continue to accelerate the long-term growth of online retail, reducing consumer demand for shopping at physical shopping malls. Further, consumers who had limited or no experience using online retail have recently turned to online retail as a necessity due to the inability to access our centers and the ability to purchase non-essential goods from these online retailers. As retailers become more successful selling products online, they could begin to close stores or choose not to renew existing leases at terms attractive to us;
|
•
|
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, some of which are the most productive centers in our portfolio), 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 adversely affected by the COVID-19 pandemic due to the factors mentioned elsewhere in this risk factor, which could impede us from pursuing our historical 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. In response to the COVID-19 pandemic, U.S. planned capital expenditures for the year have been lowered by approximately $135 million, at our beneficial interest, which represents a reduction of nearly 65% from the original budget and could also impede us from realizing internal growth within our portfolio;
|
•
|
the potential negative impact on the health of our employees, particularly if a significant number of senior management members are impacted, could affect our ability to ensure business continuity during the period of disruption related to the pandemic. The outbreak has forced 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. As our on-site and management office employees return to their work locations, rising COVID-19 infection rates could result in these employees transitioning back to working remotely, with additional financial burdens and further disruption to our business. The pandemic may also have long-term effects on the nature of the office environment and remote working, and this may present operational challenges that may adversely affect our business;
|
•
|
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, and 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 an adverse effect on our business, financial statements, and liquidity. In August 2020, we entered into amendments to waive all of our existing financial covenants related to our primary unsecured revolving line of credit, $275 million unsecured term loan, and $250 million unsecured term loan for the quarter ending September 30, 2020 through and including the quarter ending June 30, 2021 (the covenant waiver period). The existing covenant requiring us to maintain a minimum of three eligible unencumbered assets remains in effect during the covenant waiver period. The amendments also added a liquidity covenant, which remains in effect until the financial covenants are in compliance using the definitions and requirements prior to the amendments (the covenant compliance date), which must be no later than the quarter ending June 30, 2022. The financial covenants for our loan on International Market Place mirror the requirements under our primary unsecured revolving line of credit so therefore, the waiver of our financial covenants also applies to the International Market Place loan. Refer to "Part I. Financial Information - Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Covenant Waiver Amendments" for further details related to the amendments for our primary unsecured revolving line of credit, $275 million unsecured term loan, and $250 million unsecured term loan. Although we are currently able to meet our liquidity covenant, and expect to be able to meet it during the covenant waiver period, for our primary unsecured revolving line of credit, $275 million unsecured term loan, and $250 million unsecured term loan, there is no assurance that we will continue to be able to do so, even with the additional flexibility provided by the amendments.
|
•
|
the financial markets and our stock price also have been adversely impacted by, and have become more volatile due to, 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 in compliance with all local, state and federal laws, as well as additional expenses incurred to protect the welfare of our employees, such as expanded access to health services;
|
•
|
our ability or desire to pay dividends on our stock could be limited in the future. We did not declare a second or third quarter dividend on our common stock, and 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. The Board of Directors will monitor our financial performance and liquidity position on an ongoing basis and will distribute taxable income, in the form of a common dividend and distributions to participating securities, in accordance with our partnership agreement and REIT qualification requirements as permitted under the new covenant waiver amendments; 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. In October 2020, we completed the sale of our interest in Stamford Town Center, and as a result of the sale, during both the three and nine months ended September 30, 2020, we recognized an impairment charge of $19.8 million within Equity in Income (Loss) of UJVs on our Consolidated Statement of Operations and Comprehensive Income (Loss).
|
Item 5.
|
Other Information
|
|
|
TAUBMAN CENTERS, INC.
|
Date:
|
November 9, 2020
|
By: /s/ Simon J. Leopold
|
|
|
Simon J. Leopold
|
|
|
Executive Vice President, Chief Financial Officer (Principal Financial 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:
|
November 9, 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:
|
November 9, 2020
|
/s/ Simon J. Leopold
|
|
|
Simon J. Leopold
|
|
|
Executive Vice President, Chief Financial Officer (Principal Financial 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:
|
November 9, 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:
|
November 9, 2020
|
Simon J. Leopold
|
|
|
Executive Vice President, Chief Financial Officer (Principal Financial Officer)
|
|
|