Retail real estate investment trust (“REIT”) Taubman Centers Inc.’s TCO second-quarter 2015 adjusted funds from operations (“FFO”) per share of 76 cents beat the Zacks Consensus Estimate of 72 cents. However, the figure was down 11.6% from 86 cents earned a year ago.
Revenues came in at nearly $131.9 million, lagging the Zacks Consensus Estimate of $133 million and the year-ago quarter figure of $170 million.
Quarter in Detail
Comparable center net operating income (“NOI”), excluding lease cancellation income, rose 2.5% year over year; while average rent per square foot was $60.35, up 1.4% year over year. For the trailing 12-month period, releasing spreads per square foot were 29.2%.
Comparable center mall tenant sales per square foot increased 2.8% year over year. As a result, the tally of 12-month trailing mall tenant sales per square foot reached $818, depicting a rise of 1.4% from that of the 12 months ended Jun 30, 2014.
As of Jun 30, 2015, comparable centers’ portfolio was 96.9% leased, denoting a 1% year-over-year increase; while ending occupancy was 93%, up 0.2% year over year.
Liquidity
Taubman exited second-quarter 2015 with cash and cash equivalents of $42.3 million, significantly down from $276.4 million recorded at year-end 2014.
2015 Guidance Up
Taubman has revised its outlook upward for 2015. The company now expects 2015 FFO per share in the range of $3.28–$3.36 as against the prior projection of $3.20–$3.28. Currently, the Zacks Consensus Estimate for 2015 is pegged at $3.25 per share.
The company’s 2015 outlook for comparable center NOI growth (excluding lease cancellation income) stands at 2.5–3.0% for the year, unchanged from the prior guidance.
Our Viewpoint
Though Taubman’s results were down year over year, we believe the company is well poised to grow on the back of a solid retail portfolio and strong tenant base, going forward. Further, stake rise in premium properties augur well for its future. Yet, stiff competition, increasing online sales and an anticipated rise in interest rates continue to pose concerns.
Taubman currently has a Zacks Rank #3 (Hold). We now look forward to other REIT stocks that are scheduled to release second-quarter 2015 results next week. These include General Growth Properties, Inc GGP, Vornado Realty Trust VNO and Highwoods Properties Inc. HIW.
Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
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