UNITED STATES
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SECURITIES AND EXCHANGE COMMISSION
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WASHINGTON, D.C. 20549
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FORM 8-K/A
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(Amendment No. 1)
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CURRENT REPORT PURSUANT
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TO SECTION 13 OR 15(d) OF THE
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SECURITIES EXCHANGE ACT OF 1934
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Date of report (date of earliest event reported): December 21, 2011
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TAUBMAN CENTERS, INC.
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(Exact Name of Registrant as Specified in its Charter)
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Michigan
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(State or Other Jurisdiction of Incorporation)
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1-11530
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38-2033632
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(Commission File Number)
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(I.R.S. Employer Identification No.)
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200 East Long Lake Road, Suite 300,
Bloomfield Hills, Michigan
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48304-2324
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(Address of Principal Executive Office)
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(Zip Code)
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Registrant’s Telephone Number, Including Area Code: (248) 258-6800
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None
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(Former Name or Former Address, if Changed Since Last Report)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (See General Instruction A.2. below):
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o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 9.01.
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FINANCIAL STATEMENTS AND EXHIBITS.
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(a)
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Financial Statements of Businesses Acquired.
Report of Independent Registered Public Accounting Firm.
Combined Historical Summary of Revenues and Certain Expenses for the Acquired Properties for the Year Ended December 31, 2010 and the Nine Months Ended September 30, 2011 (unaudited)
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(b)
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Pro Forma Financial Information.
Taubman Centers, Inc., Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2011 (unaudited), Pro Forma Condensed Consolidated Statement of Operations, Year Ended December 31, 2010 (unaudited), and the Nine Months Ended September 30, 2011 (unaudited).
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(d)
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Exhibits
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Exhibit
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Description
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23
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Consent of KPMG LLP
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For the
Year Ended
December 31, 2010
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For the Nine Months Ended
September 30, 2011
(unaudited)
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Revenues:
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Minimum rents
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$ | 19,600 | $ | 16,081 | ||||
Percentage rents
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884 | 290 | ||||||
Expense recoveries
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8,561 | 6,920 | ||||||
Other
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750 | 485 | ||||||
Total Revenues
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$ | 29,795 | $ | 23,776 | ||||
Certain Expenses:
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Maintenance, taxes, utilities, and promotion
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$ | 8,386 | $ | 6,766 | ||||
Other operating
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2,762 | 1,785 | ||||||
Interest expense (Note 4)
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13,494 | 10,220 | ||||||
Total Certain Expenses
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$ | 24,642 | $ | 18,771 | ||||
Excess of Revenues Over Certain Expenses
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$ | 5,153 | $ | 5,005 | ||||
Year Ending December 31
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Amount
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2011
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$
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20,218,218
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2012
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19,627,157
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2013
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19,062,080
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2014
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16,711,610
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2015
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14,668,570
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Thereafter
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50,166,246
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Total
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$
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140,453,881
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Year Ending December 31
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Amount
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2011
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$
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185,739
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2012
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188,525
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2013
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191,353
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2014
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194,223
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2015
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197,136
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Thereafter
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36,850,651
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Total
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$
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37,807,627
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Principal Balance
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Property
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December 31, 2010
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September 30, 2011
(unaudited)
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Stated Interest Rate
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Maturity Date
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Payment Type
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The Mall at Green Hills
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$ | 108,858,712 | $ | 107,949,789 | 6.89% |
December 2013
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Amortizing
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The Gardens on El Paseo
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81,480,000 | 81,480,000 | 6.10% |
June 2016
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Amortizing
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El Paseo Village
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17,000,000 | 16,801,003 | 4.42% |
December 2015
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Interest only
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$ | 207,338,712 | $ | 206,230,792 |
Property
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December 31, 2010
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September 30, 2011
(unaudited)
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The Mall at Green Hills
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$ | 525,049 | $ | 407,754 | ||
The Gardens on El Paseo
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276,722 | 213,767 | ||||
El Paseo Village
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19,209 | 66,763 | ||||
$ | 820,980 | $ | 688,284 |
Historical (a)
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Adjustments
for
Disposition of The Pier Shops & Regency Square (b)
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Adjusted excluding The Pier Shops & Regency Square
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Acquisitions and Pro forma Allocations
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Pro Forma
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Assets:
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Properties, net
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$ | 2,280,426 | $ | (62,372 | ) | $ | 2,218,054 | $ | 543,136 |
(c)
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$ | 2,761,190 | ||||||||
Restricted cash
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281,467 |
(d)
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281,467 | |||||||||||||||||
Other assets
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237,808 | (7,148 | ) | 230,660 | 29,831 |
(c)
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260,491 | |||||||||||||
$ | 2,518,234 | $ | (69,520 | ) | $ | 2,448,714 | $ | 854,434 | $ | 3,303,148 | ||||||||||
Liabilities:
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Mortgage notes payable
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$ | 2,524,956 | $ | (207,181 | ) | $ | 2,317,775 | $ | 496,906 |
(d)
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$ | 2,814,681 | ||||||||
Installment notes
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281,467 |
(d)
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281,467 | |||||||||||||||||
Accounts payable and accrued liabilities | 267,811 | (33,086 | ) | 234,725 | 3,377 | (d) | 238,102 | |||||||||||||
Distributions in excess of investments in and net income of Unconsolidated Joint Ventures
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193,353 | 193,353 | 193,353 | |||||||||||||||||
$ | 2,986,120 | $ | (240,267 | ) | $ | 2,745,853 | $ | 781,750 | $ | 3,527,603 | ||||||||||
Redeemable noncontrolling interest
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$ | 72,684 |
(d)
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$ | 72,684 | |||||||||||||||
Equity:
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Taubman Centers, Inc. Shareowners’ Equity
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Common and convertible preferred stock
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$ | 604 | $ | 604 | $ | 604 | ||||||||||||||
Additional paid-in capital
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666,738 | 666,738 | 666,738 | |||||||||||||||||
Accumulated other comprehensive income (loss)
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(27,075 | ) | (27,075 | ) | (27,075 | ) | ||||||||||||||
Dividends in excess of net income
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(986,124 | ) | 170,747 | (815,377 | ) | (815,377 | ) | |||||||||||||
$ | (345,857 | ) | $ | 170,747 | $ | (175,110 | ) | $ | (175,110 | ) | ||||||||||
Noncontrolling interests
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(122,029 | ) | (122,029 | ) | (122,029 | ) | ||||||||||||||
$ | 2,518,234 | $ | (69,520 | ) | $ | 2,448,714 | $ | 854,434 | $ | 3,303,148 |
(a)
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As reported in the Company’s Consolidated Balance Sheet as of September 30, 2011 as filed with the U.S. Securities and Exchange Commission on Form 10-Q for the quarter ended September 30, 2011.
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(b)
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Reflects certain assets and liabilities of The Pier Shops and Regency Square as of September 30, 2011, which were transferred to their respective lenders in November and December 2011, respectively.
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(c)
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Reflects the pro forma acquisition of the Acquired Properties and the preliminary allocation of the $560 million purchase price to the assets acquired and liabilities assumed. The following table summarizes the preliminary allocation of the purchase price to the identifiable assets acquired and liabilities assumed at the dates of acquisition:
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(in millions)
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Properties:
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Land
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$ | 74.2 | ||
Buildings, improvements, and equipment
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468.9 | |||
Total additions to properties
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$ | 543.1 | ||
Deferred charges and other assets:
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In-place leases
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29.8 | |||
Total assets acquired
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$ | 573.0 | ||
Accounts payable and accrued liabilities:
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Below market tenant rents
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(3.4 | ) | ||
Mortgage notes payable:
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Premium for above market interest rates
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(9.6 | ) | ||
Total liabilities acquired
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$ | (13.0 | ) | |
Net assets acquired
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$ | 560.0 |
(d)
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The consideration for the properties consisted of debt assumed, installment notes and 1.3 million Operating Partnership units.
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Historical (a)
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Adjustments
For
Acquisition
of Centers (b)
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Pro forma Allocations
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Pro Forma (f)
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Revenues:
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Minimum rents
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$ | 327,580 | $ | 19,600 | $ | 1,346 |
(c)
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$ | 348,526 | ||||||||
Percentage rents
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13,063 | 884 | 13,947 | ||||||||||||||
Expense recoveries
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225,079 | 8,561 | 233,640 | ||||||||||||||
Management, leasing, and development services
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16,109 | 16,109 | |||||||||||||||
Other
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44,596 | 750 | 45,346 | ||||||||||||||
$ | 626,427 | $ | 29,795 | $ | 1,346 | $ | 657,568 | ||||||||||
Expenses:
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Maintenance, taxes, utilities, and promotion
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$ | 177,703 | $ | 8,386 | $ | 186,089 | |||||||||||
Other operating
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57,354 | 2,762 | 60,116 | ||||||||||||||
Management, leasing, and development services
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8,258 | 8,258 | |||||||||||||||
General and administrative
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30,234 | 30,234 | |||||||||||||||
Interest expense
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132,362 | 13,494 | 310 |
(d)
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146,166 | ||||||||||||
Depreciation and amortization
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145,271 | 20,636 |
(e)
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165,907 | |||||||||||||
$ | 551,182 | $ | 24,642 | $ | 20,946 | $ | 596,770 | ||||||||||
Nonoperating income
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2,683 | 2,683 | |||||||||||||||
Income (loss) from continuing operations before income tax expense and equity in income of Unconsolidated Joint Ventures
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$ | 77,928 | $ | 5,153 | $ | (19,600 | ) | $ | 63,481 | ||||||||
Income tax expense
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(734 | ) | (734 | ) | |||||||||||||
Equity in Income of Unconsolidated Joint Ventures
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45,412 | 45,412 | |||||||||||||||
Income (loss) from continuing operations
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$ | 122,606 | $ | 5,153 | $ | (19,600 | ) | $ | 108,159 | ||||||||
(Income) loss from continuing operations attributable to noncontrolling interests
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(45,053 | ) | (1,734 | ) | (f) | 5,438 | (f) | (41,349 | ) | ||||||||
Preferred stock dividends and distributions to participating securities
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(16,269 | ) | (16,269 | ) | |||||||||||||
Income (loss) from continuing operations attributable to common shareowners
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$ | 61,284 | $ | 3,420 | (f) | $ | (14,162 | ) | (f) | $ | 50,542 | ||||||
Basic earnings per common share
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Income from continuing operations
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$ | 1.12 | $ | 0.93 | |||||||||||||
Weighted average number of common shares outstanding - basic
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54,569,618 | 54,569,618 | |||||||||||||||
Diluted earnings per common share
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Income from continuing operations
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$ | 1.11 | $ | 0.92 | |||||||||||||
Weighted average number of common shares outstanding - diluted
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55,702,813 | 55,705,813 |
(a)
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Represents the operations of the Company related to continuing operations as reported in the Consolidated Statement of Operations and Comprehensive Income for year ended December 31, 2010 as filed with the U.S. Securities and Exchange Commission on Form 10-K/A for the year ended December 31, 2011. The operations of The Pier Shops and Regency Square, which were transferred to their respective lenders in November and December 2011, respectively, are excluded from income from continuing operations.
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(b)
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Represents the combined revenues and certain expenses of the Acquired Properties.
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(c)
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Includes the net adjustments to record tenant rents on a straight-line basis from the acquisition date over the remaining term of the in-place leases and the amortization of the below market rents. The straightline adjustment includes the reversal of the straight-line rents in the historical statements of $(171) thousand and the pro forma straight-line adjustment. Based on the current leases in place, the pro forma straight-line rent adjustment is $664 thousand.
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(d)
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Includes a reduction in interest expense of $3.4 million as a result of recording the mortgages assumed on the acquisition of the properties at fair value. Offsetting this reduction is $3.7 million of additional interest expense, including interest on $281.5 million of installment notes, which bore interest at 3.125% and which were assumed to be outstanding for sixty days after the acquisition date, and interest expense at an average rate of 0.97% on the Company’s line of credit that fully cash collateralized the notes. The installment notes were subsequently repaid with the cash from the line of credit two months after the closing of the acquisition.
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(e)
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Represents the estimated depreciation and amortization of the acquired assets on a straight-line basis. Tenant improvements and the value of in-place leases are depreciated over the remaining lives of the related leases. Buildings are depreciated over the estimated remaining useful lives which are 40 to 48 years. Sitework is depreciated over approximately 15 years. Other assets are depreciated over the terms of the related agreements.
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(f)
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Per share amounts include the dilutive impact of the issuance of the 1.3 million of Operating Partnership units to the Seller, which would have decreased the Company's average ownership share of TRG from 67.5% to 66.4% for the year ended December 31, 2010.
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Historical (a)
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Adjustments
for Disposition of The Pier Shops and Regency Square (b)
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Adjusted
Excluding The Pier Shops and Regency Square
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Adjustments
For
Acquisition
of Centers (c)
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Pro forma Allocations
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Pro Forma (g)
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Revenues:
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Minimum rents
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$ | 260,805 | $ | (9,236 | ) | $ | 251,569 | $ | 16,081 | $ | 947 |
(d)
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$ | 268,597 | |||||||||||
Percentage rents
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9,733 | (142 | ) | 9,591 | 290 | 9,881 | |||||||||||||||||||
Expense recoveries
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170,789 | (7,853 | ) | 162,936 | 6,920 | 169,856 | |||||||||||||||||||
Management, leasing, and development services
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15,423 | 15,423 | 15,423 | ||||||||||||||||||||||
Other
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18,339 | (262 | ) | 18,077 | 485 | 18,562 | |||||||||||||||||||
$ | 475,089 | $ | (17,493 | ) | $ | 457,596 | $ | 23,776 | $ | 947 | $ | 482,319 | |||||||||||||
Expenses:
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Maintenance, taxes, utilities, and promotion
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$ | 140,115 | $ | (10,403 | ) | $ | 129,712 | $ | 6,766 | $ | 136,478 | ||||||||||||||
Other operating
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54,949 | (5,130 | ) | 49,819 | 1,785 | 51,604 | |||||||||||||||||||
Management, leasing, and development services
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7,492 | 7,492 | 7,492 | ||||||||||||||||||||||
General and administrative
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22,998 | 22,998 | 22,998 | ||||||||||||||||||||||
Interest expense
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106,903 | (17,374 | ) | 89,529 | 10,220 | (42 | ) |
(e)
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99,707 | ||||||||||||||||
Depreciation and amortization
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108,533 | (9,030 | ) | 99,503 | 15,477 |
(f)
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114,980 | ||||||||||||||||||
$ | 440,990 | $ | (41,937 | ) | $ | 399,053 | $ | 18,771 | $ | 15,435 | $ | 433,259 | |||||||||||||
Nonoperating income
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926 | (69 | ) | 857 | 857 | ||||||||||||||||||||
Income (loss) from continuing operations before income tax expense and equity in income of Unconsolidated Joint Ventures
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35,025 | 24,375 | 59,400 | 5,005 | (14,488 | ) | 49,917 | ||||||||||||||||||
Income tax expense
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(413 | ) | (413 | ) | (413 | ) | |||||||||||||||||||
Equity in Income of Unconsolidated Joint Ventures
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31,990 | 31,990 | 31,990 | ||||||||||||||||||||||
Income (loss) from continuing operations
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$ | 66,602 | $ | 24,375 | $ | 90,977 | $ | 5,005 | $ | (14,488 | ) | $ | 81,494 | ||||||||||||
(Income) loss from continuing operations attributable to noncontrolling interests
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(26,962 | ) | (7,493 | ) | (34,455 | ) | (1,600 | ) | (g) | 3,836 | (g) | (32,219 | ) | ||||||||||||
Preferred stock dividends and distributions to participating securities
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(12,119 | ) | (12,119 | ) | (12,119 | ) | |||||||||||||||||||
Income (loss) from continuing operations attributable to common shareowners
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$ | 27,521 | $ | 16,882 | $ | 44,403 | $ | 3,405 | (g) | $ | (10,652 | ) | (g) | $ | 37,156 | ||||||||||
Discontinued operations
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(24,375 | ) | (24,375 | ) | (24,375 | ) | |||||||||||||||||||
Income (loss) from discontinued operations attributable to noncontrolling interests
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7,493 | 7,493 | 276 | (g) | 7,769 | ||||||||||||||||||||
Net income (loss) attributable to common shareowners
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$ | 27,521 | $ | $ | 27,521 | $ | 3,405 | (g) | $ | (10,376 | ) | (g) | $ | 20,550 | |||||||||||
Basic earnings (loss) per common share
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Income from continuing operations
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$ | 0.49 | $ | 0.79 | $ | 0.66 | |||||||||||||||||||
Loss from discontinued operations
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(0.30 | ) | (0.29 | ) | |||||||||||||||||||||
Basic earnings per share
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$ | 0.49 | $ | 0.49 | $ | 0.36 | |||||||||||||||||||
Weighted average number of common shares outstanding - basic
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56,554,268 | 56,554,268 | 56,554,268 | ||||||||||||||||||||||
Diluted earnings (loss) per common share
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Income from continuing operations
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$ | 0.048 | $ | 0.78 | $ | 0.65 | |||||||||||||||||||
Loss from discontinued operations
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(0.30 | ) | (0.29 | ) | |||||||||||||||||||||
Diluted earnings per share
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$ | 0.048 | $ | 0.48 | $ | 0.36 | |||||||||||||||||||
Weighted average number of common shares outstanding - diluted
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58,137,149 | 58,137,149 | 58,137,149 |
(a)
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As reported in the Company’s Consolidated Statement of Operations and Comprehensive Income for the nine months ended September 30, 2011 as filed with the Securities and Exchange Commission on Form 10-Q.
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(b)
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Reflects the operations of The Pier Shops and Regency Square which were transferred to their respective lenders in November and December 2011, respectively, and which will be reflected as discontinued operations in future filings.
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(c)
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Represents the combined revenues and certain expenses of the Acquired Properties.
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(d)
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Includes the net adjustments to record tenant rents on a straight-line basis from the acquisition date over the remaining term of the in-place leases and the amortization of the below market rents. The straightline adjustment includes the reversal of the straight-line rents in the historical statements of $(232) thousand and the pro forma straight-line adjustment. Based on the current leases in place, the pro forma straight-line rent adjustment is $539 thousand.
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(e)
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Includes a reduction in interest expense of $2.6 million as a result of recording the mortgages assumed on the acquisition of the properties at fair value. Offsetting this reduction is $2.5 million of additional interest expense at an average rate of 0.90% on the Company’s line of credit that was used to repay the installment notes. The installment notes were repaid with the cash from the line of credit two months after the closing of the acquisition.
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(f)
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Represents the estimated depreciation and amortization of the acquired assets on a straight-line basis. Tenant improvements and the value of in-place leases are depreciated over the remaining lives of the related leases. Buildings are depreciated over the estimated remaining useful lives which are 40 to 48 years. Sitework is depreciated over approximately 15 years. Other assets are depreciated over the terms of the related agreements.
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(g)
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Per share amounts include the dilutive impact of the issuance of the 1.3 million of Operating Partnership units to the Seller, which would have decreased the Company's average ownership share of TRG from 69.1% to 68.0% for the nine months ended September 30, 2011.
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Date: March 5, 2012
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TAUBMAN CENTERS, INC.
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By: /s/ Lisa A. Payne
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Lisa A. Payne
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Vice Chairman and Chief Financial Officer
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Exhibit
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Description
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23
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Consent of KPMG LLP
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