Q3 2013 Earnings Call Transcript

Transcript Call Date 10/25/2013

Operator: Thank you for holding, and welcome to the Taubman Centers' Third Quarter 2013 Earnings Conference. The call will begin with prepared remarks and then we will open the line to questions. On the call today will be Robert Taubman, Taubman Centers' Chairman, President and Chief Executive Officer; Lisa Payne, Vice Chairman and Chief Financial Officer, and Barbara Baker, Vice President, Corporate Affairs and Investor Relations.

Now, I will turn the call over to Barbara for opening remarks.

Barbara Baker - Vice President, Corporate Affairs & Investor Relations: Thank you, operator, and welcome everyone to our third quarter conference call.

As you know, during this conference call, we'll make forward-looking statements within the meaning of Federal Securities laws. These statements reflect our current views with respect to future events and financial performance, although actual results may differ materially. Please see our SEC filings, including our latest 10-K and subsequent reports for a discussion of various risks and uncertainties underlying our forward-looking statements.

During this call, we'll also discuss non-GAAP financial measures as defined by SEC Regulation G. Reconciliations of those non-GAAP financial measures to the comparable GAAP financial measures are included in our earnings release and in our supplemental information. In addition, a replay of the call is provided through a link on the Investor Relations section of our website. When we get to questions, we ask that you limit them to two and then if you have more, queue up again. That way everyone has the opportunity to ask a question.

Now, let me turn over the call to Bobby.

Robert S. Taubman - Chairman, President and CEO: Thanks, Barbara, and thank you, everyone for joining us this morning. We had solid results this quarter, consistent with our expectation. NOI, excluding lease cancellation income was up 3.2%. Rents, occupancy and leased space all up.

Average rent per square foot for the third quarter of 2013 was $48.66, up 4.6% from the comparable period last year.

Year-to-date, average rent is up 4.7%. We continue to expect average rent per square foot for the year to be at least 4% better than 2012.

Trailing 12 month re-leasing spreads also remained strong at 16%. Ending occupancy in all centers was 90.9% on September 30, up 50 basis points from last year. This is the highest third quarter ending occupancy we have seen.

Temporary tenants comprise another 3.6%, bringing combined occupancy to 94.5%. In comp centers ending occupancy was 91.3%, up 80 basis points from last year. Occupancy is expected to end the year up slightly.

Leased space in comp centers also improved ending the quarter at 93.1%, 60 basis points better than last year.

Mall tenant sales per square foot grew modestly in the quarter 0.4%. Year-to-date, sales were up 2%. This brings the Company's 12-month trailing mall tenant sales per square foot to $699, an increase of 2.6%.

Sales performance tapered-off towards the end of the quarter. The political stand-off and government shutdown was likely a factor as many have suggested, including the ICSC. Some have also pointed the retailers facing tough comp, which is certainly true in our centers and that consumers are spending more on big ticket items, such as cars and home furnishings resulting in lower income for soft line retail, whatever the reason sales have moderated.

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