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Three Months Ended March 31 | |||||||
2017 | 2016 | ||||||
Federal current | $ | 1,115 | |||||
Federal deferred | $ | 152 | (761 | ) | |||
Foreign current | 88 | 134 | |||||
Foreign deferred | (121 | ) | (210 | ) | |||
State current | 86 | 127 | |||||
State deferred | 3 | (103 | ) | ||||
Total income tax expense | $ | 208 | $ | 302 |
2017 | 2016 | ||||||
Deferred tax assets: | |||||||
Federal | $ | 1,983 | $ | 3,230 | |||
Foreign | 1,946 | 1,673 | |||||
State | 851 | 935 | |||||
Total deferred tax assets | $ | 4,780 | $ | 5,838 | |||
Valuation allowances | (1,765 | ) | (1,812 | ) | |||
Net deferred tax assets | $ | 3,015 | $ | 4,026 | |||
Deferred tax liabilities: | |||||||
Foreign | $ | 1,102 | $ | 1,124 | |||
Total deferred tax liabilities | $ | 1,102 | $ | 1,124 |
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Shopping Center | Ownership as of March 31, 2017 and December 31, 2016 | |
CityOn.Xi'an | 50% | |
CityOn.Zhengzhou | 49 | |
Country Club Plaza | 50 | |
Fair Oaks | 50 | |
International Plaza | 50.1 | |
The Mall at Millenia | 50 | |
Stamford Town Center | 50 | |
Starfield Hanam | 34.3 | |
Sunvalley | 50 | |
The Mall at University Town Center | 50 | |
Waterside Shops | 50 | |
Westfarms | 79 |
March 31, 2017 | December 31, 2016 | ||||||
Assets: | |||||||
Properties | $ | 3,356,646 | $ | 3,371,216 | |||
Accumulated depreciation and amortization | (680,435 | ) | (661,611 | ) | |||
$ | 2,676,211 | $ | 2,709,605 | ||||
Cash and cash equivalents | 75,178 | 83,882 | |||||
Accounts and notes receivable, less allowance for doubtful accounts of $3,301 and $1,965 in 2017 and 2016 | 109,788 | 87,612 | |||||
Deferred charges and other assets | 54,225 | 67,167 | |||||
$ | 2,915,402 | $ | 2,948,266 | ||||
Liabilities and accumulated equity (deficiency) in assets: | |||||||
Notes payable, net (1) | $ | 2,772,089 | $ | 2,706,628 | |||
Accounts payable and other liabilities | 362,092 | 359,814 | |||||
TRG's accumulated deficiency in assets | (220,404 | ) | (166,226 | ) | |||
Unconsolidated Joint Venture Partners' accumulated equity in assets | 1,625 | 48,050 | |||||
$ | 2,915,402 | $ | 2,948,266 | ||||
TRG's accumulated deficiency in assets (above) | $ | (220,404 | ) | $ | (166,226 | ) | |
TRG's investment in CityOn.Zhengzhou | 112,163 | 112,861 | |||||
TRG basis adjustments, including elimination of intercompany profit | 125,736 | 126,240 | |||||
TCO's additional basis | 50,584 | 51,070 | |||||
Net investment in Unconsolidated Joint Ventures | $ | 68,079 | $ | 123,945 | |||
Distributions in excess of investments in and net income of Unconsolidated Joint Ventures | 504,903 | 480,863 | |||||
Investment in Unconsolidated Joint Ventures | $ | 572,982 | $ | 604,808 |
(1) | The Notes Payable, Net amounts exclude the construction financing outstanding for CityOn.Zhengzhou of $71.2 million ($34.9 million at TRG's share) and $70.5 million ($34.5 million at TRG's share) as of March 31, 2017 and December 31, 2016, respectively. |
Three Months Ended March 31 | |||||||
2017 | 2016 | ||||||
Revenues | $ | 140,600 | $ | 96,763 | |||
Maintenance, taxes, utilities, promotion, and other operating expenses | $ | 48,380 | $ | 28,322 | |||
Interest expense | 30,369 | 21,596 | |||||
Depreciation and amortization | 29,767 | 15,299 | |||||
Total operating costs | $ | 108,516 | $ | 65,217 | |||
Nonoperating income, net | 1,851 | 246 | |||||
Income tax expense | (2,943 | ) | |||||
Gain on disposition, net of tax (1) | 3,713 | ||||||
Net income | $ | 34,705 | $ | 31,792 | |||
Net income attributable to TRG | $ | 18,422 | $ | 17,459 | |||
Realized intercompany profit, net of depreciation on TRG’s basis adjustments | 2,183 | 1,506 | |||||
Depreciation of TCO's additional basis | (487 | ) | (487 | ) | |||
Equity in income of Unconsolidated Joint Ventures | $ | 20,118 | $ | 18,478 | |||
Beneficial interest in Unconsolidated Joint Ventures’ operations: | |||||||
Revenues less maintenance, taxes, utilities, promotion, and other operating expenses | $ | 51,101 | $ | 39,341 | |||
Interest expense | (15,781 | ) | (11,528 | ) | |||
Depreciation and amortization | (15,652 | ) | (9,335 | ) | |||
Income tax expense | (1,633 | ) | |||||
Gain on disposition, net of tax (1) | 2,083 | ||||||
Equity in income of Unconsolidated Joint Ventures | $ | 20,118 | $ | 18,478 |
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At 100% | At Beneficial Interest | |||||||||||||||
Consolidated Subsidiaries | Unconsolidated Joint Ventures | Consolidated Subsidiaries | Unconsolidated Joint Ventures | |||||||||||||
Debt as of: | ||||||||||||||||
March 31, 2017 | $ | 3,287,968 | $ | 2,843,331 | $ | 2,996,892 | $ | 1,454,852 | ||||||||
December 31, 2016 | 3,255,512 | 2,777,162 | 2,949,440 | 1,425,511 | ||||||||||||
Capitalized interest: | ||||||||||||||||
Three Months Ended March 31, 2017 | $ | 4,081 | (1) | $ | 551 | (2) | $ | 4,039 | (1) | $ | 551 | (2) | ||||
Three Months Ended March 31, 2016 | 6,502 | (1) | 655 | (2) | 6,486 | (1) | 655 | (2) | ||||||||
Interest expense: | ||||||||||||||||
Three Months Ended March 31, 2017 | $ | 25,546 | $ | 30,369 | $ | 22,571 | $ | 15,781 | ||||||||
Three Months Ended March 31, 2016 | 19,128 | 21,596 | 17,176 | 11,528 |
(1) | The Company capitalizes interest costs incurred in funding its equity contributions to development projects accounted for as Unconsolidated Joint Ventures. The capitalized interest cost is included in the Company's basis in its investment in Unconsolidated Joint Ventures. Such capitalized interest reduces interest expense on the Company's Consolidated Statement of Operations and Comprehensive Income and in the table above is included within Consolidated Subsidiaries. |
(2) | Capitalized interest on the Asia Unconsolidated Joint Venture construction financings is presented at the Company's beneficial interest in both the Unconsolidated Joint Ventures (at 100%) and Unconsolidated Joint Ventures (at Beneficial Interest) columns. |
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Three Months Ended March 31 | |||||||
2017 | 2016 | ||||||
Balance, January 1 | $ | 8,704 | |||||
Former Taubman Asia President vested redeemable equity | 266 | $ | 13,041 | ||||
Allocation of net loss | (192 | ) | |||||
Adjustments of redeemable noncontrolling interest | 192 | ||||||
Balance, March 31 | $ | 8,970 | $ | 13,041 |
2017 | 2016 | ||||||
Non-redeemable noncontrolling interests: | |||||||
Noncontrolling interests in consolidated joint ventures | $ | (155,960 | ) | $ | (155,919 | ) | |
Noncontrolling interests in partnership equity of TRG | 7,919 | 13,136 | |||||
$ | (148,041 | ) | $ | (142,783 | ) |
Three Months Ended March 31 | |||||||
2017 | 2016 | ||||||
Net income (loss) attributable to noncontrolling interests: | |||||||
Non-redeemable noncontrolling interests: | |||||||
Noncontrolling share of income of consolidated joint ventures | $ | 1,636 | $ | 2,521 | |||
Noncontrolling share of income of TRG | 7,790 | 10,899 | |||||
$ | 9,426 | $ | 13,420 | ||||
Redeemable noncontrolling interest: | (192 | ) | |||||
$ | 9,234 | $ | 13,420 |
Three Months Ended March 31 | |||||||
2017 | 2016 | ||||||
Net income attributable to Taubman Centers, Inc. common shareowners | $ | 17,170 | $ | 24,613 | |||
Transfers (to) from the noncontrolling interest: | |||||||
(Decrease) increase in Taubman Centers, Inc.’s paid-in capital for adjustments of noncontrolling interest (1) | (19 | ) | 3,865 | ||||
Net transfers (to) from noncontrolling interests | (19 | ) | 3,865 | ||||
Change from net income attributable to Taubman Centers, Inc. and transfers (to) from noncontrolling interests | $ | 17,151 | $ | 28,478 |
(1) | In 2017 and 2016, adjustments of the noncontrolling interest were made as a result of changes in the Company's ownership of the Operating Partnership in connection with the Company's share-based compensation under employee and director benefit plans (Note 8) and issuances of stock pursuant to the Continuing Offer (Note 9). In 2017 and 2016, adjustments of the noncontrolling interest were also made in connection with the accounting for the Former Asia President's redeemable ownership interest. |
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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 | % | $ | 200,000 | 1.64 | % | 1.45 | % | (1) | 3.09 | % | (1) | February 2019 | |||||
Receive variable (LIBOR) /pay-fixed swap (1) | 100 | % | 175,000 | 1.65 | % | 1.45 | % | (1) | 3.10 | % | (1) | February 2019 | ||||||
Receive variable (LIBOR) /pay-fixed swap (1) | 100 | % | 100,000 | 1.64 | % | 1.45 | % | (1) | 3.09 | % | (1) | February 2019 | ||||||
Receive variable (LIBOR) /pay-fixed swap (2) | 100 | % | 100,000 | (2) | (2) | (2) | February 2022 | |||||||||||
Receive variable (LIBOR) /pay-fixed swap (2) | 100 | % | 100,000 | (2) | (2) | (2) | February 2022 | |||||||||||
Receive variable (LIBOR) /pay-fixed swap (2) | 100 | % | 50,000 | (2) | (2) | (2) | February 2022 | |||||||||||
Receive variable (LIBOR) /pay-fixed swap (2) | 100 | % | 50,000 | (2) | (2) | (2) | February 2022 | |||||||||||
Receive variable (LIBOR) /pay-fixed swap (3) | 100 | % | 12,000 | 2.09 | % | (3) | 1.40 | % | (3) | 3.49 | % | (3) | March 2024 | |||||
Unconsolidated Joint Ventures: | ||||||||||||||||||
Receive variable (LIBOR) /pay-fixed swap (4) | 50 | % | 131,967 | 2.40 | % | 1.70 | % | 4.10 | % | April 2018 | ||||||||
Receive variable (LIBOR) /pay-fixed swap (4) | 50 | % | 131,967 | 2.40 | % | 1.70 | % | 4.10 | % | April 2018 | ||||||||
Receive variable (LIBOR) /pay-fixed swap (5) | 50.1 | % | 168,164 | 1.83 | % | 1.75 | % | 3.58 | % | December 2021 | ||||||||
Receive variable (LIBOR) USD/pay-fixed Korean Won (KRW) cross-currency interest rate swap (6) | 34.3 | % | 52,065 USD / 60,500,000 KRW | 1.52 | % | 1.60 | % | 3.12 | % | September 2020 |
(1) | The hedged forecasted transaction for each of these swaps is the first previously unhedged one-month LIBOR-indexed interest payments 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. The Company is currently using these swaps to manage interest rate risk on the $475 million unsecured term loan. The credit spread on this loan can also vary within a range of 1.35% to 1.90%, depending on the Company's total leverage ratio at the measurement date, resulting in an effective rate in the range of 2.99% to 3.55% during the swap period. |
(2) | The hedged forecasted transaction for each of these swaps is the first previously unhedged one-month LIBOR-indexed interest payments 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 January 2018 effective date of the swaps. The Company anticipates using these forward starting swaps to manage interest rate risk on the $300 million unsecured term loan beginning with the January 2018 effective date. Beginning in January 2018, the LIBOR rate will be swapped to a fixed rate of 2.14%. The credit spread on this loan can vary within a range of 1.25% to 1.90%, depending on the Company's total leverage ratio at the measurement date, resulting in an effective rate in the range of 3.39% to 4.04% during the swap period. |
(3) | The notional amount on this swap is equal to the outstanding principal balance of the floating rate loan on the U.S. headquarters building. |
(4) | The notional amount on each of these swaps is equal to 50% of the outstanding principal balance of the loan on Fair Oaks. |
(5) | The notional amount on this swap is equal to the outstanding principal balance of the floating rate loan on International Plaza. |
(6) | The notional amount on this swap is equal to the outstanding principal balance of the U.S. dollar construction loan for Starfield Hanam. There is a cross-currency interest rate swap to fix the interest rate on the loan and swap the related principal and interest payments from U.S. dollars to KRW in order to reduce the impact of fluctuations in interest rates and exchange rates on the cash flows of the joint venture. The currency swap exchange rate is 1,162.0. |
Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion) | Location of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion) | Amount of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion) | |||||||||||||||
Three Months Ended March 31 | Three Months Ended March 31 | ||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||
Derivatives in cash flow hedging relationships: | |||||||||||||||||
Interest rate contracts – consolidated subsidiaries | $ | 764 | $ | (5,742 | ) | Interest Expense | $ | (1,074 | ) | $ | (1,517 | ) | |||||
Interest rate contracts – UJVs | 1,042 | (2,791 | ) | Equity in Income of UJVs | (759 | ) | (974 | ) | |||||||||
Cross-currency interest rate contract – UJV | 36 | (290 | ) | Equity in Income of UJVs | (1,402 | ) | (546 | ) | |||||||||
Total derivatives in cash flow hedging relationships | $ | 1,842 | $ | (8,823 | ) | $ | (3,235 | ) | $ | (3,037 | ) |
Fair Value | |||||||||
Consolidated Balance Sheet Location | March 31, 2017 | December 31, 2016 | |||||||
Derivatives designated as hedging instruments: | |||||||||
Asset derivative: | |||||||||
Interest rate contracts – consolidated subsidiary | Deferred Charges and Other Assets | $ | 22 | ||||||
Interest rate contracts - UJVs | Investment in UJVs | 160 | |||||||
Cross-currency interest rate swap - UJV | Investment in UJVs | $ | 381 | ||||||
Total assets designated as hedging instruments | $ | 182 | $ | 381 | |||||
Liability derivatives: | |||||||||
Interest rate contracts – consolidated subsidiaries | Accounts Payable and Accrued Liabilities | $ | (2,824 | ) | $ | (3,548 | ) | ||
Interest rate contracts – UJVs | Investment in UJVs | (1,614 | ) | (2,496 | ) | ||||
Cross-currency interest rate swap – UJV | Investment in UJVs | (933 | ) | ||||||
Total liabilities designated as hedging instruments | $ | (5,371 | ) | $ | (6,044 | ) |
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Fair Value Measurements as of March 31, 2017 Using | Fair Value Measurements as of December 31, 2016 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) | ||||||||||||
SPG common shares | $ | 43,008 | $ | 44,418 | ||||||||||||
Insurance deposit | 15,430 | 15,440 | ||||||||||||||
Derivative interest rate contracts (Note 7) | $ | 22 | ||||||||||||||
Total assets | $ | 58,438 | $ | 22 | $ | 59,858 | $ | — | ||||||||
Derivative interest rate contracts (Note 7) | $ | (2,824 | ) | $ | (3,548 | ) | ||||||||||
Total liabilities | $ | (2,824 | ) | $ | (3,548 | ) |
2017 | 2016 | ||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||
Notes payable, net | $ | 3,287,968 | $ | 3,232,923 | $ | 3,255,512 | $ | 3,184,036 |
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Taubman Centers, Inc. AOCI | Noncontrolling Interests AOCI | ||||||||||||||||||||||||||||||
Cumulative translation adjustment | Unrealized gains (losses) on interest rate instruments | Fair value adjustment for marketable equity securities | Total | Cumulative translation adjustment | Unrealized gains (losses) on interest rate instruments | Fair value adjustment for marketable equity securities | Total | ||||||||||||||||||||||||
January 1, 2017 | $ | (23,147 | ) | $ | (12,467 | ) | $ | (302 | ) | $ | (35,916 | ) | $ | (9,613 | ) | $ | 7,191 | $ | (126 | ) | $ | (2,548 | ) | ||||||||
Other comprehensive income (loss) before reclassifications | 6,694 | (986 | ) | (999 | ) | 4,709 | 2,755 | (407 | ) | (411 | ) | 1,937 | |||||||||||||||||||
Amounts reclassified from AOCI | 2,291 | 2,291 | 944 | 944 | |||||||||||||||||||||||||||
Net current period other comprehensive income (loss) | $ | 6,694 | $ | 1,305 | $ | (999 | ) | $ | 7,000 | $ | 2,755 | $ | 537 | $ | (411 | ) | $ | 2,881 | |||||||||||||
Adjustments due to changes in ownership | (61 | ) | 47 | (14 | ) | 61 | (47 | ) | 14 | ||||||||||||||||||||||
March 31, 2017 | $ | (16,514 | ) | $ | (11,115 | ) | $ | (1,301 | ) | $ | (28,930 | ) | $ | (6,797 | ) | $ | 7,681 | $ | (537 | ) | $ | 347 |
Taubman Centers, Inc. 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, 2016 | $ | (10,890 | ) | $ | (16,330 | ) | $ | (27,220 | ) | $ | (4,531 | ) | $ | 5,595 | $ | 1,064 | |||||||
Other comprehensive income (loss) before reclassifications | 4,198 | (8,380 | ) | (4,182 | ) | 1,744 | (3,480 | ) | (1,736 | ) | |||||||||||||
Amounts reclassified from AOCI | 2,146 | 2,146 | 891 | 891 | |||||||||||||||||||
Net current period other comprehensive income (loss) | $ | 4,198 | $ | (6,234 | ) | $ | (2,036 | ) | $ | 1,744 | $ | (2,589 | ) | $ | (845 | ) | |||||||
Adjustments due to changes in ownership | (6 | ) | 7 | 1 | 6 | (7 | ) | (1 | ) | ||||||||||||||
March 31, 2016 | $ | (6,698 | ) | $ | (22,557 | ) | $ | (29,255 | ) | $ | (2,781 | ) | $ | 2,999 | $ | 218 |
Details about AOCI Components | Amounts reclassified from AOCI | Affected line item in Consolidated Statement of Operations and Comprehensive Income | ||||
Losses on interest rate instruments and other: | ||||||
Realized loss on interest rate contracts - consolidated subsidiaries | $ | 1,074 | Interest Expense | |||
Realized loss on interest rate contracts - UJVs | 759 | Equity in Income of UJVs | ||||
Realized loss on cross-currency interest rate contract - UJV | 1,402 | Equity in Income of UJVs | ||||
Total reclassifications for the period | $ | 3,235 |
Details about AOCI Components | Amounts reclassified from AOCI | Affected line item in Consolidated Statement of Operations and Comprehensive Income | ||||
Losses on interest rate instruments and other: | ||||||
Realized loss on interest rate contracts - consolidated subsidiaries | $ | 1,517 | Interest Expense | |||
Realized loss on interest rate contracts - UJVs | 974 | Equity in Income of UJVs | ||||
Realized loss on cross-currency interest rate contract - UJV | 546 | Equity in Income of UJVs | ||||
Total reclassifications for the period | $ | 3,037 |
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Three Months Ended March 31 | |||||||
2017 | 2016 | ||||||
Federal current | $ | 1,115 | |||||
Federal deferred | $ | 152 | (761 | ) | |||
Foreign current | 88 | 134 | |||||
Foreign deferred | (121 | ) | (210 | ) | |||
State current | 86 | 127 | |||||
State deferred | 3 | (103 | ) | ||||
Total income tax expense | $ | 208 | $ | 302 |
2017 | 2016 | ||||||
Deferred tax assets: | |||||||
Federal | $ | 1,983 | $ | 3,230 | |||
Foreign | 1,946 | 1,673 | |||||
State | 851 | 935 | |||||
Total deferred tax assets | $ | 4,780 | $ | 5,838 | |||
Valuation allowances | (1,765 | ) | (1,812 | ) | |||
Net deferred tax assets | $ | 3,015 | $ | 4,026 | |||
Deferred tax liabilities: | |||||||
Foreign | $ | 1,102 | $ | 1,124 | |||
Total deferred tax liabilities | $ | 1,102 | $ | 1,124 |
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Shopping Center | Ownership as of March 31, 2017 and December 31, 2016 | |
CityOn.Xi'an | 50% | |
CityOn.Zhengzhou | 49 | |
Country Club Plaza | 50 | |
Fair Oaks | 50 | |
International Plaza | 50.1 | |
The Mall at Millenia | 50 | |
Stamford Town Center | 50 | |
Starfield Hanam | 34.3 | |
Sunvalley | 50 | |
The Mall at University Town Center | 50 | |
Waterside Shops | 50 | |
Westfarms | 79 |
March 31, 2017 | December 31, 2016 | ||||||
Assets: | |||||||
Properties | $ | 3,356,646 | $ | 3,371,216 | |||
Accumulated depreciation and amortization | (680,435 | ) | (661,611 | ) | |||
$ | 2,676,211 | $ | 2,709,605 | ||||
Cash and cash equivalents | 75,178 | 83,882 | |||||
Accounts and notes receivable, less allowance for doubtful accounts of $3,301 and $1,965 in 2017 and 2016 | 109,788 | 87,612 | |||||
Deferred charges and other assets | 54,225 | 67,167 | |||||
$ | 2,915,402 | $ | 2,948,266 | ||||
Liabilities and accumulated equity (deficiency) in assets: | |||||||
Notes payable, net (1) | $ | 2,772,089 | $ | 2,706,628 | |||
Accounts payable and other liabilities | 362,092 | 359,814 | |||||
TRG's accumulated deficiency in assets | (220,404 | ) | (166,226 | ) | |||
Unconsolidated Joint Venture Partners' accumulated equity in assets | 1,625 | 48,050 | |||||
$ | 2,915,402 | $ | 2,948,266 | ||||
TRG's accumulated deficiency in assets (above) | $ | (220,404 | ) | $ | (166,226 | ) | |
TRG's investment in CityOn.Zhengzhou | 112,163 | 112,861 | |||||
TRG basis adjustments, including elimination of intercompany profit | 125,736 | 126,240 | |||||
TCO's additional basis | 50,584 | 51,070 | |||||
Net investment in Unconsolidated Joint Ventures | $ | 68,079 | $ | 123,945 | |||
Distributions in excess of investments in and net income of Unconsolidated Joint Ventures | 504,903 | 480,863 | |||||
Investment in Unconsolidated Joint Ventures | $ | 572,982 | $ | 604,808 |
(1) | The Notes Payable, Net amounts exclude the construction financing outstanding for CityOn.Zhengzhou of $71.2 million ($34.9 million at TRG's share) and $70.5 million ($34.5 million at TRG's share) as of March 31, 2017 and December 31, 2016, respectively. |
Three Months Ended March 31 | |||||||
2017 | 2016 | ||||||
Revenues | $ | 140,600 | $ | 96,763 | |||
Maintenance, taxes, utilities, promotion, and other operating expenses | $ | 48,380 | $ | 28,322 | |||
Interest expense | 30,369 | 21,596 | |||||
Depreciation and amortization | 29,767 | 15,299 | |||||
Total operating costs | $ | 108,516 | $ | 65,217 | |||
Nonoperating income, net | 1,851 | 246 | |||||
Income tax expense | (2,943 | ) | |||||
Gain on disposition, net of tax (1) | 3,713 | ||||||
Net income | $ | 34,705 | $ | 31,792 | |||
Net income attributable to TRG | $ | 18,422 | $ | 17,459 | |||
Realized intercompany profit, net of depreciation on TRG’s basis adjustments | 2,183 | 1,506 | |||||
Depreciation of TCO's additional basis | (487 | ) | (487 | ) | |||
Equity in income of Unconsolidated Joint Ventures | $ | 20,118 | $ | 18,478 | |||
Beneficial interest in Unconsolidated Joint Ventures’ operations: | |||||||
Revenues less maintenance, taxes, utilities, promotion, and other operating expenses | $ | 51,101 | $ | 39,341 | |||
Interest expense | (15,781 | ) | (11,528 | ) | |||
Depreciation and amortization | (15,652 | ) | (9,335 | ) | |||
Income tax expense | (1,633 | ) | |||||
Gain on disposition, net of tax (1) | 2,083 | ||||||
Equity in income of Unconsolidated Joint Ventures | $ | 20,118 | $ | 18,478 |
|
At 100% | At Beneficial Interest | |||||||||||||||
Consolidated Subsidiaries | Unconsolidated Joint Ventures | Consolidated Subsidiaries | Unconsolidated Joint Ventures | |||||||||||||
Debt as of: | ||||||||||||||||
March 31, 2017 | $ | 3,287,968 | $ | 2,843,331 | $ | 2,996,892 | $ | 1,454,852 | ||||||||
December 31, 2016 | 3,255,512 | 2,777,162 | 2,949,440 | 1,425,511 | ||||||||||||
Capitalized interest: | ||||||||||||||||
Three Months Ended March 31, 2017 | $ | 4,081 | (1) | $ | 551 | (2) | $ | 4,039 | (1) | $ | 551 | (2) | ||||
Three Months Ended March 31, 2016 | 6,502 | (1) | 655 | (2) | 6,486 | (1) | 655 | (2) | ||||||||
Interest expense: | ||||||||||||||||
Three Months Ended March 31, 2017 | $ | 25,546 | $ | 30,369 | $ | 22,571 | $ | 15,781 | ||||||||
Three Months Ended March 31, 2016 | 19,128 | 21,596 | 17,176 | 11,528 |
(1) | The Company capitalizes interest costs incurred in funding its equity contributions to development projects accounted for as Unconsolidated Joint Ventures. The capitalized interest cost is included in the Company's basis in its investment in Unconsolidated Joint Ventures. Such capitalized interest reduces interest expense on the Company's Consolidated Statement of Operations and Comprehensive Income and in the table above is included within Consolidated Subsidiaries. |
(2) | Capitalized interest on the Asia Unconsolidated Joint Venture construction financings is presented at the Company's beneficial interest in both the Unconsolidated Joint Ventures (at 100%) and Unconsolidated Joint Ventures (at Beneficial Interest) columns. |
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Three Months Ended March 31 | |||||||
2017 | 2016 | ||||||
Balance, January 1 | $ | 8,704 | |||||
Former Taubman Asia President vested redeemable equity | 266 | $ | 13,041 | ||||
Allocation of net loss | (192 | ) | |||||
Adjustments of redeemable noncontrolling interest | 192 | ||||||
Balance, March 31 | $ | 8,970 | $ | 13,041 |
2017 | 2016 | ||||||
Non-redeemable noncontrolling interests: | |||||||
Noncontrolling interests in consolidated joint ventures | $ | (155,960 | ) | $ | (155,919 | ) | |
Noncontrolling interests in partnership equity of TRG | 7,919 | 13,136 | |||||
$ | (148,041 | ) | $ | (142,783 | ) |
Three Months Ended March 31 | |||||||
2017 | 2016 | ||||||
Net income (loss) attributable to noncontrolling interests: | |||||||
Non-redeemable noncontrolling interests: | |||||||
Noncontrolling share of income of consolidated joint ventures | $ | 1,636 | $ | 2,521 | |||
Noncontrolling share of income of TRG | 7,790 | 10,899 | |||||
$ | 9,426 | $ | 13,420 | ||||
Redeemable noncontrolling interest: | (192 | ) | |||||
$ | 9,234 | $ | 13,420 |
Three Months Ended March 31 | |||||||
2017 | 2016 | ||||||
Net income attributable to Taubman Centers, Inc. common shareowners | $ | 17,170 | $ | 24,613 | |||
Transfers (to) from the noncontrolling interest: | |||||||
(Decrease) increase in Taubman Centers, Inc.’s paid-in capital for adjustments of noncontrolling interest (1) | (19 | ) | 3,865 | ||||
Net transfers (to) from noncontrolling interests | (19 | ) | 3,865 | ||||
Change from net income attributable to Taubman Centers, Inc. and transfers (to) from noncontrolling interests | $ | 17,151 | $ | 28,478 |
(1) | In 2017 and 2016, adjustments of the noncontrolling interest were made as a result of changes in the Company's ownership of the Operating Partnership in connection with the Company's share-based compensation under employee and director benefit plans (Note 8) and issuances of stock pursuant to the Continuing Offer (Note 9). In 2017 and 2016, adjustments of the noncontrolling interest were also made in connection with the accounting for the Former Asia President's redeemable ownership interest. |
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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 | % | $ | 200,000 | 1.64 | % | 1.45 | % | (1) | 3.09 | % | (1) | February 2019 | |||||
Receive variable (LIBOR) /pay-fixed swap (1) | 100 | % | 175,000 | 1.65 | % | 1.45 | % | (1) | 3.10 | % | (1) | February 2019 | ||||||
Receive variable (LIBOR) /pay-fixed swap (1) | 100 | % | 100,000 | 1.64 | % | 1.45 | % | (1) | 3.09 | % | (1) | February 2019 | ||||||
Receive variable (LIBOR) /pay-fixed swap (2) | 100 | % | 100,000 | (2) | (2) | (2) | February 2022 | |||||||||||
Receive variable (LIBOR) /pay-fixed swap (2) | 100 | % | 100,000 | (2) | (2) | (2) | February 2022 | |||||||||||
Receive variable (LIBOR) /pay-fixed swap (2) | 100 | % | 50,000 | (2) | (2) | (2) | February 2022 | |||||||||||
Receive variable (LIBOR) /pay-fixed swap (2) | 100 | % | 50,000 | (2) | (2) | (2) | February 2022 | |||||||||||
Receive variable (LIBOR) /pay-fixed swap (3) | 100 | % | 12,000 | 2.09 | % | (3) | 1.40 | % | (3) | 3.49 | % | (3) | March 2024 | |||||
Unconsolidated Joint Ventures: | ||||||||||||||||||
Receive variable (LIBOR) /pay-fixed swap (4) | 50 | % | 131,967 | 2.40 | % | 1.70 | % | 4.10 | % | April 2018 | ||||||||
Receive variable (LIBOR) /pay-fixed swap (4) | 50 | % | 131,967 | 2.40 | % | 1.70 | % | 4.10 | % | April 2018 | ||||||||
Receive variable (LIBOR) /pay-fixed swap (5) | 50.1 | % | 168,164 | 1.83 | % | 1.75 | % | 3.58 | % | December 2021 | ||||||||
Receive variable (LIBOR) USD/pay-fixed Korean Won (KRW) cross-currency interest rate swap (6) | 34.3 | % | 52,065 USD / 60,500,000 KRW | 1.52 | % | 1.60 | % | 3.12 | % | September 2020 |
(1) | The hedged forecasted transaction for each of these swaps is the first previously unhedged one-month LIBOR-indexed interest payments 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. The Company is currently using these swaps to manage interest rate risk on the $475 million unsecured term loan. The credit spread on this loan can also vary within a range of 1.35% to 1.90%, depending on the Company's total leverage ratio at the measurement date, resulting in an effective rate in the range of 2.99% to 3.55% during the swap period. |
(2) | The hedged forecasted transaction for each of these swaps is the first previously unhedged one-month LIBOR-indexed interest payments 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 January 2018 effective date of the swaps. The Company anticipates using these forward starting swaps to manage interest rate risk on the $300 million unsecured term loan beginning with the January 2018 effective date. Beginning in January 2018, the LIBOR rate will be swapped to a fixed rate of 2.14%. The credit spread on this loan can vary within a range of 1.25% to 1.90%, depending on the Company's total leverage ratio at the measurement date, resulting in an effective rate in the range of 3.39% to 4.04% during the swap period. |
(3) | The notional amount on this swap is equal to the outstanding principal balance of the floating rate loan on the U.S. headquarters building. |
(4) | The notional amount on each of these swaps is equal to 50% of the outstanding principal balance of the loan on Fair Oaks. |
(5) | The notional amount on this swap is equal to the outstanding principal balance of the floating rate loan on International Plaza. |
(6) | The notional amount on this swap is equal to the outstanding principal balance of the U.S. dollar construction loan for Starfield Hanam. There is a cross-currency interest rate swap to fix the interest rate on the loan and swap the related principal and interest payments from U.S. dollars to KRW in order to reduce the impact of fluctuations in interest rates and exchange rates on the cash flows of the joint venture. The currency swap exchange rate is 1,162.0. |
Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion) | Location of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion) | Amount of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion) | |||||||||||||||
Three Months Ended March 31 | Three Months Ended March 31 | ||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||
Derivatives in cash flow hedging relationships: | |||||||||||||||||
Interest rate contracts – consolidated subsidiaries | $ | 764 | $ | (5,742 | ) | Interest Expense | $ | (1,074 | ) | $ | (1,517 | ) | |||||
Interest rate contracts – UJVs | 1,042 | (2,791 | ) | Equity in Income of UJVs | (759 | ) | (974 | ) | |||||||||
Cross-currency interest rate contract – UJV | 36 | (290 | ) | Equity in Income of UJVs | (1,402 | ) | (546 | ) | |||||||||
Total derivatives in cash flow hedging relationships | $ | 1,842 | $ | (8,823 | ) | $ | (3,235 | ) | $ | (3,037 | ) |
Fair Value | |||||||||
Consolidated Balance Sheet Location | March 31, 2017 | December 31, 2016 | |||||||
Derivatives designated as hedging instruments: | |||||||||
Asset derivative: | |||||||||
Interest rate contracts – consolidated subsidiary | Deferred Charges and Other Assets | $ | 22 | ||||||
Interest rate contracts - UJVs | Investment in UJVs | 160 | |||||||
Cross-currency interest rate swap - UJV | Investment in UJVs | $ | 381 | ||||||
Total assets designated as hedging instruments | $ | 182 | $ | 381 | |||||
Liability derivatives: | |||||||||
Interest rate contracts – consolidated subsidiaries | Accounts Payable and Accrued Liabilities | $ | (2,824 | ) | $ | (3,548 | ) | ||
Interest rate contracts – UJVs | Investment in UJVs | (1,614 | ) | (2,496 | ) | ||||
Cross-currency interest rate swap – UJV | Investment in UJVs | (933 | ) | ||||||
Total liabilities designated as hedging instruments | $ | (5,371 | ) | $ | (6,044 | ) |
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Fair Value Measurements as of March 31, 2017 Using | Fair Value Measurements as of December 31, 2016 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) | ||||||||||||
SPG common shares | $ | 43,008 | $ | 44,418 | ||||||||||||
Insurance deposit | 15,430 | 15,440 | ||||||||||||||
Derivative interest rate contracts (Note 7) | $ | 22 | ||||||||||||||
Total assets | $ | 58,438 | $ | 22 | $ | 59,858 | $ | — | ||||||||
Derivative interest rate contracts (Note 7) | $ | (2,824 | ) | $ | (3,548 | ) | ||||||||||
Total liabilities | $ | (2,824 | ) | $ | (3,548 | ) |
2017 | 2016 | ||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||
Notes payable, net | $ | 3,287,968 | $ | 3,232,923 | $ | 3,255,512 | $ | 3,184,036 |
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Details about AOCI Components | Amounts reclassified from AOCI | Affected line item in Consolidated Statement of Operations and Comprehensive Income | ||||
Losses on interest rate instruments and other: | ||||||
Realized loss on interest rate contracts - consolidated subsidiaries | $ | 1,074 | Interest Expense | |||
Realized loss on interest rate contracts - UJVs | 759 | Equity in Income of UJVs | ||||
Realized loss on cross-currency interest rate contract - UJV | 1,402 | Equity in Income of UJVs | ||||
Total reclassifications for the period | $ | 3,235 |
Details about AOCI Components | Amounts reclassified from AOCI | Affected line item in Consolidated Statement of Operations and Comprehensive Income | ||||
Losses on interest rate instruments and other: | ||||||
Realized loss on interest rate contracts - consolidated subsidiaries | $ | 1,517 | Interest Expense | |||
Realized loss on interest rate contracts - UJVs | 974 | Equity in Income of UJVs | ||||
Realized loss on cross-currency interest rate contract - UJV | 546 | Equity in Income of UJVs | ||||
Total reclassifications for the period | $ | 3,037 |
Taubman Centers, Inc. AOCI | Noncontrolling Interests AOCI | ||||||||||||||||||||||||||||||
Cumulative translation adjustment | Unrealized gains (losses) on interest rate instruments | Fair value adjustment for marketable equity securities | Total | Cumulative translation adjustment | Unrealized gains (losses) on interest rate instruments | Fair value adjustment for marketable equity securities | Total | ||||||||||||||||||||||||
January 1, 2017 | $ | (23,147 | ) | $ | (12,467 | ) | $ | (302 | ) | $ | (35,916 | ) | $ | (9,613 | ) | $ | 7,191 | $ | (126 | ) | $ | (2,548 | ) | ||||||||
Other comprehensive income (loss) before reclassifications | 6,694 | (986 | ) | (999 | ) | 4,709 | 2,755 | (407 | ) | (411 | ) | 1,937 | |||||||||||||||||||
Amounts reclassified from AOCI | 2,291 | 2,291 | 944 | 944 | |||||||||||||||||||||||||||
Net current period other comprehensive income (loss) | $ | 6,694 | $ | 1,305 | $ | (999 | ) | $ | 7,000 | $ | 2,755 | $ | 537 | $ | (411 | ) | $ | 2,881 | |||||||||||||
Adjustments due to changes in ownership | (61 | ) | 47 | (14 | ) | 61 | (47 | ) | 14 | ||||||||||||||||||||||
March 31, 2017 | $ | (16,514 | ) | $ | (11,115 | ) | $ | (1,301 | ) | $ | (28,930 | ) | $ | (6,797 | ) | $ | 7,681 | $ | (537 | ) | $ | 347 |
Taubman Centers, Inc. 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, 2016 | $ | (10,890 | ) | $ | (16,330 | ) | $ | (27,220 | ) | $ | (4,531 | ) | $ | 5,595 | $ | 1,064 | |||||||
Other comprehensive income (loss) before reclassifications | 4,198 | (8,380 | ) | (4,182 | ) | 1,744 | (3,480 | ) | (1,736 | ) | |||||||||||||
Amounts reclassified from AOCI | 2,146 | 2,146 | 891 | 891 | |||||||||||||||||||
Net current period other comprehensive income (loss) | $ | 4,198 | $ | (6,234 | ) | $ | (2,036 | ) | $ | 1,744 | $ | (2,589 | ) | $ | (845 | ) | |||||||
Adjustments due to changes in ownership | (6 | ) | 7 | 1 | 6 | (7 | ) | (1 | ) | ||||||||||||||
March 31, 2016 | $ | (6,698 | ) | $ | (22,557 | ) | $ | (29,255 | ) | $ | (2,781 | ) | $ | 2,999 | $ | 218 |
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