* Fourth-quarter FFO $1.06 vs. Wall St estimate 97 cents
* Sets 2011 FFO $2.86 to $2.98 per share vs est $2.77
* Forms joint venture for outlet center development
* Sales per square foot sets industry record
* Shares up slightly after hours
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By Ilaina Jonas
NEW YORK, Feb 10 Luxury mall operator Taubman
Centers Inc (TCO.N) reported higher-than-expected earnings,
helped by lower property expenses, a rise in sales, and
improved occupancy and rental income.
Luxury retailers, hobbled during the financial crisis and
recession, have staged a comeback. Saks Inc SKS.N, Nordstrom
Inc (JWN.N) and Polo Ralph Lauren Corp (RL.N) enjoyed some of
the biggest sales gains of all retailers in 2010 as the stock
market rally gave well-off shoppers the confidence to splurge
on luxury again. French luxury goods maker LVMH Moet Hennessy
Louis Vuitton SA (LVMH.PA) racked up a double-digit sales increase
as it enjoyed a robust holiday sales.
A portion of those sales become part of Taubman's revenue, but
more importantly they indicate where rents are headed.
Sales at the company's malls rose 12.4 percent in the
quarter, resulting in sales per square foot of $564 for 2010,
an industry record, the company said.
"They upgraded the mix of their portfolio, bringing in more
luxury tenants into certain malls," Keefe, Bruyette & Woods
analyst Ben Yang said. "That certainly helps raise the price
point of merchandising."
Taubman reported fourth-quarter funds from operations (FFO)
of $59.6 million, or $1.06 per share, compared with $31.1
million, or 56 cents per share, a year earlier when the company
incurred litigation charges.
Analysts on average had expected quarterly FFO of 97 cents
per share, according to Thomson Reuters I/B/E/S.
FFO is a real estate investment trust performance measure
that removes the profit-reducing effect of depreciation from
The company, based in Bloomfield Hills, Michigan set a 2011
full-year FFO forecast in a range of $2.86 to $2.98 per share,
excluding The Pier Shops in Atlantic City and Regency Square in
Richmond, Virginia, both of which the company plans to return to
Analysts had forecast FFO of $2.77 per share.
Including the effects of those two malls, the company sees
FFO in the range of $2.62 to $2.74 per share.
The mall owner also stepped up progress on its entry into
the outlet center business, forming a joint venture with a
company headed by Bruce Zalaznick, a former executive vice
president of Prime Outlets and Chelsea Property Group, two
companies bought by Simon Property Group Inc (SPG.N), the
largest U.S. mall owner.
Taubman will hold a 90 percent stake in the joint venture for
any of the outlet centers they build.
Taubman shares closed down 0.4 percent, or 19 cents, at $52.91
before its results were released and traded at $52.95 after
(Reporting by Ilaina Jonas; Editing by Phil Berlowitz)