April 22, 2010 / 10:02 PM / 8 years ago

UPDATE 2-Taubman Centers Q1 FFO falls, sales surge

* Q1 FFO 63 cents, matching Street view

* Sees 2010 FFO $2.55 to $2.75 per share

* Shares close at $43.23, unchanged after hours (Adds analysts view, share price, details)

NEW YORK, April 22 (Reuters) - Taubman Centers Inc (TCO.N), an owner of upscale shopping malls, said its quarterly funds from operations (FFO) fell 15 percent compared with a year earlier, partly as a result of lower rents.

But sales surged at its malls, especially those in areas that had been hardest hit by the recession.

The company also included a charge for the transfer of a loan on property it is returning to a lender, but it maintained its forecast for the year.

“Tenant sales are the best predictor of the leasing environment ahead,” CEO Robert Taubman said in a statement.

“Retailers’ expectations have improved markedly and they are becoming more aggressive about their expansion plans.”

First-quarter FFO totaled $33.5 million, or 60 cents per share, compared with $39.4 million, or 70 cents per share, in the year-earlier quarter.

The results included a charge of 3 cents per share in the first quarter of 2010 and 1-cent per share in the prior year’s quarter for the company’s writeoff of its investment in The Pier Shops at Caesars in Atlantic City, New Jersey.

Excluding the charge, FFO met the average analyst forecast of 63 cents per share, according to Thomson Reuters I/B/E/S.

Rents were lower and lease cancellation income was higher than in the year earlier quarter. Pre-development expenses were also higher in the latest quarter, in part due to nonrecurring consultant fees, Taubman said.

    Tenant sales, which began to pick up in the fourth quarter of 2009, surged in the first quarter of the new year, rising10.8 percent over the prior year and bringing the company’s 12-month trailing sales per square foot to $509. Sales growth was particularly strong in Michigan and Florida.

    The Bloomfield Hills, Michigan-based company, which owns 26 U.S. malls, said the average occupancy during the quarter was 88.2 percent, below the 88.8 percent of a year earlier.

    Rent fell to $43.20 per square foot from $44.48.

    Although the company maintained its 2010 forecast for FFO in the range of $2.55 to $2.75 per share, it said it would include a charge of 6 cents per share for The Pier Shops, effectively increasing the range.

    In addition, a noncash accounting gain is now expected to be recognized when the loan obligation on The Pier Shops is extinguish when it is transferred, the company said.

    Analysts had expected the company to post 2010 FFO of $2.63 per share, according to Thomson Reuters I/B/E/S.

    Taubman shares closed 1.2 percent higher at $43.23 on the New York Stock Exchange before the results were released. They were unchanged in after-hours trade.

    Reporting by Ilaina Jonas, editing by Matthew Lewis and Ted Kerr

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