Taubman Expects Higher Fiscal FFO - Analyst Blog

Taubman Centers Inc. (TCO), a real estate investment trust (REIT), has recently announced that it expects 2010 funds from operations (FFO) to be slightly above its previous guidance of $2.65 to $2.75 per share. Fund from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

The anticipated increase in FFO is primarily due to a lease cancellation income resulting from the decision of Saks Inc. (SKS) to close the Saks Fifth Avenue store at The Shops at Willow Bend in Texas. Taubman Centers would provide detailed fiscal earnings guidance with its third quarter results. Currently, the Zacks Consensus Estimate for fiscal 2010 is $2.70.

Taubman Centers owns, develops, acquires and operates regional and super-regional shopping centers throughout the U.S. and Asia. Retail shopping centers spanning over 400,000 square feet of gross leaseable area (GLA) are generally referred to as regional shopping centers, while those with GLA in excess of 800,000 square feet are called super-regional shopping centers. A large number of these shopping centers are strategically located in major metropolitan areas, including Los Angeles, San Francisco, Denver, Detroit, Phoenix, Miami, Dallas, Tampa, Orlando and Washington DC.

Taubman Centers has a strong portfolio of the best-in-class retail malls that generate the highest average sales per square foot in the country. The company also has a healthy balance sheet with minimal debt maturities and adequate liquidity. Consequently, Taubman Centers is better placed than most of its peers to withstand the challenges of the macroeconomic environment.

Currently, we have a long-term Neutral rating on Taubman Centers with a Zacks #2 Rank, which translates into a short-term Buy recommendation and indicates that the stock is expected to perform well above the overall U.S. equity market for the next 1-3 months.

SAKS INC (SKS): Free Stock Analysis Report

TAUBMAN CENTERS (TCO): Free Stock Analysis Report

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Taubman Expects Higher Fiscal FFO - Analyst Blog

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