Fourth Quarter 2017 Earnings Press Release & Supplemental...

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Fourth Quarter 2017 Earnings Press Release & Supplemental Information

Transcript of Fourth Quarter 2017 Earnings Press Release & Supplemental...

Page 1: Fourth Quarter 2017 Earnings Press Release & Supplemental ...s1.q4cdn.com/799408505/files/doc_financials/supplemental/2017/Q417-Supplemental.pdfSummary Financial Information & Operational

Fourth Quarter 2017 Earnings Press Release & Supplemental Information

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TABLE OF CONTENTS

PAGE

Earnings Press Release ER 1-4

OverviewCompany Information & Analyst Coverage 1Trading Information 2

Summary Financial Information & Operational Statistics 3-4

Summary of Key Guidance Measures 5

Income Statements 6-7

Changes in Funds from Operations and Earnings Per Common Share 8-9

Balance Sheet InformationBalance Sheet 10Debt Summary 11-12Capital Spending 13

Property InformationOwned Centers 14Redevelopments 15Anchors & Major Tenants in Owned Portfolio 16

OtherComponents of Other Income, Other Operating Expense, and Nonoperating Income, Net 17-18Use of Non-GAAP Financial Measures and Reconciliations to GAAP Measures 19-24Glossary 25

This supplemental contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21Eof the Securities Exchange Act of 1934, as amended. These statements reflect management's current views with respect to future events and financialperformance. Forward-looking statements can be identified by words such as “will”, “may”, “could”, “expect”, “anticipate”, “believes”, “intends”, “should”,“plans”, “estimates”, “approximate”, “guidance” and similar expressions in this supplemental that predict or indicate future events and trends and thatdo not report historical matters. The forward-looking statements included in this supplemental are made as of the date hereof. Except as required by law,the Company assumes no obligation to update these forward-looking statements, even if new information becomes available in the future. Actual resultsmay differ materially from those expected because of various risks, uncertainties and other factors. Such factors include, but are not limited to: changesin market rental rates; unscheduled closings or bankruptcies of tenants; relationships with anchor tenants; trends in the retail industry; challenges withdepartment stores; changes in consumer shopping behavior; the liquidity of real estate investments; the Company’s ability to comply with debt covenants;the availability and terms of financings; changes in market rates of interest and foreign exchange rates for foreign currencies; changes in value of investmentsin foreign entities; the ability to hedge interest rate and currency risk; risks related to acquiring, developing, expanding, leasing and managing properties;competitors gaining economies of scale through M&A and consolidation activity; changes in value of investments in foreign entities; risks related to jointventure properties; insurance costs and coverage; security breaches that could impact the Company’s information technology, infrastructure or personaldata; costs associated with response to technology breaches; the loss of key management personnel; shareholder activism costs and related diversion ofmanagement time; terrorist activities; maintaining the Company’s status as a real estate investment trust; changes in the laws of states, localities, andforeign jurisdictions that may increase taxes on the Company’s operations; and changes in global, national, regional and/or local economic and geopoliticalclimates. You should review the Company's filings with the Securities and Exchange Commission, including “Risk Factors” in its most recent Annual Reporton Form 10-K and subsequent quarterly reports, for a discussion of such risks and uncertainties.

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EARNINGS PRESS RELEASE

TAUBMAN CENTERS, INC. ISSUES FOURTH QUARTER AND FULL YEAR 2017 RESULTS AND INTRODUCES 2018 GUIDANCE

– Mall Tenant Sales Per Square Foot Up 3.2 Percent for the Quarter, Sixth Consecutive Quarter of Positive Sales Growth– Industry-leading Sales Per Square Foot $810, Up 2.3 Percent for the Year– Occupancy and Average Rent Per Square Foot Up– Nordstrom Joining Country Club Plaza Lineup

BLOOMFIELD HILLS, Mich., Feb. 8, 2018 - - Taubman Centers, Inc. (NYSE: TCO) today reported financial results for the quarter and full yearperiods ended December 31, 2017.

“Notwithstanding a very challenging retail environment, we saw growth in nearly all our key metrics in 2017,” said Robert S. Taubman,chairman, president and chief executive officer of Taubman Centers. “Adjusted FFO, sales, occupancy and average rent were up, and totalNOI increased over 10 percent, primarily due to the growth of our newest assets in the U.S. and Asia. We continue to execute on ourpromise to deliver growth and value to shareholders.”

Operating Statistics

For the year, comparable center NOI was up 1.7 percent (up 0.7 percent excluding lease cancellation income). For the fourth quarter,comparable center NOI was up 0.1 percent (up 0.5 percent excluding lease cancellation income). Comparable center NOI for the year andthe quarter benefited from favorable net recoveries and other income. Higher bad debt expense impacted the year-to-date and quarterlycomparable center NOI by 0.8 percent and 1.4 percent, respectively.

Comparable center mall tenant sales per square foot were $810 for 2017, an increase of 2.3 percent from 2016. The fourth quarter of2017 was up 3.2 percent. “This marked our sixth consecutive quarter of positive sales growth, and Holiday sales were especiallyencouraging,” said Mr. Taubman.

Ending occupancy in comparable centers was 95 percent at year-end, up 0.3 percent from 94.7 percent on December 31, 2016. Endingoccupancy in all centers was 94.8 percent, up 0.9 percent from last year.

Leased space in comparable centers was 96 percent at year-end, essentially flat compared to December 31, 2016. Leased space in allcenters was 95.9 percent, up 0.3 percent from last year.

December 31, 2017Three Months

Ended

December 31, 2016Three Months

Ended

December 31, 2017Year Ended

December 31, 2016Year Ended

Net income attributable to commonshareowners, diluted (in thousands)Growth rate

$20,291(30.9)%

$29,361 $55,381(48.5)%

$107,615

Net income attributable to commonshareowners (EPS) per diluted common shareGrowth rate

$0.33(31.3)%

$0.48 $0.91(48.6)%

$1.77

Funds from Operations (FFO) per dilutedcommon shareGrowth rate

$1.02(7.3)%

$1.10 $3.51(10.2)%

$3.91

Adjusted Funds from Operations (AdjustedFFO) per diluted common shareGrowth rate

$1.03 (1)

2.0%$1.01 (2) $3.70 (1)

3.4%$3.58 (2)

(1) Adjusted FFO for the three months and year ended December 31, 2017 excludes a restructuring charge, costs associated with shareowner activism, and a gain recognizedupon the conversion of the company’s remaining investment in Simon Property Group Limited Partnership units (SPG LP Units) to common shares of SPG. Adjusted FFO forthe year ended December 31, 2017 also excludes a charge recognized in connection with the partial write-off of deferred financing costs related to an amendment of thecompany's primary line of credit in February 2017.(2) Adjusted FFO for the three months and year ended December 31, 2016 excludes costs associated with shareowner activism and a gain, net of tax, recognized upon theconversion of a portion of the company’s investment in SPG LP Units to common shares of SPG. Adjusted FFO for the year ended December 31, 2016 also excludes a one-time payment the company received in the second quarter due to the termination of the company’s leasing services agreement at The Shops at Crystals (Las Vegas, Nev.).

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For the year, average rent per square foot in comparable centers was $61.66, up 1 percent from $61.07 in 2016. For the fourth quarter,average rent per square foot in comparable centers was $61.35, up 0.6 percent from $60.97 last year.

The trailing 12-month releasing spread per square foot for the period ended December 31, 2017 was 5 percent. This spread was impacted,for the third quarter in a row, by a small number of spaces that opened in early 2017. These spaces have an average lease term of lessthan two-and-a-half years. Without these leases, the spread was nearly 15 percent.

“As the retail environment continues to stabilize, we’re seeing very good demand for space in our centers,” said Mr. Taubman. “Occupancy,rent, and sales are all at, or near, all-time highs.”

2017 Milestones, Events and Financing Activities

During 2017, the company:

• Amended and restated the company’s primary revolving line of credit, which included a new, unsecured, $300 million term loanand an extension of the $1.1 billion revolving credit facility to February 2021, with two six-month extension options. Both theterm loan and the revolving line of credit facility bear interest at a range based on the company’s total leverage ratio. See TaubmanCenters Announces the Amendment and Restatement of $1.1 Billion Line of Credit Including Additional $300 Million UnsecuredTerm Loan - February 7, 2017.

• Increased the regular quarterly dividend by 5 percent to $0.625 per share of common stock. See Taubman Centers IncreasesQuarterly Common Dividend 5 Percent to $0.625 Per Share - March 2, 2017.

• Celebrated the opening of CityOn.Zhengzhou in Zhengzhou, China, 100 percent leased with nearly 200 retailers, restaurants andentertainment venues. The center was jointly developed by Taubman Asia and Wangfujing Group Co., Ltd. See The NewCityOn.Zhengzhou Shopping Center Opened to Capacity Crowds Today in Henan Province - March 16, 2017.

• Repaid the $302 million construction loan on The Mall of San Juan (San Juan, Puerto Rico) - March 16, 2017.• Sold the company’s 50 percent owned Valencia Place office tower located within the Country Club Plaza (Kansas City, Mo.) for a

net value of $37.6 million at the company’s share - March 17, 2017.• In September was impacted by Hurricane Irma in Florida and Hurricane Maria in Puerto Rico. The company’s five centers in Florida

sustained minimal damage, but were closed between four and 11 days. The Mall of San Juan was closed for approximately onemonth. The center’s performance will continue to be impacted for the foreseeable future.

• Announced the appointments of Mayree C. Clark and Michael J. Embler to the company’s Board of Directors, and declassificationof the Board by the 2020 annual meeting of shareholders. See Taubman Appoints Two New Independent Directors and AnnouncesOther Governance Enhancements - November 9, 2017.

• Underwent a restructuring of its workforce and reorganization of various functions in response to the completion of anothermajor development cycle and in order to create operational efficiencies. During the three months and year ended December 31,2017, the company incurred $9.8 million and $13.8 million, respectively, of expenses related to the restructuring.

Nordstrom Joining Country Club Plaza Lineup

Last week, Nordstrom, Inc., announced it is opening a new, state-of-the-art, approximately 116,000-square-foot store at Country ClubPlaza, the company’s joint venture in Kansas City, Missouri. The new store is expected to open in 2021. See Nordstrom Announces Relocationof Oak Park Mall Store to Country Club Plaza - February 2, 2018.

2018 Guidance

The company is introducing guidance for 2018. Net income attributable to common shareholders (EPS) for the year is expected to be inthe range of $1.15 to $1.39.

The company expects FFO per diluted common share to be in the range of $3.72 to $3.86. This guidance does not reflect any future coststhat may be incurred related to shareowner activism.

This guidance assumes comparable center NOI growth of 2 to 3 percent for the year.

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EARNINGS PRESS RELEASE

Supplemental Investor Information Available

The company provides supplemental investor information along with its earnings announcements, available online at www.taubman.comunder “Investors.” This includes the following:

• Earnings Press Release• Company Overview• Operational Statistics• Summary of Key Guidance Measures• Income Statements• Changes in Funds from Operations and Earnings Per Common Share• Balance Sheet Information• Debt Summary• Capital Spending • Owned Centers• Redevelopments• Anchors & Major Tenants in Owned Portfolio• Components of Other Income, Other Operating Expense, and Nonoperating Income, Net• Earnings Reconciliations• Operating Statistics Glossary

Investor Conference Call

The company will host a conference call at 10:00 a.m. EST on Friday, February 9 to discuss these results, business conditions and thecompany’s outlook for 2018. The conference call will be simulcast at www.taubman.com. An online replay will follow shortly after the calland continue for approximately 90 days. Shareholders and interested parties may also listen to a live broadcast of the conference call bydialing 1-866-820-1712 or 1-973-638-3468 and using reservation code 5997197.

About Taubman

Taubman Centers is an S&P MidCap 400 Real Estate Investment Trust engaged in the ownership, management and/or leasing of 27 regional,super-regional and outlet shopping centers in the U.S. and Asia. Taubman’s U.S.-owned properties are the most productive in the publiclyheld U.S. regional mall industry. Founded in 1950, Taubman is headquartered in Bloomfield Hills, Mich. Taubman Asia, founded in 2005,is headquartered in Hong Kong. www.taubman.com.

For ease of use, references in this press release to “Taubman Centers,” “company,” “Taubman” or an operating platform mean TaubmanCenters, Inc. and/or one or more of a number of separate, affiliated entities. Business is actually conducted by an affiliated entity ratherthan Taubman Centers, Inc. itself or the named operating platform.

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This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended,and Section 21E of the Securities Exchange Act of 1934, as amended. These statements reflect management's current views with respectto future events and financial performance. Forward-looking statements can be identified by words such as “will”, “may”, “could”, “expect”,“anticipate”, “believes”, “intends”, “should”, “plans”, “estimates”, “approximate”, “guidance” and similar expressions in this press releasethat predict or indicate future events and trends and that do not report historical matters. The forward-looking statements included in thisrelease are made as of the date hereof. Except as required by law, the company assumes no obligation to update these forward-lookingstatements, even if new information becomes available in the future. Actual results may differ materially from those expected because ofvarious risks, uncertainties and other factors. Such factors include, but are not limited to: changes in market rental rates; unscheduledclosings or bankruptcies of tenants; relationships with anchor tenants; trends in the retail industry; challenges with department stores;changes in consumer shopping behavior; the liquidity of real estate investments; the company’s ability to comply with debt covenants; theavailability and terms of financings; changes in market rates of interest and foreign exchange rates for foreign currencies; changes in valueof investments in foreign entities; the ability to hedge interest rate and currency risk; risks related to acquiring, developing, expanding,leasing and managing properties; competitors gaining economies of scale through M&A and consolidation activity; changes in value ofinvestments in foreign entities; risks related to joint venture properties; insurance costs and coverage; security breaches that could impactthe company’s information technology, infrastructure or personal data; costs associated with response to technology breaches; the loss ofkey management personnel; shareholder activism costs and related diversion of management time; terrorist activities; maintaining thecompany’s status as a real estate investment trust; changes in the laws of states, localities, and foreign jurisdictions that may increasetaxes on the company’s operations; and changes in global, national, regional and/or local economic and geopolitical climates. You shouldreview the company's filings with the Securities and Exchange Commission, including “Risk Factors” in its most recent Annual Report onForm 10-K and subsequent quarterly reports, for a discussion of such risks and uncertainties.

CONTACTS:Ryan Hurren, Taubman, Director, Investor Relations, 248-258-7232, [email protected] Mainville, Taubman, Director, Strategic Communications, 248-258-7469, [email protected]

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OVERVIEW

Company Information

Taubman Centers, Inc. (the Company or TCO) is a Michigan corporation that operates as a self-administered and self-managed real estateinvestment trust (REIT). The Taubman Realty Group Limited Partnership (Operating Partnership or TRG) is a majority-owned partnershipsubsidiary of TCO that owns direct or indirect interests in all of its real estate properties. In this report, the term “Company" refers to TCO,the Operating Partnership, and/or the Operating Partnership's subsidiaries as the context may require. The Company engages in theownership, management, leasing, acquisition, disposition, development, and expansion of regional and super-regional retail shoppingcenters and interests therein. The Company’s owned portfolio as of December 31, 2017 included 24 urban and suburban shopping centersin 11 U.S. states, Puerto Rico, South Korea, and China.

This package was prepared to provide supplemental operating, financing, and development information of the Company and the OperatingPartnership for the fourth quarter of 2017. The information herein contains terms, captions, and other content for which definitions andadditional background can be found in the Company's regular filings with the Securities and Exchange Commission, including its mostrecent Annual Report on Form 10-K and Quarterly Report on Form 10-Q. Refer to www.taubman.com for the latest available version ofthis package, which will incorporate any revisions to the information.

If you have any questions, comments, or suggestions regarding the information contained in this package or would like additional informationabout TCO, please contact:

Ryan Hurren Erik WrightDirector, Investor Relations Senior Analyst, Investor Relations200 East Long Lake Road, Suite 300 200 East Long Lake Road, Suite 300Bloomfield Hills, Michigan 48304-2324 Bloomfield Hills, Michigan 48304-2324Telephone: (248) 258-7232 Telephone: (248) 258-7390Email: [email protected] Email: [email protected]

The Company maintains self-service investor alerts that can be found on the Company's website, www.taubman.com, Investors - InvestorResources - Email Alerts tab.

Analyst Coverage

Taubman Centers, Inc. is followed by the analysts listed above. The Company believes the list to be complete, but can provide no assurances.Please note that any opinions, estimates, or forecasts regarding the Company's performance made by these analysts are independent ofthe Company and do not represent opinions, forecasts, or predictions of its management. The Company does not, by its reference aboveor distribution, imply its endorsement of or concurrence with such information, conclusions, or recommendations.

Company Analyst Email Address

Bank of America Securities-Merrill Lynch Craig Schmidt [email protected]

BMO Capital Markets Jeremy Metz [email protected]

Boenning & Scattergood, Inc. Floris van Dijkum [email protected]

BTIG James Sullivan [email protected]

Citigroup Global Markets, Inc. Christy McElroy [email protected]

Deutsche Bank Securities, Inc. Vincent Chao [email protected]

Evercore ISI Steve Sakwa [email protected]

Goldman Sachs & Co. Caitlin Burrows [email protected]

Green Street Advisors, Inc. Daniel Busch [email protected]

Jefferies, LLC Omotayo Okusanya [email protected]

J.P. Morgan Securities Michael Mueller [email protected]

Keybanc Capital Markets, Inc. Todd Thomas [email protected]

Mizuho Securities USA Inc. Haendel St. Juste [email protected]

Morgan Stanley Richard Hill [email protected]

Raymond James Collin Mings [email protected]

Sandler O'Neill & Partners, L.P. Alexander Goldfarb [email protected]

UBS Securities, LLC Nick Yulico [email protected]

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OVERVIEW

Trading Information

The Company's common stock and two issuances of preferred stock are traded on the New York Stock Exchange.

SymbolCommon Stock TCO6.5% Series J Cumulative Redeemable Preferred Stock TCO PR J6.25% Series K Cumulative Redeemable Preferred Stock TCO PR K

Common Stock

Market Quotation per Common Share Common StockDividends

Declared and PaidQuarters-Ended High Low

March 31, 2017 76.17 64.08 0.625June 30, 2017 66.64 57.77 0.625September 30, 2017 61.90 49.14 0.625December 31, 2017 65.71 46.30 0.625

March 31, 2016 77.24 66.67 0.595June 30, 2016 74.20 68.21 0.595September 30, 2016 81.63 73.64 0.595December 31, 2016 75.21 69.69 0.595

Preferred Equity(in millions of dollars)

Face Value Book ValueNumber of Shares

OutstandingOptional

Redemption Date6.5% Series J Cumulative Redeemable Preferred 192.5 186.2 7,700,000 August 14, 20176.25% Series K Cumulative Redeemable Preferred 170.0 164.4 6,800,000 March 15, 2018

362.5 350.6

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Summary Financial InformationFor the Periods Ended December 31, 2017 and 2016(in thousands of dollars, except as noted)

Three Months Ended Year Ended2017 2016 2017 2016

Funds from Operations (1):FFO:

TRG 88,620 95,918 304,125 340,189TCO 62,840 67,346 215,786 239,963

FFO per common share:Basic 1.03 1.11 3.55 3.98Diluted 1.02 1.10 3.51 3.91Growth rate-diluted -7.3% -10.2%

Adjusted FFO:TRG 89,292 87,849 321,273 310,418TCO 63,289 62,108 227,619 219,390

Adjusted FFO per common share:Basic 1.04 1.03 3.75 3.63Diluted 1.03 1.01 3.70 3.58Growth rate-diluted 2.0% 3.4%

Earnings attributable to common shareowners:Net income attributable to common shareowners:

Basic 20,251 29,275 55,267 107,358Diluted 20,291 29,361 55,381 107,615Per common share - basic 0.33 0.48 0.91 1.78Per common share - diluted 0.33 0.48 0.91 1.77

Dividends (2):Dividends paid per common share 0.625 0.595 2.50 2.38Payout ratio of Adjusted FFO per diluted common share 61% 59% 68% 66%

Coverage (3):Interest only 3.3 3.6 3.1 3.6Fixed charges 2.6 2.8 2.5 2.7

Market Capitalization:Closing stock price at end of period 65.43 73.93Market equity value of share equivalents 5,613,132 6,319,307Preferred equity (at face value) 362,500 362,500Net beneficial interest in debt 4,721,600 4,375,000Total market capitalization 10,697,232 11,056,807Debt to total market capitalization 44.1% 39.6%

Ownership:TCO common shares outstanding:

End of period 60,832,918 60,430,613Weighted average - basic 60,737,750 60,427,603 60,675,129 60,363,416Weighted average - diluted 61,105,094 60,993,380 61,040,495 60,829,555

TRG units of partnership interest:End of period 85,788,252 85,476,892Weighted average - basic 85,693,184 85,473,882 85,640,286 85,419,070Weighted average - diluted 86,931,790 86,910,920 86,876,914 86,756,471

TCO ownership of TRG:End of period 70.9% 70.7%Weighted average - basic 70.9% 70.7% 70.8% 70.7%Weighted average - diluted 69.9% 69.5% 69.8% 69.6%

(1) FFO for the three months and year ended December 31, 2017 includes, and Adjusted FFO excludes, a restructuring charge, costs associated with shareowner activism, and a gain recognized uponthe conversion of the Company's remaining investment in Simon Property Group Limited Partnership units (SPG LP Units) to common shares of Simon Property Group (SPG). In addition, FFO forthe year ended December 31, 2017 includes, and Adjusted FFO excludes, a charge recognized in connection with the partial write-off of deferred financing costs related to an amendment of theCompany's primary unsecured revolving line of credit in February 2017. FFO for the three months and year ended December 31, 2016 includes, and Adjusted FFO excludes, costs associated withshareowner activism, and a gain, net of tax recognized upon the conversion of a portion of the Company's investment in SPG LP Units to common shares of SPG. In addition, FFO for the yearended December 31, 2016 includes, and Adjusted FFO excludes, the lump sum payment received in May 2016 for the termination of the Company's third party leasing agreement at Crystals dueto a change in ownership in the center.

(2) The tax status of total 2017 common dividends declared was approximately 56% ordinary income, 19% return of capital, 18% long term capital gains, and 8% unrecaptured Section 1250 capitalgains. The tax status of total 2017 dividends paid on Series J and Series K Preferred Stock was 65% ordinary income, 25% long term capital gains, and 11% unrecaptured Section 1250 capital gains.Amounts do not add to 100% due to rounding. Refer to the Company's press release on January 17, 2018 ("Taubman Centers Announces Taxable Allocations of 2017 Common and Preferred ShareDividend Distributions"), for a breakout of these taxable allocations by quarter.

(3) Interest coverage ratio is calculated by dividing beneficial interest in EBITDA or adjusted beneficial interest in EBITDA by beneficial interest expense. Fixed charges coverage ratio is calculated bydividing beneficial interest in EBITDA or adjusted beneficial interest in EBITDA by beneficial interest expense and the sum of preferred dividends, distributions, and debt payments. For the threemonths and year ended December 31, 2017, EBITDA was adjusted to exclude a restructuring charge, costs associated with shareowner activism, and a gain recognized upon the conversion of theCompany's remaining investment in SPG LP Units to common shares of SPG. For the year ended December 31, 2017, EBITDA was also adjusted to exclude a gain recognized in connection withthe sale of the Valencia Place office tower at Country Club Plaza. For the three months and year ended December 31, 2017, EBITDA was adjusted to exclude costs associated with shareowneractivism, and a gain, net of tax recognized upon the conversion of a portion of the Company's investment in SPG LP Units to common shares of SPG. For the year ended December 31, 2016, EBITDAwas also adjusted to exclude the lump sum payment received in May 2016 for the termination of the Company's third party leasing agreement at Crystals due to a change in ownership in thecenter.

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Operational StatisticsFor the Periods Ended December 31, 2017 and 2016

Three Months Ended Year Ended2017 2016 2017 2016

Occupancy and Leased Space (1):Ending occupancy - all centers 94.8 % 93.9 % 94.8 % 93.9 %Ending occupancy - comparable (2) 95.0 % 94.7 % 95.0 % 94.7 %Leased space - all centers 95.9 % 95.6 % 95.9 % 95.6 %Leased space - comparable (2) 96.0 % 96.1 % 96.0 % 96.1 %

Average Base Rents (2)(3):Average rent per square foot : Consolidated Businesses 64.25 63.27 64.82 63.83 Unconsolidated Joint Ventures 58.27 58.51 58.31 58.10 Combined 61.35 60.97 61.66 61.07Average rent per square foot growth 0.6 % 1.0 %

Opening/Closing Rents (2)(3):Opening base rent per square foot: Consolidated Businesses 65.27 85.86 Unconsolidated Joint Ventures 50.44 57.80 Combined 59.43 72.68Square feet of GLA opened: Consolidated Businesses 488,536 422,752 Unconsolidated Joint Ventures 317,524 374,119 Combined 806,060 796,871Closing base rent per square foot: Consolidated Businesses 60.59 72.60 Unconsolidated Joint Ventures 50.63 47.85 Combined 56.61 61.19Square feet of GLA closed: Consolidated Businesses 534,099 409,088 Unconsolidated Joint Ventures 354,959 350,060 Combined 889,058 759,148Releasing spread per square foot: Consolidated Businesses 4.68 13.26 Unconsolidated Joint Ventures (0.19) 9.95 Combined 2.82 11.49Releasing spread per square foot growth: Consolidated Businesses 7.7 % 18.3 % Unconsolidated Joint Ventures (0.4)% 20.8 % Combined 5.0 % 18.8 %

Mall Tenant Sales (in thousands of dollars) (4):Mall tenant sales - all centers 1,978,554 1,958,432 6,327,787 5,773,614Mall tenant sales - comparable (2) 1,574,704 1,568,221 4,943,268 4,921,032Sales per square foot (2) 810 792Sales per square foot growth (2) 3.2 % 2.3 %

Occupancy Costs as a Percentage of Sales (4):All centers: Consolidated Businesses 15.2 % 14.6 % Unconsolidated Joint Ventures 13.7 % 14.2 % Combined 14.4 % 14.4 %Comparable centers (2): Consolidated Businesses 14.3 % 14.1 % Unconsolidated Joint Ventures 13.9 % 13.9 % Combined 14.1 % 14.0 %

Tenant Bankruptcy Filings as a Percentage of Total Tenants 0.2 % 0.1 % 3.1 % 0.8 %Growth in Net Operating Income at 100% (2):

Including all lease cancellation income 0.1 % 0.3 % 1.7 % 3.4 %Excluding all lease cancellation income 0.5 % -0.1 % 0.7 % 3.9 %

Number of Owned Properties at End of Period 24 23 24 23

(1) Occupancy statistics include TILs and anchor spaces at value and outlet centers (Dolphin Mall, Great Lakes Crossing Outlets, and Taubman Prestige Outlets Chesterfield).

(2) Statistics exclude non-comparable centers for all periods presented.

(3) Opening and closing statistics exclude spaces greater than or equal to 10,000 square feet.

(4) Based on reports of sales furnished by mall tenants. Sales per square foot exclude spaces greater than or equal to 10,000 square feet.

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2018 Annual Guidance(may not add or recalculate due to rounding)

Range for Year EndedDecember 31, 2018 (1)

Funds from Operations per common share $3.72 $3.86Real estate depreciation - TRG (2.43) (2.33)Distributions to participating securities of TRG (0.03) (0.03)Depreciation of TCO's additional basis in TRG (0.11) (0.11)Net income attributable to common shareowners, per common share (EPS) $1.15 $1.39

Summary of Key Guidance Assumptions - 2018Year Ended Year Ended

December 31, 2018 December 31, 2017Guidance (1) Actual

NOI at 100% - comparable centers - growth % 2% - 3% 1.7% (2)0.7% (3)

Domestic and non-U.S. general and administrative expense $9 - $10 million perquarter

$39.0 million

Beneficial share of lease cancellation income About $14 million $12.1 millionEnding Occupancy - Comparable Centers (4) Around 95% 95.3%Consolidated interest expense, at 100% $130 -$133 million $108.6 millionUnconsolidated interest expense, at 100% $130 - $132 million $130.3 millionConsolidated and Unconsolidated interest expense, at 100% $260 - $265 million $238.9 millionConsolidated interest expense, at beneficial share $118-$121 million $96.6 millionUnconsolidated interest expense, at beneficial share $67 - $69 million $67.3 millionConsolidated and Unconsolidated interest expense, at beneficial share $185 - $190 million $163.9 million

(1) Guidance is current as of February 8, 2018, see "Taubman Centers, Inc. Issues Fourth Quarter and Full Year 2017 Results and Introduces 2018 Guidance- February 8, 2018."

(2) Represents NOI growth including lease cancellation income for the comparable centers that were owned and open, excluding centers impacted bysignificant redevelopment activity, during the entire two year period ending December 31, 2017. In addition, The Mall of San Juan has been excluded from“comparable center” statistics as a result of Hurricane Maria and the expectation that the center’s performance will be impacted for the foreseeable future.

(3) Represents NOI growth excluding lease cancellation income for the comparable centers that were owned and open, excluding centers impacted bysignificant redevelopment activity, during the entire two year period ending December 31, 2017. In addition, The Mall of San Juan has been excluded from“comparable center” statistics as a result of Hurricane Maria and the expectation that the center’s performance will be impacted for the foreseeable future.

(4) The year ended December 31, 2017 statistics have been restated to included comparable centers to 2018.

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Income StatementFor the Three Months Ended December 31, 2017 and 2016(in thousands of dollars)

2017 2016

CONSOLIDATEDBUSINESSES

UNCONSOLIDATEDJOINT

VENTURES (1)CONSOLIDATED

BUSINESSES

UNCONSOLIDATEDJOINT

VENTURES (1)REVENUES:

Minimum rents 89,980 92,794 87,252 90,580

Overage rents 9,569 8,758 10,060 7,193

Expense recoveries 57,240 48,240 55,176 50,393

Management, leasing, and development services 944 1,736

Other 14,451 7,028 11,967 9,405

Total revenues 172,184 156,820 166,191 157,571

EXPENSES:

Maintenance, taxes, utilities, and promotion 45,510 42,479 46,598 44,212

Other operating 29,157 10,504 21,012 13,458

Management, leasing, and development services 459 1,008

General and administrative 9,369 13,405

Restructuring charge 9,785

Costs associated with shareowner activism 2,500 3,000

Interest expense 28,498 33,141 24,440 30,304

Depreciation and amortization 44,848 33,274 38,040 34,022

Total expenses 170,126 119,398 147,503 121,996

Nonoperating income, net (2) 15,481 459 14,212 144

17,539 37,881 32,900 35,719

Income tax benefit (expense) (2) 270 (1,338) (1,928) (413)

36,543 35,306

Equity in income of Unconsolidated Joint Ventures 20,275 19,922

Net income 38,084 50,894

Net income attributable to noncontrolling interests:

Noncontrolling share of income of consolidated joint ventures (2,496) (2,292)

Noncontrolling share of income of TRG (8,975) (12,998)

Distributions to participating securities of TRG (577) (544)

Preferred stock dividends (5,785) (5,785)

Net income attributable to Taubman Centers, Inc. common shareowners 20,251 29,275

SUPPLEMENTAL INFORMATION:

EBITDA - 100% 90,885 104,296 95,380 100,045

EBITDA - outside partners' share (7,435) (49,274) (7,093) (47,138)

Beneficial interest in EBITDA 83,450 55,022 88,287 52,907

Beneficial interest expense (25,494) (17,079) (21,495) (15,665)

Beneficial income tax benefit (expense) - TRG and TCO 317 (554) (1,898) (307)

Beneficial income tax (benefit) expense - TCO (28) 465

Non-real estate depreciation (1,229) (591)

Preferred dividends and distributions (5,785) (5,785)

Funds from Operations attributable to partnership unitholders andparticipating securities of TRG 51,231 37,389 58,983 36,935

STRAIGHTLINE AND PURCHASE ACCOUNTING ADJUSTMENTS:

Net straight-line adjustments to rental revenue, recoveries, and groundrent expense at TRG% 828 705 1,420 303

Country Club Plaza purchase accounting adjustments - minimum rentsincrease at TRG% 39 27

The Mall at Green Hills purchase accounting adjustments - minimum rentsincrease 44 56

(1) With the exception of the Supplemental Information, amounts include 100% of the Unconsolidated Joint Ventures. Amounts are net of intercompany transactions. TheUnconsolidated Joint Ventures are presented at 100% in order to allow for measurement of their performance as a whole, without regard to the Company's ownership interest.(2) During the three months ended December 31, 2017 the Company recognized an $11.6 million gain upon the conversion of the Company's remaining investment in SPG LPUnits to common shares of SPG. During the three months ended December 31, 2016, the Company recognized an $11.1 million gain and $0.5 million of income tax expenseupon the conversion of a portion of the Company's investment in SPG LP Units to common shares of SPG.

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Income StatementFor the Year Ended December 31, 2017 and 2016(in thousands of dollars)

2017 2016

CONSOLIDATEDBUSINESSES

UNCONSOLIDATEDJOINT

VENTURES (1)CONSOLIDATED

BUSINESSES

UNCONSOLIDATEDJOINT

VENTURES (1)REVENUES:

Minimum rents 345,557 344,613 333,325 281,892Overage rents 16,923 25,393 20,020 13,220Expense recoveries 211,625 186,161 202,467 162,652Management, leasing, and development services (2) 4,383 28,059Other 50,677 29,872 28,686 19,152

Total revenues 629,165 586,039 612,557 476,916

EXPENSES:Maintenance, taxes, utilities, and promotion 167,091 158,437 156,506 130,971Other operating 94,513 45,371 78,794 28,384Management, leasing, and development services 2,157 4,042General and administrative 39,018 48,056Restructuring charge 13,848Costs associated with shareowner activism 14,500 3,000Interest expense 108,572 130,339 86,285 103,185Depreciation and amortization 167,806 130,537 138,139 97,859

Total expenses 607,505 464,684 514,822 360,399

Nonoperating income, net (3) 23,828 3,010 22,927 65645,488 124,365 120,662 117,173

Income tax expense (3) (105) (5,837) (2,212) (728)118,528

Gain on disposition, net of tax (4) 3,713122,241 116,445

Equity in income of Unconsolidated Joint Ventures 67,374 69,701Net income 112,757 188,151Net income attributable to noncontrolling interests:

Noncontrolling share of income of consolidated joint ventures (6,775) (8,105)Noncontrolling share of income of TRG (25,277) (47,433)

Distributions to participating securities of TRG (2,300) (2,117)Preferred stock dividends (23,138) (23,138)Net income attributable to Taubman Centers, Inc. common shareowners 55,267 107,358

SUPPLEMENTAL INFORMATION:EBITDA - 100% 321,866 389,685 345,086 318,217EBITDA - outside partners' share (26,315) (184,539) (24,329) (140,208)Beneficial interest in EBITDA 295,551 205,146 320,757 178,009

Beneficial share of gain on disposition (4) (2,814)

Beneficial interest expense (96,630) (67,283) (75,954) (54,674)

Beneficial income tax benefit (expense) - TRG and TCO 29 (2,825) (2,163) (622)

Beneficial income tax (benefit) expense - TCO (315) 446

Non-real estate depreciation (3,596) (2,472)

Preferred dividends and distributions (23,138) (23,138)

Funds from Operations attributable to partnership unitholders and participatingsecurities of TRG 171,901 132,224 217,476 122,713

STRAIGHTLINE AND PURCHASE ACCOUNTING ADJUSTMENTS:

Net straight-line adjustments to rental revenue, recoveries, and ground rentexpense at TRG% 1,261 1,932 2,311 2,316

Country Club Plaza purchase accounting adjustments - minimum rents increaseat TRG% 34 109

The Mall at Green Hills purchase accounting adjustments - minimum rentsincrease 174 223

(1) With the exception of the Supplemental Information, amounts include 100% of the Unconsolidated Joint Ventures. Amounts are net of intercompany transactions. The Unconsolidated JointVentures are presented at 100% in order to allow for measurement of their performance as a whole, without regard to the Company's ownership interest.

(2) The 2016 amount includes the $21.7 million lump sum payment received in May 2016 for the termination of the Company's third party leasing agreement at Crystals due to a change in ownershipin the center.

(3) During the year ended December 31, 2017, the Company recognized an $11.6 million gain upon the conversion of the Company's remaining investment in SPG LP Units to common shares of SPG.During the year ended December 31, 2016, the Company recognized an $11.1 million gain and $0.5 million of income tax expense upon the conversion of a portion of the Company's investment inSPG LP Units to common shares of SPG.(4) During the year ended December 31, 2017, the joint venture that owns the Valencia Place office tower at Country Club Plaza recognized a $4.4 million gain ($2.8 million at TRG's share) and $0.7million of income tax expense ($0.7 million at TRG's share) in connection with the sale of the office tower.

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Changes in Funds from Operations and Earnings per Common ShareFor the Three Months Ended December 31, 2017(all per share amounts on a diluted basis unless otherwise noted; rounded to nearest half penny; amounts may not add due to rounding)

2016 Fourth Quarter Funds from Operations per Common Share $ 1.10

Gain on SPG common stock conversion, net of tax (0.120)

Costs associated with shareowner activism 0.035

2016 Fourth Quarter Funds from Operations per Common Share - Adjusted $ 1.01

Changes - 2017 vs. 2016

Net recoveries from tenants 0.030

Other operating expense (0.010)

General and administrative 0.045

Non-comparable centers (0.060)

Other 0.015

2017 Fourth Quarter Funds from Operations per Common Share - Adjusted $ 1.03

Restructuring charge (0.110)

Costs associated with shareowner activism (0.030)

Gain on SPG common stock conversion 0.135

2017 Fourth Quarter Funds from Operations per Common Share $ 1.02

2016 Fourth Quarter Earnings per Common Share $ 0.48

Changes - 2017 vs. 2016

Change in FFO per common share (0.080)

Depreciation and other (0.070)

2017 Fourth Quarter Earnings per Common Share $ 0.33

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Changes in Funds from Operations and Earnings per Common ShareFor the Year Ended December 31, 2017(all per share amounts on a diluted basis unless otherwise noted; rounded to nearest half penny; amounts may not add due to rounding)

2016 Funds from Operations per Common Share $ 3.91

Gain on SPG common stock conversion, net of tax (0.120)

Costs associated with shareowner activism 0.035

Crystals lump sum payment for termination of leasing agreement (0.250)

2016 Funds from Operations per Common Share - Adjusted $ 3.58

Changes - 2017 vs. 2016

Minimum rents 0.030

Overage rents (0.015)

Net recoveries from tenants 0.030

Lease cancellation income 0.085

Other revenue 0.020

Other operating 0.055

General and administrative 0.105

Non-comparable centers:

Post-closing adjustment (1) and one-time development success fee (0.070)

Other (0.080)

Interest expense (0.020)

Other (0.020)

2017 Funds from Operations per Common Share - Adjusted $ 3.70

Restructuring charge (0.160)

Costs associated with shareowner activism (0.170)

Gain on SPG common stock conversion 0.135

Partial write-off of deferred financing costs (0.005)

2017 Funds from Operations per Common Share $ 3.51

2016 Earnings per Common Share $ 1.77

Changes - 2017 vs. 2016

Change in FFO per common share (0.400)

Depreciation and other (0.460)

2017 Earnings per Common Share $ 0.91

(1) Includes certain post-closing adjustments recognized in 2016 related to the portfolio of centers sold to Starwood.

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Balance Sheet(in thousands of dollars)

As of

Consolidated Balance Sheet of Taubman Centers, Inc.: December 31, 2017 December 31, 2016

Assets:

Properties 4,461,045 4,173,954

Accumulated depreciation and amortization (1,276,916) (1,147,390)

3,184,129 3,026,564

Investment in Unconsolidated Joint Ventures 605,629 604,808

Cash and cash equivalents 42,499 40,603

Restricted cash 2,742 932

Accounts and notes receivable, net 78,566 60,174

Accounts receivable from related parties 1,365 2,103

Deferred charges and other assets 299,662 275,728

4,214,592 4,010,912

Liabilities:

Notes payable, net 3,555,228 3,255,512

Accounts payable and accrued liabilities 307,041 336,536

Distributions in excess of investments in and net income of Unconsolidated Joint Ventures 494,851 480,863

4,357,120 4,072,911

Redeemable noncontrolling interest 7,500 8,704

Equity (Deficit):

Taubman Centers, Inc. Shareowners' Equity:

Series B Non-Participating Convertible Preferred Stock 25 25

Series J Cumulative Redeemable Preferred Stock

Series K Cumulative Redeemable Preferred Stock

Common Stock 608 604

Additional paid-in capital 675,333 657,281

Accumulated other comprehensive income (loss) (6,919) (35,916)

Dividends in excess of net income (646,807) (549,914)

22,240 72,080

Noncontrolling interests:

Noncontrolling interests in consolidated joint ventures (160,359) (155,919)

Noncontrolling interests in partnership equity of TRG (11,909) 13,136

(172,268) (142,783)

(150,028) (70,703)

4,214,592 4,010,912

Certain Balance Sheet InformationConsolidated Amount as of December 31, 2017

(in millions of dollars)

Properties:

Peripheral land 17.3 (1)

Accounts and notes receivable, net:

Straight-line rents and recoveries 33.4

Deferred charges and other assets:

Prepaids and deposits 129.2

590,124 SPG common shares 101.3 (2)

Accounts payable and accrued liabilities

Straight-line ground rent 62.1

Community Development District obligation 47.1 (3)

(1) Valued at historical cost. Peripheral land excludes land associated with construction in process.

(2) Recorded at fair value.

(3) The expense portion of the related payments, which are generally recoverable from tenants, are included in the line item maintenance, taxes,utilities, and promotion in the Company's Income Statement.

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Debt SummaryAs of December 31, 2017(in millions of dollars, amounts may not add due to rounding)

Ownership % Amortizing (A)/ Maturity 100% Beneficial Interest Effective Rate LIBOR RateConsolidated Fixed Rate Debt: (if not 100%) Interest Only (I) Date 12/31/2017 12/31/2017 (a) 12/31/2017 (b) SpreadCherry Creek Shopping Center 50.00% I 6/1/2028 550.0 275.0 3.85%City Creek Center A 8/1/2023 78.7 78.7 4.37%Great Lakes Crossing Outlets A 1/6/2023 203.6 203.6 3.60%The Mall at Short Hills I 10/1/2027 1,000.0 1,000.0 3.48%

1,832.3 1,557.33.64% 3.61%

Consolidated Floating Rate Debt:The Mall at Green Hills I 12/1/2018 (c) 150.0 150.0 2.96% 1.60%International Market Place 93.50% I 8/14/2018 (d) 293.8 (d) 274.7 3.11% 1.75% (d)TRG $65M Revolving Credit Facility I 4/28/2018 19.7 (e) 19.7 2.96% (e) 1.40%TRG $1.1B Revolving Credit Facility I 2/1/2021 (f) 485.0 485.0 2.82% (f) 1.45% (f)TRG $300M Term Loan I 2/1/2022 300.0 300.0 2.96% (g) 1.60% (g)

1,248.5 1,229.42.94% 2.94%

Consolidated Floating Rate Debt Swapped to Fixed: (g)TRG $475M Term Loan I 2/28/2019 475.0 475.0 3.25% (h) 1.60% (h)U.S. Headquarters I 3/1/2024 12.0 12.0 3.49% (i)

487.0 487.03.25% 3.25%

Total Consolidated Deferred Financing Costs, Net (12.5) (11.8)

Total Consolidated 3,555.2 3,261.8Weighted Rate (excluding deferred financing costs) 3.34% 3.30%

Joint Ventures Fixed Rate Debt:Country Club Plaza 50.00% I - until

5/1/20194/1/2026 320.0 160.0 3.85%

International Plaza 50.10% A 12/1/2021 309.5 155.0 4.85%The Mall at Millenia 50.00% I 10/15/2024 350.0 175.0 4.00%The Mall at Millenia 50.00% I 10/15/2024 100.0 50.0 3.75%Starfield Hanam 34.30% I 11/25/2020 292.4 (j) 100.3 2.58% (j)Sunvalley 50.00% A 9/1/2022 172.8 86.4 4.44%Taubman Land Associates 50.00% A 11/1/2022 21.7 10.8 3.84%The Mall at University Town Center 50.00% I - until

12/1/202211/1/2026 280.0 140.0 3.40%

Waterside Shops 50.00% I 4/15/2026 165.0 (k) 82.5 3.86%Westfarms 78.94% A 7/1/2022 289.0 228.2 4.50%

2,300.3 1,188.23.91% 4.01%

Joint Ventures Floating Rate Debt:CityOn.Zhengzhou 49.00% A 12/1/2026 92.5 (l) 45.3 6.37% (l)

92.5 45.36.37% 6.37%

Joint Venture Floating Rate Debt Swapped to Fixed:Fair Oaks 50.00% A 7/13/2018 260.4 130.2 4.10% (m)International Plaza 50.10% A 12/1/2021 165.7 83.0 3.58% (n)Starfield Hanam 34.30% I 11/8/2020 52.1 (o) 17.9 3.12% (o)

478.1 231.13.81% 3.84%

Total Joint Venture Deferred Financing Costs, Net (10.6) (4.8)

Total Joint Venture 2,860.4 1,459.9Weighted Rate (excluding deferred financing costs) 3.98% 4.05%

TRG Beneficial Interest Totals:Fixed Rate Debt 4,132.6 2,745.5

3.79% 3.78%Floating Rate Debt 1,341.0 1,274.7

3.18% 3.06%Floating Rate Swapped to Fixed 965.1 718.1

3.53% 3.44%

Total Deferred Financing Costs, Net (23.1) (16.6)

Total 6,415.6 4,721.6Weighted Rate (excluding deferred 3.63% 3.53%

Weighted Average Maturity Fixed Debt 8.0

Weighted Average Maturity Total Debt 5.8

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Debt Summary (continued)As of December 31, 2017

Beneficial Share of Principal Amortization and Debt Maturities

YearFixed Rate

DebtWeighted

RateFloating Rate

DebtWeighted

Rate

FloatingSwapped to

FixedWeighted

Rate

Total DeferredFinancingCosts, Net Total Debt

Weighted Rate

2018 16.8 4.27% 447.7 3.08% 131.9 4.09% (3.9) 592.5 3.34%

2019 19.4 4.23% 5.6 6.37% 476.8 3.25% (2.4) 499.4 3.32%

2020 121.5 2.87% 6.7 6.37% 19.7 3.16% (2.3) 145.6 3.06%

2021 164.9 4.76% 491.7 2.87% 77.6 3.58% (1.9) 732.3 3.37%

2022 305.1 4.44% 306.7 3.04% (1.3) 610.5 3.73%

2023 252.9 3.81% 5.6 6.37% (1.2) 257.3 3.87%

2024 231.3 3.94% 5.6 6.37% 12.0 3.49% (1.1) 247.8 3.97%

2025 6.5 3.65% 3.4 6.37% (1.0) 8.9 4.57%

2026 352.1 3.68% 1.7 6.37% (0.9) 352.8 3.70%

2028 1,000.0 3.48% (0.6) 999.4 3.48%

2028 275.0 3.85% — 275.0 3.85%

2,745.5 3.78% 1,274.7 3.06% 718.1 3.44% (16.6) 4,721.6 3.53%

Unencumbered Assets

Center Location Ownership %

Consolidated Businesses:

Beverly Center Los Angeles, CA 100% (p)

Dolphin Mall Miami, FL 100% (p)

The Gardens on El Paseo Palm Desert, CA 100% (p)

The Mall of San Juan San Juan, PR 95%

Taubman Prestige Outlets Chesterfield Chesterfield, MO 100%

Twelve Oaks Mall Novi, MI 100% (p)

Unconsolidated Joint Ventures:

Stamford Town Center Stamford, CT 50%

(a) All debt is secured and non-recourse to TRG unless otherwise indicated.

(b) Includes the impact of interest rate swaps that qualify for hedge accounting, if any, but does not include effect of amortization of debt issuance costs, losses on settlement of derivativesused to hedge the refinancing of certain fixed rate debt or interest rate cap premiums, if any.

(c) Two, one-year extension options are available.

(d) $330.9 million construction facility which bears interest at LIBOR + 1.75% and decreases to LIBOR + 1.60% upon achieving certain performance measures. Two, one-year extensionoptions are available. TRG has provided an unconditional guarantee of 100% of the principal balance and all accrued but unpaid interest during the term of the loan.

(e) Rate floats daily at LIBOR plus spread. Letters of credit totaling $4.6 million are also outstanding on facility. The facility is recourse to TRG and secured by an indirect interest in 40%of The Mall at Short Hills.

(f) The unsecured facility bears interest at a range of LIBOR + 1.15% to 1.70% with a facility fee ranging from 0.20% to 0.25% based on the Company's total leverage ratio. Two, six-monthextension options are available.

(g) The $300 million unsecured term loan bears interest at a range of LIBOR + 1.25% to 1.90% based on the Company's total leverage ratio. Beginning in January 2018 through the termof the loan, the LIBOR rate was swapped to a fixed rate of 2.14%, which will result in an effective interest rate in the range of 3.39% to 4.04%.

(h) The $475 million unsecured term loan bears interest at a range of LIBOR + 1.35% to 1.90% based on the Company's total leverage ratio. The LIBOR rate is swapped until maturity toa fixed rate of 1.65%, which results in an effective interest rate in the range of 3.00% to 3.55%.

(i) Debt is swapped to an effective rate of 3.49% until maturity.

(j) 520 billion Korean Won (KRW) ($487.3 million USD equivalent at December 31, 2017) non-recourse construction facility which bears interest at the Korea Development Bank Five-Year Bond Yield plus 1.06% and is fixed upon each draw. A letter of credit totaling $53.2 million USD is outstanding on this facility as security for the Starfield Hanam USD loan, therebyreducing the availability under this facility to $141.7 million USD after considering the amount outstanding.

(k) The Waterside Shops loan is interest-only for the term of the loan. However, if net operating income available for debt service as defined in the loan agreement is less than a certainamount for calendar year 2020, the lender may require the loan to amortize based on a 30-year amortization period retroactive to May 2021.

(l) 834.2 million Renminbi (RMB) ($128.2 million USD equivalent at December 31, 2017) non-recourse construction facility which bears interest at 130% of the RMB People's Bank ofChina base lending rate for a loan term greater than five years. Rate resets in January each year. In January 2018, the rate was reset and continued at 6.37%.

(m) Debt is swapped to an effective rate of 4.10% until April 30, 2018, which is 2.5 months prior to maturity.

(n) Debt is swapped to an effective rate of 3.58% until maturity. TRG has provided a several guarantee of 50.1% of the swap obligations.

(o) $52.1 million USD construction loan which bears interest at three-month LIBOR + 1.60%. The joint venture has entered into a cross-currency interest rate swap to hedge the foreignexchange and interest rate risk associated with this debt since the entity's functional currency is KRW and the loan is in USD. The LIBOR rate plus spread have been swapped untiltwo months prior to maturity to a fixed rate of 3.12%. The foreign exchange rate for the initial exchange, periodic interest payments and final exchange of proceeds has been fixed at1162 USD-KRW. The loan is secured by a $53.2 million standby letter of credit drawn off the Starfield Hanam KRW construction facility (see footnote (j) above).

(p) As of December 31, 2017, the entities that own these centers were guarantors under the $1.1 billion primary unsecured revolving line of credit and both the $475 million and $300million unsecured term loans, and were unencumbered assets. Per the agreements, the Company is required to have a minimum of three eligible unencumbered assets with a minimumunencumbered asset value. Any of the assets may be removed from the unencumbered asset pool and encumbered upon notice to lender, provided that there is no default and therequired covenant calculations are met on a pro forma basis.  If the required covenant calculations are not met, a replacement eligible unencumbered asset would need to be addedto the unencumbered asset pool.

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Capital Spending(in thousands of dollars)

Three Months Ended December 31, 2017

ConsolidatedBusinesses

at 100%

ConsolidatedBusinesses

at TRG%

UnconsolidatedJoint Ventures

at 100%

UnconsolidatedJoint Ventures

at TRG%Total at TRG%

Capital Additions to Properties (1):

New development projects (2)

U.S. 5,770 5,434

Asia (3) (8,123) (3,814)

Existing Centers:

Projects with incremental GLA or anchor replacement 16,032 16,032

Projects with no incremental GLA and other 49,227 49,221 2,784 1,478

Mall tenant allowances 9,972 9,362 3,934 2,258

Asset replacement costs recoverable from tenants 4,790 4,495 4,853 2,624

Corporate office improvements and equipment and other 2,043 2,043

87,834 86,587 3,448 2,546

Capitalized Leasing Costs (1) 3,914 3,782 831 453 4,235

Year Ended December 31, 2017

ConsolidatedBusinesses

at 100%

ConsolidatedBusinesses

at TRG%

UnconsolidatedJoint Ventures

at 100%

UnconsolidatedJoint Ventures

at TRG%Total at TRG%

Capital Additions to Properties (1):

New development projects (2)

U.S. 37,682 35,672

Asia (3) 16,201 8,193

Existing Centers:

Projects with incremental GLA or anchor replacement 33,263 33,263

Projects with no incremental GLA and other 194,087 191,541 9,505 4,878

Mall tenant allowances 19,524 18,173 12,013 6,401

Asset replacement costs recoverable from tenants 13,031 12,601 12,147 6,463

Corporate office improvements and equipment and other 23,128 23,128

320,715 314,378 49,866 25,935

Capitalized Leasing Costs (1) 7,981 7,582 4,775 2,523 10,105

Construction Work in Process (4) 389,124 387,711 4,088 (5) 2,186 (5) 389,897

Capitalized Interest - Capital Additions Classification (BalanceSheet) 11,863 11,787 995 (5) 995 (5) 12,782

Capitalized Interest - Expense Reduction (Income Statement) (6) 12,402 12,326 456 456 12,782

(1) Costs are net of intercompany profits and are computed on an accrual basis.

(2) Includes costs related to International Market Place, CityOn.Xi'an, CityOn.Zhengzhou, and Starfield Hanam.

(3) Asia balances exclude net increases to total project costs due to changes in exchange rates during the period.

(4) Interest is being capitalized on $356 million of construction work in process.

(5) The Company capitalizes interest costs incurred in funding its equity contributions to development projects accounted for as Unconsolidated Joint Ventures. The capitalizedinterest cost is included in the Company's basis in its investment in Unconsolidated Joint Ventures.

(6) Interest costs incurred by the Company's Consolidated Businesses in funding equity contributions to Unconsolidated Joint Venture development projects reduce consolidatedinterest expense in the Company's Statement of Operations and Comprehensive Income.

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Owned CentersAs of December 31, 2017

Sq. Ft. of GLA/ Year Opened/ YearCenter Anchors Mall GLA Expanded Acquired Ownership %Consolidated Businesses: Beverly Center Bloomingdale's, Macy's 793,000 1982 100% Los Angeles, CA 469,000 Cherry Creek Shopping Center Macy's, Neiman Marcus, Nordstrom 1,025,000 1990/1998/ 50% Denver, CO 623,000 2015 City Creek Center Macy's, Nordstrom 622,000 2012 100% Salt Lake City, UT 341,000 Dolphin Mall Bass Pro Shops Outdoor World, Bloomingdale's Outlet, Burlington 1,429,000 2001/2007/ 100% Miami, FL Coat Factory, Cobb Theatres, Dave & Buster's, Marshalls, Neiman 702,000 2015

Marcus-Last Call, Polo Ralph Lauren Factory Store. Saks Off 5th The Gardens on El Paseo Saks Fifth Avenue 236,000 1998/2010 2011 100% Palm Desert, CA 186,000 Great Lakes Crossing Outlets AMC Theatres, Bass Pro Shops Outdoor World, Burlington Coat 1,355,000 (1) 1998 100% Auburn Hills, MI Factory, Legoland, Lord & Taylor Outlet, Neiman Marcus-Last Call, 533,000 (Detroit Metropolitan Area) Round 1 Bowling and Amusement, Saks Off 5th, Sea Life The Mall at Green Hills Dillard's, Macy's, Nordstrom 851,000 (2) 1955/2011 2011 100% Nashville, TN 339,000 International Market Place Saks Fifth Avenue 343,000 2016 93.5% Waikiki, Honolulu, HI 263,000 The Mall of San Juan Nordstrom, Saks Fifth Avenue 626,000 2015 95% San Juan, PR 388,000 The Mall at Short Hills Bloomingdale's, Macy's, 1,453,000 (3) 1980/1994/ 100% Short Hills, NJ Neiman Marcus, Nordstrom 546,000 1995 /2011 Taubman Prestige Outlets Chesterfield Polo Ralph Lauren Factory Store, 299,000 2013 100% Chesterfield, MO Restoration Hardware Outlet 299,000 (St. Louis Metropolitan Area) Twelve Oaks Mall JCPenney, Lord & Taylor, Macy's, 1,518,000 1977/1978/ 100% Novi, MI Nordstrom, Sears 549,000 2007/2008 (Detroit Metropolitan Area)

Total GLA 10,550,000 Total Mall GLA 5,238,000 TRG % of Total GLA 9,984,000 TRG % of Total Mall GLA 4,890,000

Unconsolidated Joint Ventures: CityOn.Xi'an Wangfujing 996,000 2016 50% Xi'an, China 694,000 CityOn.Zhengzhou G-Super, Wangfujing 917,000 2017 49% Zhengzhou, China 619,000 Country Club Plaza 1,001,000 (4) 1922/1977/ 2016 50% Kansas City, MO 781,000 2000/2015 Fair Oaks JCPenney, Lord & Taylor, 1,559,000 (5) 1980/1987/ 50% Fairfax, VA Macy's (two locations), Sears 563,000 1988/2000 (Washington, DC Metropolitan Area)

International Plaza Dillard's, Life Time Athletic, Neiman Marcus, Nordstrom 1,253,000 2001/2015 50.1% Tampa, FL 617,000 The Mall at Millenia Bloomingdale’s, Macy's, Neiman Marcus 1,122,000 2002 50% Orlando, FL 522,000 Stamford Town Center Macy's, Saks Off 5th 761,000 1982/2007 50% Stamford, CT 438,000 Starfield Hanam PK Market, Shinsegae, Traders 1,701,000 2016 34.3% Hanam, South Korea 971,000 Sunvalley JCPenney, Macy's (two locations), Sears 1,320,000 1967/1981 2002 50% Concord, CA 481,000 (San Francisco Metropolitan Area)

The Mall at University Town Center Dillard's, Macy's, Saks Fifth Avenue 861,000 2014 50% Sarasota, FL 440,000 Waterside Shops Nordstrom, Saks Fifth Avenue 341,000 1992/2006/ 2003 50% Naples, FL 201,000 2008 Westfarms JCPenney, Lord & Taylor, Macy's (two locations), Nordstrom 1,271,000 1974/1983/ 79% West Hartford, CT 501,000 1997 Total GLA 13,103,000 Total Mall GLA 6,828,000 TRG % of Total GLA 6,645,000 TRG % of Total Mall GLA 3,401,000 Grand Total GLA 23,653,000 Grand Total Mall GLA 12,066,000 TRG % of Total GLA 16,629,000 TRG % of Total Mall GLA 8,291,000

(1) GLA includes the Neiman Marcus-Last Call store, which in August 2017 elected to terminate its lease. The lease termination became effective January 31, 2018.

(2) GLA does not reflect the incremental GLA to be added in connection with the redevelopment project currently ongoing at the center.

(3) GLA includes the former Saks Fifth Avenue store, which closed in September 2016. This space is currently under redevelopment.

(4) GLA includes 220,000 square feet of office property.

(5) GLA includes approximately 100,000 square feet of GLA related to the second level of the Sears space which was vacated in the fourth quarter of 2016.

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Redevelopments

Center NameIncremental

GLA (1)Completion

Date (1)Anticipated

Investment (1)Capitalized

Cost-To-Date

ExpectedAfter-TaxReturn at

Stabilization(1)

Project with Incremental GLA

The Mall at Green Hills - Nashville, TN 170,000 sq. ft. 2019 $200 million $105.4 million 6.5%-7.5%

Renovation and expansion

Project with no Incremental GLA

Beverly Center - Los Angeles, CA N/A Holiday 2018 $500 million (2) $280.0 million 3%-4% (3)

Renovation

(1) Anticipated completion date, incremental GLA, anticipated investment, and stabilized returns for redevelopments are subject to adjustment as a result of factors inherentin the redevelopment process, some of which may not be under the direct control of the Company. Refer to the Company's filings with the Securities and Exchange Commissionon Form 10-K and Form 10-Q for other risk factors.

(2) Approximately 20% of the anticipated cost relates to deferred and prospective customary capital upgrades and improvements.

(3) Projected returns are calculated using the cash flow differential between two scenarios; a full renovation and a non-renovation scenario. The Company is also expecting a10-year unlevered IRR in excess of 10% on the project, using a terminal year of 2025.

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Anchors in Owned PortfolioAs of December 31, 2017

(Excludes Value and Outlet Centers; GLA in thousands of square feet)

Number

Name of Stores GLA % of GLA

Macy's

Bloomingdale's (1) 3 641

Macy's 12 2,539

Macy's Men's Store/Furniture Gallery 3 489

18 3,669 17.8%

Nordstrom 9 1,302 6.3%

Hudson's Bay Company

Lord & Taylor (2) 3 392

Saks Fifth Avenue 5 375

Saks Off 5th (3) 1 78

9 845 4.1%

JCPenney 4 745 3.6%

Dillard's 3 607 (4) 3.0%

Sears 3 569 (5) 2.8%

Wangfujing 2 565 2.7%

Shinsegae

PK Market 1 63

Shinsegae 1 485

2 548 2.7%

Neiman Marcus (6) 4 402 2.0%

Traders 1 183 0.9%

Life Time Athletic 1 56 0.3%

G-Super 1 36 0.2%

Total 57 9,527 46.3% (7)

Major Tenants in Owned PortfolioAs of December 31, 2017

TenantNumberof Stores

SquareFootage

% MallGLA

Forever 21 (Forever 21, XXI Forever) 17 513,277 4.3%

The Gap (Gap, Gap Kids, Baby Gap, Banana Republic, Old Navy, Athleta, and others) 51 441,484 3.7%

H&M 21 420,946 3.5%

Limited Brands (Bath & Body Works/White Barn Candle, Pink, Victoria's Secret, and others) 40 263,179 2.2%

Williams-Sonoma (Williams-Sonoma, Pottery Barn, Pottery Barn Kids, and others) 29 229,690 1.9%

Urban Outfitters (Anthropologie, Free People, Urban Outfitters) 28 219,985 1.8%

Ascena Retail Group (Ann Taylor, Ann Taylor Loft, Justice, and others) 42 209,757 1.7%

Abercrombie & Fitch (Abercrombie & Fitch, Hollister, and others) 26 193,366 1.6%

Inditex (Zara, Zara Home, Massimo Dutti, Bershka, and others) 19 180,989 1.5%

Foot Locker (Foot Locker, Lady Foot Locker, Champs Sports, Foot Action USA, and others) 37 173,970 1.4%

(1) Excludes one Bloomingdale's Outlet store at a value center.

(2) Excludes one Lord & Taylor Outlet store at an outlet center.

(3) Excludes two Saks Off 5th stores at value and outlet centers.

(4) GLA reflects the opening of the new Dillard's store at The Mall at Green Hills in March 2017 in connection with the redevelopment project currently ongoing at the center.

(5) Excludes the GLA related to the second level of the Sears space at Fair Oaks, which was vacated in the fourth quarter of 2016.

(6) Excludes two Neiman Marcus-Last Call stores at value and outlet centers. The Neiman Marcus-Last Call lease at Great Lakes Crossing Outlets was terminated effective January 31, 2018.

(7) Percentages may not add due to rounding.

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Components of Other Income, Other Operating Expense, and Nonoperating Income, NetFor the Three Months Ended December 31, 2017 and 2016(in thousands of dollars)

Three Months Ended December 31, 2017 Three Months Ended December 31, 2016

ConsolidatedBusinesses

at 100%

UnconsolidatedJoint Ventures

at 100%

ConsolidatedBusinesses

at 100%

UnconsolidatedJoint Ventures

at 100%

Other Income

Shopping center and other operational revenues 11,450 6,261 9,752 8,098

Lease cancellation income 3,001 767 2,215 1,307

14,451 7,028 11,967 9,405

Other Operating Expense

Shopping center and other operational expenses 19,916 9,761 17,718 13,349

Provision for tenant bad debts 3,413 497 (684) (114)

Domestic and non-U.S. pre-development costs 2,247 1,338

Ground rent 3,581 246 2,640 223

29,157 10,504 21,012 13,458

Nonoperating Income, Net

Gains on SPG common stock conversions 11,613 11,069

Insurance recoveries - The Mall of San Juan 1,101

Dividend income 1,091 974

Interest income 1,722 480 2,078 231

Other nonoperating income (expense) (46) (21) 91 (87)

15,481 459 14,212 144

Three Months Ended December 31, 2017 Three Months Ended December 31, 2016

ConsolidatedBusinesses

at TRG%

UnconsolidatedJoint Ventures

at TRG%

ConsolidatedBusinesses

at TRG%

UnconsolidatedJoint Ventures

at TRG%

Other Income

Shopping center and other operational revenues 8,793 3,161 8,115 3,664

Lease cancellation income 2,766 384 1,842 657

11,559 3,545 9,957 4,321

Other Operating Expense

Shopping center and other operational expenses 17,201 4,404 15,852 5,564

Provision for tenant bad debts 3,225 226 (637) (57)

Domestic and non-U.S. pre-development costs 2,247 1,338

Ground rent 3,278 123 2,392 113

25,951 4,753 18,945 5,620

Nonoperating Income, Net

Gains on SPG common stock conversions 11,613 11,069

Insurance recoveries - The Mall of San Juan 1,046

Dividend income 1,091 974

Interest income 1,694 217 2,076 107

Other nonoperating income (expense) (42) 2 90 242

15,402 219 14,209 349

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Components of Other Income, Other Operating Expense, and Nonoperating Income, NetFor the Year Ended December 31, 2017 and 2016

(in thousands of dollars)

Year Ended December 31, 2017 Year Ended December 31, 2016

ConsolidatedBusinesses

at 100%

UnconsolidatedJoint Ventures

at 100%

ConsolidatedBusinesses

at 100%

UnconsolidatedJoint Ventures

at 100%

Other Income

Shopping center and other operational revenues 40,902 24,046 24,914 16,508

Lease cancellation income 9,775 5,826 3,772 2,644

50,677 29,872 28,686 19,152

Other Operating Expense

Shopping center and other operational expenses 64,499 40,735 60,388 26,106

Provision for tenant bad debts 11,025 3,643 4,047 1,355

Domestic and non-U.S. pre-development costs 5,629 5,031

Ground rent 13,360 993 9,328 923

94,513 45,371 78,794 28,384

Nonoperating Income, Net

Gains on SPG common stock conversions 11,613 11,069

Insurance recoveries - The Mall of San Juan 1,101

Gains on sales of peripheral land 945 1,668 1,828

Dividend income 4,219 3,836

Interest income 5,888 1,363 5,745 743

Other nonoperating income (expense) 62 (21) 449 (87)

23,828 3,010 22,927 656

Year Ended December 31, 2017 Year Ended December 31, 2016

ConsolidatedBusinesses

at TRG%

UnconsolidatedJoint Ventures

at TRG%

ConsolidatedBusinesses

at TRG%

UnconsolidatedJoint Ventures

at TRG%

Other Income

Shopping center and other operational revenues 30,453 11,166 22,026 8,060

Lease cancellation income 9,051 3,009 3,312 1,326

39,504 14,175 25,338 9,386

Other Operating Expense

Shopping center and other operational expenses 54,269 17,398 56,116 12,255

Provision for tenant bad debts 10,510 1,859 3,811 740

Domestic and non-U.S. pre-development costs 5,629 5,031

Ground rent 12,152 497 8,392 463

82,560 19,754 73,350 13,458

Nonoperating Income, Net

Gains on SPG common stock conversions 11,613 11,069

Insurance recoveries - The Mall of San Juan 1,046

Gains on sales of peripheral land 945 1,008 1,828

Dividend income 4,219 3,836

Interest income 5,789 649 5,734 365

Other nonoperating income (expense) 62 2 448 242

23,674 1,659 22,915 607

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Use of Non-GAAP Financial Measures

Within this supplemental information package, the Company uses certain non-GAAP operating measures, including EBITDA, beneficial interest in EBITDA,Net Operating Income, and Funds from Operations. These measures are reconciled to the most comparable GAAP measures. Additional information asto the use of these measures are as follows.

EBITDA represents earnings before interest, income taxes, and depreciation and amortization of the Operating Partnership's consolidated andunconsolidated businesses. Beneficial interest in EBITDA represents the Operating Partnership’s share of the earnings before interest, income taxes, anddepreciation and amortization of its consolidated and unconsolidated businesses. The Company believes EBITDA and beneficial interest in EBITDA provideuseful indicators of operating performance, as it is customary in the real estate and shopping center business to evaluate the performance of propertieson a basis unaffected by capital structure.

The Company uses Net Operating Income (NOI) as an alternative measure to evaluate the operating performance of centers, both on individual andstabilized portfolio bases. The Company defines NOI as property-level operating revenues (includes rental income excluding straight-line adjustments ofminimum rent) less maintenance, taxes, utilities, promotion, ground rent (including straight-line adjustments), and other property operating expenses.Since NOI excludes general and administrative expenses, pre-development charges, interest income and expense, depreciation and amortization,impairment charges, restructuring charges, and gains from peripheral land and property dispositions, it provides a performance measure that, whencompared period over period, reflects the revenues and expenses most directly associated with owning and operating rental properties, as well as theimpact on their operations from trends in tenant sales, occupancy and rental rates, and operating costs. The Company also uses NOI excluding leasecancellation income as an alternative measure because this income may vary significantly from period to period, which can affect comparability and trendanalysis. The Company generally provides separate projections for expected comparable center NOI growth and lease cancellation income. Comparablecenters are generally defined as centers that were owned and open for the entire current and preceding period presented, excluding centers impactedby significant redevelopment activity. In addition, The Mall of San Juan has been excluded from “comparable center” statistics as a result of HurricaneMaria and the expectation that the center’s performance will be impacted for the foreseeable future.

The National Association of Real Estate Investment Trusts (NAREIT) defines Funds from Operations (FFO) as net income (computed in accordance withGenerally Accepted Accounting Principles (GAAP)), excluding gains (or losses) from extraordinary items and sales of properties and impairment write-downs of depreciable real estate, plus real estate related depreciation and after adjustments for unconsolidated partnerships and joint ventures. TheCompany believes that FFO is a useful supplemental measure of operating performance for REITs. Historical cost accounting for real estate assets implicitlyassumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with marketconditions, the Company and most industry investors and analysts have considered presentations of operating results that exclude historical costdepreciation to be useful in evaluating the operating performance of REITs. The Company primarily uses FFO in measuring performance and in formulatingcorporate goals and compensation.

The Company may also present adjusted versions of NOI, beneficial interest in EBITDA, and FFO when used by management to evaluate operatingperformance when certain significant items have impacted results that affect comparability with prior or future periods due to the nature or amounts ofthese items. The Company believes the disclosure of the adjusted items is similarly useful to investors and others to understand management's view oncomparability of such measures between periods. For the three months and year ended December 31, 2017, FFO and EBITDA were adjusted to excludea restructuring charge, costs incurred associated with shareowner activism, and a gain recognized upon the conversion of the Company's remaininginvestment in SPG LP Units to common shares of SPG. For the year ended December 31, 2017, FFO was also adjusted for a charge recognized in connectionwith the partial write-off of deferred financing costs related to an amendment of the Company's primary unsecured revolving line of credit in February2017. For the year ended December 31, 2017, EBITDA was also adjusted to exclude a gain recognized in connection with the sale of the Valencia Placeoffice tower at Country Club Plaza. For the three months and year ended December 31, 2016, FFO and EBITDA were adjusted to exclude costs incurredassociated with shareowner activism and a gain, net of tax recognized upon the conversion of a portion of the Company's investment in SPG LP Units tocommon shares of SPG. For the year ended December 31, 2016, FFO and EBITDA were also adjusted to exclude the lump sum payment received in May2016 for the termination of the Company's third party leasing agreement at The Shops at Crystals (Crystals) due to a change in ownership of the center.

These non-GAAP measures as presented by the Company are not necessarily comparable to similarly titled measures used by other REITs due to the factthat not all REITs use the same definitions. These measures should not be considered alternatives to net income or as an indicator of the Company'soperating performance. Additionally, these measures do not represent cash flows from operating, investing, or financing activities as defined by GAAP.

Also within this supplemental information package, the Company provides its beneficial interest in certain financial information of its UnconsolidatedJoint Ventures. This beneficial information is derived as the Company’s ownership interest in the investee multiplied by the specific financial statementitem being presented. Investors are cautioned that deriving the Company’s beneficial interest in this manner may not accurately depict the legal andeconomic implications of holding a non-controlling interest in the investee.

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Reconciliation of Net Income Attributable to Taubman Centers, Inc. Common Shareowners to Funds From Operationsand Adjusted Funds From OperationsFor the Three Months Ended December 31, 2017 and 2016

(in thousands of dollars except as noted; may not add or recalculate due to rounding)

2017 2016

DollarsShares/Units

PerShare/Unit Dollars

Shares/Units

Per Share/Unit

Net income attributable to TCO common shareowners - basic 20,251 60,737,750 0.33 29,275 60,427,603 0.48

Add impact of share-based compensation 40 367,344 86 565,777

Net income attributable to TCO common shareowners - diluted 20,291 61,105,094 0.33 29,361 60,993,380 0.48

Add depreciation of TCO's additional basis 1,617 0.03 1,617 0.03

Add (less) TCO's additional income tax (benefit) expense (28) (0.00) 465 0.01

Net income attributable to TCO common shareowners, excluding step-up depreciation and additional income tax (benefit) expense 21,880 61,105,094 0.36 31,443 60,993,380 0.52

Add noncontrolling share of income of TRG 8,975 24,955,434 12,998 25,046,278

Add distributions to participating securities of TRG 577 871,262 544 871,262

Net income attributable to partnership unitholders and participating securities of TRG 31,432 86,931,790 0.36 44,985 86,910,920 0.52

Add (less) depreciation and amortization:

Consolidated businesses at 100% 44,848 0.52 38,040 0.44

Depreciation of TCO's additional basis (1,617) (0.02) (1,617) (0.02)

Noncontrolling partners in consolidated joint ventures (1,888) (0.02) (1,826) (0.02)

Share of Unconsolidated Joint Ventures 17,114 0.20 17,013 0.20

Non-real estate depreciation (1,229) (0.01) (591) (0.01)

Less impact of share-based compensation (40) (0.00) (86) (0.00)

Funds from Operations attributable to partnership unitholders and participating securities of TRG 88,620 86,931,790 1.02 95,918 86,910,920 1.10

TCO's average ownership percentage of TRG - basic (1) 70.9% 70.7%

Funds from Operations attributable to TCO's common shareowners, excluding additional income tax benefit (expense) (1) 62,812 1.02 67,811 1.10

Add (less) TCO's additional income tax benefit (expense) 28 0.00 (465) 0.00

Funds from Operations attributable to TCO's common shareowners (1) 62,840 1.02 67,346 1.10

Funds from Operations attributable to partnership unitholders and participating securities of TRG 88,620 86,931,790 1.02 95,918 86,910,920 1.10

Restructuring charge 9,785 0.10

Costs associated with shareowner activism 2,500 0.03 3,000 0.03

Gains on SPG common stock conversions (11,613) (0.13) (11,069) (0.13)

Adjusted Funds from Operations attributable to partnership unitholders and participating securities of TRG 89,292 86,931,790 1.03 87,849 86,910,920 1.01

TCO's average ownership percentage of TRG - basic (2) 70.9% 70.7%

Adjusted Funds from Operations attributable to TCO's common shareowners, excluding additional income tax benefit (2) 63,289 1.03 62,107 1.01

Add TCO's additional income tax benefit 1 0.00

Adjusted Funds from Operations attributable to TCO's common shareowners (2) 63,289 1.03 62,108 1.01

(1) For the three months ended December 31, 2017, Funds from Operations attributable to TCO's common shareowners was $61,946 using TCO's diluted average ownershippercentage of TRG of 69.9%. For the three months ended December 31, 2016, Funds from Operations attributable to TCO's common shareowners was $66,225 using TCO'sdiluted average ownership percentage of TRG of 69.5%.

(2) For the three months ended December 31, 2017, Adjusted Funds from Operations attributable to TCO's common shareowners was $62,387 using TCO's diluted averageownership percentage of TRG of 69.9%. For the three months ended December 31, 2016, Adjusted Funds from Operations attributable to TCO's common shareowners was$61,081 using TCO's diluted average ownership percentage of TRG of 69.5%.

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Reconciliation of Net Income Attributable to Taubman Centers, Inc. Common Shareowners to Funds From Operationsand Adjusted Funds From OperationsFor the Year Ended December 31, 2017 and 2016

(in thousands of dollars except as noted; may not add or recalculate due to rounding)

2017 2016

DollarsShares/Units

PerShare/Unit Dollars

Shares/Units

PerShare/Unit

Net income attributable to TCO common shareowners - basic 55,267 60,675,129 0.91 107,358 60,363,416 1.78

Add impact of share-based compensation 114 365,366 257 466,139

Net income attributable to TCO common shareowners - diluted 55,381 61,040,495 0.91 107,615 60,829,555 1.77

Add depreciation of TCO's additional basis 6,468 0.11 6,468 0.11

Add (less) TCO's additional income tax (benefit) expense (315) (0.01) 446 0.01

Net income attributable to TCO common shareowners, excluding step-up depreciation and additional income tax (benefit) expense 61,534 61,040,495 1.02 114,529 60,829,555 1.88

Add noncontrolling share of income of TRG 25,277 24,965,157 47,433 25,055,654

Add distributions to participating securities of TRG 2,300 871,262 2,117 871,262

Net income attributable to partnership unitholders and participating securities of TRG 89,111 86,876,914 1.03 164,079 86,756,471 1.89

Add (less) depreciation and amortization:

Consolidated businesses at 100% 167,806 1.93 138,139 1.59

Depreciation of TCO's additional basis (6,468) (0.07) (6,468) (0.07)

Noncontrolling partners in consolidated joint ventures (7,464) (0.09) (5,844) (0.07)

Share of Unconsolidated Joint Ventures 66,933 0.77 53,012 0.61

Non-real estate depreciation (3,596) (0.04) (2,472) (0.03)

Less beneficial share of gain on disposition, net of tax (2,083) (0.02)

Less impact of share-based compensation (114) (0.00) (257) (0.00)

Funds from Operations attributable to partnership unitholders and participating securities of TRG 304,125 86,876,914 3.50 340,189 86,756,471 3.92

TCO's average ownership percentage of TRG - basic (1) 70.8% 70.7%

Funds from Operations attributable to TCO's common shareowners, excluding additional income tax benefit (expense) (1) 215,471 3.50 240,409 3.92

Add (less) TCO's additional income tax benefit (expense) 315 0.00 (446) (0.01)

Funds from Operations attributable to TCO's common shareowners (1) 215,786 3.51 239,963 3.91

Funds from Operations attributable to partnership unitholders and participating securities of TRG 304,125 86,876,914 3.50 340,189 86,756,471 3.92

Restructuring charge 13,848 0.16

Costs associated with shareowner activism 14,500 0.17 3,000 0.03

Partial write-off of deferred financing costs 413 0.00

Gains on SPG common stock conversions (11,613) (0.13) (11,069) (0.13)

Crystals lump sum payment for termination of leasing agreement (21,702) (0.25)

Adjusted Funds from Operations attributable to partnership unitholders and participating securities of TRG 321,273 86,876,914 3.70 310,418 86,756,471 3.58

TCO's average ownership percentage of TRG - basic (2) 70.8% 70.7%

Adjusted Funds from Operations attributable to TCO's common shareowners, excluding additional income tax benefit (2) 227,619 3.70 219,370 3.58

Add TCO's additional income tax benefit 20 0.00

Adjusted Funds from Operations attributable to TCO's common shareowners (2) 227,619 3.70 219,390 3.58

(1) For the year ended December 31, 2017, Funds from Operations attributable to TCO's common shareowners was $212,715 using TCO's diluted average ownership percentageof TRG of 69.8%. For the year ended December 31, 2016, Funds from Operations attributable to TCO's common shareowners was $236,257 using TCO's diluted average ownershippercentage of TRG of 69.6%.

(2) For the year ended December 31, 2017, Adjusted Funds from Operations attributable to TCO's common shareowners was $224,374 using TCO's diluted average ownershippercentage of TRG of 69.8%. For the year ended December 31, 2016, Adjusted Funds from Operations attributable to TCO's common shareowners was $215,994 using TCO'sdiluted average ownership percentage of TRG of 69.6%.

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Reconciliation of Net Income to Beneficial Interest in EBITDA and Adjusted Beneficial Interest in EBITDAFor the Periods Ended December 31, 2017 and 2016(in thousands of dollars; amounts attributable to TCO may not recalculate due to rounding)

Three Months Ended Year Ended2017 2016 2017 2016

Net income 38,084 50,894 112,757 188,151

Add (less) depreciation and amortization:

Consolidated businesses at 100% 44,848 38,040 167,806 138,139

Noncontrolling partners in consolidated joint ventures (1,888) (1,826) (7,464) (5,844)

Share of Unconsolidated Joint Ventures 17,114 17,013 66,933 53,012

Add (less) interest expense and income tax expense (benefit):

Interest expense:

Consolidated businesses at 100% 28,498 24,440 108,572 86,285

Noncontrolling partners in consolidated joint ventures (3,004) (2,945) (11,942) (10,331)

Share of Unconsolidated Joint Ventures 17,079 15,665 67,283 54,674

Income tax expense (benefit):

Consolidated businesses at 100% (270) 1,462 105 1,746

Noncontrolling partners in consolidated joint ventures (47) (30) (134) (49)

Share of Unconsolidated Joint Ventures 554 307 2,825 622

Income tax expense on SPG common stock conversion 466 466

Share of income tax expense on disposition 731

Less noncontrolling share of income of consolidated joint ventures (2,496) (2,292) (6,775) (8,105)

Beneficial interest in EBITDA 138,472 141,194 500,697 498,766

TCO's average ownership percentage of TRG - basic 70.9% 70.7% 70.8% 70.7%

Beneficial interest in EBITDA attributable to TCO 98,146 99,814 354,740 352,465

Beneficial interest in EBITDA 138,472 141,194 500,697 498,766

Add (less):

Restructuring charge 9,785 13,848

Costs associated with shareowner activism 2,500 3,000 14,500 3,000

Beneficial share of gain on disposition (2,814)

Gains on SPG common stock conversions (11,613) (11,069) (11,613) (11,069)

Crystals lump sum payment for termination of leasing agreement (21,702)

Adjusted Beneficial interest in EBITDA 139,144 133,125 514,618 468,995

TCO's average ownership percentage of TRG - basic 70.9% 70.7% 70.8% 70.7%

Adjusted Beneficial interest in EBITDA attributable to TCO 98,623 94,116 364,603 331,434

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Reconciliation of Net Income to Net Operating Income (NOI)For the Three Months Ended December 31, 2017, 2016, and 2015

(in thousands of dollars)

Three Months Ended Three Months Ended

2017 2016 2016 2015

Net income 38,084 50,894 50,894 46,595

Add (less) depreciation and amortization:

Consolidated businesses at 100% 44,848 38,040 38,040 28,780

Noncontrolling partners in consolidated joint ventures (1,888) (1,826) (1,826) (1,085)

Share of Unconsolidated Joint Ventures 17,114 17,013 17,013 9,133

Add (less) interest expense and income tax expense (benefit):

Interest expense:

Consolidated businesses at 100% 28,498 24,440 24,440 18,590

Noncontrolling partners in consolidated joint ventures (3,004) (2,945) (2,945) (1,871)

Share of Unconsolidated Joint Ventures 17,079 15,665 15,665 11,365

Income tax expense (benefit):

Consolidated businesses at 100% (270) 1,462 1,462 138

Noncontrolling partners in consolidated joint ventures (47) (30)

Share of Unconsolidated Joint Ventures 554 307 307

Income tax expense on SPG common stock conversion 466 466

Less noncontrolling share of income of consolidated joint ventures (2,496) (2,292) (2,292) (3,179)

Add EBITDA attributable to outside partners:

EBITDA attributable to noncontrolling partners in consolidated joint ventures 7,435 7,093 7,093 6,135

EBITDA attributable to outside partners in Unconsolidated Joint Ventures 49,274 47,138 47,138 32,969

Add beneficial interest in UJV impairment charge - Miami Worldcenter 11,754

EBITDA at 100% 195,181 195,425 195,455 159,324

Add (less) items excluded from shopping center NOI:

General and administrative expenses 9,369 13,405 13,405 13,132

Management, leasing, and development services, net (485) (728) (728) (1,697)

Restructuring charge 9,785

Costs associated with shareowner activism 2,500 3,000 3,000

Straight-line of rents (2,861) (1,908) (1,908) (1,417)

Gains on SPG common stock conversions (11,613) (11,069) (11,069)

Insurance recoveries - The Mall of San Juan (1,101)

Dividend income (1,091) (974) (974) (944)

Interest income (2,202) (2,309) (2,309) (403)

Other nonoperating expense (income) 67 (4) (4) (192)

Unallocated operating expenses and other 12,443 12,574 12,574 12,319

NOI at 100% - total portfolio 209,992 207,412 207,442 180,122

Less NOI of non-comparable centers (40,408) (1) (37,984) (2) (37,984) (2) (11,238) (3)

NOI at 100% - comparable centers 169,584 169,428 169,458 168,884

NOI - growth % 0.1% 0.3%

NOI at 100% - comparable centers 169,584 169,428 169,428 168,884

Lease cancellation income (2,699) (3,325) (3,325) (2,667)

NOI at 100% - comparable centers excluding lease cancellation income 166,885 166,103 166,103 166,217

NOI at 100% excluding lease cancellation income - growth % 0.5% -0.1%

(1) Includes Beverly Center, CityOn.Xi'an, CityOn.Zhengzhou, Country Club Plaza, International Market Place, The Mall of San Juan, and Starfield Hanam.

(2) Includes Beverly Center, CityOn.Xi'an, Country Club Plaza, International Market Place, The Mall of San Juan, and Starfield Hanam.

(3) Includes Beverly Center and The Mall of San Juan.

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Reconciliation of Net Income to Net Operating Income (NOI)For the Years Ended December 31, 2017, 2016, and 2015(in thousands of dollars) Year Ended Year Ended

2017 2016 2016 2015

Net income 112,757 188,151 188,151 192,557

Add (less) depreciation and amortization:

Consolidated businesses at 100% 167,806 138,139 138,139 106,355

Noncontrolling partners in consolidated joint ventures (7,464) (5,844) (5,844) (3,681)

Share of Unconsolidated Joint Ventures 66,933 53,012 53,012 34,361

Add (less) interest expense and income tax expense (benefit):

Interest expense:

Consolidated businesses at 100% 108,572 86,285 86,285 63,041

Noncontrolling partners in consolidated joint ventures (11,942) (10,331) (10,331) (6,965)

Share of Unconsolidated Joint Ventures 67,283 54,674 54,674 45,564

Income tax expense (benefit):

Consolidated businesses at 100% 105 1,746 1,746 2,248

Noncontrolling partners in consolidated joint ventures (134) (49) (49)

Share of Unconsolidated Joint Ventures 2,825 622 622

Income tax expense on SPG common stock conversion 466 466

Share of income tax expense on disposition 731

Reduction of income tax expense on dispositions of International Plaza, Arizona Mills, and Oyster Bay (437)

Less noncontrolling share of income of consolidated joint ventures (6,775) (8,105) (8,105) (11,222)

Add EBITDA attributable to outside partners:

EBITDA attributable to noncontrolling partners in consolidated joint ventures 26,315 24,329 24,329 21,868

EBITDA attributable to outside partners in Unconsolidated Joint Ventures 184,539 140,208 140,208 116,024

Add beneficial interest in UJV impairment charge - Miami Worldcenter 11,754

EBITDA at 100% 711,551 663,303 663,303 571,467

Add (less) items excluded from shopping center NOI:

General and administrative expenses 39,018 48,056 48,056 45,727

Management, leasing, and development services, net (2,226) (24,017) (1) (24,017) (1) (7,263)

Restructuring charge 13,848

Costs associated with shareowner activism 14,500 3,000 3,000

Straight-line of rents (7,698) (7,620) (7,620) (5,211)

Gains on SPG common stock conversions (11,613) (11,069) (11,069)

Insurance recoveries - The Mall of San Juan (1,101)

Gain on disposition (4,445)

Gains on sales of peripheral land (2,613) (1,828) (1,828)

Dividend income (4,219) (3,836) (3,836) (3,570)

Interest income (7,251) (6,488) (6,488) (1,999)

Other nonoperating expense (income) (41) (362) (362) 314

Unallocated operating expenses and other 39,256 44,576 44,576 36,651

NOI at 100% - total portfolio 776,966 703,715 703,715 636,116

Less NOI of non-comparable centers (152,970) (2) (90,229) (3) (90,229) (3) (42,862) (4)

NOI at 100% - comparable centers 623,996 613,486 613,486 593,254

NOI - growth % 1.7% 3.4%

NOI at 100% - comparable centers 623,996 613,486 613,486 593,254

Lease cancellation income (12,669) (6,200) (6,200) (8,865)

NOI at 100% - comparable centers excluding lease cancellation income 611,327 607,286 607,286 584,389

NOI at 100% excluding lease cancellation income - growth % 0.7% 3.9%

(1) Amount includes the lump sum payment of $21.7 million received in May 2016 for the termination of the Company's third party leasing agreement at Crystals due to achange in ownership of the center.

(2) Includes Beverly Center, CityOn.Xi'an, CityOn.Zhengzhou, Country Club Plaza, International Market Place, The Mall of San Juan, and Starfield Hanam.

(3) Includes Beverly Center, CityOn.Xi'an, Country Club Plaza, International Market Place, The Mall of San Juan, Starfield Hanam, and certain post-closing adjustments relatingto the portfolio of centers sold to Starwood.

(4) Includes Beverly Center and The Mall of San Juan.

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Operating Statistics GlossaryAs of December 31, 2017

Statistics are presented at 100% in order to allow for measurement of their performance as a whole, without regard to the Company's ownership interest.Peripheral tenants are excluded from all statistics unless otherwise noted.

Terms:

Gross Leasable Area (GLA) - total gross retail space.

Gross Leasable Occupied Area (GLOA) - total gross occupied retail space.

Net Operating Income (NOI) - property level operating revenues (rental income excluding straight-line adjustments of minimum rent) less maintenance,taxes, utilities, ground rent (including straight-line adjustments), and other property operating expenses for comparable centers.

Retail Merchandising Units (RMUs) - special purpose retail sales units located in common areas leased on a temporary basis by tenants and owned bythe Company.

Temporary In-Line Tenants (TILs) - tenants leasing mall retail space for a period of less than or equal to one year.

Value and Outlet Center Anchors - tenants greater than 20,000 square feet at value and outlet centers.

Statistic Description Includes Excludes

Ending Occupancy GLOA of all centers as of the last day of thereporting period divided by GLA of all centers asof the last day of the reporting period

Value and Outlet CenterAnchors, theaters, and TILs

Regional mall anchors

Leased Space Total percentage of leased GLA of all centers withexecuted leases as of the last day of the reportingperiod

Value and Outlet CenterAnchors, theaters, and TILs

Regional mall anchors

Average Rent psf Annualized minimum rents for the periodassociated with the mall tenants divided by theaverage GLOA for the period associated with themall tenants

All anchors (value and outlet center andregional mall), TILs and RMUs

Opening Rent psf Weighted average of the annual rents psf forspaces opening in the period (12-months trailing)

Tenant renewals, relocations,expansions/downsizings

All anchors (value and outlet center andregional mall),TILs and spaces greaterthan or equal to 10,000 sf

Sq Ft of GLAOpened

Total sq ft of centers’ spaces opening in thereporting period (12-months trailing)

Tenant renewals, relocations,expansions/downsizings

All anchors (value and outlet center andregional mall),TILs and spaces greaterthan or equal to 10,000 sf

Closing Rent psf Weighted average of the annual rents psf forspaces closing in the period (12-months trailing)

Tenant renewals, relocations,expansions/downsizings

All anchors (value and outlet center andregional mall),TILs and spaces greaterthan or equal to 10,000 sf

Sq Ft of GLAClosed

Total sq ft of centers’ spaces closing in thereporting period (12-months trailing)

Tenant renewals, relocations,expansions/downsizings

All anchors (value and outlet center andregional mall),TILs and spaces greaterthan or equal to 10,000 sf

Releasing Spreadpsf

Opening rent psf less closing rent psf (12-monthstrailing)

Tenant renewals, relocations,expansions/downsizings

All anchors (value and outlet center andregional mall),TILs and spaces greaterthan or equal to 10,000 sf

Mall Tenant Sales Total sales of centers in the reporting period TILs and RMUs All anchors (value and outlet center andregional mall)

Sales psf Total sales of centers in the reporting perioddivided by the associated GLOA

RMUs All anchors (value and outlet center andregional mall),TILs, non-comparablecenters and spaces greater than or equalto 10,000 sf

Occupancy Costsas a % of Sales

The sum of minimum rents, overage rents, CAMrecovery and tax recovery for the period dividedby the reported sales for the same tenant spaces

All anchors (value and outlet center andregional mall) and most peripheraltenants

Growth in NOI Percentage change in Net Operating Income(NOI) for the period over the same period fromthe prior year

ComparableCenters

Centers that were owned and open for the entirecurrent and preceding period presented,excluding centers impacted by significantredevelopment activity. In addition, The Mall ofSan Juan has been excluded from “comparablecenter” statistics as a result of Hurricane Mariaand the expectation that the center’sperformance will be impacted for theforeseeable future.