Robert Taubman is relieved that the retail industry seems to be stabilizing after more than a year of bankruptcies and store closures, but the mall executive said the industry is not “out of the woods” just yet.The president, chairman and chief executive officer of Taubman Centers Inc. said during a call with analysts discussing full-year financial results that he’s seen “encouraging” improvement over the last six to nine months, coinciding with the company’s occupancy for 2017 rising 1 percent to 94.8 percent. But he didn’t get too specific about how 2018 will shake out.“When you look at the closures and the bankruptcies that occurred at, really the fourth quarter of 2016 through today, we had about 360,000 square feet of unexpected closures and bankruptcies and we’ve now leased a little over 300,000 square feet of that space,” Taubman said. “So we’re getting through that, sort of that difficult period and we think the environment is firming up, stabilizing. It’s too early to say that we’re completely out of the woods, but we feel good about it.”Nevertheless, 2017 produced mixed results. Rent per square foot also rose 1 percent, to $61.66, and comparable tenant sales per square foot rose 2.3 percent to an average of $810. But the company still ended the year with net income under standardized accounting principles of $55.38 million, compared to $107.61 million at the end of 2016. Funds from operations fell 10.2 percent to $3.51 per diluted common share.These declines are partially due to restructuring costs over the year, including staff cuts. During the fourth quarter, the company brought in “an outside consultant to help us in our continuous efforts to operate more efficiently and cost effectively without sacrificing the quality of our operations,” according to Simon Leopold, Taubman chief financial officer.The company also lowered its long-term guidance on net operating income to up to $75 million by 2020, from a previous guidance of $80 million by the end of this year, but the ceo said current “momentum,” marked by new tenant deals with the likes of Amazon and Kendra Scott and a slew of high-end restaurants and concept eateries, is expected to hold.Taubman also said the company’s emerging business in Asia is growing at a clip and that he’s looking to enter South Korea, with some help from interested “blue-chip capital” investors, in the not too distant future.“We’re ready to move forward on the next evolution of this business,” Taubman said. “Our goal today is to create a platform that finances itself by bringing new capital partners and potentially adding additional operating partners where appropriate to create a less capital-intensive business that can grow the asset base with improved returns on equity, and we think that’s the right next step now.”He added that more specifics will likely come this year. As for difficulties the company faced with its property in Puerto Rico, which was affected by successive record hurricanes during fall, things are looking up there, too. While marquee tenants Nordstrom and Saks Fifth Avenue are still closed due to damages sustained to the property, a majority of other tenants were opened by year-end.Taubman also said that Saks has now begun to repair and renovate its store there, after the mall operator filed a lawsuit in the territory, accusing the retailer of refusing to even start repairs. However, it’s still unknown when Saks will reopen, while Nordstrom is expected to be open by summer.When an analyst alluded to the prospect of going private after 25 years of trading, pointing to the value of Taubman’s assets and how little “fun” having to answer investor questions is, the ceo gave no sign of an immediate change.“We’ve been very successful as a public company for many, many years...it’s been a good voyage, a really good journey,” Taubman said. “Obviously, sometimes answering questions isn’t always easy, especially when you’re in the development business and there’s a lot of volatility... but we’ve been able to make good choices over the years. Some haven’t worked out, but most have. And we’re pleased with where we are right now. We think things are recovering and are stabilizing and we’re looking forward... and we believe that we’re going to grow value for shareholders and deliver on those promises over the coming years.”For More, See:Taubman Centers Posts Mixed Q3, Lowers Full-Year GuidanceVictoria’s Secret, Urban Outfitters See Sales GainsCanada Goose Boosts Sales, Taps Jimmy Choo Exec but Disappoints Wall Street
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