UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Form 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended: September 30, 2012
Commission File No. 1-11530

Taubman Centers, Inc.
(Exact name of registrant as specified in its charter)

	
				
Michigan	 	38-2033632	
(State or other jurisdiction of
incorporation or organization)
 	 	(I.R.S. Employer Identification No.)	
200 East Long Lake Road, Suite 300, Bloomfield Hills, Michigan	 	48304-2324	
(Address of principal executive offices)	 	(Zip code)
 	
(248) 258-6800	
(Registrant's telephone number, including area code)
 	 	 	 	
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

x  Yes  o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

x  Yes  o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer,” “accelerated filer" and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer  x    Accelerated Filer  o   Non-Accelerated Filer  o    Smaller Reporting Company o
(Do not check if a smaller reporting company)

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o  Yes x  No

As of October 26, 2012 there were outstanding 61,698,846 shares of the Company's common stock, par value $0.01 per share.

Table of Contents

TAUBMAN CENTERS, INC.
CONTENTS

	

PART I – FINANCIAL INFORMATION	
Item 1.	Financial Statements (Unaudited):	 	
 	Consolidated Balance Sheet – September 30, 2012 and December 31, 2011	2	
 	Consolidated Statement of Operations and Comprehensive Income – Three and Nine Months Ended September 30, 2012 and 2011	3	
 	Consolidated Statement of Changes in Equity – Nine Months Ended September 30, 2012 and 2011	4	
 	Consolidated Statement of Cash Flows – Nine Months Ended September 30, 2012 and 2011	5	
 	Notes to Consolidated Financial Statements	6	
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	29	
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	53	
Item 4.	Controls and Procedures	53	

PART II – OTHER INFORMATION  	
Item 1.	Legal Proceedings	54	
Item 1A.	Risk Factors	54	
Item 6.	Exhibits	55	
 	 	 	
SIGNATURES	 	

1

Table of Contents

TAUBMAN CENTERS, INC.
CONSOLIDATED BALANCE SHEET
(in thousands, except share data)

	
								
 	September 30
2012	 	December 31 2011	
Assets:	 	 	 	
Properties	$	4,202,022		 	$	4,020,954		
Accumulated depreciation and amortization	(1,361,527	)	 	(1,271,943	)	
 	$	2,840,495		 	$	2,749,011		
Investment in Unconsolidated Joint Ventures (Note 4)	122,151		 	75,582		
Cash and cash equivalents	29,296		 	24,033		
Restricted cash (Notes 2 and 5)	4,611		 	295,318		
Accounts and notes receivable, less allowance for doubtful accounts of $4,308 and $3,303 in 2012 and 2011	42,135		 	59,990		
Accounts receivable from related parties	1,817		 	1,418		
Deferred charges and other assets (Note 2)	112,234		 	131,440		
Total Assets	$	3,152,739		 	$	3,336,792		
 	 	 	 	
Liabilities:	 	 	 	
Mortgage notes payable (Note 5)	$	2,654,687		 	$	2,864,135		
Installment notes (Notes 2 and 5)			 	281,467		
Accounts payable and accrued liabilities	267,147		 	255,146		
Distributions in excess of investments in and net income of Unconsolidated Joint Ventures (Note 4)	317,031		 	192,257		
 	$	3,238,865		 	$	3,593,005		
Commitments and contingencies (Notes 2, 5, 7, 8, 9, and 10)			 			
 	 	 	 	
Redeemable noncontrolling interests (Note 7)	$	81,434		 	$	84,235		
 	 	 	 	
Equity:	 		 	 		
Taubman Centers, Inc. Shareowners’ Equity:	 		 	 		
Series B Non-Participating Convertible Preferred Stock, $0.001 par and liquidation value, 40,000,000 shares authorized, 26,403,158 and 26,461,958 shares issued and outstanding at September 30, 2012 and December 31, 2011	$	26		 	$	26		
Series G Cumulative Redeemable Preferred Stock, 4,000,000 shares authorized, no par, $100 million liquidation preference, 4,000,000 shares issued and outstanding at December 31, 2011. No shares outstanding or authorized at September 30, 2012 (Note 6)	 		 	 		
Series H Cumulative Redeemable Preferred Stock, 3,480,000 shares authorized, no par, $87 million liquidation preference, 3,480,000 shares issued and outstanding at December 31, 2011. No shares outstanding or authorized at September 30, 2012 (Note 6)	 		 	 		
Series J Cumulative Redeemable Preferred Stock, 7,700,000 shares authorized, no par, $192.5 million liquidation preference, 7,700,000 shares issued and outstanding at September 30, 2012 (Note 6)	 	 	 	
Common Stock, $0.01 par value, 250,000,000 shares authorized, 61,698,618 and 58,022,475 shares issued and outstanding at September 30, 2012 and December 31, 2011	617		 	580		
Additional paid-in capital	826,594		 	673,923		
Accumulated other comprehensive loss	(31,407	)	 	(27,613	)	
Dividends in excess of net income	(890,426	)	 	(863,040	)	
 	$	(94,596	)	 	$	(216,124	)	
Noncontrolling interests (Note 7)	(72,964	)	 	(124,324	)	
 	$	(167,560	)	 	$	(340,448	)	
Total Liabilities and Equity	$	3,152,739		 	$	3,336,792		

See notes to consolidated financial statements.

2

Table of Contents

TAUBMAN CENTERS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
(in thousands, except share data)

																
 	Three Months Ended
September 30	 	Nine Months Ended
September 30	
 	2012	 	2011	 	2012	 	2011	
Revenues:	 	 	 	 	 	 	 	
Minimum rents	$	99,564		 	$	84,929		 	$	292,248		 	$	251,569		
Percentage rents	6,315		 	4,737		 	12,767		 	9,591		
Expense recoveries	66,633		 	57,231		 	185,325		 	162,936		
Management, leasing, and development services	10,234		 	5,083		 	27,441		 	15,423		
Other	6,793		 	6,575		 	20,487		 	18,077		
 	$	189,539		 	$	158,555		 	$	538,268		 	$	457,596		
Expenses:	 		 	 	 	 	 	 	
Maintenance, taxes, utilities, and promotion	$	53,253		 	$	45,200		 	$	143,854		 	$	129,712		
Other operating	16,128		 	15,255		 	52,360		 	48,138		
Management, leasing, and development services	6,165		 	2,889		 	21,674		 	7,492		
General and administrative	9,571		 	7,709		 	28,021		 	22,998		
Acquisition costs	 	 	1,681		 	 	 	1,681		
Interest expense	34,943		 	30,064		 	109,146		 	89,529		
Depreciation and amortization	36,414		 	33,054		 	109,083		 	99,503		
 	$	156,474		 	$	135,852		 	$	464,138		 	$	399,053		
Nonoperating income	56		 	96		 	251		 	857		
Income from continuing operations before income tax expense and equity in income of Unconsolidated Joint Ventures	$	33,121		 	$	22,799		 	$	74,381		 	$	59,400		
Income tax expense (Note 3)	(732	)	 	(208	)	 	(1,438	)	 	(413	)	
Equity in income of Unconsolidated Joint Ventures (Note 4)	12,672		 	10,958		 	35,743		 	31,990		
Income from continuing operations	$	45,061		 	$	33,549		 	$	108,686		 	$	90,977		
Loss from discontinued operations (Note 2)			 	(11,681	)	 	 	 	(24,375	)	
Net income	$	45,061		 	$	21,868		 	$	108,686		 	$	66,602		
Income from continuing operations attributable to noncontrolling interests (Note 7)	(12,295	)	 	(12,906	)	 	(33,893	)	 	(34,455	)	
Loss from discontinued operations attributable to noncontrolling interests (Note 7)			 	3,539		 			 	7,493		
Net income attributable to Taubman Centers, Inc.	$	32,766		 	$	12,501		 	$	74,793		 	$	39,640		
Distributions to participating securities of TRG (Note 9)	(403	)	 	(382	)	 	(1,209	)	 	(1,144	)	
Preferred stock dividends (Note 6)	(10,663	)	 	(3,658	)	 	(17,980	)	 	(10,975	)	
Net income attributable to Taubman Centers, Inc. common shareowners	$	21,700			$	8,461			$	55,604			$	27,521		
 	 	 	 	 	 	 	 	
Net income	$	45,061		 	$	21,868		 	$	108,686		 	$	66,602		
Other comprehensive income:	 		 	 	 	 	 	 	
Unrealized loss on interest rate instruments and other	(1,822	)	 	(19,253	)	 	(6,260	)	 	(19,591	)	
Reclassification adjustment for amounts recognized in net income	151		 	245		 	641		 	970		
 	$	(1,671	)	 	$	(19,008	)	 	$	(5,619	)	 	$	(18,621	)	
Comprehensive income	$	43,390		 	$	2,860		 	$	103,067		 	$	47,981		
Comprehensive income attributable to noncontrolling interests	(11,834	)	 	(3,210	)	 	(32,111	)	 	(20,981	)	
Comprehensive income (loss) attributable to Taubman Centers, Inc.	$	31,556		 	$	(350	)	 	$	70,956		 	$	27,000		
 	 	 	 	 	 	 	 	
Basic earnings per common share (Note 11):	 	 	 	 	 	 	 	
Continuing operations	$	0.36			$	0.29			$	0.94		 	$	0.79		
Discontinued operations	 		(0.14	)		 	 	(0.30	)	
Total basic earnings per common share	$	0.36			$	0.15			$	0.94			$	0.49		
 	 	 	 	 	 	 	 	
Diluted earnings per common share (Note 11):	 	 	 	 	 	 	 	
Continuing operations	$	0.35			$	0.28			$	0.92		 	$	0.77		
Discontinued operations	 		(0.14	)		 	 	(0.29	)	
Total diluted earnings per common share	$	0.35			$	0.14			$	0.92			$	0.48		
 	 	 	 	 	 	 	 	
Cash dividends declared per common share	$	0.4625		 	$	0.4375		 	$	1.3875		 	$	1.3125		
 	 	 	 	 	 	 	 	
Weighted average number of common shares outstanding – basic	60,571,612			57,890,006			59,207,828			56,554,268		

See notes to consolidated financial statements.

3

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TAUBMAN CENTERS, INC.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011
(in thousands, except share data)

	
																																		
 	Taubman Centers, Inc. Shareowners’ Equity	 	 	 	 	
 	Preferred Stock	 	Common Stock	 	Paid-In Capital	 	Accumulated Other Comprehensive Income (Loss)	 	Dividends in Excess of Net Income	 	Non-Redeemable Noncontrolling Interests	 	Total Equity	
 	Shares	 	Amount	 	Shares	 	Amount	 		 		 		 		 		
Balance, January 1, 2011	33,713,126		 	$	26		 	54,696,054		 	$	547		 	$	589,881		 	$	(14,925	)	 	$	(939,290	)	 	$	(164,150	)	 	$	(527,911	)	
Issuance of common stock, net of offering costs	 	 	 	 	2,012,500		 	20		 	111,936		 	 	 	 	 	 	 	111,956		
Issuance of stock pursuant to Continuing Offer (Notes 9 and 10)	(1,092,690	)	 	(1	)	 	1,092,766		 	11		 	(10	)	 			 	 		 			 			
Share-based compensation under employee and director benefit plans (Note 9)	 		 	 		 	90,017		 	1		 	5,704		 	 		 	 		 	 		 	5,705		
Adjustments of noncontrolling interests (Note 7)	 	 	 	 	 	 	 	 	(40,773	)	 	490		 	 	 	40,283		 			
Contributions from noncontrolling interests (excludes $473 of contributions from redeemable noncontrolling interests) (Note 7)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	31,417		 	31,417		
Dividend equivalents (Note 9)	 		 	 		 	 		 	 		 	 		 	 		 	(82	)	 	 	 	(82	)	
Dividends and distributions	 		 	 		 	 		 	 		 	 		 	 		 	(86,392	)	 	(51,033	)	 	(137,425	)	
Net income (excludes $473 of net loss attributable to redeemable noncontrolling interests) (Note 7)	 		 	 		 	 		 	 		 	 		 	 		 	39,640		 	27,435		 	67,075		
Other comprehensive income (Note 8):	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		
Unrealized loss on interest rate instruments and other	 		 	 		 	 		 	 		 	 		 	(13,315	)	 	 		 	(6,276	)	 	(19,591	)	
Reclassification adjustment for amounts recognized in net income	 		 	 		 	 		 	 		 	 		 	675		 	 		 	295		 	970		
Balance, September 30, 2011	32,620,436		 	$	25		 	57,891,337		 	$	579		 	$	666,738		 	$	(27,075	)	 	$	(986,124	)	 	$	(122,029	)	 	$	(467,886	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance, January 1, 2012	33,941,958		 	$	26		 	58,022,475		 	$	580		 	$	673,923		 	$	(27,613	)	 	$	(863,040	)	 	$	(124,324	)	 	$	(340,448	)	
Issuance of common stock, net of offering costs (Note 6)	 	 	 	 	2,875,000		 	29		 	208,910		 	 	 	 	 	 	 	208,939		
Issuance of stock pursuant to Continuing Offer (Notes 9 and 10)	(56,900	)	 			 	56,902		 	1		 	(1	)	 	 	 	 		 	 	 	 		
Issuance of Series J Preferred Stock, net of offering costs (Note 6)	7,700,000		 	 	 	 	 	 	 	186,215		 	 	 	 	 	 	 	186,215		
Redemptions of Series G and H Preferred Stock (Note 6)	(7,480,000	)	 	 	 	 	 	 	 	(180,588	)	 	 	 	 	 	 	 	(180,588	)	
Share-based compensation under employee and director benefit plans (Note 9)	 		 	 		 	744,241		 	7		 	(504	)	 	 		 	 		 	 		 	(497	)	
Tax impact of share-based compensation (Note 3)	 	 	 	 	 	 	 	 	766		 	 	 	 	 	 	 	766		
Adjustments of noncontrolling interests (Note 7)	(1,900	)	 	 	 	 	 	 	 	(62,127	)	 	43		 	 	 	61,499		 	(585	)	
Contributions from noncontrolling interests (excludes $231 of contributions from redeemable noncontrolling interests) (Note 7)	 		 	 		 	 		 	 		 	 		 	 		 	 		 	3,924		 	3,924		
Dividend equivalents (Note 9)	 		 	 		 	 		 	 		 	 		 	 		 	(103	)	 	 		 	(103	)	
Dividends and distributions (excludes $1,846 of distributions attributable to redeemable noncontrolling interests) (Note 7)	 		 	 		 	 		 	 		 	 		 	 		 	(102,076	)	 	(47,840	)	 	(149,916	)	
Net income (excludes $1,584 of net loss attributable to redeemable noncontrolling interests) (Note 7)	 		 	 		 	 		 	 		 	 		 	 		 	74,793		 	35,477		 	110,270		
Other comprehensive income (Note 8):	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		
Unrealized loss on interest rate instruments and other (excludes $82 of other comprehensive loss attributable to redeemable noncontrolling interests) (Note 7)	 		 	 		 	 		 	 		 	 		 	(4,286	)	 	 		 	(1,892	)	 	(6,178	)	
Reclassification adjustment for amounts recognized in net income	 		 	 		 	 		 	 		 	 		 	449		 	 		 	192		 	641		
Balance, September 30, 2012	34,103,158		 	$	26		 	61,698,618		 	$	617		 	$	826,594		 	$	(31,407	)	 	$	(890,426	)	 	$	(72,964	)	 	$	(167,560	)	

See notes to consolidated financial statements.

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Table of Contents

TAUBMAN CENTERS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)

								
 	Nine Months Ended
September 30	
 	2012	 	2011	
Cash Flows From Operating Activities:	 	 	 	
Net income	$	108,686		 	$	66,602		
Adjustments to reconcile net income to net cash provided by operating activities:	 		 	 		
Depreciation and amortization - continuing operations	109,083		 	99,503		
Depreciation and amortization - discontinued operations	 	 	9,030		
Provision for bad debts	1,974		 	5,262		
Gain on sale of land			 	(519	)	
Other	8,786		 	10,055		
Increase (decrease) in cash attributable to changes in assets and liabilities:	 		 	 		
Receivables, restricted cash, deferred charges, and other assets	(678	)	 	(4,211	)	
Accounts payable and other liabilities	17,089		 	9,902		
Net Cash Provided By Operating Activities	$	244,940		 	$	195,624		
 	 	 	 	
Cash Flows From Investing Activities:	 		 	 		
Additions to properties	$	(201,916	)	 	$	(54,052	)	
Proceeds from sale of land			 	3,728		
Repayments of notes receivable	5,802		 	1,167		
Release of restricted cash	289,389		 	 	
Loan to TCBL Inc. (Note 2)	 	 	(10,180	)	
Contributions to Unconsolidated Joint Ventures	(2,656	)	 	(653	)	
Investments in Asia Unconsolidated Joint Ventures (Note 2)	(46,254	)	 	(20,882	)	
Distributions from Unconsolidated Joint Ventures in excess of income	145,383		 	20,509		
Net Cash Provided By (Used In) Investing Activities	$	189,748		 	$	(60,363	)	
 	 	 	 	
Cash Flows From Financing Activities:	 		 	 		
Debt payments	$	(204,693	)	 	$	(129,016	)	
Repayment of installment notes	(281,467	)	 	 	
Debt issuance costs			 	(8,278	)	
Issuance of common stock, net of offering costs	208,939		 	111,956		
Issuance of common stock and/or partnership units in connection with incentive plans	(10,118	)	 	(2,071	)	
Issuance of Series J Preferred Stock, net of offering costs	186,215		 	 	
Redemptions of Series G and H Preferred Stock	(187,000	)	 	 	
Distributions to noncontrolling interests	(49,686	)	 	(51,033	)	
Distributions to participating securities of TRG	(1,209	)	 	(1,144	)	
Contributions from noncontrolling interests	4,155		 	31,890		
Cash dividends to preferred shareowners	(11,568	)	 	(10,975	)	
Cash dividends to common shareowners	(82,887	)	 	(74,219	)	
Other	(106	)	 	(77	)	
Net Cash Used In Financing Activities	$	(429,425	)	 	$	(132,967	)	
 	 	 	 	
Net Increase In Cash and Cash Equivalents	$	5,263		 	$	2,294		
 	 	 	 	
Cash and Cash Equivalents at Beginning of Period	24,033		 	19,291		
 	 	 	 	
Cash and Cash Equivalents at End of Period	$	29,296		 	$	21,585		

See notes to consolidated financial statements.

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Table of Contents
TAUBMAN CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

		
Note 1 -	Interim Financial Statements	

General

Taubman Centers, Inc. (the Company or TCO) is a Michigan corporation that operates as a self-administered and self-managed real estate investment trust (REIT). The Taubman Realty Group Limited Partnership (the Operating Partnership or TRG) is a majority-owned partnership subsidiary of TCO that owns direct or indirect interests in all of the Company’s 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 the ownership, management, leasing, acquisition, disposition, development, and expansion of regional and super-regional retail shopping centers and interests therein. The Company’s owned portfolio as of September 30, 2012 included 24 urban and suburban shopping centers in 12 states.

Taubman Properties Asia LLC and its subsidiaries (Taubman Asia), which is the platform for the Company’s expansion into China and South Korea, is headquartered in Hong Kong.

The unaudited interim financial statements should be read in conjunction with the audited financial statements and related notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2011 . In the opinion of management, all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the financial statements for the interim periods have been made. The results of interim periods are not necessarily indicative of the results for a full year.

Dollar amounts presented in tables within the notes to the financial statements are stated in thousands, except share data or as otherwise noted. Certain reclassifications have been made to prior year amounts to conform with current year classifications. Income statement amounts for properties disposed of have been reclassified to discontinued operations. In addition, certain income statement related disclosures in the accompanying footnotes exclude amounts that have been reclassified to discontinued operations.

Consolidation

The consolidated financial statements of the Company include all accounts of the Company, the Operating Partnership, and its consolidated subsidiaries, including The Taubman Company LLC (the Manager) and Taubman Asia. All intercompany transactions have been eliminated. The entities included in these consolidated financial statements are separate legal entities and maintain records and books of account separate from any other entity. However, inclusion of these separate entities in the consolidated financial statements does not mean that the assets and credit of each of these legal entities are available to satisfy the debts or other obligations of any other such legal entity included in the consolidated financial statements.

Investments in entities not controlled but over which the Company may exercise significant influence (Unconsolidated Joint Ventures or UJVs) are accounted for under the equity method. The Company has evaluated its investments in the Unconsolidated Joint Ventures under guidance for determining whether an entity is a variable interest entity and has concluded that the ventures are not variable interest entities. Accordingly, the Company accounts for its interests in these entities under general accounting standards for investments in real estate ventures (including guidance for determining effective control of a limited partnership or similar entity). The Company’s partners or other owners in these Unconsolidated Joint Ventures have substantive participating rights including approval rights over annual operating budgets, capital spending, financing, admission of new partners/members, or sale of the properties and the Company has concluded that the equity method of accounting is appropriate for these interests. Specifically, the Company’s 79% investment in Westfarms is through a general partnership in which the other general partners have approval rights over annual operating budgets, capital spending, refinancing, or sale of the property.

Ownership

In addition to the Company’s common stock, there are two classes of preferred stock outstanding (Series B and J) as of September 30, 2012 . Dividends on the 6.5% Series J Cumulative Redeemable Preferred Stock (Series J Preferred Stock) are cumulative and are paid on the last day of each calendar quarter. The Company owns corresponding Series J Preferred Equity interests in the Operating Partnership that entitle the Company to income and distributions (in the form of guaranteed payments) in amounts equal to the dividends payable on the Company’s Series J Preferred Stock. See "Note 6 - Equity Transactions" for further details on the issuance of Series J Preferred Stock and redemptions of Series G Cumulative Redeemable Preferred Stock (Series G Preferred Stock) and Series H Cumulative Redeemable Preferred Stock (Series H Preferred Stock).

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TAUBMAN CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company also is obligated to issue to partners in the Operating Partnership other than the Company, upon subscription, one share of nonparticipating Series B Preferred Stock per each Operating Partnership unit . The Series B Preferred Stock entitles its holders to one vote per share on all matters submitted to the Company’s shareowners and votes together with the common stock on all matters as a single class. The holders of Series B Preferred Stock are not entitled to dividends or earnings. The Series B Preferred Stock is convertible into the Company’s common stock at a ratio of 14,000 shares of Series B Preferred Stock for one share of common stock .

Outstanding voting securities of the Company at September 30, 2012 consisted of 26,403,158 shares of Series B Preferred Stock and 61,698,618 shares of common stock.

The Operating Partnership

At September 30, 2012 , the Operating Partnership’s equity included one class of preferred equity (Series J Preferred Equity) and the net equity of the partnership unitholders. Net income and distributions of the Operating Partnership are allocable first to the preferred equity interests, and the remaining amounts to the general and limited partners in the Operating Partnership in accordance with their percentage ownership. The Series J Preferred Equity is owned by the Company and is eliminated in consolidation. As part of the Company's redemption of the Series G and Series H Preferred Stock (Note 6), the Operating Partnership's corresponding classes of Series G and Series H Preferred Equity interests were redeemed. These classes of preferred equity were previously owned by the Company and eliminated in consolidation.

The Company's ownership in the Operating Partnership at September 30, 2012 consisted of a 70% managing general partnership interest, as well as the Series J Preferred Equity interests. The Company's average ownership percentage in the Operating Partnership was 69% for the nine months ended September 30, 2012 and 2011 . At September 30, 2012 , the Operating Partnership had 88,120,226 partnership units outstanding, of which the Company owned 61,698,618 units.

Note 2 -	Acquisitions, Dispositions, and Development	

Acquisitions

The Mall at Green Hills, The Gardens on El Paseo and El Paseo Village

In December 2011, the Company acquired The Mall at Green Hills in Nashville, Tennessee, and The Gardens on El Paseo and El Paseo Village in Palm Desert, California from affiliates of Davis Street Properties, LLC. The consideration for the properties was $560 million , excluding transaction costs. The consideration consisted of the assumption of $206 million of debt, $281.5 million in installment notes, and the issuance of 1.3 million of Operating Partnership units. The 1.3 million Operating Partnership units issued were determined based on a value of $55 per unit, which approximated the fair value due to restrictions on sale of these Operating Partnership units. See Note 7 for features of the Operating Partnership units. The installment notes bore interest at 3.125% and were paid in full in February 2012. As of December 31, 2011, the installment notes were secured by restricted cash funded by borrowings under the Company's revolving lines of credit, which was classified within Restricted Cash on the Consolidated Balance Sheet. For each Operating Partnership unit issued, a share of Series B Preferred Stock (Note 10) was also issued.

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TAUBMAN CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the preliminary allocation of the purchase price to the identifiable assets acquired and liabilities assumed at the dates of acquisition.

					
 	 	Allocation of purchase price	
Properties:	 	
 	Land	$	74,200		
 	Buildings, improvements, and equipment	468,936		
 	Total additions to properties	$	543,136		
Deferred charges and other assets:	 	
 	In-place leases	29,831		
 	Total assets acquired	$	572,967		
 	 	 	
Accounts payable and accrued liabilities:	 	
 	Below market rents	$	(3,377	)	
Mortgage notes payable:	 	
 	Premium for above market interest rates	(9,590	)	
 	Total liabilities acquired	$	(12,967	)	
 	Net assets acquired	$	560,000		

TCBL

In December 2011, Taubman Asia acquired a 90% controlling interest in a Beijing-based retail real estate consultancy company in Mainland China. The new company is named Taubman TCBL and the total consideration for the transaction was $23.7 million . Taubman Asia paid $11.5 million in cash and credited the noncontrolling owners with $11.9 million of capital in the newly formed company. The $11.5 million in cash included $10.2 million that was lent in August 2011 by Taubman Asia to the noncontrolling partners. Upon closing, the loan and $0.3 million of accrued interest were converted to capital and the remaining balance was paid in cash. Substantially all of the purchase price was allocated to goodwill in Taubman TCBL.

Purchase Price Allocations

For the preceding acquisitions, the Company has not yet finalized its allocations of the purchase prices to the tangible and identifiable intangible assets and liabilities acquired. The Company is evaluating certain valuation information for assets and liabilities acquired to complete its allocations. A final determination of the required purchase price allocations will be made before the end of 2012.

Dispositions

Discontinued operations in the accompanying Consolidated Statement of Operations and Comprehensive Income consist of the financial results of The Pier Shops at Caesars (The Pier Shops) and Regency Square. Total revenues from discontinued operations were $17.5 million for the nine months ended September 30, 2011 .

In November 2011, the mortgage lender for The Pier Shops completed the foreclosure on the property and title to the property was transferred to the mortgage lender. The Company was relieved of $135 million of debt obligations plus accrued default interest associated with the property.

In December 2011, the mortgage lender for Regency Square accepted a deed in lieu of foreclosure on the property and title to the property was transferred to the mortgage lender. The Company was relieved of $72.2 million of debt obligations plus accrued default interest associated with the property.

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TAUBMAN CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Development

City Creek Center

City Creek Center, a mixed-use project in Salt Lake City, Utah, opened in March 2012. The Company owns the retail space subject to a long-term participating lease. City Creek Reserve, Inc. (CCRI), an affiliate of the LDS Church, is the participating lessor and provided all of the construction financing. The Company owns 100% of the leasehold interest in the retail buildings and property. CCRI has an option to purchase the Company’s interest at fair value at various points in time over the term of the lease. The Company paid $75 million to CCRI for leasehold improvements upon opening of the retail center in March 2012, which is classified within Additions to Properties on the Consolidated Statement of Cash Flows.

The Mall at University Town Center

The Mall at University Town Center, a 0.9 million square foot center, is under construction in Sarasota, Florida. The Company has finalized agreements with the landowner, and each party will fund 50% of the project. The center will be anchored by Saks Fifth Avenue, Macy's, and Dillard's and is expected to open in October 2014.

The Mall of San Juan

The Mall of San Juan, a 0.6 million square foot center, is under construction in San Juan, Puerto Rico. In July 2012, the Company closed on the purchase of the land and owns 80% of the project. The center will be anchored by Nordstrom and Saks Fifth Avenue and is expected to open in late 2014.

Taubman Prestige Outlets Chesterfield

Taubman Prestige Outlets Chesterfield, a 0.5 million square foot outlet project in Chesterfield, Missouri, is under construction. In July 2012, the Company closed on the purchase of the land. The Company has a 90% ownership interest in the project and expects to open Phase One of the shopping center in August 2013 with the additional Phase Two to open in the spring of 2014.

Hanam Union Square

In September 2011, Taubman Asia agreed to partner with Shinsegae Group, South Korea's largest retailer, to build a shopping mall in Hanam, Gyeonggi Province, South Korea. At that time, the Company invested $20.9 million for an interest in the project, which was classified within Deferred Charges and Other Assets on the Consolidated Balance Sheet as of December 31, 2011 . In August 2012, upon completion of due diligence, the Company confirmed its 30% interest in the development and invested additional funds into the project, which is scheduled to open in 2015. As of September 30, 2012, the Company has invested $52.1 million in the project, which is classified within Investment in Unconsolidated Joint Ventures on the Consolidated Balance Sheet.

Xi'an Saigao City Plaza

In August 2012, Taubman Asia announced a joint-venture between Taubman TCBL and Beijing Wangfujing Department Store (Group) Co., Ltd, one of China's largest department store chains. The joint venture will own a 60% controlling interest in and manage a shopping center to be located at Xi'an Saigao City Plaza, a large-scale mixed-use development in Xi'an, China. Through this joint venture, the Company will beneficially own a 30% interest in the shopping center, which is scheduled to open in the third quarter of 2015. The Company has invested $15 million as of September 30, 2012 , which is classified within Investment in Unconsolidated Joint Ventures on the Consolidated Balance Sheet.

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TAUBMAN CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

		
Note 3 -	Income Taxes	

Income Tax Expense

The Company’s income tax expense for the three and nine months ended September 30, 2012 and 2011 is as follows:

																
 	Three Months Ended
September 30	 	Nine Months Ended
September 30	
 	2012	 	2011	 	2012	 	2011	
State current	$	38		 	$	156		 	$	103		 	$	585		
State deferred	(4	)	 	9		 	(16	)	 	(238	)	
Federal current	223		 	31		 	761		 	66		
Federal deferred	(65	)	 	12		 	100		 			
Foreign current	748		 	 	 	698		 	 	
Foreign deferred	(208	)	 	 	 	(208	)	 	 	
Total income tax expense	$	732		 	$	208		 	$	1,438		 	$	413		

Deferred Taxes

Deferred tax assets and liabilities as of September 30, 2012 and December 31, 2011 are as follows:

								
 	2012	 	2011	
Deferred tax assets:	 	 	 	
Federal	$	3,546		 	$	3,655		
Foreign	1,812		 	1,196		
State	206		 	232		
Total deferred tax assets	$	5,564		 	$	5,083		
Valuation allowances	(1,744	)	 	(1,373	)	
Net deferred tax assets	$	3,820		 	$	3,710		
Deferred tax liabilities:	 		 	 		
Federal	$	614		 	$	623		
State	115		 	121		
Total deferred tax liabilities	$	729		 	$	744		

The Company believes that it is more likely than not the results of future operations will generate sufficient taxable income to recognize the net deferred tax assets. These future operations are primarily dependent upon the Manager’s profitability, the timing and amounts of gains on land sales, the profitability of the Company’s Asia operations, and other factors affecting the results of operations of the Taxable REIT Subsidiaries. The valuation allowances relate to net operating loss carryforwards and tax basis differences where there is uncertainty regarding their realizability.

During the nine months ended September 30, 2012 , the Company realized a $0.8 million tax benefit as additional paid-in capital relating to the redemption of certain share-based compensation awards.  This benefit represents the amount of the tax deduction that exceeds the recognized deferred tax asset relating to the awards, which was based on their cumulative book compensation cost. This excess tax deduction is due to changes in the fair value of the Company's shares between the grant date (the measurement date for book purposes) and the exercise date (the measurement date for tax purposes) of the awards.

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TAUBMAN CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

		
Note 4 -	Investments in Unconsolidated Joint Ventures	

General Information

The Company owns beneficial interests in joint ventures that own shopping centers. The Operating Partnership is the sole direct or indirect managing general partner or managing member of Fair Oaks, Stamford Town Center, Sunvalley, and Westfarms. The Operating Partnership also provides certain management, leasing, and/or development services to the other shopping centers.

		
Shopping Center	Ownership as of
September 30, 2012 and
December 31, 2011	
Arizona Mills	50%	
Fair Oaks	50	
Hanam Union Square (under development)	Note 2	
The Mall at Millenia	50	
Stamford Town Center	50	
Sunvalley	50	
Waterside Shops	25	
Westfarms	79	
Retail component of Xi'an Saigao City Plaza (under development)	Note 2	

The Company's carrying value of its Investment in Unconsolidated Joint Ventures differs from its share of the partnership or members’ equity reported in the combined balance sheet of the Unconsolidated Joint Ventures due to (i) the Company's cost of its investment in excess of the historical net book values of the Unconsolidated Joint Ventures and (ii) the Operating Partnership’s adjustments to the book basis, including intercompany profits on sales of services that are capitalized by the Unconsolidated Joint Ventures. The Company's additional basis allocated to depreciable assets is recognized on a straight-line basis over 40 years . The Operating Partnership’s differences in bases are amortized over the useful lives of the related assets.

In its Consolidated Balance Sheet, the Company separately reports its investment in Unconsolidated Joint Ventures for which accumulated distributions have exceeded investments in and net income of the Unconsolidated Joint Ventures. The net equity of certain joint ventures is less than zero because distributions are usually greater than net income, as net income includes non-cash charges for depreciation and amortization. In addition, any distributions related to refinancing of the centers further decrease the net equity of the centers.

The estimated fair value of the Unconsolidated Joint Ventures’ notes payable was $1.4 billion and $1.2 billion at September 30, 2012 and December 31, 2011 , respectively. The methodology for determining this fair value is consistent with that used for determining the fair value of consolidated mortgage notes payable (Note 12).

In October 2012, a $350 million non-recourse financing was completed on The Mall at Millenia. A portion of the proceeds were used to defease the existing $197 million loan (Note 5).

In August 2012, a $190 million non-recourse financing was completed on Sunvalley. A portion of the proceeds were used to pay off the existing $114.5 million loan (Note 5).

In June 2012, a $320 million non-recourse refinancing was completed on Westfarms. A portion of the proceeds were used to pay off the existing $179.4 million loan (Note 5).

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TAUBMAN CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Combined Financial Information

Combined balance sheet and results of operations information is presented in the following table for the Unconsolidated Joint Ventures, followed by the Operating Partnership's beneficial interest in the combined operations information. The combined information of the Unconsolidated Joint Ventures as of September 30, 2012 excludes the balances of Hanam Union Square and the retail component of Xi'an Saigao City Plaza, which are currently under development (Note 2). Beneficial interest is calculated based on the Operating Partnership's ownership interest in each of the Unconsolidated Joint Ventures.

								
 	September 30
2012	 	December 31
2011	
Assets:	 	 	 	
Properties	$	1,119,287		 	$	1,107,314		
Accumulated depreciation and amortization	(466,621	)	 	(446,059	)	
 	$	652,666		 	$	661,255		
Cash and cash equivalents	20,597		 	22,042		
Accounts and notes receivable, less allowance for doubtful accounts of $1,568 and $1,422 in 2012 and 2011	17,404		 	24,628		
Deferred charges and other assets	41,489		 	21,289		
 	$	732,156		 	$	729,214		
 	 	 	 	
Liabilities and accumulated deficiency in assets:	 		 	 		
Mortgage notes payable	$	1,346,485		 	$	1,138,808		
Accounts payable and other liabilities	59,081		 	55,737		
TRG's accumulated deficiency in assets	(387,377	)	 	(244,758	)	
Unconsolidated Joint Venture Partners' accumulated deficiency in assets	(286,033	)	 	(220,573	)	
 	$	732,156		 	$	729,214		
 	 	 	 	
TRG's accumulated deficiency in assets (above)	$	(387,377	)	 	$	(244,758	)	
TRG's investment in property under development (Note 2)	67,136		 	 	
TRG basis adjustments, including elimination of intercompany profit	66,019		 	67,282		
TCO's additional basis	59,342		 	60,801		
Net investment in Unconsolidated Joint Ventures	$	(194,880	)	 	$	(116,675	)	
Distributions in excess of investments in and net income of Unconsolidated Joint Ventures	317,031		 	192,257		
Investment in Unconsolidated Joint Ventures	$	122,151		 	$	75,582		

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TAUBMAN CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	
																
 	Three Months Ended
September 30	 	Nine Months Ended
September 30	
 	2012	 	2011	 	2012	 	2011	
Revenues	$	70,435		 	$	64,886		 	$	202,516		 	$	191,163		
Maintenance, taxes, utilities, promotion, and other operating expenses	$	23,365		 	$	20,810		 	$	65,695		 	$	61,816		
Interest expense	16,617		 	15,619		 	48,107		 	45,164		
Depreciation and amortization	8,822		 	9,111		 	25,945		 	27,248		
Total operating costs	$	48,804		 	$	45,540		 	$	139,747		 	$	134,228		
Nonoperating income	18		 	111		 	19		 	121		
Net income	$	21,649		 	$	19,457		 	62,788		 	$	57,056		
 	 	 	 	 	 	 	 	
Net income attributable to TRG	$	12,351		 	$	10,979		 	$	35,637		 	$	32,273		
Realized intercompany profit, net of depreciation on TRG’s basis adjustments	809		 	467		 	1,566		 	1,177		
Depreciation of TCO's additional basis	(488	)	 	(488	)	 	(1,460	)	 	(1,460	)	
Equity in income of Unconsolidated Joint Ventures	$	12,672		 	$	10,958		 	$	35,743		 	$	31,990		
 	 	 	 	 	 	 	 	
Beneficial interest in Unconsolidated Joint Ventures’ operations:	 		 	 		 	 		 	 		
Revenues less maintenance, taxes, utilities, promotion, and other operating expenses	$	26,748		 	$	24,527		 	$	76,613		 	$	71,746		
Interest expense	(8,765	)	 	(8,082	)	 	(25,084	)	 	(23,406	)	
Depreciation and amortization	(5,311	)	 	(5,487	)	 	(15,786	)	 	(16,350	)	
Equity in income of Unconsolidated Joint Ventures	$	12,672		 	$	10,958		 	$	35,743		 	$	31,990		

Note 5 -	Beneficial Interest in Debt and Interest Expense	

The Operating Partnership's beneficial interest in the debt, capitalized interest, and interest expense of its consolidated subsidiaries and its Unconsolidated Joint Ventures is summarized in the following table. The Operating Partnership's beneficial interest in the consolidated subsidiaries excludes debt and interest related to the noncontrolling interests in Cherry Creek Shopping Center ( 50% ), International Plaza ( 49.9% ), The Mall at Wellington Green ( 10% ), and MacArthur Center ( 5% ).

																
 	At 100%	 	At Beneficial Interest	
 	Consolidated Subsidiaries	 	Unconsolidated Joint Ventures	 	Consolidated Subsidiaries	 	Unconsolidated Joint Ventures	
Debt as of:	 	 	 	 	 	 	 	
September 30, 2012	$	2,654,687		 	$	1,346,485		 	$	2,325,967		 	$	724,356		
December 31, 2011	3,145,602		 	1,138,808		 	2,816,877		 	580,557		
 	 	 	 	 	 	 	 	
Capitalized interest:	 		 	 		 	 		 	 		
Nine Months Ended September 30, 2012	1,239		(2)  	26		 	1,193		 	13		
Nine Months Ended September 30, 2011	406		 	 		 	406		 	 		
 	 	 	 	 	 	 	 	
Interest expense from continuing operations:	 		 	 		 	 		 	 		
Nine Months Ended September 30, 2012	109,146		 	48,107		 	96,512		 	25,084		
Nine Months Ended September 30, 2011	89,529		 	45,164		 	81,120		 	23,406		
 	 	 	 	 	 	 	 	
Interest expense from discontinued operations (1) :	 	 	 	 	 	 	 	
Nine Months Ended September 30, 2011	17,374		 	 	 	17,374		 	 	

(1)	Includes The Pier Shops and Regency Square (Note 2).	
		
(2)	The Company capitalizes interest costs incurred in funding its equity contributions to development projects accounted for as Unconsolidated Joint Ventures. This capitalized interest is included within the Consolidated Subsidiaries.	

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TAUBMAN CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Debt Covenants and Guarantees

Certain loan agreements contain various restrictive covenants, including a minimum net worth requirement, a maximum leverage ratio, minimum interest coverage ratios, a minimum debt yield ratio, a maximum payout ratio on distributions, and a minimum fixed charges coverage ratio, the latter being the most restrictive. The Company is in compliance with all covenants and loan obligations as of September 30, 2012 . The maximum payout ratio on distributions covenant limits the payment of distributions generally to 95% of funds from operations , as defined in the loan agreements, except as required to maintain the Company's tax status, pay preferred distributions, and for distributions related to the sale of certain assets.

Payments of principal and interest on the loans in the following table are guaranteed by the Operating Partnership as of September 30, 2012 .

																			
Center	 	Loan Balance
as of 9/30/12	 	TRG's Beneficial Interest in Loan Balance
as of 9/30/12	 	Amount of Loan Balance Guaranteed by TRG
as of 9/30/12	 	% of Loan Balance Guaranteed by TRG	 	% of Interest Guaranteed by TRG	
 	 	(in millions)	 	 	 	 	
Dolphin Mall	 	$	40.0		 	$	40.0		 	$	40.0		 	100	%	 	100	%	
Fairlane Town Center	 	70.0		 	70.0		 	70.0		 	100	%	 	100	%	
Twelve Oaks Mall	 	—		 	—		 	—		 	100	%	 	100	%	

The Company is required to escrow cash balances for specific uses stipulated by certain of its lenders. As of September 30, 2012 and December 31, 2011 , the Company’s cash balances restricted for these uses were $4.6 million and $5.9 million , respectively. Restricted cash at December 31, 2011 included cash funded by the Company's revolving lines of credit that was used to repay the $281.5 million of installment notes in February 2012 (Note 2).

2012 Financings

In October 2012, a 12-year , $350 million non-recourse refinancing was completed on The Mall at Millenia, a 50% owned Unconsolidated Joint Venture. The payments on the loan, which bears interest at an all-in fixed rate of 4.05% , are interest only for four years, and then amortizes principal based on 30 years . The interest-only period may be extended until the maturity date provided that the net income available for debt service equals or exceeds a certain amount for calendar year 2015. The existing $197 million , 5.46% fixed rate loan was defeased and the Company's $75 million share of excess proceeds was used to pay down its revolving lines of credit. The joint venture incurred defeasance charges of $3.2 million , $1.6 million at the Company's beneficial share.

In August 2012, a 10-year , $190 million non-recourse refinancing was completed on Sunvalley, a 50% owned Unconsolidated Joint Venture.  The payments on the loan, which bears interest at an all-in fixed rate of 4.47% , are based on amortizing principal over 30 years .  The existing $114.5 million , 5.67% fixed rate loan was paid off and the Company's $31.7 million share of excess proceeds, net of reserves for future capital spending and tenant allowances, was used to pay down its revolving lines of credit.

In June 2012, a 10-year , $320 million non-recourse refinancing was completed on Westfarms, a 79% owned Unconsolidated Joint Venture.  The payments on the loan, which bears interest at an all-in fixed rate of 4.53% , are based on amortizing principal over 30 years .  The existing $179.4 million , 6.10% fixed rate loan was paid off and the Company's $110 million share of excess proceeds was used to pay down its revolving lines of credit.  In addition, the joint venture partners at Westfarms repaid the balance owed on the $5.1 million note receivable outstanding as of December 31, 2011 related to their share of the litigation charges that were paid in 2009.

In April 2012, the maturity date on the Company's secondary line of credit was extended through April 2014 . The maximum amount available under this facility increased to $65 million and the rate was increased to LIBOR plus 1.40% from LIBOR plus 1.00% .

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Note 6 -	Equity Transactions	

In September 2012, the Company redeemed the 8% Series G Preferred Stock and 7.625% Series H Preferred Stock at prices per share of $25.35 and $25.33359375 , respectively, which include accrued and unpaid dividends. The Company previously had 4,000,000 shares (par value $100 million ) of its Series G Preferred Stock outstanding and 3,480,000 shares (par value $87 million ) of its Series H Preferred Stock outstanding. As a result of the redemptions in 2012, the Company recognized charges of $3.3 million and $3.1 million , representing the difference between the carrying values and the redemption prices of its Series G Preferred Stock and Series H Preferred Stock, respectively. These charges are included within Preferred Stock Dividends on the Consolidated Statement of Operations and Comprehensive Income for the three and nine months ended September 30, 2012.

The Series G Preferred Stock and Series H Preferred Stock were redeemed with the net proceeds of $186.2 million from the issuance of 7,700,000 shares of 6.5% Series J Preferred Stock in August 2012. Offering costs of $6.3 million were incurred in connection with this issuance. The Series J Preferred Stock has no stated maturity, sinking fund, or mandatory redemption requirements and generally is not convertible into any other security of the Company. The Series J Preferred Stock has a liquidation preference of $192.5 million ( $25 per share). Dividends are cumulative and are paid on the last day of each calendar quarter. All accrued dividends have been paid. The Series J Preferred Stock will be redeemable by the Company at par, $25 per share, plus accrued dividends, generally beginning in August 2017. The Company owns corresponding Series J Preferred Equity interests in the Operating Partnership that entitle the Company to income and distributions (in the form of guaranteed payments) in amounts equal to the dividends payable on the Company's Series J Preferred Stock. The Series J Preferred Stock is generally non-voting.

In August 2012, the Company sold 2,875,000 of its common shares. The proceeds were used by the Company to acquire an equal number of Operating Partnership units. The Operating Partnership paid all offering costs. The Operating Partnership used the net proceeds, after offering costs, of $208.9 million to reduce outstanding borrowings under its revolving lines of credit.

Note 7 -	Noncontrolling Interests	

Redeemable Noncontrolling Interests

In December 2011, the Company acquired The Mall at Green Hills and The Gardens on El Paseo and El Paseo Village from affiliates of Davis Street Properties, LLC (Note 2). The purchase price consideration included 1.3 million Operating Partnership units determined based on a value of $55 per unit. These partnership units will become eligible to be converted into the Company's common shares in December 2012 pursuant to the Continuing Offer (Note 10). Prior to that date, the holders have the ability to put the units back to the Operating Partnership for cash at the lesser of the current market price of the Company's common shares or $55 per share. Considering the redemption provisions, the Company is accounting for these Operating Partnership units as a redeemable noncontrolling interest until they become subject to the Continuing Offer. The carrying value of these units was $72.6 million at September 30, 2012 and $72.7 million at December 31, 2011 . Adjustments to the redemption value are recorded through equity.

In December 2011, Taubman Asia acquired a 90% controlling interest in TCBL (Note 2). As part of the purchase price consideration, $11.9 million of capital in the newly formed company was credited by Taubman Asia to the noncontrolling owners, who also own a 10% residual interest. The noncontrolling ownership interest can be put back to the Company at 50% of the fair value of the ownership interest beginning in December 2016, increasing to 100% in December 2018. Taubman Asia will fund any additional capital required by the business and will receive a preferred return on all capital contributed. The ownership agreements provide for the distribution of preferred returns on capital as well as returns of all such capital prior to the sharing of profits on relative ownership interests. Considering the redemption provisions, the Company accounts for the joint venture partner's interest as a contingently redeemable noncontrolling interest. The carrying value of the interest was $8.9 million at September 30, 2012 and $11.6 million at December 31, 2011 . Any adjustments to the redemption value will be recorded through equity.

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TAUBMAN CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company's president of Taubman Asia (the Asia President) has an ownership interest in Taubman Asia, a consolidated subsidiary. The Asia President is entitled to 10% of Taubman Asia's dividends, with 85% of his dividends being withheld as contributions to capital. These withholdings will continue until he contributes and maintains his capital consistent with a 10% ownership interest, including all capital funded by the Operating Partnership for Taubman Asia's operating and investment activities subsequent to the Asia President obtaining his ownership interest. The Operating Partnership will have a preferred investment in Taubman Asia to the extent the Asia President has not yet contributed capital commensurate with his ownership interest. This preferred investment will accrue an annual preferential return equal to the Operating Partnership's average borrowing rate (with the preferred investment and accrued return together being referred to herein as the preferred interest). Taubman Asia has the ability to call, and the Asia President has the ability to put, the Asia President’s ownership interest upon specified terminations of the Asia President’s employment, although such put or call right may not be exercised for specified time periods after certain termination events. The redemption price for the ownership interest is generally a nominal amount through 2013 and subsequently 50% (increasing to 100% as early as May 2015) of the fair value of the ownership interest less the amount required to return the Operating Partnership's preferred interest. The Company has determined that the Asia President's ownership interest in Taubman Asia qualifies as an equity award, considering its specific redemption provisions, and accounts for it as a contingently redeemable noncontrolling interest, with a carrying value of zero at September 30, 2012 and December 31, 2011 . Any adjustments to the redemption value are recorded through equity.

The Company owns a 90% controlling interest in a joint venture that is focusing on developing and owning outlet shopping centers. The amount of capital that the 10% joint venture partner is required to contribute is capped. The Company will have a preferred investment to the extent it contributes capital in excess of the amount commensurate with its ownership interest. The Company has the right to purchase the joint venture partner's entire interest and the joint venture partner has the right to require the Company to purchase the joint venture partner's entire interest. Additionally, the parties each have a one-time put and/or call on the joint venture partner’s interest in any stabilized centers, while still maintaining the ongoing joint venture relationship. The purchase price of the joint venture partner's interest will be based on fair value. Considering the redemption provisions, the Company accounts for the joint venture partner’s interest as a contingently redeemable noncontrolling interest with a carrying value of zero at September 30, 2012 and December 31, 2011 . Any adjustments to the redemption value are recorded through equity.

Reconciliation of Redeemable Noncontrolling Interests

								
 	2012	 	2011	
Balance January 1	$	84,235		 	$	—		
Contributions	231		 	473		
Allocation of net loss	(1,584	)	 	(473	)	
Allocation of other comprehensive loss	(82	)	 			
Distributions	(1,846	)	 	 	
Redemption of TRG partnership units	(105	)	 	 	
Adjustments of redeemable noncontrolling interests	585		 	 	
Balance September 30	$	81,434		 	$	—		

Equity Balances of Nonredeemable Noncontrolling Interests

The net equity balance of the noncontrolling interests as of September 30, 2012 and December 31, 2011 includes the following:

								
 	2012	 	2011	
Non-redeemable noncontrolling interests:	 	 	 	
Noncontrolling interests in consolidated joint ventures	$	(101,108	)	 	$	(101,872	)	
Noncontrolling interests in partnership equity of TRG	28,144		 	(22,452	)	
 	$	(72,964	)	 	$	(124,324	)	

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TAUBMAN CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Income Allocable to Noncontrolling Interests

Net income attributable to the noncontrolling interests for the three months ended September 30, 2012 and September 30, 2011 includes the following:

								
 	2012	 	2011	
Net income attributable to noncontrolling interests:	 	 	 	
Non-redeemable noncontrolling interests:	 	 	 	
Noncontrolling share of income of consolidated joint ventures	$	2,967		 	$	4,508		
Noncontrolling share of income of TRG	9,706		 	4,425		
TRG Series F preferred distributions			 	615		
 	$	12,673		 	$	9,548		
Redeemable noncontrolling interests	(378	)	 	(181	)	
 	$	12,295		 	$	9,367		

Net income attributable to the noncontrolling interests for the nine months ended September 30, 2012 and September 30, 2011 includes the following:

								
 	2012	 	2011	
Net income attributable to noncontrolling interests:	 	 	 	
Non-redeemable noncontrolling interests:	 	 	 	
Noncontrolling share of income of consolidated joint ventures	$	9,725		 	$	10,970		
Noncontrolling share of income of TRG	25,752		 	14,620		
TRG Series F preferred distributions			 	1,845		
 	$	35,477		 	$	27,435		
Redeemable noncontrolling interests	(1,584	)	 	(473	)	
 	$	33,893		 	$	26,962		

Equity Transactions

The following schedule presents the effects of changes in Taubman Centers, Inc.’s ownership interest in consolidated subsidiaries on Taubman Centers, Inc.’s equity for the nine months ended September 30, 2012 and September 30, 2011 :

								
 	2012	 	2011	
Net income attributable to Taubman Centers, Inc. common shareowners	$	55,604		 	$	27,521		
Transfers (to) from the noncontrolling interest –	 		 	 		
Decrease in Taubman Centers, Inc.’s paid-in capital for the adjustments of noncontrolling interest (1)	(62,127	)	 	(40,773	)	
Net transfers (to) from noncontrolling interests	(62,127	)	 	(40,773	)	
Change from net income attributable to Taubman Centers, Inc. and transfers (to) from noncontrolling interests	$	(6,523	)	 	$	(13,252	)	

(1)	In 2012 and 2011, adjustments of the noncontrolling interest were made as a result of changes in the Company's ownership of the Operating Partnership in connection with the Company's share-based compensation under employee and director benefit plans (Note 9), issuances of stock pursuant to the Continuing Offer (Note 10), issuance of common stock in June 2011 and August 2012 (Note 6), and redemptions of certain redeemable Operating Partnership units (Note 2).	

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TAUBMAN CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Finite Life Entities

Accounting Standards Codification Topic 480, “Distinguishing Liabilities from Equity” establishes standards for classifying and measuring as liabilities certain financial instruments that embody obligations of the issuer and have characteristics of both liabilities and equity. At September 30, 2012 , the Company held controlling interests in consolidated entities with specified termination dates in 2081 and 2083 . The noncontrolling owners’ interests in these entities are to be settled upon termination by distribution or transfer of either cash or specific assets of the underlying entity. The estimated fair value of these noncontrolling interests was approximately $208 million at September 30, 2012 , compared to a book value of $(101.6) million that is classified in Noncontrolling Interests in the Company’s Consolidated Balance Sheet. The fair values of the noncontrolling interests were calculated as the noncontrolling interests' ownership shares of the underlying properties' fair values. The properties' fair values were estimated by considering their in-place net operating incomes, current market capitalization rates, and mortgage debt outstanding.

Note 8 -	Derivative and Hedging Activities	

Risk Management Objective and Strategies for Using Derivatives

The Company uses derivative instruments, such as interest rate swaps and interest rate caps, primarily to manage exposure to interest rate risks inherent in variable rate debt and refinancings. The Company may also enter into forward starting swaps or treasury lock agreements to set the effective interest rate on a planned fixed-rate financing. The Company’s interest rate swaps involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Interest rate caps involve the receipt of variable-rate amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium. In a forward starting swap or treasury lock agreement that the Company cash settles in anticipation of a fixed rate financing or refinancing, the Company will receive or pay an amount equal to the present value of future cash flow payments based on the difference between the contract rate and market rate on the settlement date.

The Company does not use derivatives for trading or speculative purposes and currently does not have any derivatives that are not designated as hedging instruments under the accounting requirements for derivatives and hedging.

As of September 30, 2012 , the Company had the following outstanding interest rate derivatives that were designated and are expected to be effective as cash flow hedges of the interest payments on the associated debt.

																			
Instrument Type	 	Ownership	 	Notional Amount	 	Swap Rate	 	Credit Spread on Loan	 	Total Swapped Rate on Loan	 	Maturity Date	
Consolidated Subsidiaries:	 	 	 	 	 	 	 	 	 	 	 	 	
Receive variable (LIBOR) /pay-fixed swap (1)	 	95.0	%	 	$	130,893		 	2.64	%	 	2.35	%	 	4.99	%	 	September 2020	
Unconsolidated Joint Ventures:	 	 		 	 		 	 		 	 		 	 		 	 	
Receive variable (LIBOR) /pay-fixed swap	 	50.0	%	 	30,000		 	5.05	%	 	0.90	%	 	5.95	%	 	November 2012	
Receive variable (LIBOR) /pay-fixed swap  (2)	 	50.0	%	 	137,500		 	2.40	%	 	1.70	%	 	4.10	%	 	April 2018	
Receive variable (LIBOR) /pay-fixed swap  (2)	 	50.0	%	 	137,500		 	2.40	%	 	1.70	%	 	4.10	%	 	April 2018	

(1)	The notional amount of the swap is equal to the outstanding principal balance on the loan, which began amortizing in September 2012.	
		
(2)	The notional amount on each of these swaps is equal to 50% of the outstanding principal balance on the loan, which begins amortizing in August 2014.	

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TAUBMAN CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Cash Flow Hedges of Interest Rate Risk

For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the unrealized gain or loss on the derivative is reported as a component of Other Comprehensive Income (OCI). The ineffective portion of the change in fair value, if any, is recognized directly in earnings. Net realized gains or losses resulting from derivatives that were settled in conjunction with planned fixed-rate financings or refinancings continue to be included in Accumulated Other Comprehensive Income (Loss) (AOCI) during the term of the hedged debt transaction.

Amounts reported in AOCI related to currently outstanding derivatives are recognized as an adjustment to income as interest payments are made on the Company’s variable-rate debt. Realized gains or losses on settled derivative instruments included in AOCI are recognized as an adjustment to income over the term of the hedged debt transaction.

The Company expects that approximately $6.9 million of the AOCI of Taubman Centers, Inc. and the noncontrolling interests will be reclassified from AOCI and recognized as a reduction of income in the following 12 months.

As of September 30, 2012 , the Company had $0.8 million of net realized losses included in AOCI resulting from settled derivative instruments, which were designated as cash flow hedges that are being recognized as a reduction of income over the term of the hedged debt.

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TAUBMAN CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following tables present the effect of derivative instruments on the Company’s Consolidated Statement of Operations and Comprehensive Income for the three and nine months ended September 30, 2012 and September 30, 2011 . The tables include the location and amount of unrealized gains and losses on outstanding derivative instruments in cash flow hedging relationships and the location and amount of realized losses reclassified from AOCI into income resulting from settled derivative instruments associated with hedged debt.

During the three months ended September 30, 2012 and September 30, 2011 , the Company did not have any hedge ineffectiveness or amounts that were excluded from the assessment of hedge effectiveness recorded in earnings.

																		
 	Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)	 	Location of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion)	 	Amount of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion)	
 	Three Months Ended
September 30	 	 	 	Three Months Ended
September 30	
 	2012	 	2011	 	 	 	2012	 	2011	
Derivatives in cash flow hedging relationships:	 	 	 	 	 	 	 	 	 	
Interest rate contracts – consolidated subsidiaries	$	(897	)	 	$	(11,392	)	 	Interest Expense	 	$	(802	)	 	$	(817	)	
Interest rate contracts – UJVs	(893	)	 	(7,710	)	 	Equity in Income of UJVs	 	(935	)	 	(695	)	
Total derivatives in cash flow hedging relationships	$	(1,790	)	 	$	(19,102	)	 	 	 	$	(1,737	)	 	$	(1,512	)	
 	 	 	 	 	 	 	 	 	 	
Realized losses on settled cash flow hedges:	 		 	 		 	 	 	 		 	 		
Interest rate contract – consolidated subsidiary	 		 	 		 	Interest Expense	 	$	(151	)	 	$	(151	)	
Interest rate contract – UJVs	 		 	 		 	Equity in Income of UJVs	 	—		 	(94	)	
Total realized losses on settled cash flow hedges	 		 	 		 	 	 	$	(151	)	 	$	(245	)	

During the nine months ended September 30, 2012 and September 30, 2011 , the Company did not have any hedge ineffectiveness or amounts that were excluded from the assessment of hedge effectiveness recorded in earnings.

																		
 	Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)	 	Location of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion)	 	Amount of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion)	
 	Nine Months Ended
September 30	 	 	 	Nine Months Ended
September 30	
 	2012	 	2011	 	 	 	2012	 	2011	
Derivatives in cash flow hedging relationships:	 	 	 	 	 	 	 	 	 	
Interest rate contracts – consolidated subsidiaries	$	(3,671	)	 	$	(12,945	)	 	Interest Expense	 	$	(2,380	)	 	$	(2,689	)	
Interest rate contracts – UJVs	(2,802	)	 	(6,666	)	 	Equity in Income of UJVs	 	(2,770	)	 	(1,853	)	
Total derivatives in cash flow hedging relationships	$	(6,473	)	 	$	(19,611	)	 	 	 	$	(5,150	)	 	$	(4,542	)	
 	 	 	 	 	 	 	 	 	 	
Realized losses on settled cash flow hedges:	 		 	 		 	 	 	 		 	 		
Interest rate contracts – consolidated subsidiaries	 		 	 		 	Interest Expense	 	$	(453	)	 	$	(688	)	
Interest rate contract – UJVs	 		 	 		 	Equity in Income of UJVs	 	(188	)	 	(282	)	
Total realized losses on settled cash flow hedges	 		 	 		 	 	 	$	(641	)	 	$	(970	)	

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TAUBMAN CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company records all derivative instruments at fair value in the Consolidated Balance Sheet. The following table presents the location and fair value of the Company’s derivative financial instruments as reported in the Consolidated Balance Sheet as of September 30, 2012 and December 31, 2011 .

										
 	 	 	Fair Value	
 	Consolidated Balance Sheet Location	 	September 30
2012	 	December 31
2011	
Derivatives designated as hedging instruments:	 	 	 	 	 	
Liability derivatives:	 	 	 		 	 		
Interest rate contract – consolidated subsidiaries	Accounts Payable and Accrued Liabilities	 	$	(12,715	)	 	$	(9,044	)	
Interest rate contracts – UJVs	Investment in UJVs	 	(11,847	)	 	(9,045	)	
Total liabilities designated as hedging instruments	 	 	$	(24,562	)	 	$	(18,089	)	

Contingent Features

All of the Company's outstanding derivatives contain provisions that state if the hedged entity defaults on any of its indebtedness in excess of $1 million , then the derivative obligation could also be declared in default. As of September 30, 2012 , the Company is not in default on any debt obligations that would trigger a credit risk related default on its current outstanding derivatives.

As of September 30, 2012 and December 31, 2011 , the fair value of derivative instruments with credit-risk-related contingent features that are in a liability position was $24.6 million and $18.1 million , respectively. As of September 30, 2012 and December 31, 2011 , the Company was not required to post any collateral related to these agreements. If the Company breached any of these provisions it would be required to settle its obligations under the agreements at their fair value. See Note 12 for fair value information on derivatives.

Note 9 -	Share-Based Compensation	

The Taubman Company 2008 Omnibus Long-Term Incentive Plan (2008 Omnibus Plan), as amended, which is shareowner approved, provides for the award to directors, officers, employees, and other service providers of the Company of restricted shares, restricted units of limited partnership in the Operating Partnership, options to purchase shares or Operating Partnership units, unrestricted shares or Operating Partnership units, and other awards to acquire up to an aggregate of 8.5 million Company common shares or Operating Partnership units. In addition, non-employee directors have the option to defer their compensation, other than their meeting fees, under a deferred compensation plan.

Non-option awards granted after an amendment of the 2008 Omnibus Plan in 2010 are deducted at a ratio of 1.85 Company common shares or Operating Partnership units, while non-option awards granted prior to the amendment are deducted at a ratio of 2.85 . Options are deducted on a one-for-one basis. The amount available for future grants is adjusted when the number of contingently issuable shares or units are settled, for grants that are forfeited, and for options that expire without being exercised.

Prior to the adoption of the 2008 Omnibus Plan, the Company provided share-based compensation through an incentive option plan and non-employee directors' stock grant and deferred compensation plans.

The compensation cost charged to income for the Company’s share-based compensation plans was $2.5 million and $8.7 million for the three and nine months ended September 30, 2012 , respectively. The compensation cost charged to income for the Company's share-based compensation plans was $2.2 million and $6.8 million for the three and nine months ended September 30, 2011 , respectively. Compensation cost capitalized as part of properties and deferred leasing costs was $0.2 million and $0.8 million for the three and nine months ended September 30, 2012 , respectively, and $0.1 million and $0.3 million for the three and nine months ended September 30, 2011 , respectively.

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TAUBMAN CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company estimated the grant-date fair values of options, performance share units, and restricted share units using the methods discussed in the separate sections below for each type of grant. Expected volatility and dividend yields are based on historical volatility and yields of the Company’s common stock, respectively, as well as other factors. The risk-free interest rates used are based on the U.S. Treasury yield curves in effect at the times of grants. The Company assumes no forfeitures of options or performance share units due to the small number of participants and low turnover rate.

Options

A summary of option activity for the nine months ended September 30, 2012 is presented below:

																		
 	Number of Options	 	Weighted Average Exercise Price	 	Weighted Average Remaining Contractual Term (in years)	 	Range of Exercise Prices	
Outstanding at January 1, 2012	1,321,990		 	$	37.13		 	4.8		 	$	13.83		-	$	55.90		
Exercised	(96,408	)	 	31.90		 	 	 	 	 	 	
Outstanding at September 30, 2012	1,225,582		 	$	37.55		 	4.1		 	$	13.83		-	$	55.90		
 	 	 	 	 	 	 	 	 	 	
Fully vested options at September 30, 2012	1,225,582		 	37.55		 	4.1		 	 		 	 	

There were 0.2 million options that vested during the nine months ended September 30, 2012 .

The aggregate intrinsic value (the difference between the period end stock price and the option exercise price) of in-the-money options outstanding and in-the-money fully vested options was $48 million as of September 30, 2012 .

The total intrinsic value of options exercised during the nine months ended September 30, 2012 was $3.8 million . Cash received from option exercises for the nine months ended September 30, 2012 was $3.1 million . No options were exercised during the nine months ended September 30, 2011 .

As of September 30, 2012 , all options outstanding were fully vested, and there was no unrecognized compensation cost related to options.

Under both the prior option plan and the 2008 Omnibus Plan, vested unit options can be exercised by tendering mature units with a market value equal to the exercise price of the unit options. In 2002, Robert S. Taubman, the Company’s chief executive officer, exercised options for 3.0 million units by tendering 2.1 million mature units and deferring receipt of 0.9 million units under the unit option deferral election. As the Operating Partnership pays distributions, the deferred option units receive their proportionate share of the distributions in the form of cash payments. Under an amendment executed in January 2011, beginning in December 2017 (unless Mr. Taubman retires earlier), the deferred partnership units will be issued in ten annual installments. The deferred units are accounted for as participating securities of the Operating Partnership.

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TAUBMAN CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Performance Share Units

In 2012, the Company granted Performance Share Units (PSU) under the 2008 Omnibus Plan. Each PSU represents the right to receive, upon vesting, shares of the Company’s common stock ranging from 0-300% of the PSU based on the Company’s market performance relative to that of a peer group . The units vest in March 2015, if continuous service has been provided, or upon retirement or certain other events (such as death or disability) if earlier. No dividends accumulate during the vesting period. The Company estimated the value of these PSU granted using a Monte Carlo simulation, considering the Company’s common stock price at the grant date less the present value of the expected dividends during the vesting period, historical returns of the Company and the peer group of companies, a risk-free interest rate of 0.35% to 0.45% , and a measurement period of three years . The resulting weighted average grant-date fair value was $107.45 per PSU.

Also in 2012, the Company granted additional PSU under the 2008 Omnibus Plan that represents the right to receive, upon vesting, shares of the Company’s common stock ranging from 0-400% of the PSU based on the Company’s market performance relative to that of a peer group . The units vest in March 2017, if continuous service has been provided, or upon certain other events (such as death or disability) if earlier. No dividends accumulate during the vesting period. The Company estimated the value of these PSU granted using a Monte Carlo simulation, considering the Company’s common stock price at the grant date less the present value of the expected dividends during the vesting period, historical returns of the Company and the peer group of companies, a risk-free interest rate of 0.70% to 0.90% , and a measurement period of five years . The resulting weighted average grant-date fair value was $189.23 per PSU.

A summary of PSU activity for the nine months ended September 30, 2012 is presented below:

							
 	Number of Performance Share Units	 	Weighted Average Grant Date Fair Value	
Outstanding at January 1, 2012	326,151		 	$	38.20		
Vested	(196,943	)	(1)  	15.60		
Granted (three year vesting)	50,041		 	107.45		
Granted (five year vesting)	108,224		 	189.23		
Forfeited	(24,733	)	 	$	123.41		
Outstanding at September 30, 2012	262,740		 	$	122.52		

(1)	Based on the Company's market performance relative to that of a peer group, the actual number of shares of common stock issued upon vesting during the nine months ended September 30, 2012 equaled 240% of the number of PSU awards vested in the table above.	

None of the PSU outstanding at September 30, 2012 were vested. As of September 30, 2012 , there was $23 million of total unrecognized compensation cost related to nonvested PSU outstanding. This cost is expected to be recognized over an average period of 3.7  years.

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TAUBMAN CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Restricted Share Units

During 2012, Restricted Share Units (RSU) were issued under the 2008 Omnibus Plan and represent the right to receive upon vesting one share of the Company’s common stock . The units vest in March 2015, if continuous service has been provided through that period, or upon retirement or certain other events if earlier. No dividends accumulate during the vesting period.

The Company estimated the values of the RSU granted in 2012 using the Company’s common stock at the grant dates deducting the present value of expected dividends during the vesting period using a risk-free rate of 0.35% to 0.50% . The result of the Company’s valuations was a weighted average grant-date fair value of $65.14 per RSU granted during 2012.

A summary of RSU activity for the nine months ended September 30, 2012 is presented below:

							
 	Number of Restricted Share Units	 	Weighted Average Grant Date Fair Value	
Outstanding at January 1, 2012	605,927		 	$	22.06		
Vested	(364,610	)	 	9.90		
Granted	107,653		 	65.14		
Forfeited	(21,039	)	 	46.81		
Outstanding at September 30, 2012	327,931		 	$	48.14		

None of the RSU outstanding at September 30, 2012 were vested. As of September 30, 2012 , there was $7.6 million of total unrecognized compensation cost related to nonvested RSU outstanding. This cost is expected to be recognized over an average period of 1.9  years.

Note 10 -	Commitments and Contingencies	

Cash Tender

At the time of the Company's initial public offering and acquisition of its partnership interest in the Operating Partnership in 1992, the Company entered into an agreement (the Cash Tender Agreement) with A. Alfred Taubman, who owns an interest in the Operating Partnership, whereby he has the annual right to tender to the Company partnership units in the Operating Partnership (provided that the aggregate value is at least $50 million ) and cause the Company to purchase the tendered interests at a purchase price based on a market valuation of the Company on the trading date immediately preceding the date of the tender. At A. Alfred Taubman's election, his family may participate in tenders. The Company will have the option to pay for these interests from available cash, borrowed funds, or from the proceeds of an offering of the Company's common stock. Generally, the Company expects to finance these purchases through the sale of new shares of its stock. The tendering partner will bear all market risk if the market price at closing is less than the purchase price and will bear the costs of sale. Any proceeds of the offering in excess of the purchase price will be for the sole benefit of the Company. The Company accounts for the Cash Tender Agreement between the Company and Mr. Taubman as a freestanding written put option. As the option put price is defined by the current market price of the Company's stock at the time of tender, the fair value of the written option defined by the Cash Tender Agreement is considered to be zero .

Based on a market value at September 30, 2012 of $76.73 per common share, the aggregate value of interests in the Operating Partnership that may be tendered under the Cash Tender Agreement was $1.9 billion . The purchase of these interests at September 30, 2012 would have resulted in the Company owning an additional 27% interest in the Operating Partnership.

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TAUBMAN CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Continuing Offer

The Company has made a continuing, irrevocable offer to all present holders (other than certain excluded holders, including A. Alfred Taubman), permitted assignees of all present holders, those future holders of partnership interests in the Operating Partnership as the Company may, in its sole discretion, agree to include in the continuing offer, all existing optionees under the previous option plan, and all existing and future optionees under the 2008 Omnibus Plan to exchange shares of common stock for partnership interests in the Operating Partnership (the Continuing Offer). The Operating Partnership units issued in connection with the acquisition of The Mall at Green Hills and The Gardens on El Paseo and El Paseo Village are not eligible to be converted into common shares under the Continuing Offer until December 2012. Under the Continuing Offer agreement, one unit of the Operating Partnership interest is exchangeable for one share of the Company's common stock . Upon a tender of Operating Partnership units, the corresponding shares of Series B Preferred Stock, if any, will automatically be converted into the Company’s common stock at a ratio of 14,000 shares of Series B Preferred Stock for one share of common stock .

Litigation

In April 2009, two restaurant owners, their two restaurants, and their principal filed a lawsuit in United States District Court for the Eastern District of Pennsylvania (Case No.  09-CV-01619 ) against Atlantic Pier Associates LLC ("APA", the then owner of the leasehold interest in The Pier Shops), the Operating Partnership, Taubman Centers, Inc., the owners of APA and certain affiliates of such owners, three individuals affiliated with, or at one time employed by an affiliate of one of the owners, and, subsequently added the Manager as a defendant. The plaintiffs are alleging the defendants misrepresented and concealed the status of certain tenant leases at The Pier Shops and that such status was relied upon by the plaintiffs in making decisions about their own leases. The plaintiffs are seeking damages exceeding $20 million , rescission of their leases, exemplary or punitive damages, costs and expenses, attorney's fees, return of certain rent, and other relief as the court may determine. The claims against the Operating Partnership, Taubman Centers, Inc., the Manager, other Taubman defendants, and one of the owners were dismissed in July 2011, but, in August 2011, the restaurant owners reinstated the same claims in a state court action that was then removed to the United States District Court for the Eastern District of Pennsylvania (Case No.  11-CV-05676 ). The defendants are vigorously defending the action. The outcome of this lawsuit cannot be predicted with any certainty and management is currently unable to estimate an amount or range of potential loss that could result if an unfavorable outcome occurs. While management does not believe that an adverse outcome in this lawsuit would have a material adverse effect on the Company's financial condition, there can be no assurance that an adverse outcome would not have a material effect on the Company's results of operations for any particular period.

Other

See Note 5 for the Operating Partnership's guarantees of certain notes payable, Note 7 for contingent features relating to certain joint venture agreements, Note 8 for contingent features relating to derivative instruments, and Note 9 for obligations under existing share-based compensation plans.

See Note 7 for the Operating Partnership's contingent obligation to repurchase units issued in connection with the acquisition of centers ending December 2012. Subsequent to that date the units will become eligible to be converted into common shares under the Continuing Offer.

Note 11 -	Earnings Per Share	

Basic earnings per share amounts are based on the weighted average of common shares outstanding for the respective periods. Diluted earnings per share amounts are based on the weighted average of common shares outstanding plus the dilutive effect of potential common stock. Potential common stock includes outstanding partnership units exchangeable for common shares under the Continuing Offer (Note 10), outstanding options for partnership units, PSU, RSU, deferred shares under the Non-Employee Directors’ Deferred Compensation Plan, and unissued partnership units under a unit option deferral election (Note 9). In computing the potentially dilutive effect of potential common stock, partnership units are assumed to be exchanged for common shares under the Continuing Offer, increasing the weighted average number of shares outstanding. The potentially dilutive effects of partnership units outstanding and/or issuable under the unit option deferral elections are calculated using the if-converted method, while the effects of other potential common stock are calculated using the treasury method. Contingently issuable shares are included in diluted EPS based on the number of shares, if any, that would be issuable if the end of the reporting period were the end of the contingency period.

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TAUBMAN CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of September 30, 2012 , there were 4.2 million partnership units outstanding and 0.9 million unissued partnership units under unit option deferral elections exchangeable for common shares of the Company under the Continuing Offer that were excluded from the computation of diluted earnings per share as they were anti-dilutive in all periods presented. Also, there were out-of-the-money options for 0.1 million shares for the nine months ended September 30, 2011 that were excluded from the computation of diluted EPS because they were anti-dilutive.

	
																
 	Three Months Ended
September 30	 	Nine Months Ended
September 30	
 	2012	 	2011	 	2012	 	2011	
Net income (loss) attributable to Taubman Centers, Inc. common shareowners (Numerator):	 	 	 	 	 	 	 	
Income from continuing operations	$	21,700		 	$	16,603		 	$	55,604		 	$	44,403		
Loss from discontinued operations	 	 	(8,142	)	 	 	 	(16,882	)	
Basic	$	21,700		 	$	8,461		 	$	55,604		 	$	27,521		
 	 	 	 	 	 	 	 	
Shares (Denominator) – basic	60,571,612		 	57,890,006		 	59,207,828		 	56,554,268		
 	 	 	 	 	 	 	 	
Earnings per common share from continuing operations	$	0.36		 	$	0.29		 	$	0.94		 	$	0.79		
Loss from discontinued operations	 	 	(0.14	)	 	 	 	(0.30	)	
Earnings per common share – basic	$	0.36		 	$	0.15		 	$	0.94		 	$	0.49		

	
																
 	Three Months Ended
September 30	 	Nine Months Ended
September 30	
 	2012	 	2011	 	2012	 	2011	
Net income (loss) attributable to Taubman Centers, Inc. common shareowners (Numerator):	 	 	 	 	 	 	 	
Income from continuing operations - basic	$	21,700		 	$	16,603		 	$	55,604		 	$	44,403		
Impact of additional ownership of TRG on income from continuing operations	168		 	163		 	470		 	420		
Income from continuing operations - diluted	$	21,868		 	$	16,766		 	$	56,074		 	$	44,823		
Loss from discontinued operations - basic	 	 	(8,142	)	 	 	 	(16,882	)	
Impact of additional ownership of TRG on loss from discontinued operations	 	 	(72	)	 	 	 	(145	)	
Diluted	$	21,868		 	$	8,552		 	$	56,074		 	$	27,796		
 	 	 	 	 	 	 	 	
Shares – basic	60,571,612		 	57,890,006		 	59,207,828		 	56,554,268		
Effect of dilutive securities	1,453,710		 	1,745,551		 	1,508,690		 	1,582,881		
Shares (Denominator) – diluted	62,025,322		 	59,635,557		 	60,716,518		 	58,137,149		
 	 	 	 	 	 	 	 	
Earnings per common share from continuing operations	$	0.35		 	$	0.28		 	$	0.92		 	$	0.77		
Loss from discontinued operations	 	 	(0.14	)	 	 	 	(0.29	)	
Earnings per common share – diluted	$	0.35		 	$	0.14		 	$	0.92		 	$	0.48		

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TAUBMAN CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

		
Note 12 -	Fair Value Disclosures	

This note contains required fair value disclosures for assets and liabilities remeasured at fair value on a recurring basis and financial instruments carried at other than fair value, as well as assumptions employed in deriving these fair values.

Recurring Valuations

Derivative Instruments

The fair value of interest rate hedging instruments is the amount that the Company would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the reporting date. The Company’s valuations of its derivative instruments are determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative, and therefore fall into Level 2 of the fair value hierarchy. The valuations reflect the contractual terms of the derivatives, including the period to maturity, and use observable market-based inputs, including forward curves. The fair values of interest rate hedging instruments also incorporate credit valuation adjustments to appropriately reflect both the Company’s own nonperformance risk and the respective counterparty's nonperformance risk.

Marketable Securities

The Company's valuations of marketable securities, which are considered to be available-for-sale, and an insurance deposit utilize unadjusted quoted prices determined by active markets for the specific securities the Company has invested in, and therefore fall into Level 1 of the fair value hierarchy.

For assets and liabilities measured at fair value on a recurring basis, quantitative disclosure of the fair value for each major category of assets and liabilities is presented below:

																	
 	 	Fair Value Measurements as of
September 30, 2012 Using	 	Fair Value Measurements as of
December 31, 2011 Using	
Description	 	Quoted Prices in Active Markets for Identical Assets
(Level 1)	 	Significant Other Observable Inputs
(Level 2)	 	Quoted Prices in Active Markets for Identical Assets
(Level 1)	 	Significant Other Observable Inputs
(Level 2)	
Available-for-sale securities	 	$	2,476		 	 	 	$	2,158		 	 	
Insurance deposit	 	11,290		 	 		 	10,708		 	 		
Total assets	 	$	13,766		 			 	$	12,866		 			
 	 	 	 	 	 	 	 	 	
Derivative interest rate contracts	 	 		 	$	(12,715	)	 	 		 	$	(9,044	)	
Total liabilities	 	 		 	$	(12,715	)	 	 		 	$	(9,044	)	

The insurance deposit shown above represents an escrow account maintained in connection with a property and casualty insurance arrangement for the Company’s shopping centers, and is classified within Deferred Charges and Other Assets on the Consolidated Balance Sheet. Corresponding deferred revenue relating to amounts billed to tenants for this arrangement has been classified within Accounts Payable and Accrued Liabilities on the Consolidated Balance Sheet.

The available-for-sale securities shown above consist of marketable securities that represent shares in a Vanguard REIT fund that were purchased to facilitate a tax efficient structure for the 2005 disposition of Woodland mall and is classified within Deferred Charges and Other Assets on the Consolidated Balance Sheet.

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TAUBMAN CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Financial Instruments Carried at Other Than Fair Values

Community Development District Obligation

The owner of one shopping center pays annual special assessment levies of a Community Development District (CDD), which provided certain infrastructure assets and improvements. As the amount and period of the special assessments were determinable, the Company capitalized the infrastructure assets and improvements and recognized an obligation for the future special assessments to be levied. At September 30, 2012 and December 31, 2011 , the book value of the infrastructure assets and improvements, net of depreciation, was $40.2 million and $41.6 million , respectively. The related obligation is classified within Accounts Payable and Accrued Liabilities on the Consolidated Balance Sheet and had a balance of $61.8 million at September 30, 2012 and December 31, 2011 . The fair value of this obligation, derived from quoted market prices and therefore falling into Level 1 of the fair value hierarchy, was $63.2 million at September 30, 2012 and $58.2 million at December 31, 2011 .

Notes Payable

The fair value of notes payable are estimated using cash flows discounted at current market rates and therefore fall into Level 2 of the fair value hierarchy. When selecting discount rates for purposes of estimating the fair value of notes payable at September 30, 2012 and December 31, 2011 , the Company employed the credit spreads at which the debt was originally issued. Excluding 2010 through 2012 refinancings and debt assumed as part of the 2011 acquisitions, an additional 1.50% credit spread was added to the discount rate at September 30, 2012 and December 31, 2011 , to attempt to account for current market conditions. This additional spread is an estimate and is not necessarily indicative of what the Company could obtain in the market at the reporting date. The Company does not believe that the use of different interest rate assumptions would have resulted in a materially different fair value of notes payable as of September 30, 2012 or December 31, 2011 . To further assist financial statement users, the Company has included with its fair value disclosures an analysis of interest rate sensitivity.

The estimated fair values of notes payable at September 30, 2012 and December 31, 2011 are as follows:

																
 	2012	 	2011	
 	Carrying Value	 	Fair Value	 	Carrying Value	 	Fair Value	
Notes payable	$	2,654,687		 	$	2,799,802		 	$	3,145,602		 	$	3,299,243		

The fair values of the notes payable are dependent on the interest rates used in estimating the values. An overall 1% increase in rates employed in making these estimates would have decreased the fair values of the debt shown above at September 30, 2012 by $79.9 million or 2.9% .

See Note 4 regarding the fair value of the Unconsolidated Joint Ventures’ notes payable, and Note 8 regarding additional information on derivatives.

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Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains various “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 forward-looking statements represent our expectations or beliefs concerning future events, including the following: statements regarding future developments and joint ventures, rents, returns, and earnings; statements regarding the continuation of trends; and any statements regarding the sufficiency of our cash balances and cash generated from operating, investing, and financing activities for our future liquidity and capital resource needs. We caution that although forward-looking statements reflect our good faith beliefs and reasonable judgment based upon current information, these statements are qualified by important factors that could cause actual results to differ materially from those in the forward-looking statements, because of risks, uncertainties, and factors including, but not limited to, the global credit environment and the continuing impacts of the recent U.S. recession, other changes in general economic and real estate conditions, changes in the interest rate environment and the availability of financing, adverse changes in the retail industry, general development risks, fluctuations in foreign currency exchange rates, and integration and other acquisition risks. The forward-looking statements included in this report are made as of the date hereof. Except as required by law, we assume no obligation to update these forward-looking statements, even if new information becomes available in the future. Other risks and uncertainties are detailed from time to time in reports filed with the SEC, and in particular those set forth under “Risk Factors” in our most recent Annual Report on Form 10-K. The following discussion should be read in conjunction with the accompanying consolidated financial statements of Taubman Centers, Inc. and the notes thereto.

General Background and Performance Measurement

Taubman Centers, Inc. (TCO) is a Michigan corporation that operates as a self-administered and self-managed real estate investment trust (REIT). The Taubman Realty Group Limited Partnership (the Operating Partnership or TRG) is a majority-owned partnership subsidiary of TCO, which owns direct or indirect interests in all of our real estate properties. In this report, the terms "we", "us", and "our" refer to TCO, the Operating Partnership, and/or the Operating Partnership's subsidiaries as the context may require. We own, manage, lease, acquire, dispose of, develop, and expand regional and super-regional shopping centers. The Consolidated Businesses consist of shopping centers and entities that are controlled by ownership or contractual agreements, The Taubman Company LLC (Manager), and Taubman Properties Asia LLC and its subsidiaries (Taubman Asia). Shopping centers owned through joint ventures that are not controlled by us but over which we have significant influence (Unconsolidated Joint Ventures) are accounted for under the equity method.

References in this discussion to “beneficial interest” refer to our ownership or pro-rata share of the item being discussed. Also, the operations of the shopping centers are often best understood by measuring their performance as a whole, without regard to our ownership interest. Consequently, in addition to the discussion of the operations of the Consolidated Businesses, the operations of the Unconsolidated Joint Ventures are presented and discussed as a whole. The comparability of information used in measuring performance is affected by the opening of City Creek Center in March 2012, as well as the dispositions of The Pier Shops at Caesars (The Pier Shops) and Regency Square and the acquisitions of The Mall at Green Hills, The Gardens on El Paseo and El Paseo Village in 2011. Additional "comparable center" statistics that exclude City Creek Center, The Mall at Green Hills, The Gardens on El Paseo, El Paseo Village, The Pier Shops and Regency Square are provided to present the performance of comparable centers in our continuing operations. Comparable centers are generally defined as centers that were owned and open for the entire current and preceding period. The Pier Shops and Regency Square are excluded from all operating statistics. See “Results of Operations – Development,” "Results of Operations –Acquisitions," and “Results of Operations – Dispositions/Discontinued Operations,” for background and information on operations of these centers.

Use of Non-GAAP Measures

We use Net Operating Income (NOI) as an alternative measure to evaluate the operating performance of centers, both on individual and stabilized portfolio bases. We define NOI as property-level operating revenues (includes rental income excluding straight-line adjustments of minimum 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 land and property dispositions, it provides a performance measure that, when compared period over period, reflects the revenues and expenses most directly associated with owning and operating rental properties, as well as the impact on their operations from trends in tenant sales, occupancy and rental rates, and operating costs. We also use NOI excluding lease cancellation income as an alternative measure because this income may vary significantly from period to period, which can affect comparability and trend analysis. We generally provide separate projections for expected comparable center NOI growth and our lease cancellation income.

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The operating results in “Results of Operations” include the supplemental earnings measures of Beneficial Interest in EBITDA and Funds from Operations (FFO). Beneficial Interest in EBITDA represents our share of the earnings before interest, income taxes, and depreciation and amortization of our consolidated and unconsolidated businesses. We believe Beneficial Interest in EBITDA provides a useful indicator of operating performance, as it is customary in the real estate and shopping center business to evaluate the performance of properties on a basis unaffected by capital structure.

The National Association of Real Estate Investment Trusts (NAREIT) defines Funds from Operations (FFO) as net income (computed in accordance with Generally 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. We believe that FFO is a useful supplemental measure of operating performance for REITs. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, we and most industry investors and analysts have considered presentations of operating results that exclude historical cost depreciation to be useful in evaluating the operating performance of REITs. We primarily use FFO in measuring performance and in formulating corporate goals and compensation.

We may also present adjusted versions of NOI, Beneficial Interest in EBITDA, and FFO when used by management to evaluate our operating performance when certain significant items have impacted our results that affect comparability with prior or future periods due to the nature or amounts of these items. In addition to the reasons noted above for each measure, we believe the disclosure of the adjusted items is similarly useful to investors and others to understand management's view on comparability of such measures between periods. For the three and nine months ended September 30, 2012, FFO was adjusted for the redemption charges related to the Series G and H Preferred Stock. For the three and nine months ended September 30, 2011, FFO was adjusted for acquisition costs.

Our presentations of NOI, Beneficial Interest in EBITDA, FFO, and also adjusted versions of these measures, if any, are not necessarily comparable to the similarly titled measures of other REITs due to the fact that not all REITs use the same definitions. These measures should not be considered alternatives to net income or as an indicator of our operating performance. Additionally, these measures do not represent cash flows from operating, investing or financing activities as defined by GAAP. Reconciliations of Net Income Attributable to Taubman Centers, Inc. Common Shareowners to Funds from Operations, Net Income to Beneficial Interest in EBITDA, and Net Income to Net Operating Income are presented following the Comparison of the Nine Months Ended September 30, 2012 to the Nine Months Ended September 30, 2011 .

Current Operating Trends

Our mall tenants reported a 6.2% increase in sales per square foot in the third quarter of 2012 from the same period in 2011 . This increase is on top of a 11.7% increase in the third quarter of 2011 . Our increase in sales per square foot growth has moderated from the double-digit sales increases we saw for the nine consecutive quarters ending March 31, 2012. For the twelve month period ended September 30, 2012 , mall tenant sales were $681 per square foot, a 10.7% increase over $615 per square foot for the trailing twelve month period ended September 30, 2011.

Tenant sales and sales per square foot information are operating statistics used in measuring the productivity of the portfolio and are based on reports of sales furnished by mall tenants. Sales are the most important measure of a portfolio’s overall strength and the best predictor of the leasing environment ahead. Over the long term, the level of mall tenant sales is the single most important determinant of revenues of the shopping centers because mall tenants provide approximately 90% of these revenues and mall tenant sales determine the amount of rent, percentage rent, and recoverable expenses (together, total occupancy costs) that mall tenants can afford to pay. However, levels of mall tenant sales can be considerably more volatile in the short run than total occupancy costs, and may be impacted significantly, either positively or negatively, by the success or lack of success of a small number of tenants or even a single tenant.

Tenant sales directly impact the amount of percentage rents certain tenants and anchors pay. The effects of increases or declines in tenant sales on our operations are moderated by the relatively minor share of total rents that percentage rents represent.

While tenant sales are critical over the long term, the high quality regional mall business has been a very stable business model with its diversity of income from thousands of tenants, its staggered lease maturities, and high proportion of fixed rent. However, a sustained trend in sales does impact, either negatively or positively, our ability to lease vacancies and negotiate rents at advantageous rates.

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Ending occupancy increased to 90.4% at September 30, 2012 compared to 88.5% at September 30, 2011 for all centers and for our comparable centers. We continue to expect occupancy to end the year up as much as 1.5% over 2011. Temporary tenants, defined as those with lease terms less than or equal to a year, are not included in occupancy or leased space statistics. As of September 30, 2012 , 4.1% of mall tenant space was occupied by temporary tenants compared to 4.6% as of September 30, 2011 . See “Seasonality” for occupancy and leased space statistics.

Leased space was 92.6% at September 30, 2012 , compared to 91.4% at September 30, 2011 . For our comparable centers, leased space was 92.4% at September 30, 2012 , compared to 91.4% at September 30, 2011 . The difference between leased space and occupancy is that leased space includes spaces where leases have been signed but the tenants are not yet open. Neither statistic includes temporary tenants. We view occupancy as more relevant to operating results as it represents those spaces upon which we are currently collecting rent from permanent tenants. Finally, the spread between leased space and occupied space, at 2.2% this quarter, is consistent with our history of 2% to 3% in the third quarter.

As leases have expired in the centers, we have generally been able to rent the available space, either to the existing tenant or a new tenant, at rental rates that are higher than those of the expired leases. Generally, center revenues have increased as older leases rolled over or were terminated early and replaced with new leases negotiated at current rental rates that were usually higher than the average rates for existing leases. In periods of increasing sales, as we are experiencing now, rents on new leases will generally tend to rise. In periods of slower growth or declining sales, rents on new leases will grow more slowly or will decline for the opposite reason, as tenants' expectations of future growth become less optimistic.

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Rent per square foot statistics are computed using contractual rentals per the tenant lease agreements, which reflect any lease modifications, including those for rental concessions. Rent per square foot information for our comparable centers in our Consolidated Businesses and Unconsolidated Joint Ventures follows:

																
 	Three Months Ended
September 30	 	Nine Months Ended
September 30	
 	2012	 	2011	 	2012	 	2011	
Average rent per square foot:	 	 	 	 	 	 	 	
Consolidated Businesses	$	47.43		 	$	45.72		 	$	47.18		 	$	45.48		
Unconsolidated Joint Ventures	45.61		 	44.36		 	45.27		 	44.91		
Combined	46.85		 	45.28		 	46.57		 	45.29		

								
 	Trailing 12 Months Ended September 30	
 	2012 (1)	 	2011 (1)	
Opening base rent per square foot:	 	 	 	
Consolidated Businesses	$	56.02		 	$	57.35		
Unconsolidated Joint Ventures	52.42		 	48.32		
Combined	55.22		 	55.39		
Square feet of GLA opened:	 	 	 	
Consolidated Businesses	927,446		 	858,695		
Unconsolidated Joint Ventures	264,924		 	237,760		
Combined	1,192,370		 	1,096,455		
Closing base rent per square foot:	 	 	 	
Consolidated Businesses	$	46.11		 	$	48.23		
Unconsolidated Joint Ventures	47.18		 	45.73		
Combined	46.37		 	47.57		
Square feet of GLA closed:	 	 	 	
Consolidated Businesses	876,385		 	886,887		
Unconsolidated Joint Ventures	281,503		 	315,362		
Combined	1,157,888		 	1,202,249		
Releasing spread per square foot:	 	 	 	
Consolidated Businesses	$	9.91		 	$	9.12		
Unconsolidated Joint Ventures	5.24		 	2.59		
Combined	8.85		 	7.82		

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

Average rent per square foot across our portfolio, including comparable centers for both consolidated and unconsolidated properties, was up 3.5% for this quarter and up 2.8% for the nine month period. We continue to expect average rent per square foot for the year to be up about 3.0% for 2012 . The spread between opening and closing rents may not be indicative of future periods, as this statistic is not computed on comparable tenant spaces, and can vary significantly from period to period depending on the total amount, location, and average size of tenant space opening and closing in the period.

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Seasonality

The regional shopping center industry is seasonal in nature, with mall tenant sales highest in the fourth quarter due to the Christmas season, and with lesser, though still significant, sales fluctuations associated with the Easter holiday and back-to-school period. While minimum rents and recoveries are generally not subject to seasonal factors, most leases are scheduled to expire in the first quarter, and the majority of new stores open in the second half of the year in anticipation of the Christmas selling season. Additionally, most percentage rents are recorded in the fourth quarter. Accordingly, revenues and occupancy levels are generally highest in the fourth quarter. Gains on sales of peripheral land and lease cancellation income may vary significantly from quarter to quarter.

																									
 	 	3 rd  Quarter 2012	 	2 nd  Quarter 2012	 	1 st  Quarter 2012	 	Total 2011	 	4 th  Quarter 2011	 	3 rd  Quarter 2011	 	2 nd  Quarter 2011	 	1 st  Quarter 2011	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Mall tenant sales (1)	 	$1,378,384	 	$1,396,440	 	$1,354,100	 	$5,164,916	 	$1,670,378	 	$1,197,351	 	$1,182,236	 	$1,114,951	
Revenues and gains on land sales and other nonoperating income from continuing operations:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Consolidated Businesses	 	189,595		 	179,536		 	169,388		 	646,170		 	187,717		 	158,651		 	150,063		 	149,739		
Unconsolidated Joint Ventures	 	70,453		 	66,764		 	65,318		 	266,617		 	75,333		 	64,997		 	62,923		 	63,364		
Occupancy:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 		
Ending - comparable	 	90.4	%	 	90.2	%	 	89.5	%	 	90.6	%	 	90.6	%	 	88.5	%	 	88.2	%	 	87.9	%	
Average - comparable	 	90.2		 	90.0		 	89.6		 	88.8		 	90.0		 	88.6		 	88.2		 	88.2		
Ending - all centers	 	90.4		 	90.1		 	89.5		 	90.7		 	90.7		 	88.5		 	88.2		 	87.9		
Average - all centers	 	90.1		 	89.9		 	89.7		 	88.8		 	90.0		 	88.6		 	88.2		 	88.2		
Leased space:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Comparable	 	92.4	%	 	92.2	%	 	92.0	%	 	92.3	%	 	92.3	%	 	91.4	%	 	90.9	%	 	90.5	%	
All centers	 	92.6		 	92.3		 	91.9		 	92.4		 	92.4		 	91.4		 	90.9		 	90.5		

(1)	Based on reports of sales furnished by mall tenants.	

Because the seasonality of sales contrasts with the generally fixed nature of minimum rents and recoveries, mall tenant occupancy costs (the sum of minimum rents, percentage rents, and expense recoveries) as a percentage of sales are considerably higher in the first three quarters than they are in the fourth quarter.

																									
 	 	3 rd  Quarter 2012	 	2 nd  Quarter 2012	 	1 st  Quarter 2012	 	Total 2011	 	4 th  Quarter 2011	 	3 rd  Quarter 2011	 	2 nd  Quarter 2011	 	1 st  Quarter 2011	
Consolidated Businesses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Minimum rents	 	8.8	%	 	8.6	%	 	8.7	%	 	8.4	%	 	6.7	%	 	9.0	%	 	9.0	%	 	9.8	%	
Percentage rents	 	0.5		 	0.2		 	0.5		 	0.5		 	0.8		 	0.4		 	0.2		 	0.4		
Expense recoveries	 	4.7		 	4.3		 	4.0		 	4.5		 	4.2		 	4.7		 	4.6		 	4.6		
Mall tenant occupancy costs	 	14.0	%	 	13.1	%	 	13.2	%	 	13.4	%	 	11.7	%	 	14.1	%	 	13.8	%	 	14.8	%	
Unconsolidated Joint Ventures:	 	 	 	 	 	 		 	 		 	 		 	 	 	 	 	 		
Minimum rents	 	8.5	%	 	8.5	%	 	7.8	%	 	7.9	%	 	6.2	%	 	8.4	%	 	8.7	%	 	8.8	%	
Percentage rents	 	0.5		 	0.3		 	0.5		 	0.5		 	0.8		 	0.4		 	0.2		 	0.3		
Expense recoveries	 	4.5		 	4.0		 	3.7		 	3.8		 	3.7		 	4.2		 	3.7		 	4.0		
Mall tenant occupancy costs	 	13.5	%	 	12.8	%	 	12.0	%	 	12.2	%	 	10.7	%	 	13.0	%	 	12.6	%	 	13.1	%	
Combined:	 	 	 	 	 	 		 	 		 	 		 	 	 	 	 	 		
Minimum rents	 	8.7	%	 	8.6	%	 	8.4	%	 	8.2	%	 	6.6	%	 	8.8	%	 	8.9	%	 	9.4	%	
Percentage rents	 	0.5		 	0.2		 	0.5		 	0.5		 	0.8		 	0.4		 	0.2		 	0.4		
Expense recoveries	 	4.7		 	4.2		 	4.0		 	4.3		 	4.0		 	4.5		 	4.3		 	4.4		
Mall tenant occupancy costs	 	13.9	%	 	13.0	%	 	12.9	%	 	13.0	%	 	11.4	%	 	13.7	%	 	13.4	%	 	14.2	%	

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Results of Operations

In addition to the results and trends in our operations disclosed in the preceding sections, the following sections discuss certain transactions that affected operations in the nine month periods ended September 30, 2012 and September 30, 2011 , or are expected to impact operations in the future.

Development

City Creek Center, a mixed-use project in Salt Lake City, Utah, opened in March 2012. The center includes a retail component anchored by Macy’s and Nordstrom. We own 0.6 million square feet of the retail space subject to a long-term participating lease. City Creek Reserve, Inc. (CCRI), an affiliate of the LDS Church, is the participating lessor and provided all of the construction financing. We own 100% of the leasehold interest in the retail buildings and property. CCRI has an option to purchase our interest at fair value at various points in time over the term of the lease. We expect an approximately 12% return at stabilization on our $76 million investment, of which $75 million was paid to CCRI upon opening of the retail center.

Our United States development currently includes three projects that have begun construction: a new outlet mall in Chesterfield, Missouri and new regional malls in Sarasota, Florida and San Juan, Puerto Rico (see "Liquidity and Capital Resources - Capital Spending - New Developments"). In addition, we have projects under development in Asia (see Taubman Asia below).

Acquisitions

In December 2011, we acquired The Mall at Green Hills in Nashville, Tennessee, and The Gardens on El Paseo and El Paseo Village in Palm Desert, California from affiliates of Davis Street Properties, LLC. The consideration for the properties was $560 million, excluding transaction costs. The consideration consisted of the assumption of $206 million of debt, $281.5 million in installment notes, and the issuance of 1.3 million of Operating Partnership units. The number of partnership units issued was determined based on a value of $55 per unit. The partnership units will become eligible to be converted into common shares in December 2012. Prior to this date, holders have the ability to put the units back to us at the lesser of the current market price of Taubman Centers' common stock or $55 per share. The installment notes were secured by restricted cash, which was funded by borrowings under our revolving lines of credit, and were paid in full in February 2012. See "Note 2 - Acquisitions, Dispositions and Development" for a preliminary allocation of the purchase price to the identifiable assets acquired and liabilities assumed at the dates of acquisition.
    
We expect the impact of these acquisitions to be about neutral to FFO per share in 2012, excluding approximately $4.5 million in positive adjustments for purchase accounting. The impact of these centers on net income in 2012 will also include approximately $21 million of depreciation and amortization. See “General Background and Performance Measurement – Use of Non-GAAP Measures” for the definition and discussion of NOI and FFO and see “Reconciliation of Net Income to Net Operating Income” and "Reconciliation of Net Income Attributable to Taubman Centers, Inc. Common Shareowners to Funds from Operations and Adjusted Funds from Operations."

In December 2011, Taubman Asia acquired a 90% controlling interest in a Beijing-based retail real estate consultancy company in Mainland China. The new company is named Taubman TCBL. The total consideration for the transaction was $23.7 million. Taubman Asia paid $11.5 million in cash and credited the noncontrolling owners with $11.9 million of capital in the newly formed company. The $11.5 million in cash includes $10.2 million that was lent in August 2011 by Taubman Asia to the noncontrolling partners. Upon closing, the loan and $0.3 million of accrued interest were converted to capital and the remaining balance was paid in cash. Substantially all of the purchase price was allocated to goodwill in Taubman TCBL. Taubman Asia will fund any additional capital required by the business and will receive a preferred return on all capital contributed. The ownership agreements provide for the distribution of preferred returns on capital as well as returns of all such capital prior to the sharing of profits on relative ownership interests.

For the preceding acquisitions, we have not yet finalized our allocations of the purchase prices to the tangible and identifiable intangible assets and liabilities acquired. We are evaluating certain valuation information for assets and liabilities acquired to complete our allocations. A final determination of the required purchase price allocations will be made before the end of 2012.

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Dispositions/Discontinued Operations

In December 2011, the mortgage lender for Regency Square accepted a deed in lieu of foreclosure on the property. As a result, title to the property was transferred to the mortgage lender, and we were relieved of the $72.2 million of debt obligations plus accrued interest.

In November 2011, the mortgage lender for The Pier Shops completed the foreclosure on the property. As a result, title to the property was transferred to the mortgage lender and we were relieved of the $135 million of debt obligations plus accrued interest.

Financial results of The Pier Shops and Regency Square are classified in discontinued operations for 2011 in the Consolidated Statement of Operations and Comprehensive Income.

Taubman Asia

In August 2012, IFC Mall opened in Yeouido, South Korea. We provide management, leasing and development services for the 0.4 million square foot mall. In 2011, we recognized the first installment of the leasing success fee and we recognized the second installment in the third quarter of 2012. We expect to recognize the final installment in 2013.

Also in August 2012, we announced a joint-venture between Taubman TCBL and Beijing Wangfujing Department Store (Group) Co., Ltd (Wangfujing), one of China's largest department store chains to be located at Xi'an Saigao City Plaza. Taubman Asia has invested $15 million for an interest in the project (see "Liquidity and Capital Resources - Capital Spending - New Developments").

In addition, in August 2012, due diligence was completed on a shopping mall project in Hanam, Gyeonggi Province, South Korea (Hanam Union Square) in which Taubman Asia has partnered with Shinsegae Group (Shinsegae), South Korea's largest retailer. Taubman Asia has invested $52.1 million for an interest in the project (see "Liquidity and Capital Resources - Capital Spending - New Developments").

In December 2011, Taubman Asia acquired a controlling interest in Taubman TCBL (see "Results of Operations - Acquisitions").

Equity Transactions

In August 2012, we issued $192.5 million of 6.5% Series J Cumulative Redeemable Preferred Stock. Proceeds from the issuance were used to redeem all of our $100 million 8.00% Series G Cumulative Redeemable Preferred Stock and $87 million 7.625% Series H Cumulative Redeemable Preferred Stock in September 2012. We recognized a $6.4 million charge representing the difference in the book values over the redemption amounts of the Series G and Series H Preferred Stock redeemed. This issuance and redemption will reduce our future annual preferred dividends paid by $2.1 million.

Also in August 2012, we sold 2,875,000 of our common shares. The proceeds were used to acquire an equal number of Operating Partnership units. The Operating Partnership paid all offering costs. The Operating Partnership used the net proceeds of $208.9 million to reduce outstanding borrowings under our revolving lines of credit.

Financings

In October 2012, we defeased the existing loan at The Mall at Millenia, an Unconsolidated Joint Venture, with the proceeds of a refinancing. We incurred defeasance charges of $3.2 million, $1.6 million at our beneficial share. In August 2012 and June 2012, refinancings were completed on Sunvalley and Westfarms, which are Unconsolidated Joint Ventures. See "Liquidity and Capital Resources" for more information regarding these transactions and other planned financings that are expected to affect net income in 2012 and future periods.

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Center Operations

The NOI of our comparable centers in the third quarter of 2012 was up 7.4% over the same period in 2011 , excluding lease cancellation income, primarily due to increased rents and net recoveries. For the nine months ended September 30, 2012 , NOI excluding lease cancellation income was up 8.3% from the comparable period in 2011 . We now estimate that NOI of our comparable centers, excluding lease cancellation income, will be up about 6% in 2012 . Although rent is projected to contribute to the NOI growth for the remainder of the year, we anticipate volatility and seasonality of net recoveries to reduce comparable NOI growth in the next quarter. For the nine months ended September 30, 2012 , we recognized our $2.2 million share of lease cancellation income. We now expect our share of lease cancellation income to be about $3 million for 2012. See “General Background and Performance Measurement – Use of Non-GAAP Measures” for the definition and discussion of NOI and see “Reconciliation of Net Income to Net Operating Income.”

Third-Party Services

We currently provide management and leasing services to Woodfield Mall in Schaumburg, Illinois. If we were no longer to be involved in the leasing and management of the shopping center, the annual impact on FFO and net income will be in the range of $0.03 to $0.04 per common share. However, there would be no impact until 2013.

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Comparison of the Three Months Ended September 30, 2012 to the Three Months Ended September 30, 2011

The following table sets forth operating results for the three months ended September 30, 2012 and September 30, 2011 , showing the results of the Consolidated Businesses and Unconsolidated Joint Ventures:

																
 	Three Months Ended	 	Three Months Ended	
 	September 30, 2012	 	September 30, 2011	
 	CONSOLIDATED BUSINESSES	 	UNCONSOLIDATED JOINT VENTURES AT 100% (1)	 	CONSOLIDATED BUSINESSES	 	UNCONSOLIDATED JOINT VENTURES AT 100% (1)	
 	(in millions)	
REVENUES:	 	 	 	 	 	 	 	
Minimum rents	$	99.6		 	$	40.0		 	$	84.9		 	$	38.2		
Percentage rents	6.3		 	2.4		 	4.7		 	1.8		
Expense recoveries	66.6		 	26.2		 	57.2		 	23.4		
Management, leasing, and development services	10.2		 	 	 	5.1		 	 	
Other	6.8		 	1.8		 	6.6		 	1.5		
Total revenues	$	189.5		 	$	70.4		 	$	158.6		 	$	64.9		
EXPENSES:	 		 	 		 	 		 	 		
Maintenance, taxes, utilities, and promotion	$	53.3		 	$	18.6		 	$	45.2		 	$	16.4		
Other operating	16.1		 	3.6		 	15.3		 	3.7		
Management, leasing, and development services	6.2		 	 	 	2.9		 	 	
General and administrative	9.6		 	 	 	7.7		 	 	
Acquisition costs	 	 	 	 	1.7		 	 	
Interest expense	34.9		 	16.6		 	30.1		 	15.6		
Depreciation and amortization (2)	36.4		 	9.1		 	33.1		 	9.3		
Total expenses	$	156.5		 	$	47.9		 	$	135.9		 	$	45.0		
Nonoperating income	0.1		 	 	 	0.1		 	0.1		
Income from continuing operations before income tax expense and equity in income of Unconsolidated Joint Ventures	33.1		 	$	22.6		 	22.8		 	$	20.0		
Income tax expense	(0.7	)	 	 	 	(0.2	)	 	 	
Equity in income of Unconsolidated Joint Ventures (2)	12.7		 	 	 	11.0		 	 	
Income from continuing operations	$	45.1		 	 	 	$	33.5		 	 	
Loss from discontinued operations (3)	 	 	 	 	(11.7	)	 	 	
Net income	$	45.1		 	 	 	$	21.9		 	 	
Net income attributable to noncontrolling interests:	 	 	 	 	 	 	 	
Noncontrolling share of income of consolidated joint ventures	(2.1	)	 	 	 	(4.3	)	 	 	
TRG Series F preferred distributions	 	 	 	 	(0.6	)	 	 	
Noncontrolling share of income of TRG - continuing operations	(10.2	)	 	 	 	(8.0	)	 	 	
Noncontrolling share of loss of TRG - discontinued operations	 	 	 	 	3.5		 	 	
Distributions to participating securities of TRG	(0.4	)	 	 	 	(0.4	)	 	 	
Preferred stock dividends (4)	(10.7	)	 	 	 	(3.7	)	 	 	
Net income attributable to Taubman Centers, Inc. common shareowners	$	21.7		 	 	 	$	8.5		 	 	
 	 	 	 	 	 	 	 	
SUPPLEMENTAL INFORMATION  (5) :	 	 	 	 	 	 	 	
EBITDA – 100%	$	104.5		 	$	48.3		 	$	86.0		 	$	44.9		
EBITDA – outside partners' share	(9.3	)	 	(21.5	)	 	(9.5	)	 	(20.3	)	
Beneficial interest in EBITDA	$	95.2		 	$	26.7		 	$	76.5		 	$	24.5		
Beneficial interest expense	(30.7	)	 	(8.8	)	 	(33.7	)	 	(8.1	)	
Beneficial income tax expense	(0.7	)	 	 	 	(0.2	)	 	 	
Non-real estate depreciation	(0.7	)	 	 	 	(0.6	)	 	 	
Preferred dividends and distributions	(10.7	)	 	 	 	(4.3	)	 	 	
Funds from Operations contribution	$	52.5		 	$	18.0		 	$	37.7		 	$	16.4		
		
(1)	With the exception of the Supplemental Information, amounts include 100% of the Unconsolidated Joint Ventures. Amounts are net of intercompany transactions. The Unconsolidated Joint Ventures are presented at 100% in order to allow for measurement of their performance as a whole, without regard to our ownership interest. In our consolidated financial statements, we account for investments in the Unconsolidated Joint Ventures under the equity method.	
		
(2)	Amortization of our additional basis in the Operating Partnership included in depreciation and amortization was $1.2 million in both 2012 and 2011 . Also, amortization of our additional basis included in equity in income of Unconsolidated Joint Ventures was $0.5 million in both 2012 and 2011 .	
		
(3)	Includes the operations of The Pier Shops and Regency Square.	
		
(4)	Preferred dividends for the three months ended September 30, 2012 include charges of $3.3 million and $3.1 million incurred in connection with the $100 million redemption of the Series G Preferred Stock and the $87 million redemption of the Series H Preferred Stock, respectively.	
		
(5)	See “General Background and Performance Measurement – Use of Non-GAAP Measures” for the definition and discussion of EBITDA and FFO.	
		
(6)	Amounts in this table may not add due to rounding.	

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Consolidated Businesses

Total revenues for the quarter ended September 30, 2012 were $ 189.5  million, a $ 30.9  million or 19.5% increase from the comparable period in 2011 . Minimum rents increased by $ 14.7 million primarily due to The Mall at Green Hills, The Gardens on El Paseo and El Paseo Village, which we acquired in December 2011, and City Creek Center which opened in March 2012. Minimum rents also increased due to increases in average rent per square foot and average occupancy. Percentage rents increased primarily due to higher tenant sales. Expense recoveries increased primarily due to The Mall at Green Hills, The Gardens on El Paseo and El Paseo Village, and City Creek Center, an increase in fixed CAM revenue and an increase in recoverable property taxes. Management, leasing, and development income increased primarily due to an incentive fee recognized in 2012 for our leasing at IFC Mall in Seoul, South Korea and an increase in revenue related to Taubman TCBL.

Total expenses were $ 156.5  million, a $ 20.6  million or 15.2% increase from the comparable period in 2011 . Maintenance, taxes, utilities, and promotion expense increased primarily due to The Mall at Green Hills, The Gardens on El Paseo and El Paseo Village, and City Creek Center as well as increased maintenance costs and property taxes at certain centers. Management, leasing, and development costs increased primarily due to Taubman TCBL. General and administrative expense increased primarily due to increased compensation expense. Interest expense increased primarily due to The Mall at Green Hills, The Gardens on El Paseo and El Paseo Village and the November 2011 refinancing of the International Plaza loan at a fixed interest rate higher than the previous floating rate, partially offset by the impact of the August 2012 common share issuance. Depreciation expense increased primarily due to The Mall at Green Hills, The Gardens on El Paseo and El Paseo Village and City Creek Center, partially offset by changes in depreciable lives of tenant allowances in connection with early terminations in 2011.

Unconsolidated Joint Ventures

Total revenues for the three months ended September 30, 2012 were $ 70.4 million, up $ 5.5 million or 8.5% over the comparable period in 2011 . Minimum rents increased primarily due to increases in average rent per square foot and average occupancy. Expense recoveries increased due to increased expenses and fixed CAM revenue as a result of higher occupancy.

Total expenses increased by $ 2.9  million or 6.4% , to $ 47.9  million for the three months ended September 30, 2012 . Maintenance, taxes, utilities and promotion expense increased primarily due to increased property taxes and maintenance costs at certain centers. Interest expense increased due to the June 2012 refinancing of Westfarms at a higher principal balance, partially offset by a lower rate, and the July 2011 refinancing of the Fair Oaks loan at a higher rate.

As a result of the foregoing, income of the Unconsolidated Joint Ventures increased by $ 2.6 million or 13.0% to $ 22.6  million for the three months ended September 30, 2012 . Our equity in income of the Unconsolidated Joint Ventures was $ 12.7 million, a $ 1.7  million or 15.5% increase from the comparable period in 2011 .

Net Income

Our income from continuing operations was $ 45.1 million for the three months ended September 30, 2012 , compared to $ 33.5  million for the three months ended September 30, 2011 . Net income was $ 45.1 million for the three months ended September 30, 2012 compared to $21.9 million for the three months ended September 30, 2011 , with the 2011 period reflecting a $ 11.7 million loss from discontinued operations. After allocation of income to noncontrolling, preferred, and participating interests, the net income attributable to Taubman Centers, Inc. common shareowners for the three months ended September 30, 2012 was $ 21.7  million compared to $ 8.5  million in the comparable period in 2011 .

FFO and FFO per Share

Our FFO was $ 70.5 million for the three months ended September 30, 2012 compared to $ 54.1 million for the three months ended September 30, 2011 . FFO per diluted share was $0.79 in 2012 compared to $0.63 in the comparable period in 2011 . Adjusted FFO in 2012, which excludes charges upon redemption of the Series G and H Preferred Stock, was $76.9 million or $0.86 per diluted share. Adjusted FFO in 2011, which excludes acquisition costs, was $55.8 million , or $0.65 per diluted share. See “General Background and Performance Measurement – Use of Non-GAAP Measures” for the definition of FFO and “Reconciliation of Net Income Attributable to Taubman Centers, Inc. Common Shareowners to Funds from Operations and Adjusted Funds from Operations.”

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Comparison of the Nine Months Ended September 30, 2012 to the Nine Months Ended September 30, 2011

The following table sets forth operating results for the nine months ended September 30, 2012 and September 30, 2011 , showing the results of the Consolidated Businesses and Unconsolidated Joint Ventures:

																
 	Nine Months Ended	 	Nine Months Ended	
 	September 30, 2012	 	September 30, 2011	
 	CONSOLIDATED BUSINESSES	 	UNCONSOLIDATED JOINT VENTURES AT 100% (1)	 	CONSOLIDATED BUSINESSES	 	UNCONSOLIDATED JOINT VENTURES AT 100% (1)	
 	(in millions)	
REVENUES:	 	 	 	 	 	 	 	
Minimum rents	$	292.2		 	$	119.2		 	$	251.6		 	$	115.6		
Percentage rents	12.8		 	5.8		 	9.6		 	4.1		
Expense recoveries	185.3		 	72.6		 	162.9		 	67.6		
Management, leasing, and development services	27.4		 	 	 	15.4		 	 	
Other	20.5		 	4.9		 	18.1		 	3.9		
Total revenues	$	538.3		 	$	202.5		 	$	457.6		 	$	191.2		
EXPENSES:	 		 	 		 	 		 	 		
Maintenance, taxes, utilities, and promotion	$	143.9		 	$	52.2		 	$	129.7		 	$	48.9		
Other operating	52.4		 	11.5		 	48.1		 	11.1		
Management, leasing, and development services	21.7		 	 	 	7.5		 	 	
General and administrative	28.0		 	 	 	23.0		 	 	
Acquisition costs	 	 	 	 	1.7		 	 	
Interest expense	109.1		 	48.1		 	89.5		 	45.2		
Depreciation and amortization (2)	109.1		 	26.7		 	99.5		 	27.9		
Total expenses	$	464.1		 	$	138.5		 	$	399.1		 	$	133.0		
Nonoperating income	0.3		 	—		 	0.9		 	0.1		
Income from continuing operations before income tax expense and equity in income of Unconsolidated Joint Ventures	74.4		 	$	64.1		 	59.4		 	$	58.2		
Income tax expense	(1.4	)	 	 	 	(0.4	)	 	 	
Equity in income of Unconsolidated Joint Ventures (2)	35.7		 	 	 	32.0		 	 	
Income from continuing operations	$	108.7		 	 	 	$	91.0		 	 	
Loss from discontinued operations (3)	—		 	 	 	(24.4	)	 	 	
Net income	$	108.7		 	 	 	$	66.6		 	 	
Net income attributable to noncontrolling interests:	 	 	 	 	 	 	 	
Noncontrolling share of income of consolidated joint ventures	(6.8	)	 	 	 	(10.5	)	 	 	
TRG Series F preferred distributions			 	 	 	(1.8	)	 	 	
Noncontrolling share of income of TRG - continuing operations	(27.1	)	 	 	 	(22.1	)	 	 	
Noncontrolling share of loss of TRG - discontinued operations	 	 	 	 	7.5		 	 	
Distributions to participating securities of TRG	(1.2	)	 	 	 	(1.1	)	 	 	
Preferred stock dividends (4)	(18.0	)	 	 	 	(11.0	)	 	 	
Net income attributable to Taubman Centers, Inc. common shareowners	$	55.6		 	 	 	$	27.5		 	 	
 	 	 	 	 	 	 	 	
SUPPLEMENTAL INFORMATION  (5) :	 	 	 	 	 	 	 	
EBITDA – 100%	$	292.6		 	$	138.9		 	$	250.5		 	$	131.3		
EBITDA – outside partners' share	(27.1	)	 	(62.3	)	 	(27.0	)	 	(59.5	)	
Beneficial interest in EBITDA	$	265.5		 	$	76.6		 	$	223.4		 	$	71.7		
Beneficial interest expense	(96.5	)	 	(25.1	)	 	(98.5	)	 	(23.4	)	
Beneficial income tax expense	(1.4	)	 	 	 	(0.4	)	 	 	
Non-real estate depreciation	(2.0	)	 	 	 	(2.0	)	 	 	
Preferred dividends and distributions	(18.0	)	 	 	 	(12.8	)	 	 	
Funds from Operations contribution	$	147.6		 	$	51.5		 	$	109.7		 	$	48.3		
		
(1)	With the exception of the Supplemental Information, amounts include 100% of the Unconsolidated Joint Ventures. Amounts are net of intercompany transactions. The Unconsolidated Joint Ventures are presented at 100% in order to allow for measurement of their performance as a whole, without regard to our ownership interest. In our consolidated financial statements, we account for investments in the Unconsolidated Joint Ventures under the equity method.	
		
(2)	Amortization of our additional basis in the Operating Partnership included in depreciation and amortization was $3.7 million in both 2012 and 2011 . Also, amortization of our additional basis included in equity in income of Unconsolidated Joint Ventures was $1.5 million in both 2012 and 2011 .	
		
(3)	Includes the operations of The Pier Shops and Regency Square.	
		
(4)	Preferred dividends for the nine months ended September 30, 2012 include charges of $3.3 million and $3.1 million incurred in connection with the $100 million redemption of the Series G Preferred Stock and the $87 million redemption of the Series H Preferred Stock, respectively.	
		
(5)	See “General Background and Performance Measurement – Use of Non-GAAP Measures” for the definition and discussion of EBITDA and FFO.	
		
(6)	Amounts in this table may not add due to rounding.	

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Consolidated Businesses

Total revenues for the nine months ended September 30, 2012 were $ 538.3 million, a $ 80.7 million or 17.6% increase from the comparable period in 2011 . Minimum rents increased by $ 40.6 million primarily due to The Mall at Green Hills, The Gardens on El Paseo and El Paseo Village, which we acquired in December 2011 and City Creek Center, which opened in March 2012. Minimum rents also increased due to increases in average rent per square foot and average occupancy. Percentage rents increased primarily due to higher tenant sales. Expense recoveries increased primarily due to The Mall at Green Hills, The Gardens on El Paseo and El Paseo Village, and City Creek Center, an increase in fixed CAM revenue and an increase in expenses chargeable to net CAM tenants. Management, leasing, and development income increased primarily due to an increase in revenue related to Taubman TCBL and an incentive fee recognized in 2012 for our leasing at IFC Mall in Seoul, South Korea, partially offset by a one-time collection of past due development fees in 2011 for services provided on the Riverstone project in Songdo International Business District, Incheon, South Korea. We now expect our share of net management leasing and development income to be about $7 million in 2012. Other income increased primarily due to an increase in sponsorship revenue and income from City Creek Center.

Total expenses were $ 464.1 million, a $ 65.0  million or 16.3% increase from the comparable period in 2011 . Maintenance, taxes, utilities, and promotion expense increased primarily due to The Mall at Green Hills, The Gardens on El Paseo and El Paseo Village, and City Creek Center. Other operating expense increased primarily due to The Mall at Green Hills, The Gardens on El Paseo and El Paseo Village and City Creek Center, an increase in center-related property management costs offset by a reduction in bad debt and pre-development costs. We now expect our share of pre-development expenses, including both U.S. and Asia, to be about $19 million, which is slightly down from our previous guidance of $21 million. Management, leasing, and development costs increased primarily due to increased costs relating to Taubman TCBL and reimbursable third-party costs. General and administrative expense increased primarily due to increased compensation expense and professional fees. We continue to expect general and administrative expense to be somewhat over $9 million for the fourth quarter of 2012. Interest expense increased primarily due to The Mall at Green Hills, The Gardens on El Paseo and El Paseo Village and the November 2011 refinancing of the International Plaza loan at a fixed interest rate higher than the previous floating rate. Interest expense was also impacted by the July 2011 refinancing of our primary line of credit at a higher rate, partially offset by the impacts of the June 2011 and the August 2012 common share issuances. Depreciation expense increased primarily due to The Mall at Green Hills, The Gardens on El Paseo and El Paseo Village, and City Creek Center, partially offset by changes in depreciable lives of tenant allowances in connection with early terminations in 2011. Income tax expense increased due to the level of income allocable to our taxable REIT subsidiaries and tax related to the incentive fee recognized in 2012 for leasing at IFC mall.

Unconsolidated Joint Ventures

Total revenues for the nine months ended September 30, 2012 were $ 202.5 million, up $ 11.3 million or 5.9% over the comparable period in 2011 . Minimum rents increased primarily due to increases in average occupancy and average rent per square foot and increased income from temporary tenants and specialty retailers. Percentage rents increased primarily due to higher tenant sales. Expense recoveries increased due to an increase in fixed CAM revenue as a result of higher occupancy and increased expenses chargeable to net CAM tenants. Other income increased due to increased lease cancellation income and sponsorship revenue.

Total expenses increased by $ 5.5  million or 4.1% , to $ 138.5  million for the nine months ended September 30, 2012 . Maintenance, taxes, utilities and promotion expense increased primarily due to increased property taxes and maintenance costs at certain centers. Interest expense increased primarily due to the July 2011 refinancing of the Fair Oaks loan at a higher rate, and the June 2012 refinancing of Westfarms at a higher principal balance, partially offset by a lower rate on the refinancing. Depreciation expense increased primarily due to an increase in depreciation on CAM assets.

As a result of the foregoing, income of the Unconsolidated Joint Ventures increased by $ 5.9 million or 10.1% to $ 64.1  million for the nine months ended September 30, 2012 . Our equity in income of the Unconsolidated Joint Ventures was $ 35.7 million, a $ 3.7  million or 11.6% increase from the comparable period in 2011 .

Net Income

Our income from continuing operations was $ 108.7 million for the nine months ended September 30, 2012 , compared to $ 91.0  million for the nine months ended September 30, 2011 . Net income was $ 108.7 million for the nine months ended September 30, 2012 compared to $ 66.6 million for the nine months ended September 30, 2011 , with the 2011 period reflecting a $ 24.4 million loss from discontinued operations. After allocation of income to noncontrolling, preferred, and participating interests, the net income attributable to Taubman Centers, Inc. common shareowners for the nine months ended September 30, 2012 was $ 55.6  million compared to $ 27.5  million in the comparable period in 2011 .

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FFO and FFO per Share

Our FFO was $ 199.1 million for the nine months ended September 30, 2012 compared to $ 158.1 million for the nine months ended September 30, 2011 . FFO per diluted share was $ 2.26 in 2012 compared to $ 1.88 in the comparable period in 2011 . Adjusted FFO in 2012, which excludes charges upon redemption of the Series G and H Preferred Stock, was $205.6 million, or $2.33 per diluted share. Adjusted FFO in 2011, which excludes acquisition costs, was $ 159.8 million , or $ 1.90 per diluted share. See “General Background and Performance Measurement – Use of Non-GAAP Measures” for the definition of FFO and “Reconciliation of Net Income Attributable to Taubman Centers, Inc. Common Shareowners to Funds from Operations and Adjusted Funds from Operations.”

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Reconciliation of Net Income Attributable to Taubman Centers, Inc. Common Shareowners
to Funds from Operations and Adjusted Funds from Operations	
																						
 	Three Months Ended September 30	
 	2012	 	2011	
 	Dollars in millions	 	Diluted Shares/ Units	 	Per Share/ Unit	 	Dollars in millions	 	Diluted Shares/ Units	 	Per Share/ Unit	
Net income attributable to TCO common shareowners – basic	$	21.7		 	60,571,612		 	$	0.36		 	$	8.5		 	57,890,006		 	$	0.15		
Add impact of share-based compensation	0.2		 	1,453,710		 	 	 	0.1		 	1,745,551		 	 	
Net income attributable to TCO common shareowners – diluted	$	21.9		 	62,025,322		 	$	0.35		 	$	8.6		 	59,635,557		 	$	0.14		
Add depreciation of TCO’s additional basis	1.7		 	 	 	0.03		 	1.7		 	 	 	0.03		
Net income attributable to TCO common shareowners, excluding step-up depreciation	$	23.6		 	62,025,322		 	$	0.38		 	$	10.3		 	59,635,557		 	$	0.17		
Add:	 	 	 	 	 	 	 	 	 	 	 	
Noncontrolling share of income of TRG - continuing operations	10.2		 	26,422,911		 		 	8.0		 	25,158,885		 	 	
Noncontrolling share of loss of TRG - discontinued operations	 	 	 	 	 	 	(3.5	)	 	 	 	 	
Distributions to participating securities	0.4		 	871,262		 	 	 	0.4		 	871,262		 	 	
Net income attributable to partnership unitholders and participating securities	$	34.2		 	89,319,495		 	$	0.38		 	$	15.1		 	85,665,704		 	$	0.18		
Add (less) depreciation and amortization (1) :	 	 	 	 	 	 	 	 	 	 	 	
Consolidated businesses at 100% - continuing operations	36.4		 	 	 	0.41		 	33.1		 	 	 	0.39		
Consolidated businesses at 100% - discontinued operations	 	 	 	 	 	 	5.4		 	 	 	0.06		
Depreciation of TCO’s additional basis	(1.7	)	 	 	 	(0.02	)	 	(1.7	)	 	 	 	(0.02	)	
Noncontrolling partners in consolidated joint ventures	(2.9	)	 	 	 	(0.03	)	 	(2.4	)	 	 	 	(0.03	)	
Share of Unconsolidated Joint Ventures	5.3		 	 	 	0.06		 	5.5		 	 	 	0.06		
Non-real estate depreciation	(0.7	)	 	 	 	(0.01	)	 	(0.6	)	 	 	 	(0.01	)	
Less impact of share-based compensation	(0.2	)	 	 	 	—		 	(0.1	)	 	 	 	—		
Funds from Operations	$	70.5		 	89,319,495		 	$	0.79		 	$	54.1		 	85,665,704		 	$	0.63		
TCO's average ownership percentage of TRG	69.6	%	 	 	 	 	 	69.7	%	 	 	 	 	
Funds from Operations attributable to TCO	$	49.1		 	 	 	$	0.79		 	$	37.7		 	 	 	$	0.63		
 	 	 	 	 	 	 	 	 	 	 	 	
Funds from Operations	$	70.5		 	89,319,495		 	$	0.79		 	$	54.1		 	85,665,704		 	$	0.63		
Charge upon redemption of Series G and H Preferred Stock	6.4		 	 	 	0.07		 	 	 	 	 	 	
Acquisition costs			 	 	 			 	1.7		 	 	 	0.02		
Adjusted Funds from Operations	$	76.9		 	89,319,495		 	$	0.86		 	$	55.8		 	85,665,704		 	$	0.65		
TCO's average ownership percentage of TRG	69.6	%	 	 	 	 	 	69.7	%	 	 	 	 	
Adjusted Funds from Operations attributable to TCO	$	53.5		 	 	 	$	0.86		 	$	38.9		 	 	 	$	0.65		
 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted Funds from Operations	 	 	 	 	 	 	$	55.8		 	85,665,704		 	$	0.65		
The Pier Shops' and Regency Square's negative FFO	 	 	 	 	 	 	6.3		 	 	 	0.07		
Adjusted Funds from Operations, excluding The Pier Shops and Regency Square	 	 	 	 	 	 	$	62.1		 	85,665,704		 	$	0.73		
TCO's average ownership percentage of TRG	 	 	 	 	 	 	69.7	%	 	 	 	 	
Adjusted Funds from Operations attributable to TCO, excluding The Pier Shops and Regency Square	 	 	 	 	 	 	$	43.3		 	 	 	$	0.73		

(1)	Depreciation includes $4.9 million and $4.5 million of mall tenant allowance amortization for the three months ended September 30, 2012 and 2011 , respectively.	
		
(2)	Amounts in this table may not recalculate due to rounding.	

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Reconciliation of Net Income Attributable to Taubman Centers, Inc. Common Shareowners
to Funds from Operations and Adjusted Funds from Operations	
																						
 	Nine Months Ended September 30	
 	2012	 	2011	
 	Dollars in millions	 	Diluted Shares/ Units	 	Per Share/ Unit	 	Dollars in millions	 	Diluted Shares/ Units	 	Per Share/ Unit	
Net income attributable to TCO common shareowners – basic	$	55.6		 	59,207,828		 	$	0.94		 	$	27.5		 	56,554,268		 	$	0.49		
Add impact of share-based compensation	0.5		 	1,508,690		 	 	 	0.3		 	1,582,881		 	 	
Net income attributable to TCO common shareowners – diluted	$	56.1		 	60,716,518		 	$	0.92		 	$	27.8		 	58,137,149		 	$	0.48		
Add depreciation of TCO’s additional basis	5.2		 	 	 	0.08		 	5.2		 	 	 	0.09		
Net income attributable to TCO common shareowners, excluding step-up depreciation	$	61.2		 	60,716,518		 	$	1.01		 	$	33.0		 	58,137,149		 	$	0.57		
Add:	 	 	 	 	 	 	 	 	 	 	 	
Noncontrolling share of income of TRG - continuing operations	27.1		 	26,447,257		 	 	 	22.1		 	25,243,652		 	 	
Noncontrolling share of loss of TRG - discontinued operations	 	 	 	 	 	 	(7.5	)	 	 	 	 	
Distributions to participating securities	1.2		 	871,262		 	 	 	1.1		 	871,262		 	 	
Net income attributable to partnership unitholders and participating securities	$	89.5		 	88,035,037		 	$	1.02		 	$	48.7		 	84,252,063		 	$	0.58		
Add (less) depreciation and amortization (1) :	 	 	 	 	 	 	 	 	 	 	 	
Consolidated businesses at 100% - continuing operations	109.1		 	 	 	1.24		 	99.5		 	 	 	1.18		
Consolidated businesses at 100% - discontinued operations	 	 	 	 	 	 	9.0		 	 	 	0.11		
Depreciation of TCO’s additional basis	(5.2	)	 	 	 	(0.06	)	 	(5.2	)	 	 	 	(0.06	)	
Noncontrolling partners in consolidated joint ventures	(7.7	)	 	 	 	(0.09	)	 	(8.1	)	 	 	 	(0.10	)	
Share of Unconsolidated Joint Ventures	15.8		 	 	 	0.18		 	16.4		 	 	 	0.19		
Non-real estate depreciation	(2.0	)	 	 	 	(0.02	)	 	(2.0	)	 	 	 	(0.02	)	
Less impact of share-based compensation	(0.5	)	 	 	 	(0.01	)	 	(0.3	)	 	 	 	—		
Funds from Operations	$	199.1		 	88,035,037		 	$	2.26		 	$	158.1		 	84,252,063		 	$	1.88		
TCO's average ownership percentage of TRG	69.1	%	 	 	 	 	 	69.1	%	 	 	 	 	
Funds from Operations attributable to TCO	$	137.7		 	 	 	$	2.26		 	$	109.3		 	 	 	$	1.88		
 	 	 	 	 	 	 	 	 	 	 	 	
Funds from Operations	$	199.1		 	88,035,037		 	$	2.26		 	$	158.1		 	84,252,063		 	$	1.88		
Charge upon redemption of Series G and H Preferred Stock	6.4		 	 	 	0.07		 	 	 	 	 	 	
Acquisition costs	 	 	 	 	 	 	1.7		 	 	 	0.02		
Adjusted Funds from Operations	$	205.6		 	88,035,037		 	$	2.33		 	$	159.8		 	84,252,063		 	$	1.90		
TCO's average ownership percentage of TRG	69.1	%	 	 	 	 	 	69.1	%	 	 	 	 	
Adjusted Funds from Operations attributable to TCO	$	142.1		 	 	 	$	2.33		 	$	110.5		 	 	 	$	1.90		
 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted Funds from Operations	 	 	 	 	 	 	$	159.8		 	84,252,063		 	$	1.90		
The Pier Shops' and Regency Square's negative FFO		 	 	 		 	15.3		 	 	 	0.18		
Adjusted Funds from Operations, excluding The Pier Shops and Regency Square	 	 	 	 	 	 	$	175.1		 	84,252,063		 	$	2.08		
TCO's average ownership percentage of TRG			 	 	 	 	 	69.1	%	 	 	 	 	
Adjusted Funds from Operations attributable to TCO, excluding The Pier Shops and Regency Square			 	 	 			 	$	121.1		 	 	 	$	2.08		

(1)	Depreciation includes $15.1 million and $12.8 million of mall tenant allowance amortization for the nine months ended September 30, 2012 and 2011 , respectively.	
		
(2)	Amounts in this table may not recalculate due to rounding.	

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Reconciliation of Net Income to Beneficial Interest in EBITDA

 	Three Months Ended
September 30	 	Nine Months Ended
September 30	
 	(in millions)	
 	2012	 	2011	 	2012	 	2011	
Net income	$	45.1		 	$	21.9		 	$	108.7		 	$	66.6		
 	 	 	 	 	 	 	 	
Add (less) depreciation and amortization:	 	 	 	 	 	 	 	
Consolidated businesses at 100% - continuing operations	36.4		 	33.1		 	109.1		 	99.5		
Consolidated businesses at 100% - discontinued operations	 	 	5.4		 			 	9.0		
Noncontrolling partners in consolidated joint ventures	(2.9	)	 	(2.4	)	 	(7.7	)	 	(8.1	)	
Share of Unconsolidated Joint Ventures	5.3		 	5.5		 	15.8		 	16.4		
 	 	 	 	 	 	 	 	
Add (less) interest expense and income tax expense:	 	 	 	 	 	 	 	
Interest expense:	 	 	 	 	 	 	 	
Consolidated businesses at 100% - continuing operations	34.9		 	30.1		 	109.1		 	89.5		
Consolidated businesses at 100% - discontinued operations	 	 	6.4		 			 	17.4		
Noncontrolling partners in consolidated joint ventures	(4.2	)	 	(2.8	)	 	(12.6	)	 	(8.4	)	
Share of Unconsolidated Joint Ventures	8.8		 	8.1		 	25.1		 	23.4		
Share of income tax expense	0.7		 	0.2		 	1.4		 	0.4		
 	 	 	 	 	 	 	 	
Less noncontrolling share of income of consolidated joint ventures	(2.1	)	 	(4.3	)	 	(6.8	)	 	(10.5	)	
 	 	 	 	 	 	 	 	
Beneficial interest in EBITDA	$	122.0		 	$	101.0		 	$	342.1		 	$	295.2		
 	 	 	 	 	 	 	 	
TCO's average ownership percentage of TRG	69.6	%	 	69.7	%	 	69.1	%	 	69.1	%	
 	 	 	 	 	 	 	 	
Beneficial interest in EBITDA attributable to TCO	$	84.9		 	$	70.4		 	$	236.5		 	$	204.1		

(1)	Amounts in this table may not add due to rounding.	

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Reconciliation of Net Income to Net Operating Income

 	Three Months Ended
September 30	 	Nine Months Ended
September 30	
 	(in millions)	
 	2012	 	2011	 	2012	 	2011	
Net income	$	45.1		 	$	21.9		 	$	108.7		 	$	66.6		
Add (less) depreciation and amortization:	 	 	 	 	 	 	 	
Consolidated businesses at 100% - continuing operations	36.4		 	33.1		 	109.1		 	99.5		
Consolidated businesses at 100% - discontinued operations	 	 	5.4		 	 	 	9.0		
Noncontrolling partners in consolidated joint ventures	(2.9	)	 	(2.4	)	 	(7.7	)	 	(8.1	)	
Share of Unconsolidated Joint Ventures	5.3		 	5.5		 	15.8		 	16.4		
Add (less) interest expense and income tax expense:	 	 	 	 	 	 	 	
Interest expense:	 	 	 	 	 	 	 	
Consolidated businesses at 100% - continuing operations	34.9		 	30.1		 	109.1		 	89.5		
Consolidated businesses at 100% - discontinued operations	 	 	6.4		 	 	 	17.4		
Noncontrolling partners in consolidated joint ventures	(4.2	)	 	(2.8	)	 	(12.6	)	 	(8.4	)	
Share of Unconsolidated Joint Ventures	8.8		 	8.1		 	25.1		 	23.4		
Share of income tax expense	0.7		 	0.2		 	1.4		 	0.4		
Less noncontrolling share of income of consolidated joint ventures	(2.1	)	 	(4.3	)	 	(6.8	)	 	(10.5	)	
Add EBITDA attributable to outside partners:	 	 	 	 	 	 	 	
EBITDA attributable to noncontrolling partners in consolidated joint ventures	9.3		 	9.5		 	27.1		 	27.0		
EBITDA attributable to outside partners in Unconsolidated Joint Ventures	21.5		 	20.3		 	62.3		 	59.5		
EBITDA at 100%	$	152.8		 	$	130.8		 	$	431.5		 	$	381.7		
Add (less) items excluded from shopping center Net Operating Income:	 	 	 	 	 	 	 	
General and administrative expenses	9.6		 	7.7		 	28.0		 	23.0		
Management, leasing, and development services, net	(4.1	)	 	(2.2	)	 	(5.8	)	 	(7.9	)	
Gain on sale of peripheral land	 	 			 	 	 	(0.5	)	
Interest income	(0.1	)	 	(0.2	)	 	(0.3	)	 	(0.5	)	
Straight-line rents	(2.1	)	 	(0.8	)	 	(4.5	)	 	(1.4	)	
Acquisition Costs	 	 	1.7		 	 	 	1.7		
Non-center specific operating expenses and other	6.4		 	7.2		 	21.8		 	22.1		
Net Operating Income at 100% - all centers	$	162.5		 	$	144.2		 	$	470.7		 	$	418.1		
Less - Net Operating Income of non-comparable centers  (1)	(7.5	)	 	—		 	(20.2	)	 	(1.9	)	
Net Operating Income at 100% - comparable centers	155.0		 	144.1		 	450.5		 	416.2		
Lease cancellation income	(1.1	)	 	(0.8	)	 	(3.0	)	 	(3.0	)	
Net Operating Income at 100% excluding lease cancellation income (2)	$	154.0		 	$	143.4		 	$	447.5		 	$	413.2		

(1)	Includes City Creek Center, The Mall at Green Hills, The Gardens on El Paseo, and El Paseo Village in 2012. Includes The Pier Shops and Regency Square in 2011.	
		
(2)	See "General Background and Performance Measurement - Use of Non-GAAP Measures" for a discussion of the use and utility of Net Operating Income excluding lease cancellation income as a performance measure.	
		
(3)	Amounts in this table may not recalculate due to rounding.	

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Liquidity and Capital Resources

Our internally generated funds and distributions from operating centers and other investing activities, augmented by use of our existing revolving lines of credit, provide resources to maintain our current operations and assets and pay dividends. Generally, our need to access the capital markets is limited to refinancing debt obligations at or near maturity and funding major capital investments. From time to time, we also may access the equity markets to raise additional funds or refinance existing obligations on a strategic basis. See “Capital Spending” for more details. Market conditions may limit our sources of funds for these financing activities and our ability to refinance our debt obligations at present principal amounts, interest rates, and other terms.

We are financed with property-specific secured debt and we have three unencumbered center properties (Willow Bend, Stamford Town Center - a 50% owned Unconsolidated Joint Venture property, and City Creek Center).

As of September 30, 2012 , we had a consolidated cash balance of $ 29.3 million. We also have secured revolving lines of credit of $650 million and $65 million, as of September 30, 2012 . The availability under these facilities as of September 30, 2012 , after considering then outstanding loan balances and outstanding letters of credit, was $581 million. Thirteen banks participate in our $650 million revolving line of credit and the failure of one bank to fund a draw on our line does not negate the obligation of the other banks to fund their pro-rata shares.

In October 2012, a 12-year, $350 million non-recourse refinancing was completed on The Mall at Millenia, a 50% owned Unconsolidated Joint Venture. The payments on the loan, which bears interest at an all-in rate of 4.05%, will be interest only for four years, and then amortizes principal based on 30 years. The interest-only period may be extended until the maturity date provided that the net income available for debt service equals or exceeds a certain amount for calendar year 2015. Proceeds from the refinancing were used to defease the existing $197 million, 5.46% fixed rate loan, and pay the $3.2 million, $1.6 million at our share, in defeasance charges. Excess proceeds of $150 million, $75 million at our share, were used to pay down our revolving lines of credit.

In August 2012, a 10-year, $190 million non-recourse refinancing was completed on Sunvalley, a 50% owned Unconsolidated Joint Venture. The payments on the loan, which bears interest at an all-in rate of 4.47%, are based on amortizing principal over 30 years. Proceeds from the refinancing were used to pay off the existing $114.5 million, 5.67% fixed-rate loan. A portion of excess proceeds were reserved for future capital spending and tenant allowances, and our $31.7 million share, after reserves, was used to pay down our revolving lines of credit. We also expect to refinance the $30 million Taubman Land Associates (Sunvalley entity) loan, $15 million at our beneficial share, in the fourth quarter of 2012. The loan matures in November 2012, and is prepayable without penalty at any time. Currently the loan is swapped to an effective rate of 5.95% until maturity. We expect to refinance this with a $24 million loan, $12 million at our beneficial share, 3.84% fixed rate loan.

In June 2012, a 10-year, $320 million non-recourse refinancing was completed on Westfarms, a 79% owned Unconsolidated Joint Venture.  The payments on the loan, which bears interest at an all-in fixed rate of 4.53%, are based on amortizing principal over 30 years.  The existing $179.4 million, 6.10% fixed rate loan was paid off and our $110 million share of excess proceeds was used to pay down our revolving lines of credit. 

Summaries of Capital Activities and Transactions for the Nine Months Ended September 30, 2012 and 2011

Operating Activities

Our net cash provided by operating activities was $ 244.9  million in 2012 , compared to $ 195.6  million in 2011 . See also “Results of Operations” for descriptions of 2012 and 2011 transactions affecting operating cash flows.

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Investing Activities

Net cash provided by investing activities was $ 189.7  million in 2012 , compared to $ 60.4  million used in investing activities in 2011 . Additions to properties in 2012 related primarily to the $75 million paid upon the opening of City Creek Center, costs of the new centers under development, tenant improvements at existing centers, and other capital items. Additions to properties in 2011 related primarily to the purchase of the space vacated by Saks Fifth Avenue at Cherry Creek Shopping Center, tenant improvements at existing centers and other capital items. A tabular presentation of 2012 capital spending is shown in “Capital Spending.” Net proceeds from the sale of peripheral land were $3.7 million in 2011. There were no land sales in 2012. The timing of land sales is variable and proceeds from land sales can vary significantly from period to period. Repayments of notes receivable were $ 5.8 million and $ 1.2 million in 2012 and 2011 , respectively. The amount in 2012 included the $5.1 million that was repaid by the joint venture partners at Westfarms related to their share of the litigation charges, which were paid in 2009. Restricted cash in 2012 was used to repay the $281.5 million of installment notes that were issued as part of the consideration for the acquired centers in 2011 (see "Results of Operations - Acquisitions"). In 2011, Taubman Asia made a $10.2 million loan to TCBL, Inc. related to its acquisition. Also in 2011, Taubman Asia invested $20.9 million for an interest in the new Hanam project with Shinsegae. In 2012, Taubman Asia invested $ 46.3 million in two projects: one in Xi'an, China and additional funds for the project in Hanam, Gyeonggi Province, South Korea (see "Capital Spending - New Developments").

Sources of cash used in funding these investing activities other than cash flows from operating activities included distributions from Unconsolidated Joint Ventures. Distributions in excess of income from Unconsolidated Joint Ventures provided $ 145.4  million in 2012 , compared to $ 20.5  million in 2011 . The amount in 2012 included $31.7 million and $110 million of excess proceeds from the Sunvalley and Westfarms refinancings, respectively, which were used to pay down our revolving lines of credit. The amount in 2011 included $11.1 million of excess proceeds from the Fair Oaks refinancing.

Financing Activities

Net cash used in financing activities was $ 429.4  million in 2012 compared to $ 133.0  million in 2011 . Payments of debt were $ 204.7  million in 2012 . Payments of debt and issuance costs were $137.3 million in 2011 . Installment notes issued in connection with the acquisitions of centers in 2011 were repaid in February 2012. In 2012 and 2011, $208.9 million and $112.0 million, respectively, were received from issuing new shares of common stock, net of offering costs. In 2012 , $10.1  million was paid in connection with incentive plans, compared to $ 2.1  million in 2011 . In 2012, we used the $ 186.2 million of net proceeds from the issuance of Series J Preferred Stock to redeem the $ 187.0 million Series G and Series H Preferred Stock. Contributions from noncontrolling interests were $ 4.2 million in 2012 compared to $31.9 million in 2011, which included contributions to fund the paydown of the International Plaza loan and the purchase of the space vacated by Saks Fifth Avenue at Cherry Creek. Total dividends and distributions paid were $ 145.4  million and $ 137.4  million in 2012 and 2011 , respectively.

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Beneficial Interest in Debt

At September 30, 2012 , the Operating Partnership's debt and its beneficial interest in the debt of its Consolidated Businesses and Unconsolidated Joint Ventures totaled $3,050.3 million, with an average interest rate of 5.04% excluding amortization of debt issuance costs and interest rate hedging costs. These costs are reported as interest expense in the results of operations. Interest expense includes non-cash amortization of premiums relating to acquisitions. On an annualized basis, this amortization of acquisition premiums is equal to 0.11% of the average all-in rate. Beneficial interest in debt includes debt used to fund development and expansion costs. Beneficial interest in construction work in progress totaled $200 million as of September 30, 2012 , which includes $142.4 million of assets on which interest is being capitalized. The following table presents information about our beneficial interest in debt as of September 30, 2012 :

								
 	Amount	 	Interest Rate Including Spread	 	
 	(in millions)	 	 	 	
Fixed rate debt	$	2,643.3		 	5.24	%	(1)  	
Floating rate debt:	 	 	 	   	
Swapped through October 2012	$	15.0		 	5.95	%	 	
Swapped through April 2018	137.5		 	4.10	%	 	
Swapped through August 2020	124.3		 	4.99	%	 	
 	$	276.8		 	4.60	%	(1)  	
 	 	 	 	 	
Floating month to month	130.1		 	1.92	%	(1)  	
Total floating rate debt	$	407.0		 	3.74	%	(1)  	
 	 	 	 	 	
Total beneficial interest in debt	$	3,050.3		 	5.04	%	(1)  	
 	 	 	 	 	
Amortization of financing costs (2)	 		 	0.19	%	 	
Average all-in rate	 		 	5.23	%	 	

(1)	Represents weighted average interest rate before amortization of financing costs.	
		
(2)	Financing costs include debt issuance costs and costs related to interest rate agreements of certain fixed rate debt.	
		
(3)	Amounts in table may not add due to rounding.	

Sensitivity Analysis

We have exposure to interest rate risk on our debt obligations and interest rate instruments. We use derivative instruments primarily to manage exposure to interest rate risks inherent in variable rate debt and refinancings. We routinely use cap, swap, and treasury lock agreements to meet these objectives. Based on the Operating Partnership's beneficial interest in floating rate debt in effect at September 30, 2012 , a one percent increase in interest rates on this floating rate debt would decrease cash flows by approximately $1.3 million and due to the effect of capitalized interest, decrease annual earnings by approximately $1.2 million. A one percent decrease in interest rates (or to zero percent for LIBOR rates that are below one percent) would increase cash flows and annual earnings by $0.3 million. Based on our consolidated debt and interest rates in effect at September 30, 2012 , a one percent increase in interest rates would decrease the fair value of debt by approximately $79.9 million, while a one percent decrease in interest rates would increase the fair value of debt by approximately $83.9 million.

Loan Commitments and Guarantees

Certain loan agreements contain various restrictive covenants, including a minimum net worth requirement, a maximum leverage ratio, minimum interest coverage ratios, a minimum debt yield ratio, a maximum payout ratio on distributions, and a minimum fixed charges coverage ratio, the latter being the most restrictive. We are in compliance with all of our covenants and loan obligations at September 30, 2012 . The maximum payout ratio on distributions covenant limits the payment of distributions generally to 95% of funds from operations, as defined in the loan agreements, except as required to maintain our tax status, pay preferred distributions, and for distributions related to the sale of certain assets. See “Note 5 – Beneficial Interest in Debt and Interest Expense – Debt Covenants and Guarantees” to our consolidated financial statements for more details on loan guarantees.

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Cash Tender Agreement

A. Alfred Taubman has the annual right to tender units of partnership interest in the Operating Partnership and cause us to purchase the tendered interests at a purchase price based on a market valuation of TCO on the trading date immediately preceding the date of the tender. See “Note 10 – Commitments and Contingencies – Cash Tender” to our consolidated financial statements for more details.

Capital Spending

New Developments

City Creek Center, a mixed-use project in Salt Lake City, Utah, opened in March 2012. At opening, we paid $75 million to CCRI and the $25 million letter of credit that was previously issued to CCRI to secure the payment was cancelled (see "Results of Operations - Development").

Our United States development currently includes three projects that have begun construction: a new outlet mall in Chesterfield, Missouri and new regional malls in Sarasota, Florida and San Juan, Puerto Rico. We have also have made initial investments in two projects in Asia: one in Xi'an, China and a second project in Hanam, Gyeonggi Province, South Korea. Internally generated funds, excess proceeds from refinancings of maturing debt obligations, and borrowings under our revolving lines of credit would be sufficient to finance these projects, but we also expect construction loan financing to be available.

In Sarasota, the zoning is complete for The Mall at University Town Center and we have begun construction. We have finalized our agreements with the landowner, and we will each own and fund 50% of the project. We will be responsible for management, leasing and development of the center. The 0.9 million square foot center will be anchored by Saks Fifth Avenue, Macy's and Dillard's, and is expected to open in October 2014. We expect an 8% to 8.5% unlevered return on our share of the approximately $315 million total project cost.

We have begun construction on The Mall of San Juan in San Juan, Puerto Rico. The 0.6 million square foot center will be anchored by the Caribbean's first Nordstrom and Saks Fifth Avenue. In July 2012, we closed on the purchase of the land. We are targeting a late 2014 opening. The casino and hotel being developed by the landowner will connect to and are expected to open with the center. We are expecting an 8% to 8.5% unlevered return on our 80% share of the approximately $405 million total project cost.

Taubman Prestige Outlets Chesterfield, our project in the St. Louis market, is under construction. The 0.5 million square foot open-air outlet shopping center will feature more than 100 stores and the first of two phases of the project is expected to open in August 2013 with the second phase expected to open in the spring of 2014. We expect an 8% to 8.5% unlevered return on our 90% share of the approximately $150 million total project cost. The total project cost includes the construction of both phases. Due to the uncertainty of competitive activities, the overall returns could be lower by as much as 100 basis points.

In August 2012, we announced a joint-venture between Taubman TCBL and Beijing Wangfujing Department Store (Group) Co., Ltd (Wangfujing), one of China's largest department store chains. The joint venture will own a 60% controlling interest in and manage a shopping center to be located at Xi'an Saigao City Plaza, a large-scale mixed-use development in Xi'an, China. The remaining ownership of the shopping center will be held by Shaanxi Fuli Real Estate Development Co. Ltd. Anchored by a Wangfujing department store, the seven-level Xi'an shopping center is expected to feature a cinema, restaurants, and approximately 300 international and local specialty stores. It is scheduled to open in the third quarter of 2015 and is part of a 5.9 million square foot mixed-use project, which includes two hotels, a residential tower, two serviced apartment towers and an office building. We are investing in the retail portion only, which will be over 1.0 million square feet with over half of that in mall specialty stores. Taubman Asia has invested $15 million for an interest in the project. Our total anticipated investment will be somewhat over $100 million for a 30% equity interest. We are expecting a 6% to 6.5% unlevered return at stabilization. Sales growth rates are expected to be in excess of 10%. Combined with shorter lease terms than the U.S., returns on our investment are expected to equal those earned in the U.S. by the seventh or eighth year.

Later this year, we expect to announce a similar project in another second-tier city in central China. This project would partner with the same department store and a different local developer, and would have similar roles for our Company. This would be a stand-alone retail project of over one million square feet, with over half of the space devoted to specialty stores. We expect our equity ownership, size of the investment, the anticipated unlevered returns, and the growth rates will all be similar to the first project.

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Due diligence is complete on a 1.7 million square foot shopping mall project in Hanam, Gyeonggi Province, South Korea (Hanam Union Square) in which Taubman Asia has partnered with Shinsegae Group (Shinsegae), South Korea's largest retailer. The center is scheduled to open in 2015. As of September 30, 2012, Taubman Asia has invested $52.1 million for an interest in the project. Our total anticipated investment including capitalized interest will be about $330 million for a 30% equity interest in the retail portion of the project. We are considering bringing in a financial partner for as much as 50% of our share. We are expecting a 7% to 7.5% unlevered return at stabilization.

2012 Capital Spending

Capital spending for routine maintenance of the shopping centers is generally recovered from tenants. Capital spending through September 30, 2012 , is summarized in the following table:

																
 	2012 (1)	
 	Consolidated Businesses	 	Beneficial Interest in Consolidated Businesses	 	Unconsolidated Joint Ventures	 	Beneficial Interest in Unconsolidated Joint Ventures	
 	(in millions)	
New development projects - U.S. (2)	$	151.8		 	$	139.9		 	 	 	 	
New development projects - Asia (3)	 	 	 	 	$	46.3		 	$	46.3		
Existing centers:	 	 	 	 	 	 	 	
Projects with incremental GLA or anchor replacement	3.4		 	3.4		 	 	 	 	
Projects with no incremental GLA and other	4.5		 	3.8		 	1.7		 	0.9		
Mall tenant allowances	17.1		 	16.3		 	5.2		 	2.5		
Asset replacement costs recoverable from tenants	14.8		 	13.2		 	8.0		 	4.7		
Corporate office improvements, technology, equipment, and other	1.1		 	1.1		 	 	 	 	
Total	$	192.8		 	$	177.7		 	$	61.2		 	$	54.3		

(1)	Costs are net of intercompany profits and are computed on an accrual basis.	
		
(2)	Includes the $75 million paid at opening of City Creek Center and costs related to our Sarasota, Florida; San Juan, Puerto Rico; and Chesterfield, Missouri projects.	
		
(3)	Includes costs related to our Xi'an and Hanam projects. Asia spending is included at our beneficial interest in both the Unconsolidated Joint Ventures and Beneficial Interest in Unconsolidated Joint Ventures columns.	
		
(4)	Amounts in this table may not add due to rounding.	

For the nine months ended September 30, 2012 , in addition to the costs above, we incurred our $4.2 million share of Consolidated Businesses’ and $1.2 million share of Unconsolidated Joint Ventures’ capitalized leasing costs.

The following table presents a reconciliation of the Consolidated Businesses’ capital spending shown above (on an accrual basis) to additions to properties (on a cash basis) as presented in our Consolidated Statement of Cash Flows for the nine months ended September 30, 2012 :

				
 	(in millions)	
Consolidated Businesses’ capital spending	$	192.8		
Differences between cash and accrual basis	9.1		
Additions to properties	$	201.9		

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Planned 2012 Capital Spending

The following table summarizes planned capital spending for 2012, including actual spending through September 30, 2012 and anticipated spending for the remainder of the year:

	
																
 	2012 (1)	
 	Consolidated Businesses	 	Beneficial Interest in Consolidated Businesses	 	Unconsolidated Joint Ventures	 	Beneficial Interest in Unconsolidated Joint Ventures	
 	(in millions)	
New development projects - U.S. (2)	$	174.1		 	$	160.0		 	$	93.8		 	$	48.2		
New development projects - Asia (3)	 	 	 	 	101.4		 	101.4		
Existing centers:	 	 	 	 	 	 	 	
Projects with incremental GLA or anchor replacement	8.8		 	8.8		 	 	 	 	
Projects with no incremental GLA and other	10.4		 	7.2		 	3.8		 	1.9		
Mall tenant allowances	34.6		 	33.4		 	8.7		 	4.7		
Asset replacement costs recoverable from tenants	32.7		 	27.8		 	17.7		 	9.6		
Corporate office improvements, technology, equipment, and other	2.7		 	2.7		 	 	 	 	
Total	$	263.2		 	$	239.9		 	$	225.4		 	$	165.9		

(1)	Costs are net of intercompany profits and are computed on an accrual basis.	
		
(2)	Includes the $75 million paid at opening of City Creek Center and costs related to our Sarasota, Florida; San Juan, Puerto Rico; and Chesterfield, Missouri projects.	
		
(3)	Includes costs related to our Xi'an and Hanam projects. Asia spending is included at our beneficial interest in both the Unconsolidated Joint Ventures Column and the Beneficial Interest in Unconsolidated Joint Ventures columns.	
		
(4)	Amounts in this table may not add due to rounding.	

Estimates of future capital spending will change as new projects are approved.

Disclosures regarding planned capital spending, including estimates regarding timing of openings, capital expenditures, occupancy, and returns on new developments are forward-looking statements and certain significant factors could cause the actual results to differ materially, including but not limited to (1) actual results of negotiations with anchors, tenants, and contractors, (2) timing and outcome of litigation and entitlement processes, (3) changes in the scope, number, and valuation of projects, (4) cost overruns, (5) timing of expenditures, (6) availability of and cost of financing and other financing considerations, (7) actual time to start construction and complete projects, (8) changes in economic climate, (9) competition from others attracting tenants and customers, (10) increases in operating costs, (11) timing of tenant openings, (12) early lease terminations and bankruptcies, and (13) fluctuations in foreign currency exchange rates.

Dividends

We pay regular quarterly dividends to our common and preferred shareowners. Dividends to our common shareowners are at the discretion of the Board of Directors and depend on the cash available to us, our financial condition, capital and other requirements, and such other factors as the Board of Directors deems relevant. To qualify as a REIT, we must distribute at least 90% of our REIT taxable income prior to net capital gains to our shareowners, as well as meet certain other requirements. We must pay these distributions in the taxable year the income is recognized, or in the following taxable year if they are declared during the last three months of the taxable year, payable to shareowners of record on a specified date during such period and paid during January of the following year. Such distributions are treated as paid by us and received by our shareowners on December 31 of the year in which they are declared. In addition, at our election, a distribution for a taxable year may be declared in the following taxable year if it is declared before we timely file our tax return for such year and if paid on or before the first regular dividend payment after such declaration. These distributions qualify as dividends paid for the 90% REIT distribution test for the previous year and are taxable to holders of our capital stock in the year in which paid. Preferred dividends accrue regardless of whether earnings, cash availability, or contractual obligations were to prohibit the current payment of dividends.

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The annual determination of our common dividends is based on anticipated Funds from Operations available after preferred dividends and our REIT taxable income, as well as assessments of annual capital spending, financing considerations, and other appropriate factors.

Any inability of the Operating Partnership or its Joint Ventures to secure financing as required to fund maturing debts, capital expenditures and changes in working capital, including development activities and expansions, may require the utilization of cash to satisfy such obligations, thereby possibly reducing distributions to partners of the Operating Partnership and funds available to us for the payment of dividends.

On September 5, 2012, we declared a quarterly dividend of $0.4625 per common share and $0.21215278 per share on our 6.5% Series J Preferred Stock, which was paid on September 28, 2012 to shareowners of record on September 17, 2012.

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Item 3.	Quantitative and Qualitative Disclosures About Market Risk	

The information required by this item is included in this report at Item 2 under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Sensitivity Analysis.”

Item 4.	Controls and Procedures	

As of the end of the period covered by this quarterly report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2012 , our disclosure controls and procedures were effective to ensure the information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized, and reported within the time periods prescribed by the SEC, and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

There were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II
OTHER INFORMATION

Item 1.	Legal Proceedings	

Refer to “Note 10 – Commitments and Contingencies” to our consolidated financial statements relating to the restaurant owners at The Pier Shops litigation. There were no material developments regarding these matters during the quarter ended September 30, 2012 .

Item 1 A.	Risk Factors	

There were no material changes in our risk factors previously disclosed in Part I, Item 1A. of our Form 10-K for the year ended December 31, 2011 .

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Item 6. Exhibits

	
													
 	 	 	 	Incorporated by Reference	 	 	
Exhibit Number	 	Exhibit Description	 	Form	 	Period Ending	 	Exhibit	 	Filing Date	 	Filed Herewith	
10	 	Separation Agreement and Release, dated July 2, 2012, for David Weinert	 	 	 	 	 	 	 	 	 	X	
12	 	Statement Re: Computation of Taubman Centers, Inc. Ratio of Earnings to Combined Fixed Charges and Preferred Dividends	 	 	 	 	 	 	 	 	 	X	
31.1	 	Certification of Chief Executive Officer pursuant to 15 U.S.C. Section 10A, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	 	 	 	 	 	 	 	 	 	X	
31.2	 	Certification of Chief Financial Officer pursuant to 15 U.S.C. Section 10A, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	 	 	 	 	 	 	 	 	 	X	
32.1	 	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	 	 	 	 	 	 	 	 	 	X	
32.2	 	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	 	 	 	 	 	 	 	 	 	X	
99	 	Debt Maturity Schedule	 	 	 	 	 	 	 	 	 	X	
*101.INS	 	XBRL Instance Document	 	 	 	 	 	 	 	 	 	X	
*101.SCH	 	XBRL Taxonomy Extension Schema Document	 	 	 	 	 	 	 	 	 	X	
*101.CAL	 	XBRL Taxonomy Extension Calculation Linkbase Document	 	 	 	 	 	 	 	 	 	X	
*101.LAB	 	XBRL Taxonomy Extension Label Linkbase Document	 	 	 	 	 	 	 	 	 	X	
*101.PRE	 	XBRL Taxonomy Extension Presentation Linkbase Document	 	 	 	 	 	 	 	 	 	X	
*101.DEF	 	XBRL Taxonomy Extension Definition Linkbase Document	 	 	 	 	 	 	 	 	 	X	
 	 	 	 	 	 	 	 	 	 	 	 	 	
*	 	Pursuant to Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.	 	 	 	 	 	 	 	 	 	 	

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	
			
 	 	TAUBMAN CENTERS, INC.	
Date:	October 29, 2012	By: /s/ Lisa A. Payne                                                                     	
 	 	Lisa A. Payne	
 	 	Vice Chairman, Chief Financial Officer, and Director (Principal Financial Officer)	

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Exhibit 10

SEPARATION AGREEMENT AND RELEASE

This Separation Agreement and Release is entered into between David Weinert and Taubman Centers, Inc., The Taubman Realty Group Limited Partnership, The Taubman Company LLC, and Taubman Properties Asia LLC, this 2nd day of July 2012 (the “Effective Date”).

I.	DEFINITIONS	

A. The term “Weinert” shall mean David Weinert and all of his heirs, assigns, attorneys, family members and all other individuals or entities associated with him.

B. The term “Taubman Entities” shall mean Taubman Centers, Inc., The Taubman Realty Group Limited Partnership, The Taubman Company LLC, Taubman Properties Asia LLC, and all of its and their past and present affiliate(s), division(s), parent(s), successor(s), predecessor(s), assign(s), subsidiary(ies), consolidated businesses and joint ventures.

C. The term “Released Parties” shall be given its broadest possible interpretation and shall include, but not be limited to, the Taubman Entities, and all of its and their past and present directors, managers, employees, agents, officers, shareholders, board members and others acting by, through or in connection with any of them.

D. The term “2008 Omnibus Long-Term Incentive Plan and Related Award Agreements” shall mean The Taubman Company LLC 2008 Omnibus Long-Term Incentive Plan, The Taubman Company LLC 2008 Omnibus Long-Term Incentive Plan Restricted and Performance Share Unit Award Agreement dated as of May 21, 2010, The Taubman Company LLC 2008 Omnibus Long-Term Incentive Plan Restricted and Performance Share Unit Award Agreement dated as of March 2, 2011, and The Taubman Company LLC 2008 Omnibus Long-Term Incentive Plan Restricted and Performance Share Unit Award Agreement dated as of February 29, 2012.

E. The term “1992 Incentive Option Plan and Related Award Agreements” shall mean The Taubman Realty Group Limited Partnership 1992 Incentive Option Plan (as Amended and Restated Effective as of September 30, 1997) and all amendments thereto, The Taubman Realty Group Limited Partnership 1992 Incentive Option Plan Option Agreement dated as of March 4, 2005, The Taubman Realty Group Limited Partnership 1992 Incentive Option Plan Option Agreement dated as of March 8, 2006, The Taubman Realty Group Limited Partnership 1992 Incentive Option Plan Option Agreement dated as of May 15, 2006, The Taubman Realty Group Limited Partnership 1992 Incentive Option Plan Option Agreement dated as of March 7, 2007, and The Taubman Realty Group Limited Partnership 1992 Incentive Option Plan Option Agreement dated as of February 27, 2008.

F. The term “Fair Competition Agreement” shall mean the Fair Competition Agreement executed by David Weinert on December 10, 2009.

G. The terms “Claim(s)” and “Right(s)” shall be given their broadest possible interpretation and shall mean every type of cause of action, allegation and/or charge that could be asserted or alleged by Weinert based upon any fact(s), existing from the beginning of time until the date he executes this Agreement, whether known or unknown, which relate in any way to any of the Released Parties and/or Weinert's employment and/or cessation of employment with The Taubman Company LLC, including, but not limited to, claims for

wrongful discharge, discrimination, harassment, public policy violation, or retaliation; claims under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act (“ADEA”), the Family and Medical Leave Act, the Employee Retirement Income Security Act, the Rehabilitation Act of 1973, the Older Workers Benefit Protection Act (“OWBPA”), Michigan's Wages and Fringe Benefits Act, the Americans with Disabilities Act, Michigan's Elliott‑Larsen Civil Rights Act, Michigan's Persons With Disabilities Civil Rights Act, Michigan's Whistleblowers' Protection Act, Michigan's Bullard‑Plawecki Right to Know Act, the 1992 Incentive Option Plan and Related Award Agreements, the 2008 Omnibus Long-Term Incentive Plan and Related Award Agreements, and/or any other agreement or federal, state, or local statute(s), law(s) or rule(s); and every type of damages, wages, commissions, bonuses, benefits, attorney fees, costs and relief of any type (legal, equitable or otherwise) available to Weinert.

H. The term “Agreement” shall mean this Separation Agreement and Release.

II.	RECITALS	

WHEREAS, there is a dispute concerning David Weinert's cessation of employment with The Taubman Company LLC, his continuing obligations under the Fair Competition Agreement, and his entitlement to Incentive Options under the 1992 Incentive Option Plan and Related Award Agreements;

WHEREAS, the parties have agreed to resolve their dispute and any and all other actual or potential disputes pursuant to the terms of this Agreement.

III.	TERMS OF AGREEMENT	

NOW, THEREFORE, THE UNDERSIGNED AGREE AS FOLLOWS:

1. Weinert resigns his employment with The Taubman Company LLC, effective July 2, 2012.

2. For and in consideration of the amounts, benefits and privileges described in this Agreement, including, but not limited to, the items described more fully in Paragraphs 6, 9, 13, 14, 15 and 22 below, Weinert releases and forever discharges the Released Parties with respect to all Claims and Rights.

3. Weinert agrees that the amounts, benefits and privileges described in this Agreement are in excess of any amount, benefit and privilege to which he is entitled or owed. Weinert also agrees that the amounts, benefits and privileges described in this Agreement are independent and adequate consideration for his release of all Claims and Rights, and for all other obligations set forth in this Agreement.

4. Weinert agrees not to file or initiate a lawsuit in any court or initiate an arbitration proceeding asserting any of the claims released pursuant to this Agreement. Weinert further agrees that he will not permit himself to be a member of any class action and/or collective action in any court or in any arbitration proceeding seeking relief based on any claims released pursuant to this Agreement. Weinert further agrees that he shall not receive or be entitled to any monetary damages, recovery and/or relief of any type in connection with any charge, administrative action or legal proceeding pursued by Weinert, any governmental agency, person, group or entity regarding and/or relating to any of the claims released under this Agreement.

5. Weinert agrees and acknowledges that any and all outstanding restricted share units and performance share units are forfeited as of the Effective Date of this Agreement under and in accordance with 2008 Omnibus Long-Term Incentive Plan and Related Award Agreements. Notwithstanding anything to the contrary in this Paragraph 5, Weinert shall retain any and all Shares issued to him under the 2008

Omnibus Long-Term Incentive Plan which are held in his personal Vanguard brokerage account, and he shall not be subject to forfeiture of such Shares or any gain realized with respect thereto.

6. Weinert agrees and acknowledges that: (a) any and all outstanding options to purchase units of limited partnership interest in The Taubman Realty Group Limited Partnership, which will be exchanged for new shares of common stock of Taubman Centers, Inc. (the “Shares”) upon exercise of such options under the Second Amended and Restated Continuing Offer, dated May 16, 2000, of Taubman Centers, Inc., owned by David Weinert are set forth in Exhibit 1 hereto (the “Options”); (b) the Options remain subject to 1992 Incentive Option Plan and Related Award Agreements, provided that the following terms shall supersede Sections 7.8 and 7.9 of the Plan with respect to the Options:  (i) so long as Weinert complies with every provision of this Agreement, beginning on July 1, 2013 and ending on September 26, 2014, David Weinert may exercise up to one half of the number of Options granted and outstanding on the Effective Date under each of the award agreements described in Recital E above, provided that David Weinert cannot exercise any Options at any time the Gross Value of the remaining Options held by him is less than One Million Dollars and Zero Cents ($1,000,000.00); and (ii) so long as Weinert complies with every provision of this Agreement, beginning on July 1, 2014 and ending on September 26, 2014, David Weinert may exercise any and all outstanding Options. David Weinert's heirs shall be permitted to exercise his rights under this Paragraph 6 in the event of his death or disability, provided that Weinert has complied and continues to comply with every provision of this Agreement. The Compensation Committee has approved the provisions in this Paragraph 6. Weinert acknowledges and agrees that his rights under this Paragraph 6 are subject to any restrictions under securities and insider trading laws, regulations and rules.

For purposes of this Paragraph 6, “Gross Value” of an Option will be calculated daily, and is the Fair Market Value of an Option less the exercise price of such Option, on a pre-tax basis.

For purposes of this Paragraph 6, “Fair Market Value” of an Option shall be determined as of the trading day immediately preceding the date of exercise of the Option as follows: if on the determination date the Shares are listed on an established national or regional share exchange, are admitted to quotation on the New York Stock Exchange (“NYSE”) or are publicly traded on an established securities market, the Fair Market Value of an Option shall be the closing price of a Share on such exchange or in such market (if there is more than one such exchange or market, the first exchange of the following exchanges that have such listing shall be used:  NYSE, Nasdaq, another national securities exchange, a regional share exchange, or another established securities market) on the determination date (or if there is no such reported closing price, the Fair Market Value shall be the mean between the highest bid and lowest asked prices or between the high and low sale prices on such trading day) or, if no sale of Shares is reported for such trading day, on the next preceding day on which any sale shall have been reported. If the Shares are not listed on such an exchange, quoted on such system or traded on such a market, Fair Market Value shall be the value of the Shares as determined by Weinert in good faith by the reasonable application of a reasonable valuation method as described in Treas. Reg. Section 1.409A-1(b)(5)(iv)(B).

7. The parties wish to resolve all disputes amicably and without additional costs and expenses. Nothing in this Agreement shall be construed as an admission of liability or wrongdoing by any party.

8. Weinert shall not make or cause to be made any statements, observations, or other communications (whether in written or oral form) that defames, slanders or disparages any of the Released Parties. Further, Weinert shall make no statements, comments or other communications concerning any of the Released Parties or its/their products and/or services to the press, media or other similar entity or organization, nor shall Weinert post or cause to be posted any such statements, comments or communications on any website, blog, social network or any other Internet or computer site.

9. The Taubman Company LLC shall direct Robert Taubman, Lisa Payne, and William Taubman not to make or cause to be made any statements, observations, or other communications (whether in written or oral form) that defames, slanders or disparages David Weinert. Further, The Taubman Company LLC shall direct Robert Taubman, Lisa Payne, and William Taubman not to post or cause to be posted any statements, comments or communications concerning David Weinert on any blog or social network. Nothing in this Paragraph 9 shall prevent the identified individuals from testifying truthfully in a deposition or other proceeding or providing statements required by law.

10. Except as permitted by this Agreement or required by law, Weinert agrees to keep confidential all facts, opinions, and information which relate in any way to this Agreement, including, but not limited to, the fact of this Agreement and/or the terms of this Agreement. Weinert represents and warrants that he has returned all documents, data, property and other materials, in whatever form, that he received, created or compiled during his employment with The Taubman Company LLC or related to the business of the Taubman Entities, and has not retained any copies thereof. On or before July 13, 2012, David Weinert shall give his personal iPad and all other similar devices to the Taubman Entities, who shall then engage an expert to delete all information and data relating to the business of the Taubman Entities. David Weinert represents and warrants that he has not provided or sent, and will not provide or send, such information and/or data to any person or entity. Weinert further agrees that his continuing obligations concerning confidential and proprietary information pursuant to the Taubman Code of Business Conduct and Ethics and the Taubman Policy on Information Security shall remain in full force and effect.

11. Weinert represents and warrants that: (a) he has the sole right, title, and interest to the claims released under this Agreement; (b) he has not assigned or transferred, or purported to assign or transfer, to any person or entity, any claim released under this Agreement; and (c) he has not assigned or transferred, or purported to assign or transfer, to any person or entity, the right to any of the monies that may be received pursuant to this Agreement.

12. David Weinert acknowledges and agrees that during his employment, he formed, on behalf of the Taubman Entities, certain business relationships that are part of the goodwill of the Taubman Entities, and he had access to and knowledge of the Taubman Entities' confidential information, which gives the Taubman Entities a competitive advantage over their competitors. Weinert acknowledges and agrees that the Taubman Entities are entitled to protect their investment in the foregoing and to keep the results of their efforts, their goodwill, and their confidential information for their sole and exclusive use through the enforcement of the obligations set forth in this Agreement, which are reasonable and necessary for that purpose.

13. During the time period July 1, 2012 through and including June 30, 2013, David Weinert will not, directly or indirectly, for himself or on behalf of or in connection with any other person, entity or organization: (a) engage in any business or activity that is competitive with the actual or prospective business of the Taubman Entities; (b) own, manage, maintain, consult with, operate, acquire any interest in (other than 5% or less of the common stock of any publicly traded company), or otherwise assist or be connected with (including, but not limited to, as an employee, consultant, advisor, agent, independent contractor, owner, partner, co-venturer, principal, director, shareholder, lender or otherwise) any Identified Company; or (c) undertake any efforts or activities toward pre-incorporating, incorporating, financing, or commencing any business or activity that is competitive with the actual or prospective business of the Taubman Entities. “Identified Company” means any person or entity, or any affiliate thereof, who, as of the date(s) that any action(s) listed in (b) above is/are taken, (i) owns two or more leases, anchor pads and/or parcels of real property (or any two or more combinations of any of the foregoing) at any shopping center owned directly or indirectly by The Taubman Realty Group Limited Partnership, (ii) is included on the FTSE NAREIT Retail

Index (or any successor index published by NAREIT), (iii) owns and/or manages a retail real estate portfolio in excess of one million square feet, or (iv) to the extent not covered by clause (i) through (iii), the entities set forth on Exhibit 2 hereto.

14. During the time period July 1, 2013 through and including February 28, 2014, David Weinert will not, directly or indirectly, for himself or on behalf of or in connection with any other person, entity or organization: (a) engage in any business or activity that is competitive with the actual or prospective business of the Taubman Entities in connection with any of the Restricted Entities; (b) own, manage, maintain, consult with, operate, acquire any interest in (other than 5% or less of the common stock of any publically traded company), or otherwise assist or be connected with (including, but not limited to, as an employee, consultant, advisor, agent, independent contractor, owner, partner, co-venturer, principal, director, shareholder, lender or otherwise) any of the Restricted Entities; or (c) undertake any efforts or activities toward pre-incorporating, incorporating, financing, or commencing any business or activity that is competitive with the actual or prospective business of Taubman Entities in connection with any of the Restricted Entities. “Restricted Entities” means the entities set forth on Exhibit 3 hereto.

15. During the time period July 1, 2012 through and including June 30, 2013, David Weinert will not, directly or indirectly, for himself or on behalf of or in connection with any other person, entity or organization, call on, solicit, have contact with, or service any client, prospective client, consultant, strategic partner, funding source, or other business relation of the Taubman Entities in order to: (a) solicit business of the type provided by the Taubman Entities; (b) induce or attempt to induce such person or entity to cease doing business with, or reduce the amount of business conducted with, the Taubman Entities; or (c) in any way to interfere with the relationship between any such person or entity and the Taubman Entities. Nothing in this Paragraph 15 shall be construed to preclude David Weinert from performing leasing services for individual retailers.

16. During the time period July 1, 2012 through and including June 30, 2014, David Weinert will not, directly or indirectly, for himself or on behalf of or in connection with any other person, entity or organization: (a) induce or attempt to induce any employee or consultant of the Taubman Entities to leave the employ or services of any of the Taubman Entities, or in any way interfere with the relationship between any of the Taubman Entities and any employee or consultant thereof; or (b) hire, engage and/or contract with any person who was an employee of or consultant to any of the Taubman Entities at any time during the six (6) month period immediately prior to the date on which such hiring, engagement and/or contract would take place (it being conclusively presumed by the parties so as to avoid any disputes under this paragraph that any such hiring within such six (6) month period is in violation of clause (a) above).

17. Weinert acknowledges that: (a) the breach of Paragraphs 8, 10, 13, 14, 15 and/or 16 of this Agreement will result in immediate and irreparable harm to the Taubman Entities; (b) no adequate remedy at law exists with regard to any such breach; (c) public policy will be furthered by the enforcement of this Agreement by an injunction; (d) injunctive relief will not deprive Weinert of an ability to earn a living because he is qualified for many positions which do not necessitate the breach of any provision of this Agreement; and (e) the Taubman Entities will be entitled to enforce this Agreement by injunction or other equitable remedies in the event of such breach, in addition to any other remedies available to the Taubman Entities (including, without limitation, monetary damages).

18. It is the intent of the parties that the terms, conditions, provisions and covenants in this Agreement shall be enforceable to the fullest extent permitted by law. If any such term, condition, covenant or provision is determined by a court, agency or arbitrator to be illegal, invalid, void or unenforceable, then such term, condition, covenant or provision shall be construed in a manner so as to permit its enforceability

under the applicable law to the fullest extent permitted by law in light of such determination. In addition, the invalidity or unenforceability of any provision of this Agreement in a particular respect shall not affect the validity and enforceability of any other provision of this Agreement or of the same provision in any other respect.

19. Weinert warrants and agrees that he will not, directly or indirectly, challenge and/or dispute the enforceability and/or validity of this Agreement, or any portion thereof. Weinert further agrees and warrants that he will not, and has not, directly or indirectly, instigate(d), incite(d), encourage(d) and/or otherwise cause(d) or aid(ed) any person and/or entity to bring any claim and/or action which challenges and/or disputes the enforceability and/or validity of this Agreement, including any portion thereof. Weinert further agrees that in the event that any such claim, action and/or challenge is brought, he will support, advocate for and agree with the enforceability and validity of this Agreement, and will cooperate with Taubman in defending against any such claim, action and/or challenge.

20. In the event Weinert, directly or indirectly, challenges the enforceability of any term of this Agreement, Weinert shall: (a) immediately pay to the Taubman Entities any and all amounts received pursuant to Paragraph 6 of this Agreement; (b) immediately forfeit any right to exercise any and all outstanding Options identified in Paragraph 6 of this Agreement; (c) immediately pay to the Taubman Entities the amount of Two Hundred Fifty Thousand Dollars and Zero Cents ($250,000.00); and (d) reimburse the Taubman Entities for any costs, fees and expenses, including, but not limited to, actual attorneys' fees, incurred by the Taubman Entities associated with enforcing this Agreement, and/or obtaining payment of any amount Weinert owes. In addition to the remedies provided in clauses (a) through (d) herein, Weinert agrees that the Taubman Entities shall be entitled to pursue all available remedies at law or in equity for a breach of the covenants, terms and obligations contained in this Agreement, all of which shall be cumulative.
  
21. Weinert agrees that his obligations under this Agreement are binding upon his heirs, executors, administrators, or other legal representatives or assigns, and that this Agreement inures to the benefit of the Taubman Entities.

22. The Taubman Entities will issue the press release attached as Exhibit 4 hereto.

23. Weinert agrees, represents and warrants that he has not sustained any compensable workplace injury, has not suffered any damages and has no right to relief under the Michigan's Worker's Disability Compensation Act, the ADEA or the OWBPA.

24. All questions concerning the construction, validity, interpretation, and enforcement of this Agreement will be governed by and construed in accordance with the laws of the State of Michigan, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Michigan or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Michigan. Any lawsuit arising out of or in any way related to this Agreement, Weinert's employment, and/or the cessation of Weinert's employment shall be brought in a court of competent jurisdiction in Oakland County, Michigan or the United States District Court for the Eastern District of Michigan. AS A SPECIFICALLY BARGAINED INDUCEMENT WITH RESPECT TO ENTRY INTO THIS AGREEMENT, AND HAVING HAD THE OPPORTUNITY TO CONSULT COUNSEL, WEINERT EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY PROCEEDING RELATING TO OR ARISING IN ANY WAY FROM THIS AGREEMENT, HIS EMPLOYMENT, OR THE CESSATION OF HIS EMPLOYMENT.

25. The parties acknowledge that this Agreement is a joint product and shall not be construed against any party on the grounds of sole authorship. This Agreement may not be amended, modified, waived, or terminated except in a writing signed by authorized representatives of the parties.

26. The parties agree to cooperate fully with each other and to execute all additional documents and to take all actions which may be necessary or appropriate to give full force and effect to the terms and intent of this Agreement.

27. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same agreement.
 
28. Except as provided herein, this Agreement sets forth the entire agreement between the parties concerning the subject matters hereof and supersedes and replaces any and all written or oral understandings, obligations, promises, representations, contracts and/or agreements, whether written or oral, express or implied, directly or indirectly related to it.

THE UNDERSIGNED HAVE READ THE FOREGOING SEPARATION AGREEMENT AND RELEASE AND ENTER INTO THIS AGREEMENT KNOWINGLY AND VOLUNTARILY.

	
				
/s/ David Weinert	 	THE TAUBMAN COMPANY LLC	
DAVID WEINERT	 	 	 	
 	 	 	 	
Dated: July 2, 2012	 	By: /s/ William S. Taubman	
 	 	 	 	
 	 	Its: Chief Operating Officer	
 	 	 	 	
 	 	Dated: July 2, 2012	

 	 	TAUBMAN CENTERS, INC.	
 	 	 	 	
 	 	By: /s/ William S. Taubman	
 	 	 	 	
 	 	Its: Chief Operating Officer	
 	 	 	 	
 	 	Dated: July 2, 2012	

                

                                    

            

                            

        

	
				
 	 	THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP

 	 	 	 	
 	 	By: /s/ William S. Taubman	
 	 	 	 	
 	 	Its: Authortized Signatory	
 	 	 	 	
 	 	Dated: July 2, 2012	

 	 	TAUBMAN PROPERTIES ASIA LLC	
 	 	 	 	
 	 	By: /s/ William S. Taubman	
 	 	 	 	
 	 	Its: Authortized Signatory	
 	 	 	 	
 	 	Dated: July 2, 2012	

                            

                            

                            

                            

EXHIBIT 1 TO SEPARATION AGREEMENT AND RELEASE

	
			
GRANT DATE	TOTAL NUMBER OF OPTIONS	EXERCISE PRICE	
3/4/2005	26,666	$29.38	
5/15/2006	8,945	$40.25	
3/8/2006	13,618	$40.39	
2/27/2008	18,954	$50.65	
3/7/2007	16,101	$55.90	
 	 TOTAL = 84,284	 	

EXHIBIT 2 TO SEPARATION AGREEMENT AND RELEASE

The Westfield Group, and all of its affiliate(s), division(s), parent(s), successor(s), predecessor(s), assign(s), subsidiary(ies), consolidated businesses and joint ventures.

EXHIBIT 3 TO SEPARATION AGREEMENT AND RELEASE

Simon Property Group, Inc., Tanger Factory Outlet Centers, Inc., The Macerich Company, and/or General Growth Properties, Inc., and each of their affiliate(s), division(s), parent(s), successor(s), predecessor(s), assign(s), subsidiary(ies), consolidated businesses and joint ventures.

EXHIBIT 4 TO SEPARATION AGREEMENT AND RELEASE

CONTACT:     
Karen Mac Donald                     
Taubman, Director, Communications             
248-258-7469                         
kmacdonald@taubman.com                 
                                
Barbara Baker
Taubman, Vice President, Investor Relations
248-258-7367
bbaker@taubman.com

FOR IMMEDIATE RELEASE

DAVID T. WEINERT RESIGNS AS TAUBMAN'S SVP LEASING
William S. Taubman to assume leadership for the leasing function

BLOOMFIELD HILLS, Mich., July 2, 2012- - Taubman Centers, Inc. (NYSE: TCO) today announced David T. Weinert resigned today in order to pursue other interests.

Immediately assuming day-to-day leadership for the leasing function will be William S. Taubman, who in his role as Taubman's chief operating officer is currently responsible for development, operations and leasing for the company.

Mr. Weinert had been with the company since 1986, having previously served as a commercial real estate broker in the Chicago office of Coldwell Banker Commercial Real Estate. In 1992 he was named vice president, heading leasing for the company's western region, based in San Francisco. He returned in 2001 to the company's Bloomfield Hills headquarters as group vice president, leasing, where he was responsible for helping manage the entire leasing activity. He assumed the position of senior vice president of leasing in 2004.

Taubman Centers is a real estate investment trust engaged in the development, leasing and management of regional and super regional shopping centers. Taubman's 27 U.S. owned, leased and/or managed properties, the most productive in the publicly held U.S. regional mall industry, serve major markets from coast to coast. Taubman Centers is headquartered in Bloomfield Hills, Michigan, and its Taubman Asia subsidiary is headquartered in Hong Kong. For more information about Taubman, visit www.taubman.com.

-more-

David Weinert Resigns /2

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

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 respect to future events and financial performance. The forward-looking statements included in this release are made as of the date hereof. Except as required by law, we assume no obligation to update these forward-looking statements, even if new information becomes available in the future. Actual results may differ materially from those expected because of various risks and uncertainties, including, but not limited to the global credit environment and the continuing impacts of the recent U.S. recession, other changes in general economic and real estate conditions, changes in the interest rate environment and the availability of financing, adverse changes in the retail industry and integration and other acquisition risks. Other risks and uncertainties are discussed in the company's filings with the Securities and Exchange Commission including its most recent Annual Report on Form 10-K.

# # #

	
											
 	 	 	 	Exhibit 12	 	
 	 	 	 	 	 	
 	TAUBMAN CENTERS, INC.	 	
 	 	 	 	 	 	
 	Computation of Ratios of Earnings to Combined Fixed Charges and Preferred Dividends	 	
 	(in thousands, except ratios)	 	

 	 	Nine Months Ended September 30	 	
 	 	2012	 	2011	 	
 	 	 	 	 	 	
 	Earnings from continuing operations before income from equity investees and taxes  (1)	$	74,381		 	$	59,400		 	
 	 	 	 	 	 	
 	Add back:	 	 	 	 	
 	Fixed charges	114,189		 	95,309		 	
 	Amortization of previously capitalized interest	3,318		 	3,298		 	
 	Distributed income of Unconsolidated Joint Ventures	35,743		 	31,990		 	
 	 	 	 	 	 	
 	Deduct:	 	 	 	 	
 	Capitalized interest	(761	)	 	(406	)	 	
 	Preferred distributions	 	 	(1,845	)	 	
 	 	 	 	 	 	
 	Earnings available for fixed charges and preferred dividends	$	226,870		 	$	187,746		 	
 	 	 	 	 	 	
 	Fixed charges:	 	 	 	 	
 	Interest expense	$	109,146		 	$	89,529		 	
 	Capitalized interest	761		 	406		 	
 	Interest portion of rent expense	4,282		 	3,529		 	
 	Preferred distributions	 	 	1,845		 	
 	Total fixed charges	$	114,189		 	$	95,309		 	
 	 	 	 	 	 	
 	Preferred dividends  (2)	17,980		 	10,975		 	
 	 	 	 	 	 	
 	Total fixed charges and preferred dividends	$	132,169		 	$	106,284		 	
 	 	 	 	 	 	
 	Ratio of earnings to fixed charges and preferred dividends  (1)	1.7		 	1.8		 	

(1	)	In 2011, the Company disposed of The Pier Shops at Caesars and Regency Square. These centers are reported separately as discontinued operations in the Consolidated Financial Statements in 2011. See "Note 2- Acquisitions, Dispositions, and Development" to the Consolidated Financial Statements for further discussion of our discontinued operations. The calculation of the ratio of earnings to fixed charges was restated to exclude discontinued operations in 2011.	 	
 	 	 	 	 	 	
(2	)	In September 2012, the Company redeemed its 8% Series G Preferred Stock and its 7.625% Series H Preferred Stock. As a result of these redemptions, the Company recognized a charge of $6.4 million, which represents the difference between the carrying values and the redemption prices of the Series G & H Preferred Stock. This charge is included in preferred dividends for the nine months ended September 30, 2012.	 	

Exhibit 31.1

Certification of Chief Executive Officer
Pursuant to 15 U.S.C. Section 10A, as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
    
I, Robert S. Taubman, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Taubman Centers, Inc.;

2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;	

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;	

4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:	

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;	

b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;	

c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and	

d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and	

5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):	

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and	

b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.	

	
		
Date: October 29, 2012	/s/ Robert S. Taubman	
 	Robert S. Taubman	
 	Chairman of the Board of Directors, President, and Chief Executive Officer	

Exhibit 31.2

Certification of Chief Financial Officer
Pursuant to 15 U.S.C. Section 10A, as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
                                        
I, Lisa A. Payne, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Taubman Centers, Inc.;

2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;	

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;	

4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:	

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;	

b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;	

c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and	

d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and	

5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):	

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and	

b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.	

	
		
Date: October 29, 2012	/s/ Lisa A. Payne	
 	Lisa A. Payne	
 	Vice Chairman, Chief Financial Officer, and Director (Principal Financial Officer)	

Exhibit 32.1

Certification of Chief Executive Officer
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

I, Robert S. Taubman, Chief Executive Officer of Taubman Centers, Inc. (the "Registrant"), certify that based upon a review of the Quarterly Report on Form 10-Q for the period ended September 30, 2012 (the "Report"):

(i)	The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and	

(ii)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.	

	
		
/s/ Robert S. Taubman	Date: October 29, 2012	
Robert S. Taubman	 	
Chairman of the Board of Directors, President, and Chief Executive Officer	 	

Exhibit 32.2

Certification of Chief Financial Officer
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

I, Lisa A. Payne, Chief Financial Officer of Taubman Centers, Inc. (the "Registrant"), certify that based upon a review of the Quarterly Report on Form 10-Q for the period ended September 30, 2012 (the "Report"):

(i)	The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and	

(ii)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.	

	
		
/s/ Lisa A. Payne	Date: October 29, 2012	
Lisa A. Payne	 	
Vice Chairman, Chief Financial Officer, and Director (Principal Financial Officer)	 	

	
																																											
TAUBMAN CENTERS, INC.	 	 	 	 	 	 	 	 	 	 	 	 	 	Exhibit 99	 	
Debt Summary	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
As of September 30, 2012	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(in millions of dollars, amounts may not add due to rounding)	 	 	 	 	 	 	 	 	
 	MORTGAGE AND OTHER NOTES PAYABLE (a)	 	
 	INCLUDING WEIGHTED AVERAGE INTEREST RATES AT SEPTEMBER 30, 2012	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	100%	 	Beneficial Interest	 	Effective Rate	 	LIBOR Rate	 	Principal Amortization and Debt Maturities	 	
 	 	 	 	 	9/30/2012	 	9/30/2012	 	9/30/2012	(b)	Spread	 	2012	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022	Total	 	
Consolidated Fixed Rate Debt:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Beverly Center	 	 	312.1		 	312.1		 	5.28	%	 	 	 	1.6		6.6		303.8		 	 	 	 	 	 	 	 	312.1		 	
Cherry Creek Shopping Center	50.00	%	 	280.0		 	140.0		 	5.24	%	 	 	 	 	 	 	 	140.0	 	 	 	 	 	 	140.0		 	
El Paseo Village	 	 	16.8		(c)	16.8		 	3.86	%	(c)	 	 	0.1		0.4		0.4		15.9	 	 	 	 	 	 	 	16.8		(j)	
Great Lakes Crossing Outlets	 	 	126.9		 	126.9		 	5.25	%	 	 	 	0.8		126.0		 	 	 	 	 	 	 	 	 	126.9		 	
International Plaza	50.10	%	 	325.0		 	162.8		 	4.85	%	 	 	 	 	 	 	2.5	2.6	2.7		2.9	3.0	3.1	146.1	 	162.8		 	
Northlake Mall	 	 	215.5		 	215.5		 	5.41	%	 	 	 	 	 	 	 	215.5	 	 	 	 	 	 	215.5		 	
Stony Point Fashion Park	 	 	102.2		 	102.2		 	6.24	%	 	 	 	0.5		2.1		99.5		 	 	 	 	 	 	 	 	102.2		 	
The Gardens on El Paseo	 	 	85.6		(d)	85.6		 	4.50	%	(d)	 	 	0.3		1.1		1.1		1.1		81.9		 	 	 	 	 	 	85.6		(j)	
The Mall at Green Hills	 	 	109.2		(e)	109.2		 	4.71	%	(e)	 	 	0.9		108.3		 	 	 	 	 	 	 	 	 	109.2		(j)	
The Mall at Partridge Creek	 	 	80.5		 	80.5		 	6.15	%	 	 	 	0.3		1.1		1.1		1.2		1.3		1.4		1.4		1.5		71.2		 	 	80.5		 	
The Mall at Short Hills	 	 	540.0		 	540.0		 	5.47	%	 	 	 	 	 	 	540.0	 	 	 	 	 	 	 	540.0		 	
The Mall at Wellington Green	90.00	%	 	200.0		 	180.0		 	5.44	%	 	 	 	 	 	 	180.0	 	 	 	 	 	 	 	180.0		 	
Total Consolidated Fixed	 	 	2,393.7		 	2,071.5		 	 	 	 	 	4.5		245.7		406.0		740.7		441.3		4.1		4.3		4.5		74.4		146.1		 	2,071.5		 	
Weighted Rate	 	 	5.29	%	 	5.32	%	 	 	 	 	 	5.24	%	5.02	%	5.51	%	5.42	%	5.19	%	5.28	%	5.29	%	5.29	%	6.10	%	4.85	%	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Consolidated Floating Rate Debt:	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
MacArthur Center	95.00	%	 	130.9		 	124.3		 	4.99	%	(f)	 	 	0.3		1.3		1.4		1.5		1.6		1.7		1.8		2.0		112.8		 	 	124.3		 	
TRG $65M Revolving Credit	 	 	20.1		 	20.1		 	1.61	%	(g)	1.40	%	 	 	 	20.1	 	 	 	 	 	 	 	 	20.1		 	
TRG $650M Revolving Credit Facility:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
  Dolphin Mall (i)	 	 	40.0		 	40.0		 	1.98	%	 	1.75	%	 	 	 	 	40.0	(i)	 	 	 	 	 	 	40.0		 	
  Fairlane Town Center (i)	 	 	70.0		 	70.0		 	1.98	%	 	1.75	%	 	 	 	 	70.0	(i)	 	 	 	 	 	 	70.0		 	
  Twelve Oaks Mall (i)	 	 	0.0		 	0.0		 	 	 	1.75	%	 	 	 	 	0.0		(i)	 	 	 	 	 	 	0.0		 	
Total Consolidated Floating	 	 	261.0		 	254.5		 	 	 	 	 	0.3		1.3		21.5		111.5		1.6		1.7		1.8		2.0		112.8		 	 	254.5		 	
Weighted Rate	 	 	3.46	%	 	3.42	%	 	 	 	 	 	4.99	%	4.99	%	1.83	%	2.02	%	4.99	%	4.99	%	4.99	%	4.99	%	4.99	%	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Consolidated	 	 	2,654.7		 	2,326.0		 	 	 	 	 	4.8		247.0		427.5		852.2		442.9		5.8		6.1		6.5		187.1		146.1		 	2,326.0		 	
Weighted Rate	 	 	5.11	%	 	5.12	%	 	 	 	 	 	5.23	%	5.02	%	5.33	%	4.98	%	5.19	%	5.20	%	5.20	%	5.20	%	5.43	%	4.85	%	 	 	 	
Joint Ventures Fixed Rate Debt:	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Arizona Mills	50.00	%	 	170.3		 	85.2		 	5.76	%	 	 	 	0.3		1.2		1.3		1.4		1.4		1.5		1.6		1.7		74.7		 	 	85.2		 	
The Mall at Millenia	50.00	%	 	197.0		 	98.5		 	5.46	%	 	 	 	0.4		98.1		(k)	 	 	 	 	 	 	 	 	98.5		 	
Sunvalley	50.00	%	 	190.0		 	95.0		 	4.44	%	 	 	 	0.4		1.5		1.6	1.6	1.7	1.8	1.9	2.0	2.1	2.2	78.3	95.0		 	
Waterside Shops	25.00	%	 	165.0		 	41.3		 	5.54	%	 	 	 	 	 	 	 	41.3	 	 	 	 	 	 	41.3		 	
Westfarms	78.94	%	 	319.2		 	251.9		 	4.50	%	 	 	 	1.0		4.2		4.3		4.5		4.8		5.0		5.2		5.4		5.7		5.9		205.9		251.9		 	
Total Joint Venture Fixed	 	 	1,041.5		 	571.9		 	 	 	 	 	2.1		104.9		7.2		7.5		49.1		8.3		8.7		9.1		82.5		8.1		284.2		571.9		 	
Weighted Rate	 	 	5.04	%	 	4.92	%	 	 	 	 	 	4.86	%	5.41	%	4.71	%	4.71	%	5.41	%	4.72	%	4.72	%	4.72	%	5.64	%	4.48	%	4.48	%	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Joint Ventures Floating Rate Debt:	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Fair Oaks	50.00	%	 	275.0		 	137.5		 	4.10	%	(h)	 	 	 	 	0.8		2.0	2.2	2.3	130.2	 	 	 	 	137.5		 	
Taubman Land Associates	50.00	%	 	30.0		 	15.0		 	5.95	%	(f)	 	 	15.0	 	 	 	 	 	 	 	 	 	 	15.0		 	
Total Joint Venture Floating	 	 	305.0		 	152.5		 	 	 	 	 	15.0		 	0.8		2.0		2.2		2.3		130.2		 	 	 	 	152.5		 	
Weighted Rate	 	 	4.28	%	 	4.28	%	 	 	 	 	 	5.95	%	 	4.10	%	4.10	%	4.10	%	4.10	%	4.10	%	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Joint Venture	 	 	1,346.5		 	724.4		 	 	 	 	 	17.1		104.9		8.0		9.6		51.3		10.6		138.9		9.1		82.5		8.1		284.2		724.4		 	
Weighted Rate	 	 	4.87	%	 	4.78	%	 	 	 	 	 	5.82	%	5.41	%	4.65	%	4.58	%	5.35	%	4.58	%	4.14	%	4.72	%	5.64	%	4.48	%	4.48	%	 	 	
TRG Beneficial Interest Totals	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Fixed Rate Debt	 	 	3,435.1		 	2,643.3		(c),(d),(e)	 	 	 	6.6		350.6		413.2		748.3		490.4		12.4		13.0		13.7		156.9		154.2		284.2		2,643.3		 	
 	 	 	 	5.21	%	 	5.24	%	 	 	 	 	 	5.12	%	5.14	%	5.50	%	5.41	%	5.21	%	4.90	%	4.91	%	4.91	%	5.86	%	4.83	%	4.48	%	 	 	
Floating Rate Debt	 	 	566.0		 	407.0		 	 	 	 	 	15.3		1.3		22.3		113.5		3.8		4.0		132.0		2.0		112.8		 	 	407.0		 	
 	 	 	 	3.90	%	 	3.74	%	 	 	 	 	 	5.93	%	4.99	%	1.91	%	2.06	%	4.48	%	4.48	%	4.11	%	4.99	%	4.99	%	 	 	 	 	
Total	 	 	4,001.2		 	3,050.3		(c),(d),(e)	 	 	 	21.9		351.9		435.5		861.8		494.2		16.4		145.0		15.6		269.6		154.2		284.2		3,050.3		 	
 	 	 	 	5.03	%	 	5.04	%	 	 	 	 	 	5.69	%	5.14	%	5.32	%	4.97	%	5.20	%	4.80	%	4.18	%	4.92	%	5.49	%	4.83	%	4.48	%	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	Average Maturity Fixed Debt	 	 	4		 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	Average Maturity Total Debt	 	 	4		 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(a)	All debt is secured and non-recourse to TRG unless otherwise indicated.	 	(f)		Debt is swapped to the effective rate indicated until maturity.	 	
(b)	Includes the impact of interest rate swaps, if any, but does not include effect of amortization of debt issuance costs, losses on settlement of derivatives used to hedge the refinancing of certain fixed rate debt or interest rate cap premiums.	 	(g)		Rate floats daily at LIBOR plus spread. Letters of credit totaling $3.8 million are also outstanding on the facility.	 	
 		 	(h)		Debt is swapped to an effective rate of 4.10% until 2.5 months prior to maturity.	 	
(c)	Debt includes $0.3 million of purchase accounting premium from acquisition which reduces the stated rate on the debt of 4.42% to an effective rate of 3.86%.	 	(i)		TRG revolving credit facility of $650 million. Dolphin, Fairlane and Twelve Oaks are the direct borrowers under this facility. Debt is guaranteed by TRG. A one year extension option is available.	 	
 		 	 		 	
(d)	Debt includes $4.1 million of purchase accounting premium from acquisition which reduces the stated rate on the debt of 6.10% to an effective rate of 4.50%.	 	(j)		Principal amortization includes amortization of purchase accounting adjustments.	 	
 		 	(k)		In October 2012, the existing $197.0 million, 5.46% loan on The Mall at Millenia, a 50% owned joint venture, was refinanced.  The new 12-year, non-recourse, $350 million loan bears interest at a fixed rate of 4%.	 	
(e)	Debt includes $2.5 million of purchase accounting premium from acquisition which reduces the stated rate on the debt of 6.89% to an effective rate of 4.71%.