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BLOOMFIELD HILLS, MI-Taubman Centers Inc. posted its third quarter earnings results Tuesday, seeing a net income loss of $1.77 per diluted share. The decline in numbers was due in large part to the $2.00 per share impairment charge from the Pier Shops at Caesars in Atlantic City and Regency Square in Richmond VA.

“We’re continuing to experience a tough retail environment,” says Robert Taubman, chairman, president and CEO of Taubman. “As retailers rationalize locations, we have been very successful collecting lease cancellation income. This more than offset the declines in rents and recoveries during the quarter.”

Excluding the impairment charge, funds from operation for the first nine months of the year totaled $2.13 per share, a 2.4% increase from the $2.08 FFO for the first nine months of 2008.

Vacancy fell in the third quarter as well. Taubman’s portfolio was 88.5% occupied, down from last year’s Q3 number of 90.5%. Rent per square foot declined across the portfolio to an average of $43.47, compared to $44.04 from Q3 2008. Mall tenants saw sales drop 8% in Q3, which brings the total decline in the last year to 11.8% or $497 per square foot.

Still Taubman executives remained upbeat on the investor earnings call Tuesday afternoon. “The sales performance trend is the best we’ve reported since the third quarter of 2008,” Taubman says. “In fact, the month of September, while down 2.9%, was significantly better than we have been reporting all year. We are hopeful that the improved sales trends mark the bottom of this cycle. As sales improve, our retailers will become more profitable. Eventually, this will be reflected in stronger leasing and operating results.”

The fourth quarter, usually the biggest time for retailers with the Christmas holiday as a bolster, is not likely to see further decline, according to Taubman. “We are cautiously optimistic that we will come through the fourth quarter flat or slightly up.”

Taubman told investors he expects the first three quarters of 2010 to remain flat or rise slightly with potential “modest single digit gains,” with the real test coming in the fourth quarter of next year. By then, he says, a number of factors will be working through the system and should determine the strength of the economy. Factors like job loss and the government’s intervention in the economy could make a difference.

Taubman is optimistic that by Q4 2010, retailers will be willing to make lease deals, vacancy will begin to drop and rental rates will again begin to rise.

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