UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

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

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

Commission File Number 1-11530

TAUBMAN CENTERS, INC.

(Exact Name of Registrant as Specified in Its Charter)

Michigan		38-2033632
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)
200 East Long Lake Road, Suite 300
Bloomfield Hills, Michigan		48304-2324
(Address of principal executive office)		(Zip Code)
Registrant’s telephone number, including area code:		(248) 258-6800

Securities registered pursuant to Section 12(b) of the Act:

		Name of each exchange
Title of each class		on which registered
Common Stock,		New York Stock Exchange
$0.01 Par Value
8% Series G Cumulative		New York Stock Exchange
Redeemable Preferred Stock,
No Par Value
7.625% Series H Cumulative		New York Stock Exchange
Redeemable Preferred Stock,
No Par Value

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. þ Yes
o No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. o Yes
þ No

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. þ 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). o Yes o No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

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 þ		Accelerated Filer o		Non-Accelerated Filer o		Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes þ No

The aggregate market value of the 52,059,790 shares of Common Stock held by non-affiliates of the registrant as of June 30, 2009 was $1.4 billion, based upon the closing price $26.86 per share on the New York Stock Exchange composite tape on June 30, 2009. (For this computation, the registrant has excluded the market value of all shares of its Common Stock held by directors of the registrant and certain other shareholders; such exclusion shall not be deemed to constitute an admission that any such person is an “affiliate” of the registrant.) As of February 24, 2010, there were outstanding 54,326,934 shares of Common Stock.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the proxy statement for the annual shareholders meeting to be held in 2010 are incorporated by reference into Part III.

 

 

TAUBMAN CENTERS, INC.
CONTENTS

PART I
Item 1. Business			2
Item 1A. Risk Factors			9
Item 1B. Unresolved Staff Comments			16
Item 2. Properties			16
Item 3. Legal Proceedings			21
Item 4. Submission of Matters to a Vote of Security Holders			21
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities			22
Item 6. Selected Financial Data			24
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations			25
Item 7A. Quantitative and Qualitative Disclosures About Market Risk			51
Item 8. Financial Statements and Supplementary Data			51
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure			51
Item 9A. Controls and Procedures			51
Item 9B. Other Information			51
PART III
Item 10. Directors, Executive Officers, and Corporate Governance			51
Item 11. Executive Compensation			51
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			52
Item 13. Certain Relationships and Related Transactions, and Director Independence			52
Item 14. Principal Accountant Fees and Services			52
PART IV
Item 15. Exhibits, Financial Statement Schedules			53

PART I

Item 1.		BUSINESS.

     The following discussion of our business 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. We caution that although forward-looking statements reflect our good faith beliefs and best 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, including those risks, uncertainties, and factors detailed from time to time in reports filed with the SEC, and in particular those set forth under “Risk Factors” in this Annual Report on Form 10-K.

The Company

     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, lease, acquire, dispose of, develop, expand, and manage regional and super-regional shopping centers. Our portfolio as of December 31, 2009 consisted of 23 owned urban and suburban shopping centers in ten states. 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). See the table on pages 17 and 18 of this report for information regarding the centers.

     Taubman Asia, which is the platform for our expansion into the Asia-Pacific region, is headquartered in Hong Kong.

     We operate as a REIT under the Internal Revenue Code of 1986, as amended (the Code). In order to satisfy the provisions of the Code applicable to REITs, we must distribute to our shareowners at least 90% of our REIT taxable income prior to net capital gains and meet certain other requirements. The Operating Partnership’s partnership agreement provides that the Operating Partnership will distribute, at a minimum, sufficient amounts to its partners such that our pro rata share will enable us to pay shareowner dividends (including capital gains dividends that may be required upon the Operating Partnership’s sale of an asset) that will satisfy the REIT provisions of the Code.

Recent Developments

     For a discussion of business developments that occurred in 2009, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A).” The loan encumbering The Pier Shops at Caesars (The Pier Shops) is currently in default, and the loan obligation will be extinguished upon transfer of the title of the center, which is expected to occur in 2010 (see “MD&A — Results of Operations — Impairment Charges — The Pier Shops at Caesars”). Consequently, The Pier Shops has been excluded from operating statistics in 2009 and 2008 and certain other information as indicated.

The Shopping Center Business

     There are several types of retail shopping centers, varying primarily by size and marketing strategy. Retail shopping centers range from neighborhood centers of less than 100,000 square feet of GLA to regional and super-regional shopping centers. Retail shopping centers in excess of 400,000 square feet of GLA are generally referred to as “regional” shopping centers, while those centers having in excess of 800,000 square feet of GLA are generally referred to as “super-regional” shopping centers. In this Annual Report on Form 10-K, the term “regional shopping centers” refers to both regional and super-regional shopping centers. The term “GLA” refers to gross retail space, including anchors and mall tenant areas, and the term “Mall GLA” refers to gross retail space, excluding anchors. The term “anchor” refers to a department store or other large retail store. The term “mall tenants” refers to stores (other than anchors) that lease space in shopping centers.

Business of the Company

     We are engaged in the ownership, management, leasing, acquisition, disposition, development, and expansion of regional shopping centers.

     The centers:

•

are strategically located in major metropolitan areas, many in communities that are among the most affluent in the country, including Charlotte, Dallas, Denver, Detroit, Los Angeles, Miami, New York City, Orlando, Phoenix, San Francisco, Tampa, and Washington, D.C.;

•

range in size between 295,000 and 1.6 million square feet of GLA and between 197,000 and 636,000 square feet of Mall GLA. The smallest center has approximately 60 stores, and the largest has over 200 stores. Of the 23 centers, 18 are super-regional shopping centers;

•

have approximately 3,000 stores operated by their mall tenants under approximately 900 trade names;

•

have 68 anchors, operating under 15 trade names;

•

lease over 90% of leased Mall GLA to national chains, including subsidiaries or divisions of Forever 21 (Forever 21, For Love 21, XXI Forever, and others), The Gap (Gap, Gap Kids/Baby Gap, Banana Republic, Old Navy, and others), and Limited Brands (Bath & Body Works/White Barn Candle, Pink, Victoria’s Secret, and others); and

•

are among the most productive (measured by mall tenants’ average sales per square foot) in the United States. In 2009, mall tenants reported average sales per square foot of $498, excluding The Pier Shops, which is higher than the average for all regional shopping centers owned by public companies.

     The most important factor affecting the revenues generated by the centers is leasing to mall tenants (including temporary tenants and specialty retailers), which represents approximately 90% of revenues. Anchors account for less than 10% of revenues because many own their stores and, in general, those that lease their stores do so at rates substantially lower than those in effect for mall tenants.

     Our portfolio is concentrated in highly productive super-regional shopping centers. Of our 23 owned centers, 20 had annual rent rolls at December 31, 2009 of over $10 million. We believe that this level of productivity is indicative of the centers’ strong competitive positions and is, in significant part, attributable to our business strategy and philosophy. We believe that large shopping centers (including regional and especially super-regional shopping centers) are the least susceptible to direct competition because (among other reasons) anchors and large specialty retail stores do not find it economically attractive to open additional stores in the immediate vicinity of an existing location for fear of competing with themselves. In addition to the advantage of size, we believe that the centers’ success can be attributed in part to their other physical characteristics, such as design, layout, and amenities.

Business Strategy And Philosophy

     We believe that the regional shopping center business is not simply a real estate development business, but rather an operating business in which a retailing approach to the on-going management and leasing of the centers is essential. Thus we:

•

offer retailers a location where they can maximize their profitability;

•

offer a large, diverse selection of retail stores in each center to give customers a broad selection of consumer goods and variety of price ranges;

•

endeavor to increase overall mall tenants’ sales by leasing space to a constantly changing mix of tenants, thereby increasing achievable rents;

•

seek to anticipate trends in the retailing industry and emphasize ongoing introductions of new retail concepts into our centers. Due in part to this strategy, a number of successful retail trade names have opened their first mall stores in the centers. In addition, we have brought to the centers “new to the market” retailers. We believe that the execution of this leasing strategy is an important element in building and maintaining customer loyalty and increasing mall productivity; and

•

provide innovative initiatives, including those that utilize technology and the Internet, to increase revenues, heighten the shopping experience, build customer loyalty, and increase tenant sales. Our Taubman center website program connects shoppers and retailers through an interactive content-driven website. We also offer our shoppers a robust direct email program, which allows them to receive, each week, information featuring what’s on sale and what’s new at the stores they select.

     The centers compete for retail consumer spending through diverse, in-depth presentations of predominantly fashion merchandise in an environment intended to facilitate customer shopping. While the majority of our centers include stores that target high-end, upscale customers, each center is individually merchandised in light of the demographics of its potential customers within convenient driving distance.

     Our leasing strategy involves assembling a diverse mix of mall tenants in each of the centers in order to attract customers, thereby generating higher sales by mall tenants. High sales by mall tenants make the centers attractive to prospective tenants, thereby increasing the rental rates that prospective tenants are willing to pay. We implement an active leasing strategy to increase the centers’ productivity and to set minimum rents at higher levels. Elements of this strategy include renegotiating existing leases and leasing space to prospective tenants that would enhance a center’s retail mix.

     In 2005, we began a new leasing strategy to have our tenants pay a fixed charge rather than pay their share of common area maintenance (CAM) costs, allowing the retailer greater predictability for a modest premium. From a financial perspective, our analysis shows the premium will balance our additional risk. Over time there will be significantly less matching of CAM income with CAM expenditures, which can vary considerably from period to period. Approximately 37% of leases in our portfolio as of December 31, 2009 have fixed CAM provisions.

Potential For Growth

     Our principal objective is to enhance shareowner value. We seek to maximize the financial results of our core assets, while also pursuing a growth strategy that primarily has included an active new center development program. However, the U.S. recession and global credit environment have continued to negatively impact certain of our planned development projects and the potential for new projects. We have reduced spending on development projects by slowing down or by putting projects on hold. Consistent with this reduction, in 2009, we went through the process of downsizing our organization, reducing our overall workforce by about 40 positions. See “MD&A - Results of Operations — Restructuring” for further information. This primarily impacted the areas that directly or indirectly support these development initiatives. We believe we are now right sized to efficiently pursue targeted growth opportunities in this environment, while ensuring we have sufficient support within all of our teams to maintain the strength of our core assets. We do not know how long the effects of the recession will continue to impact our operations and prospects for new projects, but we believe the regional mall business will continue to prove its resiliency and its unique value proposition to the customer. See “MD&A -Overall Summary of Management’s Discussion and Analysis of Financial Condition and Results of Operations” for more details.

Internal Growth

     We expect that over time the majority of our future growth will come from our existing core portfolio and business. We have always had a culture of intensively managing our assets and maximizing the rents from tenants.

     As noted in “Business Strategy and Philosophy” above in detail, our core business strategy is to maintain a portfolio of properties that deliver above-market profitable growth by providing targeted retailers with the best opportunity to do business in each market and targeted shoppers with the best local shopping experience for their needs.

New Centers

     We have finalized the majority of agreements, subject to certain conditions, regarding City Creek Center, a mixed-use project in Salt Lake City, Utah and continue to work toward an early 2012 opening. The 0.7 million square foot retail component of the project will include Macy’s and Nordstrom as anchors. We are currently providing development and leasing services and will be the manager for the retail space, which we will own under a participating lease. See “MD&A — Liquidity and Capital Resources — Capital Spending” regarding additional information on City Creek Center.

     In addition, we continue to work on and evaluate various development possibilities for new centers both in the United States and Asia. We expect however, that with current economic and capital market conditions, few new retail centers will be built in the U.S. over the next two years. We expect that in three to five years, with growth in population, there will be more demand for new centers. We are also working with a consultant with deep expertise in Asia to reassess the market opportunity and address the geographies, products, and services we intend to pursue.

     We generally do not intend to acquire land early in the development process. Instead, we generally acquire options on land or form partnerships with landowners holding potentially attractive development sites. We typically exercise the options only once we are prepared to begin construction. The pre-construction phase for a regional center typically extends over several years and the time to obtain anchor commitments, zoning and regulatory approvals, and public financing arrangements can vary significantly from project to project. In addition, we do not intend to begin construction until a sufficient number of anchor stores have agreed to operate in the shopping center, such that we are confident that the projected tenant sales and rents from Mall GLA are sufficient to earn a return on invested capital in excess of our cost of capital. Having historically followed these principles, our experience indicates that, on average, less than 10% of the costs of the development of a regional shopping center will be incurred prior to the construction period. However, no assurance can be given that we will continue to be able to so limit pre-construction costs.

     While we will continue to evaluate development projects using criteria, including financial criteria for rates of return, similar to those employed in the past, no assurances can be given that the adherence to these criteria will produce comparable results in the future. In addition, the costs of shopping center development opportunities that are explored but ultimately abandoned will, to some extent, diminish the overall return on development projects taken as a whole. See “MD&A — Liquidity and Capital Resources — Capital Spending” for further discussion of our development activities.

Strategic Acquisitions

     Given the current economic conditions there may be opportunities to acquire existing centers, or interests in existing centers, from other companies at attractive prices. Our objective is to acquire existing centers only when they are compatible with the quality of our portfolio (or can be redeveloped to that level). We also may acquire additional interests in centers currently in our portfolio. We plan to carefully evaluate our future capital needs along with our strategic plans and pricing requirements.

Expansions of the Centers

     Another potential element of growth over time is the strategic expansion of existing properties to update and enhance their market positions, by replacing or adding new anchor stores or increasing mall tenant space. Most of the centers have been designed to accommodate expansions. Expansion projects can be as significant as new shopping center construction in terms of scope and cost, requiring governmental and existing anchor store approvals, design and engineering activities, including rerouting utilities, providing additional parking areas or decking, acquiring additional land, and relocating anchors and mall tenants (all of which must take place with a minimum of disruption to existing tenants and customers).

     In September 2007, a 165,000 square foot Nordstrom opened at Twelve Oaks Mall (Twelve Oaks) along with approximately 97,000 square feet of additional new store space. In 2008, Macy’s renovated its store and added 60,000 square feet of store space.

     A lifestyle component addition to Stamford Town Center (Stamford), on the site once occupied by Filene’s Department store, opened in November 2007. The project consists of a mix of signature retail and restaurant offerings, creating significantly greater visibility to the city and much needed pedestrian access to the center. In addition, we renovated the seventh level in 2007, adding a 450-seat food court and interactive children’s play area. The food court tenants opened in early 2008.

     Nordstrom opened as an anchor at Waterside Shops (Waterside) in November 2008 and an expansion and full renovation of the current anchor, Saks Fifth Avenue, was completed in the second half of 2008.

Rental Rates

     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, rents on new leases will generally tend to rise. In periods of slower growth or declining sales, as we are experiencing now, rents on new leases will grow more slowly or will decline for the opposite reason, as tenants’ expectations of future growth become less optimistic.

     The following tables contain certain information regarding per square foot minimum rent in our Consolidated Businesses and Unconsolidated Joint Ventures at the comparable centers (centers that had been owned and open for the current and preceding year). The amounts in the table exclude The Pier Shops, and in 2009 and 2008, exclude spaces with greater than 10,000 square feet:

		2009				2008				2007				2006				2005
Average rent per square foot:
Consolidated Businesses		$	43.31			$	43.95			$	43.39			$	42.77			$	41.41
Unconsolidated Joint Ventures			44.49				44.61				41.89				41.03				42.28
Opening base rent per square foot:
Consolidated Businesses		$	45.19			$	54.78			$	53.35			$	41.25			$	42.38
Unconsolidated Joint Ventures			51.10				59.36				48.05				42.98				44.90
Square feet of GLA opened:
Consolidated Businesses			681,773				589,730				885,982				1,007,419				682,305
Unconsolidated Joint Ventures			218,953				340,275				394,316				306,461				400,477
Closing base rent per square foot:
Consolidated Businesses		$	41.70			$	49.60			$	45.39			$	39.57			$	40.59
Unconsolidated Joint Ventures			48.64				48.72				48.63				42.49				44.26
Square feet of GLA closed:
Consolidated Businesses			832,451				650,607				807,899				911,986				650,701
Unconsolidated Joint Ventures			259,457				342,698				345,122				246,704				366,932
Releasing spread per square foot:
Consolidated Businesses		$	3.49			$	5.18			$	7.96			$	1.68			$	1.79
Unconsolidated Joint Ventures			2.46				10.64				(0.58	)			0.49				0.64

     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. Openings in 2009 were generally negotiated in a declining sales and tight capital environment, whereas openings in 2008 and 2007 were generally negotiated in a rising sales environment. However, the releasing spread per square foot of the Unconsolidated Joint Ventures in 2007 was adversely impacted by the opening of large tenant spaces.

Lease Expirations

     The following table shows scheduled lease expirations for mall tenants based on information available as of December 31, 2009 for the next ten years for all owned centers in operation at that date, with the exception of The Pier Shops:

																		Percent of
														Annualized Base				Total Leased
Lease		Number of								Annualized Base Rent				Rent Under				Square Footage
Expiration		Leases				Leased Area in				Under Expiring Leases				Expiring Leases				Represented by
Year		Expiring				Square Footage				(in thousands of dollars)				Per Square Foot				Expiring Leases
2010 (1)			149				467,010				14,626			$	31.32				4.1	%
2011			441				1,421,747				51,215				36.02				12.4
2012			358				1,364,090				52,753				38.67				11.9
2013			359				1,427,653				51,080				35.78				12.5
2014			263				943,793				34,860				36.94				8.2
2015			283				1,018,630				38,836				38.13				8.9
2016			252				917,124				36,851				40.18				8.0
2017			298				1,258,726				53,269				42.32				11.0
2018			207				937,719				40,906				43.62				8.2
2019			164				754,341				29,228				38.75				6.6

     We believe that the information in the table is not necessarily indicative of what will occur in the future because of several factors, but principally because of early lease terminations at the centers. For example, the average remaining term of the leases that were terminated during the period 2004 to 2009 was approximately one year. The average term of leases signed was approximately six years during 2009 and approximately seven years during 2008.

     In addition, mall tenants at the centers may seek the protection of the bankruptcy laws, which could result in the termination of such tenants’ leases and thus cause a reduction in cash flow. In 2009, tenants representing 4.1% of leases filed for bankruptcy during the year compared to 2.5% in 2008. This statistic has ranged from 0.4% to 4.5% since we went public in 1992. Since 1991, the annual provision for losses on accounts receivable has been less than 2% of annual revenues.

Occupancy

     Occupancy statistics include value center anchors. The 2009 and 2008 statistics exclude The Pier Shops.

		2009				2008				2007				2006				2005
Leased space			91.6	%			92.0	%			93.8	%			92.5	%			91.7	%
Ending occupancy			89.6				90.5				91.2				91.3				90.0
Average occupancy			89.0				90.5				90.0				89.2				88.9

Major Tenants

     No single retail company represents 10% or more of our Mall GLA or revenues. The combined operations of Forever 21 accounted for less than 4% of Mall GLA as of December 31, 2009 and less than 3% of 2009 minimum rent. No other single retail company accounted for more than 3.5% of Mall GLA as of December 31, 2009 or 5% of 2009 minimum rent.

     The following table shows the ten mall tenants who occupy the most space at our centers and their square footage as of December 31, 2009:

		# of				Square				% of
Tenant		Stores				Footage				Mall GLA
Forever 21 (Forever 21, For Love 21, XXI Forever, and others)			32				403,206				3.7	%
The Gap (Gap, Gap Kids, Baby Gap, Banana Republic, Old Navy, and others)			44				381,760				3.5
Limited Brands (Bath & Body Works/White Barn Candle, Pink, Victoria’s Secret, and others)			46				293,298				2.7
Abercrombie & Fitch (Abercrombie & Fitch, Hollister, and others)			38				277,963				2.5
Williams-Sonoma (Williams-Sonoma, Pottery Barn, Pottery Barn Kids, and others)			25				193,458				1.8
Foot Locker (Foot Locker, Lady Foot Locker, Champs Sports, Foot Action USA, and others)			45				190,605				1.7
Ann Taylor (Ann Taylor, Ann Taylor Loft, and others)			32				184,340				1.7
H&M			10				175,351				1.6
Express (Express, Express Men)			19				171,230				1.6
American Eagle Outfitters (American Eagle Outfitters, Aerie, and Martin + Osa)			25				147,397				1.3

Competition

     There are numerous shopping facilities that compete with our properties in attracting retailers to lease space. We compete with other major real estate investors with significant capital for attractive investment opportunities. See “Risk Factors” for further details of our competitive business.

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. See “MD&A — Seasonality” for further discussion.

Environmental Matters

     See “Risk Factors” regarding discussion of environmental matters.

Financial Information about Geographic Areas

     We have not had material revenues attributable to foreign countries in the last three years. We also do not yet have material long-lived assets located in foreign countries.

Personnel

     We have engaged the Manager to provide real estate management, acquisition, development, leasing, and administrative services required by us and our properties in the United States. Taubman Asia Management Limited (TAM) provides similar services for Taubman Asia.

     As of December 31, 2009, the Manager and TAM had 590 full-time employees. The following table provides a breakdown of employees by operational areas as of December 31, 2009:

		Number of Employees
Center Operations			241
Property Management			153
Financial Services			64
Leasing and Tenant Coordination			52
Development			20
Other			60
Total			590

Available Information

     The Company makes available free of charge through its website at www.taubman.com all reports it electronically files with, or furnishes to, the Securities Exchange Commission (the “SEC”), including its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, as well as any amendments to those reports, as soon as reasonably practicable after those documents are filed with, or furnished to, the SEC. These filings are also accessible on the SEC’s website at www.sec.gov.

Item 1A.		RISK FACTORS.

The economic performance and value of our shopping centers are dependent on many factors.

     The economic performance and value of our shopping centers are dependent on various factors. Additionally, these same factors will influence our decision whether to go forward on the development of new centers and may affect the ultimate economic performance and value of projects under construction. Adverse changes in the economic performance and value of our shopping centers would adversely affect our income and cash available to pay dividends.

     Such factors include:

	•		changes in the national, regional, and/or local economic and geopolitical climates, which as in the current economic environment of high unemployment, uncertain recovery, and credit availability, may significantly impact our anchors, tenants and prospective customers of our shopping centers;
	•		changes in mall tenant sales performance of our centers, which over the long term, are the single most important determinant of revenues of the shopping centers because mall tenants provide approximately 90% of these revenues and because mall tenant sales determine the amount of rent, percentage rent, and recoverable expenses that mall tenants can afford to pay;
	•		availability and cost of financing, which may significantly reduce our ability to obtain financing or refinance existing debt at current amounts, interest rates, and other terms or may affect our ability to finance improvements to a property;
	•		decreases in other operating income, including sponsorship, garage and other income;
	•		increases in operating costs;
	•		the public perception of the safety of customers at our shopping centers;
	•		legal liabilities;
	•		changes in government regulations; and
	•		changes in real estate zoning and tax laws.

     In addition, the value and performance of our shopping centers may be adversely affected by certain other factors discussed below including the global economic condition and weakness in the financial markets, the current state of the capital markets, unscheduled closings or bankruptcies of our tenants, competition, uninsured losses, and environmental liabilities.

The global economic and financial market downturn has had and may continue to have a negative effect on our business and operations.

     The global economic and financial market downturn has caused, among other things, a significant tightening in the credit markets, lower levels of liquidity, increases in the rates of default and bankruptcy, lower consumer and business spending, and lower consumer confidence and net worth, all of which has had and may continue to have a negative effect on our business, results of operations, financial condition and liquidity. Many of our tenants have been affected by the current economic conditions. We expect that the economy will continue to strain the resources of our tenants and their customers. The timing and nature of any recovery in the credit and financial markets remains uncertain, and there can be no assurance that market conditions will improve in the near future or that our results will not continue to be adversely affected. Such conditions make it very difficult to forecast operating results, make business decisions and identify and address material business risks. The foregoing conditions may also impact the valuation of certain long-lived or intangible assets that are subject to impairment testing, potentially resulting in impairment charges, which may be material to our financial condition or results of operations. In 2009, we concluded that the book values of the investments in The Pier Shops and Regency Square were impaired, which resulted in a non-cash charge of $166.7 million (or $160.8 million at our share). In 2008, we recognized an impairment charge of $8.3 million related to our Sarasota project, which was put on hold due to the current economic and retail environment (see “MD&A - Results of Operations — Impairment Charges”).

Capital markets are currently experiencing a period of disruption and instability, which has had and could continue to have a negative impact on the availability and cost of capital.

     The general disruption in the U.S. capital markets has impacted the broader worldwide financial and credit markets and reduced the availability of capital for the market as a whole. These global conditions could persist for a prolonged period of time or worsen in the future. Our ability to access the capital markets may be restricted at a time when we would like, or need, to access those markets, which could have an impact on our flexibility to react to changing economic and business conditions. The resulting lack of available credit, lack of confidence in the financial sector, increased volatility in the financial markets and reduced business activity could materially and adversely affect our business, financial condition, results of operations and our ability to obtain and manage our liquidity. In addition, the cost of debt financing and the proceeds may be materially adversely impacted by these market conditions.

Credit market developments may reduce availability under our credit agreements.

     Due to the current volatile state of the credit markets, there is risk that lenders, even those with strong balance sheets and sound lending practices, could fail or refuse to honor their legal commitments and obligations under existing credit commitments, including but not limited to extending credit up to the maximum permitted by a credit facility and/or honoring loan commitments. Twelve banks participate in our $550 million 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. However, if one or more of our lenders fail to honor their legal commitments under our credit facilities, it could be difficult in the current environment to replace such lenders and/or our credit facilities on similar terms. Although we believe that our operating cash flow, access to capital markets, two unencumbered center properties and existing credit facilities will give us the ability to satisfy our liquidity needs, the failure of one or more of the lenders under our credit facilities may impact our ability to finance our operating or investing activities.

We are in a competitive business.

     There are numerous shopping facilities that compete with our properties in attracting retailers to lease space. In addition, retailers at our properties face continued competition from discount shopping centers, lifestyle centers, outlet malls, wholesale and discount shopping clubs, direct mail, telemarketing, television shopping networks and shopping via the Internet. Competition of this type could adversely affect our revenues and cash available for distribution to shareowners.

     We compete with other major real estate investors with significant capital for attractive investment opportunities. These competitors include other REITs, investment banking firms and private institutional investors. This competition may impair our ability to make suitable property acquisitions on favorable terms in the future.

The bankruptcy or early termination of our tenants and anchors could adversely affect us.

     We could be adversely affected by the bankruptcy or early termination of tenants and anchors. The bankruptcy of a mall tenant could result in the termination of its lease, which would lower the amount of cash generated by that mall. In addition, if a department store operating as an anchor at one of our shopping centers were to go into bankruptcy and cease operating, we may experience difficulty and delay in replacing the anchor. In addition, the anchor’s closing may lead to reduced customer traffic and lower mall tenant sales. As a result, we may also experience difficulty or delay in leasing spaces in areas adjacent to the vacant anchor space. The early termination of mall tenants or anchors for reasons other than bankruptcy could have a similar impact on the operations of our centers. (See “MD&A — Rental Rates and Occupancy”).

The bankruptcy of our joint venture partners could adversely affect us.

     The profitability of shopping centers held in a joint venture could also be adversely affected by the bankruptcy of one of the joint venture partners if, because of certain provisions of the bankruptcy laws, we were unable to make important decisions in a timely fashion or became subject to additional liabilities.

Our investments are subject to credit and market risk.

     We occasionally extend credit to third parties in connection with the sale of land or other transactions. We have occasionally made investments in marketable and other equity securities. We are exposed to risk in the event the values of our investments and/or our loans decrease due to overall market conditions, business failure, and/or other nonperformance by the investees or counterparties.

Our real estate investments are relatively illiquid.

     We may be limited in our ability to vary our portfolio in response to changes in economic, market, or other conditions by restrictions on transfer imposed by our partners or lenders. In addition, under TRG’s partnership agreement, upon the sale of a center or TRG’s interest in a center, TRG may be required to distribute to its partners all of the cash proceeds received by TRG from such sale. If TRG made such a distribution, the sale proceeds would not be available to finance TRG’s activities, and the sale of a center may result in a decrease in funds generated by continuing operations and in distributions to TRG’s partners, including us. Further, pursuant to TRG’s partnership agreement, TRG may not dispose or encumber certain of its centers or its interest in such centers without the consent of a majority-in-interest of its partners other than us.

We may acquire or develop new properties, and these activities are subject to various risks.

     We actively pursue development and acquisition activities as opportunities arise, and these activities are subject to the following risks:

•

the pre-construction phase for a regional center typically extends over several years, and the time to obtain anchor commitments, zoning and regulatory approvals, and public financing can vary significantly from project to project;

•

we may not be able to obtain the necessary zoning or other governmental approvals for a project, or we may determine that the expected return on a project is not sufficient; if we abandon our development activities with respect to a particular project, we may incur a loss on our investment;

•

construction and other project costs may exceed our original estimates because of increases in material and labor costs, delays and costs to obtain anchor and tenant commitments;

•

we may not be able to obtain financing or to refinance construction loans, which are generally recourse to TRG; and

•

occupancy rates and rents, as well as occupancy costs and expenses, at a completed project may not meet our projections, and the costs of development activities that we explore but ultimately abandon will, to some extent, diminish the overall return on our completed development projects.

     In addition, adverse impacts of the global economic and market downturn may reduce viable development and acquisition opportunities that meet our unlevered return requirements.

Our pursuit of new opportunities in Asia may pose risks.

     We have an office in Hong Kong and we are pursuing and evaluating management, leasing and development service and investment opportunities in various Asian markets. These activities are subject to risks that may reduce our financial return. In addition to the general risks related to development and acquisition activities described in the preceding section, our international activities are subject to unique risks, including:

•

adverse effects of changes in exchange rates for foreign currencies;

•

changes in foreign political environments;

•

difficulties of complying with a wide variety of foreign laws including laws affecting corporate governance, operations, taxes, and litigation;

•

changes in and/or difficulties in complying with applicable laws and regulations in the United States that affect foreign operations, including the Foreign Corrupt Practices Act;

•

difficulties in managing international operations, including difficulties that arise from ambiguities in contracts written in foreign languages; and

•

obstacles to the repatriation of earnings and cash.

     Although our international activities are currently limited in their scope, to the extent that we expand them, these risks could increase in significance and adversely affect our financial returns on international projects and services and overall financial condition. We have put in place policies, practices, and systems for mitigating some of these international risks, although we cannot provide assurance that we will be entirely successful in doing so.

Some of our potential losses may not be covered by insurance.

     We carry liability, fire, flood, earthquake, extended coverage and rental loss insurance on each of our properties. We believe the policy specifications and insured limits of these policies are adequate and appropriate. There are, however, some types of losses, including lease and other contract claims, that generally are not insured. If an uninsured loss or a loss in excess of insured limits occurs, we could lose all or a portion of the capital we have invested in a property, as well as the anticipated future revenue from the property. If this happens, we might nevertheless remain obligated for any mortgage debt or other financial obligations related to the property.

     In November 2002, Congress passed the “Terrorism Risk Insurance Act of 2002” (TRIA), which required insurance companies to offer terrorism coverage to all existing insured companies for an additional cost. As a result, our property insurance policies are currently provided without a sub-limit for terrorism, eliminating the need for separate terrorism insurance policies.

     In 2007, Congress extended the expiration date of TRIA by seven years to December 31, 2014. There are specific provisions in our loans that address terrorism insurance. Simply stated, in most loans, we are obligated to maintain terrorism insurance, but there are limits on the amounts we are required to spend to obtain such coverage. If a terrorist event occurs, the cost of terrorism insurance coverage would be likely to increase, which could result in our having less coverage than we have currently. Our inability to obtain such coverage or to do so only at greatly increased costs may also negatively impact the availability and cost of future financings.

We may be subject to liabilities for environmental matters.

     All of the centers presently owned by us (not including option interests in certain pre-development projects) have been subject to environmental assessments. We are not aware of any environmental liability relating to the centers or any other property in which we have or had an interest (whether as an owner or operator) that we believe would have a material adverse effect on our business, assets, or results of operations. No assurances can be given, however, that all environmental liabilities have been identified by us or that no prior owner or operator, or any occupant of our properties has created an environmental condition not known to us. Moreover, no assurances can be given that (1) future laws, ordinances, or regulations will not impose any material environmental liability or that (2) the current environmental condition of the centers will not be affected by tenants and occupants of the centers, by the condition of properties in the vicinity of the centers (such as the presence of underground storage tanks), or by third parties unrelated to us.

We hold investments in joint ventures in which we do not control all decisions, and we may have conflicts of interest with our joint venture partners.

     Some of our shopping centers are partially owned by non-affiliated partners through joint venture arrangements. As a result, we do not control all decisions regarding those shopping centers and may be required to take actions that are in the interest of the joint venture partners but not our best interests. Accordingly, we may not be able to favorably resolve any issues that arise with respect to such decisions, or we may have to provide financial or other inducements to our joint venture partners to obtain such resolution.

     For joint ventures that we do not manage, we do not control decisions as to the design or operation of internal controls over accounting and financial reporting, including those relating to maintenance of accounting records, authorization of receipts and disbursements, selection and application of accounting policies, reviews of period-end financial reporting, and safeguarding of assets. Therefore, we are exposed to increased risk that such controls may not be designed or operating effectively, which could ultimately affect the accuracy of financial information related to these joint ventures as prepared by our joint venture partners.

     Various restrictive provisions and rights govern sales or transfers of interests in our joint ventures. These may work to our disadvantage because, among other things, we may be required to make decisions as to the purchase or sale of interests in our joint ventures at a time that is disadvantageous to us.

We may not be able to maintain our status as a REIT.

     We may not be able to maintain our status as a REIT for federal income tax purposes with the result that the income distributed to shareowners would not be deductible in computing taxable income and instead would be subject to tax at regular corporate rates. We may also be subject to the alternative minimum tax if we fail to maintain our status as a REIT. Any such corporate tax liability would be substantial and would reduce the amount of cash available for distribution to our shareowners which, in turn, could have a material adverse impact on the value of, or trading price for, our shares. Although we believe we are organized and operate in a manner to maintain our REIT qualification, many of the REIT requirements of the Internal Revenue Code of 1986, as amended (the Code), are very complex and have limited judicial or administrative interpretations. Changes in tax laws or regulations or new administrative interpretations and court decisions may also affect our ability to maintain REIT status in the future. If we do not maintain our REIT status in any year, we may be unable to elect to be treated as a REIT for the next four taxable years.

     Although we currently intend to maintain our status as a REIT, future economic, market, legal, tax, or other considerations may cause us to determine that it would be in our and our shareowners’ best interests to revoke our REIT election. If we revoke our REIT election, we will not be able to elect REIT status for the next four taxable years.

We may be subject to taxes even if we qualify as a REIT.

     Even if we qualify as a REIT for federal income tax purposes, we will be required to pay certain federal, state, local and foreign taxes on our income and property. For example, we will be subject to income tax to the extent we distribute less than 100% of our REIT taxable income, including capital gains. Moreover, if we have net income from “prohibited transactions,” that income will be subject to a 100% penalty tax. In general, prohibited transactions are sales or other dispositions of property held primarily for sale to customers in the ordinary course of business. The determination as to whether a particular sale is a prohibited transaction depends on the facts and circumstances related to that sale. We cannot guarantee that sales of our properties would not be prohibited transactions unless we comply with certain statutory safe-harbor provisions. The need to avoid prohibited transactions could cause us to forego or defer sales of assets that non-REITs otherwise would have sold or that might otherwise be in our best interest to sell.

     In addition, any net taxable income earned directly by our taxable REIT subsidiaries will be subject to federal, and state corporate income tax, and to the extent there are foreign operations certain foreign taxes. In this regard, several provisions of the laws applicable to REITs and their subsidiaries ensure that a taxable REIT subsidiary will be subject to an appropriate level of federal income taxation. For example, a taxable REIT subsidiary is limited in its ability to deduct certain interest payments made to an affiliated REIT. In addition, the REIT has to pay a 100% penalty tax on some payments that it receives or on some deductions taken by the taxable REIT subsidiaries if the economic arrangements between the REIT, the REIT’s tenants, and the taxable REIT subsidiary are not comparable to similar arrangements between unrelated parties. Finally, some state and local jurisdictions may tax some of our income even though as a REIT we are not subject to federal income tax on that income, because not all states and localities follow the federal income tax treatment of REITs. To the extent that we and our affiliates are required to pay federal, state and local taxes, we will have less cash available for distributions to our shareowners.

The lower tax rate on certain dividends from non-REIT “C” corporations may cause investors to prefer to hold stock in non-REIT “C” corporations.

     Whereas corporate dividends have traditionally been taxed at ordinary income rates, the maximum tax rate on certain corporate dividends received by individuals through December 31, 2010, has been reduced from 35% to 15%. This change has reduced substantially the so-called “double taxation” (that is, taxation at both the corporate and shareowner levels) that had generally applied to non-REIT “C” corporations but did not apply to REITs. Generally, dividends from REITs do not qualify for the dividend tax reduction because REITs generally do not pay corporate-level tax on income that they distribute currently to shareowners. REIT dividends are eligible for the lower dividend rates only in the limited circumstances in which the dividends are attributable to income that has already been subject to corporate tax, such as income from a prior taxable year that the REIT did not distribute and dividend income received by the REIT from a taxable REIT subsidiary or other fully-taxable C corporation. Although REITs, unlike non-REIT “C” corporations, have the ability to designate certain dividends as capital gain dividends subject to the favorable rates applicable to capital gain, the application of reduced dividend rates to non-REIT “C” corporation dividends may still cause individual investors to view stock in non-REIT “C” corporations as more attractive than shares in REITs, which may negatively affect the value of our shares.

Our ownership limitations and other provisions of our articles of incorporation and bylaws generally prohibit the acquisition of more than 8.23% of the value of our capital stock and may otherwise hinder any attempt to acquire us.

     Various provisions of our articles of incorporation and bylaws could have the effect of discouraging a third party from accumulating a large block of our stock and making offers to acquire us, and of inhibiting a change in control, all of which could adversely affect our shareowners’ ability to receive a premium for their shares in connection with such a transaction. In addition to customary anti-takeover provisions, as detailed below, our articles of incorporation contain REIT-specific restrictions on the ownership and transfer of our capital stock which also serve similar anti-takeover purposes.

     Under our Restated Articles of Incorporation, in general, no shareowner may own more than 8.23% (the “General Ownership Limit”) in value of our “Capital Stock” (which term refers to the common stock, preferred stock and Excess Stock, as defined below). Our Board of Directors has the authority to allow a “look through entity” to own up to 9.9% in value of the Capital Stock (Look Through Entity Limit), provided that after application of certain constructive ownership rules under the Internal Revenue Code and rules regarding beneficial ownership under the Michigan Business Corporation Act, no individual would constructively or beneficially own more than the General Ownership Limit. A look through entity is an entity (other than a qualified trust under Section 401(a) of the Internal Revenue Code, certain other tax-exempt entities described in the Articles, or an entity that owns 10% or more of the equity of any tenant from which we or TRG receives or accrues rent from real property) whose beneficial owners, rather than the entity, would be treated as owning the capital stock owned by such entity.

     The Articles provide that if the transfer of any shares of Capital Stock or a change in our capital structure would cause any person (Purported Transferee) to own Capital Stock in excess of the General Ownership Limit or the Look Through Entity Limit, then the transfer is to be treated as invalid from the outset, and the shares in excess of the applicable ownership limit automatically acquire the status of “Excess Stock.” A Purported Transferee of Excess Stock acquires no rights to shares of Excess Stock. Rather, all rights associated with the ownership of those shares (with the exception of the right to be reimbursed for the original purchase price of those shares) immediately vest in one or more charitable organizations designated from time to time by our Board of Directors (each, a “Designated Charity”). An agent designated from time to time by the Board (each, a “Designated Agent”) will act as attorney-in-fact for the Designated Charity to vote the shares of Excess Stock, take delivery of the certificates evidencing the shares that have become Excess Stock, and receive any distributions paid to the Purported Transferee with respect to those shares. The Designated Agent will sell the Excess Stock, and any increase in value of the Excess Stock between the date it became Excess Stock and the date of sale will inure to the benefit of the Designated Charity. A Purported Transferee must notify us of any transfer resulting in shares converting into Excess Stock, as well as such other information regarding such person’s ownership of the capital stock we request.

     These ownership limitations will not be automatically removed even if the REIT requirements are changed so as to no longer contain any ownership concentration limitation or if the concentration limitation is increased because, in addition to preserving our status as a REIT, the effect of such ownership limit is to prevent any person from acquiring unilateral control of us. Changes in the ownership limits can not be made by our Board of Directors and would require an amendment to our articles. Currently, amendments to our articles require the affirmative vote of holders owning not less than two-thirds of the outstanding capital stock entitled to vote.

     Although Mr. A. Alfred Taubman beneficially owns 28% of our stock, which is entitled to vote on shareowner matters (Voting Stock), most of his Voting Stock consists of Series B Preferred Stock. The Series B Preferred Stock is convertible into shares of common stock at a ratio of 14,000 shares of Series B Preferred Stock to one share of common stock, and therefore one share of Series B Preferred Stock has a value of 1/14,000ths of the value of one share of common stock. Accordingly, Mr. A. Alfred Taubman’s significant ownership of Voting Stock does not violate the ownership limitations set forth in our charter.

Members of the Taubman family have the power to vote a significant number of the shares of our capital stock entitled to vote.

     Based on information contained in filings made with the SEC, as of December 31, 2009, A. Alfred Taubman and the members of his family have the power to vote approximately 31% of the outstanding shares of our common stock and our Series B preferred stock, considered together as a single class, and approximately 92% of our outstanding Series B preferred stock. Our shares of common stock and our Series B preferred stock vote together as a single class on all matters generally submitted to a vote of our shareowners, and the holders of the Series B preferred stock have certain rights to nominate up to four individuals for election to our board of directors and other class voting rights. Mr. Taubman’s son, Robert S. Taubman, serves as our Chairman of the Board, President and Chief Executive Officer. Mr. Taubman’s son, William S. Taubman, serves as our Chief Operating Officer and one of our directors. These individuals occupy the same positions with the Manager. As a result, Mr. A. Alfred Taubman and the members of his family may exercise significant influence with respect to the election of our board of directors, the outcome of any corporate transaction or other matter submitted to our shareowners for approval, including any merger, consolidation or sale of all or substantially all of our assets. In addition, because our articles of incorporation impose a limitation on the ownership of our outstanding capital stock by any person and such ownership limitation may not be changed without the affirmative vote of holders owning not less than two-thirds of the outstanding shares of capital stock entitled to vote on such matter, Mr. A. Alfred Taubman and the members of his family, as a practical matter, have the power to prevent a change in control of our company.

Our ability to pay dividends on our stock may be limited.

     Because we conduct all of our operations through TRG or its subsidiaries, our ability to pay dividends on our stock will depend almost entirely on payments and dividends received on our interests in TRG. Additionally, the terms of some of the debt to which TRG is a party limits its ability to make some types of payments and other dividends to us. This in turn limits our ability to make some types of payments, including payment of dividends on our stock, unless we meet certain financial tests or such payments or dividends are required to maintain our qualification as a REIT. As a result, if we are unable to meet the applicable financial tests, we may not be able to pay dividends on our stock in one or more periods beyond what is required for REIT purposes.

Our ability to pay dividends is further limited by the requirements of Michigan law.

     Our ability to pay dividends on our stock is further limited by the laws of Michigan. Under the Michigan Business Corporation Act, a Michigan corporation may not make a distribution if, after giving effect to the distribution, the corporation would not be able to pay its debts as the debts become due in the usual course of business, or the corporation’s total assets would be less than the sum of its total liabilities plus the amount that would be needed, if the corporation were dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of shareowners whose preferential rights are superior to those receiving the distribution. Accordingly, we may not make a distribution on our stock if, after giving effect to the distribution, we would not be able to pay our debts as they become due in the usual course of business or our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the preferential rights upon dissolution of the holders of any shares of our preferred stock then outstanding.

We may incur additional indebtedness, which may harm our financial position and cash flow and potentially impact our ability to pay dividends on our stock.

     Our governing documents do not limit us from incurring additional indebtedness and other liabilities. As of December 31, 2009, we had approximately $2.7 billion of consolidated indebtedness outstanding, and our beneficial interest in both our consolidated debt and the debt of our unconsolidated joint ventures was $2.9 billion. We may incur additional indebtedness and become more highly leveraged, which could harm our financial position and potentially limit our cash available to pay dividends.

We cannot assure that we will be able to pay dividends regularly, although we have done so in the past.

     Our ability to pay dividends in the future is dependent on our ability to operate profitably and to generate cash from our operations. Although we have done so in the past, we cannot guarantee that we will be able to pay dividends on a regular quarterly basis or at the same level in the future. In addition, we may choose to pay a portion in stock dividends. Furthermore, any new shares of common stock issued will increase the cash required to continue to pay cash dividends at current levels. Any common stock or preferred stock that may in the future be issued to finance acquisitions, upon exercise of stock options or otherwise, would have a similar effect.

Item 1B.		UNRESOLVED STAFF COMMENTS.

     None.

Item 2.		PROPERTIES.

Ownership

     The following table sets forth certain information about each of the centers. The table includes only centers in operation at December 31, 2009. Centers are owned in fee other than Beverly Center (Beverly), Cherry Creek Shopping Center (Cherry Creek), International Plaza, MacArthur Center, and The Pier Shops, which are held under ground leases expiring between 2049 and 2083.

     Certain of the centers are partially owned through joint ventures. Generally, our joint venture partners have ongoing rights with regard to the disposition of our interest in the joint ventures, as well as the approval of certain major matters.

				Sq. Ft of
				GLA/Mall				Year								Ownership
				GLA as of				Opened/				Year				% as of
Center		Anchors		12/31/09				Expanded				Acquired				12/31/09
Consolidated Businesses:
Beverly Center		Bloomingdale’s, Macy’s			880,000				1982								100	%
Los Angeles, CA					572,000
Cherry Creek Shopping Center		Macy’s, Neiman Marcus, Nordstrom,			1,038,000				1990/1998								50	%
Denver, CO		Saks Fifth Avenue			547,000
Dolphin Mall		Bass Pro Shops Outdoor World,			1,399,000				2001/2007								100	%
Miami, FL		Burlington Coat Factory, Cobb Theatres,			636,000
		Dave & Buster’s, Marshalls,
		Neiman Marcus-Last Call, Off 5th Saks,
		The Sports Authority
Fairlane Town Center		JCPenney, Macy’s, Sears			1,384,000	(1)			1976/1978/								100	%
Dearborn, MI					587,000				1980/2000
(Detroit Metropolitan Area)
Great Lakes Crossing		AMC Theatres, Bass Pro Shops Outdoor World,			1,354,000				1998								100	%
Auburn Hills, MI		GameWorks, Neiman Marcus-Last Call,			537,000
(Detroit Metropolitan Area)		Off 5th Saks
International Plaza		Dillard’s, Neiman Marcus, Nordstrom,			1,204,000				2001								50	%
Tampa, FL		Robb & Stucky			583,000
MacArthur Center		Dillard’s, Nordstrom			937,000				1999								95	%
Norfolk, VA					523,000
Northlake Mall		Belk, Dick’s Sporting Goods, Dillard’s, Macy’s			1,071,000				2005								100	%
Charlotte, NC					465,000
The Mall at Partridge Creek		Nordstrom, Parisian			599,000				2007/2008								100	%
Clinton Township, MI					365,000
(Detroit Metropolitan Area)
The Pier Shops at Caesars (2)					295,000				2006								78	%
Atlantic City, NJ					295,000
Regency Square		JCPenney, Macy’s (two locations), Sears			818,000				1975/1987				1997				100	%
Richmond, VA					231,000
The Mall at Short Hills		Bloomingdale’s, Macy’s, Neiman Marcus,			1,340,000				1980/1994/								100	%
Short Hills, NJ		Nordstrom, Saks Fifth Avenue			518,000				1995
Stony Point Fashion Park		Dillard’s, Dick’s Sporting Goods,			662,000				2003								100	%
Richmond, VA		Saks Fifth Avenue			296,000
Twelve Oaks Mall		JCPenney, Lord & Taylor, Macy’s,			1,512,000				1977/1978/								100	%
Novi, MI		Nordstrom, Sears			547,000				2007/2008
(Detroit Metropolitan Area)
The Mall at Wellington Green		City Furniture and Ashley Furniture Home Store,			1,273,000				2001/2003								90	%
Wellington, FL		Dillard’s, JCPenney, Macy’s, Nordstrom			460,000
(Palm Beach County)
The Shops at Willow Bend		Dillard’s, Macy’s, Neiman Marcus,			1,379,000	(3)			2001/2004								100	%
Plano, TX		Saks Fifth Avenue			521,000
(Dallas Metropolitan Area)
		Total GLA			17,145,000
		Total Mall GLA			7,683,000
		TRG% of Total GLA			15,785,000
		TRG% of Total Mall GLA			6,981,000

				Sq. Ft of
				GLA/Mall				Year								Ownership
				GLA as of				Opened/				Year				% as of
Center		Anchors		12/31/09				Expanded				Acquired				12/31/09
Unconsolidated Joint Ventures:
Arizona Mills		GameWorks, Harkins Cinemas,			1,214,000				1997								50	%
Tempe, AZ		JCPenney Outlet, Neiman Marcus-Last Call,			527,000
(Phoenix Metropolitan Area)		Off 5th Saks
Fair Oaks		JCPenney, Lord & Taylor,			1,570,000				1980/1987/								50	%
Fairfax, VA		Macy’s (two locations), Sears			566,000				1988/2000
(Washington, DC Metropolitan Area)
The Mall at Millenia		Bloomingdale’s, Macy’s, Neiman Marcus			1,116,000				2002								50	%
Orlando, FL					516,000
Stamford Town Center		Macy’s, Saks Fifth Avenue			772,000				1982/2007								50	%
Stamford, CT					449,000
Sunvalley		JCPenney, Macy’s (two locations), Sears			1,331,000				1967/1981				2002				50	%
Concord, CA					491,000
(San Francisco Metropolitan Area)
Waterside Shops		Nordstrom, Saks Fifth Avenue			337,000				1992/2006/				2003				25	%
Naples, FL					197,000				2008
Westfarms		JCPenney, Lord & Taylor, Macy’s,			1,287,000				1974/1983/								79	%
West Hartford, CT		Macy’s Men’s Store/Furniture Gallery, Nordstrom			517,000				1997
		Total GLA			7,627,000
		Total Mall GLA			3,263,000
		TRG% of Total GLA			4,102,000
		TRG% of Total Mall GLA			1,732,000
		Grand Total GLA			24,772,000
		Grand Total Mall GLA			10,946,000
		TRG% of Total GLA			19,887,000
		TRG% of Total Mall GLA			8,713,000

Anchors

     The following table summarizes certain information regarding the anchors at the operating centers (excluding the value centers) as of December 31, 2009:

						12/31/09 GLA
		Number of				(in thousands
Name		Anchor Stores				of square feet)				% of GLA
Belk			1				180				0.9	%
City Furniture and Ashley Furniture Home Store			1				140				0.7	%
Dick’s Sporting Goods			2				159				0.8	%
Dillard’s			6				1,335				6.4	%
JCPenney			7				1,266				6.1	%
Lord & Taylor			3				397				1.9	%
Macy’s
Bloomingdale’s			3				614
Macy’s			17				3,454
Macy’s Men’s Store/Furniture Gallery			1				80
Total			21				4,148				19.9	%
Neiman Marcus (1)			5				556				2.7	%
Nordstrom			9				1,294				6.2	%
Parisian			1				116				0.6	%
Robb & Stucky			1				119				0.6	%
Saks (2)			6				487				2.3	%
Sears			5				1,104				5.3	%
Total			68				11,301				54.3	%(3)

Mortgage Debt

     The following table sets forth certain information regarding the mortgages encumbering the centers as of December 31, 2009. All mortgage debt in the table below is nonrecourse to the Operating Partnership except for debt encumbering Dolphin Mall (Dolphin), Fairlane Town Center (Fairlane), and Twelve Oaks. The Operating Partnership has guaranteed the payment of all or a portion of the principal and interest on the mortgage debt of these centers, all of which are wholly owned. See “MD&A — Liquidity and Capital Resources — Loan Commitments and Guarantees” for more information on guarantees and covenants.

						Principal				Annual								Balance
						Balance as				Debt								Due on
		Stated				of 12/31/09				Service								Maturity				Earliest
Centers Consolidated in		Interest				(thousands				(thousands				Maturity				(thousands				Prepayment
TCO’s Financial Statements		Rate				of dollars)				of dollars)				Date				of dollars)				Date
Beverly Center			5.28	%			328,365				23,101	(1)			02/11/14				303,277			30 Days Notice(2)
Cherry Creek Shopping Center (50%)			5.24	%			280,000			Interest Only					06/08/16				280,000			30 Days Notice(2)
Dolphin Mall		LIBOR+0.70%					64,000	(3)		Interest Only					02/14/11	(4)			64,000			2 Days Notice(5)
Fairlane Town Center		LIBOR+0.70%					80,000	(3)		Interest Only					02/14/11	(4)			80,000			2 Days Notice(5)
Great Lakes Crossing			5.25	%			135,144				10,006	(1)			03/11/13				125,507			30 Days Notice(2)
International Plaza (50.1%)		LIBOR+1.15%(6)					325,000			Interest Only		(6)			01/08/11	(6)			325,000			3 Days Notice(5)
MacArthur Center (95%)			7.59	%(7)			129,358	(7)			12,400	(1)			10/01/10				126,884			30 Days Notice(2)
Northlake Mall			5.41	%			215,500			Interest Only					02/06/16				215,500			30 Days Notice(8)
The Mall at Partridge Creek		LIBOR+1.15%					73,770			Interest Only					09/07/10				73,770			3 Days Notice(5)
The Pier Shops at Caesars (77.5%)			(9)				135,000	(9)				(9)				(9)				(9)				(9)
Regency Square			6.75	%			74,085				6,421	(1)			11/01/11				71,569			60 Days Notice(10)
The Mall at Short Hills			5.47	%			540,000			Interest Only					12/14/15				540,000				01/01/11	(11)
Stony Point Fashion Park			6.24	%			107,237				8,488	(1)			06/01/14				98,585			30 Days Notice(8)
Twelve Oaks Mall		LIBOR+0.70%					—	(3)		Interest Only					02/14/11	(4)			—			2 Days Notice(5)
The Mall at Wellington Green (90%)			5.44	%			200,000			Interest Only					05/06/15				200,000			30 Days Notice(8)
Other Consolidated Secured Debt
TRG Credit Facility		Variable Bank Rate(12)					3,560			Interest Only					02/14/11				3,560			At Any Time(5)
Centers Owned by Unconsolidated Joint Ventures/TRG’s % Ownership
Arizona Mills (50%)			7.90	%			132,073				12,728	(1)			10/05/10				130,419			30 Days Notice(2)
Fair Oaks (50%)		LIBOR+1.40%(13)					250,000			Interest Only(13)					04/01/11	(13)			250,000			3 Days Notice(5)
The Mall at Millenia (50%)			5.46	%			205,458				14,245	(1)			04/09/13				195,255			30 Days Notice(2)
Sunvalley (50%)			5.67	%			121,387				9,372	(1)			11/01/12				114,056			30 Days Notice(2)
Taubman Land Associates (50%)		LIBOR+0.90%(14)					30,000			Interest Only					11/01/12				30,000			At Any Time(5)
Waterside Shops (25%)			5.54	%			165,000			Interest Only					10/07/16				165,000			30 Days Notice(10)
Westfarms (79%)			6.10	%			188,718				15,272	(1)			07/11/12				179,028			30 Days Notice(2)

     For additional information regarding the centers and their operations, see the responses to Item 1 of this report.

Item 3.		LEGAL PROCEEDINGS.

     On December 8, 2009, West Farms Associates and West Farms Mall, LLC (together, “Westfarms”) and The Taubman Company LLC (together with Westfarms, the “WFM Parties”) entered into a settlement agreement (the “Settlement Agreement”) with three developers of a project called Blue Back Square in West Hartford, Connecticut. The Settlement Agreement relates to a lawsuit originally filed by the developers against the WFM Parties and related persons in November 2007 in the Connecticut Superior Court, Judicial District of Hartford at Hartford and subsequently transferred to the Superior Court for the Judicial District of Waterbury at Waterbury. The developers alleged damages in excess of $40 million and sought double, treble, and punitive damages, as well as attorneys fees. Pursuant to the Settlement Agreement, the lawsuit was withdrawn with prejudice upon payment by Westfarms of $34 million to the developers on December 15, 2009. We have a 79% investment in Westfarms Associates, an unconsolidated joint venture which owns Westfarms mall, and our share of the settlement was $26.8 million. The developers, for themselves and on behalf of related persons, agreed to a full and general release for the benefit of the WFM Parties and related persons as of December 8, 2009. There was no admission of liability or fault by any parties to the lawsuit or related persons. In early November 2007, the Town of West Hartford and the West Hartford Town Council (the “Town”) filed a substantially similar lawsuit against the same entities in the same court, which was also subsequently transferred to the Superior Court for the Judicial District of Waterbury at Waterbury. The Town alleged damages in excess of $5.5 million and sought double, treble, and punitive damages, as well as attorneys fees. In January 2010, the WFM Parties executed a settlement agreement with the Town, which provided for a full and general release for the benefit of the WFM Parties upon payment by Westfarms of $4.5 million, or $3.6 million at our share, which was recorded in 2009. There was no admission of liability or fault by any parties to the lawsuit or related persons.

     See “Note 15 — Commitments and Contingencies — Litigation” to our consolidated financial statements for information regarding other outstanding litigation. While management does not believe that an adverse outcome in the lawsuits described would have a material adverse effect on our financial condition, there can be no assurance that adverse outcomes would not have material effects on our results of operations for any particular period.

Item 4.		SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     Not applicable.

PART II

Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES.

     The common stock of Taubman Centers, Inc. is listed and traded on the New York Stock Exchange (Symbol: TCO). As of February 24, 2010, the 54,326,934 outstanding shares of Common Stock were held by 548 holders of record. A substantially greater number of holders are beneficial owners whose shares are held of record by banks, brokers, and other financial institutions. The closing price per share of the Common Stock on the New York Stock Exchange on February 24, 2010 was $38.69.

     The following table presents the dividends declared on our Common Stock and the range of closing share prices of our Common Stock for each quarter of 2009 and 2008:

		Market Quotations
2009 Quarter Ended		High				Low				Dividends
March 31		$	26.79			$	13.56			$	0.415
June 30			28.16				16.65				0.415
September 30			37.37				22.55				0.415
December 31			37.66				30.40				0.415

		Market Quotations
2008 Quarter Ended		High				Low				Dividends
March 31		$	55.70			$	43.93			$	0.415
June 30			58.05				48.65				0.415
September 30			55.40				43.35				0.415
December 31			48.19				18.69				0.415

     The restrictions on our ability to pay dividends on our Common Stock are set forth in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Dividends.”

Shareowner Return Performance Graph

     The following line graph sets forth the cumulative total returns on a $100 investment in each of our Common Stock, the MSCI US REIT Index, the FTSE NAREIT All REIT Index, Property Sector: Retail, and the S&P Composite — 500 Stock Index for the period December 31, 2004 through December 31, 2009 (assuming in all cases, the reinvestment of dividends):

COMPARISON OF CUMULATIVE TOTAL RETURN

				12/31/04					12/31/05					12/31/06					12/31/07					12/31/08					12/31/09
	Taubman Centers Inc.			$	100.00				$	120.37				$	181.46				$	180.79				$	97.54				$	146.49
	MSCI US REIT Index				100.00					112.13					152.41					126.78					78.64					101.14
	FTSE NAREIT All REIT Index, Property Sector: Retail				100.00					111.80					144.23					121.49					62.74					79.78
	S&P 500 Index				100.00					104.91					121.48					128.15					80.74					102.11

     Note: The stock performance shown on the graph above is not necessarily indicative of future price performance.

Item 6. SELECTED FINANCIAL DATA.

     The following table sets forth selected financial data and should be read in conjunction with the financial statements and notes thereto and MD&A included in this report. See “Note 9 - Noncontrolling Interests” to our consolidated financial statements regarding reclassifications of previously reported information.

		Year Ended December 31
		2009				2008				2007				2006				2005
						(in thousands of dollars, except as noted)
STATEMENT OF OPERATIONS DATA:
Rents, recoveries, and other shopping center revenues			666,104				671,498				626,822				579,284				479,405
Income (loss) before gain on disposition of interest in center (1)			(79,161	)			(8,052	)			116,236				95,140				57,432
Gain on disposition of interest in center (2)																			52,799
Net income (loss) (1)			(79,161	)			(8,052	)			116,236				95,140				110,231
Attributable to noncontrolling interests			25,649				(62,527	)			(51,782	)			(48,919	)			(37,491	)
Distributions to participating securities of TRG			(1,560	)			(1,446	)			(1,330	)			(1,104	)			(1,005	)
Preferred dividends			(14,634	)			(14,634	)			(14,634	)			(23,723	)			(27,622	)
Net income (loss) attributable to Taubman Centers, Inc. common shareowners			(69,706	)			(86,659	)			48,490				21,394				44,113
Net income (loss) per common share — diluted			(1.31	)			(1.64	)			0.90				0.40				0.87
Dividends declared per common share			1.66				1.66				1.54				1.29				1.16
Weighted average number of common shares outstanding — basic			53,239,279				52,866,050				52,969,067				52,661,024				50,459,314
Weighted average number of common shares outstanding — diluted			53,239,279				52,866,050				53,622,017				52,979,453				50,530,139
Number of common shares outstanding at end of period			54,321,586				53,018,987				52,624,013				52,931,594				51,866,184
Ownership percentage of TRG at end of period			67	%			67	%			66	%			65	%			64	%
BALANCE SHEET DATA:
Real estate before accumulated depreciation			3,496,853				3,699,480				3,781,136				3,398,122				3,081,324
Total assets			2,606,853				2,974,982				3,105,975				2,781,290				2,797,580
Total debt			2,691,019				2,796,821				2,700,980				2,319,538				2,089,948
SUPPLEMENTAL INFORMATION:
Funds from Operations attributable to TCO (1)(3)			36,799				81,274				155,376				136,736				110,578
Mall tenant sales (4)(5)			4,227,936				4,536,500				4,734,940				4,344,565				4,124,534
Sales per square foot (4)(5)(6)			498				533				555				529				508
Number of shopping centers at end of period			23				23				23				22				21
Ending Mall GLA in thousands of square feet			10,946				10,937				10,879				10,448				10,029
Leased space (5)(7)			91.6	%			92.0	%			93.8	%			92.5	%			91.7	%
Ending occupancy (5)			89.6	%			90.5	%			91.2	%			91.3	%			90.0	%
Average occupancy (5)			89.0	%			90.5	%			90.0	%			89.2	%			88.9	%
Average base rent per square foot (5)(6):
Consolidated businesses:
All mall tenants		$	43.31			$	43.95			$	43.39			$	42.77			$	41.41
Stores opening during year (8)			45.19				54.78				53.35				41.25				42.38
Stores closing during year(8)			41.70				49.60				45.39				39.57				40.59
Unconsolidated Joint Ventures:
All mall tenants		$	44.49			$	44.61			$	41.89			$	41.03			$	42.28
Stores opening during year(8)			51.10				59.36				48.05				42.98				44.90
Stores closing during year(8)			48.64				48.72				48.63				42.49				44.26

Item 7. 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 continuing impacts of the U.S. recession and global credit environment, other changes in general economic and real estate conditions, changes in the interest rate environment and the availability of financing, and adverse changes in the retail industry. 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” of this 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, lease, acquire, dispose of, develop, expand, and manage 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). In September 2008, we acquired the interests of the owner of Partridge Creek (see “Note 2 - Acquisitions” to our consolidated financial statements). Prior to the acquisition, we consolidated the accounts of the owner of Partridge Creek, which qualified as a variable interest entity for which the Operating Partnership was considered to be the primary beneficiary. 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.

Overall Summary of Management’s Discussion and Analysis of Financial Condition and Results of Operations

     Our primary source of revenue is from the leasing of space in our shopping centers. Generally these leases are long term, with our average lease term of new leases at approximately six years during 2009 and approximately seven years during 2008, excluding temporary leases. Therefore general economic trends most directly impact our tenants’ sales and consequently their ability to perform under their existing lease agreements and expand into new locations as well as our ability to find new tenants for our shopping centers.

     The real estate industry continues to face difficult times due to the impacts of the recent recession and tough capital market and retail environment. Although there have been some positive signs, unemployment continues to be very high and there is considerable uncertainty as to how long the impacts of the recession may continue. We have seen the negative effect on our business in 2009, and we expect that the economy will continue to strain the resources of our tenants and their customers. A number of regional and national retailers have announced store closings or filed for bankruptcy. During 2009, 4.1% of our tenants sought the protection of the bankruptcy laws, compared to 2.5% and 0.5% in 2008 and 2007, respectively. The highest level of bankruptcies we’ve experienced in the last 20 years for a full year was 4.5% in both 1992 and 2001.

     Tenant sales per square foot were $498 in 2009, a 6.7% decrease from 2008. However, sales per square foot increased by 3.8% in the fourth quarter of 2009. This is the first positive quarterly tenant sales performance since the third quarter of 2008. We are expecting sales to be flat to 3% to 4% up in 2010. See “Mall Tenant Sales and Center Revenues.”

     Ending occupancy was 89.6% at December 31, 2009, down 0.9% from 2008. We anticipate occupancy will end the year flat in 2010, although it is likely to be down as much as 1% in the first three quarters of the year. Rent per square foot decreased 2.2% for the fourth quarter of 2009 and decreased 1% for the year. We expect that average rents per square foot in 2010 will be down in comparison to 2009 by approximately 2% to 2.5%. The rents we are able to achieve are affected by economic trends and tenants’ expectations thereof, as described under “Rental Rates and Occupancy.” The spread between rents on openings and closings 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. Mall tenant sales, occupancy levels and our resulting revenues are seasonal in nature (see “Seasonality”).

     Our analysis of our financial results begins under “Results of Operations.”

     In the fourth quarter of 2009 we recognized $38.5 million of litigation charges related to Westfarms mall, an Unconsolidated Joint Venture, of which our share was $30.4 million (see “Results of Operations — Litigation Charges”).

     In the third quarter of 2009, we concluded that the book values of the investments in The Pier Shops and Regency Square were impaired, which resulted in a non-cash charge of $166.7 million (or $160.8 million at our share). We also recorded impairment charges in the fourth quarter of 2008 of $126.3 million related to our Oyster Bay project in the Town of Oyster Bay, New York (Oyster Bay project or Oyster Bay) and our Sarasota project. See “Results of Operations — Impairment Charges” for further discussion and the status of The Pier Shops’ loan, which is in default.

     In the first half of 2009, in response to the decreased level of active projects due to the downturn in the economy, we reduced our workforce by about 40 positions, primarily in areas that directly or indirectly affect our development initiatives in the U.S. and Asia. The restructuring charge was $2.5 million, and primarily represents the cost of terminations of personnel.

     We have certain additional sources of income beyond our rental revenues, recoveries from tenants, and revenue from management, leasing, and development services. We disclose our share of these sources of income under “Results of Operations — Other Income.”

     We also describe the current status of our efforts to broaden our growth in Asia (see “Results of Operations — Taubman Asia”).

     We then provide a discussion of the impact in 2009 of recently issued accounting pronouncements including the new requirements for accounting for noncontrolling interests.

     With all the preceding information as background, we then provide insight and explanations for variances in our financial results for 2009, 2008, and 2007 under “Comparison of 2009 to 2008” and “Comparison of 2008 to 2007.” As information useful to understanding our results, we have described the presentation of our noncontrolling interests, the presentation of certain interests in centers, and the reasons for our use of non-GAAP measures such as Beneficial Interests in EBITDA and Funds from Operations (FFO) under “Results of Operations — Use of Non-GAAP Measures.” Reconciliations from net income (loss) and net income (loss) allocable to common shareowners to these measures follow the annual comparisons.

     We then provide a discussion of our critical accounting policies and new accounting pronouncements that will affect periods subsequent to 2009.

     Our discussion of sources and uses of capital resources under “Liquidity and Capital Resources” begins with a brief overview of current market conditions and our financial position. We have no maturities on our current debt until fall 2010, when three loans mature with principal amounts of $335 million at 100% and $262 million at our beneficial share and we are in discussions with a variety of lenders to refinance these three loans. We then discuss our capital activities and transactions that occurred in 2009. Analysis of specific operating, investing, and financing activities is then provided in more detail.

     Specific analysis of our fixed and floating rates and periods of interest rate risk exposure is provided under “Liquidity and Capital Resources — Beneficial Interest in Debt.” Completing our analysis of our exposure to rates are the effects of changes in interest rates on our cash flows and fair values of debt contained under “Liquidity and Capital Resources — Sensitivity Analysis.” Also see “Liquidity and Capital Resources — Loan Commitments and Guarantees” for discussion of compliance with debt covenants.

     In conducting our business, we enter into various contractual obligations, including those for debt, capital leases for property improvements, operating leases for land and office space, purchase obligations, and other long-term commitments. Detail of these obligations, including expected settlement periods, is contained under “Liquidity and Capital Resources — Contractual Obligations.” Property-level debt represents the largest single class of obligations. Described under “Liquidity and Capital Resources — Loan Commitments and Guarantees” and “Liquidity and Capital Resources — Cash Tender Agreement” are our significant guarantees and commitments.

     Renovation and expansion of existing malls has been a significant use of our capital in recent years, as described in “Liquidity and Capital Resources — Capital Spending” and “Liquidity and Capital Resources — Capital Spending — Planned Capital Spending.” Our City Creek Center project, which we will own under a participating lease, is expected to open in early 2012 at which time a $75 million payment will be made to the lessor. With our Sarasota project on hold and the continued delays on our Oyster Bay and Asia projects, we expect capital spending in 2010 to consist primarily of tenant allowances and other capital expenditures on our operating centers.

     Dividends and distributions are also significant uses of our capital resources. The factors considered when determining the amount of our dividends, including requirements arising because of our status as a REIT, are described under “Liquidity and Capital Resources — Dividends.”

Mall Tenant Sales and Center Revenues

     Our mall tenant sales per square foot statistics have shown improvement since July 2009 and in the fourth quarter of 2009 increased by 3.8% compared to the prior year. This is the first quarter sales have been up since third quarter 2008. For 2009, our sales decreased 6.7% to a level of $498 per square foot.

     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 because 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.

     We believe that the ability of tenants to pay occupancy costs and earn profits over long periods of time increases as sales per square foot increase, whether through inflation or real growth in customer spending. Because most mall tenants have certain fixed expenses, the occupancy costs that they can afford to pay and still be profitable are a higher percentage of sales at higher sales per square foot.

     Sales directly impact the amount of percentage rents certain tenants and anchors pay. The effects of increases or declines in sales on our operations are moderated by the relatively minor share of total rents that percentage rents represent of total rents (approximately 3% in 2009).

     While 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.

     The following table summarizes occupancy costs, excluding utilities, for mall tenants as a percentage of mall tenant sales:

		2009 (1)				2008 (1)				2007
Mall tenant sales (in thousands of dollars)			4,227,936				4,536,500				4,734,940
Sales per square foot			498				533				555	(1)
Consolidated Businesses:
Minimum rents			10.2	%			9.7	%			8.9	%
Percentage rents			0.3				0.4				0.4
Expense recoveries			5.7				5.3				4.9
Mall tenant occupancy costs as a percentage of mall tenant sales			16.2	%			15.4	%			14.2	%
Unconsolidated Joint Ventures:
Minimum rents			9.6	%			8.9	%			8.0	%
Percentage rents			0.3				0.4				0.4
Expense recoveries			5.0				4.6				4.2
Mall tenant occupancy costs as a percentage of mall tenant sales			14.9	%			13.9	%			12.6	%