UPDATE: ISI Group Reiterates Buy Rating, Raises PT on Taubman Centers

In a report published Friday, ISI Group reiterated its Buy rating on Taubman Centers TCO, and slightly raised its price target from $82.00 to $83.00. ISI Group noted, “Taubman reported Q2 FFO of $0.73, $0.03 ahead of our estimate and $0.04 ahead of the street. The beat was attributed to a combination of better top line revenue and lower-than-expected interest expense. What's notable about this quarter versus others was that NOI growth was not amplified by a favorable jump in the tenant recovery ratio, as the figure actually fell to 105% this quarter from 107% in 2Q11 (it reached 112% in 1Q12 versus 106% in 1Q11). The recovery rate was lower due to higher ‘shopping center related expenses' (we'll look for a clarification on this item on the call) which were either non-recoverable or reimbursements from tenants for these expenses may be a timing issue. If the latter is the case, we believe TCO's new same-store NOI guidance of 5-6% (8.8% in 1H12) is conservative.” Taubman Centers closed on Thursday at $76.90.