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Section 1: 8-K (8-K)

Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549
___________

FORM 8-K

Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934

Date of Report (date of earliest event reported): May 1, 2018

TANGER FACTORY OUTLET CENTERS, INC.
_________________________________________
(Exact name of registrant as specified in its charter)
 
North Carolina
 
 
 
1-11986
 
 
 
56-1815473
 
 
(State or other jurisdiction of Incorporation)
 
 
 
(Commission File Number)
 
 
 
(I.R.S. Employer Identification Number)
 
 
3200 Northline Avenue, Greensboro, North Carolina 27408
 
 
 
(Address of principal executive offices) (Zip Code)
 
 
 
 
(336) 292-3010
 
 
 
 
(Registrants' telephone number, including area code)
 
 
 
 
N/A
 
 
 
(former name or former address, if changed since last report)
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o





Item 2.02   Results of Operations and Financial Condition

On May 1, 2018, Tanger Factory Outlet Centers, Inc. (the "Company") issued a press release announcing its results of operations and financial condition as of and for the quarter ended March 31, 2018. A copy of the Company's press release is hereby furnished as Exhibit 99.1 to this report on Form 8-K. The information contained in this report on Form 8-K, including Exhibit 99.1, shall not be deemed "filed" with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed by the Company under the Securities Act of 1933, as amended, unless specified otherwise.

Item 7.01   Regulation FD Disclosure

On May 1, 2018, the Company made publicly available on its website, www.tangeroutlet.com, certain supplemental operating and financial information for the quarter ended March 31, 2018. This supplemental operating and financial information is hereby attached to this current report as Exhibit 99.2. The information contained in this report on Form 8-K, including Exhibit 99.2, shall not be deemed "filed" with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed by the Company under the Securities Act of 1933, as amended, unless specified otherwise. The information found on, or otherwise accessible through, the Company's website is not incorporated into, and does not form a part of, this current report on Form 8-K or any other report or document the Company files with or furnishes to the United States Securities and Exchange Commission.

Item 9.01   Financial Statements and Exhibits

(d) Exhibits

The following exhibits are included with this Report:

Exhibit No.
 
 
99.1
 
 
 
 
99.2
 
 
 
 







SIGNATURES

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

Dated: May 1, 2018


TANGER FACTORY OUTLET CENTERS, INC.

By:    /s/ James F. Williams
James F. Williams
Senior Vice President, Chief Financial Officer


(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


EXHIBIT 99.1

News Release
TANGER REPORTS FIRST QUARTER RESULTS
Net Income Per Share Increased 4%
FFO Per Share Grew 3%
Dividend Raised for 25th Consecutive Year
Updates 2018 Guidance


Greensboro, NC, May 1, 2018, Tanger Factory Outlet Centers, Inc. (NYSE:SKT) today reported financial and operating results for the three months ended March 31, 2018.

First Quarter Financial Results and Key Highlights

Net income available to common shareholders increased 4% to $0.24 per share, or $22.6 million, compared to $0.23 per share, or $22.0 million, for the prior year period
Funds from operations ("FFO") available to common shareholders grew 3% to $0.60 per share, or $59.3 million, compared to $0.58 per share, or $57.7 million, for the prior year period
Raised the annual common share cash dividend by 2.2% to $1.40 per share, marking the 25th consecutive year the annual cash dividend was raised, representing a three-year cumulative growth rate of 22%
Repurchased approximately 444,000 common shares for total consideration of approximately $10.0 million

FFO and Adjusted Funds from Operations ("AFFO") are widely accepted supplemental non-GAAP financial measures used in the real estate industry to measure and compare the operating performance of real estate companies. Complete reconciliations containing adjustments from GAAP net income to FFO and AFFO are included in this release. Per share amounts for net income, FFO and AFFO are on a diluted basis.
“Our outlet centers continue to perform well, as demonstrated by consistent traffic and strong sales, and a long and successful record of delivering steady NOI growth over Tanger's extensive history," said Steven B. Tanger, Chief Executive Officer. “One of the keys to our success is maintaining highly occupied outlet centers. A proven and successful strategy we have deployed to support this initiative is to selectively utilize leases of 12 months or less throughout various retail cycles in order to preserve potential revenue upside. The percentage of leases in this category today remains within our historical average. Based on our ongoing discussions with tenants and prospects, we remain confident in our growth opportunities for future years. With an unwavering emphasis on creating long-term value for shareholders, we are committed to keeping our centers vibrant and allocating our capital prudently, with the intent to continue to grow our dividend while maintaining a strong payout ratio, execute our share repurchase program, and continue to reduce variable rate debt.”


Operating Metrics

For the quarter ended March 31, 2018, the Company’s portfolio results were as follows:

Portfolio NOI for the consolidated portfolio increased 0.3% from the prior year quarter
Same Center NOI for the consolidated portfolio decreased 1.5% from the prior year quarter, due primarily to 2017 and 2018 store closures and inclement weather during the first quarter of 2018
Consolidated portfolio occupancy rate was 95.9% on March 31, 2018, compared 96.2% on March 31, 2017
Commenced leases for the trailing twelve months that were renewed or released for a term of more than twelve months achieved a 13.5% increase in blended average rental rates, excluding the impact of strategic re-merchandising activities. For additional detail on leasing activity see pages 11 and 12 in the Company’s Supplemental Operating and Financial Data package.
Lease termination fees, which are excluded from Same Center NOI and Portfolio NOI, totaled $1.1 million and $1.2 million for the consolidated portfolio for the first quarters of 2018 and 2017, respectively
Average tenant sales productivity for the consolidated portfolio was $384 per square foot for the twelve months ended March 31, 2018, compared to $380 per square foot in the comparable prior year period
Same center tenant sales performance for the overall portfolio increased 1.7% for the twelve months ended March 31, 2018 compared to the twelve months ended March 31, 2017
Occupancy cost ratio for the trailing twelve months ended March 31, 2017 was 10.0%

1






Same Center NOI and Portfolio NOI are supplemental non-GAAP financial measures of our operating performance. Complete definitions of Same Center NOI and Portfolio NOI and a reconciliation to the nearest comparable GAAP measure are included in this release.
 

Leasing Activity

Commenced leases for the trailing twelve months ended March 31, 2018 that were renewed or released for a term of 12 months or more included 277 leases totaling approximately 1.3 million square feet. Total commenced leases for the trailing twelve months ended March 31, 2018 that were renewed or released for all terms, included 338 leases totaling approximately 1.6 million square feet.

Tanger recaptured approximately 37,000 square feet within its consolidated portfolio during first quarter of 2018 related to bankruptcies and brand-wide restructurings by retailers, compared to 62,000 square feet during the first quarter of 2017. The Company currently expects to recapture an additional 72,000 square feet during the second quarter of 2018, approximately 41,000 square feet of which closed during April 2018.

Balance Sheet and Capital Market Activity

Repurchased approximately 444,000 common shares during the first quarter at a weighted average price of $22.52 per share for total consideration of approximately $10.0 million, leaving $65.7 million remaining under Tanger's $125 million share repurchase authorization, which is valid through May 2019
Raised the annual common share cash dividend by 2.2% to $1.40 per share, marking the 25th consecutive year the annual cash dividend was raised, representing a three-year cumulative growth rate of 22%
Amended the unsecured lines of credit on January 9, 2018, increasing the borrowing capacity to $600.0 million from $520.0 million, extending maturity to October 2021 from October 2019 plus a one-year extension option, and reducing the interest rate spread over LIBOR to 0.875% from 0.900%
Total enterprise value was $4.0 billion and debt-to-enterprise value ratio was 45%
Total outstanding floating rate debt was $239 million, representing 13% of total consolidated debt outstanding, or about 6% of total enterprise value
Unused capacity under the Company's $600 million unsecured lines of credit was 62%, or $366 million
Weighted average interest rate was 3.4% and weighted average term to maturity of outstanding consolidated debt, including extension options, was approximately 6.3 years
Approximately 94% of the Company's consolidated square footage was unencumbered by mortgages
Interest coverage ratio was 4.4 times for the first quarter 2018, compared to 4.2 times for the first quarter 2017

Earnings Guidance for 2018

The Company is updating its guidance for 2018, primarily due to a revision of average occupancy expectations, as a result of the store closures caused by tenant bankruptcies, the effect of a harsh winter in the first quarter of 2018, and select rent adjustments to maintain high occupancy. Based on this updated outlook, management currently believes its net income and FFO for 2018 will be as follows:
For the year ended December 31, 2018:
Current
Prior
 
 
Low Range
High Range
Low Range
High Range
Estimated diluted net income per share
$0.95
$1.01
$1.02
$1.08
Noncontrolling interest, depreciation and amortization of real estate assets including noncontrolling interest share and our share of unconsolidated joint ventures
1.45
1.45
1.41
1.41
Estimated diluted FFO per share
$2.40
$2.46
$2.43
$2.49

Tanger's estimates reflect the following adjustments to key assumptions:
Portfolio NOI growth for the consolidated portfolio between (0.5)% and 0.5%, compared to the prior range of 0.5% and 1.5%
Same Center NOI guidance for the consolidated portfolio between (2.5)% and (1.5)%, compared to the prior range of (1.0)% and 0.0% reflecting the following:

2





Projected average occupancy for the year is expected to be between 95.0% and 95.5%, down from the Company's previous forecast of approximately 96.0%
Projected 2018 store closings totaling between 150,000 and 175,000 square feet for the consolidated portfolio, increased from the original expectation of approximately 100,000 square feet
The impact of lease modifications and renewals with terms of 12 months or less commencing in 2017 and 2018, which the Company strategically executed to preserve upside potential and maintain high occupancy
Higher non-reimbursed snow removal expenses in the first quarter and reduced estimates for variable rents due to the center closings caused by winter storms
Projected full year lease termination fees (which are not included in Same Center NOI) of approximately $1.5 million for the consolidated portfolio, compared to the prior estimate of $1.0 million
The Company's share of interest expense in the unconsolidated portfolio of $6.5 million to $7.5 million, compared to the prior range of $6.0 to $7.0 million
2018 weighted average diluted common shares of approximately 93.2 million for earnings per share and 98.2 million for FFO per share, compared to the prior estimates of 93.1 million and 98.1 million, respectively
Combined recurring capital expenditures and second generation tenant allowances of approximately $35 million to $40 million
The following assumptions remain unchanged compared to the Company's initial guidance:
Tenant sales remain stable
Average general and administrative expense of between $11.1 million and $11.5 million per quarter
Interest expense for the year for the consolidated portfolio of $64.0 million to $66.0 million
Does not include the impact of any additional financing activity, the sale of any outparcels, properties or joint venture interests, or the acquisition of any properties or joint venture partner interests

First Quarter Conference Call

Tanger will host a conference call to discuss its first quarter results for analysts, investors and other interested parties on Wednesday, May 2, 2018, at 10:00 a.m. Eastern Time. To access the conference call, listeners should dial 1-877-277-5113 and provide conference ID # 8985977 to be connected to the Tanger Factory Outlet Centers First Quarter 2018 Financial Results call. Alternatively, the call will be web cast by S&P Global Market Intelligence and can be accessed at Tanger's web site, investors.tangeroutlets.com. A telephone replay of the call will be available from May 2, 2018 at 1:00 p.m. through May 11, 2018 at 11:59 p.m. by dialing 1-855-859-2056, conference ID # 8985977. An online archive of the web cast will also be available through May 11, 2018.

3





About Tanger Factory Outlet Centers, Inc.

Tanger Factory Outlet Centers, Inc. (NYSE:SKT), is a publicly-traded REIT headquartered in Greensboro, North Carolina that operates and owns, or has an ownership interest in, a portfolio of 44 upscale outlet shopping centers. Tanger's operating properties are located in 22 states coast to coast and in Canada, totaling approximately 15.3 million square feet leased to over 3,100 stores operated by more than 490 different brand name companies. The Company has more than 37 years of experience in the outlet industry. Tanger Outlet Centers continue to attract more than 189 million shoppers annually. Tanger is furnishing a Form 8-K with the Securities and Exchange Commission that includes a supplemental information package for the quarter ended March 31, 2018. For more information on Tanger Outlet Centers, call 1-800-4TANGER or visit the Company's web site at www.tangeroutlets.com.

Safe Harbor Statement
This news release contains certain 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. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with the safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe the Company’s future plans, strategies and expectations, are generally identifiable by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” “will,” “forecast” or similar expressions.
You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond the Company’s control and could materially affect actual results, performances or achievements. Factors which may cause actual results to differ materially from current expectations include, but are not limited to, (i) the risks associated with general economic and real estate conditions in the United States and Canada, (ii) adverse changes in governmental laws and regulations, (iii) the Company's ability to meet its obligations on existing indebtedness, reduce variable rate debt, or refinance existing indebtedness on favorable terms, (iv) the availability and cost of capital, (v) the valuation of marketable securities and other investments, (vi) increases in operating costs, (vii) whether the Company's regular evaluation of acquisition and disposition opportunities results in any consummated transactions, and whether or not any such consummated transaction results in an increase or decrease in liquidity, net income, FFO or AFFO, (viii) whether projects in our pipeline convert into successful developments, (ix) the Company's ability to lease its properties, (x) the Company's ability to implement its plans and strategies for joint venture properties that it does not fully control, (xi) the reduction in the Company’s income in the event of multiple lease terminations by tenants or a failure by multiple tenants to occupy their premises in a shopping center, (xii) impairment charges, (xiii) the ability of tenants to continue paying their rent obligations due to bankruptcy, insolvency or a general downturn in their business, (xiv) adverse weather conditions, including hurricanes, and other natural disasters, (xv) the Company’s ability to pay dividends at current levels, (xvi) competition, and (xvii) the risks and uncertainties identified under Item 1A, “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 as may be updated or supplemented in the Company’s Quarterly Reports on Form 10-Q and the Company’s other filings with the SEC. Accordingly, there is no assurance that the Company’s expectations will be realized. The Company disclaims any intention or obligation to update the forward-looking statements, whether as a result of new information, future events or otherwise. You are advised to refer to any further disclosures the Company makes or related subjects in the Company’s Current Reports on Form 8-K that the Company files with the SEC.


Contact Information

Cyndi Holt    Jim Williams
VP, Investor Relations    SVP & CFO
336-834-6892    336-834-6800    
cyndi.holt@tangeroutlets.com    jim.williams@tangeroutlets.com        

4




TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
 
Three months ended
 
March 31,
 
2018
 
2017
Revenues:
 
 
 
Base rentals (a)
$
81,533

 
$
80,330

Percentage rentals
1,429

 
1,855

Expense reimbursements
38,280

 
36,598

Management, leasing and other services
613

 
579

Other income
1,680

 
2,006

Total revenues
123,535

 
121,368

Expenses:
 
 
 
Property operating
42,218

 
40,387

General and administrative
11,112

 
11,412

Abandoned pre-development costs

 
627

Depreciation and amortization
33,123

 
31,294

Total expenses
86,453

 
83,720

Operating income
37,082

 
37,648

Other income (expense):
 
 
 
Interest expense
(15,800
)
 
(16,487
)
Other non-operating income
209

 
35

Income before equity in earnings of unconsolidated joint ventures
21,491

 
21,196

Equity in earnings of unconsolidated joint ventures
2,194

 
2,318

Net income
23,685

 
23,514

Noncontrolling interests in Operating Partnership
(1,217
)
 
(1,178
)
Noncontrolling interests in other consolidated partnerships
370

 

Net income attributable to Tanger Factory Outlet Centers, Inc.
22,838

 
22,336

Allocation of earnings to participating securities
(263
)
 
(295
)
Net income available to common shareholders of
Tanger Factory Outlet Centers, Inc.
$
22,575

 
$
22,041

 
 
 
 
Basic earnings per common share:
 
 
 
Net income
$
0.24

 
$
0.23

 
 
 
 
Diluted earnings per common share:
 
 
 
Net income
$
0.24

 
$
0.23

a.
Includes straight-line rent and market rent adjustments of $1,450 and $1,098 for the three months ended March 31, 2018 and 2017, respectively.





5





TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(Unaudited)
 
March 31,
 
December 31,
 
2018
 
2017
Assets
 
 
 
   Rental property:
 
 
 
   Land
$
279,978

 
$
279,978

   Buildings, improvements and fixtures
2,810,980

 
2,793,638

   Construction in progress
615

 
14,854

 
3,091,573

 
3,088,470

   Accumulated depreciation
(929,608
)
 
(901,967
)
      Total rental property, net
2,161,965

 
2,186,503

   Cash and cash equivalents
3,427

 
6,101

   Investments in unconsolidated joint ventures
114,304

 
119,436

   Deferred lease costs and other intangibles, net
127,493

 
132,061

   Prepaids and other assets
98,669

 
96,004

         Total assets
$
2,505,858

 
$
2,540,105

 
 
 
 
Liabilities and Equity
 
 
 
Liabilities
 
 
 
   Debt:
 
 
 
Senior, unsecured notes, net
$
1,135,230

 
$
1,134,755

Unsecured term loan, net
323,082

 
322,975

Mortgages payable, net
90,109

 
99,761

Unsecured lines of credit, net
223,634

 
206,160

Total debt
1,772,055

 
1,763,651

Accounts payable and accrued expenses
66,405

 
90,416

Other liabilities
73,907

 
73,736

         Total liabilities
1,912,367

 
1,927,803

Commitments and contingencies
 
 
 
Equity
 
 
 
Tanger Factory Outlet Centers, Inc.:
 
 
 
Common shares, $.01 par value, 300,000,000 shares authorized, 94,382,583 and 94,560,536 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively
944

 
946

   Paid in capital
776,753

 
784,782

   Accumulated distributions in excess of net income
(194,416
)
 
(184,865
)
   Accumulated other comprehensive loss
(19,623
)
 
(19,285
)
         Equity attributable to Tanger Factory Outlet Centers, Inc.
563,658

 
581,578

Equity attributable to noncontrolling interests:
 
 
 
Noncontrolling interests in Operating Partnership
29,833

 
30,724

Noncontrolling interests in other consolidated partnerships

 

         Total equity
593,491

 
612,302

            Total liabilities and equity
$
2,505,858

 
$
2,540,105



6





TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
CENTER INFORMATION
(Unaudited)

 
 
March 31,
 
 
2018
 
2017
Gross leasable area open at end of period (in thousands):
 
 
 
 
Consolidated
 
12,920

 
12,710

Partially owned - unconsolidated
 
2,370

 
2,373

 
 
 
 
 
Outlet centers in operation at end of period:
 
 
 
 
Consolidated
 
36

 
36

Partially owned - unconsolidated
 
8

 
8

 
 
 
 
 
States operated in at end of period (1)
 
22

 
22

Occupancy at end of period (1), (2)
 
95.9
%
 
96.2
%
(1)
Excludes the centers in which we have ownership interests but are held in unconsolidated joint ventures.
(2)
Excludes centers not yet stabilized at period end. The 2018 period excludes our Fort Worth outlet center (which opened during the fourth quarter of 2017 and the 2017 period excludes our Fort Worth outlet center and Daytona Beach outlet center (which opened during the fourth quarter of 2016).

NON-GAAP SUPPLEMENTAL MEASURES

Funds From Operations

Funds From Operations ("FFO") is a widely used measure of the operating performance for real estate companies that supplements net income (loss) determined in accordance with GAAP. We determine FFO based on the definition set forth by the National Association of Real Estate Investment Trusts ("NAREIT"), of which we are a member. FFO represents net income (loss) (computed in accordance with GAAP) before extraordinary items and gains (losses) on sale or disposal of depreciable operating properties, plus depreciation and amortization of real estate assets, impairment losses on depreciable real estate of consolidated real estate and after adjustments for unconsolidated partnerships and joint ventures, including depreciation and amortization, and impairment losses on investments in unconsolidated joint ventures driven by a measurable decrease in the fair value of depreciable real estate held by the unconsolidated joint ventures.

FFO is intended to exclude historical cost depreciation of real estate as required by GAAP which assumes that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO excludes depreciation and amortization of real estate assets, gains and losses from property dispositions and extraordinary items, it provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities and interest costs, providing perspective not immediately apparent from net income.

We present FFO because we consider it an important supplemental measure of our operating performance. In addition, a portion of cash bonus compensation to certain members of management is based on our FFO or Adjusted Funds From Operations ("AFFO"), which is described in the section below. We believe it is useful for investors to have enhanced transparency into how we evaluate our performance and that of our management. In addition, FFO is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO when reporting their results. FFO is also widely used by us and others in our industry to evaluate and price potential acquisition candidates. NAREIT has encouraged its member companies to report their FFO as a supplemental, industry-wide standard measure of REIT operating performance.

FFO has significant limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

FFO does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;

FFO does not reflect changes in, or cash requirements for, our working capital needs;

Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and FFO does not reflect any cash requirements for such replacements;

FFO, which includes discontinued operations, may not be indicative of our ongoing operations; and

Other companies in our industry may calculate FFO differently than we do, limiting its usefulness as a comparative measure.

Because of these limitations, FFO should not be considered as a measure of discretionary cash available to us to invest in the growth of our business or our dividend paying capacity. We compensate for these limitations by relying primarily on our GAAP results and using FFO only as a supplemental measure.


7






Adjusted Funds From Operations

We present AFFO as a supplemental measure of our performance. We define AFFO as FFO further adjusted to eliminate the impact of certain items that we do not consider indicative of our ongoing operating performance. These further adjustments are itemized in the table below. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating AFFO you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of AFFO should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

We present AFFO because we believe it assists investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. In addition, we believe it is useful for investors to have enhanced transparency into how we evaluate management’s performance and the effectiveness of our business strategies. We use AFFO when certain material, unplanned transactions occur as a factor in evaluating management's performance and to evaluate the effectiveness of our business strategies, and may use AFFO when determining incentive compensation.

AFFO has limitations as an analytical tool. Some of these limitations are:

AFFO does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;

AFFO does not reflect changes in, or cash requirements for, our working capital needs;

Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and AFFO does not reflect any cash requirements for such replacements;

AFFO does not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations; and

Other companies in our industry may calculate AFFO differently than we do, limiting its usefulness as a comparative measure.

Because of these limitations, AFFO should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using AFFO only as a supplemental measure.

Portfolio Net Operating Income and Same Center Net Operating Income

We present portfolio net operating income ("Portfolio NOI") and same center net operating income ("Same Center NOI") as supplemental measures of our operating performance. Portfolio NOI represents our property level net operating income which is defined as total operating revenues less property operating expenses and excludes termination fees and non-cash adjustments including straight-line rent, net above and below market rent amortization and gains or losses on the sale of outparcels recognized during the periods presented. We define Same Center NOI as Portfolio NOI for the properties that were operational for the entire portion of both comparable reporting periods and which were not acquired or subject to a material expansion or non-recurring event, such as a natural disaster, during the comparable reporting periods.

We believe Portfolio NOI and Same Center NOI are non-GAAP metrics used by industry analysts, investors and management to measure the operating performance of our properties because they provide performance measures directly related to the revenues and expenses involved in owning and operating real estate assets and provide a perspective not immediately apparent from net income, FFO or AFFO. Because Same Center NOI excludes properties developed, redeveloped, acquired and sold; as well as non-cash adjustments, gains or losses on the sale of outparcels and termination rents; it highlights operating trends such as occupancy levels, rental rates and operating costs on properties that were operational for both comparable periods. Other REITs may use different methodologies for calculating Portfolio NOI and Same Center NOI, and accordingly, our Portfolio NOI and Same Center NOI may not be comparable to other REITs.

Portfolio NOI and Same Center NOI should not be considered alternatives to net income (loss) or as an indicator of our financial performance since they do not reflect the entire operations of our portfolio, nor do they reflect the impact of general and administrative expenses, acquisition-related expenses, interest expense, depreciation and amortization costs, other non-property income and losses, the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties, or trends in development and construction activities which are significant economic costs and activities that could materially impact our results from operations. Because of these limitations, Portfolio NOI and Same Center NOI should not be viewed in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using Portfolio NOI and Same Center NOI only as supplemental measures.



8





TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP SUPPLEMENTAL MEASURES
(in thousands, except per share)
(Unaudited)

Below is a reconciliation of net income to FFO and AFFO:
 
 
Three months ended
 
 
March 31,
 
 
2018
 
2017
Net income
 
$
23,685

 
$
23,514

Adjusted for:
 
 
 
 
Depreciation and amortization of real estate assets - consolidated
 
32,542

 
30,855

Depreciation and amortization of real estate assets - unconsolidated joint ventures
 
3,229

 
3,838

FFO
 
59,456

 
58,207

FFO attributable to noncontrolling interests in other consolidated partnerships
 
370

 

Allocation of earnings to participating securities
 
(477
)
 
(512
)
FFO available to common shareholders  (1)
 
$
59,349

 
$
57,695

As further adjusted for:
 
 
 
 
Abandoned pre-development costs
 

 
627

Impact of above adjustments to the allocation of earnings to participating securities
 

 
(5
)
AFFO available to common shareholders (1)
 
$
59,349

 
$
58,317

FFO available to common shareholders per share - diluted (1)
 
$
0.60

 
$
0.58

AFFO available to common shareholders per share - diluted (1)
 
$
0.60

 
$
0.58

 
 
 
 
 
Weighted Average Shares:
 
 
 
 
Basic weighted average common shares
 
93,644

 
95,245

Effect of outstanding options and certain restricted common shares
 

 
66

Diluted weighted average common shares (for earnings per share computations)
 
93,644

 
95,311

Exchangeable operating partnership units
 
4,996

 
5,028

Diluted weighted average common shares (for FFO and AFFO per share computations) (1)
 
98,640

 
100,339

(1)
Assumes the Class A common limited partnership units of the Operating Partnership held by the noncontrolling interests are exchanged for common shares of the Company. Each Class A common limited partnership unit is exchangeable for one of the Company's common shares, subject to certain limitations to preserve the Company's REIT status.

9





Below is a reconciliation of net income to Portfolio NOI and Same Center NOI for the consolidated portfolio:

 
 
Three months ended
 
 
 
March 31,
 
 
 
2018
 
2017
 
Net income
 
$
23,685

 
$
23,514

 
Adjusted to exclude:
 
 
 
 
 
Equity in earnings of unconsolidated joint ventures
 
(2,194
)
 
(2,318
)
 
Interest expense
 
15,800

 
16,487

 
Other non-operating income
 
(209
)
 
(35
)
 
Depreciation and amortization
 
33,123

 
31,294

 
Other non-property expenses
 
432

 
311

 
Abandoned pre-development costs
 

 
627

 
Corporate general and administrative expenses
 
11,023

 
11,277

 
Non-cash adjustments (1)
 
(1,367
)
 
(963
)
 
Termination rents
 
(1,051
)
 
(1,184
)
 
Portfolio NOI
 
79,242

 
79,010

 
Non-same center NOI (2)
 
(4,215
)
 
(2,856
)
 
Same Center NOI
 
$
75,027

 
$
76,154

 
(1)
Non-cash items include straight-line rent, above and below market rent amortization and gains or losses on outparcel sales.
(2)
Excluded from Same Center NOI:
Outlet centers opened:
 
Outlet centers sold:
 
Outlet center expansions:
Fort Worth
October 2017
 
Westbrook
May 2017
 
Lancaster
September 2017









10


(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2)

Exhibit


Exhibit 99.2
393285100_tangerlargea01a03a05.jpg
Tanger Factory Outlet Centers, Inc.
  
Supplemental Operating and Financial Data
March 31, 2018



Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2018

393285100_tangeroutlet-small93015a04.jpg



Notice
  
  
For a more detailed discussion of the factors that affect our operating results, interested parties should review the Tanger Factory Outlet Centers, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 2017.
 
This Supplemental Portfolio and Financial Data is not an offer to sell or a solicitation to buy any securities of the Company. Any offers to sell or solicitations to buy any securities of the Company shall be made only by means of a prospectus.


2
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2018
393285100_tangeroutlet-small93015a04.jpg



Table of Contents
Section
 
 
 
Portfolio Data:
 
 
 
Geographic Diversification
Property Summary - Occupancy at End of Each Period Shown
Portfolio Occupancy at the End of Each Period
Average Tenant Sales Per Square Foot by Outlet Center Ranking
Major Tenants
Lease Expirations as of March 31, 2018
Leasing Activity
 
 
Financial Data:
 
 
 
Consolidated Balance Sheets
Consolidated Statements of Operations
Unconsolidated Joint Venture Information
Debt Outstanding Summary
Future Scheduled Principal Payments
Senior Unsecured Notes Financial Covenants
 
 
Non-GAAP Supplemental Measures:
 
 
 
Non-GAAP Definitions
FFO and FAD Analysis
Portfolio NOI and Same Center NOI
Pro Rata Balance Sheet Information
Pro Rata Statement of Operations Information
 
 
Investor Information


3
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2018
393285100_tangeroutlet-small93015a04.jpg



Geographic Diversification
As of March 31, 2018
Consolidated Properties
State
# of Centers
 
GLA
 
% of GLA
South Carolina
5

 
1,599,032

 
12
%
New York
2

 
1,469,865

 
11
%
Georgia
3

 
1,121,579

 
9
%
Texas
3

 
1,001,357

 
8
%
Pennsylvania
3

 
997,441

 
8
%
Michigan
2

 
671,539

 
5
%
Delaware
1

 
557,353

 
4
%
Alabama
1

 
556,677

 
4
%
North Carolina
3

 
505,056

 
4
%
New Jersey
1

 
489,706

 
4
%
Tennessee
1

 
448,150

 
3
%
Ohio
1

 
411,793

 
3
%
Arizona
1

 
410,783

 
3
%
Florida
1

 
351,721

 
3
%
Missouri
1

 
329,861

 
3
%
Louisiana
1

 
321,066

 
3
%
Mississippi
1

 
320,348

 
3
%
Utah
1

 
319,661

 
2
%
Connecticut
1

 
311,616

 
2
%
Iowa
1

 
276,331

 
2
%
New Hampshire
1

 
250,107

 
2
%
Maryland
1

 
199,425

 
2
%
Total
36

 
12,920,467

 
100
%
 
 
 
 
 
 
Unconsolidated Joint Venture Properties
 
 
 
 
 
 
 
 
 
 
 
 
# of Centers
 
GLA
 
Ownership %
Charlotte, NC
1

 
397,857

 
50.00
%
Columbus, OH
1

 
355,245

 
50.00
%
Ottawa, ON
1

 
354,978

 
50.00
%
Texas City, TX
1

 
352,705

 
50.00
%
National Harbor, MD
1

 
341,156

 
50.00
%
Cookstown, ON
1

 
307,779

 
50.00
%
Bromont, QC
1

 
161,307

 
50.00
%
Saint-Sauveur, QC
1

 
99,405

 
50.00
%
Total
8

 
2,370,432

 
 
 
 
 
 
 
 
Grand Total
44

 
15,290,899

 
 



4
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2018
393285100_tangeroutlet-small93015a04.jpg



Property Summary - Occupancy at End of Each Period Shown
Consolidated properties
Location
Total GLA
3/31/18
 
% Occupied
3/31/18
 
% Occupied
12/31/17
 
% Occupied
3/31/17
 
Deer Park, NY
740,159

 
95
%
 
95
%
 
96
%
 
Riverhead, NY
729,706

 
95
%
 
99
%
 
98
%
 
Rehoboth Beach, DE
557,353

 
97
%
 
98
%
 
98
%
 
Foley, AL
556,677

 
96
%
 
99
%
 
99
%
 
Atlantic City, NJ
489,706

 
89
%
 
88
%
 
89
%
 
San Marcos, TX
471,816

 
97
%
 
99
%
 
96
%
 
Sevierville, TN
448,150

 
100
%
 
100
%
 
100
%
 
Savannah, GA
429,089

 
96
%
 
98
%
 
97
%
 
Myrtle Beach Hwy 501, SC
425,334

 
88
%
 
94
%
 
95
%
 
Jeffersonville, OH
411,793

 
89
%
 
95
%
 
89
%
 
Glendale, AZ (Westgate)
410,783

 
97
%
 
99
%
 
96
%
 
Myrtle Beach Hwy 17, SC
403,347

 
99
%
 
100
%
 
97
%
 
Charleston, SC
382,117

 
98
%
 
98
%
 
97
%
 
Lancaster, PA
376,997

 
95
%
 
95
%
 
95
%
 
Pittsburgh, PA
372,944

 
99
%
 
99
%
 
99
%
 
Commerce, GA
371,408

 
99
%
 
98
%
 
97
%
 
Grand Rapids, MI
357,080

 
94
%
 
96
%
 
95
%
 
Fort Worth, TX
351,741

 
94
%
 
94
%
 
N/A

 
Daytona Beach, FL
351,721

 
99
%
 
100
%
 
96
%
 
Branson, MO
329,861

 
100
%
 
100
%
 
100
%
 
Locust Grove, GA
321,082

 
100
%
 
99
%
 
98
%
 
Gonzales, LA
321,066

 
97
%
 
99
%
 
100
%
 
Southaven, MS
320,348

 
95
%
 
99
%
 
96
%
 
Park City, UT
319,661

 
96
%
 
98
%
 
97
%
 
Mebane, NC
318,886

 
100
%
 
100
%
 
98
%
 
Howell, MI
314,459

 
94
%
 
98
%
 
90
%
 
Mashantucket, CT (Foxwoods)
311,616

 
95
%
 
94
%
 
94
%
 
Williamsburg, IA
276,331

 
95
%
 
96
%
 
98
%
 
Tilton, NH
250,107

 
94
%
 
93
%
 
96
%
 
Hershey, PA
247,500

 
99
%
 
100
%
 
99
%
 
Hilton Head II, SC
206,564

 
94
%
 
94
%
 
100
%
 
Ocean City, MD
199,425

 
96
%
 
98
%
 
82
%
 
Hilton Head I, SC
181,670

 
98
%
 
99
%
 
100
%
 
Terrell, TX
177,800

 
96
%
 
96
%
 
96
%
 
Blowing Rock, NC
104,009

 
96
%
 
98
%
 
98
%
 
Nags Head, NC
82,161

 
98
%
 
97
%
 
96
%
 
Westbrook, CT (1)
N/A

 
N/A

 
N/A

 
90
%
 
Total
12,920,467

 
96
%
(2) 
97
%
(3) 
96
%
(4) 
(1)
Sold Westbrook outlet center in May 2017.
(2)
Excludes the occupancy rate at our Fort Worth outlet center which opened during the fourth quarter of 2017 and has not yet stabilized.
(3)
Excludes the occupancy rate at our Fort Worth and Daytona Beach outlet centers which opened during the fourth quarter of 2017 and 2016, respectively, and have not yet stabilized.
(4)
Excludes the occupancy rate at our Daytona Beach outlet center which opened during the fourth quarter of 2016 and had not yet stabilized.



5
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2018
393285100_tangeroutlet-small93015a04.jpg



Unconsolidated joint venture properties
Location
Total GLA
3/31/18
 
% Occupied
3/31/18
 
% Occupied
12/31/17
 
% Occupied
3/31/17
 
Charlotte, NC
397,857

 
99
%
 
99
%
 
97
%
 
Columbus, OH
355,245

 
95
%
 
97
%
 
95
%
 
Ottawa, ON
354,978

 
93
%
 
95
%
 
96
%
 
Texas City, TX (Galveston/Houston)
352,705

 
96
%
 
99
%
 
97
%
 
National Harbor, MD
341,156

 
95
%
 
99
%
 
96
%
 
Cookstown, ON
307,779

 
98
%
 
99
%
 
97
%
 
Bromont, QC
161,307

 
72
%
 
72
%
 
69
%
 
Saint-Sauveur, QC
99,405

 
96
%
 
96
%
 
93
%
 
Total
2,370,432

 
94
%
 
96
%
 
94
%
(1) 
(1)
Excludes the occupancy rate at our Columbus outlet center which opened in June 2016 and had not yet stabilized.


6
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2018
393285100_tangeroutlet-small93015a04.jpg



Portfolio Occupancy at the End of Each Period (1) 
393285100_chart-9455b36dcd285f76bf4a01.jpg
(1) Excludes unconsolidated outlet centers. See table on page 4.




7
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2018
393285100_tangeroutlet-small93015a04.jpg



Average Tenant Sales Per Square Foot by Outlet Center Ranking As of March 31, 2018 (1) 
 Ranking (2)
12 Months
 SPSF
 Period End
 Occupancy
  Sq Ft
(thousands)
% of
 Square Feet
% of
Portfolio
NOI (3)
Consolidated Centers
 
 
 
 
Centers 1 - 5
$
525

97
%
2,795

23
%
30
%
Centers 6 - 10
$
441

98
%
1,703

14
%
16
%
Centers 11 - 15
$
392

98
%
1,681

13
%
13
%
Centers 16 - 20
$
356

95
%
1,684

13
%
13
%
Centers 21 - 25
$
322

95
%
1,932

15
%
14
%
Centers 26 - 30
$
289

95
%
1,554

12
%
9
%
Centers 31 - 35
$
256

93
%
1,220

10
%
5
%
 
 
 
 
 
 
 Ranking (2)
Cumulative 12 Months
 SPSF
 Cumulative Period End
 Occupancy
  Cumulative Sq Ft
(thousands)
Cumulative % of
 Square Feet
Cumulative % of
Portfolio
NOI (3)
Consolidated Centers
 
 
 
 
Centers 1 - 5
$
525

97
%
2,795

23
%
30
%
Centers 1 - 10
$
493

97
%
4,498

37
%
46
%
Centers 1 - 15
$
463

97
%
6,179

50
%
59
%
Centers 1 - 20
$
438

97
%
7,863

63
%
72
%
Centers 1 - 25
$
415

97
%
9,795

78
%
86
%
Centers 1 - 30
$
397

96
%
11,349

90
%
95
%
Centers 1 - 35
$
384

96
%
12,569

100
%
100
%
 
 
 
 
 
 
Unconsolidated centers (4)
$
447

97
%
1,447

n/a

n/a

Domestic centers (5)
$
391

96
%
14,016

n/a

n/a

 
 
(1)
Sales are based on reports for the trailing 12 months by retailers which have occupied outlet center stores for a minimum of 12 months. Sales per square foot are based on all stores less than 20,000 square feet in size. Centers are ranked by sales per square foot for the trailing twelve months ended March 31, 2018. Excludes outlet centers open less than 12 full calendar months and centers which have not yet stabilized (Fort Worth, Texas opened in October 2017).
 
 
 
 
 
 
 
 
(2)
Outlet centers included in each ranking group above are as follows (in alphabetical order):
 
Centers 1 - 5:
Deer Park, NY
Mebane, NC
Rehoboth Beach, DE
Riverhead, NY
Sevierville, TN
 
 
Centers 6 - 10:
Branson, MO
Hilton Head I, SC
Lancaster, PA
Myrtle Beach 17, SC
Westgate (Glendale), AZ
 
 
Centers 11 - 15:
Charleston, SC
Grand Rapids, MI
Hershey, PA
Locust Grove, GA
Pittsburgh, PA
 
 
Centers 16 - 20:
Atlantic City, NJ
Gonzales, LA
Nags Head, NC
Park City, UT
San Marcos, TX
 
 
Centers 21 - 25:
Foley, AL
Foxwoods (Mashantucket), CT
Howell, MI
Savannah, GA
Southaven (Memphis), MS
 
 
Centers 26 - 30:
Commerce, GA
Daytona Beach, FL
Hilton Head II, SC
Myrtle Beach 501, SC
Ocean City, MD
 
 
Centers 31 - 34:
Blowing Rock, NC
Jeffersonville, OH
Terrell, TX
Tilton, NH
Williamsburg, IA
 
 
 
 
 
 
 
 
 
(3)
Based on the Company's forecast of Portfolio NOI (see non-GAAP definitions). The Company's forecast is based on management's estimates as of March 31, 2018 and may be considered a forward-looking statement which is subject to risks and uncertainties. Actual results could differ materially from those projected due to various factors including, but not limited to, the risks associated with general economic and real estate conditions. For a more detailed discussion of the factors that affect operating results, interested parties should review the Tanger Factory Outlet Centers, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 2017.
 
 
(4)
Includes domestic outlet centers open 12 full calendar months (in alphabetical order):
 
Unconsolidated:
Charlotte, NC
Columbus, OH
National Harbor, MD
Texas City (Houston), TX
 
 
(5)
Includes consolidated portfolio and domestic unconsolidated joint ventures

8
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2018
393285100_tangeroutlet-small93015a04.jpg



Major Tenants (1) 
Ten Largest Tenants as of March 31, 2018  
Tenant
# of
Stores
 
GLA
 
% of
Total GLA
The Gap, Inc.
97

 
1,022,648

 
7.9
%
Ascena Retail Group, Inc.
145

 
876,450

 
6.8
%
Nike, Inc.
44

 
468,184

 
3.6
%
PVH Corp.
67

 
410,108

 
3.2
%
H&M Hennes & Mauritz L.P.
19

 
407,342

 
3.2
%
Ralph Lauren Corporation
38

 
376,855

 
2.9
%
V. F. Corporation
44

 
363,290

 
2.8
%
G-III Apparel Group, Ltd.
60

 
278,242

 
2.2
%
Carter's, Inc.
61

 
263,056

 
2.0
%
Under Armour, Inc.
33

 
257,396

 
2.0
%
Total of All Listed Above
608

 
4,723,571

 
36.6
%
(1)
Excludes unconsolidated outlet centers. See table on page 4.


9
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2018
393285100_tangeroutlet-small93015a04.jpg



Lease Expirations as of March 31, 2018

Percentage of Total Gross Leasable Area (1) 
393285100_chart-b7df3007d14a5741ac5a01.jpg

Percentage of Total Annualized Base Rent (1) 
393285100_chart-8a892e2ce32f596ca67.jpg

(1) Excludes unconsolidated outlet centers. See table on page 4.


10
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2018
393285100_tangeroutlet-small93015a04.jpg



Leasing Activity (1) 
TTM ended
03/31/2018
 
03/31/2017
Re-tenanted Space (terms greater than 12 months)(1):
 

 
 

Number of leases
75

 
114

Gross leasable area
265,885

 
355,165

New initial rent per square foot
$
40.13

 
$
37.29

Prior expiring rent per square foot
$
37.54

 
$
33.15

Percent increase  (2)
6.9
 %
 
12.5
%
 
 
 
 
New straight line rent per square foot
$
44.46

 
$
42.12

Prior straight line rent per square foot
$
36.68

 
$
32.11

Percent increase (2)
21.2
 %
 
31.2
%
 
 
 
 
Renewed Space (terms greater than 12 months)(1):
 
 
 
Number of leases
202

 
235

Gross leasable area
1,044,922

 
1,034,527

New initial rent per square foot
$
29.52

 
$
31.77

Prior expiring rent per square foot
$
28.47

 
$
28.92

Percent increase
3.7
 %
 
9.9
%
 
 
 
 
New straight line rent per square foot
$
30.87

 
$
33.80

Prior straight line rent per square foot
$
27.82

 
$
28.35

Percent increase
11.0
 %
 
19.2
%
 
 
 
 
Total Re-tenanted and Renewed Space (terms greater than 12 months)(1):
 
 
 
Number of leases
277

 
349

Gross leasable area
1,310,807

 
1,389,692

New initial rent per square foot
$
31.67

 
$
33.18

Prior expiring rent per square foot
$
30.31

 
$
30.00

Percent increase (2)
4.5
 %
 
10.6
%
 
 
 
 
New straight line rent per square foot
$
33.63

 
$
35.93

Prior straight line rent per square foot
$
29.62

 
$
29.31

Percent increase (2)
13.5
 %
 
22.6
%
 
 
 
 
Total Re-tenanted and Renewed Space (all terms)(3):
 
 
 
Number of leases
338

 
398

Gross leasable area
1,568,408

 
1,598,567

New initial rent per square foot
$
30.17

 
$
32.04

Prior expiring rent per square foot
$
30.31

 
$
29.56

Percent increase (2)
(0.5
)%
 
8.4
%
 
 
 
 
New straight line rent per square foot
$
31.80

 
$
34.43

Prior straight line rent per square foot
$
29.53

 
$
28.91

Percent increase (2)
7.7
 %
 
19.1
%
(1)
Represents change in rent (base rent and common area maintenance) for leases for a term of more than 12 months for new stores that opened or renewals that started during the respective trailing twelve month periods within the consolidated portfolio
(2)
Excludes leases related to re-merchandising projects (see rent spreads including these leases on the following page)
(3)
Represents change in rent (base rent and common area maintenance) for all leases for new stores that opened or renewals that started during the respective trailing twelve month periods within the consolidated portfolio, expect for license agreements, seasonal tenants, and month-to-month leases

11
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2018
393285100_tangeroutlet-small93015a04.jpg




Leasing Activity Including Re-merchandising Projects
TTM ended
03/31/2018
03/31/2017
 
 
 
Number of leases related to re-merchandising projects
8

1

Gross leasable area of these leases
146,211

19,002

 
 
 
 
 
 
Re-tenanted Space (terms greater than 12 months)(1):
 
 

Cash basis
(2.5
)%
10.4
%
Straight-line basis
8.9
 %
28.2
%
 
 
 
Total Re-tenanted and Renewed Space (terms greater than 12 months)(1):
 
 

Cash basis
1.8
 %
10.0
%
Straight-line basis
10.3
 %
21.8
%
 
 
 
 
 
 
Re-tenanted Space (all terms)(2):
 
 

Cash basis
(3.9
)%
9.5
%
Straight-line basis
7.3
 %
26.9
%
 
 
 
Total Re-tenanted and Renewed Space (all terms)(2):
 
 

Cash basis
(2.4
)%
7.9
%
Straight-line basis
5.3
 %
18.4
%
 
 
 

(1)
Represents change in rent (base rent and common area maintenance) for leases for a term of more than 12 months for new stores that opened or renewals that started during the respective trailing twelve month periods within the consolidated portfolio
(2)
Represents change in rent (base rent and common area maintenance) for all leases for new stores that opened or renewals that started during the respective trailing twelve month periods within the consolidated portfolio, except for license agreements, seasonal tenants, and month-to-month leases


12
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2018
393285100_tangeroutlet-small93015a04.jpg


Consolidated Balance Sheets (dollars in thousands)
 
March 31,
 
December 31,
 
2018
 
2017
Assets
 
 
 
   Rental property:
 
 
 
   Land
$
279,978

 
$
279,978

   Buildings, improvements and fixtures
2,810,980

 
2,793,638

   Construction in progress
615

 
14,854

 
3,091,573

 
3,088,470

   Accumulated depreciation
(929,608
)
 
(901,967
)
      Total rental property, net
2,161,965

 
2,186,503

   Cash and cash equivalents
3,427

 
6,101

   Investments in unconsolidated joint ventures
114,304

 
119,436

   Deferred lease costs and other intangibles, net
127,493

 
132,061

   Prepaids and other assets
98,669

 
96,004

         Total assets
$
2,505,858

 
$
2,540,105

 
 
 
 
Liabilities and Equity
 
 
 
Liabilities
 
 
 
   Debt:
 
 
 
Senior, unsecured notes, net
$
1,135,230

 
$
1,134,755

Unsecured term loan, net
323,082

 
322,975

Mortgages payable, net
90,109

 
99,761

Unsecured lines of credit, net
223,634

 
206,160

Total debt
1,772,055

 
1,763,651

Accounts payable and accrued expenses
66,405

 
90,416

Other liabilities
73,907

 
73,736

         Total liabilities
1,912,367

 
1,927,803

Commitments and contingencies
 
 
 
Equity
 
 
 
Tanger Factory Outlet Centers, Inc.:
 
 
 
Common shares, $.01 par value, 300,000,000 shares authorized, 94,382,583 and 94,560,536 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively
944

 
946

   Paid in capital
776,753

 
784,782

   Accumulated distributions in excess of net income
(194,416
)
 
(184,865
)
   Accumulated other comprehensive loss
(19,623
)
 
(19,285
)
         Equity attributable to Tanger Factory Outlet Centers, Inc.
563,658

 
581,578

Equity attributable to noncontrolling interests:
 
 
 
Noncontrolling interests in Operating Partnership
29,833

 
30,724

Noncontrolling interests in other consolidated partnerships

 

         Total equity
593,491

 
612,302

            Total liabilities and equity
$
2,505,858

 
$
2,540,105




13
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2018
393285100_tangeroutlet-small93015a04.jpg



Consolidated Statements of Operations (in thousands, except per share data)
 
Three months ended
 
March 31,
 
2018
 
2017
Revenues:
 
 
 
Base rentals
$
81,533

 
$
80,330

Percentage rentals
1,429

 
1,855

Expense reimbursements
38,280

 
36,598

Management, leasing and other services
613

 
579

Other income
1,680

 
2,006

Total revenues
123,535

 
121,368

Expenses:
 
 
 
Property operating
42,218

 
40,387

General and administrative
11,112

 
11,412

Abandoned pre-development costs

 
627

Depreciation and amortization
33,123

 
31,294

Total expenses
86,453

 
83,720

Operating income
37,082

 
37,648

Other income (expense):
 
 
 
Interest expense
(15,800
)
 
(16,487
)
Other non-operating income
209

 
35

Income before equity in earnings of unconsolidated joint ventures
21,491

 
21,196

Equity in earnings of unconsolidated joint ventures
2,194

 
2,318

Net income
23,685

 
23,514

Noncontrolling interests in Operating Partnership
(1,217
)
 
(1,178
)
Noncontrolling interests in other consolidated partnerships
370

 

Net income attributable to Tanger Factory Outlet Centers, Inc.
22,838

 
22,336

Allocation of earnings to participating securities
(263
)
 
(295
)
Net income available to common shareholders of
Tanger Factory Outlet Centers, Inc.
$
22,575

 
$
22,041

 
 
 
 
Basic earnings per common share:
 
 
 
Net income
$
0.24

 
$
0.23

 
 
 
 
Diluted earnings per common share:
 
 
 
Net income
$
0.24

 
$
0.23



14
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2018
393285100_tangeroutlet-small93015a04.jpg



Unconsolidated Joint Venture Information  

The following table details certain information as of March 31, 2018, except for Net Operating Income ("NOI") which is for the three months ended March 31, 2018, about various unconsolidated real estate joint ventures in which we have an ownership interest (dollars in millions):
Joint Venture
 
Center Location
 
Tanger's Ownership %
 
Square Feet
 
Tanger's Share of Total Assets
 
Tanger's Share of NOI
 
Tanger's Share of Net Debt (1)
Charlotte
 
Charlotte, NC
 
50.0
%
 
397,857

 
$
41.1

 
$
1.7

 
$
44.9

Columbus
 
Columbus, OH
 
50.0
%
 
355,245

 
42.9

 
1.2

 
42.3

Galveston/Houston
 
Texas City, TX
 
50.0
%
 
352,705

 
25.0

 
1.0

 
39.7

National Harbor
 
National Harbor, MD
 
50.0
%
 
341,156

 
46.0

 
1.2

 
43.3

RioCan Canada (2)
 
Various
 
50.0
%
 
923,469

 
117.3

 
1.8

 
5.3

Total
 
 
 
 
 
2,370,432

 
$
272.3

 
$
6.9

 
$
175.5

(1)
Net of debt origination costs and premiums.
(2)
Includes a 161,307 square foot center in Bromont, Quebec; a 307,779 square foot center in Cookstown, Ontario; a 354,978 square foot center in Ottawa, Ontario; and a 99,405 square foot center in Saint-Sauveur, Quebec.



15
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2018
393285100_tangeroutlet-small93015a04.jpg



Debt Outstanding Summary
As of March 31, 2018
(dollars in thousands)
 
Total Debt Outstanding
 
Our Share of Debt
 
Stated
Interest Rate
 
End of Period Effective Interest Rate(1) 
 
Maturity
Date (2)
 
Weighted Average Years to Maturity (2)
Consolidated Debt:
 
 
 
 
 
 
 
 
 
 
 
Unsecured debt:
 

 
 
 
 
 
 
 
 
 
 
Unsecured lines of credit(3)
$
227,600

 
$
227,600

 
LIBOR + 0.875%

 
2.76
%
 
10/31/2022
 
4.6

2023 Senior unsecured notes
250,000

 
250,000

 
3.875%

 
4.08
%
 
12/1/2023
 
5.7

2024 Senior unsecured notes
250,000

 
250,000

 
3.75
%
 
3.82
%
 
12/1/2024
 
6.7

2026 Senior unsecured notes
350,000

 
350,000

 
3.125
%
 
3.19
%
 
9/1/2026
 
8.4

2027 Senior unsecured notes
300,000

 
300,000

 
3.875
%
 
3.93
%
 
7/15/2027
 
9.3

Unsecured term loan
325,000

 
325,000

 
LIBOR + 0.95%

 
2.11
%
 
4/13/2021
 
3.0

Net debt discounts and debt origination costs
(20,654
)
 
(20,654
)
 
 

 
 
 
 
 
 
Total net unsecured debt
1,681,946

 
1,681,946

 
 

 
3.32
%
 
 
 
6.4

Secured mortgage debt:
 
 
 
 
 
 
 
 
 
 
 
Atlantic City, NJ
36,682

 
36,682

 
5.14% - 7.65%

 
5.05
%
 
11/15/2021 - 12/8/2026
 
6.6

Southaven, MS
51,400

 
51,400

 
LIBOR + 1.80%

 
4.14
%
 
4/29/2023
 
5.1

Debt premium and debt origination costs
2,027

 
2,027

 
 
 
 
 
 
 
 
Total net secured mortgage debt
90,109

 
90,109

 
 
 
4.52
%
 
 
 
5.7

Total consolidated debt
1,772,055

 
1,772,055

 
 
 
3.38
%
 
 
 
6.3

Unconsolidated JV debt:
 

 
 
 
 

 
 
 
 
 
 
Charlotte 
90,000

 
45,000

 
LIBOR + 1.45%

 
3.33
%
 
11/24/2019
 
1.7

Columbus
85,000

 
42,500

 
LIBOR + 1.65%

 
3.53
%
 
11/28/2021
 
3.7

Galveston/Houston
80,000

 
40,000

 
LIBOR + 1.65%

 
3.53
%
 
7/1/2022
 
4.3

National Harbor
87,000

 
43,500

 
LIBOR + 1.65%

 
3.53
%
 
11/13/2019
 
1.6

RioCan Canada
10,297

 
5,149

 
5.75
%
 
4.18
%
 
5/10/2020
 
2.1

Debt premium and debt origination costs
(1,281
)
 
(641
)
 
 
 
 
 
 
 
 
Total unconsolidated JV net debt
351,016

 
175,508

 
 

 
3.50
%
 
 
 
2.7

Total
$
2,123,071

 
$
1,947,563

 
 
 
3.40
%
 
 
 
5.8

(1)
The effective interest rate includes the impact of discounts and premiums and interest rate swap agreements, as applicable. See page 17 for additional details.
(2)
Includes applicable extensions available at our option.
(3)
The Company has unsecured lines of credit that provide for borrowings of up to $600.0 million. The unsecured lines of credit include a $20.0 million liquidity line and a $580.0 million syndicated line. A 15 basis point facility fee is due annually on the entire committed amount of each facility. The syndicated line may be increased up to $1.2 billion through an accordion feature in certain circumstances.


16
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2018
393285100_tangeroutlet-small93015a04.jpg



Summary of Our Share of Fixed and Variable Rate Debt
As of March 31, 2018
(dollars in thousands)
 
Total Debt %
 
Our Share of Debt
 
End of Period Effective Interest Rate
 
Average Years to Maturity (1)
 
 

 
 
 
 
 
 
Consolidated:
 
 
 
 
 
 
 
Fixed (2)
87
%
 
$
1,537,313

 
3.42
%
 
6.6
Variable
13
%
 
234,742

 
3.13
%
 
4.6
 
100
%
 
1,772,055

 
3.38
%
 
6.3
Unconsolidated Joint ventures:
 
 


 
 
 
 
Fixed
3
%
 
$
5,309

 
4.18
%
 
2.1
Variable
97
%
 
170,199

 
3.48
%
 
2.8
 
100
%
 
175,508

 
3.50
%
 
2.7
Total:
 
 
 
 
 
 
 
Fixed
79
%
 
1,542,622

 
3.43
%
 
6.6
Variable
21
%
 
404,941

 
3.34
%
 
3.5
Total share of debt
100
%
 
$
1,947,563

 
3.40
%
 
5.8
(1)
Includes applicable extensions available at our option.
(2)
The effective interest rate includes interest rate swap agreements that fix the base LIBOR rate at a weighted average of 1.30% on notional amounts aggregating $365.0 million as follows:
(a)
Interest rate swaps entered into in October 2013 to hedge our variable interest rate exposure on notional amounts aggregating $150.0 million. These interest rate swap agreements fix the base LIBOR rate at an average of 1.30% through August 14, 2018, and
(b)
Interest rate swaps entered into in April 2016 to hedge our variable interest rate exposure on notional amounts aggregating $175.0 million. These interest rate swap agreements fix the base LIBOR rate at an average of 1.03% through January 1, 2021,
(c)
In March 2018, the consolidated joint venture that owns the Tanger outlet center in Southaven, Mississippi, entered into an interest rate swap, effective March 1, 2018, that fixed the base LIBOR rate at 2.47% on a notional amount of $40.0 million through January 31, 2021.




17
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2018
393285100_tangeroutlet-small93015a04.jpg



Future Scheduled Principal Payments (dollars in thousands)(1)
As of March 31, 2018
Year
Tanger
Consolidated
Payments
 
Tanger's Share
of Unconsolidated
JV Payments
 
Total
Scheduled
Payments
2018
$
2,404

 
$
223

 
$
2,627

2019
3,369

 
88,813

 
92,182

2020
3,566

 
4,613

 
8,179

2021
330,793

 
42,500

 
373,293

2022(2)
232,036

 
40,000

 
272,036

2023
306,168

 

 
306,168

2024
255,140

 

 
255,140

2025
1,501