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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 6, 2019

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 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

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

Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Shares,
$0.01 par value
SKT
New York Stock Exchange






Item 2.02   Results of Operations and Financial Condition

On May 6, 2019, 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, 2019. 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 6, 2019, the Company made publicly available on its website, www.tangeroutlet.com, certain supplemental operating and financial information for the quarter ended March 31, 2019. 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 6, 2019


TANGER FACTORY OUTLET CENTERS, INC.

By:    /s/ James F. Williams
James F. Williams
Executive 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
Tenant Sales and Rent Spreads Increase for the Trailing Twelve Months

Greensboro, NC, May 6, 2019, Tanger Factory Outlet Centers, Inc. (NYSE:SKT) today reported financial and operating results for the three months ended March 31, 2019.

First Quarter Results

Net income available to common shareholders was $0.66 per share, or $61.7 million, compared to $0.24 per share, or $22.6 million, for the prior year period. The current year period includes a gain on the sale of four outlet centers totaling $43.4 million, or $0.44 per share.
Funds from operations ("FFO") available to common shareholders was $0.57 per share, or $55.9 million, compared to $0.60 per share, or $59.3 million, for the prior year period

FFO is a widely accepted supplemental non-GAAP financial measure used in the real estate industry to measure and compare the operating performance of real estate companies. A complete reconciliation containing adjustments from GAAP net income to FFO is included in this release. Per share amounts for net income and FFO are on a diluted basis.
“First quarter results were as anticipated. Our targeted marketing programs and experiential events helped drive increased traffic to our centers,” said Steven B. Tanger, Chief Executive Officer. “As a desired destination for our shoppers, Tanger Centers provide an important, proven and profitable distribution channel for our tenants. Following the recent strategic sale of four non-core, declining assets, we are better positioned to allocate our resources towards our centers with more favorable growth profiles. However, as the year progresses, we continue to expect that our results will be impacted by previously announced store closures. We remain focused on filling vacant space with high volume brand name tenants which do not typically require significant redevelopment capital. With a low 61% payout ratio currently, we plan to maintain a secure dividend and to generate solid cash flows. Supported by our strong balance sheet, these cash flows provide Tanger with stability and allow us to fund selective redevelopment and development projects as we strive to continue to build shareholder value.”




Operating Metrics

The Company’s key portfolio results were as follows:

Consolidated portfolio occupancy rate was 95.4% on March 31, 2019, compared to 95.9% on March 31, 2018
Blended average rental rates improved 0.6% on a cash basis and 4.7% on a straight-line basis for all renewals and re-tenanted leases that commenced during the trailing twelve months ended March 31, 2019
Lease termination fees totaled $1.1 million for first quarters of both 2019 and 2018
Portfolio net operating income ("NOI") for the consolidated portfolio decreased 0.8% for the quarter
Same Center NOI for the consolidated portfolio decreased 0.5% for the quarter
Average tenant sales productivity for the consolidated portfolio was $391 per square foot for the twelve months ended March 31, 2019, compared to $384 per square foot in the comparable prior year period. Average tenant sales for the twelve months ended March 31, 2019 includes the Company's Fort Worth, Texas center, which stabilized in the first quarter of 2019.
Same center tenant sales performance for the overall portfolio increased 0.6% for the twelve months ended March 31, 2019 compared to the twelve months ended March 31, 2018
Occupancy cost ratio for the trailing twelve months ended March 31, 2019 was 10.0%

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.
 

1





Leasing Activity

Total commenced leases for the trailing twelve months ended March 31, 2019 that were renewed or released for all terms, included 361 leases totaling approximately 1.8 million square feet.

As of March 31, 2019, Tanger had lease renewals executed or in process for 63.0% of the space in the consolidated portfolio scheduled to expire during 2019, compared to 63.9% of the space scheduled to expire during 2018 that was executed or in process as of March 31, 2018.

Tanger recaptured approximately 82,000 square feet within its consolidated portfolio during the first quarter of 2019 related to bankruptcies and brand-wide restructurings by retailers, most of which closed at the end of the quarter. During the first quarter of 2018, the Company recaptured approximately 37,000 square feet.

Strategic Portfolio Management

Consistent with its long-standing history of financial stewardship and strategic portfolio management, Tanger completed the sale of four non-core outlet centers for total gross proceeds of $130.5 million on March 29, 2019. The four properties were located in Nags Head, North Carolina; Ocean City, Maryland; Park City, Utah; and Williamsburg, Iowa and represented 6.8% of Tanger's consolidated portfolio square footage and approximately 5.1% of its forecasted 2019 Portfolio NOI.

With the completion of this sale, Tanger improved its overall portfolio quality by disposing of non-core declining assets that it did not expect would achieve the long-term growth targets for its overall portfolio. Some characteristics that contributed to Tanger identifying these particular assets as non-core include demographic and competitive changes in the markets, incremental capital expenditures related to asset age or market climate, and small asset size without expansion capacity. The average age of the properties sold was 24 years.

The key performance metrics of the four sold centers were well below those of the Company's remaining portfolio, as follows:

Metric

2018 As
Reported

2018
Average for
Sold Properties
2018
Excluding Sold Properties
TTM tenant sales per square foot for consolidated portfolio
$385
$295
$392
TTM same center tenant sales performance for the overall portfolio
+1.9%
-3.2%
+2.2%
Consolidated portfolio year-end occupancy
96.8%
95.8%
96.9%
Consolidated portfolio cash basis rent spreads for TTM lease commencements
-1.4%
-10.2%
-0.7%
Consolidated portfolio straight-line basis rent spreads for TTM lease commencements
+5.3%
-3.3%
+6.0%

Tanger used the net proceeds of $128.2 million to repay outstanding balances under its lines of credit, but may ultimately utilize a portion of the related increase in line availability for common share repurchases.

Tanger has generated gross proceeds of $402 million through the sale of thirteen non-core assets comprising 2.1 million square feet since December 2014. During this time, the Company has invested over $1 billion to create additional value by expanding its footprint, reinvesting in its portfolio and buying back its shares. This includes the addition of 2.6 million square feet through the development of eight new outlet centers and the acquisition of its joint venture partners' ownership interests in three key assets, along with reinvesting in its existing portfolio through renovations that attract new high-volume retailers.

Dividend

In February 2019, the Company's Board of Directors approved a 1.4% increase in the annualized dividend on its common shares from $1.40 per share to $1.42 per share and simultaneously declared a quarterly dividend of $0.355 per share for the first quarter ended March 31, 2019. This cash dividend will be payable on May 15, 2019 to holders of record on April 30, 2019. Since becoming a public company in May 1993, the Company has paid a cash dividend each quarter and has increased its dividend each year.

Balance Sheet and Capital Market Activity

As of March 31, 2019:

2





Total enterprise value was $3.7 billion and debt-to-enterprise value ratio was 43%
Total outstanding floating rate debt was approximately $51 million, representing 3% of total consolidated debt outstanding, or less than 2% of total enterprise value
Unused capacity under the Company's $600 million unsecured lines of credit was 97.5%, or $584.8 million
Weighted average interest rate was 3.6% and weighted average term to maturity of outstanding consolidated debt, including extension options, was approximately 6.2 years
Approximately 94% of the Company's consolidated square footage was unencumbered by mortgages
Interest coverage ratio was 4.2 times for the first quarter of 2019, compared to 4.4 times for the first quarter of 2018
FFO payout ratio was 61% for the first quarter of 2019

FFO payout ratio is a supplemental non-GAAP financial measure of the Company's operating performance. The Company's definition of FFO payout ratio is included below in "Non-GAAP Supplemental Measures."

Due to the pending asset sales, the Company did not repurchase any shares during the first quarter. Cumulatively, the Company has repurchased approximately 2.8 million common shares at a weighted average price of $24.48 per share for total consideration of approximately $69.3 million since May 2017. In February 2019, the Company's Board of Directors approved an increase of the remaining authorization to $100 million and an extension of the expiration by two years to May 2021.

Tanger's priority uses of capital at this time include: reinvesting in its assets, paying its dividend, repurchasing its common shares opportunistically, and deleveraging its balance sheet, while evaluating potential long-term opportunities for growth.

Guidance for 2019

The Company has updated its estimated net income and FFO guidance due to the impact of the recent assets sales discussed above. Due to the limited NOI contribution of these assets, the Company does not anticipate any material impact to its Same Center NOI trend assumptions for 2019. Management currently believes its net income and FFO for 2019 will be as follows:
For the year ended December 31, 2019:
 
 
 
Low Range
High Range
Estimated diluted net income per share
$1.30
$1.36
Depreciation and amortization of real estate assets - consolidated and the Company's share of unconsolidated joint ventures
1.35
1.35
Gain on sale of assets
(0.44)
(0.44)
Other
$0.01
$0.01
Estimated diluted FFO per share
$2.22
$2.28

Tanger's estimates reflect the following key assumptions:

Same Center NOI guidance for the consolidated portfolio between (2.00)% and (2.75)%, which reflects the following:
Projected 2019 store closings of up to 200,000 square feet for the consolidated portfolio, including 82,000 square feet that closed late in the first quarter and 86,000 square feet of additional known closures that occurred in April
Projected average occupancy for the year between 94.0% and 94.5%, with occupancy and same center NOI lower in the last nine months than the first three months as a result of the store closings referenced above
Projected full year lease termination fees (which are not included in Same Center NOI) of approximately $1.5 million for the consolidated portfolio
Incremental revenue of approximately $5 million, or $0.05 per share, from the straight-line recognition of fixed common area maintenance related to the implementation of the new lease standard
Average general and administrative expense of between $12.3 million and $12.7 million per quarter, which includes approximately $4 - $5 million, or $0.04 - $0.05 per share, of incremental expense related to the implementation of the new lease standard
Interest expense for the year for the consolidated portfolio of $61.0 million to $63.5 million, assuming all of the net proceeds from the asset sales completed in March 2019 are used to repay outstanding debt balances
The Company's share of interest expense in the unconsolidated portfolio of $8.4 million to $8.9 million
2019 weighted average diluted common shares of approximately 92.6 million for earnings per share and 97.5 million for FFO per share

3





Combined recurring capital expenditures and second generation tenant allowances of approximately $36 million to $40 million
Does not include the impact of any 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 Tuesday, May 7, 2019, at 8:30 a.m. Eastern Time. To access the conference call, listeners should dial 1-877-277-5113 and provide conference ID # 6486093 to be connected to the Tanger Factory Outlet Centers First Quarter 2019 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 7, 2019 at 11:00 a.m. through May 14, 2019 at 11:59 p.m. by dialing 1-855-859-2056, conference ID # 6486093. An online archive of the web cast will also be available through May 14, 2019.

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 40 upscale outlet shopping centers. Tanger's operating properties are located in 20 states coast to coast and in Canada, totaling approximately 14.4 million square feet leased to over 2,900 stores operated by more than 500 different brand name companies. The Company has more than 38 years of experience in the outlet industry. Tanger Outlet Centers continue to attract more than 181 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, 2019. 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, and include the Company's expectations regarding its financial results and the assumptions used to forecast such expected results, uses of capital, dividend, cash flows, filling vacant space and share repurchases.
You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other important factors which are, in some cases, beyond our control and which could materially affect our actual results, performance or achievements. Important factors which may cause actual results to differ materially from current expectations include, but are not limited to: our inability to develop new outlet centers or expand existing outlet centers successfully; risks related to the economic performance and market value of our outlet centers; the relative illiquidity of real property investments; impairment charges affecting our properties; our dispositions of assets may not achieve anticipated results; competition for the acquisition and development of outlet centers, and our inability to complete outlet centers we have identified; environmental regulations affecting our business; risk associated with a possible terrorist activity or other acts or threats of violence and threats to public safety; our dependence on rental income from real property; our dependence on the results of operations of our retailers; the fact that certain of our properties are subject to ownership interests held by third parties, whose interests may conflict with ours; risks related to uninsured losses; the risk that consumer, travel, shopping and spending habits may change; risks associated with our Canadian investments; risks associated with attracting and retaining key personnel; risks associated with debt financing; risk associated with our guarantees of debt for, or other support we may provide to, joint venture properties; the effectiveness of our interest rate hedging arrangements; uncertainty relating to the potential phasing out of LIBOR; our potential failure to qualify as a REIT; our legal obligation to make distributions to our shareholders; legislative or regulatory actions that could adversely affect our shareholders, including the recent changes in the U.S. federal income taxation of U.S. businesses; our dependence on distributions from the Operating Partnership to meet our financial obligations, including dividends; the risk of a cyber-attack or an act of cyber-terrorism and other important factors set forth under Item 1A - "Risk Factors" in the Company's and the Operating Partnership's Annual Report on Form 10-K for the year ended December 31, 2018, 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    EVP & 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,
 
2019
 
2018
Revenues:
 
 
 
Rental revenues (1)
$
119,954

 
$
120,656

Management, leasing and other services (2)
1,342

 
1,199

Other revenues
1,859

 
1,680

Total revenues
123,155

 
123,535

Expenses:
 
 
 
Property operating
42,377

 
42,218

General and administrative (3)
12,145

 
11,112

Depreciation and amortization
31,760

 
33,123

Total expenses
86,282

 
86,453

Other income (expense):
 
 
 
Interest expense
(16,307
)
 
(15,800
)
Gain on sale of assets
43,422

 

Other income
224

 
209

Total other income (expense)
27,339

 
(15,591
)
Income before equity in earnings of unconsolidated joint ventures
64,212

 
21,491

Equity in earnings of unconsolidated joint ventures
1,629

 
2,194

Net income
65,841

 
23,685

Noncontrolling interests in Operating Partnership
(3,315
)
 
(1,217
)
Noncontrolling interests in other consolidated partnerships
(195
)
 
370

Net income attributable to Tanger Factory Outlet Centers, Inc.
62,331

 
22,838

Allocation of earnings to participating securities
(611
)
 
(263
)
Net income available to common shareholders of
Tanger Factory Outlet Centers, Inc.
$
61,720

 
$
22,575

 
 
 
 
Basic earnings per common share:
 
 
 
Net income
$
0.66

 
$
0.24

 
 
 
 
Diluted earnings per common share:
 
 
 
Net income
$
0.66

 
$
0.24

(1)
In connection with our adoption of ASC 842 on January 1, 2019, rental revenues includes base rentals, percentage rentals, and expense reimbursements for both periods presented. Additionally, for the three months ended March 31, 2019, rental revenues is presented net of uncollectible tenant revenues and includes a straight-line rent adjustment of $1.5 million to record contractual payments received as consideration from certain executory costs on a straight-line basis.

(2)
Upon adoption of ASC 842, expense reimbursements from joint ventures of $586,000 previously included in expense reimbursements for the three months ended March 31, 2018, which are not related to leases, have been reclassified to management, leasing and other services on the consolidated statements of operations to conform to the current year presentation.

(3)
Upon adoption of ASC 842, indirect internal leasing costs previously capitalized are now expensed. For the three months ended March 31, 2019, lease costs of approximately $1.1 million were expensed as general and administrative expenses which would have been capitalized under the previous accounting standard.






5





TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(Unaudited)
 
March 31,
 
December 31,
 
2019
 
2018
Assets
 
 
 
   Rental property:
 
 
 
   Land
$
267,910

 
$
278,428

   Buildings, improvements and fixtures
2,639,764

 
2,764,649

   Construction in progress

 
3,102

 
2,907,674

 
3,046,179

   Accumulated depreciation
(941,193
)
 
(981,305
)
      Total rental property, net
1,966,481

 
2,064,874

   Cash and cash equivalents
1,616

 
9,083

   Investments in unconsolidated joint ventures
97,654

 
95,969

   Deferred lease costs and other intangibles, net
106,170

 
116,874

   Operating lease right-of-use assets (1)
87,679

 

   Prepaids and other assets
94,224

 
98,102

         Total assets
$
2,353,824

 
$
2,384,902

 
 
 
 
Liabilities and Equity
 
 
 
Liabilities
 
 
 
   Debt:
 
 
 
Senior, unsecured notes, net
$
1,137,145

 
$
1,136,663

Unsecured term loan, net
346,950

 
346,799

Mortgages payable, net
86,572

 
87,471

Unsecured lines of credit, net
12,117

 
141,985

Total debt
1,582,784

 
1,712,918

Accounts payable and accrued expenses
87,536

 
82,676

Operating lease liabilities (1)
92,354

 

Other liabilities
87,707

 
83,773

         Total liabilities
1,850,381

 
1,879,367

Commitments and contingencies
 
 
 
Equity
 
 
 
Tanger Factory Outlet Centers, Inc.:
 
 
 
Common shares, $.01 par value, 300,000,000 shares authorized, 94,102,666 and 93,941,783 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively
941

 
939

   Paid in capital
780,936

 
778,845

   Accumulated distributions in excess of net income
(276,491
)
 
(272,454
)
   Accumulated other comprehensive loss
(27,153
)
 
(27,151
)
         Equity attributable to Tanger Factory Outlet Centers, Inc.
478,233

 
480,179

Equity attributable to noncontrolling interests:
 
 
 
Noncontrolling interests in Operating Partnership
25,210

 
25,356

Noncontrolling interests in other consolidated partnerships

 

         Total equity
503,443

 
505,535

            Total liabilities and equity
$
2,353,824

 
$
2,384,902

(1)
In connection with our adoption of ASC 842 on January 1, 2019, operating lease right-of-use assets and operating lease liabilities were recorded.


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TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
CENTER INFORMATION
(Unaudited)
 
 
March 31,
 
 
2019
 
2018
Gross leasable area open at end of period (in thousands):
 
 
 
 
Consolidated
 
12,047

 
12,920

Partially owned - unconsolidated
 
2,371

 
2,370

Total
 
14,418

 
15,290

 
 
 
 
 
Outlet centers in operation at end of period:
 
 
 
 
Consolidated
 
32

 
36

Partially owned - unconsolidated
 
8

 
8

Total
 
40

 
44

 
 
 
 
 
States operated in at end of period (1)
 
19

 
22

Occupancy at end of period (1), (2)
 
95.4
%
 
95.9
%
(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).

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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. In December 2018, NAREIT issued “NAREIT Funds From Operations White Paper - 2018 Restatement” which clarifies, where necessary, existing guidance and consolidates alerts and policy bulletins into a single document for ease of use. NAREIT defines FFO as net income/(loss) available to the Company’s common shareholders computed in accordance with generally accepted accounting principles in the United States (“GAAP”), excluding (i) depreciation and amortization related to real estate, (ii) gains or losses from sales of certain real estate assets, (iii) gains and losses from change in control, (iv) impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity and (v) after adjustments for unconsolidated partnerships and joint ventures calculated to reflect FFO on the same basis.

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, 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. We believe that FFO payout ratio, which represents regular distributions to common shareholders and unit holders of the Operating Partnership expressed as a percentage of FFO, is useful to investors because it facilitates the comparison of dividend coverage between REITs. 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; 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.

Funds Available for Distribution

Funds Available for Distribution ("FAD") is a non-GAAP financial measure that we define as FFO, excluding corporate depreciation, amortization of finance costs, amortization of net debt discount (premium), amortization of share-based compensation, straight-line rent amounts, market rent amounts, less 2nd generation tenant allowances, capital improvement expenditures, and our share of the items listed above for our unconsolidated joint ventures. Investors, analysts and the Company utilize FAD as an indicator of common dividend potential. The FAD payout ratio, which represents regular distributions to common shareholders and unit holders of the Operating Partnership expressed as a percentage of FAD, facilitates the comparison of dividend coverage between REITs.

We believe that net income (loss) is the most directly comparable GAAP financial measure to FAD. FAD does not represent cash generated from operating activities in accordance with GAAP and should not be considered as an alternative to net income (loss) as an indication of our performance or to cash flows as a measure of liquidity or our ability to make distributions. Other companies in our industry may calculate FAD differently than we do, limiting its usefulness as a comparative 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. 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

8





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.



9





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:
 
 
Three months ended
 
 
 
March 31,
 
 
 
2019
 
2018
 
Net income
 
$
65,841

 
$
23,685

 
Adjusted for:
 
 
 
 
 
Depreciation and amortization of real estate assets - consolidated
 
31,148

 
32,542

 
Depreciation and amortization of real estate assets - unconsolidated joint ventures
 
3,130

 
3,229

 
Gain on sale of assets
 
(43,422
)
 

 
FFO
 
56,697

 
59,456

 
FFO attributable to noncontrolling interests in other consolidated partnerships
 
(195
)
 
370

 
Allocation of earnings to participating securities
 
(611
)
 
(477
)
 
FFO available to common shareholders  (1)
 
$
55,891

 
$
59,349

 
FFO available to common shareholders per share - diluted (1)
 
$
0.57

 
$
0.60

 
 
 
 
 
 
 
Weighted Average Shares:
 
 
 
 
 
Basic weighted average common shares
 
93,303

 
93,644

 
Diluted weighted average common shares (for earnings per share computations)
 
93,303

 
93,644

 
Exchangeable operating partnership units
 
4,961

 
4,996

 
Diluted weighted average common shares (for FFO per share computations) (1)
 
98,264

 
98,640

 
(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.


10





Reconciliation of FFO to FAD (dollars and shares in thousands)
 
 
Three months ended
 
 
 
March 31,
 
 
 
2019
 
2018
 
FFO available to common shareholders
 
$
55,891

 
$
59,349

 
Adjusted for:
 
 
 
 
 
Corporate depreciation excluded above
 
612

 
581

 
Amortization of finance costs
 
747

 
783

 
Amortization of net debt discount (premium)
 
109

 
101

 
Amortization of equity-based compensation
 
3,818

 
3,392

 
Straight-line rent adjustments
 
(1,970
)
 
(1,948
)
 
Market rent adjustments
 
480

 
562

 
2nd generation tenant allowances
 
(2,974
)
 
(2,926
)
 
Capital improvements
 
(3,049
)
 
(2,723
)
 
Adjustments from unconsolidated joint ventures
 
(406
)
 
(271
)
 
FAD available to common shareholders (1)
 
$
53,258

 
$
56,900

 
Dividends per share
 
$
0.3500

 
$
0.3425

 
FFO payout ratio
 
61
%
 
57
%
 
FAD payout ratio
 
65
%
 
59
%
 
Diluted weighted average common shares (1)
 
98,264

 
98,640

 
(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.

11





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

 
 
Three months ended
 
 
 
March 31,
 
 
 
2019
 
2018
 
Net income
 
$
65,841

 
$
23,685

 
Adjusted to exclude:
 
 
 
 
 
Equity in earnings of unconsolidated joint ventures
 
(1,629
)
 
(2,194
)
 
Interest expense
 
16,307

 
15,800

 
Gain on sale of assets
 
(43,422
)
 

 
Other non-operating income
 
(224
)
 
(209
)
 
Depreciation and amortization
 
31,760

 
33,123

 
Other non-property expenses
 
161

 
388

 
Corporate general and administrative expenses
 
12,118

 
10,754

 
Non-cash adjustments (1)
 
(1,472
)
 
(1,367
)
 
Lease termination fees
 
(1,130
)
 
(1,051
)
 
Portfolio NOI
 
78,310

 
78,929

 
Non-same center NOI (2)
 
(4,084
)
 
(4,367
)
 
Same Center NOI
 
$
74,226

 
$
74,562

 
(1)
Non-cash items include straight-line rent, above and below market rent amortization, straight-line rent expense on land leases and gains or losses on outparcel sales, as applicable.
(2)
Excluded from Same Center NOI:
Outlet centers sold:
Nags Head, Ocean City, Park City, and Williamsburg
March 2019










12


(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2)

Exhibit


Exhibit 99.2
397820157_tangerlargea01a03a06.jpg
Tanger Factory Outlet Centers, Inc.
  
Supplemental Operating and Financial Data
March 31, 2019



Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2019

397820157_tangeroutlet-small93015a05.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, 2018.
 
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 3/31/2019
397820157_tangeroutlet-small93015a05.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
Top 25 Tenants Based on Percentage of Total Annualized Base Rent
Lease Expirations as of March 31, 2019
Capital expenditures
Leasing Activity
 
 
Financial Data:
 
 
 
Consolidated Balance Sheets
Consolidated Statements of Operations
Components of Rental Revenues
Unconsolidated Joint Venture Information
Debt Outstanding Summary
Future Scheduled Principal Payments
Senior Unsecured Notes Financial Covenants
 
 
Non-GAAP and 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 3/31/2019
397820157_tangeroutlet-small93015a05.jpg



Geographic Diversification
As of March 31, 2019
Consolidated Properties
State
# of Centers
 
GLA
 
% of GLA
South Carolina
5

 
1,600,362

 
13
%
New York
2

 
1,468,887

 
12
%
Georgia
3

 
1,121,579

 
9
%
Texas
3

 
1,001,357

 
8
%
Pennsylvania
3

 
999,576

 
8
%
Michigan
2

 
671,541

 
6
%
Delaware
1

 
557,353

 
5
%
Alabama
1

 
554,673

 
5
%
New Jersey
1

 
489,706

 
4
%
Tennessee
1

 
447,815

 
4
%
North Carolina
2

 
422,895

 
3
%
Ohio
1

 
411,866

 
3
%
Arizona
1

 
410,734

 
3
%
Florida
1

 
351,721

 
3
%
Missouri
1

 
329,861

 
3
%
Mississippi
1

 
324,703

 
3
%
Louisiana
1

 
321,066

 
3
%
Connecticut
1

 
311,539

 
3
%
New Hampshire
1

 
250,107

 
2
%
Total
32

 
12,047,341

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

 
398,697

 
50.00
%
Columbus, OH
1

 
355,245

 
50.00
%
Ottawa, ON
1

 
355,013

 
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

 
161,449

 
50.00
%
Saint-Sauveur, QC
1

 
99,405

 
50.00
%
Total
8

 
2,371,449

 
 
 
 
 
 
 
 
Grand Total
40

 
14,418,790

 
 



4
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2019
397820157_tangeroutlet-small93015a05.jpg



Property Summary - Occupancy at End of Each Period Shown
Consolidated properties
Location
Total GLA
3/31/19
 
% Occupied
3/31/19
 
% Occupied
12/31/18
 
% Occupied
3/31/18
 
Deer Park, NY
739,109

 
98
%
 
96
%
 
95
%
 
Riverhead, NY
729,778

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

 
97
%
 
96
%
 
97
%
 
Foley, AL
554,673

 
94
%
 
98
%
 
96
%
 
Atlantic City, NJ
489,706

 
80
%
 
84
%
 
89
%
 
San Marcos, TX
471,816

 
95
%
 
97
%
 
97
%
 
Sevierville, TN
447,815

 
99
%
 
100
%
 
100
%
 
Savannah, GA
429,089

 
97
%
 
98
%
 
96
%
 
Myrtle Beach Hwy 501, SC
426,523

 
98
%
 
99
%
 
88
%
 
Jeffersonville, OH
411,866

 
94
%
 
97
%
 
89
%
 
Glendale, AZ (Westgate)
410,734

 
97
%
 
99
%
 
97
%
 
Myrtle Beach Hwy 17, SC
403,425

 
100
%
 
99
%
 
99
%
 
Charleston, SC
382,180

 
99
%
 
97
%
 
98
%
 
Lancaster, PA
376,997

 
92
%
 
93
%
 
95
%
 
Pittsburgh, PA
372,883

 
97
%
 
99
%
 
99
%
 
Commerce, GA
371,408

 
94
%
 
98
%
 
99
%
 
Grand Rapids, MI
357,103

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

 
97
%
 
99
%
 
94
%
 
Daytona Beach, FL
351,721

 
98
%
 
100
%
 
99
%
 
Branson, MO
329,861

 
98
%
 
100
%
 
100
%
 
Southaven, MS
324,703

 
94
%
 
98
%
 
95
%
 
Locust Grove, GA
321,082

 
97
%
 
100
%
 
100
%
 
Gonzales, LA
321,066

 
96
%
 
95
%
 
97
%
 
Mebane, NC
318,886

 
99
%
 
100
%
 
100
%
 
Howell, MI
314,438

 
92
%
 
95
%
 
94
%
 
Mashantucket, CT (Foxwoods)
311,539

 
93
%
 
96
%
 
95
%
 
Tilton, NH
250,107

 
96
%
 
96
%
 
94
%
 
Hershey, PA
249,696

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

 
88
%
 
94
%
 
94
%
 
Hilton Head I, SC
181,670

 
100
%
 
97
%
 
98
%
 
Terrell, TX
177,800

 
97
%
 
97
%
 
96
%
 
Blowing Rock, NC
104,009

 
95
%
 
98
%
 
96
%
 
Nags Head, NC
N/A

 
N/A

 
100
%
 
98
%
 
Ocean City, MD
N/A

 
N/A

 
97
%
 
96
%
 
Park City, UT
N/A

 
N/A

 
98
%
 
96
%
 
Williamsburg, IA
N/A

 
N/A

 
92
%
 
95
%
 
Total
12,047,341

 
95
%
 
97
%
(1) 
96
%
(1) 
(1)
Excludes the occupancy rate at our Fort Worth outlet center which opened during the fourth quarter of 2017 and has not yet stabilized.




5
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2019
397820157_tangeroutlet-small93015a05.jpg



Unconsolidated joint venture properties
Location
Total GLA
3/31/19
 
% Occupied
3/31/19
 
% Occupied
12/31/18
 
% Occupied
3/31/18
 
Charlotte, NC
398,697

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

 
95
%
 
97
%
 
95
%
 
Ottawa, ON
355,013

 
94
%
 
96
%
 
93
%
 
Texas City, TX (Galveston/Houston)
352,705

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

 
96
%
 
98
%
 
95
%
 
Cookstown, ON
307,779

 
97
%
 
100
%
 
98
%
 
Bromont, QC
161,449

 
77
%
 
77
%
 
72
%
 
Saint-Sauveur, QC
99,405

 
94
%
 
96
%
 
96
%
 
Total
2,371,449

 
95
%
 
97
%
 
94
%
 


6
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2019
397820157_tangeroutlet-small93015a05.jpg



Portfolio Occupancy at the End of Each Period (1) 
397820157_chart-c788adc5c59054739a8.jpg
(1) Excludes unconsolidated outlet centers. See table on page 4.




7
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2019
397820157_tangeroutlet-small93015a05.jpg



Average Tenant Sales Per Square Foot by Outlet Center Ranking As of March 31, 2019 (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
%
2,793

24
%
32
%
Centers 6 - 10
$
439

98
%
1,847

15
%
17
%
Centers 11 - 15
$
393

91
%
1,655

14
%
14
%
Centers 16 - 20
$
354

96
%
1,906

16
%
16
%
Centers 21 - 26
$
316

94
%
2,104

17
%
13
%
Centers 27 - 32
$
263

96
%
1,742

14
%
8
%
 
 
 
 
 
 
 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
%
2,793

24
%
32
%
Centers 1 - 10
$
488

97
%
4,640

39
%
49
%
Centers 1 - 15
$
463

96
%
6,295

53
%
62
%
Centers 1 - 20
$
436

96
%
8,201

69
%
78
%
Centers 1 - 26
$
412

96
%
10,305

86
%
91
%
Centers 1 - 32
$
391

95
%
12,047

100
%
99
%
 
 
 
 
 
 
Unconsolidated centers (4)
$
443

96
%
1,448

n/a

n/a

Domestic centers (5)
$
397

96
%
13,495

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, 2019.
 
 
 
 
 
 
 
 
(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
Charleston, SC
Locust Grove, GA
Myrtle Beach 17, SC
Westgate (Glendale), AZ
 
 
Centers 11 - 15:
Atlantic City, NJ
Grand Rapids, MI
Hershey, PA
Hilton Head I, SC
Lancaster, PA
 
 
Centers 16 - 20:
Foxwoods (Mashantucket), CT
Gonzales, LA
Pittsburgh, PA
San Marcos, TX
Savannah, GA
 
 
Centers 21 - 26:
Daytona Beach, FL
Foley, AL
Fort Worth, Texas
Hilton Head II, SC
Howell, MI
Southaven, MS
 
Centers 27 - 32:
Blowing Rock, NC
Commerce, GA
Jeffersonville, OH
Myrtle Beach 501, SC
Terrell, TX
Tilton, NH
 
 
 
 
 
 
 
 
(3)
Based on the Company's forecast of 2019 Portfolio NOI (see non-GAAP definitions), excluding centers not yet stabilized. The Company's forecast is based on management's estimates as of March 31, 2019 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, 2018.
 
 
(4)
Includes domestic outlet centers open 12 full calendar months (in alphabetical order):
 
Unconsolidated:
Charlotte, NC
Columbus, OH
National Harbor, MD
Texas City, TX
 
(5)
Includes consolidated portfolio and domestic unconsolidated joint ventures

8
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2019
397820157_tangeroutlet-small93015a05.jpg



Top 25 Tenants Based on Percentage of Total Annualized Base Rent
As of March 31, 2019 (1) 

Consolidated
 
Unconsolidated
Tenant
Brands
# of
Stores
 
GLA
 
% of
Total GLA
 
% of Total Annualized Base Rent (2)
 
# of
Stores
Ascena Retail Group, Inc.
Dress Barn, Loft, Ann Taylor, Justice, Lane Bryant, roz & ALI
132

 
792,981

 
6.6
%
 
7.0
%
 
18

The Gap, Inc.
Gap, Banana Republic, Old Navy
88

 
935,536

 
7.8
%
 
5.8
%
 
17

PVH Corp.
Tommy Hilfiger, Van Heusen, Calvin Klein
62

 
384,811

 
3.2
%
 
3.9
%
 
15

Under Armour, Inc.
Under Armour, Under Armour Kids
30

 
231,911

 
1.9
%
 
2.7
%
 
6

Nike, Inc.
Nike, Converse, Hurley
39

 
423,215

 
3.5
%
 
2.7
%
 
11

Tapestry, Inc.
Coach, Kate Spade
44

 
209,345

 
1.7
%
 
2.6
%
 
10

G-III Apparel Group, Ltd.
Bass, Wilson's Leather, Donna Karan
48

 
223,501

 
1.9
%
 
2.4
%
 
6

American Eagle Outfitters, Inc.
American Eagle Outfitters, Aerie
35

 
247,529

 
2.1
%
 
2.4
%
 
7

V. F. Corporation
VF Outlet, The North Face, Vans, Timberland, Lee/Wrangler
31

 
259,630

 
2.2
%
 
2.2
%
 
3

Carter's, Inc.
Carters, OshKosh B Gosh
51

 
224,227

 
1.9
%
 
2.2
%
 
11

Michael Kors Holdings Limited
Michael Kors, Michael Kors Men's
28

 
136,816

 
1.1
%
 
2.0
%
 
5

Signet Jewelers Limited
Kay Jewelers, Zales, Jared Vault
52

 
118,704

 
1.0
%
 
1.9
%
 
8

Hanesbrands Inc.
Hanesbrands, Maidenform, Champion
36

 
181,876

 
1.5
%
 
1.8
%
 
2

Chico's, FAS Inc.
Chicos, White House/Black Market, Soma Intimates
45

 
130,131

 
1.1
%
 
1.8
%
 
6

Ralph Lauren Corporation
Polo Ralph Lauren, Polo Children, Polo Ralph Lauren Big & Tall, Lauren Ralph Lauren
33

 
352,524

 
2.9
%
 
1.8
%
 
5

Adidas AG
Adidas, Reebok
28

 
173,601

 
1.4
%
 
1.7
%
 
10

Columbia Sportswear Company
Columbia Sportswear
18

 
137,716

 
1.1
%
 
1.6
%
 
3

J. Crew Group, Inc.
J. Crew, J. Crew Men's
26

 
140,366

 
1.2
%
 
1.5
%
 
4

Caleres Inc.
Famous Footwear, Naturalizer, Allen Edmonds
33

 
167,481

 
1.4
%
 
1.5
%
 
11

Express Inc.
Express Factory
23

 
160,730

 
1.3
%
 
1.5
%
 
4

Skechers USA, Inc.
Skechers
29

 
137,044

 
1.1
%
 
1.5
%
 
6

Brooks Brothers Group, Inc.
Brooks Brothers
24

 
145,247

 
1.2
%
 
1.5
%
 
5

Rack Room Shoes, Inc.
Rack Room Shoes
22

 
129,699

 
1.1
%
 
1.4
%
 
2

Rue 21 Holdings, Inc
Rue 21
21

 
127,562

 
1.0
%
 
1.3
%
 
1

H&M Hennes & Mauritz L.P.
H&M
19

 
407,342

 
3.4
%
 
1.3
%
 
2

Total of Top 25 tenants
 
997

 
6,579,525

 
54.6
%
 
58.0
%
 
178

(1)
Excludes leases that have been entered into but which tenant has not yet taken possession, temporary leases and month-to month leases.
(2)
Annualized base rent is defined as the minimum monthly payments due as of the end of the reporting period annualized, excluding periodic contractual fixed increases. Include rents which are based on a percentage of sales in lieu of fixed contractual rents.





9
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2019
397820157_tangeroutlet-small93015a05.jpg



Lease Expirations as of March 31, 2019

Percentage of Total Gross Leasable Area (1) 
397820157_chart-11b29b44d19457eba26.jpg

Percentage of Total Annualized Base Rent (1) 
397820157_chart-31342910c0875b05913.jpg

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


10
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2019
397820157_tangeroutlet-small93015a05.jpg



Capital expenditures (in thousands)
 
 
Three months ended
 
 
March 31,
 
 
2019
 
2018
Value-enhancing:
 
 
 
 
New center developments and expansions
 
$
939

 
$
851

Other
 
55

 

 
 
994

 
851

Recurring capital expenditures:
 
 
 
 
Second generation tenant allowances
 
2,974

 
2,926

Operational capital expenditures
 
2,852

 
1,823

Major outlet center renovations
 
197

 
900

 
 
6,023


5,649

Total additions to rental property-accrual basis
 
7,017

 
6,500

Conversion from accrual to cash basis
 
2,889

 
13,214

Total additions to rental property-cash basis
 
$
9,906

 
$
19,714


Leasing Activity

The tables below show changes in rent (base rent and common area maintenance ("CAM")) for leases including remerchandising projects in the consolidated portfolio for new stores that opened or renewals that started during the respective trailing twelve month periods:
Re-tenant(1)
 
Trailing twelve months ended:
# of Leases
Square Feet
(in 000's)
Average
Annual
Straight-line Rent (psf)
Average
Tenant
Allowance (psf)(2)
Average Initial Term
 (in years)
Net Average
Annual
Straight-line Rent (psf) (3)
March 31, 2019
81

388

$
33.32

$
45.13

7.83

$
27.56

March 31, 2018
84

415

$
34.32

$
70.88

8.55

$
26.03

 
 
 
 
 
 
 
Renewal(1)
 
Trailing twelve months ended:
# of Leases
Square Feet
(in 000's)
Average
Annual
Straight-line Rent (psf)
Average
Tenant
Allowance (psf)(2)
Average Initial Term
 (in years)
Net Average
Annual
Straight-line Rent (psf) (3)

March 31, 2019
280

1,404

$
34.37

$
0.49

3.82

$
34.24

March 31, 2018
262

1,300

$
29.25

$
0.25

4.07

$
29.19

 
 
 
 
 
 
 
Total(1)
 
Trailing twelve months ended:
# of Leases
Square Feet
(in 000's)
Average
Annual
Straight-line Rent (psf)
Average
Tenant
Allowance (psf)(2)
Average Initial Term
 (in years)
Net Average
Annual
Straight-line Rent (psf) (3)
March 31, 2019
361

1,792

$
34.14

$
10.16

4.69

$
31.97

March 31, 2018
346

1,715

$
30.48

$
17.35

5.15

$
27.11

(1)
Represents change in rent (base rent and CAM) 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.
(2)
Includes landlord costs.
(3)
Net average straight-line base rent is calculated by dividing the average tenant allowance costs per square foot by the average initial term and subtracting this calculated number from the average straight-line base rent per year amount. The average annual straight-line base rent disclosed in the table above includes all concessions, abatements and reimbursements of rent to tenants. The average tenant allowance disclosed in the table above includes landlord costs.

11
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2019
397820157_tangeroutlet-small93015a05.jpg



Leasing Activity(1) 

 
 
 
Excluding Re-Merchanding

 
 
TTM ended

TTM ended

TTM ended

 
All Lease Terms
3/31/2019

3/31/2018

3/31/2018

(2) 
Re-tenanted Space:
 
 
 
 
Number of leases
81

84

76

 
Gross leasable area
388,192

415,055

268,844

 
New initial rent per square foot
$
30.71

$
31.42

$
39.84

 
Prior expiring rent per square foot
$
30.02

$
32.71

$
38.04

 
Percent increase
2.3
%
(3.9
)%
4.7
 %
 
 
 
 
 
 
New straight-line rent per square foot
$
33.32

$
34.32

$
44.12

 
Prior straight-line rent per square foot
$
30.02

$
31.98

$
37.11

 
Percent increase
11.0
%
7.3
 %
18.9
 %
 
 
 
 
 
 
Renewed Space:
 
 
 
 
Number of leases
280

262

262

 
Gross leasable area
1,404,053

1,299,564

1,299,564

 
New initial rent per square foot
$
33.27

$
28.16

$
28.16

 
Prior expiring rent per square foot
$
33.19

$
28.71

$
28.71

 
Percent increase
0.2
%
(1.9
)%
(1.9
)%
 
 
 
 
 
 
New straight-line rent per square foot
$
34.37

$
29.25

$
29.25

 
Prior straight-line rent per square foot
$
33.31

$
27.96

$
27.96

 
Percent increase
3.2
%
4.6
 %
4.6
 %
 
 
 
 
 
 
Total Re-tenanted and Renewed Space:
 
 
 
 
Number of leases
361

346

338

 
Gross leasable area
1,792,245

1,714,619

1,568,408

 
New initial rent per square foot
$
32.71

$
28.95

$
30.17

 
Prior expiring rent per square foot
$
32.50

$
29.68

$
30.31

 
Percent increase (decrease)
0.6
%
(2.4
)%
(0.5
)%
 
 
 
 
 
 
New straight-line rent per square foot
$
34.14

$
30.48

$
31.80

 
Prior straight-line rent per square foot
$
32.60

$
28.93

$
29.53

 
Percent increase
4.7
%
5.3
 %
7.7
 %
 

(1)
For consolidated properties owned as of the period-end date. 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, except for license agreements, seasonal tenants, and month-to-month leases.
(2)
Excludes leases related to re-merchandising projects, all of which commenced during calendar 2017.





12
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2019
397820157_tangeroutlet-small93015a05.jpg



Leasing Activity(1) 
 
 
 
Excluding Re-Merchanding

 
 
TTM ended

TTM ended

TTM ended

 
Terms of More Than 12 Months
3/31/2019

3/31/2018

3/31/2018

(2) 
Re-tenanted Space:
 
 
 
 
Number of leases
79

83

75

 
Gross leasable area
365,345

412,096

265,885

 
New initial rent per square foot
$
32.03

$
31.55

$
40.13

 
Prior expiring rent per square foot
$
30.04

$
32.34

$
37.54

 
Percent increase
6.6
%
(2.5
)%
6.9
%
 
 
 
 
 
 
New straight-line rent per square foot
$
34.81

$
34.47

$
44.46

 
Prior straight-line rent per square foot
$
30.21

$
31.66

$
36.68

 
Percent increase
15.2
%
8.9
 %
21.2
%
 
 
 
 
 
 
Renewed Space:
 
 
 
 
Number of leases
244

202

202

 
Gross leasable area
1,236,668

1,044,922

1,044,922

 
New initial rent per square foot
$
34.48

$
29.52

$
29.52

 
Prior expiring rent per square foot
$
33.59

$
28.47

$
28.47

 
Percent increase
2.6
%
3.7
 %
3.7
%
 
 
 
 
 
 
New straight-line rent per square foot
$
35.72

$
30.87

$
30.87

 
Prior straight-line rent per square foot
$
33.82

$
27.82

$
27.82

 
Percent increase
5.6
%
11.0
 %
11.0
%
 
 
 
 
 
 
Total Re-tenanted and Renewed Space:
 
 
 
 
Number of leases
323

285

277

 
Gross leasable area
1,602,013

1,457,018

1,310,807

 
New initial rent per square foot
$
33.92

$
30.09

$
31.67

 
Prior expiring rent per square foot
$
32.78

$
29.56

$
30.31

 
Percent increase
3.5
%
1.8
 %
4.5
%
 
 
 
 
 
 
New straight-line rent per square foot
$
35.52

$
31.89

$
33.63

 
Prior straight-line rent per square foot
$
32.99

$
28.91

$
29.62

 
Percent increase
7.7
%
10.3
 %
13.5
%
 

(1)
For consolidated properties owned as of the period-end date. 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.
(2)
Excludes leases related to re-merchandising projects, all of which commenced during calendar 2017.





13
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2019
397820157_tangeroutlet-small93015a05.jpg


Consolidated Balance Sheets (dollars in thousands)
 
March 31,
 
December 31,
 
2019
 
2018
Assets
 
 
 
   Rental property:
 
 
 
   Land
$
267,910

 
$
278,428

   Buildings, improvements and fixtures
2,639,764

 
2,764,649

   Construction in progress

 
3,102

 
2,907,674

 
3,046,179

   Accumulated depreciation
(941,193
)
 
(981,305
)
      Total rental property, net
1,966,481

 
2,064,874

   Cash and cash equivalents
1,616

 
9,083

   Investments in unconsolidated joint ventures
97,654

 
95,969

   Deferred lease costs and other intangibles, net
106,170

 
116,874

   Operating lease right-of-use assets (1)
87,679

 

   Prepaids and other assets
94,224

 
98,102

         Total assets
$
2,353,824

 
$
2,384,902

 
 
 
 
Liabilities and Equity
 
 
 
Liabilities
 
 
 
   Debt:
 
 
 
Senior, unsecured notes, net
$
1,137,145

 
$
1,136,663

Unsecured term loan, net
346,950

 
346,799

Mortgages payable, net
86,572

 
87,471

Unsecured lines of credit, net
12,117

 
141,985

Total debt
1,582,784

 
1,712,918

Accounts payable and accrued expenses
87,536

 
82,676

Operating lease liabilities (1)
92,354

 

Other liabilities
87,707

 
83,773

         Total liabilities
1,850,381

 
1,879,367

Commitments and contingencies
 
 
 
Equity
 
 
 
Tanger Factory Outlet Centers, Inc.:
 
 
 
Common shares, $.01 par value, 300,000,000 shares authorized, 94,102,666 and 93,941,783 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively
941

 
939

   Paid in capital
780,936

 
778,845

   Accumulated distributions in excess of net income
(276,491
)
 
(272,454
)
   Accumulated other comprehensive loss
(27,153
)
 
(27,151
)
         Equity attributable to Tanger Factory Outlet Centers, Inc.
478,233

 
480,179

Equity attributable to noncontrolling interests:
 
 
 
Noncontrolling interests in Operating Partnership
25,210

 
25,356

Noncontrolling interests in other consolidated partnerships

 

         Total equity
503,443

 
505,535

            Total liabilities and equity
$
2,353,824

 
$
2,384,902

(1)
In connection with our adoption of ASC 842 on January 1, 2019, operating lease right-of-use assets and operating lease liabilities were recorded.



14
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2019
397820157_tangeroutlet-small93015a05.jpg



Consolidated Statements of Operations (in thousands, except per share data)
 
Three months ended
 
March 31,
 
2019
 
2018
Revenues:
 
 
 
Rental revenues (1)
$
119,954

 
$
120,656

Management, leasing and other services (2)
1,342

 
1,199

Other revenues
1,859

 
1,680

Total revenues
123,155

 
123,535

Expenses:
 
 
 
Property operating
42,377

 
42,218

General and administrative(3)
12,145

 
11,112

Depreciation and amortization
31,760

 
33,123

Total expenses
86,282

 
86,453

Other income (expense):
 
 
 
Interest expense
(16,307
)
 
(15,800
)
Gain on sale of assets
43,422

 

Other income
224

 
209

Total other income (expense)
27,339

 
(15,591
)
Income before equity in earnings of unconsolidated joint ventures
64,212

 
21,491

Equity in earnings of unconsolidated joint ventures
1,629

 
2,194

Net income
65,841

 
23,685

Noncontrolling interests in Operating Partnership
(3,315
)
 
(1,217
)
Noncontrolling interests in other consolidated partnerships
(195
)
 
370

Net income attributable to Tanger Factory Outlet Centers, Inc.
62,331

 
22,838

Allocation of earnings to participating securities
(611
)
 
(263
)
Net income available to common shareholders of
Tanger Factory Outlet Centers, Inc.
$
61,720

 
$