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Section 1: 8-K (8-K)

Document
false0000899715 0000899715 2019-10-30 2019-10-30


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): October 30, 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, Suite 360, Greensboro, NC 27408
(Address of principal executive offices)
(336) 292-3010
(Registrant’s 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:

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

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

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

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

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

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

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 October 30, 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 September 30, 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 October 30, 2019, the Company made publicly available on its website, www.tangeroutlet.com, certain supplemental operating and financial information for the quarter ended September 30, 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
 
 
 
 
104
 
Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document





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: October 30, 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 THIRD QUARTER RESULTS
Consolidated Portfolio 95.9% Occupied
Tenant Sales Increase
Raises Annual Guidance for Net Income, AFFO and Same Center NOI

Greensboro, NC, October 30, 2019, Tanger Factory Outlet Centers, Inc. (NYSE:SKT) today reported financial and operating results for the three and nine months ended September 30, 2019.

Third Quarter Results

Net income available to common shareholders was $0.25 per share, or $23.2 million, compared to a net loss available to common shareholders of $0.24 per share, or $22.2 million, for the prior year period. The current year period is inclusive of a $0.02 per share dilutive impact related to assets sold in March 2019, net of interest expense savings related to the use of proceeds. The prior year period was impacted by a non-cash impairment charge totaling $49.7 million, or $0.51 per share, related to the Company’s outlet center in Jeffersonville, Ohio.
Funds from operations (“FFO”) and adjusted funds from operations (“AFFO”) available to common shareholders were both $0.58 per share, or $56.8 million, compared to $0.63 per share, or $61.9 million, for the prior year period. The current year period is inclusive of a $0.04 per share dilutive impact related to the asset sales discussed above.

Year-to-Date Results

Net income available to common shareholders was $1.06 per share, or $98.6 million, compared to $0.25 per share, or $23.1 million, for the prior year period. The current year period is inclusive of a $0.42 per share dilutive impact related to the asset sales discussed above, including a gain on the sale of four outlet centers totaling $43.4 million, or $0.44 per share. The prior year period was impacted by a non-cash impairment charge discussed above totaling $49.7 million, or $0.51 per share.
FFO available to common shareholders was $1.68 per share, or $164.2 million, compared to $1.83 per share, or $180.3 million, for the prior year period. The current year period is inclusive of a $0.07 per share dilutive impact related to the asset sales discussed above.
AFFO available to common shareholders was $1.72 per share, or $168.6 million, compared to $1.83 per share, or $180.3 million, for the prior year period. AFFO excludes certain items that the Company does not consider indicative of its ongoing operating performance. The current year period is inclusive of a $0.07 per share dilutive impact related to the asset sales discussed above and excludes $4.4 million, or $0.04 per share, of general and administrative expense in the current year period for the accelerated recognition of compensation cost related to the planned retirement of an executive officer.

FFO and 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. A complete reconciliation 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 third quarter results exceeded our AFFO and same center NOI expectations as we continue to focus on our priorities of leasing and providing shoppers with the brands and the value they seek,” said Steven B. Tanger, Chief Executive Officer. “We have maintained a high 95.9% occupancy rate, reflecting the resilience and desirability of the outlet channel. Additionally, we have continued to increase traffic, as our targeted marketing programs and engaging on-site experiences helped to draw shoppers to our centers. Our tenant occupancy cost ratio remains lower than any of the mall REITs at 9.9%. We have also sustained a strong financial position, with no significant debt maturities in our consolidated portfolio until December 2023 and a low 3.5% weighted average interest rate. We have a 26-year historic commitment to paying a quarterly cash dividend. Our dividend remains well covered, as we expect to generate nearly $95 million of free cash flow over and above our dividend during 2019 and have nearly $600 million in unused line of credit capacity. As we move towards 2020, we remain focused on leasing to desired brands while creating the level of activity and excitement that drives shoppers to Tanger Centers.”

Operating Metrics

The Company’s key portfolio results were as follows:

Consolidated portfolio occupancy rate was 95.9% on September 30, 2019, compared to 96.0% on June 30, 2019 and 96.4% on September 30, 2018
Blended average rental rates increased 2.5% on a straight-line basis and decreased 2.0% on a cash basis for all renewals and re-tenanted leases that commenced during the trailing twelve months ended September 30, 2019

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Lease termination fees totaled $1.5 million for the first nine months of 2019, including $0.1 million for the third quarter of 2019, compared to $1.1 million for the first nine months of 2018, including $0.1 million for the third quarter of 2018
Same center net operating income (“Same Center NOI”) for the consolidated portfolio decreased 1.8% for the quarter and 0.8% year to date due primarily to the impact of tenant bankruptcies, lease modifications and store closures
Average tenant sales productivity for the consolidated portfolio was $395 per square foot for the twelve months ended September 30, 2019, compared to $383 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 September 30, 2019 compared to the twelve months ended September 30, 2018
Occupancy cost ratio for the trailing twelve months ended September 30, 2019 was 9.9%

Same Center NOI is a supplemental non-GAAP financial measure of operating performance. A complete definition of Same Center NOI and a reconciliation to the nearest comparable GAAP measure is included in this release.
 
Leasing Activity

Total commenced leases for the trailing twelve months ended September 30, 2019 that were renewed or re-leased for all terms included 345 leases, totaling approximately 1.7 million square feet. As of September 30, 2019, Tanger had lease renewals executed or in process for 74.2% of the space in the consolidated portfolio scheduled to expire during 2019 compared to 76.1% of the space scheduled to expire during 2018 that was executed or in process as of September 30, 2018.

Tanger recaptured approximately 195,000 square feet within its consolidated portfolio during the first nine months of 2019 related to bankruptcies and brand-wide restructurings by retailers, including 6,000 square feet in the third quarter. During the first nine months of 2018, approximately 123,000 square feet were recaptured, including 17,000 square feet during the third quarter.

Balance Sheet and Capital Market Activity

As of September 30, 2019:

Total enterprise value was $3.1 billion
Total outstanding floating rate debt was approximately $16 million, representing 1% of total consolidated debt outstanding, or less than 1% of total enterprise value
Unused capacity under the Company’s $600 million unsecured lines of credit was 99%, or $595.7 million
Weighted average interest rate was 3.5% and weighted average term to maturity of outstanding consolidated debt, including extension options, was approximately 5.7 years
Approximately 94% of the Company’s consolidated square footage was unencumbered by mortgages
Interest coverage ratio was 4.3 times for the first nine months of 2019
FAD payout ratio was 71% for the first nine months of 2019

FAD payout ratio is a supplemental non-GAAP financial measure of operating performance. A definition of FAD payout ratio is included in this release.

Tanger has reduced its outstanding consolidated debt by $141.0 million since December 31, 2018.

During the first nine months of 2019, the Company repurchased approximately 1,209,000 common shares for total consideration of approximately $20.0 million, including approximately 651,000 common shares for total consideration of approximately $10.0 million during the third quarter. As of September 30, 2019, $80.0 million remains under the current repurchase authorization, which is valid through 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 de-leveraging its balance sheet, while evaluating potential long-term opportunities for growth.

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Guidance for 2019

The Company is raising its 2019 annual guidance. Management currently believes its net income, FFO and AFFO per share for 2019 will be as follows:
For the year ended December 31, 2019:
Current
Previous
 
 
Low Range
High Range
Low Range
High Range
Estimated diluted net income per share
$1.26
$1.30
$1.24
$1.30
Depreciation and amortization of real estate assets - consolidated and the Company’s share of unconsolidated joint ventures
1.36
1.36
1.36
1.36
Gain on sale of assets
(0.44)
(0.44)
(0.44)
(0.44)
Foreign currency loss from sale of joint venture property
0.04
0.04
0.04
0.04
Other
0.01
0.01
0.01
0.01
Estimated diluted FFO per share
$2.23
$2.27
$2.21
$2.27
AFFO adjustment per share
0.04
0.04
0.04
0.04
Estimated diluted AFFO per share
$2.27
$2.31
$2.25
$2.31

Tanger’s estimates reflect the following key assumptions:

Increase in Same Center NOI guidance for the consolidated portfolio to a range of (1.40)% to (1.80)% from the previous range of (1.50)% to (2.25)%, which reflects the following:
Outperformance of the Company’s forecast for the third quarter of 2019
Projected 2019 store closings related to tenant bankruptcies and restructurings of up to 225,000 square feet for the consolidated portfolio. This excludes the Dressbarn stores, which are expected to remain open through December 31, 2019, and assumes that recently announced footprint optimization plans by tenants, which remain fluid at this time, will not have a significant impact on 2019 occupancy or Same Center NOI.
Increase in projected average occupancy for the year to between 95.5% and 95.8%, from the previous range of 94.75% to 95.25%. This change reflects fewer than previously anticipated store closures and the contribution of Tanger’s pop-up and temporary leasing program.
Projected full-year lease termination fees (which are not included in Same Center NOI) of approximately $1.5 million for the consolidated portfolio
Estimated incremental annual revenue of approximately $6.0 million, or $0.06 per share, from the straight-line recognition of fixed common area maintenance related to the implementation of the new lease standard effective January 1, 2019
Increase in average general and administrative expense to between $12.3 million and $12.7 million for the fourth quarter of 2019 from the previous range of $12.0 million to $12.4 million. The implementation of the new lease standard is currently expected to result in incremental general and administrative expense of approximately $4.0 million to $5.0 million, or $0.04 to $0.05 per share, annually.
Annual consolidated portfolio interest expense of $61.0 million to $63.0 million
The Company’s share of annual interest expense in the unconsolidated portfolio of $8.0 million to $8.5 million
2019 weighted average diluted common shares of approximately 92.8 million for earnings per share and 97.7 million for FFO per share
Combined annual recurring capital expenditures and second generation tenant allowances of approximately $38 million to $40 million, compared to the previous range of $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

Third Quarter Conference Call

Tanger will host a conference call to discuss its third quarter results for analysts, investors and other interested parties on Thursday, October 31, 2019, at 8:00 a.m. Eastern Time. To access the conference call, listeners should dial 1-877-277-5113 and provide conference ID # 4674518 to be connected to the Tanger Factory Outlet Centers Third Quarter 2019 Financial Results call. Alternatively, a live audio webcast of this call will be available to the public on Tanger’s Investor Relations website, investors.tangeroutlets.com, hosted by S&P Global Market Intelligence. A telephone replay of the call will be available from October 31, 2019 at 11:00 a.m. through November 7, 2019 at 11:59 p.m. by dialing 1-855-859-2056, conference ID # 4674518. An online archive of the webcast will also be available through November 7, 2019.


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About Tanger Factory Outlet Centers, Inc.

Tanger Factory Outlet Centers, Inc. (NYSE: SKT), is a publicly-traded REIT headquartered in Greensboro, North Carolina that presently operates and owns, or has an ownership interest in, a portfolio of 39 upscale outlet shopping centers. Tanger’s operating properties are located in 20 states and in Canada, totaling approximately 14.3 million square feet, leased to over 2,900 stores which are operated by more than 510 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 visitors annually. Tanger is furnishing a Form 8-K with the Securities and Exchange Commission that includes a supplemental information package for the quarter ended September 30, 2019. For more information on Tanger Outlet Centers, call 1-800-4TANGER or visit the Company’s website 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, our leasing strategy and value proposition to retailers, uses of capital, liquidity, dividend payments, 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; risks associated with 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; risks 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.


Investor Contact Information

Cyndi Holt    Jim Williams
VP, Investor Relations    EVP & CFO
336-834-6892    336-834-6800    
[email protected]    [email protected]


Media Contact Information

Quentin Pell
VP, Corporate Communications and Enterprise Risk Management
336-834-6827    
[email protected]    
        

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TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
 
Three months ended
 
Nine months ended
 
September 30,
 
September 30,
 
2019
 
2018
 
2019
 
2018
Revenues:
 
 
 
 
 
 
 
Rental revenues (1)
$
115,050

 
$
120,277

 
$
347,389

 
$
357,450

Management, leasing and other services (2)
1,356

 
1,239

 
3,943

 
3,580

Other revenues
2,588

 
2,720

 
6,524

 
6,452

Total revenues
118,994

 
124,236

 
357,856

 
367,482

Expenses:
 
 
 
 
 
 
 
Property operating
39,149

 
39,653

 
118,252

 
119,817

General and administrative (3), (4)
12,292

 
10,752

 
40,910

 
32,861

Impairment charge

 
49,739

 

 
49,739

Depreciation and amortization
30,103

 
32,850

 
93,009

 
98,667

Total expenses
81,544

 
132,994

 
252,171

 
301,084

Other income (expense):
 
 
 
 
 
 
 
Interest expense
(15,197
)
 
(16,367
)
 
(46,638
)
 
(48,348
)
Gain on sale of assets

 

 
43,422

 

Other income (expense) (5)
227

 
261

 
(2,966
)
 
661

Total other income (expense)
(14,970
)
 
(16,106
)
 
(6,182
)
 
(47,687
)
Income (loss) before equity in earnings of unconsolidated joint ventures
22,480

 
(24,864
)
 
99,503

 
18,711

Equity in earnings of unconsolidated joint ventures
2,329

 
1,833

 
5,604

 
6,233

Net income (loss)
24,809

 
(23,031
)
 
105,107

 
24,944

Noncontrolling interests in Operating Partnership
(1,263
)
 
1,172

 
(5,308
)
 
(1,274
)
Noncontrolling interests in other consolidated partnerships

 

 
(195
)
 
278

Net income (loss) attributable to Tanger Factory Outlet Centers, Inc.
23,546

 
(21,859
)
 
99,604

 
23,948

Allocation of earnings to participating securities
(305
)
 
(313
)
 
(1,030
)
 
(889
)
Net income (loss) available to common shareholders of
Tanger Factory Outlet Centers, Inc.
$
23,241

 
$
(22,172
)
 
$
98,574

 
$
23,059

 
 
 
 
 
 
 
 
Basic earnings per common share:
 
 
 
 
 
 
 
Net income (loss)
$
0.25

 
$
(0.24
)
 
$
1.06

 
$
0.25

 
 
 
 
 
 
 
 
Diluted earnings per common share:
 
 
 
 
 
 
 
Net income (loss)
$
0.25

 
$
(0.24
)
 
$
1.06

 
$
0.25

(1)
In connection with the 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 and nine months ended September 30, 2019, rental revenues is presented net of uncollectible tenant revenues and includes a straight-line rent adjustment of $1.6 million and $4.9 million, respectively, 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 $656,000 and $1.8 million, respectively, previously included in expense reimbursements for the three and nine months ended September 30, 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 and nine months ended September 30, 2019, lease costs of approximately $1.3 million and $3.5 million, respectively, were expensed as general and administrative expenses which would have been capitalized under the previous accounting standard.

(4)
The nine months ended ended September 30, 2019 includes $4.4 million related to the accelerated recognition of compensation cost entitled to be received by the Company’s President and Chief Operating Officer per the terms of a transition agreement executed in connection with his planned retirement.

(5)
The nine months ended September 30, 2019 include a $3.6 million charge related to the foreign currency effect of the sale of the Bromont, Quebec property by the RioCan Canada joint venture.

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TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(Unaudited)
 
September 30,
 
December 31,
 
2019
 
2018
Assets
 
 
 
   Rental property:
 
 
 
   Land
$
267,642

 
$
278,428

   Buildings, improvements and fixtures
2,663,507

 
2,764,649

   Construction in progress

 
3,102

 
2,931,149

 
3,046,179

   Accumulated depreciation
(991,441
)
 
(981,305
)
      Total rental property, net
1,939,708

 
2,064,874

   Cash and cash equivalents
4,664

 
9,083

   Investments in unconsolidated joint ventures
94,415

 
95,969

   Deferred lease costs and other intangibles, net
101,373

 
116,874

   Operating lease right-of-use assets (1)
86,830

 

   Prepaids and other assets
97,367

 
98,102

         Total assets
$
2,324,357

 
$
2,384,902

 
 
 
 
Liabilities and Equity
 
 
 
Liabilities
 
 
 
   Debt:
 
 
 
Senior, unsecured notes, net
$
1,138,115

 
$
1,136,663

Unsecured term loan, net
347,253

 
346,799

Mortgages payable, net
84,738

 
87,471

Unsecured lines of credit, net
1,817

 
141,985

Total debt
1,571,923

 
1,712,918

Accounts payable and accrued expenses
73,932

 
82,676

Operating lease liabilities (1)
91,683

 

Other liabilities
88,619

 
83,773

         Total liabilities
1,826,157

 
1,879,367

Commitments and contingencies
 
 
 
Equity
 
 
 
Tanger Factory Outlet Centers, Inc.:
 
 
 
Common shares, $.01 par value, 300,000,000 shares authorized, 92,893,338 and 93,941,783 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively
929

 
939

   Paid in capital
771,868

 
778,845

   Accumulated distributions in excess of net income
(272,481
)
 
(272,454
)
   Accumulated other comprehensive loss
(27,372
)
 
(27,151
)
         Equity attributable to Tanger Factory Outlet Centers, Inc.
472,944

 
480,179

Equity attributable to noncontrolling interests:
 
 
 
Noncontrolling interests in Operating Partnership
25,256

 
25,356

Noncontrolling interests in other consolidated partnerships

 

         Total equity
498,200

 
505,535

            Total liabilities and equity
$
2,324,357

 
$
2,384,902

(1)
In connection with the 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)
 
 
September 30,
 
 
2019
 
2018
Gross leasable area open at end of period (in thousands):
 
 
 
 
Consolidated
 
12,048

 
12,923

Partially owned - unconsolidated
 
2,212

 
2,370

Total
 
14,260

 
15,293

 
 
 
 
 
Outlet centers in operation at end of period:
 
 
 
 
Consolidated
 
32

 
36

Partially owned - unconsolidated
 
7

 
8

Total
 
39

 
44

 
 
 
 
 
States operated in at end of period (1)
 
19

 
22

Occupancy at end of period (1), (2)
 
95.9
%
 
96.4
%
(1)
Excludes the centers in which the Company has ownership interests but are held in unconsolidated joint ventures.
(2)
Excludes centers not yet stabilized at period end. The 2018 period excludes the 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 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. 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.

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.

8






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.

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, impairment charges and gains or losses on the sale of assets 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.



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 and AFFO:
 
 
Three months ended
 
Nine months ended
 
 
September 30,
 
September 30,
 
 
2019
 
2018
 
2019
 
2018
Net income (loss)
 
$
24,809

 
$
(23,031
)
 
$
105,107

 
$
24,944

Adjusted for:
 
 
 
 
 
 
 
 
Depreciation and amortization of real estate assets - consolidated
 
29,451

 
32,237

 
91,149

 
96,841

Depreciation and amortization of real estate assets - unconsolidated joint ventures
 
3,058

 
3,466

 
9,453

 
10,020

Impairment charge - consolidated
 

 
49,739

 

 
49,739

Foreign currency loss from sale of joint venture property
 

 

 
3,641

 

Gain on sale of assets
 

 

 
(43,422
)
 

FFO
 
57,318

 
62,411

 
165,928

 
181,544

FFO attributable to noncontrolling interests in other consolidated partnerships
 

 

 
(195
)
 
278

Allocation of earnings to participating securities
 
(481
)
 
(560
)
 
(1,502
)
 
(1,571
)
FFO available to common shareholders (1)
 
$
56,837

 
$
61,851

 
$
164,231

 
$
180,251

As further adjusted for:
 
 
 
 
 
 
 
 
Compensation related to executive officer retirement (2)
 
$

 
$

 
$
4,371

 
$

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

 

 
(35
)
 

AFFO available to common shareholders (1)
 
$
56,837

 
$
61,851

 
$
168,567

 
$
180,251

FFO available to common shareholders per share - diluted (1)
 
$
0.58

 
$
0.63

 
$
1.68

 
$
1.83

AFFO available to common shareholders per share - diluted (1)
 
$
0.58

 
$
0.63

 
$
1.72

 
$
1.83

 
 
 
 
 
 
 
 
 
Weighted Average Shares:
 
 
 
 
 
 
 
 
Basic weighted average common shares
 
92,514

 
93,109

 
92,999

 
93,349

Diluted weighted average common shares (for earnings per share computations)
 
92,514

 
93,109

 
92,999

 
93,349

Exchangeable operating partnership units
 
4,960

 
4,995

 
4,960

 
4,995

Diluted weighted average common shares (for FFO and AFFO per share computations) (1)
 
97,474

 
98,104

 
97,959

 
98,344

(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.
(2)
Represents the accelerated recognition of compensation cost entitled to be received by the Company’s President and Chief Operating Officer per the terms of a transition agreement executed in connection with his planned retirement.

10





Reconciliation of FFO to FAD (dollars and shares in thousands)
 
 
Three months ended
 
Nine months ended
 
 
September 30,
 
September 30,
 
 
2019
 
2018
 
2019
 
2018
FFO available to common shareholders
 
$
56,837

 
$
61,851

 
$
164,231

 
$
180,251

Adjusted for:
 
 
 
 
 
 
 
 
Corporate depreciation excluded above
 
652

 
613

 
1,860

 
1,826

Amortization of finance costs
 
749

 
748

 
2,246

 
2,280

Amortization of net debt discount (premium)
 
113

 
105

 
333

 
309

Amortization of equity-based compensation
 
3,571

 
3,769

 
14,371

 
10,814

Straight-line rent adjustments
 
(2,518
)
 
(1,450
)
 
(7,404
)
 
(4,744
)
Market rent adjustments
 
314

 
729

 
1,067

 
1,980

2nd generation tenant allowances
 
(9,121
)
 
(3,262
)
 
(15,171
)
 
(11,588
)
Capital improvements
 
(4,781
)
 
(5,562
)
 
(14,678
)
 
(16,483
)
Adjustments from unconsolidated joint ventures
 
(50
)
 
(456
)
 
(1,254
)
 
(875
)
FAD available to common shareholders (1)
 
$
45,766

 
$
57,085

 
$
145,601

 
$
163,770

Dividends per share
 
$
0.3550

 
$
0.3500

 
$
1.0600

 
$
1.0425

FFO payout ratio
 
61
%
 
56
%
 
63
%
 
57
%
FAD payout ratio
 
76
%
 
60
%
 
71
%
 
62
%
Diluted weighted average common shares (1)
 
97,474

 
98,104

 
97,959

 
98,344

(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
 
Nine months ended
 
 
September 30,
 
September 30,
 
 
2019
 
2018
 
2019
 
2018
Net income (loss)
 
$
24,809

 
$
(23,031
)
 
$
105,107

 
$
24,944

Adjusted to exclude:
 
 
 
 
 
 
 
 
Equity in earnings of unconsolidated joint ventures
 
(2,329
)
 
(1,833
)
 
(5,604
)
 
(6,233
)
Interest expense
 
15,197

 
16,367

 
46,638

 
48,348

Gain on sale of assets
 

 

 
(43,422
)
 

Other non-operating (income) expense
 
(227
)
 
(261
)
 
2,966

 
(661
)
Impairment charge
 

 
49,739

 

 
49,739

Depreciation and amortization
 
30,103

 
32,850

 
93,009

 
98,667

Other non-property expenses
 
160

 
457

 
491

 
832

Corporate general and administrative expenses
 
12,265

 
10,521

 
41,032

 
32,223

Non-cash adjustments (1)
 
(1,729
)
 
(702
)
 
(5,829
)
 
(2,707
)
Lease termination fees
 
(127
)
 
(70
)
 
(1,526
)
 
(1,134
)
Portfolio NOI
 
78,122

 
84,037

 
232,862

 
244,018

Non-same center NOI (2)
 
(82
)
 
(4,579
)
 
(4,190
)
 
(13,505
)
Same Center NOI
 
$
78,040

 
$
79,458

 
$
228,672

 
$
230,513

(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
400726924_tangerlargea01a03a07.jpg
Tanger Factory Outlet Centers, Inc.
  
Supplemental Operating and Financial Data
September 30, 2019



Supplemental Operating and Financial Data for the
Quarter Ended 9/30/2019

400726924_tangeroutlet-small93015a06.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 9/30/2019
400726924_tangeroutlet-small93015a06.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 September 30, 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 9/30/2019
400726924_tangeroutlet-small93015a06.jpg



Geographic Diversification
As of September 30, 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

 
1,000,556

 
8
%
Michigan
2

 
671,541

 
6
%
Delaware
1

 
557,353

 
5
%
Alabama
1

 
554,583

 
5
%
New Jersey
1

 
489,706

 
4
%
Tennessee
1

 
447,815

 
4
%
North Carolina
2

 
422,895

 
3
%
Ohio
1

 
411,867

 
3
%
Arizona
1

 
410,726

 
3
%
Florida
1

 
351,721

 
3
%
Missouri
1

 
329,861

 
3
%
Mississippi
1

 
324,716

 
3
%
Louisiana
1

 
321,066

 
3
%
Connecticut
1

 
311,508

 
3
%
New Hampshire
1

 
250,107

 
2
%
Total
32

 
12,048,206

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

 
398,677

 
50.00
%
Ottawa, ON
1

 
357,213

 
50.00
%
Columbus, OH
1

 
355,245

 
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
%
Saint-Sauveur, QC
1

 
99,405

 
50.00
%
Total
7

 
2,212,180

 
 
 
 
 
 
 
 
Grand Total
39

 
14,260,386

 
 



4
Supplemental Operating and Financial Data for the
Quarter Ended 9/30/2019
400726924_tangeroutlet-small93015a06.jpg



Property Summary - Occupancy at End of Each Period Shown
Consolidated properties
Location
Total GLA
9/30/19
 
% Occupied
9/30/19
 
% Occupied
6/30/19
 
% Occupied
9/30/18
 
Deer Park, NY
739,109

 
98
%
 
97
%
 
97
%
 
Riverhead, NY
729,778

 
97
%
 
96
%
 
95
%
 
Rehoboth Beach, DE
557,353

 
98
%
 
98
%
 
97
%
 
Foley, AL
554,583

 
90
%
 
92
%
 
94
%
 
Atlantic City, NJ
489,706

 
80
%
 
78
%
 
86
%
 
San Marcos, TX
471,816

 
94
%
 
92
%
 
97
%
 
Sevierville, TN
447,815

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

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

 
98
%
 
99
%
 
99
%
 
Jeffersonville, OH
411,867

 
92
%
 
94
%
 
97
%
 
Glendale, AZ (Westgate)
410,726

 
99
%
 
95
%
 
99
%
 
Myrtle Beach Hwy 17, SC
403,425

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

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

 
88
%
 
95
%
 
92
%
 
Pittsburgh, PA
373,863

 
97
%
 
98
%
 
99
%
 
Commerce, GA
371,408

 
97
%
 
99
%
 
99
%
 
Grand Rapids, MI
357,103

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

 
99
%
 
96
%
 
98
%
 
Daytona Beach, FL
351,721

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

 
100
%
 
100
%
 
100
%
 
Southaven, MS
324,716

 
98
%
 
97
%
 
93
%
 
Locust Grove, GA
321,082

 
97
%
 
97
%
 
96
%
 
Gonzales, LA
321,066

 
95
%
 
94
%
 
96
%
 
Mebane, NC
318,886

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

 
93
%
 
92
%
 
95
%
 
Mashantucket, CT (Foxwoods)
311,508

 
95
%
 
94
%
 
95
%
 
Tilton, NH
250,107

 
97
%
 
95
%
 
94
%
 
Hershey, PA
249,696

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

 
92
%
 
97
%
 
92
%
 
Hilton Head I, SC
181,670

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

 
97
%
 
97
%
 
95
%
 
Blowing Rock, NC
104,009

 
88
%
 
95
%
 
96
%
 
Nags Head, NC
N/A

 
N/A

 
N/A

 
98
%
 
Ocean City, MD
N/A

 
N/A

 
N/A

 
96
%
 
Park City, UT
N/A

 
N/A

 
N/A

 
98
%
 
Williamsburg, IA
N/A

 
N/A

 
N/A

 
93
%
 
Total
12,048,206

 
96
%
 
96
%
 
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 9/30/2019
400726924_tangeroutlet-small93015a06.jpg



Unconsolidated joint venture properties
Location
Total GLA
9/30/19
 
% Occupied
9/30/19
 
% Occupied
6/30/19
 
% Occupied
9/30/18
 
Charlotte, NC
398,677

 
99
%
 
98
%
 
99
%
 
Ottawa, ON
357,213

 
97
%
 
95
%
 
94
%
 
Columbus, OH
355,245

 
97
%
 
94
%
 
96
%
 
Texas City, TX (Galveston/Houston)
352,705

 
96
%
 
97
%
 
95
%
 
National Harbor, MD
341,156

 
97
%
 
96
%
 
95
%
 
Cookstown, ON
307,779

 
98
%
 
97
%
 
100
%
 
Saint-Sauveur, QC
99,405

 
96
%
 
94
%
 
96
%
 
Bromont, QC
N/A

 
N/A

 
%
 
80
%
 
Total
2,212,180

 
97
%
 
96
%
 
95
%
 


6
Supplemental Operating and Financial Data for the
Quarter Ended 9/30/2019
400726924_tangeroutlet-small93015a06.jpg



Portfolio Occupancy at the End of Each Period (1) 
400726924_chart-a2dd5d471be25ebd9c1a02.jpg
(1) Excludes unconsolidated outlet centers. See table on page 4.




7
Supplemental Operating and Financial Data for the
Quarter Ended 9/30/2019
400726924_tangeroutlet-small93015a06.jpg



Average Tenant Sales Per Square Foot by Outlet Center Ranking As of September 30, 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
$
527

98
%
2,793

23
%
32
%
Centers 6 - 10
$
448

99
%
1,847

15
%
17
%
Centers 11 - 15
$
403

91
%
1,672

14
%
13
%
Centers 16 - 20
$
357

96
%
1,904

16
%
15
%
Centers 21 - 26
$
320

95
%
2,165

18
%
14
%
Centers 27 - 32
$
260

96
%
1,667

14
%
9
%
 
 
 
 
 
 
 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
$
527

98
%
2,793

23
%
32
%
Centers 1 - 10
$
493

99
%
4,640

38
%
49
%
Centers 1 - 15
$
469

97
%
6,312

52
%
62
%
Centers 1 - 20
$
442

96
%
8,216

68
%
77
%
Centers 1 - 26
$
417

96
%
10,381

86
%
91
%
Centers 1 - 32
$
395

96
%
12,048

100
%
100
%
 
 
 
 
 
 
Unconsolidated centers (4)
$
441

97
%
1,448

n/a

n/a

Domestic centers (5)
$
400

96
%
13,496

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 September 30, 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
Glendale, AZ (Westgate)
Locust Grove, GA
Myrtle Beach Hwy 17, SC
 
 
Centers 11 - 15:
Atlantic City, NJ
Hershey, PA
Hilton Head I, SC
Lancaster, PA
Pittsburgh, PA
 
 
Centers 16 - 20:
Gonzales, LA
Grand Rapids, MI
San Marcos, TX
Savannah, GA
Southaven, MS
 
 
Centers 21 - 26:
Foley, AL
Fort Worth, TX
Hilton Head II, SC
Howell, MI
Mashantucket, CT (Foxwoods)
Myrtle Beach Hwy 501, SC
 
Centers 27 - 32:
Blowing Rock, NC
Commerce, GA
Daytona Beach, FL
Jeffersonville, OH
Terrell, TX
Tilton, NH
 
 
 
 
 
 
 
 
(3)
Based on the Company’s forecast of 2019 Portfolio NOI (see non-GAAP definitions), excluding centers not yet stabilized (none). The Company’s forecast is based on management’s estimates as of September 30, 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 (Galveston/Houston)
 
(5)
Includes consolidated portfolio and domestic unconsolidated joint ventures

8
Supplemental Operating and Financial Data for the
Quarter Ended 9/30/2019
400726924_tangeroutlet-small93015a06.jpg



Top 25 Tenants Based on Percentage of Total Annualized Base Rent
As of September 30, 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
118

 
711,190

 
5.9
%
 
6.3
%
 
16

The Gap, Inc.
Gap, Banana Republic, Janie & Jack, Old Navy
96

 
947,819

 
7.9
%
 
5.9
%
 
19

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

 
391,131

 
3.2
%
 
4.0
%
 
14

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

 
231,911

 
1.9
%
 
2.7
%
 
6

Tapestry, Inc.
Coach, Kate Spade, Stuart Weitzman
45

 
214,702

 
1.8
%
 
2.7
%
 
11

Nike, Inc.
Nike, Converse, Hurley
39

 
423,215

 
3.5
%
 
2.7
%
 
11

American Eagle Outfitters, Inc.
American Eagle Outfitters, Aerie
38

 
262,597

 
2.2
%
 
2.5
%
 
7

G-III Apparel Group, Ltd.
Bass, Wilsons Leather, DKNY, Karl Lagerfeld Paris
42

 
197,357

 
1.6
%
 
2.2
%
 
5

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

 
224,227

 
1.9
%
 
2.2
%
 
10

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
51

 
117,204

 
1.0
%
 
1.9
%
 
8

Hanesbrands Inc.
Hanesbrands, Maidenform, Champion
36

 
176,907

 
1.5
%
 
1.9
%
 
2

Chico’s, FAS Inc.
Chicos, White House/Black Market, Soma Intimates
44

 
127,631

 
1.1
%
 
1.8
%
 
6

Columbia Sportswear Company
Columbia Sportswear
19

 
148,145

 
1.2
%
 
1.8
%
 
3

Ralph Lauren Corporation
Polo Ralph Lauren, Polo Children, Polo Ralph Lauren Big & Tall
32

 
352,261

 
2.9
%
 
1.8
%
 
5

Adidas AG
Adidas, Reebok
27

 
168,478

 
1.4
%
 
1.6
%
 
9

Skechers USA, Inc.
Skechers
30

 
149,167

 
1.2
%
 
1.6
%
 
6

V. F. Corporation
The North Face, Vans, Timberland, Dickies
26

 
139,883

 
1.2
%
 
1.6
%
 
2

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

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

 
407,342

 
3.4
%
 
1.5
%
 
2

L Brands, Inc.
Bath & Body Works, Pink, Victoria’s Secret
29

 
114,162

 
0.9
%
 
1.5
%
 
7

Levis
Levis
29

 
121,486

 
1.0
%
 
1.4
%
 
5

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

 
140,366

 
1.2
%
 
1.4
%
 
4

Rack Room Shoes, Inc.
Rack Room Shoes
22

 
129,699

 
1.1
%
 
1.4
%
 
2

Total of Top 25 tenants
 
995

 
6,361,907

 
52.8
%
 
57.4
%
 
180

(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 9/30/2019
400726924_tangeroutlet-small93015a06.jpg



Lease Expirations as of September 30, 2019

Percentage of Total Gross Leasable Area (1) 
400726924_chart-580053b53f8a5c2284aa02.jpg

Percentage of Total Annualized Base Rent (1) 
400726924_chart-cbd713acb27552efbdba02.jpg

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


10
Supplemental Operating and Financial Data for the
Quarter Ended 9/30/2019
400726924_tangeroutlet-small93015a06.jpg



Capital expenditures (in thousands)
 
 
Nine months ended
 
 
September 30,
 
 
2019
 
2018
Value-enhancing:
 
 
 
 
New center developments and expansions
 
$
6,913

 
$
6,398

Other
 
1,377

 
1,419

 
 
8,290

 
7,817

Recurring capital expenditures:
 
 
 
 
Second generation tenant allowances
 
15,171

 
11,588

Operational capital expenditures
 
13,758

 
14,510

Major outlet center renovations
 
919

 
1,973

 
 
29,848


28,071

Total additions to rental property-accrual basis
 
38,138

 
35,888

Conversion from accrual to cash basis
 
(2,930
)
 
17,461

Total additions to rental property-cash basis
 
$
35,208

 
$
53,349


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)
9/30/2019
106

520

$
34.02

$
42.35

8.41

$
28.98

9/30/2018
99

478

$
32.92

$
63.74

7.86

$
24.81

 
 
 
 
 
 
 
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)

9/30/2019
239

1,147

$
34.02

$
0.55

3.81

$
33.88

9/30/2018
265

1,343

$
29.79

$
0.26

3.79

$
29.72

 
 
 
 
 
 
 
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)
9/30/2019
345

1,667

$
34.02

$
13.59

5.24

$
31.43

9/30/2018
364

1,821

$
30.61

$
16.93

4.86

$
27.13

(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 9/30/2019
400726924_tangeroutlet-small93015a06.jpg



Leasing Activity(1) 

 
 
 
Excluding Re-Merchanding

 
 
TTM ended

TTM ended

TTM ended

 
All Lease Terms
9/30/2019

9/30/2018

9/30/2018

(2) 
Re-tenanted Space:
 
 
 
 
Number of leases
106

99

96

 
Gross leasable area
520,342

478,289

415,517

 
New initial rent per square foot
$
31.09

$
30.31

$
32.32

 
Prior expiring rent per square foot
$
33.06

$
30.25

$
32.31

 
Percent increase (decrease)
(5.9
)%
0.2
 %
 %
 
 
 
 
 
 
New straight-line rent per square foot
$
34.02

$
32.92

$
35.26

 
Prior straight-line rent per square foot
$
32.71

$
29.98

$
32.00

 
Percent increase
4.0
 %
9.8
 %
10.2
 %
 
 
 
 
 
 
Renewed Space:
 
 
 
 
Number of leases
239

265

265

 
Gross leasable area
1,146,943

1,342,779

1,342,779

 
New initial rent per square foot
$
32.92

$
28.89

$
28.89

 
Prior expiring rent per square foot
$
32.97

$
29.15

$
29.15

 
Percent increase (decrease)
(0.1
)%
(0.9
)%
(0.9
)%
 
 
 
 
 
 
New straight-line rent per square foot
$
34.02

$
29.79

$
29.79

 
Prior straight-line rent per square foot
$
33.40

$
28.46

$
28.46

 
Percent increase
1.9
 %
4.7
 %
4.7
 %
 
 
 
 
 
 
Total Re-tenanted and Renewed Space:
 
 
 
 
Number of leases
345

364

361

 
Gross leasable area
1,667,285

1,821,068

1,758,296

 
New initial rent per square foot
$
32.35

$
29.27

$
29.70

 
Prior expiring rent per square foot
$
33.00

$
29.44

$
29.90

 
Percent increase (decrease)
(2.0
)%
(0.6
)%
(0.6
)%
 
 
 
 
 
 
New straight-line rent per square foot
$
34.02

$
30.61

$
31.09

 
Prior straight-line rent per square foot
$
33.18

$
28.86

$
29.30

 
Percent increase
2.5
 %
6.1
 %
6.1
 %
 

(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 9/30/2019
400726924_tangeroutlet-small93015a06.jpg



Leasing Activity(1) 
 
 
 
Excluding Re-Merchanding

 
 
TTM ended

TTM ended

TTM ended

 
Terms of More Than 12 Months
9/30/2019

9/30/2018

9/30/2018

(2) 
Re-tenanted Space: