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Section 1: 8-K (8-K)

Document
false0000899715 0000899715 2019-07-31 2019-07-31


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): July 31, 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 July 31, 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 June 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 July 31, 2019, the Company made publicly available on its website, www.tangeroutlet.com, certain supplemental operating and financial information for the quarter ended June 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: July 31, 2019


TANGER FACTORY OUTLET CENTERS, INC.

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


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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


EXHIBIT 99.1

News Release
TANGER REPORTS SECOND QUARTER RESULTS
Consolidated Portfolio Occupancy Grows to 96.0%
Traffic and Tenant Sales Increase
2019 Annual Outlook Improves

Greensboro, NC, July 31, 2019, Tanger Factory Outlet Centers, Inc. (NYSE:SKT) today reported financial and operating results for the three and six months ended June 30, 2019.

Second Quarter Results

•
Net income available to common shareholders was $0.15 per share, or $13.6 million, compared to $0.24 per share, or $22.7 million, for the prior year period. The current year period includes $4.4 million, or $0.04 per share, in general and administrative expense for the accelerated recognition of compensation cost related to the planned retirement of an executive officer.
•
Funds from operations (“FFO”) available to common shareholders was $0.52 per share, or $51.5 million, compared to $0.60 per share, or $59.1 million, for the prior year period.
•
Adjusted funds from operations (“AFFO”) available to common shareholders was $0.57 per share, or $55.8 million, compared to $0.60 per share, or $59.1 million, for the prior year period. AFFO, which excludes certain items that the Company does not consider indicative of its ongoing operating performance, excludes the compensation cost discussed above.

Year-to-Date Results

•
Net income available to common shareholders was $0.81 per share, or $75.3 million, compared to $0.48 per share, or $45.2 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, and the $4.4 million, or $0.04 per share, of general and administrative expense discussed above.
•
FFO available to common shareholders was $1.09 per share, or $107.4 million, compared to $1.20 per share, or $118.4 million, for the prior year period.
•
AFFO available to common shareholders was $1.14 per share, or $111.7 million, compared to $1.20 per share, or $118.4 million, for the prior year period. AFFO excludes the compensation cost discussed above.

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.
“I am delighted by our outperformance relative to expectations in the second quarter and year to date, which benefited from strong variable rental contributions and increased occupancy. With better than expected results for the first half, we are raising our guidance for the year. Our unwavering focus on leasing resulted in a 60 basis point sequential increase in consolidated portfolio occupancy to 96% at quarter end. The outlet distribution channel continues to offer a compelling value proposition to retailers because of its low cost of occupancy and high profitability,” said Steven B. Tanger, Chief Executive Officer.

“Our marketing initiatives, including a strategic combination of digital engagement and on-site experiences, helped to drive traffic increases of 2.3% for the quarter and 1.5% for the first half. In addition, same center tenant sales increased 1.5% during the last twelve months. Given the ongoing retail industry transformation, and some known closures going into 2020, we are already proactively addressing anticipated vacancies. We continue to refine our strategy to reaccelerate NOI growth, as we position Tanger to be the first choice among our tenants and consumers,” he added.

Operating Metrics

The Company’s key portfolio results were as follows:

•
Consolidated portfolio occupancy rate was 96.0% on June 30, 2019, compared to 95.4% on March 31, 2019 and 95.6% on June 30, 2018
•
Blended average rental rates decreased 0.6% on a cash basis and increased 3.5% on a straight-line basis for all renewals and re-tenanted leases that commenced during the trailing twelve months ended June 30, 2019

1




•
Lease termination fees totaled $1.4 million for the first half of 2019, including $0.3 million for the second quarter of 2019, compared to $1.1 million for the first half of 2018. No material lease termination fees were recognized during the second quarter of 2018.
•
Same center net operating income (“Same Center NOI”) for the consolidated portfolio decreased 0.1% for the quarter and 0.3% year to date due to the impact of prior bankruptcies, lease modifications and store closures
•
Average tenant sales productivity for the consolidated portfolio was $395 per square foot for the twelve months ended June 30, 2019, compared to $383 per square foot in the comparable prior year period
•
Same center tenant sales performance for the overall portfolio increased 1.5% for the twelve months ended June 30, 2019 compared to the twelve months ended June 30, 2018
•
Occupancy cost ratio for the trailing twelve months ended June 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 June 30, 2019 that were renewed or re-leased for all terms included 338 leases, totaling approximately 1.6 million square feet. Tanger had lease renewals executed or in process for 72.6% of the space in the consolidated portfolio scheduled to expire during the calendar year as of both June 30, 2019 and 2018.

Tanger recaptured approximately 187,000 square feet within its consolidated portfolio during the first half of 2019 related to bankruptcies and brand-wide restructurings by retailers, including 105,000 square feet in the second quarter. During the first half of 2018, 105,000 square feet were recaptured, including 68,000 square feet during the second quarter.

Balance Sheet and Capital Market Activity

As of June 30, 2019:

•
Total enterprise value was $3.2 billion
•
Total outstanding floating rate debt was approximately $55 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 96.9%, or $581.3 million
•
Weighted average interest rate was 3.6% and weighted average term to maturity of outstanding consolidated debt, including extension options, was approximately 5.9 years
•
Approximately 94% of the Company’s consolidated square footage was unencumbered by mortgages
•
Interest coverage ratio was 4.2 times for the first half of 2019
•
FAD payout ratio was 69% for the first half 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.

The Company reduced its exposure to floating rate debt by entering into a forward starting interest rate swap agreement that fixes the base LIBOR rate at 1.75% on $25.0 million of LIBOR-denominated debt from July 1, 2019 through February 1, 2024.

Tanger has reduced its outstanding consolidated debt by $126.6 million since December 31, 2018.

During the first half of 2019, the Company repurchased approximately 558,000 common shares for total consideration of approximately $10.0 million, all of which occurred during the second quarter. As of June 30, 2019, $90.0 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.

Board Refreshment

In July 2019, Tanger announced the appointment of Luis A. Ubiñas to the Company’s Board of Directors effective July 29, 2019 and the planned retirement of the Company’s longest serving independent directors, William G. Benton, Thomas E. Robinson, and Allan L. Schuman, effective at the end of their current terms in May 2020. Along with the addition of Susan E. Skerritt last year and, as part of the Board’s chair rotation practice, the appointment of David B. Henry as Chair in May of this year, these changes demonstrate the board’s commitment to refreshment and diversity.


2




Guidance for 2019

The Company is updating 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:
 
 
 
Low Range
High Range
Estimated diluted net income per share
$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
Gain on sale of assets
(0.44)
(0.44)
Foreign currency loss from sale of joint venture property
0.04
0.04
Other
0.01

0.01

Estimated diluted FFO per share
$2.21
$2.27
AFFO adjustment per share
0.04

0.04

Estimated diluted AFFO per share
$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 (1.50)% to (2.25)% from the previous range of (2.00)% to (2.75)%, which reflects the following:
◦
Outperformance of the Company’s forecast for the first half of 2019
◦
Projected 2019 store closings related to tenant bankruptcies and restructurings of up to 225,000 square feet for the consolidated portfolio, excluding the Dressbarn stores, which are expected to remain open through December 31, 2019
◦
Projected average occupancy for the year between 94.75% and 95.25%
•
Projected full-year lease termination fees (which are not included in Same Center NOI) of approximately $1.5 million for the consolidated portfolio
•
Increase in estimated incremental annual revenue from the straight-line recognition of fixed common area maintenance related to the implementation of the new lease standard effective January 1, 2019 to approximately $6.0 million, or $0.06 per share, from the previous estimate of approximately $5.0 million, or $0.05 per share
•
Average general and administrative expense between $12.0 million and $12.4 million per quarter for the remainder of 2019. This range also reflects the implementation of the new lease standard, which is currently expected to result in incremental 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 $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

Second Quarter Conference Call

Tanger will host a conference call to discuss its second quarter results for analysts, investors and other interested parties on Thursday, August 1, 2019, at 8:30 a.m. Eastern Time. To access the conference call, listeners should dial 1-877-277-5113 and provide conference ID # 3587452 to be connected to the Tanger Factory Outlet Centers Second 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 August 1, 2019 at 11:00 a.m. through August 8, 2019 at 11:59 p.m. by dialing 1-855-859-2056, conference ID # 3587452. An online archive of the webcast will also be available through August 8, 2019.


3




About Tanger Factory Outlet Centers, Inc.

Tanger Factory Outlet Centers, Inc. (NYSE: SKT), is a publicly-traded REIT headquartered in Greensboro, North Carolina that 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 2,800 stores which are 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 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 June 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 value proposition to retailers, 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; risks 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; 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    
cyndi.holt@tangeroutlets.com    jim.williams@tangeroutlets.com


Media Contact Information

Quentin Pell
VP, Corporate Communications and Enterprise Risk Management
336-834-6827    
quentin.pell@tangeroutlets.com    
        

4



TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
 
Three months ended
 
Six months ended
 
June 30,
 
June 30,
 
2019
 
2018
 
2019
 
2018
Revenues:
 
 
 
 
 
 
 
Rental revenues (1)
$
112,385

 
$
116,518

 
$
232,339

 
$
237,174

Management, leasing and other services (2)
1,245

 
1,142

 
2,587

 
2,340

Other revenues
2,077

 
2,051

 
3,936

 
3,732

Total revenues
115,707

 
119,711

 
238,862

 
243,246

Expenses:
 
 
 
 
 
 
 
Property operating
36,726

 
37,946

 
79,103

 
80,164

General and administrative (3), (4)
16,473

 
10,997

 
28,618

 
22,109

Depreciation and amortization
31,146

 
32,694

 
62,906

 
65,817

Total expenses
84,345

 
81,637

 
170,627

 
168,090

Other income (expense):
 
 
 
 
 
 
 
Interest expense
(15,134
)
 
(16,181
)
 
(31,441
)
 
(31,981
)
Gain on sale of assets
—

 
—

 
43,422

 
—

Other income (expense) (5)
(3,417
)
 
191

 
(3,193
)
 
400

Total other income (expense)
(18,551
)
 
(15,990
)
 
8,788

 
(31,581
)
Income before equity in earnings of unconsolidated joint ventures
12,811

 
22,084

 
77,023

 
43,575

Equity in earnings of unconsolidated joint ventures
1,646

 
2,206

 
3,275

 
4,400

Net income
14,457

 
24,290

 
80,298

 
47,975

Noncontrolling interests in Operating Partnership
(730
)
 
(1,229
)
 
(4,045
)
 
(2,446
)
Noncontrolling interests in other consolidated partnerships
—

 
(92
)
 
(195
)
 
278

Net income attributable to Tanger Factory Outlet Centers, Inc.
13,727

 
22,969

 
76,058

 
45,807

Allocation of earnings to participating securities
(114
)
 
(313
)
 
(725
)
 
(576
)
Net income available to common shareholders of
Tanger Factory Outlet Centers, Inc.
$
13,613

 
$
22,656

 
$
75,333

 
$
45,231

 
 
 
 
 
 
 
 
Basic earnings per common share:
 
 
 
 
 
 
 
Net income
$
0.15

 
$
0.24

 
$
0.81

 
$
0.48

 
 
 
 
 
 
 
 
Diluted earnings per common share:
 
 
 
 
 
 
 
Net income
$
0.15

 
$
0.24

 
$
0.81

 
$
0.48

(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 six months ended June 30, 2019, rental revenues is presented net of uncollectible tenant revenues and includes a straight-line rent adjustment of $1.7 million and $3.2 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 $512,000 and $1.1 million, respectively, previously included in expense reimbursements for the three and six months ended June 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 six months ended June 30, 2019, lease costs of approximately $1.1 million and $2.1 million, respectively, were expensed as general and administrative expenses which would have been capitalized under the previous accounting standard.

(4)
The three and six months ended June 30, 2019 include $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 three and six months ended June 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.



5




TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(Unaudited)
 
June 30,
 
December 31,
 
2019
 
2018
Assets
 
 
 
   Rental property:
 
 
 
   Land
$
267,966

 
$
278,428

   Buildings, improvements and fixtures
2,651,300

 
2,764,649

   Construction in progress
—

 
3,102

 
2,919,266

 
3,046,179

   Accumulated depreciation
(966,805
)
 
(981,305
)
      Total rental property, net
1,952,461

 
2,064,874

   Cash and cash equivalents
7,379

 
9,083

   Investments in unconsolidated joint ventures
96,299

 
95,969

   Deferred lease costs and other intangibles, net
104,286

 
116,874

   Operating lease right-of-use assets (1)
87,430

 
—

   Prepaids and other assets
95,913

 
98,102

         Total assets
$
2,343,768

 
$
2,384,902

 
 
 
 
Liabilities and Equity
 
 
 
Liabilities
 
 
 
   Debt:
 
 
 
Senior, unsecured notes, net
$
1,137,629

 
$
1,136,663

Unsecured term loan, net
347,102

 
346,799

Mortgages payable, net
85,661

 
87,471

Unsecured lines of credit, net
15,917

 
141,985

Total debt
1,586,309

 
1,712,918

Accounts payable and accrued expenses
60,324

 
82,676

Operating lease liabilities (1)
92,092

 
—

Other liabilities
88,235

 
83,773

         Total liabilities
1,826,960

 
1,879,367

Commitments and contingencies
 
 
 
Equity
 
 
 
Tanger Factory Outlet Centers, Inc.:
 
 
 
Common shares, $.01 par value, 300,000,000 shares authorized, 93,544,267 and 93,941,783 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively
935

 
939

   Paid in capital
778,026

 
778,845

   Accumulated distributions in excess of net income
(262,764
)
 
(272,454
)
   Accumulated other comprehensive loss
(25,415
)
 
(27,151
)
         Equity attributable to Tanger Factory Outlet Centers, Inc.
490,782

 
480,179

Equity attributable to noncontrolling interests:
 
 
 
Noncontrolling interests in Operating Partnership
26,026

 
25,356

Noncontrolling interests in other consolidated partnerships
—

 
—

         Total equity
516,808

 
505,535

            Total liabilities and equity
$
2,343,768

 
$
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.


6




TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
CENTER INFORMATION
(Unaudited)
 
 
June 30,
 
 
2019
 
2018
Gross leasable area open at end of period (in thousands):
 
 
 
 
Consolidated
 
12,047

 
12,919

Partially owned - unconsolidated
 
2,210

 
2,370

Total
 
14,257

 
15,289

 
 
 
 
 
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)
 
96.0
%
 
95.6
%
(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 and gains or losses on the sale of outparcels recognized during the periods presented. We define Same Center NOI as Portfolio NOI for the properties that were operational for the entire portion of both comparable reporting periods and which were not acquired or subject to a material expansion or non-recurring event, such as a natural disaster, during the comparable reporting periods.

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

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



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
 
Six months ended
 
 
June 30,
 
June 30,
 
 
2019
 
2018
 
2019
 
2018
Net income
 
$
14,457

 
$
24,290

 
$
80,298

 
$
47,975

Adjusted for:
 
 
 
 
 
 
 
 
Depreciation and amortization of real estate assets - consolidated
 
30,550

 
32,062

 
61,698

 
64,604

Depreciation and amortization of real estate assets - unconsolidated joint ventures
 
3,265

 
3,325

 
6,395

 
6,554

Foreign currency loss from sale of joint venture property
 
3,641

 
—

 
3,641

 
—

Gain on sale of assets
 
—

 
—

 
(43,422
)
 
—

FFO
 
51,913

 
59,677

 
108,610

 
119,133

FFO attributable to noncontrolling interests in other consolidated partnerships
 
—

 
(92
)
 
(195
)
 
278

Allocation of earnings to participating securities
 
(410
)
 
(534
)
 
(1,021
)
 
(1,011
)
FFO available to common shareholders (1)
 
$
51,503

 
$
59,051

 
$
107,394

 
$
118,400

As further adjusted for:
 
 
 
 
 
 
 
 
Compensation related to executive officer retirement (2)
 
$
4,371

 
$
—

 
$
4,371

 
$
—

Impact of above adjustment to the allocation of earnings to participating securities
 
(35
)
 
—

 
(35
)
 
—

AFFO available to common shareholders (1)
 
$
55,839

 
$
59,051

 
$
111,730

 
$
118,400

FFO available to common shareholders per share - diluted (1)
 
$
0.52

 
$
0.60

 
$
1.09

 
$
1.20

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

 
$
0.60

 
$
1.14

 
$
1.20

 
 
 
 
 
 
 
 
 
Weighted Average Shares:
 
 
 
 
 
 
 
 
Basic weighted average common shares
 
93,187

 
93,298

 
93,245

 
93,470

Diluted weighted average common shares (for earnings per share computations)
 
93,187

 
93,298

 
93,245

 
93,470

Exchangeable operating partnership units
 
4,960

 
4,996

 
4,960

 
4,996

Diluted weighted average common shares (for FFO and AFFO per share computations) (1)
 
98,147

 
98,294

 
98,205

 
98,466

(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
 
Six months ended
 
 
June 30,
 
June 30,
 
 
2019
 
2018
 
2019
 
2018
FFO available to common shareholders
 
$
51,503

 
$
59,051

 
$
107,394

 
$
118,400

Adjusted for:
 
 
 
 
 
 
 
 
Corporate depreciation excluded above
 
596

 
632

 
1,208

 
1,213

Amortization of finance costs
 
750

 
749

 
1,497

 
1,532

Amortization of net debt discount (premium)
 
111

 
103

 
220

 
204

Amortization of equity-based compensation
 
6,982

 
3,653

 
10,800

 
7,045

Straight-line rent adjustments
 
(2,916
)
 
(1,346
)
 
(4,886
)
 
(3,294
)
Market rent adjustments
 
273

 
689

 
753

 
1,251

2nd generation tenant allowances
 
(3,076
)
 
(5,400
)
 
(6,050
)
 
(8,326
)
Capital improvements
 
(6,848
)
 
(8,198
)
 
(9,897
)
 
(10,920
)
Adjustments from unconsolidated joint ventures
 
(798
)
 
(148
)
 
(1,204
)
 
(419
)
FAD available to common shareholders (1)
 
$
46,577

 
$
49,785

 
$
99,835

 
$
106,686

Dividends per share
 
$
0.3550

 
$
0.3500

 
$
0.7050

 
$
0.6925

FFO payout ratio
 
68
%
 
58
%
 
65
%
 
58
%
FAD payout ratio
 
76
%
 
69
%
 
69
%
 
64
%
Diluted weighted average common shares (1)
 
98,147

 
98,294

 
98,205

 
98,466

(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
 
Six months ended
 
 
June 30,
 
June 30,
 
 
2019
 
2018
 
2019
 
2018
Net income
 
$
14,457

 
$
24,290

 
$
80,298

 
$
47,975

Adjusted to exclude:
 
 
 
 
 
 
 
 
Equity in earnings of unconsolidated joint ventures
 
(1,646
)
 
(2,206
)
 
(3,275
)
 
(4,400
)
Interest expense
 
15,134

 
16,181

 
31,441

 
31,981

Gain on sale of assets
 
—

 
—

 
(43,422
)
 
—

Other non-operating (income) expense
 
3,417

 
(191
)
 
3,193

 
(400
)
Depreciation and amortization
 
31,146

 
32,694

 
62,906

 
65,817

Other non-property expenses
 
180

 
(13
)
 
331

 
374

Corporate general and administrative expenses
 
16,635

 
10,943

 
28,767

 
21,702

Non-cash adjustments (1)
 
(2,628
)
 
(638
)
 
(4,100
)
 
(2,004
)
Lease termination fees
 
(269
)
 
(13
)
 
(1,399
)
 
(1,064
)
Portfolio NOI
 
76,426

 
81,047

 
154,740

 
159,981

Non-same center NOI (2)
 
(23
)
 
(4,558
)
 
(4,108
)
 
(8,926
)
Same Center NOI
 
$
76,403

 
$
76,489

 
$
150,632

 
$
151,055

(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
398990613_tangerlargea01a03a06.jpg
Tanger Factory Outlet Centers, Inc.
  
Supplemental Operating and Financial Data
June 30, 2019



Supplemental Operating and Financial Data for the
Quarter Ended 6/30/2019

398990613_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 6/30/2019
398990613_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 June 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 6/30/2019
398990613_tangeroutlet-small93015a05.jpg


Geographic Diversification
As of June 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

 
999,549

 
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

 
410,734

 
3
%
Florida
1

 
351,721

 
3
%
Missouri
1

 
329,861

 
3
%
Mississippi
1

 
324,716

 
3
%
Louisiana
1

 
321,066

 
3
%
Connecticut
1

 
311,529

 
3
%
New Hampshire
1

 
250,107

 
2
%
Total
32

 
12,047,228

 
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
%
Saint-Sauveur, QC
1

 
99,405

 
50.00
%
Total
7

 
2,210,000

 
 
 
 
 
 
 
 
Grand Total
39

 
14,257,228

 
 



4
Supplemental Operating and Financial Data for the
Quarter Ended 6/30/2019
398990613_tangeroutlet-small93015a05.jpg


Property Summary - Occupancy at End of Each Period Shown
Consolidated properties
Location
Total GLA
6/30/19
 
% Occupied
6/30/19
 
% Occupied
3/31/19
 
% Occupied
6/30/18
 
Deer Park, NY
739,109

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

 
96
%
 
95
%
 
92
%
 
Rehoboth Beach, DE
557,353

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

 
92
%
 
94
%
 
95
%
 
Atlantic City, NJ
489,706

 
78
%
 
80
%
 
87
%
 
San Marcos, TX
471,816

 
92
%
 
95
%
 
96
%
 
Sevierville, TN
447,815

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

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

 
99
%
 
98
%
 
88
%
 
Jeffersonville, OH
411,867

 
94
%
 
94
%
 
96
%
 
Glendale, AZ (Westgate)
410,734

 
95
%
 
97
%
 
97
%
 
Myrtle Beach Hwy 17, SC
403,425

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

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

 
95
%
 
92
%
 
92
%
 
Pittsburgh, PA
372,856

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

 
99
%
 
94
%
 
96
%
 
Grand Rapids, MI
357,103

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

 
96
%
 
97
%
 
97
%
 
Daytona Beach, FL
351,721

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

 
100
%
 
98
%
 
99
%
 
Southaven, MS
324,716

 
97
%
 
94
%
 
94
%
 
Locust Grove, GA
321,082

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

 
94
%
 
96
%
 
98
%
 
Mebane, NC
318,886

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

 
92
%
 
92
%
 
94
%
 
Mashantucket, CT (Foxwoods)
311,529

 
94
%
 
93
%
 
95
%
 
Tilton, NH
250,107

 
95
%
 
96
%
 
94
%
 
Hershey, PA
249,696

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

 
97
%
 
88
%
 
92
%
 
Hilton Head I, SC
181,670

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

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

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

 
N/A

 
N/A

 
100
%
 
Ocean City, MD
N/A

 
N/A

 
N/A

 
96
%
 
Park City, UT
N/A

 
N/A

 
N/A

 
94
%
 
Williamsburg, IA
N/A

 
N/A

 
N/A

 
93
%
 
Total
12,047,228

 
96
%
 
95
%
 
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 6/30/2019
398990613_tangeroutlet-small93015a05.jpg


Unconsolidated joint venture properties
Location
Total GLA
6/30/19
 
% Occupied
6/30/19
 
% Occupied
3/31/19
 
% Occupied
6/30/18
 
Charlotte, NC
398,697

 
98
%
 
97
%
 
99
%
 
Columbus, OH
355,245

 
94
%
 
95
%
 
95
%
 
Ottawa, ON
355,013

 
95
%
 
94
%
 
94
%
 
Texas City, TX (Galveston/Houston)
352,705

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

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

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

 
94
%
 
94
%
 
89
%
 
Bromont, QC
N/A

 
N/A

 
77
%
 
73
%
 
Total
2,210,000

 
96
%
 
95
%
 
94
%
 


6
Supplemental Operating and Financial Data for the
Quarter Ended 6/30/2019
398990613_tangeroutlet-small93015a05.jpg


Portfolio Occupancy at the End of Each Period (1) 
398990613_chart-13d00d567d95592e937.jpg
(1) Excludes unconsolidated outlet centers. See table on page 4.




7
Supplemental Operating and Financial Data for the
Quarter Ended 6/30/2019
398990613_tangeroutlet-small93015a05.jpg


Average Tenant Sales Per Square Foot by Outlet Center Ranking As of June 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
$
526

98
%
2,793

24
%
32
%
Centers 6 - 10
$
444

98
%
1,847

15
%
17
%
Centers 11 - 15
$
401

92
%
1,655

14
%
14
%
Centers 16 - 20
$
358

95
%
1,906

16
%
16
%
Centers 21 - 26
$
320

95
%
2,104

17
%
13
%
Centers 27 - 32
$
265

97
%
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
$
526

98
%
2,793

24
%
32
%
Centers 1 - 10
$
491

98
%
4,640

39
%
49
%
Centers 1 - 15
$
467

96
%
6,295

53
%
63
%
Centers 1 - 20
$
440

96
%
8,201

69
%
79
%
Centers 1 - 26
$
416

96
%
10,305

86
%
92
%
Centers 1 - 32
$
395

96
%
12,047

100
%
100
%
 
 
 
 
 
 
Unconsolidated centers (4)
$
443

96
%
1,448

n/a

n/a

Domestic centers (5)
$
400

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 June 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
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 (none). The Company’s forecast is based on management’s estimates as of June 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
 
(5)
Includes consolidated portfolio and domestic unconsolidated joint ventures

8
Supplemental Operating and Financial Data for the
Quarter Ended 6/30/2019
398990613_tangeroutlet-small93015a05.jpg


Top 25 Tenants Based on Percentage of Total Annualized Base Rent
As of June 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
119

 
726,940

 
6.0
%
 
6.5
%
 
16

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

 
947,819

 
7.9
%
 
6.0
%
 
18

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

 
384,811

 
3.2
%
 
4.0
%
 
14

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, Stuart Weitzman
45

 
211,743

 
1.8
%
 
2.6
%
 
11

American Eagle Outfitters, Inc.
American Eagle Outfitters, Aerie
37

 
258,849

 
2.1
%
 
2.5
%
 
7

G-III Apparel Group, Ltd.
Bass, Wilson’s Leather, Donna Karan
46

 
215,746

 
1.8
%
 
2.4
%
 
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
35

 
177,508

 
1.5
%
 
1.8
%
 
2

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

 
130,131

 
1.1
%
 
1.8
%
 
6

Adidas AG
Adidas, Reebok
27

 
168,478

 
1.4
%
 
1.7
%
 
9

Ralph Lauren Corporation
Polo Ralph Lauren, Polo Children, Polo Ralph Lauren Big & Tall
31

 
341,280

 
2.8
%
 
1.7
%
 
5

Skechers USA, Inc.
Skechers
30

 
149,167

 
1.2
%
 
1.6
%
 
6

Columbia Sportswear Company
Columbia Sportswear
18

 
137,716

 
1.1
%
 
1.6
%
 
3

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

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

 
140,366

 
1.2
%
 
1.5
%
 
4

Express Inc.
Express Factory
23

 
160,730

 
1.3
%
 
1.5
%
 
4

Brooks Brothers Group, Inc.
Brooks Brothers
24

 
143,625

 
1.2
%
 
1.5
%
 
5

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

 
113,162

 
0.9
%
 
1.4
%
 
7

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

 
407,342

 
3.4
%
 
1.4
%
 
2

Rack Room Shoes, Inc.
Rack Room Shoes
22

 
129,699

 
1.1
%
 
1.4
%
 
2

Total of Top 25 tenants
 
992

 
6,385,849

 
53.0
%
 
57.5
%
 
179

(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 6/30/2019
398990613_tangeroutlet-small93015a05.jpg


Lease Expirations as of June 30, 2019

Percentage of Total Gross Leasable Area (1) 
398990613_chart-983c00824b3751f3989.jpg

Percentage of Total Annualized Base Rent (1) 
398990613_chart-13234f6dbc4a50cd840.jpg

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


10
Supplemental Operating and Financial Data for the
Quarter Ended 6/30/2019
398990613_tangeroutlet-small93015a05.jpg


Capital expenditures (in thousands)
 
 
Six months ended
 
 
June 30,
 
 
2019
 
2018
Value-enhancing:
 
 
 
 
New center developments and expansions
 
$
4,010

 
$
5,285

Other
 
686

 
—

 
 
4,696

 
5,285

Recurring capital expenditures:
 
 
 
 
Second generation tenant allowances
 
6,050

 
8,326

Operational capital expenditures
 
9,607

 
9,134

Major outlet center renovations
 
290

 
1,786

 
 
15,947


19,246

Total additions to rental property-accrual basis
 
20,643

 
24,531

Conversion from accrual to cash basis
 
1,759

 
16,681

Total additions to rental property-cash basis
 
$
22,402

 
$
41,212


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)
June 30, 2019
83

420

$
33.93

$
43.37

8.65

$
28.92

June 30, 2018
103

457

$
33.54

$
69.41

7.75

$
24.58

 
 
 
 
 
 
 
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)

June 30, 2019
255

1,200

$
34.58

$
0.58

3.78

$
34.43

June 30, 2018
261

1,349

$
29.92

$
0.11

3.63

$
29.89

 
 
 
 
 
 
 
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)
June 30, 2019
338

1,620

$
34.42

$
11.66

5.04

$
32.11

June 30, 2018
364

1,806

$
30.84

$
17.65

4.80

$
27.16

(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 6/30/2019
398990613_tangeroutlet-small93015a05.jpg


Leasing Activity(1) 

 
 
 
Excluding Re-Merchanding

 
 
TTM ended

TTM ended

TTM ended

 
All Lease Terms
6/30/2019

6/30/2018

6/30/2018

(2) 
Re-tenanted Space:
 
 
 
 
Number of leases
83

103

97

 
Gross leasable area
419,627

457,095

335,755

 
New initial rent per square foot
$
30.69

$
31.25

$
37.35

 
Prior expiring rent per square foot
$
30.90

$
31.37

$
34.78

 
Percent increase (decrease)
(0.7
)%
(0.4
)%
7.4
 %
 
 
 
 
 
 
New straight-line rent per square foot
$
33.93

$
33.54

$
40.41

 
Prior straight-line rent per square foot
$
31.37

$
30.86

$
34.20

 
Percent increase
8.2
 %
8.7
 %
18.2
 %
 
 
 
 
 
 
Renewed Space:
 
 
 
 
Number of leases
255

261

261

 
Gross leasable area
1,199,972

1,348,935

1,348,935

 
New initial rent per square foot
$
33.44

$
28.86

$
28.86

 
Prior expiring rent per square foot
$
33.64

$
29.15

$
29.15

 
Percent increase (decrease)
(0.6
)%
(1.0
)%
(1.0
)%
 
 
 
 
 
 
New straight-line rent per square foot
$
34.58

$
29.92

$
29.92

 
Prior straight-line rent per square foot
$
33.91

$
28.38

$
28.38

 
Percent increase
2.0
 %
5.4
 %
5.4
 %
 
 
 
 
 
 
Total Re-tenanted and Renewed Space:
 
 
 
 
Number of leases
338

364

358

 
Gross leasable area
1,619,599

1,806,030

1,684,690

 
New initial rent per square foot
$
32.73

$
29.47

$
30.55

 
Prior expiring rent per square foot
$
32.93

$
29.71

$
30.27

 
Percent increase (decrease)
(0.6
)%
(0.8
)%
0.9
 %
 
 
 
 
 
 
New straight-line rent per square foot
$
34.42

$
30.84

$
32.01

 
Prior straight-line rent per square foot
$
33.26

$
29.01

$
29.54

 
Percent increase
3.5
 %
6.3
 %
8.4
 %
 

(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 6/30/2019
398990613_tangeroutlet-small93015a05.jpg


Leasing Activity(1) 
 
 
 
Excluding Re-Merchanding

 
 
TTM ended

TTM ended

TTM ended

 
Terms of More Than 12 Months
6/30/2019

6/30/2018

6/30/2018

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

102

96

 
Gross leasable area
414,377

448,749

327,409

 
New initial rent per square foot
$
30.65

$
31.72

$
38.15

 
Prior expiring rent per square foot
$
30.73

$
31.70

$
35.32

 
Percent increase (decrease)
(0.3
)%
0.1
%
8.0
%
 
 
 
 
 
 
New straight-line rent per square foot
$
33.93

$