Tanger Reports First Quarter 2009 Results

Funds From Operation Increases 12.8%, Same Center Net Operating Income Up 2.4%

GREENSBORO, N.C., April 23 /PRNewswire-FirstCall/ -- Tanger Factory Outlet Centers, Inc. (NYSE: SKT) today reported funds from operations ("FFO") available to common shareholders, a widely accepted supplemental measure of REIT performance, for the three months ended March 31, 2009 was $24.7 million, or $0.66 per share, as compared to FFO of $21.9 million, or $0.59 per share, for the three months ended March 31, 2008, representing a 12.8% increase in total FFO and a 11.9% increase in FFO per share. Net income available to common shareholders for the three months ended March 31, 2009 was $28.9 million, or $0.92 per share, as compared to net income of $4.9 million, or $0.16 per share for the first quarter of 2008.

Net income and FFO per share amounts above are on a diluted basis. FFO is a supplemental non-GAAP financial measure used as a standard in the real estate industry to measure and compare the operating performance of real estate companies. A complete reconciliation containing adjustments from GAAP net income to FFO is included in this release.

First Quarter Highlights

  • Dividend increase approved by Board of Directors to raise the quarterly common share cash dividend from $0.38 to $0.3825 per share, $1.53 per share annualized, representing the 16th consecutive year of increased dividends
  • Announced exchange offer for 3.75% Exchangeable Senior Notes
  • 2.4% increase in same center net operating income
  • 14.5% increase in average base rental rates on leases renewed during the quarter, compared to 17.9% last year
  • 42.4% increase in average base rental rates on released space during the quarter, compared to 41.7% last year
  • 93.5% period-end wholly-owned portfolio occupancy rate, compared to 95.3% last year
  • $338 per square foot in reported tenant comparable sales for the rolling twelve months ended March 31, 2009

Steven B. Tanger, President and Chief Executive Officer, commented, "During the first quarter we announced that our board of directors had approved an increase in our common share dividend for the 16th consecutive year. We also announced the exchange offer relating to our 3.75% Exchangeable Senior Notes. With a successful completion of this offering, our 2011 debt maturities will be substantially reduced."

Portfolio Operating Results

During the first quarter of 2009, Tanger executed 213 leases, totaling 994,000 square feet throughout its wholly-owned portfolio. Lease renewals during the first quarter accounted for 806,000 square feet, generated a 14.5% increase in average base rental rates and represented 53.8% of the square feet originally scheduled to expire during 2009. Average base rental increases on re-tenanted space during the first quarter averaged 42.4% and accounted for the remaining 188,000 square feet.

Same center net operating income increased 2.4% for the first quarter of 2009 compared to 2.5% in the fourth quarter of 2008 and 5.7% in the first quarter of 2008. Reported tenant comparable sales for our wholly owned properties for the rolling twelve months ended March 31, 2009 decreased 3.2% to $338 per square foot due to the current downturn in the economy. Reported tenant comparable sales numbers exclude our centers in Foley, Alabama and on Highway 501 in Myrtle Beach, South Carolina, both of which underwent major renovations during last year.

Cash Dividend Increased

On April 9, 2009, Tanger announced that its Board of Directors approved an increase in the annual cash dividend on its common shares from $1.52 per share to $1.53 per share. Simultaneously, the Board of Directors declared a quarterly dividend of $0.3825 per share for the first quarter ended March 31, 2009. A cash dividend of $0.3825 per share will be payable on May 15, 2009 to holders of record on April 30, 2009. Tanger has increased its dividend each year since becoming a public company in May of 1993.

Exchange Offer Launched

On April 9, 2009, Tanger also announced that it had commenced an offer to exchange common shares of Tanger for any and all of the outstanding 3.75% Exchangeable Senior Notes due 2026 of Tanger Properties Limited Partnership. For each $1,000 principal amount of exchangeable notes validly tendered, note holders will receive 27.7434 common shares, which represents an exchange price of approximately $36.04 per share, plus $215 paid in the form of additional common shares (based on the average of the volume weighted average prices of Tanger's common shares over an eight trading day averaging period beginning April 24, 2009 and ending May 5, 2009), subject to a minimum and a maximum number of common shares as described in the prospectus for the offer. Holders will also receive a cash payment for accrued and unpaid interest on the exchangeable notes up to but not including the settlement date. The offer is scheduled to expire at 5:00 p.m., New York City time, on Thursday, May 7, 2009. As of April 8, 2009, there was $149,500,000 principal amount of 3.75% Exchangeable Notes outstanding.

Balance Sheet Summary

As of March 31, 2009, Tanger had a total market capitalization of approximately $2.1 billion including $849.2 million of debt outstanding, equating to a 40.5% debt-to-total market capitalization ratio. As of March 31, 2009, 77.8% of Tanger's debt was at fixed interest rates and the company had $188.4 million outstanding on its $325.0 million in available unsecured lines of credit. During the first quarter of 2009, Tanger continued to maintain a strong interest coverage ratio of 3.34 times, compared to 3.22 times during the first quarter of last year.

2009 FFO Per Share Guidance

Based on current market conditions and the strength and stability of its core portfolio, the company currently believes its net income available to common shareholders for 2009 will be between $1.35 and $1.45 per share and its FFO available to common shareholders for 2009 will be between $2.73 and $2.83 per share. The company's earnings estimates do not include the impact of the exchange offer described above, nor any potential gains on the sale of land parcels or the impact of any potential sales or acquisitions of properties. The following table provides the reconciliation of estimated diluted net income available to common shareholders per share to estimated diluted FFO available to common shareholders per share:


     For the twelve months ended December 31,
      2009:
                                                  Low Range   High Range
     Estimated diluted net income per share          $1.35       $1.45
     Non-controlling interest, gain/loss on
      acquisition of real estate, depreciation
      and amortization uniquely significant to
      real estate including non-controlling
      interest share and our share of joint
      ventures                                        1.38        1.38
     Estimated diluted FFO per share                 $2.73       $2.83

First Quarter Conference Call

Tanger will host a conference call to discuss its first quarter results for analysts, investors and other interested parties on Friday, April 24, 2009, at 10:00 A.M. eastern time. To access the conference call, listeners should dial 1-877-277-5113 and request to be connected to the Tanger Factory Outlet Centers First Quarter Financial Results call. Alternatively, the call will be web cast by CCBN and can be accessed at Tanger Factory Outlet Centers, Inc.'s web site at http://www.tangeroutlet.com/investorrelations/news/ under the News Releases section. A telephone replay of the call will be available from April 24, 2009 starting at 1:00 P.M. Eastern Time through May 1, 2009, by dialing 1-800-642-1687 (conference ID # 92097927). Additionally, an online archive of the broadcast will also be available through May 1, 2009.

About Tanger Factory Outlet Centers

Tanger Factory Outlet Centers, Inc.(NYSE: SKT), a fully integrated, self-administered and self-managed publicly traded REIT, presently owns and operates 31 outlet centers in 21 states coast to coast, totaling approximately 9.2 million square feet of gross leasable area. Tanger also manages for a fee and owns an interest in two outlet centers containing approximately 950,000 square feet. Tanger is filing a Form 8-K with the Securities and Exchange Commission that includes a supplemental information package for the quarter ended March 31, 2009. For more information on Tanger Outlet Centers, visit our web site at www.tangeroutlet.com.

Estimates of future net income per share and FFO per share are by definition, and certain other matters discussed in this press release regarding our re-merchandising strategy, the renewal and re-tenanting of space, tenant sales and sales trends, interest rates, funds from operations, the development of new centers, and coverage of the current dividend may be forward-looking statements within the meaning of the federal securities laws. These forward-looking statements are 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 local real estate conditions, the company's ability to meet its obligations on existing indebtedness or refinance existing indebtedness on favorable terms, the availability and cost of capital, the company's ability to lease its properties, the company's inability to collect rent due to the bankruptcy or insolvency of tenants or otherwise, and competition. 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, 2008.

                 TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF OPERATIONS
                       (In thousands, except per share data)
                                   (Unaudited)

                                                   Three Months Ended
                                                        March 31,
                                                   2009            2008
     Revenues
        Base rentals (a)                        $42,927         $37,232
        Percentage rentals                        1,308           1,178
        Expense reimbursements                   19,219          17,478
        Other income                              1,704           1,388
               Total revenues                    65,158          57,276
     Expenses
        Property operating                       21,748          19,219
        General and administrative                5,935           5,271
        Depreciation and amortization (b)        20,397          15,583
              Total expenses                     48,080          40,073
     Operating income                            17,078          17,203
        Interest expense (c)                     11,210          10,199
     Income before equity in earnings (loss)
      of unconsolidated joint ventures and
      gain on fair value measurement of
      previously held interest in acquired
      joint venture                               5,868           7,004
     Equity in earnings (loss) of
      unconsolidated joint ventures (d)            (897)            394
     Income from continuing operations            4,971           7,398
     Gain on fair value measurement of
      previously held interest in acquired
      joint venture (e)                          31,497              --
     Net income                                  36,468           7,398
     Preferred share dividends                   (1,406)         (1,406)
     Non-controlling interest in operating
      partnership                                (5,698)           (981)
     Allocation to participating securities
      (f)                                          (437)           (139)
     Net income available to common
      shareholders                              $28,927          $4,872

     Basic earnings per common share available
      to common shareholders:
        Income from continuing operations          $.93            $.16
        Net income                                  .93             .16

     Diluted earnings per common share
      available to common shareholders:
        Income from continuing operations          $.92            $.16
        Net income                                  .92             .16


    (a) Includes straight-line rent and market rent adjustments of $699 and
        $683 for the three months ended March 31, 2009 and 2008,
        respectively.
    (b) Includes accelerated deprecation and amortization of approximately
        $1.2 million for the three months ended March 31, 2009 as a result of
        the change in estimated useful life of the Hilton Head I, South
        Carolina center to three years based on our redevelopment plan for
        the center.  The accelerated depreciation and amortization reduced
        income from continuing operations and net income by approximately $.03
        per share for the three months ended March 31, 2009.
    (c) In accordance with FSP APB 14-1 "Accounting for Convertible Debt
        Instruments That May Be Settled in Cash upon Conversion (Including
        Partial Cash Settlement)", the results of operations for all prior
        periods presented for which such instruments were outstanding have
        been restated.
    (d) Includes Wisconsin Dells, Wisconsin property for the 2009 and 2008
        periods which is operated by us through 50% ownership joint venture.
        Includes Myrtle Beach, South Carolina Hwy 17 property for the 2008
        period during which period it was operated by us through a 50%
        ownership joint venture.  We acquired the remaining 50% interest in
        January 2009.  Includes Deer Park, New York property for the 2009
        period which is operated by us through a 33.3% ownership joint
        venture.  Includes our share of losses incurred by the Deer Park
        property, which opened during October 2008, totaling $1.1 million due
        to depreciation charges and leverage on the project.  However, we
        expect results to improve during the stabilization of the property in
        its first year of operation.
    (e) Represents FAS 141R "Business Combinations", gain on fair value
        measurement of our previously held interest in the Myrtle Beach Hwy
        17 joint venture upon acquisition on January 5, 2009.
    (f) In accordance with EITF 03-06-1 "Determining Whether Instruments
        Granted in Share-Based Payment Transactions Are Participating
        Securities", represents earnings allocated to unvested restricted
        share awards that contain non-forfeitable rights to dividends or
        dividend equivalents.



               TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                 (In thousands, except share and per share data)
                                 (Unaudited)


                                               March 31,       December 31,
                                                 2009             2008



    ASSETS:
      Rental property
      Land                                     $135,710          $135,689
      Building, improvement and
       fixtures                               1,348,211         1,260,243
      Construction in progress                    4,805             3,823
                                              1,488,726         1,399,755
      Accumulated depreciation                 (374,541)         (359,301)
      Rental property, net                    1,114,185         1,040,454
      Cash and cash equivalents                   3,101             4,977
      Investments in unconsolidated
       joint ventures                             9,773             9,496
      Deferred charges, net                      48,294            37,750
      Other assets                               34,010            29,248
      Total assets                           $1,209,363        $1,121,925

    LIABILITIES AND EQUITY
    Liabilities
      Debt
      Senior, unsecured notes (net
       of discounts of $8,367 and
       $9,136, respectively)                   $391,133          $390,363
      Mortgage loan, net of discount
       of $1,166 and $0, respectively)           34,634                --
      Unsecured term loan                       235,000           235,000
      Unsecured lines of credit                 188,400           161,500
          Total debt                            849,167           786,863
      Construction trade payables                 9,070            11,968
      Accounts payable and accrued expenses      27,777            26,277
      Other liabilities                          33,868            30,914
          Total liabilities                     919,882           856,022

    Commitments
    Equity
    Shareholder's equity
      Preferred shares, 7.5% Class C,
       liquidation preference $25 per share,
       8,000,000 shares authorized,
       3,000,000 shares issued and
       outstanding at March 31, 2009 and
       December 31, 2008                         75,000            75,000
      Common shares, $.01 par value,
       150,000,000 shares authorized,
       31,888,401 and 31,667,501 shares
       issued and outstanding at March 31,
       2009 and December 31, 2008,
       respectively                                 319               317
      Paid in capital                           372,762           371,190
      Distributions in excess of net
       income (a)                              (184,349)         (201,679)
      Accumulated other comprehensive loss       (8,533)           (9,617)
          Total shareholders' equity            255,199           235,211
    Non-controlling interest in operating
     partnership (b)                             34,282            30,692
          Total equity                          289,481           265,903
             Total liabilities and equity    $1,209,363        $1,121,925


    (a) Distributions in excess of net income as of December 31, 2008
        includes a reduction of earnings of $5,144 that represents the
        cumulative effect adjustment of the implementation of FSP APB 14-1,
        "Accounting for Convertible Debt Instruments that May be Settled in
        Cash Upon Conversion (Including Partial Cash Settlement)".
    (b) Represents a reclassification of non-controlling interest from prior
        presentation upon adoption of FAS 160 "Non-controlling Interests in
        Consolidated Financial Statements, an amendment of ARB No. 51".



              TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
                           SUPPLEMENTAL INFORMATION
        (in thousands, except per share, state and center information)
                                 (Unaudited)

                                                  Three Months Ended
                                                       March 31,
                                                  2009           2008
     FUNDS FROM OPERATIONS (a)
     Net income                                $36,468         $7,398
     Adjusted for:
        Depreciation and amortization
         uniquely significant to
         real estate - wholly-owned             20,278         15,508
        Depreciation and amortization
         uniquely significant to
         real estate - unconsolidated
         joint ventures                          1,166            652
        Gain on fair value measurement of
         previously held interest in
         acquired
           joint venture                       (31,497)            --
     Funds from operations (FFO)                26,415         23,558
     Preferred share dividends                  (1,406)        (1,406)
     Allocation to participating
      securities                                  (306)          (246)
     Funds from operations available to
      common shareholders                       24,703         21,906
     Funds from operations available to
      common shareholders per share -
      diluted                                     $.66           $.59

     WEIGHTED AVERAGE SHARES
     Basic weighted average common shares       31,269         30,979
     Effect of exchangeable notes                   --             92
     Effect of outstanding options                  81            169
     Diluted weighted average common
      shares (for earnings per share
      computations)                             31,350         31,240
     Convertible operating partnership
      units (b)                                  6,067          6,067
     Diluted weighted average common share
      (for funds from operations per
       share computations)                      37,417         37,307

     OTHER INFORMATION
     Gross leasable are open at end of
      period -
        Wholly-owned                             9,218          8,434
        Partially-owned  -  unconsolidated         950            667

     Outlet centers in operations -
        Wholly-owned                                31             29
        Partially-owned  -  unconsolidated           2              2

     States operated in at end of period (c)        21             21
     Occupancy percentage at end of period
      (c) (d)                                     93.5%          95.2%


    (a)  FFO is a non-GAAP financial measure.  The most directly
         comparable GAAP measure is net income (loss), to which it is
         reconciled.  We believe that for a clear understanding of our
         operating results, FFO should be considered along with net income
         as presented elsewhere in this report.  FFO is presented because
         it is a widely accepted financial indicator used by certain
         investors and analysts to analyze and compare one equity REIT
         with another on the basis of operating performance.  FFO is
         generally defined as net income (loss), computed in accordance
         with generally accepted accounting principles, before
         extraordinary items and gains (losses) on sale or disposal of
         depreciable operating properties, plus depreciation and
         amortization uniquely significant to real estate and after
         adjustments for unconsolidated partnerships and joint ventures.
         We caution that the calculation of FFO may vary from entity to
         entity and as such the presentation of FFO by us may not be
         comparable to other similarly titled measures of other reporting
         companies.  FFO does not represent net income or cash flow from
         operations as defined by accounting principles generally accepted
         in the United States of America and should not be considered an
         alternative to net income as an indication of operating performance
         or to cash flows from operations as a measure of liquidity.  FFO is
         not necessarily indicative of cash flows available to fund dividends
         to shareholders and other cash needs.
    (b)  The convertible operating partnership units (non-controlling
         interest in operating partnership) are not dilutive on earnings per
         share computed in accordance with generally accepted accounting
         principles.
    (c)  Excludes Wisconsin Dells, Wisconsin property for the 2009 and
         2008 periods which is operated by us through 50% ownership joint
         venture.  Excludes Myrtle Beach, South Carolina Hwy 17 property for
         the 2008 period during which period it was operated by us through a
         50% ownership joint venture.  We acquired the remaining 50% interest
         in January 2009.  Excludes Deer Park, New York property for the 2009
         period which is operated by us through a 33.3% ownership joint
         venture.  The Deer Park property opened during October 2008.
    (d)  Excludes our wholly-owned, non-stabilized center in Washington,
         Pennsylvania for the 2009 period.
                                                                            

SOURCE Tanger Factory Outlet Centers, Inc.



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