EX-99.2 3 skt8kex992december312016.htm EXHIBIT 99.2 Exhibit


Exhibit 99.2
tangerlargea01a03a01.jpg
Tanger Factory Outlet Centers, Inc.
  
Supplemental Operating and Financial Data
December 31, 2016


1
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2016
tangeroutlet-small93015.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, 2015 and for the fiscal year ended December 31, 2016 (when available).
  
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 12/31/2016
tangeroutlet-small93015.jpg


Table of Contents
Section
 
 
 
Portfolio Data:
 
 
 
Geographic Diversification
Property Summary - Occupancy at End of Each Period Shown
Portfolio Occupancy at the End of Each Period
Average Tenant Sales Per Square Foot by Outlet Center Ranking
Major Tenants
Lease Expirations as of December 31, 2016
Leasing Activity
Development Summary
 
 
Financial Data:
 
 
 
Consolidated Balance Sheets
Consolidated Statements of Operations
Unconsolidated Joint Venture Information
Debt Outstanding Summary
Future Scheduled Principal Payments
Senior Unsecured Notes Financial Covenants
 
 
Non-GAAP Supplemental Measures:
 
 
 
Non-GAAP Definitions
FFO and FAD Analysis
Portfolio NOI and Same Center NOI
Pro Rata Balance Sheet Information
Pro Rata Statement of Operations Information
 
 
Investor Information


3
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2016
tangeroutlet-small93015.jpg


Geographic Diversification

Consolidated Properties
As of December 31, 2016
State
# of Centers
 
GLA
 
% of GLA
South Carolina
5

 
1,598,398

 
13
%
New York
2

 
1,478,780

 
12
%
Georgia
3

 
1,111,675

 
9
%
Pennsylvania
3

 
861,460

 
7
%
Michigan
2

 
671,539

 
5
%
Texas
2

 
649,556

 
5
%
Connecticut
2

 
601,512

 
5
%
Alabama
1

 
556,677

 
4
%
Delaware
1

 
556,409

 
4
%
North Carolina
3

 
505,123

 
4
%
New Jersey
1

 
489,706

 
4
%
Tennessee
1

 
448,335

 
3
%
Ohio
1

 
411,776

 
3
%
Arizona
1

 
407,673

 
3
%
Florida
1

 
349,402

 
3
%
Missouri
1

 
329,861

 
3
%
Louisiana
1

 
321,066

 
3
%
Mississippi
1

 
320,337

 
2
%
Utah
1

 
319,661

 
2
%
Iowa
1

 
276,331

 
2
%
New Hampshire
1

 
245,698

 
2
%
Maryland
1

 
198,800

 
2
%
Total
36

 
12,709,775

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

 
397,838

 
50.00
%
Columbus, OH
1

 
355,220

 
50.00
%
Texas City, TX
1

 
352,705

 
50.00
%
National Harbor, MD
1

 
341,156

 
50.00
%
Ottawa, ON
1

 
316,494

 
50.00
%
Cookstown, ON
1

 
307,789

 
50.00
%
Bromont, QC
1

 
161,307

 
50.00
%
Saint-Sauveur, QC
1

 
115,771

 
50.00
%
Total
8

 
2,348,280

 
 


4
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2016
tangeroutlet-small93015.jpg


Property Summary - Occupancy at End of Each Period Shown
Consolidated properties
 
 
 
 
 
 
 
 
 
 
 
Location
Total GLA
12/31/16
 
% Occupied
12/31/16
 
% Occupied
9/30/16
 
% Occupied
6/30/16
 
% Occupied
3/31/16
 
% Occupied
12/31/15
 
Deer Park, NY
749,074

 
97
%
 
97
%
 
96
%
 
96
%
 
95
%
 
Riverhead, NY
729,706

 
99
%
 
99
%
 
99
%
 
99
%
 
99
%
 
Foley, AL
556,677

 
99
%
 
97
%
 
96
%
 
94
%
 
96
%
 
Rehoboth Beach, DE
556,409

 
99
%
 
99
%
 
100
%
 
99
%
 
100
%
 
Atlantic City, NJ
489,706

 
90
%
 
90
%
 
92
%
 
91
%
 
91
%
 
San Marcos, TX
471,756

 
98
%
 
97
%
 
98
%
 
98
%
 
98
%
 
Sevierville, TN
448,335

 
100
%
 
100
%
 
99
%
 
100
%
 
100
%
 
Myrtle Beach Hwy 501, SC
425,247

 
98
%
 
97
%
 
97
%
 
96
%
 
95
%
 
Savannah, GA
419,197

 
99
%
 
99
%
 
N/A

 
N/A

 
N/A

 
Jeffersonville, OH
411,776

 
96
%
 
96
%
 
98
%
 
98
%
 
100
%
 
Glendale, AZ (Westgate)
407,673

 
100
%
 
99
%
 
97
%
 
N/A

 
N/A

 
Myrtle Beach Hwy 17, SC
402,800

 
98
%
 
99
%
 
100
%
 
98
%
 
100
%
 
Charleston, SC
382,117

 
97
%
 
98
%
 
98
%
 
98
%
 
99
%
 
Pittsburgh, PA
372,958

 
99
%
 
100
%
 
100
%
 
100
%
 
100
%
 
Commerce, GA
371,408

 
100
%
 
99
%
 
99
%
 
94
%
 
97
%
 
Grand Rapids, MI
357,080

 
97
%
 
96
%
 
94
%
 
94
%
 
95
%
 
Daytona Beach, FL
349,402

 
94
%
 
N/A

 
N/A

 
N/A

 
N/A

 
Branson, MO
329,861

 
100
%
 
99
%
 
100
%
 
100
%
 
100
%
 
Locust Grove, GA
321,070

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

 
99
%
 
99
%
 
98
%
 
98
%
 
99
%
 
Southaven, MS
320,337

 
97
%
 
96
%
 
96
%
 
97
%
 
96
%
 
Park City, UT
319,661

 
100
%
 
98
%
 
97
%
 
98
%
 
100
%
 
Mebane, NC
318,910

 
100
%
 
100
%
 
97
%
 
98
%
 
100
%
 
Howell, MI
314,459

 
94
%
 
92
%
 
92
%
 
92
%
 
94
%
 
Mashantucket, CT (Foxwoods)
311,614

 
96
%
 
96
%
 
96
%
 
96
%
 
95
%
 
Westbrook, CT
289,898

 
86
%
 
87
%
 
87
%
 
92
%
 
94
%
 
Williamsburg, IA
276,331

 
99
%
 
99
%
 
97
%
 
95
%
 
99
%
 
Hershey, PA
247,500

 
100
%
 
100
%
 
100
%
 
99
%
 
100
%
 
Tilton, NH
245,698

 
99
%
 
100
%
 
97
%
 
97
%
 
98
%
 
Lancaster, PA
241,002

 
98
%
 
96
%
 
97
%
 
97
%
 
99
%
 
Hilton Head II, SC
206,564

 
100
%
 
98
%
 
94
%
 
95
%
 
97
%
 
Ocean City, MD
198,800

 
80
%
 
77
%
 
81
%
 
79
%
 
79
%
 
Hilton Head I, SC
181,670

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

 
98
%
 
98
%
 
98
%
 
98
%
 
98
%
 
Blowing Rock, NC
104,052

 
98
%
 
98
%
 
99
%
 
100
%
 
100
%
 
Nags Head, NC
82,161

 
96
%
 
100
%
 
100
%
 
97
%
 
97
%
 
Fort Myers, FL (1)
N/A

 
N/A

 
N/A

 
N/A

 
N/A

 
91
%
 
Total
12,709,775

 
98
%
(2) 
97
%
(3) 
97
%
(4) 
97
%
(4) 
98
%
(4)(5) 

(1)
Sold Fort Myers center in January 2016.
(2)
Excludes the occupancy rate of centers not yet stabilized (our Foxwoods, Southaven, and Daytona centers, which opened during the second quarter of 2015, fourth quarter of 2015, and fourth quarter of 2016, respectively).
(3)
Excludes the occupancy rate of centers not yet stabilized (our Foxwoods, and Southaven centers, which opened during the second quarter and fourth quarter of 2015, respectively).
(4)
Excludes the occupancy rate of centers not yet stabilized (Foxwoods, Grand Rapids and Southaven centers which opened during the second, third and fourth quarters of 2015, respectively).
(5)
Excludes the occupancy rate of the Fort Myers center which was sold in January 2016.


5
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2016
tangeroutlet-small93015.jpg


Unconsolidated joint venture properties
 
 
 
 
 
 
 
 
 
 
 
Location
Total GLA
12/31/16
 
% Occupied
12/31/16
 
% Occupied
9/30/16
 
% Occupied
6/30/16
 
% Occupied
3/31/16
 
% Occupied
12/31/15
 
Charlotte, NC
397,838

 
98
%
 
97
%
 
97
%
 
98
%
 
99
%
 
Columbus, OH (1)
355,220

 
98
%
 
96
%
 
95
%
 
N/A

 
N/A

 
Texas City, TX (Galveston/Houston)
352,705

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

 
99
%
 
99
%
 
98
%
 
99
%
 
99
%
 
Ottawa, ON
316,494

 
99
%
 
98
%
 
95
%
 
95
%
 
97
%
 
Cookstown, ON
307,789

 
99
%
 
99
%
 
99
%
 
99
%
 
100
%
 
Bromont, QC
161,307

 
69
%
 
72
%
 
72
%
 
74
%
 
75
%
 
Saint-Sauveur, QC
115,771

 
97
%
 
94
%
 
97
%
 
97
%
 
97
%
 
Savannah, GA (2)
N/A

 
N/A

 
N/A

 
99
%
 
99
%
 
99
%
 
Glendale, AZ (Westgate) (3)
N/A

 
N/A

 
N/A

 
N/A

 
96
%
 
100
%
 
Total
2,348,280

 
96
%
(4) 
96
%
(4) 
96
%
(4) 
96
%
 
98
%
 

(1)
Center opened in June 2016.
(2)
The Company acquired our partners' interest in the Savannah outlet center in August 2016. The center is now reported above in the section labeled consolidated properties.
(3)
The Company acquired our partners' interest in the Westgate outlet center in June 2016. The center is now reported above in the section labeled consolidated properties.
(4)
Excludes the occupancy rate at our Columbus center which opened in June 2016 and has not yet stabilized.






6
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2016
tangeroutlet-small93015.jpg


Portfolio Occupancy at the End of Each Period (1) 
skt8kex99_chart-01249.jpg

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




7
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2016
tangeroutlet-small93015.jpg


Average Tenant Sales Per Square Foot by Outlet Center Ranking As of December 31, 2016(1) 
 
 
 
 12 Months
 Period End
 Sq Ft
% of
% of
Portfolio
 Ranking (2)
 SPSF
 Occupancy
 (thousands)
 Square Feet
NOI (3)
Consolidated Centers
 
 
 
 
Centers 1 - 5
$
528

99
%
2,802

24
%
32
%
Centers 6 - 10
$
436

99
%
1,702

15
%
16
%
Centers 11 - 15
$
395

99
%
1,215

10
%
10
%
Centers 16 - 20
$
356

96
%
2,011

17
%
18
%
Centers 21 - 25
$
315

99
%
1,868

16
%
13
%
Centers 26 - 33
$
269

95
%
2,130

18
%
11
%
 
 
 
 
 
 
 
 
 
 
 
 Cumulative
 Cumulative
 Cumulative
 Cumulative
 Cumulative
% of
Portfolio
 
 
 
 12 Months
 Period End
 Sq Ft
% of
NOI, as
 Ranking (2)
 SPSF
 Occupancy
 (thousands)
 Square Feet
adjusted (3)
Consolidated Centers
 
 
 
 
Centers 1 - 5
$
528

99
%
2,802

24
%
32
%
Centers 1 - 10
$
490

99
%
4,504

39
%
48
%
Centers 1 - 15
$
469

99
%
5,719

49
%
58
%
Centers 1 - 20
$
437

98
%
7,730

66
%
76
%
Centers 1 - 25
$
414

98
%
9,598

82
%
89
%
Centers 1 - 33
$
387

98
%
11,728

100
%
100
%
 
 
 
 
 
 
 
 
Unconsolidated centers (4)
$
436

99
%
1,092

n/a

n/a

 
 
 
 
 
 
 
 
(1)
Sales are based on reports by retailers leasing outlet center stores for the trailing 12 months for tenants which have occupied such 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 twelve months ended December 31, 2016.
 
 
 
 
 
 
 
 
(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
Glendale, AZ
Lancaster, PA
Locust Grove, GA
Myrtle Beach 17, SC
 
 
Centers 11 - 15:
Charleston, SC
Gonzales, LA
Hershey, PA
Hilton Head I, SC
Nags Head, NC
 
 
Centers 16 - 20:
Atlantic City, NJ
Grand Rapids, NC
Park City, UT
Pittsburgh, PA
San Marcos, TX
 
 
Centers 21 - 25:
Commerce, GA
Foley, AL
Hilton Head II, SC
Howell, MI
Savannah, GA
 
 
Centers 26 - 33:
Blowing Rock, NC
Jeffersonville, OH
Myrtle Beach 501, SC
Ocean City, MD
Terrell, TX
 
 
 
Tilton, NH
Westbrook, CT
Williamsburg, OH
 
 
 
 
 
Excludes outlet centers not open for 12 full calendar months and the centers in Mashantucket, CT (Foxwoods) and Southaven, MS, which opened in the second and fourth quarters of 2015, respectively and have not yet stabilized.
 
 
 
 
 
 
 
 
(3)
Based on the Company’s forecast of 2017 Portfolio NOI (see Non-GAAP Definitions). The Company’s forecast is based on management’s estimates as of December 31, 2016 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 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, 2015 and December 31, 2016 when available.
 
 
 
 
 
 
 
 
(4)
Includes domestic outlet centers open 12 full calendar months (in alphabetical order):
 
Unconsolidated:
Charlotte, NC
National Harbor, MD
Texas City, TX
 
 
 

8
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2016
tangeroutlet-small93015.jpg


Major Tenants (1) 
Ten Largest Tenants as of December 31, 2016
Tenant
# of
Stores

 
GLA

 
% of
Total GLA

The Gap, Inc.
92

 
970,454

 
7.6
%
Ascena Retail Group, Inc.
148

 
889,970

 
7.0
%
Nike, Inc.
42

 
440,037

 
3.5
%
PVH Corp.
67

 
407,192

 
3.2
%
V. F. Corporation
44

 
390,213

 
3.1
%
Ralph Lauren Corporation
38

 
365,246

 
2.9
%
G-III Apparel Group, Ltd.
69

 
320,611

 
2.5
%
Carter's, Inc.
63

 
276,606

 
2.2
%
H&M Group
13

 
271,854

 
2.1
%
Under Armour, Inc.
33

 
247,396

 
1.9
%
Total of All Listed Above
609

 
4,579,579

 
36.0
%
(1)
Excludes unconsolidated outlet centers. See table on page 4.


9
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2016
tangeroutlet-small93015.jpg


Lease Expirations as of December 31, 2016
skt8kex99_chart-01135.jpg


skt8kex99_chart-03144.jpg

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


10
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2016
tangeroutlet-small93015.jpg


Leasing Activity (1) (2)  
 
3/31/2016
 
6/30/2016
 
9/30/2016
 
12/31/2016
 
Year to Date
 
Prior
Year to
Date(3)
Re-tenanted Space :
 
 
 

 
 

 
 

 
 

 
 

Number of leases
63

 
35

 
20

 
6

 
124

 
119

Gross leasable area
188,245

 
113,911

 
65,970

 
16,098

 
384,224

 
443,877

New initial base rent per square foot
$
29.80

 
$
27.62

 
$
32.25

 
$
26.34

 
$
29.43

 
$
28.13

Prior expiring base rent per square foot
$
25.95

 
$
25.87

 
$
28.47

 
$
30.00

 
$
26.53

 
$
24.81

Percent increase (4)
14.8
%
 
6.8
%
 
13.3
%
 
(12.2
)%
 
10.9
%
 
13.4
%
 
 
 
 
 
 
 
 
 
 
 


New straight line base rent per square foot
$
32.84

 
$
30.54

 
$
35.96

 
$
31.48

 
$
32.64

 
$
31.48

Prior straight line base rent per square foot
$
25.19

 
$
24.67

 
$
27.58

 
$
29.32

 
$
25.62

 
$
24.33

Percent increase (4)
30.4
%
 
23.8
%
 
30.4
%
 
7.4
 %
 
27.4
%
 
29.4
%
 
 
 
 
 
 
 
 
 
 
 


Renewed Space:
 
 
 
 
 
 
 
 
 
 


Number of leases
166

 
34

 
26

 
49

 
275

 
278

Gross leasable area
762,300

 
171,736

 
121,879

 
166,937

 
1,222,852

 
1,282,316

New initial base rent per square foot
$
24.69

 
$
24.86

 
$
25.57

 
$
29.13

 
$
25.41

 
$
24.73

Prior expiring base rent per square foot
$
22.78

 
$
23.50

 
$
24.04

 
$
24.48

 
$
23.24

 
$
22.35

Percent increase
8.4
%
 
5.8
%
 
6.4
%
 
19.0
 %
 
9.3
%
 
10.7
%
 
 
 
 
 
 
 
 
 
 
 


New straight line base rent per square foot
$
25.91

 
$
26.18

 
$
26.25

 
$
30.37

 
$
26.59

 
$
26.06

Prior straight line base rent per square foot
$
21.96

 
$
22.82

 
$
23.50

 
$
24.63

 
$
22.60

 
$
21.77

Percent increase
18.0
%
 
14.7
%
 
11.7
%
 
23.3
 %
 
17.7
%
 
19.7
%
 
 
 
 
 
 
 
 
 
 
 


Total Re-tenanted and Renewed Space:
 
 
 
 
 
 
 
 
 
 


Number of leases
229

 
69

 
46

 
55

 
399

 
397

Gross leasable area
950,545

 
285,647

 
187,849

 
183,035

 
1,607,076

 
1,726,193

New initial base rent per square foot
$
25.70

 
$
25.96

 
$
27.91

 
$
28.88

 
$
26.37

 
$
25.60

Prior expiring base rent per square foot
$
23.41

 
$
24.45

 
$
25.60

 
$
24.97

 
$
24.03

 
$
22.98

Percent increase
9.8
%
 
6.2
%
 
9.0
%
 
15.7
 %
 
9.8
%
 
11.4
%
 
 
 
 
 
 
 
 
 
 
 


New straight line base rent per square foot
$
27.28

 
$
27.92

 
$
29.66

 
$
30.47

 
$
28.04

 
$
27.45

Prior straight line base rent per square foot
$
22.60

 
$
23.56

 
$
24.93

 
$
25.04

 
$
23.32

 
$
22.43

Percent increase
20.7
%
 
18.5
%
 
19.0
%
 
21.7
 %
 
20.2
%
 
22.4
%
(1)
Excludes unconsolidated outlet centers. See table on page 4.
(2)
All 2016 information excludes the outlet center in Fort Myers, FL, which was sold in January 2016 and includes the Westgate and Savannah outlet centers as we acquired our partners' interests in the centers in June and August 2016, respectively.
(3)
All 2015 information excludes the outlet centers in Kittery I & II, ME; Tuscola, IL; and West Branch, MI, which were sold on September 30, 2015, and Barstow, CA, which was sold in October 2015.
(4)
Excluding three leases (8,000 sf) re-tenanted in the fourth quarter of 2016, cash and straight-line re-tenanting spreads would have been 23.6% and 44.0%, respectively for the fourth quarter and 12.3% and 28.7% respectively for 2016.



11
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2016
tangeroutlet-small93015.jpg


External Growth Pipeline Summary as of December 31, 2016

Project/Market
Projected
Opening Date
Approx Size in
Sq Ft (000s)
Est
Total Net Cost
(millions)
Cost to Date
(millions)
Tanger Ownership Percentage
Est Total Construction Loan (millions)
Amount Drawn
(millions)
Est Future Tanger Capital Requirement (millions)
Projected Stabilized Yield (1)
 
 
 
 
 
 
 
 
 
 
 
Under Construction:
 
 
 
 
 
 
 
 
 
New Developments -
 
 
 
 
 
 
 
 
 
Fort Worth, TX
Holiday 2017
352

$
90.2

$
18.1

100%
$
—

$
—

$
72.1

9.5% - 10.5%
Total New Developments
 
352

$
90.2

$
18.1

 
$
—

$
—

$
72.1

10.0%
 
 
 
 
 
 
 
 
 
 
Expansions -
 
 
 
 
 
 
 
 
 
Lancaster, PA
3Q17
123

$
47.7

$
14.3

100%
$
—

$
—

$
33.4

7.5% - 8.5%
Total Expansions
 
123

$
47.7

$
14.3

 
$
—

$
—

$
33.4

8.0%
Total Under Construction
 
475

$
137.9

$
32.4

 
$
—

$
—

$
105.5

9.3%
(1)
Weighted average projected stabilized yield for projects under construction is calculated using the midpoint of the projected stabilized yield disclosed for each project
The Company's estimates, projections and judgments with respect to projected opening date, approximate size, estimated total net cost, Tanger ownership percentage, estimated total construction loan, estimated future Tanger capital requirement and projected stabilized yield for new development and expansion projects are subject to adjustment prior to and during the development process. Estimated total net cost shown net of outparcel sales and public financing, if applicable. There are risks inherent to real estate development, some of which are not under the direct control of the Company. Please refer to the Company's filings with the Securities and Exchange Commission on Form10-K and Form 10-Q for a discussion of these risks.


12
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2016
tangeroutlet-small93015.jpg

Consolidated Balance Sheets (dollars in thousands)
 
12/31/2016
 
9/30/2016
 
6/30/2016
 
3/31/2016
 
12/31/2015
Assets
 
 
 
 
 
 
 
 
 
Rental property
 
 
 
 
 
 
 
 
 
Land
$
272,153

 
$
262,240

 
$
254,809

 
$
235,622

 
$
240,267

Buildings, improvements and fixtures
2,647,477

 
2,553,564

 
2,377,765

 
2,219,955

 
2,249,417

Construction in progress
46,277

 
92,937

 
61,038

 
42,287

 
23,533

 
2,965,907

 
2,908,741

 
2,693,612

 
2,497,864

 
2,513,217

Accumulated depreciation
(814,583
)
 
(792,272
)
 
(769,777
)
 
(749,325
)
 
(748,341
)
Total rental property, net
2,151,324

 
2,116,469

 
1,923,835

 
1,748,539

 
1,764,876

Cash and cash equivalents
12,222

 
25,902

 
27,107

 
18,877

 
21,558

Restricted cash
—

 
2,936

 
—

 
—

 
121,306

Rental property held for sale
—

 
—

 
—

 
—

 
—

Investments in unconsolidated joint ventures
128,104

 
170,855

 
210,486

 
218,732

 
201,083

Deferred lease costs and other intangibles, net
151,579

 
156,496

 
133,578

 
123,404

 
127,089

Prepaids and other assets
82,985

 
88,261

 
84,346

 
81,054

 
78,913

Total assets (a)
$
2,526,214

 
$
2,560,919

 
$
2,379,352

 
$
2,190,606

 
$
2,314,825

Liabilities and Equity
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
Debt
 
 
 
 
 
 
 
 
 
Senior, unsecured notes, net
$
1,135,309

 
$
1,037,073

 
$
789,991

 
$
789,635

 
$
789,285

Unsecured term loans, net
322,410

 
322,195

 
321,980

 
258,540

 
265,832

Mortgages payable, net
172,145

 
172,647

 
235,215

 
167,603

 
310,587

Unsecured lines of credit, net
58,002

 
192,731

 
255,661

 
259,890

 
186,220

Total debt (a)
1,687,866

 
1,724,646

 
1,602,847

 
1,475,668

 
1,551,924

Accounts payable and accruals
78,143

 
78,542

 
62,658

 
67,608

 
97,396

Deferred financing obligation
—

 
—

 
—

 
—

 
28,388

Other liabilities
54,764

 
52,079

 
53,433

 
31,758

 
31,085

Total liabilities
1,820,773

 
1,855,267

 
1,718,938

 
1,575,034

 
1,708,793

Commitments and contingencies
—

 
—

 
—

 
—

 
—

Equity
 
 
 
 
 
 
 
 
 
Tanger Factory Outlet Centers, Inc.
 
 
 
 
 
 
 
 
 
Common shares
961

 
961

 
960

 
961

 
959

Paid in capital
820,251

 
816,464

 
811,853

 
808,779

 
806,379

Accumulated distributions in excess of net income
(122,701
)
 
(115,565
)
 
(153,465
)
 
(195,654
)
 
(195,486
)
Accumulated other comprehensive loss
(28,295
)
 
(31,618
)
 
(32,090
)
 
(29,814
)
 
(36,715
)
  Equity attributable to Tanger Factory Outlet
  Centers, Inc.
670,216

 
670,242

 
627,258

 
584,272

 
575,137

Equity attributable to noncontrolling interests
 
 
 
 
 
 
 
 
 
Noncontrolling interests in Operating Partnership
35,066

 
35,250

 
32,996

 
30,711

 
30,309

Noncontrolling interests in other consolidated partnerships
159

 
160

 
160

 
589

 
586

Total equity
705,441

 
705,652

 
660,414

 
615,572

 
606,032

Total liabilities and equity
$
2,526,214

 
$
2,560,919

 
$
2,379,352

 
$
2,190,606

 
$
2,314,825

(a)
In accordance with recent accounting guidance, "Simplifying the Presentation of Debt Issuance Costs", our deferred debt origination costs and related accumulated amortization previously recorded in the line item “deferred debt origination costs, net” have been reclassified from assets to the respective debt line items within the liabilities section in the consolidated balance sheet as of December 31, 2015.

13
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2016
tangeroutlet-small93015.jpg


Consolidated Statements of Operations (dollars and shares in thousands)
 
 
 
Three Months Ended
 
YTD
 
12/31/16
 
9/30/16
 
6/30/16
 
3/31/16
 
12/31/15
 
 
12/31/16
 
12/31/15
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Base rentals
$
81,158

 
$
79,569

 
$
75,003

 
$
72,623

 
$
73,889

 
 
$
308,353

 
$
289,688

Percentage rentals
3,750

 
2,995

 
2,326

 
2,150

 
3,261

 
 
11,221

 
10,157

Expense reimbursements
36,697

 
33,125

 
30,754

 
33,242

 
32,653

 
 
133,818

 
126,468

Management, leasing and other services
588

 
806

 
1,332

 
1,121

 
1,163

 
 
3,847

 
5,426

Other income
2,366

 
2,642

 
1,918

 
1,669

 
1,835

 
 
8,595

 
7,630

Total revenues
124,559

 
119,137

 
111,333

 
110,805

 
112,801

 
 
465,834

 
439,369

Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property operating
41,689

 
37,442

 
35,012

 
37,874

 
37,582

 
 
152,017

 
146,503

General and administrative
11,328

 
12,128

 
11,675

 
11,565

 
10,038

 
 
46,696

 
44,469

Acquisition costs
—

 
487

 
—

 
—

 
—

 
 
487

 
—

Depreciation and amortization
33,279

 
29,205

 
26,306

 
26,567

 
26,890

 
 
115,357

 
103,936

Total expenses
86,296

 
79,262

 
72,993

 
76,006

 
74,510

 
 
314,557

 
294,908

Operating income
38,263

 
39,875

 
38,340

 
34,799

 
38,291

 
 
151,277

 
144,461

Other income/(expense)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense
(16,469
)
 
(15,516
)
 
(13,800
)
 
(14,884
)
 
(14,078
)
 
 
(60,669
)
 
(54,188
)
Gain on sale of assets and interests in unconsolidated entities
—

 
1,418

 
—

 
4,887

 
86,506

 
 
6,305

 
120,447

Gain on previously held interest in acquired joint ventures
—

 
46,258

 
49,258

 
—

 
—

 
 
95,516

 
—

Other nonoperating income (expense)
650

 
24

 
38

 
316

 
62

 
 
1,028

 
(36
)
Income before equity in earnings of unconsolidated joint ventures
22,444

 
72,059

 
73,836

 
25,118

 
110,781

 
 
193,457

 
210,684

Equity in earnings of unconsolidated joint ventures
3,192

 
715

 
3,466

 
3,499

 
3,182

 
 
10,872

 
11,484

Net income
25,636

 
72,774

 
77,302

 
28,617

 
113,963

 
 
204,329

 
222,168

Noncontrolling interests in Operating Partnership
(1,278
)
 
(3,668
)
 
(3,897
)
 
(1,444
)
 
(5,799
)
 
 
(10,287
)
 
(11,331
)
Noncontrolling interests in other consolidated partnerships
(285
)
 
(2
)
 
12

 
(23
)
 
(32
)
 
 
(298
)
 
363

Net income attributable to Tanger Factory Outlet Centers, Inc.
24,073

 
69,104

 
73,417

 
27,150

 
108,132

 
 
193,744

 
211,200

Allocation to participating securities
(280
)
 
(627
)
 
(725
)
 
(294
)
 
(1,198
)
 
 
(1,926
)
 
(2,408
)
Net income available to common shareholders
$
23,793

 
$
68,477

 
$
72,692

 
$
26,856

 
$
106,934

 
 
$
191,818

 
$
208,792

Basic earnings per common share
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
$
0.25

 
$
0.72

 
$
0.76

 
$
0.28

 
$
1.13

 
 
$
2.02

 
$
2.20

Diluted earnings per common share
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
$
0.25

 
$
0.72

 
$
0.76

 
$
0.28

 
$
1.13

 
 
$
2.01

 
$
2.20

Weighted average common shares
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
95,186

 
95,156

 
95,124

 
94,944

 
94,768

 
 
95,102

 
94,698

Diluted
95,455

 
95,672

 
95,375

 
95,003

 
94,827

 
 
95,345

 
94,759


14
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2016
tangeroutlet-small93015.jpg


Unconsolidated Joint Venture Information (1)  

The following table details certain information as of December 31, 2016, except for Net Operating Income ("NOI") which is for the year ended December 31, 2016, about various unconsolidated real estate joint ventures in which we have an ownership interest (dollars in millions):
Joint Venture
 
Center Location
 
Tanger's Ownership %
 
Square Feet
 
Tanger's Share of Total Assets
 
Tanger's Share of NOI (2)
 
Tanger's Share of Net Debt (3)
Charlotte
 
Charlotte, NC
 
50.0
%
 
397,838

 
$
43.0

 
$
7.4

 
$
44.8

 
 
 
 
 
 
 
 
 
 
 
 
 
Columbus (4)
 
Columbus, OH
 
50.0
%
 
355,220

 
52.2

 
2.3

 
42.1

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

 
29.9

 
4.7

 
32.5

 
 
 
 
 
 
 
 
 
 
 
 
 
National Harbor
 
National Harbor, MD
 
50.0
%
 
341,156

 
48.0

 
5.6

 
43.1

 
 
 
 
 
 
 
 
 
 
 
 
 
RioCan Canada (5)
 
Various
 
50.0
%
 
901,361

 
123.0

 
6.7

(6) 
5.5

 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
 
 
 
 
 
 
$
296.1

 
$
26.7

 
$
168.0

(1)
Excludes the Westgate joint venture and the Savannah joint venture as we acquired our partners' interest in the centers in June 2016 and August 2016, respectively. Our share of the Westgate and Savannah joint ventures' NOI through each acquisition date was $3.0 million and $8.4 million, respectively.
(2)
Includes $1.7 million in lease termination fees, $1.0 million of which was related to the Westgate and Savannah joint ventures.
(3)
Net of debt origination costs and premiums.
(4)
Center opened in June 2016.
(5)
Includes a 161,307 square foot center in Bromont, Quebec; a 307,789 square foot center in Cookstown, Ontario; a 316,494 square foot center in Ottawa, Ontario; a 115,771 square foot center in Saint-Sauveur, Quebec.
(6)
Excludes impairment charges related to the Bromont center, in which our share was $2.9 million.











15
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2016
tangeroutlet-small93015.jpg


Debt Outstanding Summary (dollars in thousands)
As of December 31, 2016
 
Principal
Balance
 
Stated
Interest Rate
 
Effective Interest Rate(1) 
 
Maturity
Date
Unsecured debt:
 

 
 
 
 
 
 
Unsecured lines of credit (2)
$
61,000

 
LIBOR + 0.90%

 
 
 
10/29/2019
2020 Senior unsecured notes
300,000

 
6.125%

 
6.219
%
 
6/1/2020
2023 Senior unsecured notes
250,000

 
3.875%

 
4.076
%
 
12/1/2023
2024 Senior unsecured notes
250,000

 
3.75
%
 
3.819
%
 
12/1/2024
2026 Senior unsecured notes (3)
350,000

 
3.125
%
 
3.193
%
 
9/1/2026
Unsecured term loan (4)
325,000

 
LIBOR + 0.95%

 
 
 
4/13/2021
Net debt discounts and debt origination costs
(20,279
)
 
 

 
 
 
 
Total unsecured debt
$
1,515,721

 
 

 
 
 
 
Secured mortgage debt:
 
 
 
 
 
 
 
Atlantic City, NJ (5)
$
40,471

 
5.14% - 7.65%

 
5.05
%
 
11/15/2021 - 12/8/2026
Foxwoods, CT (6)
70,250

 
LIBOR + 1.55%

 
 
 
12/5/2017
Southaven, MS (7)
59,277

 
LIBOR + 1.75%

 
 
 
4/29/2018
Debt premium and debt origination costs
2,147

 
 
 
 
 
 
Total secured mortgage debt
$
172,145

 
 
 
 
 
 
Tanger's share of unconsolidated JV debt:
 

 
 

 
 
 
 
Charlotte (8)
$
45,000

 
LIBOR + 1.45%

 
 
 
11/24/2018
Columbus (9)
42,500

 
LIBOR + 1.65%

 
 
 
11/28/2019
Galveston/Houston (10)
32,500

 
LIBOR + 1.50%

 
 
 
7/1/2017
National Harbor (11)
43,500

 
LIBOR + 1.65%

 
 
 
11/13/2019
RioCan Canada(12)
5,278

 
5.75
%
 
4.18
%
 
5/10/2020
Debt premium and debt origination costs
(792
)
 
 
 
 
 
 
Total Tanger's share of unconsolidated JV debt
$
167,986

 
 

 
 
 
 
(1)
The effective interest rate excludes interest rate swap agreements that fix the base LIBOR rate at an average of 1.16% on notional amounts aggregating $325.0 million as follows:
(a)
Interest rate swaps entered into in October 2013 to hedge our variable interest rate exposure on notional amounts aggregating $150.0 million. These interest rate swap agreements fix the base LIBOR rate at an average of 1.30% through August 14, 2018, and
(b)
Interest rate swaps entered into in April 2016 to hedge our variable interest rate exposure on notional amounts aggregating $175.0 million. These interest rate swap agreements fix the base LIBOR rate at an average of 1.03% through January 1, 2021.



16
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2016
tangeroutlet-small93015.jpg


(2)
The Company has an unsecured, syndicated credit line with a borrowing capacity totaling $500.0 million and a separate cash management line of credit with a borrowing capacity of $20.0 million with one of the participants in the syndication. A 15 basis point facility fee is due annually on the entire committed amount of each facility. The syndicated credit line may be increased to $1.0 billion through an accordion feature in certain circumstances. The unsecured lines of credit have an expiration date of October 29, 2019 with an option for a one year extension.

(3)
In August 2016, we completed a public offering of $250.0 million in senior notes due 2026 in an underwritten public offering. The notes were priced at 99.605% of the principal amount to yield 3.171% to maturity. In October 2016, we sold an additional $100.0 million of our senior notes due 2026. The notes priced at 98.962% of the principal amount to yield 3.248% to maturity. The notes pay interest semi-annually at a rate of 3.125% per annum and mature on September 1, 2026. The aggregate net proceeds from the offerings, after deducting the underwriting discount and offering expenses, were approximately $344.5 million. The Company used the net proceeds from the sale of the notes to repay a $62.0 million floating rate mortgage loan related to its outlet center in Glendale (Westgate), Arizona, repay borrowings under its unsecured lines of credit, and for general corporate purposes.

(4)
In April 2016, the Company amended the unsecured term loan to increase the size of the loan from $250 million to $325 million, extend the maturity date from February 23, 2019 to April 13, 2021, and reduce the LIBOR spread from LIBOR plus 105 basis points to LIBOR plus 95 basis points. The additional loan proceeds of $75 million were used to pay down balances under the Operating Partnership's unsecured lines of credit.

(5)
Represents mortgages assumed in the acquisition of this property.

(6)
Represents a mortgage loan with the ability to borrow up to $70.3 million. The loan initially matures on December 5, 2017, with two one -year extension options. In November 2016, the interest rate was reduced from LIBOR + 1.65% to LIBOR + 1.55% due to the property achieving a certain minimum debt service coverage ratio.

(7)
Represents a mortgage loan with the ability to borrow up to $60.0 million. The loan initially matures on April 29, 2018, with one two-year extension option. The additional $0.7 million is available to fund the remaining construction costs to complete the center which opened in November 2015.

(8)
Represents a mortgage loan of $90.0 million. The loan initially matures on November 24, 2018, with one one -year extension option. As of December 31, 2016, the principal balance on the loan was $90.0 million.

(9)
In November 2016, the joint venture closed on a mortgage loan of $85.0 million. The loan initially matures on November 28, 2019, with two one-year extension options. As of December 31, 2016, the principal balance on the loan was $85.0 million. The joint venture distributed to each partner its share of the loan proceeds, which Tanger used to pay down balances outstanding under its unsecured lines of credit.

(10)
Represents a mortgage loan with the ability to borrow up to $70.0 million with a maturity date of July 1, 2017 and the option to extend the maturity for one additional year. As of December 31, 2016, the principal balance on the loan was $65.0 million. The additional $5.0 million is available for future expansion.

(11)
Represents a mortgage loan with with the ability to borrow up to $87.0 million. The loan matures on November 13, 2019. As of December 31, 2016, the principal balance on the loan was $87.0 million.

(12)
Represents the mortgage assumed related to the acquisition of the Saint-Sauveur, Quebec property by the RioCan co-owners in November 2012. The mortgage has a principal balance of $10.6 million and matures on May 10, 2020.



17
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2016
tangeroutlet-small93015.jpg


Future Scheduled Principal Payments (dollars in thousands)
As of December 31, 2016
Year
Tanger
Consolidated
Payments
 
Tanger's Share
of Unconsolidated
JV Payments
 
Total
Scheduled
Payments
2017
$
73,258

 
$
32,768

 
$
106,026

2018
62,460

 
45,283

 
107,743

2019 (1)
64,369

 
86,300

 
150,669

2020
303,566

 
4,427

 
307,993

2021
330,793

 
—

 
330,793

2022
4,436

 
—

 
4,436

2023
254,768

 
—

 
254,768

2024
255,140

 
—

 
255,140

2025
1,501

 
—

 
1,501

2026
355,707

 
—

 
355,707

2027 & thereafter
—

 
—

 
—

 
$
1,705,998

 
$
168,778

 
$
1,874,776

Net debt discounts and debt origination costs
(18,132
)
 
(792
)
 
(18,924
)
 
$
1,687,866

 
$
167,986

 
$
1,855,852

(1)
Includes principal balance of $61.0 million outstanding under the Company's unsecured lines of credit.
Senior Unsecured Notes Financial Covenants (1) 
As of December 31, 2016
 
Required
 
Actual
 
Compliance
Total Consolidated Debt to Adjusted Total Assets
<60%
 
50
%
 
Yes
Total Secured Debt to Adjusted Total Assets
<40%
 
5
%
 
Yes
Total Unencumbered Assets to Unsecured Debt
>150%
 
190
%
 
Yes
Consolidated Income Available for Debt Service to Annual Debt Service Charge
>1.5
 
5.23

 
Yes
(1)
For a complete listing of all debt covenants related to the Company's Senior Unsecured Notes, as well as definitions of the above terms, please refer to the Company's filings with the Securities and Exchange Commission.


18
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2016
tangeroutlet-small93015.jpg


NON-GAAP SUPPLEMENTAL MEASURES

Funds From Operations

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

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

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

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

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

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

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

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

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

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

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.


19
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2016
tangeroutlet-small93015.jpg


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

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

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

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

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

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

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

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 NOI

We present portfolio net operating income ("Portfolio NOI") and 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 to 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.


20
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2016
tangeroutlet-small93015.jpg


Non-GAAP Pro Rata Balance Sheet and Income Statement Information

The pro rata balance sheet and pro rata income statement information is not, and is not intended to be, a presentation in accordance with GAAP. The pro rata balance sheet and pro rata income statement information reflect our proportionate economic ownership of each asset in our portfolio that we do not wholly own. These assets may be found in the table found earlier in this report entitled, “Unconsolidated Joint Venture Information.” The amounts in the column labeled “Pro Rata Portion Unconsolidated Joint Ventures” were derived on a property-by-property basis by applying to each financial statement line item the ownership percentage interest used to arrive at our share of net income or loss during the period when applying the equity method of accounting. A similar calculation was performed for the amounts in the column labeled “Pro Rata Portion Noncontrolling interests.”

We do not control the unconsolidated joint ventures and the presentations of the assets and liabilities and revenues and expenses do not represent our legal claim to such items. The operating agreements of the unconsolidated joint ventures generally provide that partners may receive cash distributions (1) quarterly, to the extent there is available cash from operations, (2) upon a capital event, such as a refinancing or sale or (3) upon liquidation of the venture. The amount of cash each partner receives is based upon specific provisions of each operating agreement and vary depending on factors including the amount of capital contributed by each partner and whether any contributions are entitled to priority distributions. Upon liquidation of the joint venture and after all liabilities, priority distributions and initial equity contributions have been repaid, the partners generally would be entitled to any residual cash remaining based on the legal ownership percentage shown in the table found earlier in this report entitled “Unconsolidated Joint Venture Information”.

We provide pro rata balance sheet and income statement information because we believe it assists investors and analysts in estimating our economic interest in our unconsolidated joint ventures when read in conjunction with the Company’s reported results under GAAP. The presentation of pro rata financial information has limitations as an analytical tool. Some of these limitations include:

•
The amounts shown on the individual line items were derived by applying our overall economic ownership interest percentage determined when applying the equity method of accounting and do not necessarily represent our legal claim to the assets and liabilities, or the revenues and expenses; and
•
Other companies in our industry may calculate their pro rata interest differently than we do, limiting the usefulness as a comparative measure.

Because of these limitations, the pro rata balance sheet and income statement information should not be considered in isolation or as a substitute for our financial statements as reported under GAAP. We compensate for these limitations by relying primarily on our GAAP results and using the pro rata balance sheet and income statement information only supplementally.



21
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2016
tangeroutlet-small93015.jpg


Reconciliation of Net Income to FFO and AFFO (dollars and shares in thousands):
 
 
 
Three Months Ended
 
YTD
 
12/31/16
 
9/30/16
 
6/30/16
 
3/31/16
 
12/31/15
 
 
12/31/16
 
12/31/15
Net income
$
25,636

 
$
72,774

 
$
77,302

 
$
28,617

 
$
113,963

 
 
$
204,329

 
$
222,168

Adjusted for:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization of real estate assets - consolidated
32,653

 
28,850

 
25,937

 
26,205

 
26,531

 
 
113,645

 
102,515

Depreciation and amortization of real estate assets - unconsolidated joint ventures
3,438

 
4,325

 
5,808

 
5,339

 
5,528

 
 
18,910

 
20,053

Impairment charges - unconsolidated joint ventures
—

 
2,919

 
—

 
—

 
—

 
 
2,919

 
—

Gain on sale of assets and interests in unconsolidated entities
—

 
—

 
—

 
(4,887
)
 
(86,506
)
 
 
(4,887
)
 
(120,447
)
Gain on previously held interest in acquired joint venture
—

 
(46,258
)
 
(49,258
)
 
—

 
—

 
 
(95,516
)
 
—

FFO
61,727

 
62,610

 
59,789

 
55,274

 
59,516

 
 
239,400

 
224,289

FFO attributable to noncontrolling interests in other consolidated partnerships
(286
)
 
(3
)
 
(12
)
 
(47
)
 
(57
)
 
 
(348
)
 
268

Allocation to participating securities
(520
)
 
(539
)
 
(564
)
 
(569
)
 
(625
)
 
 
(2,192
)
 
(2,408
)
FFO available to common shareholders (1)
$
60,921

 
$
62,068

 
$
59,213

 
$
54,658

 
$
58,834

 
 
$
236,860

 
$
222,149

As further adjusted for:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Director and officer compensation upon termination of service (2)
—

 
887

 
—

 
293

 
(731
)
 
 
1,180

 
(731
)
Acquisition costs
—

 
487

 
—

 
—

 
—

 
 
487

 
—

Demolition costs
—

 
259

 
182

 
—

 
—

 
 
441

 
—

Gain on sale of outparcel
—

 
(1,418
)
 
—

 
—

 
—

 
 
(1,418
)
 
—

Write-off of debt discount due to repayment of debt prior to maturity (3)
—

 
—

 
—

 
882

 
—

 
 
882

 
—

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

 
(2
)
 
(1
)
 
(12
)
 
8

 
 
(15
)
 
8

AFFO available to common shareholders (1)
$
60,921

 
$
62,281

 
$
59,394

 
$
55,821

 
$
58,111

 
 
$
238,417

 
$
221,426

FFO per common share - diluted (1)
$
0.61

 
$
0.62

 
$
0.59

 
$
0.55

 
$
0.59

 
 
$
2.36

 
$
2.23

AFFO per common share - diluted (1)
$
0.61

 
$
0.62

 
$
0.59

 
$
0.56

 
$
0.58

 
 
$
2.37

 
$
2.22

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted Average Shares
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic weighted average common shares
95,186

 
95,156

 
95,124

 
94,944

 
94,768

 
 
95,102

 
94,698

Effect of notional units
202

 
426

 
183

 
—

 
—

 
 
175

 
—

Effect of outstanding options and restricted common shares
67

 
90

 
68

 
59

 
59

 
 
68

 
61

Diluted weighted average common shares (for earnings per share computations)
95,455

 
95,672

 
95,375

 
95,003

 
94,827

 
 
95,345

 
94,759

Exchangeable operating partnership units
5,053

 
5,053

 
5,053

 
5,053

 
5,078

 
 
5,053

 
5,079

Diluted weighted average common shares (for FFO and AFFO per share computations) (1)
100,508

 
100,725

 
100,428

 
100,056

 
99,905

 
 
100,398

 
99,838





22
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2016
tangeroutlet-small93015.jpg


Reconciliation of FFO to FAD (dollars and shares in thousands):
 
 
 
Three Months Ended
 
YTD
 
12/31/16
 
9/30/16
 
6/30/16
 
3/31/16
 
12/31/15
 
 
12/31/16
 
12/31/15
FFO available to common shareholders
$
60,921

 
$
62,068

 
$
59,213

 
$
54,658

 
$
58,834

 
 
$
236,860

 
$
222,149

Adjusted for:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate depreciation excluded above
626

 
355

 
369

 
362

 
359

 
 
1,712

 
1,421

Amortization of finance costs
887

 
845

 
761

 
744

 
835

 
 
3,237

 
2,731

Amortization of net debt discount (premium)
130

 
84

 
117

 
959

 
191

 
 
1,290

 
256

Amortization of share-based compensation
3,504

 
4,160

 
3,654

 
4,001

 
3,152

 
 
15,319

 
14,712

Straight line rent adjustment
(1,910
)
 
(1,772
)
 
(1,713
)
 
(1,607
)
 
(1,605
)
 
 
(7,002
)
 
(6,347
)
Market rent adjustment
1,215

 
783

 
641

 
663

 
337

 
 
3,302

 
2,461

2nd generation tenant allowances
(4,345
)
 
(2,487
)
 
(2,804
)
 
(1,671
)
 
(3,960
)
 
 
(11,307
)
 
(10,472
)
Capital improvements
(7,300
)
 
(11,290
)
 
(8,391
)
 
(3,043
)
 
(1,231
)
 
 
(30,024
)
 
(12,082
)
Adjustments from unconsolidated joint ventures
(621
)
 
(693
)
 
(504
)
 
(384
)
 
(196
)
 
 
(2,202
)
 
(1,580
)
FAD available to common shareholders (1)
$
53,107

 
$
52,053

 
$
51,343

 
$
54,682

 
$
56,716

 
 
$
211,185

 
$
213,249

Dividends per share
$
0.325

 
$
0.325

 
$
0.325

 
$
0.285

 
$
0.285

 
 
$
1.260

 
$
1.095

Special dividends per share
—

 
—

 
—

 
—

 
0.210

 
 
—

 
0.210

Total dividends per share
$
0.325

 
$
0.325

 
$
0.325

 
$
0.285

 
$
0.495

 
 
$
1.260

 
$
1.305

FFO payout ratio (4)
53
%
 
52
%
 
55
%
 
52
%
 
48
%
 
 
53
%
 
49
%
FAD payout ratio (4)
61
%
 
63
%
 
64
%
 
52
%
 
50
%
 
 
60
%
 
51
%
Diluted weighted average common shares
100,508

 
100,725

 
100,428

 
100,056

 
99,905

 
 
100,398

 
99,838

(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 cash severance and accelerated vesting of restricted shares associated with the departure of an officer in August 2016, the accelerated vesting of restricted shares due to the death of a director in February 2016, and the reversal of certain share-based compensation awards during the three months ended December 31, 2015 previously recognized on awards not expected to vest due to the announcement that the Company’s then Chief Financial Officer would retire in May 2016.
(3)
Due to the January 28, 2016 early repayment of the $150 million mortgage secured by the Deer Park, New York property, which was scheduled to mature August 30, 2018.
(4)
Excludes the special dividend of $0.21 per share paid on January 15, 2016 to holders of record on December 31, 2015.


23
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2016
tangeroutlet-small93015.jpg



Reconciliation of Net Income to Portfolio NOI and Same Center NOI for the consolidated portfolio (in thousands):
 
 
Three months ended
 
Year ended
 
 
December 31,
 
December 31,
 
 
2016
 
2015
 
2016
 
2015
Net income
 
$
25,636

 
$
113,963

 
$
204,329

 
$
222,168

Adjusted to exclude:
 
 
 
 
 
 
 
 
Equity in earnings of unconsolidated joint ventures
 
(3,192
)
 
(3,182
)
 
(10,872
)
 
(11,484
)
Interest expense
 
16,469

 
14,078

 
60,669

 
54,188

Gain on sale of assets and interests in unconsolidated entities
 
—

 
(86,506
)
 
(6,305
)
 
(120,447
)
Gain on previously held interest in acquired joint venture
 
—

 
—

 
(95,516
)
 
—

Other non-operating (income) expense
 
(650
)
 
(62
)
 
(1,028
)
 
36

Depreciation and amortization
 
33,279

 
26,890

 
115,357

 
103,936

Other non-property (income) expenses
 
674

 
(319
)
 
(23
)
 
(1,317
)
Acquisition costs
 
—

 
—

 
487

 
—

Demolition Costs
 
—

 
—

 
441

 
—

Corporate general and administrative expenses
 
11,064

 
9,887

 
46,012

 
43,966

Non-cash adjustments (1)
 
(674
)
 
(1,245
)
 
(3,613
)
 
(3,792
)
Termination rents
 
(107
)
 
(155
)
 
(3,599
)
 
(4,576
)
Portfolio NOI
 
82,499

 
73,349

 
306,339

 
282,678

Non-same center NOI (2)
 
(11,970
)
 
(4,680
)
 
(33,152
)
 
(18,340
)
Same Center NOI
 
$
70,529

 
$
68,669

 
$
273,187

 
$
264,338


(1)
Non-cash items include straight-line rent, above and below market rent amortization and gains or losses on outparcel sales.
(2)
Excluded from Same Center NOI: Daytona Beach outlet center, which opened in November 2016, Foxwoods outlet center, which opened in May of 2015; Grand Rapids outlet center, which opened in July of 2015; Southaven outlet center, which opened in November 2015; Kittery I & II, Tuscola and West Branch outlet centers, which were sold in September 2015; Barstow outlet center, which was sold in October 2015; Fort Myers outlet center, which was sold in January 2016; Glendale outlet center (Westgate), which was acquired in June 2016; and Savannah outlet center, which was acquired in August 2016.


24
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2016
tangeroutlet-small93015.jpg


Non-GAAP Pro Rata Balance Sheet Information as of December 31, 2016 (dollars in thousands)
 
Non-GAAP Pro Rata Information
 
Pro Rata Portion Noncontrolling Interests
 
Pro Rata Portion Unconsolidated Joint Ventures (1)
Assets
 
 
 
Rental property
 
 
 
Land
$
—

 
$
44,007

Buildings, improvements and fixtures
(159
)
 
251,774

Construction in progress
—

 
6,518

 
(159
)
 
302,299

Accumulated depreciation
—

 
(33,716
)
Total rental property, net
(159
)
 
268,583

Cash and cash equivalents
—

 
13,636

Deferred lease costs and other intangibles, net
—

 
6,806

Prepaids and other assets
—

 
7,119

Total assets
$
(159
)
 
$
296,144

Liabilities and Owners' Equity
 
 
 
Liabilities
 
 
 
Mortgages payable, net
—

 
167,985

Accounts payable and accruals
—

 
10,006

Total liabilities
—

 
177,991

Owners' equity
(159
)
 
118,153

Total liabilities and owners' equity
$
(159
)
 
$
296,144

(1)
The carrying value of our investments in unconsolidated joint ventures as reported in our Consolidated Balance Sheet differs from our pro rata share of the net assets shown above due to adjustments to the book basis, including intercompany profits on sales of services that are capitalized by the unconsolidated joint ventures. The differences in basis totaled $3.7 million as of December 31, 2016 and are being amortized over the various useful lives of the related assets.


25
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2016
tangeroutlet-small93015.jpg


Non-GAAP Pro Rata Statement of Operations Information year to date December 31, 2016 (dollars in thousands)
 
 
Non-GAAP Pro Rata Information
 
 
Pro Rata Portion Noncontrolling Interests
 
Pro Rata Portion Unconsolidated Joint Ventures
Revenues
 
 
 
 
Base rentals
 
$
1,295

 
$
36,476

Percentage rentals
 
78

 
2,267

Expense reimbursements
 
453

 
19,600

Other income
 
50

 
1,288

Total revenues
 
1,876

 
59,631

Expense
 
 
 
 
Property operating
 
852

 
21,345

General and administrative
 
7

 
194

Depreciation and amortization
 
928

 
18,910

Impairment charge
 
—

 
2,919

Total expenses
 
1,787

 
43,368

Operating income
 
89

 
16,263

Other income/(expense)
 
 
 
 
Interest expense
 
(387
)
 
(5,399
)
Other nonoperating income (expense)
 
—

 
8

Net income
 
$
(298
)
 
$
10,872



26
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2016
tangeroutlet-small93015.jpg


Investor Information
  
Tanger Outlet Centers welcomes any questions or comments from shareholders, analysts, investment managers, media and prospective investors. Please address all inquiries to our Investor Relations Department.
Tanger Factory Outlet Centers, Inc.
Investor Relations
Phone:
(336) 834-6892
Fax:
(336) 297-0931
e-mail:
tangerir@tangeroutlet.com
Mail:
Tanger Factory Outlet Centers, Inc.
 
3200 Northline Avenue
 
Suite 360
 
Greensboro, NC 27408


27
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2016
tangeroutlet-small93015.jpg