EX-99.1 2 tfoc8k07282009ex99-1.htm EXHIBIT 99.1 tfoc8k07282009ex99-1.htm

Tanger Factory Outlet Centers, Inc.

News Release

For Release: IMMEDIATE RELEASE   
Contact:    Frank C. Marchisello, Jr.  
                         (336) 834-6834

TANGER REPORTS SECOND QUARTER 2009 RESULTS
Adjusted Funds From Operations Increase 11.5%

Greensboro, NC, July 28, 2009, Tanger Factory Outlet Centers, Inc. (NYSE:SKT) today reported funds from operations available to common shareholders (“FFO”), a widely accepted measure of REIT performance, for the three months ended June 30, 2009 of $32.5 million, or $0.80 per share, as compared to FFO of $14.3 million, or $0.38 per share, for the three months ended June 30, 2008.  For the six months ended June 30, 2009, FFO was $57.2 million, or $1.47 per share, as compared to FFO of $36.2 million, or $0.97 per share, for the six months ended June 30, 2008.  

FFO for the three and six months ended June 30, 2009 included a $10.5 million gain on the early extinguishment of debt as well as a $5.2 million impairment charge associated with the company’s Commerce I property located in Commerce, Georgia.  FFO for the three and six months ended June 30, 2008 was negatively impacted by an $8.9 million charge relating to the settlement of $200 million in 10 year US Treasury locks.  Excluding these charges, adjusted FFO for the second quarter and six months ended June 30, 2009 would have been $0.68 and $1.34 per share respectively, while FFO for the second quarter and six months ended June 30, 2008 would have been $0.61 and $1.20 per share respectively; representing an increase of 11.5% for the three months ended June 30, 2009 and an increase of 11.7% for the six months ended June 30, 2009.  

For the three months ended June 30, 2009, the company reported net income available to common shareholders of $0.30 per share, compared to a net loss available to common shareholders of $0.03 per share for the three months ended June 30, 2008.  Net income available to common shareholders for the six months ended June 30, 2009 was $1.19 per share, as compared to net income available to common shareholders of $0.13 per share for the six months ended June 30, 2008.  Net income available to common shareholders for the three months and six months ended June 30, 2009 and June 30, 2008 was also impacted by the charges described above.  

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 press release.

Second Quarter Highlights

 
·  
Successfully completed exchange offer related to 3.75% Exchangeable Senior Notes, which reduced outstanding debt by $142.3 million, in exchange for approximately 4.9 million common shares
 
·  
32.8% debt-to-total market capitalization ratio, compared to 34.8% last year
 
·  
3.98 times interest coverage ratio for the three months ended June 30, 2009 compared to 3.33 times last year
 
·  
11.6% average increase in base rental rates on 1,032,000 square feet of signed renewals during the first six months of 2009, compared to 18.3% year to date in 2008
 
 
 
 
·  
47.1% average increase in base rental rates on 224,000 square feet of re-leased space during the first six months of 2009, compared to 43.1% year to date in 2008
 
·  
1.8% increase in same center net operating income, 2.1% increase year to date
 
·  
94.7% occupancy rate for wholly-owned properties, up 1.2% from March 31, 2009
 
·  
$335 per square foot in reported same-space tenant sales for the rolling twelve months ended June 30, 2009
 

Steven B. Tanger, President and Chief Executive Officer, commented, “We are pleased with our operating results for the second quarter of 2009.  Overall, we have remained on plan during these difficult economic times.  Our adjusted funds from operations per share increased 11.5%, while same center net operating income increased almost 2% during the second quarter and year to date”.

Portfolio Operating Results

During the first six months of 2009, Tanger executed 285 leases, totaling 1,256,000 square feet within its wholly-owned properties.  Lease renewals during the first six months of 2009 accounted for 1,032,000 square feet, which represented approximately 69% of the square feet originally scheduled to expire during 2009, and generated an 11.6% increase in average base rental rates. Base rental increases on re-tenanted space during the first six months averaged 47.1% and accounted for the remaining 224,000 square feet.    

Same center net operating income increased 1.8% for the second quarter of 2009 compared to an increase of 3.9% during the second quarter of 2008 and increased 2.1% for the first six months of 2009 compared to 4.8% for the first six months of 2008.  Reported tenant comparable sales for our wholly owned properties for the rolling twelve months ended June 30, 2009 decreased 2.7% to $335 per square foot.  However, reported tenant comparable sales for the three months ended June 30, 2009 increased 1.8%.  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.

Exchange Offer Completed

On May 11, 2009, Tanger announced the successful closing of the offer to exchange common shares of the company for any and all of the outstanding 3.75% Exchangeable Senior Notes of Tanger Properties Limited Partnership due 2026.  In the aggregate, the exchange offer resulted in the retirement of approximately $142.3 million principal amount of the notes and the issuance of approximately 4.9 million common shares of the company.  For each $1,000 principal amount of exchangeable notes validly tendered, note holders received 34.21 common shares, or $987.58, a 1.2% discount to par, based on Tanger’s May 7, 2009 closing share price.  This offer represented one of the most successful convertible debt for equity exchanges in recent market history based on its 95% success rate.

Balance Sheet Summary

As of June 30, 2009, Tanger had a total market capitalization of approximately $2.2 billion including $714.4 million of debt outstanding, equating to a 32.8% debt-to-total market capitalization ratio.  As of June 30, 2009, 73.5% of Tanger’s debt was at fixed interest rates and the company had $188.3 million outstanding on its $325.0 million in available unsecured lines of credit.  During the second quarter of 2009, Tanger continued to maintain a strong interest coverage ratio of 3.98 times, compared to 3.33 times during the second quarter of last year.  

 
 
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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 $1.52 and $1.58 per share and its FFO available to common shareholders for 2009 will be between $2.79 and $2.85 per share.  The company’s earnings estimates do not include the impact of 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
$1.52
$1.58
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
 1.27
 1.27
Estimated diluted FFO per share
$2.79
$2.85

Second Quarter Conference Call

Tanger will host a conference call to discuss its second quarter results for analysts, investors and other interested parties on Wednesday, July 29, 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 Second 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 July 29, 2009 starting at 1:00 P.M. Eastern Time through August 7, 2009, by dialing 1-800-642-1687 (conference ID # 17089763).  Additionally, an online archive of the broadcast will also be available through August 7, 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 operates two outlet centers containing approximately 950,000 square feet.  Tanger is filing a Form 8-K with the Securities and Exchange Commission that furnishes a supplemental information package for the quarter ended June 30, 2009. For more information on Tanger Outlet Centers, visit the company’s 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 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.

 
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TANGER FACTORY OUTLET CENTERS, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
         
   
Three months ended
  
Six months ended
   
June 30,
  
June 30,
   
        2009
  
        2008
  
       2009
  
    2008
   
       (unaudited)
  
        (unaudited)
  
      (unaudited)
  
    (unaudited)
  
REVENUES
                                  
 
Base rentals (a)
  
$
43,425
    
$
38,623
    
$
86,352
    
$
75,855
    
 
Percentage rentals
    
940
      
1,120
      
2,248
      
2,298
    
 
Expense reimbursements
    
18,374
      
15,692
      
37,593
      
33,170
    
 
Other income
    
1,928
      
1,570
      
3,632
      
2,958
    
   
Total revenues
    
64,667
      
57,005
      
129,825
      
114,281
    
                                   
EXPENSES
                                  
 
Property operating
    
20,794
      
17,525
      
42,542
      
36,744
    
 
General and administrative
    
5,820
      
5,677
      
11,755
      
10,948
    
 
Depreciation and amortization
    
19,652
      
14,690
      
40,049
      
30,273
    
 
Impairment charge (b)
    
5,200
      
---
      
5,200
      
---
    
   
Total expenses
    
51,466
      
37,892
      
99,546
      
77,965
    
Operating income
    
13,201
      
19,113
      
30,279
      
36,316
    
Interest expense (c)
    
(9,564
)
    
(10,143
)
    
(20,774
)
    
(20,342
)
  
Gain on early extinguishment of debt (d)
    
10,467
      
---
      
10,467
      
---
    
Gain on fair value measurement of previously held
                                 
 
interest in acquired joint venture (e)
    
---
      
---
      
31,497
      
---
    
Loss on settlement of US treasury rate locks
   
---
      
(8,910
)
    
---
      
(8,910
)
  
Income before equity in earnings (losses) of
                                 
 
unconsolidated joint ventures
   
14,104
      
60
      
51,469
      
7,064
    
Equity in earnings (losses)  of unconsolidated joint
                                  
 
ventures
    
(517
)
    
558
      
(1,414
)
    
952
    
Net income
   
13,587
      
618
      
50,055
      
8,016
    
Noncontrolling interest in Operating Partnership
    
(1,833
)
    
129
      
(7,531
)
    
(852
)
  
Net income attributable to shareholders of
                                 
 
Tanger Factory Outlet Centers, Inc.
  
$
11,754
    
$
747
    
$
42,524
    
$
7,164
    
Preferred share dividends
    
(1,407
)
    
(1,407
)
    
(2,813
)
    
(2,813
)
  
Allocation of earnings to participating securities
    
(179
)
    
(195
)
    
(616
)
    
(334
)
  
Net income (loss) available to common shareholders of
                                 
 
Tanger Factory Outlet Centers, Inc.
    
10,168
      
(855
)
    
39,095
      
4,017
    
                                   
Basic earnings per common share:
                                  
 
Income (loss) from continuing operations
  
$
.30
    
$
(.03
)
  
$
1.19
    
$
.13
    
 
Net income (loss)
  
$
.30
    
$
(.03
)
  
$
1.19
    
$
.13
    
                                   
Diluted earnings per common share:
                                  
 
Income (loss) from continuing operations
  
$
.30
    
$
(.03
)
  
$
1.19
    
$
.13
    
 
Net income (loss)
  
$
.30
    
$
(.03
)
  
$
1.19
    
$
.13
    
                                   
Funds from operations available to
                                  
 
common shareholders (FFO)
  
$
32,481
    
$
14,273
    
$
57,184
    
$
36,174
    
FFO per common share – diluted
  
$
.80
    
$
.38
    
$
1.47
    
$
.97
    
                                   
   
(a) Includes straight-line rent and market rent adjustments of $878 and $1,283 for the three months ended and $1,577 and $1,967 for the six months ended June 30, 2009 and 2008, respectively.
  
(b) Represents FAS 144 “Accounting for the Impairment or Disposal of Long Lived Assets” charge for impairment of our Commerce I, Georgia center of approximately $5.2 million.
  
(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.  Also, includes prepayment premium of $406 for the three and six months ended June 30, 2008 related to the repayment of a mortgage which had a principal balance of $170.7 million.
  
(d) Represents gain on early extinguishment of $142.3 million of exchangeable notes which were retired through an exchange offering for approximately 4.9 million common shares in May 2009.
 
(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.
  
   

 
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TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
                         
   
     June 30,
  
     December 31,
  
   
     2009
  
     2008
  
   
     (Unaudited)
  
    (Unaudited)
  
ASSETS:
                  
 
Rental property
                  
   
Land
  
$
135,708
    
$
135,689
    
   
Buildings, improvements and fixtures
    
1,343,854
      
1,260,243
    
   
Construction in progress
    
---
      
3,823
    
     
1,479,562
      
1,399,755
    
   
Accumulated depreciation
    
(379,412
)
    
(359,301
)
  
   
Rental property, net
    
1,100,150
      
1,040,454
    
 
Cash and cash equivalents
    
5,150
      
4,977
    
 
Investments in unconsolidated joint ventures
    
9,808
      
9,496
    
 
Deferred charges, net
    
43,746
      
37,750
    
 
Other assets
    
31,771
      
29,248
    
 
Total assets
  
 $
1,190,625
    
 $
1,121,925
    
 
LIABILITIES AND EQUITY:
Liabilities
                  
 
Debt
                  
 
Senior, unsecured notes (net of discount of $975 and $9,137 respectively)
  
$
256,235
    
$
390,363
    
 
Mortgages payable (net of discount of $862 and $0, respectively)
    
34,938
      
---
    
 
Unsecured term loan
    
235,000
      
235,000
    
 
Unsecured lines of credit
    
188,250
      
161,500
    
 
Total debt
    
714,423
      
786,863
    
Construction trade payables
    
6,327
      
11,968
    
Accounts payable and accrued expenses
    
25,103
      
26,277
    
Other liabilities
    
32,152
      
30,914
    
 
Total liabilities
    
778,005
      
856,022
    
                   
Commitments
                  
                   
Equity
                  
Tanger Factory Outlet Centers, Inc. shareholders’ 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 June 30, 2009
                  
 
and December 31, 2008
    
75,000
      
75,000
    
 
Common shares, $.01 par value, 150,000,000 shares authorized,
                  
 
36,782,179 and 31,667,501 shares issued and outstanding
                  
 
at June 30, 2009 and December 31, 2008, respectively
    
368
      
317
    
 
Paid in capital
    
482,532
      
371,190
    
 
Distributions in excess of earnings
    
(186,202
)
    
(201,679
)
  
 
Accumulated other comprehensive loss
    
(6,879
)
    
(9,617
)
  
 
Equity attributable to shareholders of Tanger Factory Outlet Centers, Inc.
  
364,819
      
235,211
    
Equity attributable to noncontrolling interest in Operating Partnership
  
47,801
      
30,692
    
 
Total equity
  
412,620
      
265,903
    
 
Total liabilities and equity
  
$
1,190,625
    
$
1,121,925
    
                   

 
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TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
(in thousands, except per share, state and center information)
         
   
Three months ended
  
Six months ended
   
June 30,
  
June 30,
   
2009
  
2008
  
2009
  
2008
   
(unaudited)
  
(unaudited)
  
(unaudited)
  
(unaudited)
  
FUNDS FROM OPERATIONS (a)
                                  
 
Net income
 
$
13,587
    
$
618
    
$
50,055
    
$
8,016
    
 
Adjusted for:
                                  
 
Depreciation and amortization uniquely significant to
                                  
 
real estate – consolidated
    
19,530
      
14,608
      
39,808
      
30,116
    
 
Depreciation and amortization uniquely significant to
                                  
 
real estate – unconsolidated joint ventures
    
1,223
      
651
      
2,389
      
1,303
    
 
Gain on fair value measurement of previously held  
                                  
 
interest in acquired joint venture
    
---
      
---
      
(31,497
)
    
---
    
 
Funds from operations (FFO)
    
34,340
      
15,877
      
60,755
      
39,435
    
 
Preferred share dividends
    
(1,407
)
    
(1,407
)
    
(2,813
)
    
(2,813
)
  
 
Allocation of earnings to participating securities
    
(452
)
    
(197
)
    
(758
)
    
(448
)
  
 
Funds from operations available to common
                                 
 
shareholders
  
$
32,481
    
$
14,273
    
$
57,184
    
$
36,174
    
 
Funds from operations available to common
                                 
 
shareholders per share - diluted
  
$
.80
    
$
.38
    
$
1.47
    
$
.97
    
                                   
WEIGHTED AVERAGE SHARES
                                  
 
Basic weighted average common shares
    
34,249
      
31,068
      
32,767
      
31,024
    
 
Effect of exchangeable notes
    
---
      
223
      
---
      
223
    
 
Effect of outstanding options
    
78
      
155
      
80
      
162
    
 
Diluted weighted average common shares (for earnings
                                  
 
per share computations)
    
34,327
      
31,446
      
32,847
      
31,409
    
 
Convertible operating partnership units (b)
    
6,067
      
6,067
      
6,067
      
6,067
    
 
Diluted weighted average common shares (for funds
                                  
 
from operations per share computations)
    
40,394
      
37,513
      
38,914
      
37,476
    
                                   
OTHER INFORMATION
                                  
Gross leasable area open at end of period -
                                  
Wholly owned
    
9,241
      
8,453
      
9,241
      
8,453
    
Partially owned – unconsolidated
   
950
      
667
      
950
      
667
    
                                   
Outlet centers in operation -
                                 
Wholly owned
    
31
      
29
      
31
      
29
    
Partially owned – unconsolidated
    
2
      
2
      
2
      
2
    
                                   
States operated in at end of period (c)
   
21
      
21
      
21
      
21
    
Occupancy at end of period (c) (d)
    
94.7
%
    
96.2
%
    
94.7
%
    
96.2
%
  
                                   


 
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(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 (noncontrolling 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.
 
 
 
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