Investments in Unconsolidated Real Estate Joint Ventures

Our investments in unconsolidated joint ventures as of September 30, 2012 and December 31, 2011 aggregated $82.7 million and $28.5 million, respectively. We have concluded based on the current facts and circumstances that the equity method of accounting should be used to account for each of the individual joint ventures below. At September 30, 2012, we were members of the following unconsolidated real estate joint ventures:



Joint Venture	Center Location	Ownership %		Square Feet	Carrying Value of Investment (in millions)		Total Joint Venture Debt (in millions)
Deer Park	Deer Park, Long Island NY	33.3	%	741,981	$	3.5	$	246.9
Deer Park Warehouse	Deer Park, Long Island NY	33.3	%	29,253	—		1.8
Galveston/Houston ⁽¹⁾	Texas City, Texas	50.0	%	352,705	28.5		—
National Harbor	Washington D.C. Metro Area	50.0	%	—	1.2		—
RioCan Canada	Various	50.0	%	155,522	25.9		—
Westgate	Glendale, Arizona	58.0	%	—	19.5		15.9
Wisconsin Dells	Wisconsin Dells, Wisconsin	50.0	%	265,086	3.9		24.3
Other				—	0.2		—
Total					$	82.7	$	288.9

(1) Outlet center opened on October 19, 2012.

Management, leasing and marketing fees earned from services provided to our unconsolidated joint ventures were recognized in other income as follows (in thousands):



	Three months ended September 30,				Nine months ended September 30,
	2012		2011		2012		2011
Fee:
Management and leasing	$	571	$	716	$	1,524	$	1,689
Marketing	61		37		161		125
Total Fees	$	632	$	753	$	1,685	$	1,814

Our investments in real estate joint ventures are reduced by the percentage of the profits earned for leasing and development services associated with our ownership interest in each joint venture. Our carrying value of investments in unconsolidated joint ventures differs from our share of the assets reported in the "Summary Balance Sheets - Unconsolidated Joint Ventures" shown below 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 are amortized over the various useful lives of the related assets.

Deer Park Warehouse, Long Island, New York

In June 2008, we, along with our partners in Deer Park, entered into a joint venture to purchase a warehouse adjacent to the Tanger Outlet Center located in Deer Park, NY for a total purchase price of $3.3 million and obtained mortgage financing of $2.3 million. The interest only mortgage loan secured by the warehouse matured on May 17, 2011 and the joint venture did not qualify for the one year extension option. As a result, on June 1, 2012 the joint venture reduced the outstanding principal balance by $500,000 to $1.8 million and entered into a Loan Forbearance Agreement with the lender whereby the lender agreed that it would not enforce its rights under the loan documents until the trigger date of October 1, 2012 unless extended. Extension of the trigger date was contingent among other things upon delivering a fully executed contract to sell the property to an unaffiliated third-party purchaser. Although the joint venture did not meet all of the requirements for extending the trigger date, it has delivered a fully executed contract to sell the property which has been approved by the lender. Through closing, the joint venture is committed to make monthly debt service payments at an interest rate of LIBOR + 1.85%. Additional interest accrues at a rate of Prime + 5.5% less the amount paid.

Galveston/Houston, Texas

In June 2011, we announced the formation of a joint venture for the development of a Tanger Outlet Center south of Houston in Texas City, TX. The center grand opening occurred on October 19, 2012 and featured over 85 brand name and designer outlet stores in the first phase of approximately 353,000 square feet, with room for expansion for a total build out of approximately 470,000 square feet. In July 2011, the joint venture acquired the land underlying the site for approximately $5.6 million. As of September 30, 2012, we and our partner had each contributed $27.8 million in cash to the joint venture to fund development activities. The joint venture's remaining commitments to complete construction of the outlet center amounted to approximately $17.0 million at September 30, 2012. We provide property management and marketing services to the center; and with our partner, are jointly providing development and leasing services.

National Harbor, Washington, D.C. Metro Area

In May 2011, we announced the formation of a joint venture for the development of a Tanger Outlet Center at National Harbor in the Washington, D.C. Metro area. The resulting Tanger Outlet Center is expected to contain approximately 80 brand name and designer outlet stores in a center measuring up to 350,000 square feet. The project is currently in the pre-development phase and both parties have made initial equity contributions of $1.2 million to fund certain pre-development costs. We will provide property management, leasing and marketing services to the joint venture. We and our partner will jointly provide site development and construction supervision services to the joint venture.

RioCan Canada

On December 9, 2011, the RioCan Canadian Joint Venture purchased the Cookstown Outlet Mall. The existing outlet center was acquired for $47.4 million, plus an additional $13.8 million for excess land upon the seller meeting certain conditions, for an aggregate purchase price of $61.2 million. RioCan is providing development and property management services to this existing outlet center and we are providing leasing and marketing services. In connection with the purchase, the joint venture assumed the in place financing of $29.6 million which carried an interest rate of 5.10% and had an original maturity date of June 21, 2014. In March 2012, the joint venture retired the outstanding loan and we contributed an additional $15.1 million to the joint venture to fund our portion of the payment.

During the first quarter of 2012, the joint venture terminated an option contract to develop a center in Halton Hills, Ontario and accordingly wrote-off pre-development costs of approximately $1.3 million.

Westgate, Glendale, Arizona

On May 4, 2012, we closed on the formation of a joint venture for the development of a Tanger Outlet Center in Glendale, Arizona. Construction of the center began in February 2012. Situated on 38-acres, the outlet center is located on Loop 101 and Glendale Avenue in Western Phoenix. We currently expect this center to be completed in time for a November 15, 2012 grand opening and will have approximately 80 brand name and designer outlet stores in the first phase which will contain approximately 330,000 square feet. As of September 30, 2012, we had contributed $19.4 million in cash to the joint venture to fund development activities. The joint venture's remaining commitments to complete construction of the outlet center amounted to approximately $17.6 million at September 30, 2012. We are providing property management, construction supervision, leasing and marketing services to the joint venture.

On June 27, 2012, the joint venture closed on a construction loan with the ability to borrow up to $43.8 million, which carries an interest rate of LIBOR + 1.75%. As of September 30, 2012, the joint venture's balance on the loan was $15.9 million.

We evaluate our real estate joint ventures in accordance with the Consolidation guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC"). As a result of our qualitative assessment, we concluded that our Westgate and Deer Park joint ventures are Variable Interest Entities ("VIEs") and all of our other joint ventures are not VIEs. Westgate is considered a VIE because the voting rights are disproportionate to the economic interests. Deer Park is considered a VIE because it does not meet the criteria of the members having a sufficient equity investment at risk. Investments in real estate joint ventures in which we have a non-controlling ownership interest are accounted for using the equity method of accounting.

After making the determination that Westgate and Deer Park were VIEs, we performed an assessment to determine if we would be considered the primary beneficiary and thus be required to consolidate their balance sheets and results of operations. This assessment was based upon whether we had the following:


a.	The power to direct the activities of the VIE that most significantly impact the entity's economic performance


b.	The obligation to absorb losses of the entity that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be significant to the VIE

Based on the provisions of the operating, development, leasing, and management agreements of Westgate and Deer Park, we determined that neither member has the power to direct the significant activities that affect the economic performance of the ventures and therefore, we are not required to consolidate Westgate or Deer Park. Our equity method investments in Westgate and Deer Park as of September 30, 2012 were approximately $19.5 million and $3.5 million, respectively. We are unable to estimate our maximum exposure to loss at this time because our guarantees are limited and based on the future operating performance of Westgate and Deer Park.

Condensed combined summary financial information of unconsolidated joint ventures accounted for using the equity method is as follows (in thousands):



Summary Balance Sheets - Unconsolidated Joint Ventures	As of September 30, 2012			As of December 31, 2011
Assets
Land	$	78,531		$	77,864
Buildings, improvements and fixtures	295,593			288,934
Construction in progress, including land	113,169			23,545
	487,293			390,343
Accumulated depreciation	(57,067		)	(46,245		)
Total rental property, net	430,226			344,098
Assets held for sale ⁽¹⁾	1,821			—
Cash and cash equivalents	10,778			7,582
Deferred lease costs, net	13,586			14,815
Deferred debt origination costs, net	5,773			7,566
Prepaids and other assets	21,396			11,687
Total assets	$	483,580		$	385,748
Liabilities and Owners' Equity
Mortgages payable	$	288,978		$	303,230
Construction trade payables	14,506			2,669
Accounts payable and other liabilities	26,125			27,246
Total liabilities	329,609			333,145
Owners' equity	153,971			52,603
Total liabilities and owners' equity	$	483,580		$	385,748

(1) Assets related to our Deer Park Warehouse joint venture, which is currently under contract to be sold.



	Three months ended						Nine months ended
Summary Statements of Operations	September 30,						September 30,
- Unconsolidated Joint Ventures	2012			2011			2012			2011
Revenues	$	11,985		$	9,488		$	35,249		$	28,802
Expenses
Property operating	5,521			4,718			15,495			13,292
General and administrative	365			58			765			114
Acquisition costs	—			—			704			—
Abandoned development costs	—			—			1,390			—
Impairment charge	—			—			420			—
Depreciation and amortization	4,283			3,534			13,191			10,772
Total expenses	10,169			8,310			31,965			24,178
Operating income	1,816			1,178			3,284			4,624
Interest expense	3,540			1,381			10,967			7,310
Net loss	$	(1,724	)	$	(203	)	$	(7,683	)	$	(2,686	)

The Company and Operating Partnership's share of:
Net loss	$	(555	)	$	(27	)	$	(2,874	)	$	(823	)
Depreciation and impairment charge (real estate related)	$	1,641		$	1,280		$	5,249		$	3,922