Investments in Unconsolidated Real Estate Joint Ventures

Our investments in unconsolidated joint ventures as of December 31, 2012 and 2011 aggregated $126.6 million and $28.5 million respectively. We have evaluated the accounting treatment for each of the joint ventures and have concluded based on the current facts and circumstances that the equity method of accounting should be used to account for the individual joint ventures. At December 31, 2012 and December 31, 2011, we were members of the following unconsolidated real estate joint ventures:



As of December 31, 2012
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	$	3.0	$	246.9
Deer Park Warehouse	Deer Park, Long Island NY	33.3	%	29,253	—		1.9
Galveston/Houston	Texas City, TX	50.0	%	352,705	36.7		—
National Harbor	Washington D.C. Metro Area	50.0	%	—	2.6		—
RioCan Canada	Various	50.0	%	434,562	62.2		20.1
Westgate	Glendale, AZ	58.0	%	332,234	19.1		32.0
Wisconsin Dells	Wisconsin Dells, WI	50.0	%	265,086	2.8		24.3
Other				—	0.2		—
					$	126.6	$	325.2



As of December 31, 2011
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	%	656,788	$	5.4	$	246.9
Deer Park Warehouse	Deer Park, Long Island NY	33.3	%	29,253	—		2.3
Galveston/Houston	Texas City, TX	50.0	%	—	7.9		—
National Harbor	Washington D.C. Metro Area	50.0	%	—	0.9		—
RioCan Canada	Various	50.0	%	159,391	10.0		29.7
Wisconsin Dells	Wisconsin Dells, WI	50.0	%	265,086	4.0		24.3
Other				—	0.3		—
					$	28.5	$	303.2

These investments are recorded initially at cost and subsequently adjusted for our equity in the venture's net income (loss), cash contributions, distributions and other adjustments required by the equity method of accounting as described below.

The following management, development, leasing and marketing fees were recognized from services provided to our unconsolidated joint ventures (in thousands):



	Year Ended December 31,
	2012		2011		2010
Fees:
Development	$	427	$	—	$	—
Loan guarantee	80		—		—
Management and leasing	2,102		1,958		1,927
Marketing	433		163		154
Total Fees	$	3,042	$	2,121	$	2,081

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, Long Island, New York

In October 2003, we, and two other members each having a 33.3% ownership interest, established a joint venture to develop and own a shopping center in Deer Park, New York. The center opened in October 2008.

On December 22, 2011, Deer Park, closed on the refinancing of its mortgage and mezzanine loans. At the closing, Deer Park made a payment of $20.0 million towards the principal amount of the mortgage bringing the new balance outstanding to $231.9 million. Each of the three partners made an equity contribution to Deer Park prior to closing of $6.4 million. The $20.0 million principal payment was made from a combination of these three equity contributions totaling $19.2 million and cash available within Deer Park. The principal balance on the mezzanine loan remained at $15.0 million. The new interest rates for the mortgage and mezzanine loan are LIBOR + 3.50% and LIBOR + 5.00%, respectively. The maturity date of both the mortgage and the mezzanine loan is May 17, 2014, however the loans require certain financial covenants, such as debt service coverage and loan to value ratios, to be met at various measurement dates. Based on the calculation of its debt service coverage, which is based on information as of December 31, 2012, Deer Park was not in compliance with its coverage requirements. As a result, the lenders have the right, but not the obligation to require a principal payment in an amount sufficient to satisfy the debt service coverage test. Such principal payment, if necessary, may require additional capital contributions to Deer Park by its partners.

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, New York 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, Texas. The center grand opening occurred on October 19, 2012 and features 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. As of December 31, 2012, we and our partner had each contributed $35.3 million in cash to the joint venture to fund development activities. 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 planned Tanger Outlet Center is expected to contain approximately 80 brand name and designer outlet stores in a center measuring up to 340,000 square feet. In November 2012, the joint venture broke ground and began site development. Both parties have made initial equity contributions of $2.6 million to fund certain pre-development costs. We will provide property management, leasing and marketing services to the joint venture; and with our partner, will jointly provide site development and construction supervision services.

RioCan Canadian Joint Venture

During 2011 we announced the formation of an exclusive joint venture with RioCan Real Estate Investment Trust for the acquisition, development and leasing of sites across Canada that are suitable for development or redevelopment as outlet shopping centers similar in concept and design to those within our existing U.S. portfolio. Any projects developed will be co-owned by us and RioCan on a 50/50 basis and will be branded as Tanger Outlet Centers. We have agreed to provide leasing and marketing services to the venture and RioCan will provide development and property management services.

In December 2011, the RioCan 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. In connection with the purchase, the joint venture assumed the in-place financing of $29.6 million. 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 $1.4 million.

In November 2012, the RioCan Canadian joint venture acquired two existing outlet centers in the Montreal, Quebec market for an aggregate purchase price of approximately $94.8 million. The purchase price includes the assumption of mortgages totaling $18.7 million at Les Factoreries Saint-Sauveur, which carry a weighted average interest rate of 5.7% and mature in 2015 and 2020. There is no in-place financing associated with the Bromont Outlet Mall acquisition.

Les Factoreries Saint-Sauveur, is located northwest of Montreal adjacent to Highway 15 in the town of Saint-Sauveur, Quebec. The property was built in 1980, and expanded in 2006, and is approximately 116,000 square feet with the potential to expand to approximately 131,000 square feet. This outlet center features many national brands such as, Nike, Tommy Hilfiger , Reebok, Guess, Jones New York, Naturalizer and Parasuco.

The Bromont Outlet Mall, is located east of Montreal near the eastern townships adjacent to Highway 10 in the town of Bromont, Quebec. The property was built in 2004 and expanded through 2011, and is approximately 163,000 square feet with the potential to expand to approximately 251,000 square feet. This outlet center features many national brands such as, Point Zero, Tommy Hilfiger, Guess, Puma, Mexx, and Urban Planet. Bromont is located at the base of Mont Brome.

Westgate, Glendale, Arizona

On May 4, 2012, we formed a joint venture for the development of a Tanger Outlet Center in Glendale, Arizona. The center grand opening occurred on November 15, 2012 and features approximately 80 brand name and designer outlet stores in the first phase of approximately 332,000 square feet, with room for expansion for a total build out of approximately 410,000 square feet. On June 27, 2012, the joint venture closed on a construction loan with the ability to borrow up to $48.3 million, which carries an interest rate of LIBOR + 1.75%. As of December 31, 2012, the joint venture's balance on the loan was $32.0 million. As of December 31, 2012, we had contributed $19.4 million in cash to the joint venture to fund development activities. We are providing property management, construction supervision, leasing and marketing services to the joint venture.

Wisconsin Dells, Wisconsin

In March 2005, we established the Wisconsin Dells joint venture to construct and operate a Tanger Outlet center in Wisconsin Dells, Wisconsin. In December 2012, the joint venture closed on the refinance of its $24.3 million mortgage loan. The refinanced interest-only, non-recourse mortgage loan has a 10 year term and carries an interest rate of LIBOR + 2.25%. We are providing property management, leasing and marketing services to the joint venture.

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



Summary Balance Sheets - Unconsolidated Joint Ventures	As of December 31, 2012			As of December 31, 2011
Assets
Land	$	110,665		$	77,864
Buildings, improvements and fixtures	493,424			288,934
Construction in progress, including land	2,128			23,545
	606,217			390,343
Accumulated depreciation	(62,547		)	(46,245		)
Total rental property, net	543,670			344,098
Assets held for sale ⁽¹⁾	1,828			—
Cash and cash equivalents	21,879			7,582
Deferred lease costs, net	24,411			14,815
Deferred debt origination costs, net	5,213			7,566
Prepaids and other assets	25,350			11,687
Total assets	$	622,351		$	385,748
Liabilities and Owners' Equity
Mortgages payable	$	325,192		$	303,230
Construction trade payables	21,734			2,669
Accounts payable and other liabilities	31,944			27,246
Total liabilities	378,870			333,145
Owners' equity	243,481			52,603
Total liabilities and owners' equity	$	622,351		$	385,748

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



Summary Statements of Operations- Unconsolidated Joint Ventures:	Year Ended December 31,
	2012			2011			2010
Revenues	$	54,936		$	38,847		$	37,858
Expenses:
Property operating	24,678			18,034			18,172
General and administrative	970			250			455
Acquisition costs	1,437			—			—
Abandoned development costs	1,447			—			—
Impairment charge ⁽¹⁾	420			900			—
Depreciation and amortization	19,914			14,242			14,245
	48,866			33,426			32,872
Operating income	6,070			5,421			4,986
Interest expense	14,760			10,456			6,947
Net loss	$	(8,690	)	$	(5,035	)	$	(1,961	)
The Company and Operating Partnership's share of:
Net loss	$	(3,295	)	$	(1,565	)	$	(464	)
Depreciation and asset impairments (real estate related) ⁽¹⁾	8,245			5,475			5,146

(1) The years ended December 31, 2012 and 2011, respectively, includes impairment charges recorded at the Deer Park Warehouse joint venture entity, of which our share is one-third based on our 33.3% ownership percentage. There has been no significant amount of income or expense associated with the activities of this entity in any of the years presented.