Investments in Unconsolidated Real Estate Joint Ventures

Our investments in unconsolidated joint ventures as of June 30, 2014 and December 31, 2013 aggregated $210.1 million and $140.2 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 June 30, 2014 and December 31, 2013, we were members of the following unconsolidated real estate joint ventures:



As of June 30, 2014
Joint Venture	Center Location	Ownership %		Square Feet (in 000's)	Carrying Value of Investment (in millions)		Total Joint Venture Debt (in millions)
Charlotte	Charlotte, NC	50.0	%	—	$	30.8	$	—
Galveston/Houston	Texas City, TX	50.0	%	353	6.7		65.0
National Harbor	National Harbor, MD	50.0	%	339	19.3		62.0
RioCan Canada	Various	50.0	%	432	101.4		17.5
Savannah ⁽¹⁾	Savannah, GA	50.0	%	—	33.1		—
Westgate	Glendale, AZ	58.0	%	332	15.7		45.8
Wisconsin Dells	Wisconsin Dells, WI	50.0	%	265	2.4		24.3
Other				—	0.7		—
					$	210.1	$	214.6

(1)

Based on capital contribution and distribution provisions in the joint venture agreement, we expect our economic interest in the venture's cash flow to be greater than the ownership percentage indicated above, which in this case, states our legal interest in this venture. Our economic interest may fluctuate based on a number of factors, including mortgage financing, partnership capital contributions and distributions, and proceeds from gains or losses of asset sales.



As of December 31, 2013
Joint Venture	Center Location	Ownership %		Square Feet (in 000's)	Carrying Value of Investment (in millions)		Total Joint Venture Debt (in millions)
Charlotte	Charlotte, NC	50.0	%	—	$	11.6	$	—
Galveston/Houston	Texas City, TX	50.0	%	353	7.4		65.0
National Harbor	National Harbor, MD	50.0	%	336	16.7		52.4
RioCan Canada	Various	50.0	%	433	85.7		17.9
Westgate	Glendale, AZ	58.0	%	332	16.1		43.1
Wisconsin Dells	Wisconsin Dells, WI	50.0	%	265	2.5		24.3
Other				—	0.2		—
					$	140.2	$	202.7

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.

Fees we received for various services provided to our unconsolidated joint ventures were recognized in other income as follows (in thousands):



	Three months ended					Six months ended
	June 30,					June 30,
	2014		2013			2014		2013
Fee:
Development and leasing	$	70	$	(81	)	$	78	$	(12	)
Loan guarantee	146		40			187		80
Management	438		504			846		1,001
Marketing	104		99			213		208
Total Fees	$	758	$	562		$	1,324	$	1,277

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 (totaling $3.2 million and $1.6 million as of June 30, 2014 and December 31, 2013) are amortized over the various useful lives of the related assets.

Charlotte, North Carolina

In May 2013, we formed a 50/50 joint venture for the development of an outlet center in the Charlotte, NC market. Subsequently, during the third quarter of 2013, the joint venture began construction on the outlet center which will be located eight miles southwest of uptown Charlotte at the interchange of I-485 and Steele Creek Road (NC Highway 160), the two major thoroughfares for the city. The approximately 400,000 square foot project, which features approximately 90 brand name and designer stores, opened on July 31, 2014.

As of June 30, 2014, we and our partner had each contributed approximately $30.2 million in cash to the joint venture to fund development activities. We are providing development services to the project; and with our partner, are jointly providing leasing services. Our partner will provide property management and marketing services to the center once open.

RioCan Canada

We have entered into a 50/50 co-ownership agreement with RioCan Real Estate Investment Trust ("RioCan Joint Venture") to develop and acquire outlet centers in Canada. Under the agreement, any projects developed or acquired will be branded as Tanger Outlet Centers. We have agreed to provide leasing and marketing services to the venture and RioCan has agreed to provide development and property management services.

In March of 2013, the RioCan Joint Venture acquired the land adjacent to the existing Cookstown Outlet Mall for $13.9 million. The land is being used for an expansion of the Cookstown Outlet Mall which began in May 2013. The expansion, which is expected to open in the fourth quarter of 2014, will add approximately 153,000 square feet and approximately 35 new brand name and designer outlet stores to the center.

Also, during the second quarter of 2013, the joint venture purchased land for $28.7 million and broke ground on Tanger Outlets Ottawa, the first ground up development of a Tanger Outlet Center in Canada. Located in suburban Kanata off the TransCanada Highway (Highway 417) at Palladium Drive, this center will contain approximately 316,000 square feet and will feature approximately 80 brand name and designer outlet stores. The center is currently expected to open in the fourth quarter of 2014. As of June 30, 2014, we and our co-owner had each contributed $29.9 million in cash to fund development activities on these two projects.

Savannah, Georgia

In January 2014, we announced our plans to develop Tanger Outlets Savannah through a joint venture arrangement. The center will include approximately 385,000 square feet. The site is located on I-95, just north of I-16 in Pooler, Georgia, adjacent to the City of Savannah, and near the Savannah International Airport. As of June 30, 2014, our equity contributions totaled $33.3 million and our partner's equity contribution totaled $7.4 million. Contributions we make in excess of $7.4 million will earn a preferred rate of return equal to 8% from the date the contributions are made until the outlet center’s grand opening date, and then 10% annually thereafter.

In May 2014, the joint venture closed on a $97.7 million interest only mortgage loan with a rate of LIBOR + 1.65% and a maturity date of May 21, 2017, with the option for two, one year extensions.

Westgate, Glendale, Arizona

During the second quarter of 2014, Westgate began a 65,000 square foot expansion of the existing property which is expected to open in time for the 2014 holiday season. The expansion is being substantially funded by amounts available under the amended Westgate mortgage loan which had its maximum borrowing capacity increased from $48.3 million to $62.0 million in May 2014.

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



Condensed Combined Balance Sheets - Unconsolidated Joint Ventures	June 30, 2014			December 31, 2013
Assets
Land	$	66,076		$	66,020
Buildings, improvements and fixtures	329,918			327,972
Construction in progress, including land	205,831			86,880
	601,825			480,872
Accumulated depreciation	(37,457		)	(29,523		)
Total rental property, net	564,368			451,349
Cash and cash equivalents	28,399			22,704
Deferred lease costs, net	22,533			19,281
Deferred debt origination costs, net	2,701			1,737
Prepaids and other assets	9,618			9,107
Total assets	$	627,619		$	504,178
Liabilities and Owners' Equity
Mortgages payable	$	214,616		$	202,688
Construction trade payables	24,409			19,370
Accounts payable and other liabilities	13,803			8,540
Total liabilities	252,828			230,598
Owners' equity	374,791			273,580
Total liabilities and owners' equity	$	627,619		$	504,178



	Three months ended						Six months ended
Condensed Combined Statements of Operations	June 30,						June 30,
- Unconsolidated Joint Ventures	2014			2013			2014			2013
Revenues	$	16,079		$	20,553		$	32,834		$	41,948
Expenses
Property operating	6,624			8,546			13,270			17,686
General and administrative	27			166			156			314
Acquisition costs	—			53			—			474
Abandoned development costs	—			134			—			134
Depreciation and amortization	4,564			7,584			9,538			14,968
Total expenses	11,215			16,483			22,964			33,576
Operating income	4,864			4,070			9,870			8,372
Interest expense	(1,383		)	(3,514		)	(2,609		)	(7,566		)
Net income	$	3,481		$	556		$	7,261		$	806

The Company and Operating Partnership's share of:
Net income	$	1,788		$	503		$	3,721		$	1,093
Depreciation and impairment charge (real estate related)	$	2,403		$	3,431		$	5,008		$	6,604