EX-99.2 3 skt8kex992march312019.htm EXHIBIT 99.2 Exhibit


Exhibit 99.2
tangerlargea01a03a06.jpg
Tanger Factory Outlet Centers, Inc.
  
Supplemental Operating and Financial Data
March 31, 2019



Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2019

tangeroutlet-small93015a05.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, 2018.
 
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 3/31/2019
tangeroutlet-small93015a05.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
Top 25 Tenants Based on Percentage of Total Annualized Base Rent
Lease Expirations as of March 31, 2019
Capital expenditures
Leasing Activity
 
 
Financial Data:
 
 
 
Consolidated Balance Sheets
Consolidated Statements of Operations
Components of Rental Revenues
Unconsolidated Joint Venture Information
Debt Outstanding Summary
Future Scheduled Principal Payments
Senior Unsecured Notes Financial Covenants
 
 
Non-GAAP and 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 3/31/2019
tangeroutlet-small93015a05.jpg


Geographic Diversification
As of March 31, 2019
Consolidated Properties
State
# of Centers
 
GLA
 
% of GLA
South Carolina
5

 
1,600,362

 
13
%
New York
2

 
1,468,887

 
12
%
Georgia
3

 
1,121,579

 
9
%
Texas
3

 
1,001,357

 
8
%
Pennsylvania
3

 
999,576

 
8
%
Michigan
2

 
671,541

 
6
%
Delaware
1

 
557,353

 
5
%
Alabama
1

 
554,673

 
5
%
New Jersey
1

 
489,706

 
4
%
Tennessee
1

 
447,815

 
4
%
North Carolina
2

 
422,895

 
3
%
Ohio
1

 
411,866

 
3
%
Arizona
1

 
410,734

 
3
%
Florida
1

 
351,721

 
3
%
Missouri
1

 
329,861

 
3
%
Mississippi
1

 
324,703

 
3
%
Louisiana
1

 
321,066

 
3
%
Connecticut
1

 
311,539

 
3
%
New Hampshire
1

 
250,107

 
2
%
Total
32

 
12,047,341

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

 
398,697

 
50.00
%
Columbus, OH
1

 
355,245

 
50.00
%
Ottawa, ON
1

 
355,013

 
50.00
%
Texas City, TX
1

 
352,705

 
50.00
%
National Harbor, MD
1

 
341,156

 
50.00
%
Cookstown, ON
1

 
307,779

 
50.00
%
Bromont, QC
1

 
161,449

 
50.00
%
Saint-Sauveur, QC
1

 
99,405

 
50.00
%
Total
8

 
2,371,449

 
 
 
 
 
 
 
 
Grand Total
40

 
14,418,790

 
 



4
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2019
tangeroutlet-small93015a05.jpg


Property Summary - Occupancy at End of Each Period Shown
Consolidated properties
Location
Total GLA
3/31/19
 
% Occupied
3/31/19
 
% Occupied
12/31/18
 
% Occupied
3/31/18
 
Deer Park, NY
739,109

 
98
%
 
96
%
 
95
%
 
Riverhead, NY
729,778

 
95
%
 
95
%
 
95
%
 
Rehoboth Beach, DE
557,353

 
97
%
 
96
%
 
97
%
 
Foley, AL
554,673

 
94
%
 
98
%
 
96
%
 
Atlantic City, NJ
489,706

 
80
%
 
84
%
 
89
%
 
San Marcos, TX
471,816

 
95
%
 
97
%
 
97
%
 
Sevierville, TN
447,815

 
99
%
 
100
%
 
100
%
 
Savannah, GA
429,089

 
97
%
 
98
%
 
96
%
 
Myrtle Beach Hwy 501, SC
426,523

 
98
%
 
99
%
 
88
%
 
Jeffersonville, OH
411,866

 
94
%
 
97
%
 
89
%
 
Glendale, AZ (Westgate)
410,734

 
97
%
 
99
%
 
97
%
 
Myrtle Beach Hwy 17, SC
403,425

 
100
%
 
99
%
 
99
%
 
Charleston, SC
382,180

 
99
%
 
97
%
 
98
%
 
Lancaster, PA
376,997

 
92
%
 
93
%
 
95
%
 
Pittsburgh, PA
372,883

 
97
%
 
99
%
 
99
%
 
Commerce, GA
371,408

 
94
%
 
98
%
 
99
%
 
Grand Rapids, MI
357,103

 
96
%
 
96
%
 
94
%
 
Fort Worth, TX
351,741

 
97
%
 
99
%
 
94
%
 
Daytona Beach, FL
351,721

 
98
%
 
100
%
 
99
%
 
Branson, MO
329,861

 
98
%
 
100
%
 
100
%
 
Southaven, MS
324,703

 
94
%
 
98
%
 
95
%
 
Locust Grove, GA
321,082

 
97
%
 
100
%
 
100
%
 
Gonzales, LA
321,066

 
96
%
 
95
%
 
97
%
 
Mebane, NC
318,886

 
99
%
 
100
%
 
100
%
 
Howell, MI
314,438

 
92
%
 
95
%
 
94
%
 
Mashantucket, CT (Foxwoods)
311,539

 
93
%
 
96
%
 
95
%
 
Tilton, NH
250,107

 
96
%
 
96
%
 
94
%
 
Hershey, PA
249,696

 
99
%
 
100
%
 
99
%
 
Hilton Head II, SC
206,564

 
88
%
 
94
%
 
94
%
 
Hilton Head I, SC
181,670

 
100
%
 
97
%
 
98
%
 
Terrell, TX
177,800

 
97
%
 
97
%
 
96
%
 
Blowing Rock, NC
104,009

 
95
%
 
98
%
 
96
%
 
Nags Head, NC
N/A

 
N/A

 
100
%
 
98
%
 
Ocean City, MD
N/A

 
N/A

 
97
%
 
96
%
 
Park City, UT
N/A

 
N/A

 
98
%
 
96
%
 
Williamsburg, IA
N/A

 
N/A

 
92
%
 
95
%
 
Total
12,047,341

 
95
%
 
97
%
(1) 
96
%
(1) 
(1)
Excludes the occupancy rate at our Fort Worth outlet center which opened during the fourth quarter of 2017 and has not yet stabilized.




5
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2019
tangeroutlet-small93015a05.jpg


Unconsolidated joint venture properties
Location
Total GLA
3/31/19
 
% Occupied
3/31/19
 
% Occupied
12/31/18
 
% Occupied
3/31/18
 
Charlotte, NC
398,697

 
97
%
 
99
%
 
99
%
 
Columbus, OH
355,245

 
95
%
 
97
%
 
95
%
 
Ottawa, ON
355,013

 
94
%
 
96
%
 
93
%
 
Texas City, TX (Galveston/Houston)
352,705

 
97
%
 
99
%
 
96
%
 
National Harbor, MD
341,156

 
96
%
 
98
%
 
95
%
 
Cookstown, ON
307,779

 
97
%
 
100
%
 
98
%
 
Bromont, QC
161,449

 
77
%
 
77
%
 
72
%
 
Saint-Sauveur, QC
99,405

 
94
%
 
96
%
 
96
%
 
Total
2,371,449

 
95
%
 
97
%
 
94
%
 


6
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2019
tangeroutlet-small93015a05.jpg


Portfolio Occupancy at the End of Each Period (1) 
chart-c788adc5c59054739a8.jpg
(1) Excludes unconsolidated outlet centers. See table on page 4.




7
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2019
tangeroutlet-small93015a05.jpg


Average Tenant Sales Per Square Foot by Outlet Center Ranking As of March 31, 2019 (1) 
 Ranking (2)
12 Months
 SPSF
 Period End
 Occupancy
  Sq Ft
(thousands)
% of
 Square Feet
% of
Portfolio
NOI (3)
Consolidated Centers
 
 
 
 
Centers 1 - 5
$
525

97
%
2,793

24
%
32
%
Centers 6 - 10
$
439

98
%
1,847

15
%
17
%
Centers 11 - 15
$
393

91
%
1,655

14
%
14
%
Centers 16 - 20
$
354

96
%
1,906

16
%
16
%
Centers 21 - 26
$
316

94
%
2,104

17
%
13
%
Centers 27 - 32
$
263

96
%
1,742

14
%
8
%
 
 
 
 
 
 
 Ranking (2)
Cumulative 12 Months
 SPSF
 Cumulative Period End
 Occupancy
  Cumulative Sq Ft
(thousands)
Cumulative % of
 Square Feet
Cumulative % of
Portfolio
NOI (3)
Consolidated Centers
 
 
 
 
Centers 1 - 5
$
525

97
%
2,793

24
%
32
%
Centers 1 - 10
$
488

97
%
4,640

39
%
49
%
Centers 1 - 15
$
463

96
%
6,295

53
%
62
%
Centers 1 - 20
$
436

96
%
8,201

69
%
78
%
Centers 1 - 26
$
412

96
%
10,305

86
%
91
%
Centers 1 - 32
$
391

95
%
12,047

100
%
99
%
 
 
 
 
 
 
Unconsolidated centers (4)
$
443

96
%
1,448

n/a

n/a

Domestic centers (5)
$
397

96
%
13,495

n/a

n/a

 
 
(1)
Sales are based on reports for the trailing 12 months by retailers which have occupied outlet center 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 trailing twelve months ended March 31, 2019.
 
 
 
 
 
 
 
 
(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
Charleston, SC
Locust Grove, GA
Myrtle Beach 17, SC
Westgate (Glendale), AZ
 
 
Centers 11 - 15:
Atlantic City, NJ
Grand Rapids, MI
Hershey, PA
Hilton Head I, SC
Lancaster, PA
 
 
Centers 16 - 20:
Foxwoods (Mashantucket), CT
Gonzales, LA
Pittsburgh, PA
San Marcos, TX
Savannah, GA
 
 
Centers 21 - 26:
Daytona Beach, FL
Foley, AL
Fort Worth, Texas
Hilton Head II, SC
Howell, MI
Southaven, MS
 
Centers 27 - 32:
Blowing Rock, NC
Commerce, GA
Jeffersonville, OH
Myrtle Beach 501, SC
Terrell, TX
Tilton, NH
 
 
 
 
 
 
 
 
(3)
Based on the Company's forecast of 2019 Portfolio NOI (see non-GAAP definitions), excluding centers not yet stabilized. The Company's forecast is based on management's estimates as of March 31, 2019 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 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, 2018.
 
 
(4)
Includes domestic outlet centers open 12 full calendar months (in alphabetical order):
 
Unconsolidated:
Charlotte, NC
Columbus, OH
National Harbor, MD
Texas City, TX
 
(5)
Includes consolidated portfolio and domestic unconsolidated joint ventures

8
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2019
tangeroutlet-small93015a05.jpg


Top 25 Tenants Based on Percentage of Total Annualized Base Rent
As of March 31, 2019 (1) 

Consolidated
 
Unconsolidated
Tenant
Brands
# of
Stores
 
GLA
 
% of
Total GLA
 
% of Total Annualized Base Rent (2)
 
# of
Stores
Ascena Retail Group, Inc.
Dress Barn, Loft, Ann Taylor, Justice, Lane Bryant, roz & ALI
132

 
792,981

 
6.6
%
 
7.0
%
 
18

The Gap, Inc.
Gap, Banana Republic, Old Navy
88

 
935,536

 
7.8
%
 
5.8
%
 
17

PVH Corp.
Tommy Hilfiger, Van Heusen, Calvin Klein
62

 
384,811

 
3.2
%
 
3.9
%
 
15

Under Armour, Inc.
Under Armour, Under Armour Kids
30

 
231,911

 
1.9
%
 
2.7
%
 
6

Nike, Inc.
Nike, Converse, Hurley
39

 
423,215

 
3.5
%
 
2.7
%
 
11

Tapestry, Inc.
Coach, Kate Spade
44

 
209,345

 
1.7
%
 
2.6
%
 
10

G-III Apparel Group, Ltd.
Bass, Wilson's Leather, Donna Karan
48

 
223,501

 
1.9
%
 
2.4
%
 
6

American Eagle Outfitters, Inc.
American Eagle Outfitters, Aerie
35

 
247,529

 
2.1
%
 
2.4
%
 
7

V. F. Corporation
VF Outlet, The North Face, Vans, Timberland, Lee/Wrangler
31

 
259,630

 
2.2
%
 
2.2
%
 
3

Carter's, Inc.
Carters, OshKosh B Gosh
51

 
224,227

 
1.9
%
 
2.2
%
 
11

Michael Kors Holdings Limited
Michael Kors, Michael Kors Men's
28

 
136,816

 
1.1
%
 
2.0
%
 
5

Signet Jewelers Limited
Kay Jewelers, Zales, Jared Vault
52

 
118,704

 
1.0
%
 
1.9
%
 
8

Hanesbrands Inc.
Hanesbrands, Maidenform, Champion
36

 
181,876

 
1.5
%
 
1.8
%
 
2

Chico's, FAS Inc.
Chicos, White House/Black Market, Soma Intimates
45

 
130,131

 
1.1
%
 
1.8
%
 
6

Ralph Lauren Corporation
Polo Ralph Lauren, Polo Children, Polo Ralph Lauren Big & Tall, Lauren Ralph Lauren
33

 
352,524

 
2.9
%
 
1.8
%
 
5

Adidas AG
Adidas, Reebok
28

 
173,601

 
1.4
%
 
1.7
%
 
10

Columbia Sportswear Company
Columbia Sportswear
18

 
137,716

 
1.1
%
 
1.6
%
 
3

J. Crew Group, Inc.
J. Crew, J. Crew Men's
26

 
140,366

 
1.2
%
 
1.5
%
 
4

Caleres Inc.
Famous Footwear, Naturalizer, Allen Edmonds
33

 
167,481

 
1.4
%
 
1.5
%
 
11

Express Inc.
Express Factory
23

 
160,730

 
1.3
%
 
1.5
%
 
4

Skechers USA, Inc.
Skechers
29

 
137,044

 
1.1
%
 
1.5
%
 
6

Brooks Brothers Group, Inc.
Brooks Brothers
24

 
145,247

 
1.2
%
 
1.5
%
 
5

Rack Room Shoes, Inc.
Rack Room Shoes
22

 
129,699

 
1.1
%
 
1.4
%
 
2

Rue 21 Holdings, Inc
Rue 21
21

 
127,562

 
1.0
%
 
1.3
%
 
1

H&M Hennes & Mauritz L.P.
H&M
19

 
407,342

 
3.4
%
 
1.3
%
 
2

Total of Top 25 tenants
 
997

 
6,579,525

 
54.6
%
 
58.0
%
 
178

(1)
Excludes leases that have been entered into but which tenant has not yet taken possession, temporary leases and month-to month leases.
(2)
Annualized base rent is defined as the minimum monthly payments due as of the end of the reporting period annualized, excluding periodic contractual fixed increases. Include rents which are based on a percentage of sales in lieu of fixed contractual rents.





9
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2019
tangeroutlet-small93015a05.jpg


Lease Expirations as of March 31, 2019

Percentage of Total Gross Leasable Area (1) 
chart-11b29b44d19457eba26.jpg

Percentage of Total Annualized Base Rent (1) 
chart-31342910c0875b05913.jpg

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


10
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2019
tangeroutlet-small93015a05.jpg


Capital expenditures (in thousands)
 
 
Three months ended
 
 
March 31,
 
 
2019
 
2018
Value-enhancing:
 
 
 
 
New center developments and expansions
 
$
939

 
$
851

Other
 
55

 
—

 
 
994

 
851

Recurring capital expenditures:
 
 
 
 
Second generation tenant allowances
 
2,974

 
2,926

Operational capital expenditures
 
2,852

 
1,823

Major outlet center renovations
 
197

 
900

 
 
6,023


5,649

Total additions to rental property-accrual basis
 
7,017

 
6,500

Conversion from accrual to cash basis
 
2,889

 
13,214

Total additions to rental property-cash basis
 
$
9,906

 
$
19,714


Leasing Activity

The tables below show changes in rent (base rent and common area maintenance ("CAM")) for leases including remerchandising projects in the consolidated portfolio for new stores that opened or renewals that started during the respective trailing twelve month periods:
Re-tenant(1)
 
Trailing twelve months ended:
# of Leases
Square Feet
(in 000's)
Average
Annual
Straight-line Rent (psf)
Average
Tenant
Allowance (psf)(2)
Average Initial Term
 (in years)
Net Average
Annual
Straight-line Rent (psf) (3)
March 31, 2019
81

388

$
33.32

$
45.13

7.83

$
27.56

March 31, 2018
84

415

$
34.32

$
70.88

8.55

$
26.03

 
 
 
 
 
 
 
Renewal(1)
 
Trailing twelve months ended:
# of Leases
Square Feet
(in 000's)
Average
Annual
Straight-line Rent (psf)
Average
Tenant
Allowance (psf)(2)
Average Initial Term
 (in years)
Net Average
Annual
Straight-line Rent (psf) (3)

March 31, 2019
280

1,404

$
34.37

$
0.49

3.82

$
34.24

March 31, 2018
262

1,300

$
29.25

$
0.25

4.07

$
29.19

 
 
 
 
 
 
 
Total(1)
 
Trailing twelve months ended:
# of Leases
Square Feet
(in 000's)
Average
Annual
Straight-line Rent (psf)
Average
Tenant
Allowance (psf)(2)
Average Initial Term
 (in years)
Net Average
Annual
Straight-line Rent (psf) (3)
March 31, 2019
361

1,792

$
34.14

$
10.16

4.69

$
31.97

March 31, 2018
346

1,715

$
30.48

$
17.35

5.15

$
27.11

(1)
Represents change in rent (base rent and CAM) for all leases for new stores that opened or renewals that started during the respective trailing twelve month periods within the consolidated portfolio, except for license agreements, seasonal tenants, and month-to-month leases.
(2)
Includes landlord costs.
(3)
Net average straight-line base rent is calculated by dividing the average tenant allowance costs per square foot by the average initial term and subtracting this calculated number from the average straight-line base rent per year amount. The average annual straight-line base rent disclosed in the table above includes all concessions, abatements and reimbursements of rent to tenants. The average tenant allowance disclosed in the table above includes landlord costs.

11
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2019
tangeroutlet-small93015a05.jpg


Leasing Activity(1) 

 
 
 
Excluding Re-Merchanding

 
 
TTM ended

TTM ended

TTM ended

 
All Lease Terms
3/31/2019

3/31/2018

3/31/2018

(2) 
Re-tenanted Space:
 
 
 
 
Number of leases
81

84

76

 
Gross leasable area
388,192

415,055

268,844

 
New initial rent per square foot
$
30.71

$
31.42

$
39.84

 
Prior expiring rent per square foot
$
30.02

$
32.71

$
38.04

 
Percent increase
2.3
%
(3.9
)%
4.7
 %
 
 
 
 
 
 
New straight-line rent per square foot
$
33.32

$
34.32

$
44.12

 
Prior straight-line rent per square foot
$
30.02

$
31.98

$
37.11

 
Percent increase
11.0
%
7.3
 %
18.9
 %
 
 
 
 
 
 
Renewed Space:
 
 
 
 
Number of leases
280

262

262

 
Gross leasable area
1,404,053

1,299,564

1,299,564

 
New initial rent per square foot
$
33.27

$
28.16

$
28.16

 
Prior expiring rent per square foot
$
33.19

$
28.71

$
28.71

 
Percent increase
0.2
%
(1.9
)%
(1.9
)%
 
 
 
 
 
 
New straight-line rent per square foot
$
34.37

$
29.25

$
29.25

 
Prior straight-line rent per square foot
$
33.31

$
27.96

$
27.96

 
Percent increase
3.2
%
4.6
 %
4.6
 %
 
 
 
 
 
 
Total Re-tenanted and Renewed Space:
 
 
 
 
Number of leases
361

346

338

 
Gross leasable area
1,792,245

1,714,619

1,568,408

 
New initial rent per square foot
$
32.71

$
28.95

$
30.17

 
Prior expiring rent per square foot
$
32.50

$
29.68

$
30.31

 
Percent increase (decrease)
0.6
%
(2.4
)%
(0.5
)%
 
 
 
 
 
 
New straight-line rent per square foot
$
34.14

$
30.48

$
31.80

 
Prior straight-line rent per square foot
$
32.60

$
28.93

$
29.53

 
Percent increase
4.7
%
5.3
 %
7.7
 %
 

(1)
For consolidated properties owned as of the period-end date. Represents change in rent (base rent and common area maintenance) for all leases for new stores that opened or renewals that started during the respective trailing twelve month periods, except for license agreements, seasonal tenants, and month-to-month leases.
(2)
Excludes leases related to re-merchandising projects, all of which commenced during calendar 2017.





12
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2019
tangeroutlet-small93015a05.jpg


Leasing Activity(1) 
 
 
 
Excluding Re-Merchanding

 
 
TTM ended

TTM ended

TTM ended

 
Terms of More Than 12 Months
3/31/2019

3/31/2018

3/31/2018

(2) 
Re-tenanted Space:
 
 
 
 
Number of leases
79

83

75

 
Gross leasable area
365,345

412,096

265,885

 
New initial rent per square foot
$
32.03

$
31.55

$
40.13

 
Prior expiring rent per square foot
$
30.04

$
32.34

$
37.54

 
Percent increase
6.6
%
(2.5
)%
6.9
%
 
 
 
 
 
 
New straight-line rent per square foot
$
34.81

$
34.47

$
44.46

 
Prior straight-line rent per square foot
$
30.21

$
31.66

$
36.68

 
Percent increase
15.2
%
8.9
 %
21.2
%
 
 
 
 
 
 
Renewed Space:
 
 
 
 
Number of leases
244

202

202

 
Gross leasable area
1,236,668

1,044,922

1,044,922

 
New initial rent per square foot
$
34.48

$
29.52

$
29.52

 
Prior expiring rent per square foot
$
33.59

$
28.47

$
28.47

 
Percent increase
2.6
%
3.7
 %
3.7
%
 
 
 
 
 
 
New straight-line rent per square foot
$
35.72

$
30.87

$
30.87

 
Prior straight-line rent per square foot
$
33.82

$
27.82

$
27.82

 
Percent increase
5.6
%
11.0
 %
11.0
%
 
 
 
 
 
 
Total Re-tenanted and Renewed Space:
 
 
 
 
Number of leases
323

285

277

 
Gross leasable area
1,602,013

1,457,018

1,310,807

 
New initial rent per square foot
$
33.92

$
30.09

$
31.67

 
Prior expiring rent per square foot
$
32.78

$
29.56

$
30.31

 
Percent increase
3.5
%
1.8
 %
4.5
%
 
 
 
 
 
 
New straight-line rent per square foot
$
35.52

$
31.89

$
33.63

 
Prior straight-line rent per square foot
$
32.99

$
28.91

$
29.62

 
Percent increase
7.7
%
10.3
 %
13.5
%
 

(1)
For consolidated properties owned as of the period-end date. Represents change in rent (base rent and common area maintenance) for leases for a term of more than 12 months for new stores that opened or renewals that started during the respective trailing twelve month periods.
(2)
Excludes leases related to re-merchandising projects, all of which commenced during calendar 2017.





13
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2019
tangeroutlet-small93015a05.jpg

Consolidated Balance Sheets (dollars in thousands)
 
March 31,
 
December 31,
 
2019
 
2018
Assets
 
 
 
   Rental property:
 
 
 
   Land
$
267,910

 
$
278,428

   Buildings, improvements and fixtures
2,639,764

 
2,764,649

   Construction in progress
—

 
3,102

 
2,907,674

 
3,046,179

   Accumulated depreciation
(941,193
)
 
(981,305
)
      Total rental property, net
1,966,481

 
2,064,874

   Cash and cash equivalents
1,616

 
9,083

   Investments in unconsolidated joint ventures
97,654

 
95,969

   Deferred lease costs and other intangibles, net
106,170

 
116,874

   Operating lease right-of-use assets (1)
87,679

 
—

   Prepaids and other assets
94,224

 
98,102

         Total assets
$
2,353,824

 
$
2,384,902

 
 
 
 
Liabilities and Equity
 
 
 
Liabilities
 
 
 
   Debt:
 
 
 
Senior, unsecured notes, net
$
1,137,145

 
$
1,136,663

Unsecured term loan, net
346,950

 
346,799

Mortgages payable, net
86,572

 
87,471

Unsecured lines of credit, net
12,117

 
141,985

Total debt
1,582,784

 
1,712,918

Accounts payable and accrued expenses
87,536

 
82,676

Operating lease liabilities (1)
92,354

 
—

Other liabilities
87,707

 
83,773

         Total liabilities
1,850,381

 
1,879,367

Commitments and contingencies
 
 
 
Equity
 
 
 
Tanger Factory Outlet Centers, Inc.:
 
 
 
Common shares, $.01 par value, 300,000,000 shares authorized, 94,102,666 and 93,941,783 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively
941

 
939

   Paid in capital
780,936

 
778,845

   Accumulated distributions in excess of net income
(276,491
)
 
(272,454
)
   Accumulated other comprehensive loss
(27,153
)
 
(27,151
)
         Equity attributable to Tanger Factory Outlet Centers, Inc.
478,233

 
480,179

Equity attributable to noncontrolling interests:
 
 
 
Noncontrolling interests in Operating Partnership
25,210

 
25,356

Noncontrolling interests in other consolidated partnerships
—

 
—

         Total equity
503,443

 
505,535

            Total liabilities and equity
$
2,353,824

 
$
2,384,902

(1)
In connection with our adoption of ASC 842 on January 1, 2019, operating lease right-of-use assets and operating lease liabilities were recorded.



14
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2019
tangeroutlet-small93015a05.jpg


Consolidated Statements of Operations (in thousands, except per share data)
 
Three months ended
 
March 31,
 
2019
 
2018
Revenues:
 
 
 
Rental revenues (1)
$
119,954

 
$
120,656

Management, leasing and other services (2)
1,342

 
1,199

Other revenues
1,859

 
1,680

Total revenues
123,155

 
123,535

Expenses:
 
 
 
Property operating
42,377

 
42,218

General and administrative(3)
12,145

 
11,112

Depreciation and amortization
31,760

 
33,123

Total expenses
86,282

 
86,453

Other income (expense):
 
 
 
Interest expense
(16,307
)
 
(15,800
)
Gain on sale of assets
43,422

 
—

Other income
224

 
209

Total other income (expense)
27,339

 
(15,591
)
Income before equity in earnings of unconsolidated joint ventures
64,212

 
21,491

Equity in earnings of unconsolidated joint ventures
1,629

 
2,194

Net income
65,841

 
23,685

Noncontrolling interests in Operating Partnership
(3,315
)
 
(1,217
)
Noncontrolling interests in other consolidated partnerships
(195
)
 
370

Net income attributable to Tanger Factory Outlet Centers, Inc.
62,331

 
22,838

Allocation of earnings to participating securities
(611
)
 
(263
)
Net income available to common shareholders of
Tanger Factory Outlet Centers, Inc.
$
61,720

 
$
22,575

 
 
 
 
Basic earnings per common share:
 
 
 
Net income
$
0.66

 
$
0.24

 
 
 
 
Diluted earnings per common share:
 
 
 
Net income
$
0.66

 
$
0.24

(1)
In connection with our adoption of ASC 842 on January 1, 2019, rental revenues includes base rentals, percentage rentals, and expense reimbursements for both periods presented. Additionally, for the three months ended March 31, 2019, rental revenues is presented net of uncollectible tenant revenues and includes a straight-line rent adjustment of $1.5 million to record contractual payments received as consideration from certain executory costs on a straight-line basis.

(2)
Upon adoption of ASC 842, expense reimbursements from joint ventures of $586,000 previously included in expense reimbursements for the three months ended March 31, 2018, which are not related to leases, have been reclassified to management, leasing and other services on the consolidated statements of operations to conform to the current year presentation.

(3)
Upon adoption of ASC 842, indirect internal leasing costs previously capitalized are now expensed. For the three months ended March 31, 2019, lease costs of approximately $1.1 million were expensed as general and administrative expenses which would have been capitalized under the previous accounting standard.






15
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2019
tangeroutlet-small93015a05.jpg


Components of Rental Revenues (in thousands)

As a lessor, substantially all of our revenues are earned from arrangements that are within the scope of Accounting Standards Codification Topic 842 “Leases” ("ASC 842"). We utilized the practical expedient in ASU 2018-11 to account for lease and non-lease components as a single component which resulted in all of our revenues associated with leases being recorded as rental revenues on the consolidated statements of operations. As a result of the adoption of ASC 842, the amounts disclosed in 2018 as base rentals, percentage rentals and expense reimbursements have been combined into rental revenues on the consolidated statements of operations to conform to the current year presentation. In addition, certain amounts previously included in expense reimbursements in 2018, which are not related to leases, have been reclassified to management, leasing and other services on the consolidated statements of operations. Also, uncollectible tenant revenues were previously recorded in general and and administrative expenses in 2018 and for the three months ended March 31, 2019 are recorded in rental revenues as a contra-revenue account. As a result of combining all components of a lease, all fixed contractual payments, including consideration received from certain executory costs, are now recognized on a straight-line basis. For the three months ended March 31, 2019, we recorded an adjustment of $1.5 million in rental revenues in our consolidated statements of operations to record revenues from executory costs on a straight-line basis.

The table below provides details of the components included in rental revenues:
 
Three months ended
 
March 31,
 
2019
 
2018
Rental revenues:
 
 
 
Base rentals 
$
79,101

 
$
78,982

Percentage rentals
1,565

 
1,429

Tenant expense reimbursements
37,167

 
37,694

Lease termination fees
1,130

 
1,051

Market rent adjustments
(370
)
 
(448
)
Straight-line rent adjustments
1,970

 
1,948

Uncollectible tenant revenues (1)
(609
)
 
—

Rental revenues
$
119,954

 
$
120,656

(1)
Uncollectible tenant revenues recorded in general and administrative expenses for the three months ended March 31, 2018 was approximately $268,000.





16
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2019
tangeroutlet-small93015a05.jpg


Unconsolidated Joint Venture Information  

The following table details certain information as of March 31, 2019, except for Net Operating Income ("NOI") which is for the three months ended March 31, 2019, 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
 
Tanger's Share of Net Debt (1)
Charlotte
 
Charlotte, NC
 
50.0
%
 
398,697

 
$
39.2

 
$
1.7

 
$
49.7

Columbus
 
Columbus, OH
 
50.0
%
 
355,245

 
40.4

 
1.3

 
42.4

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

 
19.3

 
1.0

 
39.9

National Harbor
 
National Harbor, MD
 
50.0
%
 
341,156

 
42.9

 
1.3

 
47.2

RioCan Canada (2)
 
Various
 
50.0
%
 
923,646

 
102.4

 
1.5

 
4.8

Total
 
 
 
 
 
2,371,449

 
$
244.2

 
$
6.8

 
$
184.0

(1)
Net of debt origination costs and premiums.
(2)
Includes a 161,449 square foot center in Bromont, Quebec; a 307,779 square foot center in Cookstown, Ontario; a 355,013 square foot center in Ottawa, Ontario; and a 99,405 square foot center in Saint-Sauveur, Quebec.



17
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2019
tangeroutlet-small93015a05.jpg


Debt Outstanding Summary
As of March 31, 2019
(dollars in thousands)
 
Total Debt Outstanding
 
Our Share of Debt
 
Stated
Interest Rate
 
End of Period Effective Interest Rate(1) 
 
Maturity
Date (2)
 
Weighted Average Years to Maturity (2)
Consolidated Debt:
 
 
 
 
 
 
 
 
 
 
 
Unsecured debt:
 

 
 
 
 
 
 
 
 
 
 
Unsecured lines of credit(3)
$
15,000

 
$
15,000

 
LIBOR + 0.875%

 
3.4
%
 
10/28/2022
 
3.6

2023 Senior unsecured notes
250,000

 
250,000

 
3.875%

 
4.1
%
 
12/1/2023
 
4.7

2024 Senior unsecured notes
250,000

 
250,000

 
3.75
%
 
3.8
%
 
12/1/2024
 
5.7

2026 Senior unsecured notes
350,000

 
350,000

 
3.125
%
 
3.2
%
 
9/1/2026
 
7.4

2027 Senior unsecured notes
300,000

 
300,000

 
3.875
%
 
3.9
%
 
7/15/2027
 
8.3

Unsecured term loan
350,000

 
350,000

 
LIBOR + 0.90%

 
2.5
%
 
4/22/2024
 
5.1

Net debt discounts and debt origination costs
(18,788
)
 
(18,788
)
 
 

 
 
 
 
 
 
Total net unsecured debt
1,496,212

 
1,496,212

 
 

 
3.5
%
 
 
 
6.3

Secured mortgage debt:
 
 
 
 
 
 
 
 
 
 
 
Atlantic City, NJ
33,454

 
33,454

 
5.14% - 7.65%

 
5.1
%
 
11/15/2021 - 12/8/2026
 
5.8

Southaven, MS
51,400

 
51,400

 
LIBOR + 1.80%

 
4.3
%
 
4/29/2023
 
4.1

Debt premium and debt origination costs
1,718

 
1,718

 
 
 
 
 
 
 
 
Total net secured mortgage debt
86,572

 
86,572

 
 
 
4.6
%
 
 
 
4.7

Total consolidated debt
1,582,784

 
1,582,784

 
 
 
3.6
%
 
 
 
6.2

Unconsolidated JV debt:
 

 
 
 
 

 
 
 
 
 
 
Charlotte
100,000

 
50,000

 
4.27
%
 
4.3
%
 
7/1/2028
 
9.3

Columbus
85,000

 
42,500

 
LIBOR + 1.65%

 
4.2
%
 
11/28/2021
 
2.7

Galveston/Houston
80,000

 
40,000

 
LIBOR + 1.65%

 
4.2
%
 
7/1/2022
 
3.3

National Harbor
95,000

 
47,500

 
4.63
%
 
4.6
%
 
1/5/2030
 
10.8

RioCan Canada
9,372

 
4,686

 
5.75
%
 
4.2
%
 
5/10/2020
 
1.1

Debt premium and debt origination costs
(1,438
)
 
(719
)
 
 
 
 
 
 
 
 
Total unconsolidated JV net debt
367,934

 
183,967

 
 

 
4.3
%
 
 
 
6.6

Total
$
1,950,718

 
$
1,766,751

 
 
 
3.7
%
 
 
 
6.3

(1)
The effective interest rate includes the impact of discounts and premiums and interest rate swap agreements, as applicable. See page 18 for additional details.
(2)
Includes applicable extensions available at our option.
(3)
The Company has unsecured lines of credit that provide for borrowings of up to $600.0 million. The unsecured lines of credit include a $20.0 million liquidity line and a $580.0 million syndicated line. A 15 basis point facility fee is due annually on the entire committed amount of each facility. The syndicated line may be increased up to $1.2 billion through an accordion feature in certain circumstances.


18
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2019
tangeroutlet-small93015a05.jpg


Summary of Our Share of Fixed and Variable Rate Debt
As of March 31, 2019
(dollars in thousands)
 
Total Debt %
 
Our Share of Debt
 
End of Period Effective Interest Rate
 
Average Years to Maturity (1)
 
 

 
 
 
 
 
 
Consolidated:
 
 
 
 
 
 
 
Fixed (2)
97
%
 
$
1,534,470

 
3.5
%
 
6.3
Variable
3
%
 
48,314

 
5.3
%
 
4.4
 
100
%
 
1,582,784

 
3.6
%
 
6.2
Unconsolidated Joint ventures:
 
 


 
 
 
 
Fixed
55
%
 
$
101,717

 
4.4
%
 
9.6
Variable
45
%
 
82,250

 
4.2
%
 
3.0
 
100
%
 
183,967

 
4.3
%
 
6.6
Total:
 
 
 
 
 
 
 
Fixed
93
%
 
$
1,636,187

 
3.6
%
 
6.6
Variable
7
%
 
130,564

 
4.4
%
 
3.3
Total share of debt
100
%
 
$
1,766,751

 
3.7
%
 
6.3
(1)
Includes applicable extensions available at our option.
(2)
The effective interest rate includes interest rate swap agreements that fix the base LIBOR rate at a weighted average of 1.7% on notional amounts aggregating $365.0 million as follows:
(a)
Interest rate swaps entered into in December 2017 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 2.2% from August 14, 2018 through January 1, 2021.
(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,
(c)
In March 2018, the consolidated joint venture that owns the Tanger outlet center in Southaven, Mississippi, entered into an interest rate swap, effective March 1, 2018, that fixed the base LIBOR rate at 2.5% on a notional amount of $40.0 million through January 31, 2021.




19
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2019
tangeroutlet-small93015a05.jpg


Future Scheduled Principal Payments (dollars in thousands)(1)
As of March 31, 2019
Year
Tanger
Consolidated
Payments
 
Tanger's Share
of Unconsolidated
JV Payments
 
Total
Scheduled
Payments
2019
$
2,545

 
$
228

 
$
2,773

2020
3,566

 
4,458

 
8,024

2021
5,793

 
42,500

 
48,293

2022(2)
19,436

 
40,000

 
59,436

2023
306,168

 
1,031

 
307,199

2024
605,140

 
1,636

 
606,776

2025
1,501

 
1,710

 
3,211

2026
355,705

 
1,788

 
357,493

2027
300,000

 
1,869

 
301,869

2028
—

 
46,944

 
46,944

2029 & thereafter
—

 
42,522

 
42,522

 
$
1,599,854

 
$
184,686

 
$
1,784,540

Net debt discounts and debt origination costs
(17,070
)
 
(719
)
 
(17,789
)
 
$
1,582,784

 
$
183,967

 
$
1,766,751

(1)
Includes applicable extensions available at our option.
(2)
Includes principal balance of $15.0 million outstanding under the Company's unsecured lines of credit.
Senior Unsecured Notes Financial Covenants (1) 
As of March 31, 2019
 
Required
 
Actual
 
Compliance
Total Consolidated Debt to Adjusted Total Assets
<60%
 
49
%
 
Yes
Total Secured Debt to Adjusted Total Assets
<40%
 
3
%
 
Yes
Total Unencumbered Assets to Unsecured Debt
>150%
 
196
%
 
Yes
Consolidated Income Available for Debt Service to Annual Debt Service Charge
>1.5
 
5.1

 
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.



20
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2019
tangeroutlet-small93015a05.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. In December 2018, NAREIT issued “NAREIT Funds From Operations White Paper - 2018 Restatement” which clarifies, where necessary, existing guidance and consolidates alerts and policy bulletins into a single document for ease of use. NAREIT defines FFO as net income/(loss) available to the Company’s common shareholders computed in accordance with generally accepted accounting principles in the United States (“GAAP”), excluding (i) depreciation and amortization related to real estate, (ii) gains or losses from sales of certain real estate assets, (iii) gains and losses from change in control, (iv) impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity and (v) after adjustments for unconsolidated partnerships and joint ventures calculated to reflect FFO on the same basis.

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, 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. We believe that FFO payout ratio, which represents regular distributions to common shareholders and unit holders of the Operating Partnership expressed as a percentage of FFO, is useful to investors because it facilitates the comparison of dividend coverage between REITs. 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; 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.

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.


21
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2019
tangeroutlet-small93015a05.jpg


Portfolio Net Operating Income and Same Center Net Operating Income

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

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.



22
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2019
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Reconciliation of Net Income to FFO (dollars and shares in thousands)

 
 
Three months ended
 
 
March 31,
 
 
2019
 
2018
Net income
 
$
65,841

 
$
23,685

Adjusted for:
 
 
 
 
Depreciation and amortization of real estate assets - consolidated
 
31,148

 
32,542

Depreciation and amortization of real estate assets - unconsolidated joint ventures
 
3,130

 
3,229

Gain on sale of assets
 
(43,422
)
 
—

FFO
 
56,697

 
59,456

FFO attributable to noncontrolling interests in other consolidated partnerships
 
(195
)
 
370

Allocation of earnings to participating securities
 
(611
)
 
(477
)
FFO available to common shareholders  (1)
 
$
55,891

 
$
59,349

FFO available to common shareholders per share - diluted (1)
 
$
0.57

 
$
0.60

 
 
 
 
 
Weighted Average Shares:
 
 
 
 
Basic weighted average common shares
 
93,303

 
93,644

Diluted weighted average common shares (for earnings per share computations)
 
93,303

 
93,644

Exchangeable operating partnership units
 
4,961

 
4,996

Diluted weighted average common shares (for FFO per share computations) (1)
 
98,264

 
98,640

(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.

Reconciliation of FFO to FAD (dollars and shares in thousands)
 
 
Three months ended
 
 
March 31,
 
 
2019
 
2018
FFO available to common shareholders
 
$
55,891

 
$
59,349

Adjusted for:
 
 
 
 
Corporate depreciation excluded above
 
612

 
581

Amortization of finance costs
 
747

 
783

Amortization of net debt discount (premium)
 
109

 
101

Amortization of equity-based compensation
 
3,818

 
3,392

Straight-line rent adjustments
 
(1,970
)
 
(1,948
)
Market rent adjustments
 
480

 
562

2nd generation tenant allowances
 
(2,974
)
 
(2,926
)
Capital improvements
 
(3,049
)
 
(2,723
)
Adjustments from unconsolidated joint ventures
 
(406
)
 
(271
)
FAD available to common shareholders (1)
 
$
53,258

 
$
56,900

Dividends per share
 
$
0.3500

 
$
0.3425

FFO payout ratio
 
61
%
 
57
%
FAD payout ratio
 
65
%
 
59
%
Diluted weighted average common shares (1)
 
98,264

 
98,640

(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.

23
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2019
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Reconciliation of Net Income to Portfolio NOI and Same Center NOI for the consolidated portfolio (in thousands)

 
 
Three months ended
 
 
March 31,
 
 
2019
 
2018
Net income
 
$
65,841

 
$
23,685

Adjusted to exclude:
 
 
 
 
Equity in earnings of unconsolidated joint ventures
 
(1,629
)
 
(2,194
)
Interest expense
 
16,307

 
15,800

Gain on sale of assets
 
(43,422
)
 
—

Other non-operating income
 
(224
)
 
(209
)
Depreciation and amortization
 
31,760

 
33,123

Other non-property expenses
 
161

 
388

Corporate general and administrative expenses
 
12,118

 
10,754

Non-cash adjustments (1)
 
(1,472
)
 
(1,367
)
Lease termination fees
 
(1,130
)
 
(1,051
)
Portfolio NOI
 
78,310

 
78,929

Non-same center NOI (2)
 
(4,084
)
 
(4,367
)
Same Center NOI
 
$
74,226

 
$
74,562

(1)
Non-cash items include straight-line rent, above and below market rent amortization, straight-line rent expense on land leases and gains or losses on outparcel sales, as applicable.
(2)
Excluded from Same Center NOI:
Outlet centers sold:
 
Nags Head, Ocean City, Park City, and Williamsburg
March 2019
 




24
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2019
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Non-GAAP Pro Rata Balance Sheet Information as of March 31, 2019 (in thousands)


Non-GAAP
 
Pro Rata Portion Unconsolidated Joint Ventures (1)
Assets
 
Rental property:
 
Land
$
46,220

Buildings, improvements and fixtures
237,491

Construction in progress
1,728

 
285,439

Accumulated depreciation
(59,998
)
Total rental property, net
225,441

Cash and cash equivalents
5,872

Deferred lease costs and other intangibles, net
4,049

Prepaids and other assets
8,832

Total assets
$
244,194

Liabilities and Owners' Equity
 
Liabilities
 
Mortgages payable, net
$
183,967

Accounts payable and accruals
5,967

Total liabilities
189,934

Owners' equity
54,260

Total liabilities and owners' equity
$
244,194

(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 $4.0 million as of March 31, 2019 and are being amortized over the various useful lives of the related assets.


25
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2019
tangeroutlet-small93015a05.jpg


Non-GAAP Pro Rata Statement of Operations Information year to date March 31, 2019 (in thousands)
 
Non-GAAP Pro Rata Portion
 
Noncontrolling Interests
 
Unconsolidated Joint Ventures
Revenues:
 
 
 
Rental revenues
$
—

 
$
11,605

Other revenues
—

 
127

Total revenues
—

 
11,732

Expense:
 
 
 
Property operating
—

 
4,894

General and administrative
—

 
45

Depreciation and amortization
—

 
3,129

Total expenses
—

 
8,068

Other income (expense):
 
 
 
Interest expense
—

 
(2,067
)
Other income (expenses)
(195
)
 
32

Total other income (expense)
$
(195
)
 
$
(2,035
)
Net income (loss)
$
(195
)
 
$
1,629



26
Supplemental Operating and Financial Data for the
Quarter Ended 3/31/2019
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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 3/31/2019
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