EX-99.2 3 skt8kex992december3120.htm EXHIBIT 99.2 Exhibit


Exhibit 99.2
tangerlargea01a03a07.jpg
Tanger Factory Outlet Centers, Inc.
  
Supplemental Operating and Financial Data
December 31, 2019



Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2019

tangeroutlet-small93015a06.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 year ended December 31, 2018 and for the year ended December 31, 2019 when available. 
 
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 12/31/2019
tangeroutlet-small93015a06.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 December 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 12/31/2019
tangeroutlet-small93015a06.jpg


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

 
1,600,362

 
13
%
New York
2

 
1,468,888

 
12
%
Georgia
3

 
1,121,579

 
9
%
Texas
3

 
1,001,357

 
8
%
Pennsylvania
3

 
1,000,556

 
8
%
Michigan
2

 
671,541

 
6
%
Delaware
1

 
557,353

 
5
%
Alabama
1

 
554,587

 
5
%
New Jersey
1

 
489,718

 
4
%
Tennessee
1

 
447,815

 
4
%
North Carolina
2

 
422,895

 
3
%
Ohio
1

 
411,867

 
3
%
Arizona
1

 
410,751

 
3
%
Florida
1

 
351,721

 
3
%
Missouri
1

 
329,861

 
3
%
Mississippi
1

 
324,716

 
3
%
Louisiana
1

 
321,066

 
3
%
Connecticut
1

 
311,507

 
3
%
New Hampshire
1

 
250,107

 
2
%
Total
32

 
12,048,247

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

 
398,674

 
50.00
%
Ottawa, ON
1

 
357,218

 
50.00
%
Columbus, OH
1

 
355,245

 
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
%
Saint-Sauveur, QC
1

 
99,405

 
50.00
%
Total
7

 
2,212,182

 
 
 
 
 
 
 
 
Grand Total
39

 
14,260,429

 
 



4
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2019
tangeroutlet-small93015a06.jpg


Property Summary - Occupancy at End of Each Period Shown
Consolidated properties
Location
Total GLA
12/31/19
 
% Occupied
12/31/19
 
% Occupied
9/30/19
 
% Occupied
12/31/18
 
Deer Park, NY
739,110

 
99
%
 
98
%
 
96
%
 
Riverhead, NY
729,778

 
97
%
 
97
%
 
95
%
 
Rehoboth Beach, DE
557,353

 
99
%
 
98
%
 
96
%
 
Foley, AL
554,587

 
94
%
 
90
%
 
98
%
 
Atlantic City, NJ
489,718

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

 
96
%
 
94
%
 
97
%
 
Sevierville, TN
447,815

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

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

 
98
%
 
98
%
 
99
%
 
Jeffersonville, OH
411,867

 
92
%
 
92
%
 
97
%
 
Glendale, AZ (Westgate)
410,751

 
100
%
 
99
%
 
99
%
 
Myrtle Beach Hwy 17, SC
403,425

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

 
100
%
 
99
%
 
97
%
 
Lancaster, PA
376,997

 
95
%
 
88
%
 
93
%
 
Pittsburgh, PA
373,863

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

 
97
%
 
97
%
 
98
%
 
Grand Rapids, MI
357,103

 
97
%
 
96
%
 
96
%
 
Fort Worth, TX
351,741

 
100
%
 
99
%
 
99
%
 
Daytona Beach, FL
351,721

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

 
100
%
 
100
%
 
100
%
 
Southaven, MS
324,716

 
100
%
 
98
%
 
98
%
 
Locust Grove, GA
321,082

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

 
99
%
 
95
%
 
95
%
 
Mebane, NC
318,886

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

 
94
%
 
93
%
 
95
%
 
Mashantucket, CT (Foxwoods)
311,507

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

 
96
%
 
97
%
 
96
%
 
Hershey, PA
249,696

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

 
92
%
 
92
%
 
94
%
 
Hilton Head I, SC
181,670

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

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

 
89
%
 
88
%
 
98
%
 
Nags Head, NC (2)
N/A

 
N/A

 
N/A

 
100
%
 
Ocean City, MD (2)
N/A

 
N/A

 
N/A

 
97
%
 
Park City, UT (2)
N/A

 
N/A

 
N/A

 
98
%
 
Williamsburg, IA (2)
N/A

 
N/A

 
N/A

 
92
%
 
Total
12,048,247

 
97
%
 
96
%
 
97
%
(1) 
(1)
Excludes the occupancy rate at our Fort Worth outlet center which opened during the fourth quarter of 2017 and had not yet stabilized.
(2)
Outlet center sold in March 2019.




5
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2019
tangeroutlet-small93015a06.jpg


Unconsolidated joint venture properties
Location
Total GLA
12/31/19
 
% Occupied
12/31/19
 
% Occupied
9/30/19
 
% Occupied
12/31/18
 
Charlotte, NC
398,674

 
99
%
 
99
%
 
99
%
 
Ottawa, ON
357,218

 
97
%
 
97
%
 
96
%
 
Columbus, OH
355,245

 
98
%
 
97
%
 
97
%
 
Texas City, TX (Galveston/Houston)
352,705

 
98
%
 
96
%
 
99
%
 
National Harbor, MD
341,156

 
99
%
 
97
%
 
98
%
 
Cookstown, ON
307,779

 
100
%
 
98
%
 
100
%
 
Saint-Sauveur, QC
99,405

 
92
%
 
96
%
 
96
%
 
Bromont, QC (1)
N/A

 
N/A

 
N/A

 
77
%
 
Total
2,212,182

 
98
%
 
97
%
 
97
%
 
(1)
Outlet center sold in May 2019.


6
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2019
tangeroutlet-small93015a06.jpg


Portfolio Occupancy at the End of Each Period (1) 
chart-c51b17ae7a0a59e8961a01.jpg
(1) Excludes unconsolidated outlet centers. See table on page 4.




7
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2019
tangeroutlet-small93015a06.jpg


Average Tenant Sales Per Square Foot by Outlet Center Ranking As of December 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
$
535

99
%
2,792

23
%
33
%
Centers 6 - 10
$
450

99
%
1,903

16
%
18
%
Centers 11 - 15
$
400

93
%
1,616

13
%
13
%
Centers 16 - 20
$
354

97
%
1,891

16
%
15
%
Centers 21 - 26
$
318

97
%
2,179

18
%
13
%
Centers 27 - 32
$
260

96
%
1,667

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
$
535

99
%
2,792

23
%
33
%
Centers 1 - 10
$
498

99
%
4,695

39
%
51
%
Centers 1 - 15
$
471

97
%
6,311

52
%
64
%
Centers 1 - 20
$
443

97
%
8,202

68
%
79
%
Centers 1 - 26
$
417

97
%
10,381

86
%
92
%
Centers 1 - 32
$
395

97
%
12,048

100
%
100
%
 
 
 
 
 
 
Unconsolidated centers (4)
$
450

98
%
1,448

n/a

n/a

Domestic centers (5)
$
402

97
%
13,496

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 December 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
Glendale, AZ (Westgate)
Lancaster, PA
Myrtle Beach Hwy 17, SC
 
 
Centers 11 - 15:
Atlantic City, NJ
Hershey, PA
Hilton Head I, SC
Locust Grove, GA
Pittsburgh, PA
 
 
Centers 16 - 20:
Gonzales, LA
Grand Rapids, MI
Mashantucket, CT (Foxwoods)
San Marcos, TX
Savannah, GA
 
 
Centers 21 - 26:
Foley, AL
Fort Worth, TX
Hilton Head II, SC
Howell, MI
Myrtle Beach Hwy 501, SC
Southaven, MS
 
Centers 27 - 32:
Blowing Rock, NC
Commerce, GA
Daytona Beach, FL
Jeffersonville, OH
Terrell, TX
Tilton, NH
 
 
 
 
 
 
 
 
(3)
Based on the Company’s forecast of 2020 Portfolio NOI (see non-GAAP definitions), excluding centers not yet stabilized (none). The Company’s forecast is based on management’s estimates as of December 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 year ended December 31, 2018, and December 31, 2019, when available.
 
 
(4)
Includes domestic outlet centers open 12 full calendar months (in alphabetical order):
 
Unconsolidated:
Charlotte, NC
Columbus, OH
National Harbor, MD
Texas City, TX (Galveston/Houston)
 
(5)
Includes consolidated portfolio and domestic unconsolidated joint ventures

8
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2019
tangeroutlet-small93015a06.jpg


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

Consolidated
 
Unconsolidated
Tenant
Brands
# of
Stores
 
GLA
 
% of
Total GLA
 
% of Total Annualized Base Rent (2)
 
# of
Stores
The Gap, Inc.
Gap, Banana Republic, Janie & Jack, Old Navy
96

 
947,819

 
7.9
%
 
5.9
%
 
19

Ascena Retail Group, Inc.
LOFT, Ann Taylor, Justice, Lane Bryant
96

 
534,084

 
4.4
%
 
4.6
%
 
13

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

 
390,692

 
3.2
%
 
4.1
%
 
14

Tapestry, Inc.
Coach, Kate Spade, Stuart Weitzman
48

 
226,289

 
1.9
%
 
2.8
%
 
11

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

 
233,877

 
1.9
%
 
2.8
%
 
6

Nike, Inc.
Nike, Converse, Hurley
39

 
423,215

 
3.5
%
 
2.7
%
 
11

American Eagle Outfitters, Inc.
American Eagle Outfitters, Aerie
39

 
272,104

 
2.3
%
 
2.6
%
 
7

G-III Apparel Group, Ltd.
Bass, Wilsons Leather, DKNY, Karl Lagerfeld Paris
44

 
203,734

 
1.7
%
 
2.4
%
 
5

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

 
224,227

 
1.9
%
 
2.2
%
 
10

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
51

 
117,204

 
1.0
%
 
1.9
%
 
8

Hanesbrands Inc.
Hanesbrands, Maidenform, Champion
36

 
176,907

 
1.5
%
 
1.9
%
 
2

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

 
358,736

 
3.0
%
 
1.8
%
 
5

Columbia Sportswear Company
Columbia Sportswear
19

 
148,145

 
1.2
%
 
1.8
%
 
5

Chico’s, FAS Inc.
Chicos, White House/Black Market, Soma Intimates
42

 
121,931

 
1.0
%
 
1.8
%
 
6

Adidas AG
Adidas, Reebok
28

 
172,867

 
1.4
%
 
1.7
%
 
9

Skechers USA, Inc.
Skechers
30

 
149,167

 
1.2
%
 
1.6
%
 
6

V. F. Corporation
The North Face, Vans, Timberland, Dickies
26

 
138,846

 
1.2
%
 
1.6
%
 
2

Caleres Inc.
Famous Footwear, Naturalizer, Allen Edmonds
33

 
167,841

 
1.4
%
 
1.6
%
 
11

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

 
407,342

 
3.4
%
 
1.5
%
 
2

L Brands, Inc.
Bath & Body Works, Pink, Victoria’s Secret
30

 
118,662

 
1.0
%
 
1.5
%
 
7

Express Inc.
Express Factory
23

 
160,730

 
1.3
%
 
1.5
%
 
4

Levis
Levis
29

 
121,486

 
1.0
%
 
1.4
%
 
5

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

 
140,366

 
1.2
%
 
1.4
%
 
4

Rack Room Shoes, Inc.
Rack Room Shoes
22

 
129,699

 
1.0
%
 
1.4
%
 
2

Total of Top 25 tenants
 
980

 
6,222,786

 
51.6
%
 
56.5
%
 
179

(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 12/31/2019
tangeroutlet-small93015a06.jpg


Lease Expirations as of December 31, 2019

Percentage of Total Gross Leasable Area (1) 
chart-2117cd60fdb953cdb79.jpg

Percentage of Total Annualized Base Rent (1) 
chart-5b496ec1a72d5e2b82da01.jpg

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


10
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2019
tangeroutlet-small93015a06.jpg


Capital expenditures (in thousands)
 
 
Year ended
 
 
December 31,
 
 
2019
 
2018
Value-enhancing:
 
 
 
 
New center developments and expansions
 
$
8,865

 
$
8,863

Other
 
1,584

 
1,718

 
 
10,449

 
10,581

Recurring capital expenditures:
 
 
 
 
Second generation tenant allowances
 
18,189

 
15,729

Operational capital expenditures
 
18,549

 
17,357

Renovations
 
2,930

 
4,690

 
 
39,668


37,776

Total additions to rental property-accrual basis
 
50,117

 
48,357

Conversion from accrual to cash basis
 
(2,232
)
 
15,896

Total additions to rental property-cash basis
 
$
47,885

 
$
64,253


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)
12/31/2019
113

460

$
38.93

$
43.48

7.89

$
33.42

12/31/2018
92

431

$
32.40

$
50.19

7.81

$
25.97

 
 
 
 
 
 
 
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)

12/31/2019
224

1,064

$
31.91

$
0.59

3.54

$
31.74

12/31/2018
281

1,398

$
31.65

$
0.22

3.66

$
31.59

 
 
 
 
 
 
 
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)
12/31/2019
337

1,524

$
34.03

$
13.54

4.85

$
31.24

12/31/2018
373

1,829

$
31.83

$
11.99

4.64

$
29.25

(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 other 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 other landlord costs.

11
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2019
tangeroutlet-small93015a06.jpg


Leasing Activity(1) 

 
TTM ended

TTM ended

All Lease Terms
12/31/2019

12/31/2018

Re-tenanted Space:
 
 
Number of leases
113

92

Gross leasable area
460,170

430,731

New initial rent per square foot
$
35.28

$
30.00

Prior expiring rent per square foot
$
36.13

$
31.03

Percent decrease
(2.4
)%
(3.3
)%
 
 
 
New straight-line rent per square foot
$
38.93

$
32.40

Prior straight-line rent per square foot
$
35.88

$
30.63

Percent increase
8.5
 %
5.8
 %
 
 
 
Renewed Space:
 
 
Number of leases
224

281

Gross leasable area
1,064,262

1,398,301

New initial rent per square foot
$
30.98

$
30.63

Prior expiring rent per square foot
$
31.22

$
30.90

Percent decrease
(0.8
)%
(0.9
)%
 
 
 
New straight-line rent per square foot
$
31.91

$
31.65

Prior straight-line rent per square foot
$
31.93

$
30.12

Percent increase (decrease)
(0.1
)%
5.1
 %
 
 
 
Total Re-tenanted and Renewed Space:
 
 
Number of leases
337

373

Gross leasable area
1,524,432

1,829,032

New initial rent per square foot
$
32.28

$
30.48

Prior expiring rent per square foot
$
32.70

$
30.93

Percent decrease
(1.3
)%
(1.4
)%
 
 
 
New straight-line rent per square foot
$
34.03

$
31.83

Prior straight-line rent per square foot
$
33.12

$
30.24

Percent increase
2.7
 %
5.3
 %
(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.





12
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2019
tangeroutlet-small93015a06.jpg


Leasing Activity(1) 
 
TTM ended

TTM ended

Terms of More Than 12 Months
12/31/2019

12/31/2018

Re-tenanted Space:
 
 
Number of leases
112

90

Gross leasable area
457,420

407,884

New initial rent per square foot
$
35.32

$
31.14

Prior expiring rent per square foot
$
36.06

$
31.10

Percent increase (decrease)
(2.1
)%
0.1
%
 
 
 
New straight-line rent per square foot
$
38.99

$
33.68

Prior straight-line rent per square foot
$
35.81

$
30.83

Percent increase
8.9
 %
9.2
%
 
 
 
Renewed Space:
 
 
Number of leases
190

221

Gross leasable area
898,040

1,107,169

New initial rent per square foot
$
32.95

$
32.89

Prior expiring rent per square foot
$
32.66

$
31.58

Percent increase
0.9
 %
4.1
%
 
 
 
New straight-line rent per square foot
$
34.06

$
34.18

Prior straight-line rent per square foot
$
33.55

$
30.76

Percent increase
1.5
 %
11.1
%
 
 
 
Total Re-tenanted and Renewed Space:
 
 
Number of leases
302

311

Gross leasable area
1,355,460

1,515,053

New initial rent per square foot
$
33.75

$
32.42

Prior expiring rent per square foot
$
33.81

$
31.45

Percent increase (decrease)
(0.2
)%
3.1
%
 
 
 
New straight-line rent per square foot
$
35.73

$
34.05

Prior straight-line rent per square foot
$
34.31

$
30.78

Percent increase
4.1
 %
10.6
%
(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.






13
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2019
tangeroutlet-small93015a06.jpg

Consolidated Balance Sheets (dollars in thousands)
 
December 31,
 
December 31,
 
2019
 
2018
Assets
 
 
 
   Rental property:
 
 
 
   Land
$
266,537

 
$
278,428

   Buildings, improvements and fixtures
2,630,357

 
2,764,649

   Construction in progress
—

 
3,102

 
2,896,894

 
3,046,179

   Accumulated depreciation
(1,009,951
)
 
(981,305
)
      Total rental property, net
1,886,943

 
2,064,874

   Cash and cash equivalents
16,672

 
9,083

   Investments in unconsolidated joint ventures
94,691

 
95,969

   Deferred lease costs and other intangibles, net
96,712

 
116,874

   Operating lease right-of-use assets (1)
86,575

 
—

   Prepaids and other assets
103,618

 
98,102

         Total assets
$
2,285,211

 
$
2,384,902

 
 
 
 
Liabilities and Equity
 
 
 
Liabilities
 
 
 
   Debt:
 
 
 
Senior, unsecured notes, net
$
1,138,603

 
$
1,136,663

Unsecured term loan, net
347,367

 
346,799

Mortgages payable, net
83,803

 
87,471

Unsecured lines of credit, net
—

 
141,985

Total debt
1,569,773

 
1,712,918

Accounts payable and accrued expenses
79,562

 
82,676

Operating lease liabilities (1)
91,237

 
—

Other liabilities
88,530

 
83,773

         Total liabilities
1,829,102

 
1,879,367

Commitments and contingencies
 
 
 
Equity
 
 
 
Tanger Factory Outlet Centers, Inc.:
 
 
 
Common shares, $.01 par value, 300,000,000 shares authorized, 92,892,849 and 93,941,783 shares issued and outstanding at December 31, 2019 and 2018, respectively
929

 
939

   Paid in capital
775,035

 
778,845

   Accumulated distributions in excess of net income
(317,263
)
 
(272,454
)
   Accumulated other comprehensive loss
(25,495
)
 
(27,151
)
         Equity attributable to Tanger Factory Outlet Centers, Inc.
433,206

 
480,179

Equity attributable to noncontrolling interests:
 
 
 
Noncontrolling interests in Operating Partnership
22,903

 
25,356

Noncontrolling interests in other consolidated partnerships
—

 
—

         Total equity
456,109

 
505,535

            Total liabilities and equity
$
2,285,211

 
$
2,384,902

(1)
In connection with the 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 12/31/2019
tangeroutlet-small93015a06.jpg


Consolidated Statements of Operations (in thousands, except per share data)
 
Three months ended
 
Year ended
 
December 31,
 
December 31,
 
2019
 
2018
 
2019
 
2018
Revenues:
 
 
 
 
 
 
 
Rental revenues (1)
$
116,557

 
$
123,256

 
$
463,946

 
$
480,707

Management, leasing and other services (2)
1,476

 
1,415

 
5,419

 
4,995

Other revenues
2,459

 
2,528

 
8,983

 
8,979

Total revenues
120,492

 
127,199

 
478,348

 
494,681

Expenses:
 
 
 
 
 
 
 
Property operating
39,482

 
40,640

 
157,734

 
160,457

General and administrative (3), (4)
12,880

 
11,306

 
53,790

 
44,167

Impairment charge
37,610

 
—

 
37,610

 
49,739

Depreciation and amortization
30,305

 
33,055

 
123,314

 
131,722

Total expenses
120,277

 
85,001

 
372,448

 
386,085

Other income (expense):
 
 
 
 
 
 
 
Interest expense
(15,034
)
 
(16,473
)
 
(61,672
)
 
(64,821
)
Gain on sale of assets
—

 
—

 
43,422

 
—

Other income (expense) (5)
205

 
203

 
(2,761
)
 
864

Total other income (expense)
(14,829
)
 
(16,270
)
 
(21,011
)
 
(63,957
)
Income (loss) before equity in earnings (losses) of unconsolidated joint ventures
(14,614
)
 
25,928

 
84,889

 
44,639

Equity in earnings (losses) of unconsolidated joint ventures
2,235

 
(5,309
)
 
7,839

 
924

Net income (loss)
(12,379
)
 
20,619

 
92,728

 
45,563

Noncontrolling interests in Operating Partnership
630

 
(1,055
)
 
(4,678
)
 
(2,329
)
Noncontrolling interests in other consolidated partnerships
—

 
143

 
(195
)
 
421

Net income (loss) attributable to Tanger Factory Outlet Centers, Inc.
(11,749
)
 
19,707

 
87,855

 
43,655

Allocation of earnings to participating securities
(306
)
 
(322
)
 
(1,336
)
 
(1,211
)
Net income (loss) available to common shareholders of
Tanger Factory Outlet Centers, Inc.
$
(12,055
)
 
$
19,385

 
$
86,519

 
$
42,444

 
 
 
 
 
 
 
 
Basic earnings per common share:
 
 
 
 
 
 
 
Net income (loss)
$
(0.13
)
 
$
0.21

 
$
0.93

 
$
0.45

 
 
 
 
 
 
 
 
Diluted earnings per common share:
 
 
 
 
 
 
 
Net income (loss)
$
(0.13
)
 
$
0.21

 
$
0.93

 
$
0.45

(1)
In connection with the adoption of ASC 842 on January 1, 2019, rental revenues includes base rentals, percentage rentals, and expense reimbursements for all periods presented. Additionally, for the three months and year ended December 31, 2019, rental revenues is presented net of uncollectible tenant revenues and includes a straight-line rent adjustment of $1.5 million and $6.4 million, respectively, 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 $745,000 and $2.5 million, respectively, previously included in expense reimbursements for the three months and year ended December 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 and year ended December 31, 2019, lease costs of approximately $1.5 million and $4.9 million, respectively, were expensed as general and administrative expenses which would have been capitalized under the previous accounting standard.
(4)
The year ended December 31, 2019 includes $4.4 million related to the accelerated recognition of compensation cost entitled to be received by the Company’s former President and Chief Operating Officer per the terms of a transition agreement executed in connection with his retirement.
(5)
The year ended December 31, 2019 includes a $3.6 million charge related to the foreign currency effect of the sale of the Bromont, Quebec property by the RioCan Canada joint venture.

15
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2019
tangeroutlet-small93015a06.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 and year ended December 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 and year ended December 31, 2019, we recorded an adjustment of $1.5 million and $6.4 million, respectively, 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
 
Year ended
 
December 31,
 
December 31,
 
2019
 
2018
 
2019
 
2018
Rental revenues:
 
 
 
 
 
 
 
Base rentals 
$
78,051

 
$
82,450

 
$
309,974

 
$
322,993

Percentage rentals
3,631

 
3,374

 
10,627

 
10,040

Tenant expense reimbursements
34,515

 
36,703

 
136,256

 
142,706

Lease termination fees
89

 
112

 
1,615

 
1,246

Market rent adjustments
(273
)
 
(482
)
 
(1,044
)
 
(2,121
)
Straight-line rent adjustments
783

 
1,099

 
7,721

 
5,843

Uncollectible tenant revenues (1)
(239
)
 
—

 
(1,203
)
 
—

Rental revenues
$
116,557

 
$
123,256

 
$
463,946

 
$
480,707

(1)
Uncollectible tenant revenues recorded in general and administrative expenses for the three months and year ended December 31, 2018 were approximately $216,000 and $904,000, respectively.





16
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2019
tangeroutlet-small93015a06.jpg


Unconsolidated Joint Venture Information  

The following table details certain information as of December 31, 2019, except for Net Operating Income (“NOI”) which is for the year ended December 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
%
 
398,674

 
$
39.2

 
$
6.9

 
$
49.8

Columbus
 
Columbus, OH
 
50.0
%
 
355,245

 
39.5

 
5.2

 
42.5

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

 
21.3

 
4.3

 
39.9

National Harbor
 
National Harbor, MD
 
50.0
%
 
341,156

 
42.0

 
5.2

 
47.2

RioCan Canada (2)
 
Various
 
50.0
%
 
764,402

 
99.4

 
6.6

 
4.6

Total
 
 
 
 
 
2,212,182

 
$
241.4

 
$
28.2

 
$
184.0

(1)
Net of debt origination costs and premiums.
(2)
Includes a 307,779 square foot outlet center in Cookstown, Ontario; a 357,218 square foot outlet center in Ottawa, Ontario; and a 99,405 square foot outlet center in Saint-Sauveur, Quebec. Tanger’s share of NOI includes $172,000 for the Bromont, Quebec outlet center, which was sold in May 2019.



17
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2019
tangeroutlet-small93015a06.jpg


Debt Outstanding Summary
As of December 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)
$
—

 
$
—

 
LIBOR + 0.875%

 
2.7
%
 
10/28/2022
 
2.8

2023 Senior unsecured notes
250,000

 
250,000

 
3.875%

 
4.1
%
 
12/1/2023
 
3.9

2024 Senior unsecured notes
250,000

 
250,000

 
3.75
%
 
3.8
%
 
12/1/2024
 
4.9

2026 Senior unsecured notes
350,000

 
350,000

 
3.125
%
 
3.2
%
 
9/1/2026
 
6.7

2027 Senior unsecured notes
300,000

 
300,000

 
3.875
%
 
3.9
%
 
7/15/2027
 
7.5

Unsecured term loan
350,000

 
350,000

 
LIBOR + 0.90%

 
2.5
%
 
4/22/2024
 
4.3

Net debt discounts and debt origination costs
(14,030
)
 
(14,030
)
 
 

 
 
 
 
 
 
Total net unsecured debt
1,485,970

 
1,485,970

 
 

 
3.5
%
 
 
 
5.5

Secured mortgage debt:
 
 
 
 
 
 
 
 
 
 
 
Atlantic City, NJ
30,909

 
30,909

 
5.14% - 7.65%

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

Southaven, MS
51,400

 
51,400

 
LIBOR + 1.80%

 
4.1
%
 
4/29/2023
 
3.3

Debt premium and debt origination costs
1,494

 
1,494

 
 
 
 
 
 
 
 
Total net secured mortgage debt
83,803

 
83,803

 
 
 
4.5
%
 
 
 
4.0

Total consolidated debt
1,569,773

 
1,569,773

 
 
 
3.5
%
 
 
 
5.5

Unconsolidated JV debt:
 

 
 
 
 

 
 
 
 
 
 
Charlotte
100,000

 
50,000

 
4.27
%
 
4.3
%
 
7/1/2028
 
8.5

Columbus
85,000

 
42,500

 
LIBOR + 1.65%

 
3.4
%
 
11/28/2021
 
1.9

Galveston/Houston
80,000

 
40,000

 
LIBOR + 1.65%

 
3.4
%
 
7/1/2022
 
2.5

National Harbor
95,000

 
47,500

 
4.63
%
 
4.6
%
 
1/5/2030
 
10.0

RioCan Canada
9,146

 
4,573

 
5.75
%
 
4.2
%
 
5/10/2020
 
0.4

Debt premium and debt origination costs
(1,114
)
 
(557
)
 
 
 
 
 
 
 
 
Total unconsolidated JV net debt
368,032

 
184,016

 
 

 
4.0
%
 
 
 
5.9

Total
$
1,937,805

 
$
1,753,789

 
 
 
3.6
%
 
 
 
5.5

(1)
The effective interest rate includes the impact of discounts and premiums and interest rate swap agreements, as applicable. See page 19 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 12/31/2019
tangeroutlet-small93015a06.jpg


Summary of Our Share of Fixed and Variable Rate Debt
As of December 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)
99
%
 
$
1,558,501

 
3.5
%
 
5.5
Variable
1
%
 
11,272

 
3.6
%
 
3.3
 
100
%
 
1,569,773

 
3.5
%
 
5.5
Unconsolidated Joint ventures:
 
 


 
 
 
 
Fixed
55
%
 
$
101,591

 
4.4
%
 
8.8
Variable
45
%
 
82,425

 
3.4
%
 
2.2
 
100
%
 
184,016

 
4.0
%
 
5.9
Total:
 
 
 
 
 
 
 
Fixed
95
%
 
$
1,660,092

 
3.6
%
 
5.9
Variable
5
%
 
93,697

 
3.4
%
 
2.3
Total share of debt
100
%
 
$
1,753,789

 
3.6
%
 
5.5
(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 $390.0 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.
(d)
In June 2019, we entered into a forward starting interest rate swap agreement, effective July 1, 2019, that fixed the base LIBOR rate at 1.75% on a notional amount of $25.0 million through February 1, 2024.




19
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2019
tangeroutlet-small93015a06.jpg


Future Scheduled Principal Payments (dollars in thousands)(1)
As of December 31, 2019
Year
Tanger
Consolidated
Payments
 
Tanger’s Share
of Unconsolidated
JV Payments
 
Total
Scheduled
Payments
2020
$
3,566

 
$
4,573

 
$
8,139

2021
5,793

 
42,500

 
48,293

2022
4,436

 
40,000

 
44,436

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
—

 
984

 
984

2030 & thereafter
—

 
41,538

 
41,538

 
$
1,582,309

 
$
184,573

 
$
1,766,882

Net debt discounts and debt origination costs
(12,536
)
 
(557
)
 
(13,093
)
 
$
1,569,773

 
$
184,016

 
$
1,753,789

(1)
Includes applicable extensions available at our option.
Senior Unsecured Notes Financial Covenants (1) 
As of December 31, 2019
 
Required
 
Actual
 
Compliance
Total Consolidated Debt to Adjusted Total Assets
<60%
 
48
%
 
Yes
Total Secured Debt to Adjusted Total Assets
<40%
 
3
%
 
Yes
Total Unencumbered Assets to Unsecured Debt
>150%
 
198
%
 
Yes
Consolidated Income Available for Debt Service to Annual Debt Service Charge
>1.5
 
5.0

 
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 12/31/2019
tangeroutlet-small93015a06.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 or Adjusted Funds From Operations (“AFFO”), 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.

Adjusted Funds From Operations

We present AFFO as a supplemental measure of our performance. We define AFFO as FFO further adjusted to eliminate the impact of certain items that we do not consider indicative of our ongoing operating performance. These further adjustments are itemized in the table below. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating AFFO you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of AFFO should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

We present AFFO because we believe it assists investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. In addition, we believe it is useful for investors to have enhanced transparency into how we evaluate management’s performance and the effectiveness of our business strategies. We use AFFO when certain material, unplanned transactions occur as a factor in evaluating management’s performance and to evaluate the effectiveness of our business strategies, and may use AFFO when determining incentive compensation.


21
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2019
tangeroutlet-small93015a06.jpg


AFFO has limitations as an analytical tool. Some of these limitations are:

•
AFFO does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;

•
AFFO 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 AFFO does not reflect any cash requirements for such replacements;

•
AFFO does not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations; and

•
Other companies in our industry may calculate AFFO differently than we do, limiting its usefulness as a comparative measure.

Because of these limitations, AFFO should not be considered 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 AFFO 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 equity-based compensation, straight-line rent amounts, market rent amounts, second 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.

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, impairment charges and gains or losses on the sale of assets 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 or AFFO. 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 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.”


22
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2019
tangeroutlet-small93015a06.jpg


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.



23
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2019
tangeroutlet-small93015a06.jpg


Reconciliation of Net Income to FFO and AFFO (dollars and shares in thousands)

 
 
Three months ended
 
Year ended
 
 
December 31,
 
December 31,
 
 
2019
 
2018
 
2019
 
2018
Net income (loss)
 
$
(12,379
)
 
$
20,619

 
$
92,728

 
$
45,563

Adjusted for:
 
 
 
 
 
 
 
 
Depreciation and amortization of real estate assets - consolidated
 
29,707

 
32,440

 
120,856

 
129,281

Depreciation and amortization of real estate assets - unconsolidated joint ventures
 
3,059

 
3,294

 
12,512

 
13,314

Impairment charge - consolidated
 
37,610

 
—

 
37,610

 
49,739

Impairment charge - unconsolidated joint ventures
 
—

 
7,180

 
—

 
7,180

Foreign currency loss from sale of joint venture property
 
—

 
—

 
3,641

 
—

Gain on sale of assets
 
—

 
—

 
(43,422
)
 
—

FFO
 
57,997

 
63,533

 
223,925

 
245,077

FFO attributable to noncontrolling interests in other consolidated partnerships
 
—

 
143

 
(195
)
 
421

Allocation of earnings to participating securities
 
(489
)
 
(580
)
 
(1,991
)
 
(2,151
)
FFO available to common shareholders  (1)
 
$
57,508

 
$
63,096

 
$
221,739

 
$
243,347

As further adjusted for:
 
 
 
 
 
 
 
 
Compensation related to executive officer retirement (2)
 
—

 
—

 
4,371

 
—

Impact of above adjustment to the allocation of earnings to participating securities
 
—

 
—

 
(35
)
 
—

AFFO available to common shareholders (1)
 
$
57,508

 
$
63,096

 
$
226,075

 
$
243,347

FFO available to common shareholders per share - diluted (1)
 
$
0.59

 
$
0.64

 
$
2.27

 
$
2.48

AFFO available to common shareholders per share - diluted (1)
 
$
0.59

 
$
0.64

 
$
2.31

 
$
2.48

 
 
 
 
 
 
 
 
 
Weighted Average Shares:
 
 
 
 
 
 
 
 
Basic weighted average common shares
 
92,243

 
93,123

 
92,808

 
93,309

Effect of outstanding options and certain restricted common shares
 
—

 
—

 
—

 
1

Diluted weighted average common shares (for earnings per share computations)
 
92,243

 
93,123

 
92,808

 
93,310

Exchangeable operating partnership units
 
4,949

 
4,983

 
4,958

 
4,993

Diluted weighted average common shares (for FFO and AFFO per share computations) (1)
 
97,192

 
98,106

 
97,766

 
98,303

(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.
(2)
Represents the accelerated recognition of compensation cost entitled to be received by the Company’s former President and Chief Operating Officer per the terms of a transition agreement executed in connection with his retirement.



24
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2019
tangeroutlet-small93015a06.jpg


Reconciliation of FFO to FAD (dollars and shares in thousands)
 
 
Three months ended
 
Year ended
 
 
December 31,
 
December 31,
 
 
2019
 
2018
 
2019
 
2018
FFO available to common shareholders
 
$
57,508

 
$
63,096

 
$
221,739

 
$
243,347

Adjusted for:
 
 
 
 
 
 
 
 
Corporate depreciation excluded above
 
598

 
615

 
2,458

 
2,441

Amortization of finance costs
 
758

 
778

 
3,004

 
3,058

Amortization of net debt discount (premium)
 
115

 
107

 
448

 
416

Amortization of equity-based compensation
 
3,749

 
3,855

 
18,120

 
14,669

Straight-line rent adjustments
 
(317
)
 
(1,100
)
 
(7,721
)
 
(5,844
)
Market rent adjustments
 
365

 
597

 
1,432

 
2,577

Second generation tenant allowances
 
(3,018
)
 
(4,141
)
 
(18,189
)
 
(15,729
)
Capital improvements
 
(6,800
)
 
(5,564
)
 
(21,478
)
 
(22,047
)
Adjustments from unconsolidated joint ventures
 
(408
)
 
94

 
(1,662
)
 
(780
)
FAD available to common shareholders (1)
 
$
52,550

 
$
58,337

 
$
198,151

 
$
222,108

Dividends per share
 
$
0.3550

 
$
0.3500

 
$
1.4150

 
$
1.3925

FFO payout ratio
 
60
%
 
55
%
 
62
%
 
56
%
FAD payout ratio
 
66
%
 
59
%
 
70
%
 
62
%
Diluted weighted average common shares (1)
 
97,192

 
98,106

 
97,766

 
98,303

(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.

25
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2019
tangeroutlet-small93015a06.jpg




Reconciliation of Net Income to Portfolio NOI and Same Center NOI for the consolidated portfolio (in thousands)

 
 
Three months ended
 
Year ended
 
 
December 31,
 
December 31,
 
 
2019
 
2018
 
2019
 
2018
Net income (loss)
 
$
(12,379
)
 
$
20,619

 
$
92,728

 
$
45,563

Adjusted to exclude:
 
 
 
 
 
 
 
 
Equity in (earnings) losses of unconsolidated joint ventures
 
(2,235
)
 
5,309

 
(7,839
)
 
(924
)
Interest expense
 
15,034

 
16,473

 
61,672

 
64,821

Gain on sale of assets
 
—

 
—

 
(43,422
)
 
—

Other non-operating (income) expense
 
(205
)
 
(203
)
 
2,761

 
(864
)
Impairment charge
 
37,610

 
—

 
37,610

 
49,739

Depreciation and amortization
 
30,305

 
33,055

 
123,314

 
131,722

Other non-property expenses
 
555

 
166

 
1,049

 
1,001

Corporate general and administrative expenses
 
12,852

 
11,072

 
53,881

 
43,291

Non-cash adjustments (1)
 
(409
)
 
(485
)
 
(6,237
)
 
(3,191
)
Lease termination fees
 
(89
)
 
(112
)
 
(1,615
)
 
(1,246
)
Portfolio NOI
 
81,039

 
85,894

 
313,902

 
329,912

Non-same center NOI (2)
 
165

 
(4,398
)
 
(4,024
)
 
(17,900
)
Same Center NOI
 
$
81,204

 
$
81,496

 
$
309,878

 
$
312,012

(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
 




26
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2019
tangeroutlet-small93015a06.jpg


Non-GAAP Pro Rata Balance Sheet Information as of December 31, 2019 (in thousands)


Non-GAAP
 
Pro Rata Portion Unconsolidated Joint Ventures (1)
Assets
 
Rental property:
 
Land
$
45,429

Buildings, improvements and fixtures
238,530

Construction in progress
2,390

 
286,349

Accumulated depreciation
(66,430
)
Total rental property, net
219,919

Cash and cash equivalents
9,875

Deferred lease costs and other intangibles, net
3,386

Prepaids and other assets
8,204

Total assets
$
241,384

Liabilities and Owners’ Equity
 
Liabilities
 
Mortgages payable, net
$
184,016

Accounts payable and accruals
8,586

Total liabilities
192,602

Owners’ equity
48,782

Total liabilities and owners’ equity
$
241,384

(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 $3.8 million as of December 31, 2019 and are being amortized over the various useful lives of the related assets.


27
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2019
tangeroutlet-small93015a06.jpg


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

 
$
46,193

Other revenues
—

 
561

Total revenues
—

 
46,754

Expense:
 
 
 
Property operating
—

 
18,406

General and administrative
—

 
136

Depreciation and amortization
—

 
12,458

Total expenses
—

 
31,000

Other income (expense):
 
 
 
Interest expense
—

 
(8,117
)
Other income (expenses)
(195
)
 
253

Total other income (expense)
$
(195
)
 
$
(7,864
)
Net income (loss)
$
(195
)
 
$
7,890


The table below provides details of the components included in our share of rental revenues for the year ended December 31, 2019 (in thousands)

 
Non-GAAP Pro Rata Portion
 
Noncontrolling Interests
 
Unconsolidated Joint Ventures
Rental revenues:
 
 
 
Base rentals 
$
—

 
$
26,299

Percentage rentals
—

 
2,128

Tenant expense reimbursements
—

 
17,011

Lease termination fees
—

 
353

Market rent adjustments
—

 
(69
)
Straight-line rent adjustments
—

 
516

Uncollectible tenant revenues
—

 
(45
)
Rental revenues
$
—

 
$
46,193




28
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2019
tangeroutlet-small93015a06.jpg


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


29
Supplemental Operating and Financial Data for the
Quarter Ended 12/31/2019
tangeroutlet-small93015a06.jpg