-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VOylbIGY5frhCT8tAcNrqMatlPi8cXvO1cEqne8lpsG4PXfsiFoPyg1peupLPtVj JdCckxRo+AwF4YjGuSLV2A== 0000950168-98-002480.txt : 19980804 0000950168-98-002480.hdr.sgml : 19980804 ACCESSION NUMBER: 0000950168-98-002480 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980731 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980803 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TANGER FACTORY OUTLET CENTERS INC CENTRAL INDEX KEY: 0000899715 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 561815473 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-11986 FILM NUMBER: 98676275 BUSINESS ADDRESS: STREET 1: 1400 WEST NORTHWOOD ST CITY: GREENSBORO STATE: NC ZIP: 27408 BUSINESS PHONE: 9192741666 MAIL ADDRESS: STREET 1: 1400 WEST NORTHWOOD STREET CITY: GREENSBORO STATE: NC ZIP: 27408 8-K 1 TANGER FACTORY OUTLET CENTERS, INC.--FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 JULY 31, 1998 Date of Report (Date of earliest event reported) TANGER FACTORY OUTLET CENTERS, INC. (Exact name of registrant as specified in its charter) NORTH CAROLINA (STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) 1-11986 56-1815473 (COMMISSION FILE NO.) (I.R.S. EMPLOYER IDENTIFICATION NO.) 1400 WEST NORTHWOOD STREET, GREENSBORO, NC 27408 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE) (336) 274-1666 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) NOT APPLICABLE (FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT) TANGER FACTORY OUTLET CENTERS, INC. CURRENT REPORT ON FORM 8-K ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS On July 31, 1998, Tanger Properties Limited Partnership, of which Tanger Factory Outlet Centers, Inc. (the "Company") is the sole general partner, completed the acquisition of Sanibel Factory Stores, a factory outlet center containing approximately 186,000 square feet, for an aggregate purchase price of $27.65 million. Sanibel Factory Stores is located on the Gulf coast of Florida between Fort Myers and Sanibel Island. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS The financial statements, unaudited pro forma financial information and exhibits filed herewith are as set forth below (a) Financial Statements Page (1) Sanibel Factory Stores Report of Independent Accountants 3 Statement of Revenues and Certain Operating Expenses for the Year Ended December 31, 1997 4 Notes to Statement of Revenues and Certain Operating Expenses 5 (b) Pro Forma Financial Information (1) Unaudited Pro Forma Consolidated Balance Sheet as of March 31, 1998 8 (2) Unaudited Pro Forma Consolidated Statements of Operations for the three months ended March 31, 1998 9 for the year ended December 31, 1997 10 (3) Adjustments to Unaudited Pro Forma Consolidated Statements of Operations 11 (c) Exhibits 23.1 Consent of PricewaterhouseCoopers LLP* - --------------------------- * Filed herewith 2 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of Tanger Factory Outlet Centers, Inc: We have audited the statement of revenues and certain operating expenses of Sanibel Factory Stores (the "Property") as described in Note 1, for the year ended December 31, 1997. This financial statement is the responsibility of the Property's management. Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of revenues and certain operating expenses is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. The accompanying statement of revenues and certain operating expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in the current report on Form 8-K of Tanger Factory Outlet Centers, Inc. as described in Note 1 and is not intended to be a complete presentation of the Property's revenues and expenses. In our opinion, the financial statement referred to above presents fairly, in all material respects, the revenues and certain operating expenses of the Property for the year ended December 31, 1997 in conformity with generally accepted accounting principles. PricewaterhouseCoopers LLP Greensboro, North Carolina June 30, 1998 3 SANIBEL FACTORY STORES STATEMENT OF REVENUES AND CERTAIN OPERATING EXPENSES For The Year Ended December 31, 1997 (In thousands) Revenues Base rentals $2,815 Percentage rentals 148 Expense reimbursements 1,071 Other income 10 -------- 4,044 -------- Certain operating expenses Advertising and promotion 374 Common area maintenance 363 Real estate taxes 296 Insurance 49 General and administrative 60 -------- 1,142 -------- Excess of revenues over certain operating expenses $2,902 ======== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT. 4 NOTES TO STATEMENT OF REVENUES AND CERTAIN OPERATING EXPENSES (IN THOUSANDS) 1. BASIS OF PRESENTATION The Statement of Revenues and Certain Operating Expenses relates to the operations of Sanibel Factory Stores, a factory outlet center located in Florida between Ft. Myers and Sanibel Island (the "Property"). The Property was acquired by Tanger Properties Limited Partnership which has as its sole general partner, Tanger Factory Outlet Centers, Inc. (the "Company"). The accompanying Statement of Revenues and Certain Operating Expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission. This statement is not representative of the actual operations for the period presented, as certain expenses, which may not be comparable to the expenses expected to be incurred by the Company in the future operation of the Property, have been excluded as discussed below. Certain Operating Expenses include advertising and promotional expenses, common area maintenance, real estate taxes, and certain other operating expenses relating to the operations of the Property. In accordance with the regulations of the Securities and Exchange Commission, mortgage interest, depreciation and amortization and certain other costs have been excluded from certain operating expenses, as they are dependent upon a particular owner, purchase price or other financial arrangement. Certain other costs excluded include: Management fees, net of tenant reimbursements $38 Leasing commissions 21 --- $59 === No Federal income taxes have been provided because the Company is taxed as a Real Estate Investment Trust under the provision of the Internal Revenue Code. Accordingly, the Company does not pay Federal income tax whenever income distributed to its shareholders is equal to at least 95% of real estate investment trust's taxable income and certain other conditions are met. 2. ACQUISITION CONSIDERATIONS (UNAUDITED) In assessing the Property, the Company's management considered the existing tenant base, which is the primary revenue source, occupancy rate, the competitive nature of the market and comparative rental rates. Furthermore, current and anticipated maintenance and repair costs, real estate taxes and capital improvement requirements were evaluated. Management is not aware of any material factors that would cause the reported financial information in the accompanying Statement of Revenues and Certain Operating Expenses to be misleading or not necessarily indicative of future operating results. 5 3. SIGNIFICANT ACCOUNTING POLICIES AND OPERATING LEASES Base and percentage rental revenues are reported as income over the lease term as earned. The preparation of the Statement of Revenues and Certain Operating Expenses in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the period reported. Actual results may differ from those estimates. The Property is leased to tenants under operating leases with expiration dates extending to the year 2005. Future minimum rentals (assuming lease renewal options, where applicable, are not exercised) under noncancellable operating leases, exclusive of additional rents from reimbursement of operating expenses are approximately as follows: 1998 $2,656 1999 2,280 2000 1,828 2001 1,602 2002 1,426 Thereafter 1,222 -------- $11,014 ======== 6 TANGER FACTORY OUTLET CENTERS, INC. PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS The accompanying Pro Forma Consolidated Financial Statements are based on the historical statements of the Company after giving effect to the acquisition of Sanibel Factory Stores, which was acquired on July 31, 1998, and Dalton Factory Stores, which was acquired on March 31, 1998 (collectively, the "Acquisitions"). The unaudited Pro Forma Consolidated Statements of Operations for the three months ended March 31, 1998 and the year ended December 31, 1997 assume the Acquisitions had occurred as of the beginning of each respective period. The Pro Forma Consolidated Financial Statements have been prepared by the Company's management. These pro forma statements may not be indicative of the results that would have actually occurred if the Acquisitions had been in effect on the date indicated, nor does it purport to represent the results of operations for future periods. The Unaudited Pro Forma Consolidated Financial Statements should be read in conjunction with the audited statement of revenues and certain operating expenses of the Sanibel Factory Stores (contained herein) for the year ended December 31, 1997, the Company's unaudited financial statements and notes thereto as of March 31, 1998 and for the three months then ended (which are contained in the Company's Form 10-Q for the period ended March 31, 1998), and the audited financial statements and notes thereto as of December 31, 1997 and for the year then ended (which are contained in the Company's Annual Report on Form 10-K for the year ended December 31, 1997). 7 TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARY PRO FORMA CONSOLIDATED BALANCE SHEETS As of March 31, 1998 (Unaudited) (In thousands, except share data) Tanger Adjustments Pro forma ---------------------------------- ASSETS Rental property, net $406,673 $27,650(a) $434,323 Cash and cash equivalents 5,181 5,181 Deferred charges, net 8,288 8,288 Other assets 12,448 12,448 ---------------------------------- TOTAL ASSETS $432,590 $27,650 $460,240 ================================== LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES Long-term debt $253,411 $27,650(a) $281,061 Construction trade payables 8,375 8,375 Accounts payable and accrued expenses 11,521 11,521 ---------------------------------- TOTAL LIABILITIES 273,307 27,650 300,957 ---------------------------------- Commitments Minority interest 38,094 38,094 ---------------------------------- SHAREHOLDERS' EQUITY Preferred shares, $.01 par value, 1,000,000 shares authorized, 89,649 shares issued and outstanding at March 31, 1998 1 1 Common shares, $.01 par value, 50,000,000 shares authorized, 7,865,303 shares issued and outstanding at March 31, 1998 79 79 Paid in capital 137,075 137,075 Distributions in excess of net income (15,966) (15,966) ---------------------------------- Total shareholders' equity 121,189 121,189 ---------------------------------- Total liabilities and shareholders' equity $432,590 $27,650 $460,240 ================================== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS. 8 TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARY PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS For The Three Months Ended March 31, 1998 (Unaudited) (In thousands, except per share data) Tanger Sanibel Dalton Adjustments Pro forma --------------------------------------------------- REVENUES Base rentals $15,655 $725 $488 $16,868 Percentage rentals 494 20 20 534 Expense reimbursements 6,360 299 140 6,799 Other income 297 6 24 327 --------------------------------------------------- Total revenues 22,806 1,050 672 24,528 --------------------------------------------------- EXPENSES Property operating 6,652 283 140 7,075 General and administrative 1,699 32 4 1,735 Interest 4,792 809 (b) 5,601 Depreciation and amortization 5,134 320 (c) 5,454 --------------------------------------------------- Total expenses 18,277 315 144 1,129 19,865 --------------------------------------------------- INCOME BEFORE GAIN ON SALE OF REAL ESTATE, MINORITY INTEREST AND EXTRAORDINARY ITEM 4,529 735 528 (1,129) 4,663 Gain on sale of real estate 994 994 --------------------------------------------------- Income before minority interest and extraordinary item 5,523 735 528 (1,129) 5,657 Minority interest (1,408) (37) (d) (1,445) --------------------------------------------------- Income before extraordinary item 4,115 735 528 (1,166) 4,212 Extraordinary item, net of minority interest of $128 (332) (332) --------------------------------------------------- Net income $3,783 $735 $528 ($1,166) $3,880 =================================================== BASIC EARNINGS PER COMMON SHARE Income before extraordinary item $.46 $.48 Net income .42 .43 =================================================== DILUTED EARNINGS PER COMMON SHARE Income before extraordinary item $.45 $.47 Net income .41 .42 =================================================== WEIGHTED AVERAGE NUMBER OF SHARES Basic 7,858 7,858 Diluted 8,038 8,038 =================================================== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS. 9 TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARY PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS For The Year Ended December 31, 1997 (Unaudited) (In thousands, except per share data)
Pro Tanger Sanibel Dalton Adjustments forma ---------------------------------------------------- REVENUES Base rentals $56,807 $2,815 $1,858 $61,480 Percentage rentals 2,637 148 23 2,808 Expense reimbursements 24,665 1,071 720 26,456 Other income 1,162 10 29 1,201 ---------------------------------------------------- Total revenues 85,271 4,044 2,630 91,945 ---------------------------------------------------- EXPENSES Property operating 26,269 1,082 932 28,283 General and administrative 6,145 60 8 6,213 Interest 16,835 3,237 (b) 20,072 Depreciation and amortization 18,439 1,280 (c) 19,719 ---------------------------------------------------- Total expenses 67,688 1,142 940 4,517 74,287 ---------------------------------------------------- INCOME BEFORE MINORITY INTEREST 17,583 2,902 1,690 (4,517) 17,658 Minority interest (4,756) (23) (d) (4,779) ==================================================== Net income $12,827 $2,902 $1,690 ($4,540) $12,879 ==================================================== EARNINGS PER COMMON SHARE Basic $1.57 $1.58 Diluted 1.54 1.55 ==================================================== WEIGHTED AVERAGE NUMBER OF SHARES Basic 7,028 7,028 Diluted 7,140 7,140 ====================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS. 10 TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARY NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (a) Represents the cost of the acquisition of the Sanibel Factory Stores which is assumed to be financed with additional borrowings under available lines of credit. The cost of the acquisition of Dalton Factory Stores has already been included in the Company's historical Consolidated Balance Sheet as of March 31, 1998. (b) Represents interest from additional borrowings under available lines of credit to finance the Acquisitions at an interest rate of LIBOR plus 160 basis points (assumed to be 7.25 %). (c) Reflects increase in depreciation and amortization resulting from the Acquisitions depreciated over lives ranging from 15 to 33 years. (d) Reflects the adjustment to minority interest, after preferred dividends of $468,000 and $1,808,000 for the periods ended March 31, 1998 and December 31, 1997, respectively, allocable to the Acquisitions and the pro forma adjustments for mortgage interest and depreciation and amortization. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. TANGER FACTORY OUTLET CENTERS, INC. By: /s/ FRANK C. MARCHISELLO, JR. Frank C. Marchisello, Jr. Vice President, Chief Financial Officer DATE: July 31, 1998 11 EX-23 2 EXHIBIT 23.1 EXHIBIT 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the registration statements of Tanger Factory Outlet Centers, Inc. on Form S-8 (File No. 33-80450), Forms S-3 (File Nos. 33-99736, 333-3526 and 333-39365) of our report dated June 30, 1998, on our audit of the Statement of Revenues and Certain Operating Expenses of Sanibel Factory Stores for the year ended December 31, 1997, which report is included in this Current Report on Form 8-K. PricewaterhouseCoopers LLP Greensboro, North Carolina July 31, 1998 -----END PRIVACY-ENHANCED MESSAGE-----