Tanger Reports Second Quarter 2012 Results
4:05 PM ET 7/31/12 | Marketwire
Tanger Factory Outlet Centers, Inc. (NYSE: SKT) today reported its financial results for the quarter and six months ended June 30, 2012. Funds from operations ("FFO") available to common shareholders, a widely accepted supplemental measure of REIT performance, increased 30.4% for the three months ended June 30, 2012 to $38.6 million, or $0.39 per share, as compared to FFO of $29.6 million, or $0.32 per share, for the three months ended June 30, 2011. For the six months ended June 30, 2012, FFO increased 25.3% to $74.2 million, or $0.75 per share, as compared to FFO of $59.2 million, or $0.64 per share, for the six months ended June 30, 2011.
"Our solid operating performance continued through the second quarter. Same center net operating income increased by 7.0% for the quarter and 6.9% for the first half of the year. Tenant comparable sales increased 3.9% for the rolling twelve months. Leasing activity remained robust, with a positive second quarter blended rental spread for renewals and re-tenanted space of 24.7%," commented Steven B. Tanger, President and Chief Executive Officer. "During the quarter we announced a new joint venture to develop a designer outlet center at Foxwoods Resort Casino. Located in Mashantucket, Connecticut, Foxwoods attracts more than 40,000 visitors each day. This exciting venture further strengthens our pipeline of external growth opportunities throughout the United States and Canada," he added.
FFO for all periods shown was impacted by a number of charges as described in the summary below (in thousands, except per share amounts):
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Three Months Ended Six Months Ended
June 30, June 30,
2012 2011 2012 2011
--------- --------- --------- ---------
FFO as reported $ 38,586 $ 29,600 $ 74,227 $ 59,222
As adjusted for:
Acquisition costs --- 974 --- 1,541
Abandoned development costs --- --- --- 158
AFFO adjustments from
unconsolidated joint ventures
(1) 206 --- 892 ---
Impact of above adjustments to
the allocation of earnings to
participating securities (2) (8) (9) (16)
--------- --------- --------- ---------
Adjusted FFO ("AFFO") $ 38,790 $ 30,566 $ 75,110 $ 60,905
Diluted weighted average common
shares 98,812 93,237 98,702 93,172
--------- --------- --------- ---------
AFFO per share $ .39 $ .33 $ .76 $ .65
--------- --------- --------- ---------
Three Months Ended Six Months Ended June 30, June 30, 2012 2011 2012 2011 --------- --------- --------- --------- FFO as reported $ 38,586 $ 29,600 $ 74,227 $ 59,222 As adjusted for: Acquisition costs --- 974 --- 1,541 Abandoned development costs --- --- --- 158 AFFO adjustments from unconsolidated joint ventures (1) 206 --- 892 --- Impact of above adjustments to the allocation of earnings to participating securities (2) (8) (9) (16) --------- --------- --------- --------- Adjusted FFO ("AFFO") $ 38,790 $ 30,566 $ 75,110 $ 60,905 Diluted weighted average common shares 98,812 93,237 98,702 93,172 --------- --------- --------- --------- AFFO per share $ .39 $ .33 $ .76 $ .65 --------- --------- --------- ---------
(1) Includes our share of acquisition costs, abandoned development costs and gain on early extinguishment of debt from unconsolidated joint ventures.
Net income available to common shareholders for the three months ended June 30, 2012 increased 24.3% to $11.5 million or $0.12 per share, as compared to net income of $9.3 million, or $0.11 per share for the three months ended June 30, 2011. For the six months ended June 30, 2012 net income available to common shareholders increased 5.5% to $19.5 million or $0.21 per share, as compared to net income of $18.5 million, or $0.23 per share for the six months ended June 30, 2011. Net income available to common shareholders for the above periods was also impacted by the charges described above.
Net income and FFO per share amounts above are on a diluted basis. FFO and AFFO are supplemental non-GAAP financial measures used as a standard in the real estate industry to measure and compare the operating performance of real estate companies. A complete reconciliation containing adjustments from GAAP net income to FFO and to AFFO are included in this release.
Second Quarter Highlights
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-- 7.0% increase in same center net operating income during the quarter,
6.9% year to date
-- 24.7% blended increase in average base rental rates on renewed and
released space during the quarter, 23.7% year to date
-- 98.0% period-end consolidated portfolio occupancy rate at June 30,
2012, up from 97.8% at June 30, 2011 and 97.3% at March 31, 2012
-- 3.9% increase in reported tenant comparable sales for the rolling
twelve months ended June 30, 2012 to $375 per square foot
-- 25.0% debt-to-total market capitalization ratio as of June 30, 2012
-- 4.08 times interest coverage for the second quarter ended June 30,
2012
-- Upgrade in outlook received from Moody's Investor Services from Baa2
Stable to Baa2 Positive
-- Announced joint venture for the development of a Tanger Outlet Center
at Foxwoods Resort Casino in Mashantucket, Connecticut
-- 7.0% increase in same center net operating income during the quarter, 6.9% year to date -- 24.7% blended increase in average base rental rates on renewed and released space during the quarter, 23.7% year to date -- 98.0% period-end consolidated portfolio occupancy rate at June 30, 2012, up from 97.8% at June 30, 2011 and 97.3% at March 31, 2012 -- 3.9% increase in reported tenant comparable sales for the rolling twelve months ended June 30, 2012 to $375 per square foot -- 25.0% debt-to-total market capitalization ratio as of June 30, 2012 -- 4.08 times interest coverage for the second quarter ended June 30, 2012 -- Upgrade in outlook received from Moody's Investor Services from Baa2 Stable to Baa2 Positive -- Announced joint venture for the development of a Tanger Outlet Center at Foxwoods Resort Casino in Mashantucket, Connecticut
National Portfolio Drives Operating Results
During the first six months of 2012, Tanger executed 334 leases, totaling 1,508,000 square feet throughout its consolidated portfolio. Lease renewals during the first six months accounted for 1,189,000 square feet, which generated a 14.7% increase in average base rental rates and represented 65.4% of the square feet originally scheduled to expire during 2012. Base rental increases on re-tenanted space during the first six months averaged 54.5% and accounted for the remaining 319,000 square feet.
Same center net operating income increased 7.0% for the second quarter of 2012 compared to 3.8% for the second quarter of last year and increased 6.9% for the first six months of 2012 compared to 4.9% for the same period last year. Reported tenant comparable sales for Tanger's consolidated properties for the rolling twelve months ended June 30, 2012 increased 3.9% to $375 per square foot. Tenant comparable sales for the three months ended June 30, 2012 increased 2.5%.
Investment Activities Provide Potential Future Growth
During the second quarter of 2012, construction continued on a new Tanger Outlet Center located in Texas City (Houston), Texas. The center is located approximately 30 miles south of Houston and 20 miles north of Galveston on the highly traveled Interstate 45, off Exit 17 on Holland Road. Houston is the fourth largest U.S. city, and Galveston is a popular Gulf Coast getaway destination that attracts over 5 million visitors a year. The center will feature over 85 brand name and designer outlet stores in the first phase of approximately 350,000 square feet, with ample room for expansion for a total build out of approximately 470,000 square feet. Tanger currently expects the center to be completed in time for a grand opening celebration to be held on October 19, 2012.
Construction also continued on Tanger Outlets Westgate in Glendale, Arizona. Situated on 38-acres, the outlet center is located on Loop 101 and Glendale Avenue in Western Phoenix. This site is adjacent to Westgate City Center, Jobing.com Arena, University of Phoenix Stadium, Cabela's and The Renaissance Glendale Hotel and Spa. This center will offer some 80 brand name outlet stores in the first phase which will contain approximately 330,000 square feet. Tanger currently expects the center to be completed in time for a November 15, 2012 grand opening celebration.
On June 18, 2012, Tanger and Gordon Group Holdings, LLC announced they have entered into an agreement to develop an upscale outlet center at Foxwoods Resort Casino in Mashantucket, Connecticut on the Mashantucket Pequot Indian Reservation. The proposed 312,000 square foot center is designed to connect the casino floors of the resort's two casinos, the MGM Grand and the Grand Pequot Casino. Foxwoods attracts approximately 16 million visitors annually and has more gaming square footage than any other casino in the country.
Tanger has announced two additional domestic sites located in Scottsdale, Arizona and in National Harbor, a waterfront resort in the Washington, DC metro area. In Canada, Tanger and RioCan Real Estate Investment Trust have announced plans to develop a site in Kanata, Ontario in the Ottawa market and plans to expand Tanger Outlets Cookstown from 156,000 square feet to approximately 320,000 square feet. Additionally, Tanger and RioCan have entered into an agreement with Orlando Corporation to create a strategic alliance to develop designer outlet opportunities on land within Heartland Town Centre, located in the western Greater Toronto Area. All of these projects are currently in the predevelopment phase.
Balance Sheet Summary
As of June 30, 2012, Tanger had a total market capitalization of approximately $4.2 billion including $1.1 billion of debt outstanding, equating to a 25.0% debt-to-total market capitalization ratio. As of June 30, 2012, 63.0% of Tanger's debt was at fixed interest rates and the company had $141.2 million outstanding on its $520.0 million in available unsecured lines of credit. During the second quarter of 2012, Tanger continued to maintain a strong interest coverage ratio of 4.08 times.
Updated 2012 FFO Per Share Guidance
Based on Tanger's internal budgeting process, the company's view on current market conditions, and the strength and stability of its core portfolio, management currently believes its net income available to common shareholders for 2012 will be between $0.58 and $0.62 per share and its FFO available to common shareholders for 2012 will be between $1.59 and $1.63 per share.
The company's earnings estimates reflect a projected increase in same-center net operating income of between 5% and 6%. The company's estimates do not include the impact of any additional rent termination fees, any additional potential refinancing transactions, the sale of any out parcels of land, or the sale or acquisition of any properties. The following table provides the reconciliation of estimated diluted net income per share to estimated diluted FFO per share:
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For the twelve months ended December 31, 2012:
Low Range High Range
----------- -----------
Estimated diluted net income per share $ 0.58 $ 0.62
Noncontrolling interest, gain/loss on acquisition of
real estate, depreciation and amortization uniquely
significant to real estate including noncontrolling
interest share and our share of joint ventures 1.01 1.01
----------- -----------
Estimated diluted FFO per share $ 1.59 $ 1.63
----------- -----------
For the twelve months ended December 31, 2012: Low Range High Range ----------- ----------- Estimated diluted net income per share $ 0.58 $ 0.62 Noncontrolling interest, gain/loss on acquisition of real estate, depreciation and amortization uniquely significant to real estate including noncontrolling interest share and our share of joint ventures 1.01 1.01 ----------- ----------- Estimated diluted FFO per share $ 1.59 $ 1.63 ----------- -----------
Second Quarter Conference Call
Tanger will host a conference call to discuss its second quarter results for analysts, investors and other interested parties on Wednesday, August 1, 2012, at 10:00 a.m. eastern time. To access the conference call, listeners should dial 1-877-277-5113 and request to be connected to the Tanger Factory Outlet Centers Second Quarter 2012 Financial Results call. Alternatively, the call will be web cast by SNL IR Solutions and can be accessed at Tanger Factory Outlet Centers, Inc.'s web site by clicking the Investor Relations link on www.tangeroutlet.com. A telephone replay of the call will be available from August 1, 2012 at 1:00 p.m. eastern time through 11:59 p.m., August 8, 2012 by dialing 1-855-859-2056, conference ID # 97394137. An online archive of the broadcast will also be available through August 8, 2012.
About Tanger Factory Outlet Centers
Tanger Factory Outlet Centers, Inc. (NYSE: SKT), is a publicly-traded REIT headquartered in Greensboro, North Carolina that presently operates and owns, or has an ownership interest in, a portfolio of 39 upscale outlet shopping centers in 25 states coast to coast and in Canada, totaling approximately 11.9 million square feet leased to over to 2,500 stores operated by more than 435 different brand name companies. More than 175 million shoppers visit Tanger Factory Outlet Centers, Inc. annually. Tanger is filing a Form 8-K with the Securities and Exchange Commission that includes a supplemental information package for the quarter ended June 30, 2012. For more information on Tanger Outlet Centers, call 1-800-4TANGER or visit the company's web site at www.tangeroutlet.com.
This news release contains forward-looking statements within the meaning of federal securities laws. These statements include, but are not limited to, estimates of future net income per share, FFO per share, same center net operating income as well as other statements regarding the expected timing of the grand openings of the current developments, the company's implementation and progress of its outlet strategy in Canada through a joint venture with RioCan Real Estate Investment Trust, the renewal and re-tenanting of space, tenant sales and sales trends, interest rates, coverage of the current dividend and management's beliefs, plans, estimates, intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. These forward-looking statements are 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 in the United States and Canada, the company's ability to meet its obligations on existing indebtedness or refinance existing indebtedness on favorable terms, the availability and cost of capital, the company's ability to lease its properties, the company's ability to implement its plans and strategies for joint venture properties that it does not fully control, the company's inability to collect rent due to the bankruptcy or insolvency of tenants or otherwise, and competition. 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, 2011.
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TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
2012 2011 2012 2011
--------- --------- --------- ---------
REVENUES
Base rentals (a) $ 58,583 $ 48,393 $ 115,802 $ 94,612
Percentage rentals 1,618 1,137 3,362 2,528
Expense reimbursements 24,989 20,616 48,465 41,821
Other income 2,145 1,955 3,949 3,879
--------- --------- --------- ---------
Total revenues 87,335 72,101 171,578 142,840
--------- --------- --------- ---------
EXPENSES
Property operating 27,977 23,765 54,065 47,873
General and administrative 8,699 7,185 18,719 13,952
Acquisition costs (b) --- 974 --- 1,541
Abandoned development costs
(c) --- --- --- 158
Depreciation and amortization 24,923 17,858 50,438 35,823
--------- --------- --------- ---------
Total expenses 61,599 49,782 123,222 99,347
--------- --------- --------- ---------
Operating income 25,736 22,319 48,356 43,493
Interest expense 12,411 10,713 24,745 21,038
--------- --------- --------- ---------
Income before equity in losses
of unconsolidated joint
ventures 13,325 11,606 23,611 22,455
Equity in losses of
unconsolidated joint ventures (867) (764) (2,319) (796)
--------- --------- --------- ---------
Net income 12,458 10,842 21,292 21,659
Noncontrolling interests in
Operating Partnership (766) (1,420) (1,479) (2,839)
Noncontrolling interests in
other consolidated partnerships 25 --- 32 ---
--------- --------- --------- ---------
Net income attributable to
Tanger Factory Outlet Centers,
Inc. 11,717 9,422 19,845 18,820
Allocation of earnings to
participating securities (209) (165) (367) (357)
--------- --------- --------- ---------
Net income available to common
shareholders of Tanger Factory
Outlet Centers, Inc. $ 11,508 $ 9,257 $ 19,478 $ 18,463
========= ========= ========= =========
Basic earnings per common share:
Net income $ .13 $ .11 $ .21 $ .23
Diluted earnings per common
share:
Net income $ .12 $ .11 $ .21 $ .23
========= ========= ========= =========
(a) Includes straight-line rent and market rent adjustments of $1,169 and
$1,442 for the three months ended and $2,514 and $2,390 for the six months
ended June 30, 2012 and 2011, respectively.
(b) Represents potential acquisition related expenses incurred during the
three and six months ended June 30, 2011.
(c) Represents the write-off of costs associated with abandoned development
projects for the six months ended June 30, 2011.
TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(Unaudited)
June 30, December 31,
2012 2011
------------- -------------
ASSETS:
Rental property
Land $ 148,002 $ 148,002
Buildings, improvements and fixtures 1,787,050 1,764,494
Construction in progress --- 3,549
------------- -------------
1,935,052 1,916,045
Accumulated depreciation (547,167) (512,485)
------------- -------------
Rental property, net 1,387,885 1,403,560
Cash and cash equivalents 11,855 7,894
Investments in unconsolidated joint ventures 72,394 28,481
Deferred lease costs and other intangibles,
net 109,850 120,636
Deferred debt origination costs, net 10,219 8,861
Prepaids and other assets 50,172 52,383
------------- -------------
Total assets $ 1,642,375 $ 1,621,815
============= =============
LIABILITIES AND EQUITY:
Liabilities
Debt
Senior, unsecured notes (net of discount
of $2,104 and $2,237, respectively) $ 547,896 $ 547,763
Unsecured term loans (net of discount of
$620 and $692, respectively) 259,380 9,308
Mortgages payable (including premiums of
$6,902 and $7,434, respectively) 109,583 111,379
Unsecured lines of credit 141,224 357,092
------------- -------------
Total debt 1,058,083 1,025,542
Construction trade payables 14,746 13,656
Accounts payable and accrued expenses 38,011 37,757
Other liabilities 16,283 16,428
------------- -------------
Total liabilities 1,127,123 1,093,383
------------- -------------
Commitments and contingencies
------------- -------------
Equity
Tanger Factory Outlet Centers, Inc.
Common shares, $.01 par value, 300,000,000
shares authorized, 93,483,988 and
86,727,656 shares issued and outstanding at
June 30, 2012 and December 31, 2011,
respectively (1) 935 867
Paid in capital (1) 758,381 720,073
Accumulated distributions in excess of net
income (279,657) (261,913)
Accumulated other comprehensive income 1,405 1,535
------------- -------------
Equity attributable to Tanger Factory
Outlet Centers, Inc. 481,064 460,562
------------- -------------
Equity attributable to noncontrolling
interests:
Noncontrolling interests in Operating
Partnership (1) 27,386 61,027
Noncontrolling interests in other
consolidated partnerships 6,802 6,843
------------- -------------
Total equity 515,252 528,432
------------- -------------
Total liabilities and equity $ 1,642,375 $ 1,621,815
============= =============
(1) As of June 30, 2012, reflects the exchange of 1,702,865 units of the
Operating Partnership owned by noncontrolling interests into 6,811,460
common shares of the company.
TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
(in thousands, except per share, state and center information)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
2012 2011 2012 2011
--------- --------- --------- ---------
FUNDS FROM OPERATIONS (a)
Net income $ 12,458 $ 10,842 $ $21,292 $ 21,659
Adjusted for:
Depreciation and amortization
uniquely significant to real
estate - consolidated 24,710 17,686 50,011 35,493
Depreciation and amortization
uniquely significant to real
estate - unconsolidated joint
ventures 1,653 1,336 3,468 2,642
Impairment charge -
unconsolidated joint ventures 140 --- 140 ---
--------- --------- --------- ---------
Funds from operations (FFO) 38,961 29,864 74,911 59,794
FFO attributable to
noncontrolling interests in
other consolidated partnerships 16 --- 14 ---
Allocation of earnings to
participating securities (391) (264) (698) (572)
--------- --------- --------- ---------
Funds from operations available
to common shareholders $ 38,586 $ 29,600 $ 74,227 $ 59,222
--------- --------- --------- ---------
Funds from operations available
to common shareholders per
share - diluted $ .39 $ .32 $ .75 $ $.64
--------- --------- --------- ---------
WEIGHTED AVERAGE SHARES
Basic weighted average common
shares 91,717 80,483 90,694 80,418
Effect of notional units 1,014 416 1,007 416
Effect of exchangeable notes --- 131 --- 131
Effect of outstanding options 85 74 74 74
--------- --------- --------- ---------
Diluted weighted average common
shares (for earnings per share
computations) 92,816 81,104 91,775 81,039
Exchangeable operating
partnership units (b) 5,996 12,133 6,927 12,133
--------- --------- --------- ---------
Diluted weighted average common
shares (for funds from
operations per share
computations) 98,812 93,237 98,702 93,172
========= ========= ========= =========
OTHER INFORMATION
Gross leasable area open at end
of period -
Consolidated 10,746 9,776 10,746 9,776
Partially-owned -
unconsolidated 1,192 948 1,192 948
========= ========= ========= =========
Outlet centers in operation -
Consolidated 36 33 36 33
Partially-owned -
unconsolidated 3 2 3 2
========= ========= ========= =========
States operated in at end of
period (c) 24 22 24 22
Occupancy at end of period (c)
(d) 98.0% 97.8% 98.0% 97.8%
(a) FFO is a non-GAAP financial measure. The most directly comparable GAAP
measure is net income (loss), to which it is reconciled. We believe that for
a clear understanding of our operating results, FFO should be considered
along with net income as presented elsewhere in this report. FFO is
presented because it is a widely accepted financial indicator used by
certain investors and analysts to analyze and compare one equity REIT with
another on the basis of operating performance. FFO is generally defined as
net income (loss), computed in accordance with generally accepted accounting
principles, before extraordinary items and gains (losses) on sale or
disposal of depreciable operating properties, plus depreciation and
amortization uniquely significant to real estate, impairment losses on
depreciable real estate of consolidated real estate, impairment losses on
investments in unconsolidated joint ventures driven by a measurable decrease
in the fair value of depreciable real estate held by the unconsolidated
joint ventures and after adjustments for unconsolidated partnerships and
joint ventures. We caution that the calculation of FFO may vary from entity
to entity and as such the presentation of FFO by us may not be comparable to
other similarly titled measures of other reporting companies. FFO does not
represent net income or cash flow from operations as defined by accounting
principles generally accepted in the United States of America and should not
be considered an alternative to net income as an indication of operating
performance or to cash flows from operations as a measure of liquidity. FFO
is not necessarily indicative of cash flows available to fund dividends to
shareholders and other cash needs.
(b) The exchangeable operating partnership units (noncontrolling interest in
operating partnership) are not dilutive on earnings per share computed in
accordance with generally accepted accounting principles.
(c) Excludes the Wisconsin Dells, Wisconsin, Deer Park, New York, and
Cookstown, Ontario properties which we have ownership interest in but are
held in unconsolidated joint ventures.
(d) Excludes for the 2011 periods our wholly-owned, non-stabilized center in
Hilton Head I, South Carolina which opened on March 31, 2011.
TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (Unaudited) Three months ended Six months ended June 30, June 30, 2012 2011 2012 2011 --------- --------- --------- --------- REVENUES Base rentals (a) $ 58,583 $ 48,393 $ 115,802 $ 94,612 Percentage rentals 1,618 1,137 3,362 2,528 Expense reimbursements 24,989 20,616 48,465 41,821 Other income 2,145 1,955 3,949 3,879 --------- --------- --------- --------- Total revenues 87,335 72,101 171,578 142,840 --------- --------- --------- --------- EXPENSES Property operating 27,977 23,765 54,065 47,873 General and administrative 8,699 7,185 18,719 13,952 Acquisition costs (b) --- 974 --- 1,541 Abandoned development costs (c) --- --- --- 158 Depreciation and amortization 24,923 17,858 50,438 35,823 --------- --------- --------- --------- Total expenses 61,599 49,782 123,222 99,347 --------- --------- --------- --------- Operating income 25,736 22,319 48,356 43,493 Interest expense 12,411 10,713 24,745 21,038 --------- --------- --------- --------- Income before equity in losses of unconsolidated joint ventures 13,325 11,606 23,611 22,455 Equity in losses of unconsolidated joint ventures (867) (764) (2,319) (796) --------- --------- --------- --------- Net income 12,458 10,842 21,292 21,659 Noncontrolling interests in Operating Partnership (766) (1,420) (1,479) (2,839) Noncontrolling interests in other consolidated partnerships 25 --- 32 --- --------- --------- --------- --------- Net income attributable to Tanger Factory Outlet Centers, Inc. 11,717 9,422 19,845 18,820 Allocation of earnings to participating securities (209) (165) (367) (357) --------- --------- --------- --------- Net income available to common shareholders of Tanger Factory Outlet Centers, Inc. $ 11,508 $ 9,257 $ 19,478 $ 18,463 ========= ========= ========= ========= Basic earnings per common share: Net income $ .13 $ .11 $ .21 $ .23 Diluted earnings per common share: Net income $ .12 $ .11 $ .21 $ .23 ========= ========= ========= ========= (a) Includes straight-line rent and market rent adjustments of $1,169 and $1,442 for the three months ended and $2,514 and $2,390 for the six months ended June 30, 2012 and 2011, respectively. (b) Represents potential acquisition related expenses incurred during the three and six months ended June 30, 2011. (c) Represents the write-off of costs associated with abandoned development projects for the six months ended June 30, 2011. TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share data) (Unaudited) June 30, December 31, 2012 2011 ------------- ------------- ASSETS: Rental property Land $ 148,002 $ 148,002 Buildings, improvements and fixtures 1,787,050 1,764,494 Construction in progress --- 3,549 ------------- ------------- 1,935,052 1,916,045 Accumulated depreciation (547,167) (512,485) ------------- ------------- Rental property, net 1,387,885 1,403,560 Cash and cash equivalents 11,855 7,894 Investments in unconsolidated joint ventures 72,394 28,481 Deferred lease costs and other intangibles, net 109,850 120,636 Deferred debt origination costs, net 10,219 8,861 Prepaids and other assets 50,172 52,383 ------------- ------------- Total assets $ 1,642,375 $ 1,621,815 ============= ============= LIABILITIES AND EQUITY: Liabilities Debt Senior, unsecured notes (net of discount of $2,104 and $2,237, respectively) $ 547,896 $ 547,763 Unsecured term loans (net of discount of $620 and $692, respectively) 259,380 9,308 Mortgages payable (including premiums of $6,902 and $7,434, respectively) 109,583 111,379 Unsecured lines of credit 141,224 357,092 ------------- ------------- Total debt 1,058,083 1,025,542 Construction trade payables 14,746 13,656 Accounts payable and accrued expenses 38,011 37,757 Other liabilities 16,283 16,428 ------------- ------------- Total liabilities 1,127,123 1,093,383 ------------- ------------- Commitments and contingencies ------------- ------------- Equity Tanger Factory Outlet Centers, Inc. Common shares, $.01 par value, 300,000,000 shares authorized, 93,483,988 and 86,727,656 shares issued and outstanding at June 30, 2012 and December 31, 2011, respectively (1) 935 867 Paid in capital (1) 758,381 720,073 Accumulated distributions in excess of net income (279,657) (261,913) Accumulated other comprehensive income 1,405 1,535 ------------- ------------- Equity attributable to Tanger Factory Outlet Centers, Inc. 481,064 460,562 ------------- ------------- Equity attributable to noncontrolling interests: Noncontrolling interests in Operating Partnership (1) 27,386 61,027 Noncontrolling interests in other consolidated partnerships 6,802 6,843 ------------- ------------- Total equity 515,252 528,432 ------------- ------------- Total liabilities and equity $ 1,642,375 $ 1,621,815 ============= ============= (1) As of June 30, 2012, reflects the exchange of 1,702,865 units of the Operating Partnership owned by noncontrolling interests into 6,811,460 common shares of the company. TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES SUPPLEMENTAL INFORMATION (in thousands, except per share, state and center information) (Unaudited) Three months ended Six months ended June 30, June 30, 2012 2011 2012 2011 --------- --------- --------- --------- FUNDS FROM OPERATIONS (a) Net income $ 12,458 $ 10,842 $ $21,292 $ 21,659 Adjusted for: Depreciation and amortization uniquely significant to real estate - consolidated 24,710 17,686 50,011 35,493 Depreciation and amortization uniquely significant to real estate - unconsolidated joint ventures 1,653 1,336 3,468 2,642 Impairment charge - unconsolidated joint ventures 140 --- 140 --- --------- --------- --------- --------- Funds from operations (FFO) 38,961 29,864 74,911 59,794 FFO attributable to noncontrolling interests in other consolidated partnerships 16 --- 14 --- Allocation of earnings to participating securities (391) (264) (698) (572) --------- --------- --------- --------- Funds from operations available to common shareholders $ 38,586 $ 29,600 $ 74,227 $ 59,222 --------- --------- --------- --------- Funds from operations available to common shareholders per share - diluted $ .39 $ .32 $ .75 $ $.64 --------- --------- --------- --------- WEIGHTED AVERAGE SHARES Basic weighted average common shares 91,717 80,483 90,694 80,418 Effect of notional units 1,014 416 1,007 416 Effect of exchangeable notes --- 131 --- 131 Effect of outstanding options 85 74 74 74 --------- --------- --------- --------- Diluted weighted average common shares (for earnings per share computations) 92,816 81,104 91,775 81,039 Exchangeable operating partnership units (b) 5,996 12,133 6,927 12,133 --------- --------- --------- --------- Diluted weighted average common shares (for funds from operations per share computations) 98,812 93,237 98,702 93,172 ========= ========= ========= ========= OTHER INFORMATION Gross leasable area open at end of period - Consolidated 10,746 9,776 10,746 9,776 Partially-owned - unconsolidated 1,192 948 1,192 948 ========= ========= ========= ========= Outlet centers in operation - Consolidated 36 33 36 33 Partially-owned - unconsolidated 3 2 3 2 ========= ========= ========= ========= States operated in at end of period (c) 24 22 24 22 Occupancy at end of period (c) (d) 98.0% 97.8% 98.0% 97.8% (a) FFO is a non-GAAP financial measure. The most directly comparable GAAP measure is net income (loss), to which it is reconciled. We believe that for a clear understanding of our operating results, FFO should be considered along with net income as presented elsewhere in this report. FFO is presented because it is a widely accepted financial indicator used by certain investors and analysts to analyze and compare one equity REIT with another on the basis of operating performance. FFO is generally defined as net income (loss), computed in accordance with generally accepted accounting principles, before extraordinary items and gains (losses) on sale or disposal of depreciable operating properties, plus depreciation and amortization uniquely significant to real estate, impairment losses on depreciable real estate of consolidated real estate, impairment losses on investments in unconsolidated joint ventures driven by a measurable decrease in the fair value of depreciable real estate held by the unconsolidated joint ventures and after adjustments for unconsolidated partnerships and joint ventures. We caution that the calculation of FFO may vary from entity to entity and as such the presentation of FFO by us may not be comparable to other similarly titled measures of other reporting companies. FFO does not represent net income or cash flow from operations as defined by accounting principles generally accepted in the United States of America and should not be considered an alternative to net income as an indication of operating performance or to cash flows from operations as a measure of liquidity. FFO is not necessarily indicative of cash flows available to fund dividends to shareholders and other cash needs. (b) The exchangeable operating partnership units (noncontrolling interest in operating partnership) are not dilutive on earnings per share computed in accordance with generally accepted accounting principles. (c) Excludes the Wisconsin Dells, Wisconsin, Deer Park, New York, and Cookstown, Ontario properties which we have ownership interest in but are held in unconsolidated joint ventures. (d) Excludes for the 2011 periods our wholly-owned, non-stabilized center in Hilton Head I, South Carolina which opened on March 31, 2011.
Contact:
Frank C. Marchisello, Jr.
Executive Vice President and CFO
(336) 834-6834
SOURCE: Tanger Factory Outlet Centers, Inc.
