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FORM 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2002

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 1-11986

TANGER FACTORY OUTLET CENTERS, INC.
(Exact name of Registrant as specified in its Charter)

NORTH CAROLINA 56-1815473
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)

3200 Northline Avenue, Suite 360, Greensboro, North Carolina 27408
(Address of principal executive offices)
(Zip code)

(336) 292-3010
(Registrant's telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No

9,030,025 shares of Common Stock,
$.01 par value, outstanding as of November 1, 2002


1

TANGER FACTORY OUTLET CENTERS, INC.

Index

Part I. Financial Information

Page Number

Item 1. Financial Statements (Unaudited)

Consolidated Statements of Operations
For the three and nine months ended
September 30, 2002 and 2001 3

Consolidated Balance Sheets
As of September 30, 2002 and December 31, 2001 4

Consolidated Statements of Cash Flows
For the nine months ended September 30, 2002 and 2001 5

Notes to Consolidated Financial Statements 6

Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 13

Item 3. Quantitative and Qualitative Disclosures about Market Risk 23

Item 4. Controls and Procedures 24

Part II. Other Information

Item 1. Legal proceedings 25

Item 6. Exhibits and Reports on Form 8-K 25

Signatures 26

Certifications 26




2



TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)

Three Months Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
- ----------------------------------------------------------------------------------------------------------------------
(unaudited) (unaudited)
REVENUES

Base rentals $ 18,839 $ 18,393 $ 55,552 $ 54,419
Percentage rentals 778 598 1,956 1,448
Expense reimbursements 7,411 7,126 22,046 22,171
Other income 1,045 846 2,193 1,923
- ----------------------------------------------------------------------------------------------------------------------
Total revenues 28,073 26,963 81,747 79,961
- ----------------------------------------------------------------------------------------------------------------------
EXPENSES
Property operating 8,654 8,334 25,988 25,761
General and administrative 2,623 2,012 6,990 6,097
Interest 7,171 7,546 21,418 22,837
Depreciation and amortization 7,201 7,112 21,400 21,070
- ----------------------------------------------------------------------------------------------------------------------
Total expenses 25,649 25,004 75,796 75,765
- ----------------------------------------------------------------------------------------------------------------------
Income before equity in earnings of unconsolidated joint
ventures, minority interest, discontinued operations
and extraordinary item 2,424 1,959 5,951 4,196
Equity in earnings of unconsolidated joint ventures 317 --- 250 ---
Minority interest (617) (419) (1,326) (793)
- ----------------------------------------------------------------------------------------------------------------------
Income from continuing operations 2,124 1,540 4,875 3,403
Discontinued operations 184 230 972 690
- ----------------------------------------------------------------------------------------------------------------------
Income before extraordinary item 2,308 1,770 5,847 4,093
Extraordinary item - Loss on early extinguishment of debt,
net of minority interest of $50 --- --- --- (130)
- ----------------------------------------------------------------------------------------------------------------------
Net income 2,308 1,770 5,847 3,963
Less applicable preferred share dividends (443) (443) (1,329) (1,328)
- ----------------------------------------------------------------------------------------------------------------------
Net income available to common shareholders $ 1,865 $ 1,327 $ 4,518 $ 2,635
- ----------------------------------------------------------------------------------------------------------------------

Basic earnings per common share:
Income from continuing operations $ .20 $ .14 $ .44 $ .26
Net income $ .22 $ .17 $ .56 $ .33
- ----------------------------------------------------------------------------------------------------------------------

Diluted earnings per common share:
Income from continuing operations $ .20 $ .14 $ .43 $ .26
Net income $ .22 $ .17 $ .55 $ .33
- ----------------------------------------------------------------------------------------------------------------------

Dividends paid per common share $ .61 $ .61 $ 1.84 $ 1.83
- ----------------------------------------------------------------------------------------------------------------------

The accompanying notes are an integral part of these consolidated financial
statements.


3



TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

September 30, December 31,
2002 2001
- -----------------------------------------------------------------------------------------------------------
(unaudited)
ASSETS
Rental Property

Land $ 52,345 $ 60,158
Buildings, improvements and fixtures 571,826 539,108
- ----------------------------------------------------------------------------------------------------------
624,171 599,266
Accumulated depreciation (168,327) (148,950)
- -----------------------------------------------------------------------------------------------------------
Rental property, net 455,844 450,316
Cash and cash equivalents 209 515
Deferred charges, net 10,494 11,413
Other assets 13,543 14,028
- -----------------------------------------------------------------------------------------------------------
Total assets $ 480,090 $ 476,272
===========================================================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Debt
Senior, unsecured notes $ 155,609 $ 160,509
Mortgages payable 175,018 176,736
Lines of credit 16,269 20,950
- -----------------------------------------------------------------------------------------------------------
346,896 358,195
Construction trade payables 4,041 3,722
Accounts payable and accrued expenses 14,743 16,478
- -----------------------------------------------------------------------------------------------------------
Total liabilities 365,680 378,395
- -----------------------------------------------------------------------------------------------------------
Commitments
Minority interest 23,727 21,506
- -----------------------------------------------------------------------------------------------------------
Shareholders' equity
Preferred shares, $.01 par value, 1,000,000 shares authorized,
80,190 and 80,600 shares issued and outstanding
at September 30, 2002 and December 31, 2001 1 1
Common shares, $.01 par value, 50,000,000 shares authorized,
9,030,025 and 7,929,711 shares issued and outstanding
at September 30, 2002 and December 31, 2001 90 79
Paid in capital 160,589 136,529
Distributions in excess of net income (69,672) (59,534)
Accumulated other comprehensive loss (325) (704)
- -----------------------------------------------------------------------------------------------------------
Total shareholders' equity 90,683 76,371
- -----------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 480,090 $ 476,272
===========================================================================================================
The accompanying notes are an integral part of these consolidated financial statements.



4



TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Nine Months Ended
September 30,
2002 2001
- ----------------------------------------------------------------------------------------------------
(unaudited)
OPERATING ACTIVITIES

Net income $ 5,847 $ 3,963
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 21,572 21,339
Amortization of deferred financing costs 898 1,299
Equity in earnings of unconsolidated joint ventures (250) ---
Minority interest 1,691 1,007
Loss on early extinguishment of debt --- 180
Gain on sale of real estate (460) ---
Gain on sale of outparcels of land (274) ---
Straight-line base rent adjustment 193 269
Increase (decrease) due to changes in:
Other assets (401) 608
Accounts payable and accrued expenses (1,216) 340
- ----------------------------------------------------------------------------------------------------
Net cash provided by operating activites 27,600 29,005
- ----------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Additions to rental property (4,182) (16,595)
Acquisition of rental property (37,500) ---
Additions to investments in unconsolidated joint ventures (30) (4,044)
Additions to deferred lease costs (1,200) (1,232)
Net proceeds from sale of real estate 17,737 723
Distributions received from unconsolidated joint ventures 150 ---
Collections from officers 331 1,422
- ----------------------------------------------------------------------------------------------------
Net cash used in investing activities (24,694) (19,726)
- ----------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Cash dividends paid (15,985) (15,805)
Distributions to minority interest (5,566) (5,543)
Net proceeds from sale of common shares 27,960 ---
Proceeds from issuance of debt 95,064 243,853
Repayments of debt (106,363) (227,783)
Additions to deferred financing costs (389) (4,638)
Proceeds from exercise of unit options 2,067 201
- ----------------------------------------------------------------------------------------------------
Net cash used in financing activities (3,212) (9,715)
- ----------------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (306) (436)
Cash and cash equivalents, beginning of period 515 634
- ----------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 209 $ 198
====================================================================================================

Supplemental schedule of non-cash investing activities:
The Company purchases capital equipment and incurs costs relating to
construction of new facilities, including tenant finishing allowances.
Expenditures included in construction trade payables as of September 30, 2002
and 2001 amounted to $4,041 and $6,431, respectively.

The accompanying notes are an integral part of these consolidated financial
statements.


5


TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2002

(Unaudited)

1. Business

Tanger Factory Outlet Centers, Inc., a fully-integrated, self-administered,
self-managed real estate investment trust ("REIT"), develops, owns, operates and
manages factory outlet centers. The factory outlet centers and other assets of
the Company's business are held by, and all of its operations are conducted by,
Tanger Properties Limited Partnership. Unless the context indicates otherwise,
the term the "Company" refers to Tanger Factory Outlet Centers, Inc. and the
term "Operating Partnership" refers to Tanger Properties Limited Partnership.
The terms "we", "our" and "us" refer to the Company or the Company and the
Operating Partnership together, as the context requires.

2. Basis of Presentation

Our unaudited Consolidated Financial Statements have been prepared pursuant to
accounting principles generally accepted in the United States of America and
should be read in conjunction with the Consolidated Financial Statements and
Notes thereto of our Annual Report on Form 10-K for the year ended December 31,
2001. Certain information and note disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted pursuant to the
Securities and Exchange Commission's ("SEC") rules and regulations, although
management believes that the disclosures are adequate to make the information
presented not misleading.

The accompanying unaudited Consolidated Financial Statements reflect, in the
opinion of management, all adjustments necessary for a fair presentation of the
interim Consolidated Financial Statements. All such adjustments are of a normal
and recurring nature.

Investments in real estate joint ventures that represent non-controlling
ownership interests are accounted for using the equity method of accounting.
These investments are recorded initially at cost and subsequently adjusted for
our net equity in the venture's income (loss) and cash contributions and
distributions. Our investments are included in other assets in our Consolidated
Balance Sheets.

Certain amounts in the 2001 Consolidated Financial Statements have been
reclassified to conform to the 2002 presentation. See Footnote 4.

3. Acquisition and Development of Rental Properties

On June 28, 2002, through our unconsolidated 50% ownership joint venture, TWMB
Associates, LLC ("TWMB"), with Rosen-Warren Myrtle Beach LLC ("Rosen-Warren"),
we opened the first phase of our new 400,000 square foot Tanger Outlet Center in
Myrtle Beach, South Carolina. The first phase consists of approximately 260,000
square feet and features 60 brand name and designer outlet stores.

On September 9, 2002, we were retained by John Hancock Life Insurance Company as
the exclusive manager of an existing 329,000 square foot factory outlet shopping
center located in Vero Beach, Florida. We will manage the day-to-day operations,
marketing and leasing of the established outlet center. Management fees earned
for our services are recorded in other income.



6


On September 10, 2002, we completed the acquisition of Kensington Valley Factory
Shops, a factory outlet center in Howell, Michigan containing approximately
325,000 square feet, for an aggregate purchase price of $37.5 million. The
acquisition was accounted for using the purchase method whereby the purchase
price was allocated to assets acquired based on their fair values. The results
of operations of the acquired property have been included in the consolidated
results of operations since the acquisition date.

Interest costs capitalized during the three months ended September 30, 2002 and
2001 amounted to $9,000 and $48,000, respectively, and for the nine months ended
September 30, 2002 and 2001 amounted to $168,000 and $471,000, respectively. The
interest capitalized in 2002 relates to the construction of TWMB's Myrtle Beach,
SC center.

4. Disposition of Rental Properties

On June 27, 2002, we completed the sale of our non-core, single tenant property
located in Ft. Lauderdale, Florida. Net proceeds from the sale were
approximately $16.8 million. We recorded a gain on sale of real estate of
approximately $460,000.

On August 14, 2002, we completed the sale of a previously leased outparcel of
land in Seymour, Indiana. Net proceeds from the sale were approximately
$359,000. We recorded a gain on sale of outparcel of approximately $243,000.

In accordance with SFAS 144 "Accounting for the Impairment or Disposal of Long
Lived Assets," effective for financial statements issued for fiscal years
beginning after December 15, 2001, results of operations and gain/(loss) on
sales of real estate for properties sold subsequent to December 31, 2001 are
reflected in the Consolidated Statements of Operations as discontinued
operations for all periods presented. Below is a summary of the results of
operations of these properties through their respective disposition dates (in
thousands):



Three Months Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
- ----------------------------------------------------- ----------- ------------ ------------ -------------
Revenues:

Base rentals $ 8 $ 408 $ 806 $1,224
Expense reimbursements --- 114 244 341
- ----------------------------------------------------- ----------- ------------ ------------ -------------
Total revenues 8 522 1,050 1,565
- ----------------------------------------------------- ----------- ------------ ------------ -------------
Expenses:
Property operating --- 114 244 342
Depreciation and amortization --- 90 172 269
- ----------------------------------------------------- ----------- ------------ ------------ -------------
Total expenses --- 204 416 611
- ----------------------------------------------------- ----------- ------------ ------------ -------------
Discontinued operations before gain on sale
of real estate 8 318 634 954
Gain on sale of outparcels 243 --- 243 ---
Gain on sale of real estate --- --- 460 ---
- ----------------------------------------------------- ----------- ------------ ------------ -------------
- ----------------------------------------------------- ----------- ------------ ------------ -------------
Discontinued operations before minority interest 251 318 1,337 954
Minority Interest (67) (88) (365) (264)
- ----------------------------------------------------- ----------- ------------ ------------ -------------
Discontinued operations $184 $230 $ 972 $ 690
- ----------------------------------------------------- ----------- ------------ ------------ -------------



7


5. Common Share Offering

On September 4, 2002, we completed a public offering of 1,000,000 common shares
at a price of $29.25 per share, receiving net proceeds of approximately $27.96
million. The net proceeds were used, together with other available funds to
acquire one outlet center located in Howell, Michigan, reduce the outstanding
balance on our lines of credit and for general corporate purposes.

6. Investments in Real Estate Joint Ventures

In 2000, we formed a joint venture with C. Randy Warren Jr., former Senior Vice
President of Leasing of the Company. The new entity, Tanger-Warren Development,
LLC ("Tanger-Warren"), was formed to identify, acquire and develop sites
exclusively for us. We agreed to be co-managers of Tanger-Warren, each with 50%
ownership interest in the joint venture and any entities formed with respect to
a specific project. As of September 30, 2002, our investment in Tanger-Warren
amounted to approximately $6,500 and the impact of this joint venture on our
results of operations has been insignificant.

In September 2001, we established the TWMB joint venture with respect to our
Myrtle Beach, South Carolina project with Rosen-Warren. We and Rosen-Warren,
each as 50% owners, contributed $4.3 million in cash for a total initial equity
in TWMB of $8.6 million. In September 2001, TWMB began construction on the first
phase of a new 400,000 square foot Tanger Outlet Center in Myrtle Beach, SC. The
first phase cost approximately $31.9 million and consists of approximately
260,000 square feet which opened on June 28, 2002 with 60 brand name outlet
tenants. We currently anticipate construction of a 140,000 square foot second,
and final phase to cost approximately $15.3 million. Prior to beginning
construction on the second phase, Rosen-Warren and we each will be required to
contribute an additional $2.55 million in cash for a total equity contribution
in phase two of TWMB of $5.1 million. We receive on-going asset management fees
for our services as property manager of the Myrtle Beach center.

In conjunction with the construction of the center, TWMB closed on a
construction loan in the amount of $36.2 million with Bank of America, NA
(Agent) and SouthTrust Bank. As of September 30, 2002, the construction loan had
a $21.6 million balance. In August 2002, TWMB entered into an interest rate swap
agreement with Bank of America, NA effective through August 2004 with a notional
amount of $19 million. Under this agreement, TWMB receives a floating interest
rate based on the 30 day LIBOR index and pays a fixed interest rate of 2.49%.
This swap effectively changes the payment of interest on $19 million of variable
rate debt to fixed rate debt for the contract period at a rate of 4.49%. All
debt incurred by this unconsolidated joint venture is collateralized by its
property as well as joint and several guarantees by Rosen-Warren and us. We do
not expect events to occur that would trigger the provisions of the guarantee
because our properties have historically produced sufficient cash flow to meet
the related debt service requirements.

At September 30, 2002, our investment in unconsolidated real estate joint
ventures was $4.2 million. These investments are recorded initially at cost and
subsequently adjusted for our net equity in the venture's income (loss) and cash
contributions and distributions. Our investment in real estate joint ventures
are included in other assets and are also reduced by 50% of the profits earned
for leasing and development services we provided to the joint ventures.

8




Summary unaudited financial information of joint ventures accounted for using
the equity method is as follows (in thousands):

September 30, December 31,
Balance Sheets: 2002 2001
- ----------------------------------------------------------------- ----------------- ----------------
Assets:

Rental property, net $31,560 $7,348
Cash and cash equivalents 510 136
Deferred charges, net 1,676 1,433
Other assets 1,503 766
- ----------------------------------------------------------------- ----------------- ----------------
Total assets $35,249 $9,683
================================================================= ================= ================
Liabilities and Owners' Equity
Mortgage payable $21,555 $ 10
Construction trade payables 4,222 586
Accounts payable and other liabilities 756 444
- ----------------------------------------------------------------- ----------------- ----------------
Total liabilities 26,533 1,040
Owners' equity 8,716 8,643
- ----------------------------------------------------------------- ----------------- ----------------
Total liabilities and owners' equity $35,249 $9,683
================================================================= ================= ================

Three Months Ended Nine Months Ended
September 30, September 30,
Statements of Operations: 2002 2002
- ----------------------------------------------------- ------------------------- -----------------------

Revenues $2,178 $ 2,419
- ----------------------------------------------------- ------------------------- -----------------------

Expenses:
Property operating 930 1,315
Interest 256 256
Depreciation and amortization 348 348
- ----------------------------------------------------- ------------------------- -----------------------
Total expenses 1,534 1,919
- ----------------------------------------------------- ------------------------- -----------------------
Net income $ 644 $ 500
===================================================== ========================= =======================


9


7. Other Comprehensive Income - Derivative Financial Instruments

Effective January 1, 2001, we adopted Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities", as amended by FAS 137 and FAS 138 (collectively, "FAS 133"). In
accordance with the provisions of FAS 133, our interest rate swap agreement and
TWMB's interest rate swap agreement have been designated as cash flow hedges and
are carried on the respective balance sheets at fair value. At September 30,
2002, the fair value of our hedge is recorded as a liability of $360,000. Our
portion of the fair value of TWMB's hedge is recorded as a reduction in
investment in joint ventures of $94,000. For the three and nine months ended
September 30, 2002, the change in the fair value of the derivative instruments
are recorded as a $107,000 and $379,000 gain, net of minority interest of
$35,000 and $140,000, respectively, to accumulated other comprehensive income
(loss).


Three Months Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
- ----------------------------------------------------- ------------ -------------- ------------ ------------ -------------


Net income $ 2,308 $1,770 $5,847 $3,963
- ----------------------------------------------------- ------------ -------------- ------------ ------------ -------------
Other comprehensive income (loss):
Cumulative effect adjustment of FAS 133
adoption, net of minority interest
of $83 --- --- --- (217)
Reclassification to earnings on termination
of cash flow hedge, net of minority
interest of $41 --- --- --- 106
Change in fair value of our portion
of TWMB cash flow hedge,
net of minority interest of $24 and
$24, respectively (70) --- (70) ---
Change in fair value of cash flow hedge,
net of minority interest of $59 and $122
and $164 and $247, respectively 177 (320) 449 (644)
- ----------------------------------------------------- ------------ -------------- ------------ ------------ -------------
Other comprehensive income (loss) 107 (320) 379 (755)
- ----------------------------------------------------- ------------ -------------- ------------ ------------ -------------
Total comprehensive income $ 2,415 $ 1,450 $6,226 $ 3,208
- ----------------------------------------------------- ------------ -------------- ------------ ------------ -------------


10


8. Earnings Per Share

The following table sets forth a reconciliation of the numerators and
denominators in computing earnings per share in accordance with Statement of
Financial Accounting Standards No. 128, Earnings Per Share (in thousands, except
per share amounts):



Three Months Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
- ------------------------------------------------------- ------------ ----------- ------------ -------------
Numerator:


Income from continuing operations $2,124 $1,540 $4,875 $3,403
Less applicable preferred share dividends (443) (443) (1,329) (1,328)
- ------------------------------------------------------- ------------ ----------- ------------ -------------
Income from continuing operations available
to common shareholders - basic and diluted 1,681 1,097 3,546 2,075
Discontinued operations 184 230 972 690
Extraordinary item - early extinguishment of debt --- --- --- (130)
- ------------------------------------------------------- ------------ ----------- ------------ -------------
Net income available to common shareholders -
basic and diluted $1,865 $ 1,327 $ 4,518 $2,635
- ------------------------------------------------------- ------------ ----------- ------------ -------------
Denominator:
Basic weighted average common shares 8,269 7,930 8,078 7,925
Effect of outstanding share and unit options 221 24 176 24
- ------------------------------------------------------- ------------ ----------- ------------ -------------
Diluted weighted average common shares 8,490 7,954 8,254 7,949
- ------------------------------------------------------- ------------ ----------- ------------ -------------

Basic earnings per common share:
Income from continuing operations $ .20 $.14 $.44 $.26
Discontinued operations .02 .03 .12 .09
Extraordinary item - early extinguishment of debt --- --- --- (.02)
- ------------------------------------------------------- ------------ ----------- ------------ -------------
Net income $ .22 $.17 $.56 $.33
- ------------------------------------------------------- ------------ ----------- ------------ -------------

Diluted earnings per common share:
Income from continuing operations $ .20 $.14 $.43 $.26
Discontinued operations .02 .03 .12 .09
Extraordinary item - early extinguishment of debt --- --- --- (.02)
- ------------------------------------------------------- ------------ ----------- ------------ -------------
Net income $ .22 $.17 $.55 $.33
- ------------------------------------------------------- ------------ ----------- ------------ -------------


The computation of diluted earnings per share excludes options to purchase
common shares when the exercise price is greater than the average market price
of the common shares for the period. Options excluded totaled 235,000 and
1,243,000 for the three months ended September 30, 2002 and 2001, respectively,
and 340,000 and 1,245,000 for the nine months ended September 30, 2002 and 2001,
respectively. The assumed conversion of preferred shares to common shares as of
the beginning of the year would have been anti-dilutive. The assumed conversion
of the partnership units held by the minority interest limited partner as of the
beginning of the year, which would result in the elimination of earnings
allocated to the minority interest, would have no impact on earnings per share
since the allocation of earnings to a partnership unit is equivalent to earnings
allocated to a common share.

9. Subsequent Event - Bond Repurchase

In October 2002, we purchased at par $5.5 million of our outstanding 7.875%
senior, unsecured public notes that mature in October 2004, ("2004 notes"). This
purchase was in addition to $19.4 million which had been purchased during the
fourth quarter of 2001 and the first quarter of 2002 at or below par. The
October purchase brings the total 2004 notes purchased in 2001 and 2002 to $24.9
million. The purchases were funded by amounts available under our unsecured
lines of credit.



11


10. New Accounting Pronouncements

In 2001, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standard No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" ("FAS 144"), which replaces FAS No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of" ("FAS 121"). FAS 144 retains the requirements of FAS 121 to
recognize an impairment loss only if the carrying amount of a long-lived asset
is not recoverable from its undiscounted cash flows and to measure an impairment
loss as the difference between the carrying amount and fair value of the asset.
The provisions of FAS 144 are effective for financial statements issued for
fiscal years beginning after December 15, 2001. We implemented the provisions of
FAS 144 on January 1, 2002. FAS 144 did not have an effect on our results of
operations or our financial position upon adoption on January 1, 2002.

Under both FAS No. 121 and 144, real estate assets designated as held for sale
are stated at their fair value less costs to sell. We classify real estate as
held for sale when our Board of Directors approves the sale of the assets and we
have commenced an active program to sell the assets. Subsequent to this
classification, no further depreciation is recorded on the assets. Under FAS No.
121, the operating results of real estate assets held for sale are included in
continuing operations. Upon implementation of FAS No. 144 in 2002, the operating
results of newly designated real estate assets held for sale will be included in
discontinued operations in our results of operations. We currently do not have
any assets that meet these classification requirements.

In April 2002, the FASB issued FAS No. 145, "Rescission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections".
In rescinding FAS No. 4, "Reporting Gains and Losses from Extinguishment of
Debt", and FAS No. 64, "Extinguishments of Debt Made to Satisfy Sinking-Fund
Requirements", FAS 145 eliminates the requirement that gains and losses from the
extinguishment of debt be aggregated and, if material, classified as an
extraordinary item, net of the related income tax effect. FAS 145 is effective
for us for transactions occurring after January 1, 2003. Management is currently
evaluating the effects of this statement.

In June 2002 the FASB issued FAS No. 146, Accounting for Exit or Disposal
Activities. FAS 146 addresses significant issues regarding the recognition,
measurement, and reporting of costs that are associated with exit and disposal
activities, including restructuring activities that are currently accounted for
pursuant to the guidance that the Emerging Issues Task Force (EITF) has set
forth in EITF Issue No. 94-3, Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring). FAS 146 will be effective for exit or
disposal activities that are initiated after December 31, 2002. Management is
currently evaluating the effects of this statement.

12


Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.

The following discussion should be read in conjunction with the unaudited,
Consolidated Financial Statements appearing elsewhere in this report. Historical
results and percentage relationships set forth in the unaudited, Consolidated
Statements of Operations, including trends which might appear, are not
necessarily indicative of future operations.

The discussion of our results of operations reported in the unaudited
consolidated statements of operations compares the three and nine months ended
September 30, 2002 with the three and nine months ended September 30, 2001.
Certain comparisons between the periods are made on a percentage basis as well
as on a weighted average gross leasable area ("GLA") basis, a technique which
adjusts for certain increases or decreases in the number of centers and
corresponding square feet related to the development, acquisition, expansion or
disposition of rental properties. The computation of weighted average GLA,
however, does not adjust for fluctuations in occupancy which may occur
subsequent to the original opening date.

Cautionary Statements

Certain statements made below are forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. We intend for such forward-looking
statements to be covered by the safe harbor provisions for forward-looking
statements contained in the Private Securities Reform Act of 1995 and included
this statement for purposes of complying with these safe harbor provisions.
Forward-looking statements, which are based on certain assumptions and describe
our future plans, strategies and expectations, are generally identifiable by use
of the words "believe", "expect", "intend", "anticipate", "estimate", "project",
or similar expressions. You should not rely on forward-looking statements since
they involve known and unknown risks, uncertainties and other factors which are,
in some cases, beyond our control and which could materially affect our actual
results, performance or achievements. Factors which may cause actual results to
differ materially from current expectations include, but are not limited to, the
following:

- national and local general economic and market conditions;

- demographic changes; our ability to sustain, manage or forecast our
growth; existing government regulations and changes in, or the failure
to comply with, government regulations;

- adverse publicity; liability and other claims asserted against us;

- competition;

- the risk that we may not be able to finance our planned development
activities;

- risks related to the retail real estate industry in which we compete,
including the potential adverse impact of external factors such as
inflation, tenant demand for space, consumer confidence, unemployment
rates and consumer tastes and preferences;

- risks associated with our development activities, such as the
potential for cost overruns, delays and lack of predictability with
respect to the financial returns associated with these development
activities;

- risks associated with real estate ownership, such as the potential
adverse impact of changes in the local economic climate on the
revenues and the value of our properties;

- risks that a significant number of tenants may become unable to meet
their lease obligations or that we may be unable to renew or re-lease
a significant amount of available space on economically favorable
terms;

13


- fluctuations and difficulty in forecasting operating results; changes
in business strategy or development plans;

- business disruptions;

- the ability to attract and retain qualified personnel;

- the ability to realized planned costs savings in acquisitions; and

- retention of earnings.

General Overview

At September 30, 2002, we have ownership interests in or management
responsibilities for 34 centers in 21 states totaling 6.19 million square feet
compared to 32 centers in 20 states totaling 5.43 million square feet at
September 30, 2001. The increase is due to the following events:

o San Marcos, Texas 7,000 square feet (Completion of expansion at
existing wholly-owned property)

o Fort Lauderdale, Florida (165,000) square feet (Disposition of
wholly-owned property)

o Myrtle Beach, South Carolina 260,000 square feet (Developed through
50% ownership joint venture)

o Howell, Michigan 325,000 square feet (Acquisition of wholly-owned
property)

o Vero Beach, Florida 329,000 square feet (Managed property)

A summary of the operating results for the three and nine months ended September
30, 2002 and 2001 is presented in the following table, expressed in amounts
calculated on a weighted average GLA basis.


Three Months Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
- ---------------------------------------------------------------------- ------------ ------------ ------------ -------------
GLA at end of period (000's):

Wholly owned 5,493 5,326 5,493 5,326
Partially owned (1) 260 --- 260 ---
Managed 434 105 434 105
- ---------------------------------------------------------------------- ------------ ------------ ------------ -------------
Total GLA at end of period (000's) 6,187 5,431 6,187 5,431
Weighted average GLA (000's) (2) 5,245 5,152 5,193 5,124
Occupancy percentage at end of period (1) 96% 95% 96% 95%

Per square foot for wholly owned properties
Revenues
Base rentals $ 3.59 $ 3.57 $ 10.70 $ 10.62
Percentage rentals .15 .12 .38 .28
Expense reimbursements 1.41 1.38 4.25 4.33
Other income .20 .16 .42 .38
- ---------------------------------------------------------------------- ------------ ------------ ------------ -------------
Total revenues 5.35 5.23 15.75 15.61
- ---------------------------------------------------------------------- ------------ ------------ ------------ -------------
Expenses
Property operating 1.65 1.62 5.00 5.03
General and administrative .50 .39 1.35 1.19
Interest 1.37 1.46 4.12 4.46
Depreciation and amortization 1.37 1.38 4.12 4.11
- ---------------------------------------------------------------------- ------------ ------------ ------------ -------------
Total expenses 4.89 4.85 14.59 14.79
- ---------------------------------------------------------------------- ------------ ------------ ------------ -------------
Income before equity in earnings of unconsolidated jointventures,
minority interest, discontinued operations and
extraordinary item $ .46 $ .38 $ 1.16 $ .82
- ---------------------------------------------------------------------- ------------ ------------ ------------ -------------

(1) Includes Myrtle Beach, SC property which we operate through a 50% ownership
joint venture. Does not include managed properties.

(2) GLA of 100% owned properties weighted by months of operations. GLA is not
adjusted for fluctuations in occupancy that may occur subsequent to the
original opening date. Excludes GLA of properties for which their results
are included in discontinued operations.


14




The table set forth below summarizes certain information with respect to our
existing centers in which we have an ownership interest as of September 30,
2002.
Mortgage Debt
Outstanding
(000's)as of
September 30,
Date Opened Location (sq. ft.) 2002 Occupied
- ---------------------------- ------------------------------- ------------ --- ---------------- --------------

Aug. 1994 Riverhead, NY 729,238 --- 99
May 1993 San Marcos, TX 441,936 $38,099 98
Feb. 1997 (1) Sevierville, TN 353,977 --- 100
Dec. 1995 Commerce II, GA 342,556 29,500 96
Sep. 2002 (1) Howell, MI 325,231 --- 100
Nov. 1994 Branson, MO 277,494 24,000 100
May 1991 Williamsburg, IA 277,230 19,516 99
Jun. 2002 (2) Myrtle Beach, SC 260,006 --- 100
Oct. 1994 (1) Lancaster, PA 255,059 14,595 96
Nov. 1994 Locust Grove, GA 248,854 --- 100
Feb. 1993 Gonzales, LA 245,199 --- 98
Jul. 1998 (1) Fort Meyers, FL 198,789 --- 97
Jul. 1989 Commerce, GA 185,750 8,401 87
Feb. 1992 Casa Grande, AZ 184,768 --- 90
Aug. 1994 Terrell, TX 177,490 --- 100
Mar. 1998 (1) Dalton, GA 173,430 11,183 98
Sep. 1994 Seymour, IN 141,051 --- 80
Dec. 1992 North Branch, MN 134,480 --- 100
Feb. 1991 West Branch, MI 112,420 7,099 100
Jan. 1995 Barstow, CA 105,950 --- 57
Sept. 1997 (1) Blowing Rock, NC 105,448 9,688 100
Jul. 1988 Pigeon Forge, TN 94,558 --- 94
Sep. 1997 (1) Nags Head, NC 82,254 6,574 100
Jul. 1988 Boaz, AL 80,775 --- 91
Jun. 1986 Kittery I, ME 59,694 6,363 100
Apr. 1988 LL Bean, North Conway, NH 50,745 --- 100
Nov. 1987 Martinsburg, WV 49,252 --- 51
Jun. 1988 Kittery II, ME 24,703 --- 94
Oct. 1989 Bourne, MA 23,417 --- 100
Mar. 1987 Clover, North Conway, NH 11,000 --- 100
- ---------------------------- ------------------------------- ------------ --- ---------------- ----------
Total 5,752,754 $175,018 96
============================ =============================== ============ === ================ ==========

(1) Represents date acquired by us.

(2) Represents center operated by us through a 50% ownership joint venture.
Mortgage debt outstanding as of September 30, 2002 on this property is
$21.6 million.


15


RESULTS OF OPERATIONS

Comparison of the three months ended September 30, 2002 to the three months
ended September 30, 2001

Base rentals increased $446,000, or 2%, in the 2002 period when compared to the
same period in 2001. The increase is primarily due to the acquisition of the
Howell, Michigan center during the third quarter of 2002 and the effect of the
completed expansion at our San Marcos, Texas center during the fourth quarter of
2001. Base rent per weighted average GLA increased by $.02 per square foot from
$3.57 per square foot in the 2001 period compared to $3.59 per square foot in
the 2002 period. The slight increase is the result of the addition of the San
Marcos expansion to the portfolio which had a higher average base rent per
square foot compared to the portfolio average. While the overall portfolio
occupancy at September 30, 2002 increased 1% from 95% to 96% compared with the
prior year quarter, two centers experienced negative occupancy trends which were
offset by positive occupancy gains in other centers.

Percentage rentals, which represent revenues based on a percentage of tenants'
sales volume above predetermined levels (the "breakpoint"), increased $180,000
or 30%, and on a weighted average GLA basis, increased $.03 per square foot in
2002 compared to 2001. Reported same-space sales per square foot for the rolling
twelve months ended September 30, 2002 were $297 per square foot. This
represents a 6% increase compared to the same period in 2001. Same-space sales
is defined as the weighted average sales per square foot reported in space open
for the full duration of each comparison period. The increases are attributable
to our continued ability to attract high volume tenants to our centers which
improves the average sales per square foot throughout our portfolio.

Expense reimbursements, which represent the contractual recovery from tenants of
certain common area maintenance, insurance, property tax, promotional,
advertising and management expenses generally fluctuates consistently with the
reimbursable property operating expenses to which it relates. Expense
reimbursements, expressed as a percentage of property operating expenses, were
86% in both the 2002 and 2001 periods.

Other income increased $199,000, or 24%, in 2002 compared to 2001 primarily due
to increases in vending and other miscellaneous income and the recognition of
management fee revenue from our TWMB joint venture and interest on held funds.

Property operating expenses increased by $320,000, or 4%, in the 2002 period as
compared to the 2001 period and, on a weighted average GLA basis, increased $.03
per square foot from $1.62 to $1.65. The increase is the result of increase
costs in common area maintenance and an increase in real estate taxes and
property insurance.

General and administrative expenses increased $611,000, or 30%, in the 2002
period as compared to the 2001 period. The increase is primarily due to
increases in performance based bonus accruals, travel, legal and other
professional fees. Also, as a percentage of total revenues, general and
administrative expenses were 9% and 7%, respectively in the 2002 and 2001
periods and, on a weighted average GLA basis increased $.11 per square foot from
$.39 per square foot in the 2001 period to $.50 per square foot in the 2002
period.


16


Interest expense decreased $375,000 during 2002 as compared to 2001 due
primarily to lower average interest rates during 2002 and a decrease in debt due
to the use of a portion of the proceeds from our equity offering during the
quarter to reduce outstanding debt. Beginning in the fourth quarter of 2001 and
continuing through the first quarter of 2002, we purchased at par or below,
approximately $19.4 million of our outstanding 7.875% senior, unsecured public
notes that mature in October 2004. The purchases were funded by amounts
available under our unsecured lines of credit. The replacement of the 2004 bonds
with funding through lines of credit provided us with a significant interest
expense reduction as the lines of credit have a lower interest rate.
Depreciation and amortization per weighted average GLA decreased from $1.38 per
square foot in the 2001 period to $1.37 per square foot in the 2002 period.

Income from unconsolidated joint ventures increased $317,000 in the 2002 period
compared to the 2001 period due to the opening of the Myrtle Beach, SC outlet
center by TWMB in June of 2002.

In accordance with SFAS 144 "Accounting for the Impairment or Disposal of Long
Lived Assets," effective for financial statements issued for fiscal years
beginning after December 15, 2001, results of operations and gain/ (loss) on
sales of real estate for properties sold subsequent to December 31, 2001 are
reflected in the Consolidated Statements of Operations as discontinued
operations for both periods presented. The decrease in discontinued operations
is due to the 2001 period reflecting the discontinued operations of our Ft.
Lauderdale, FL center, which was sold in June 2002. The 2002 period reflects the
income and gain from the sale of a leased outparcel of land in Seymour, Indiana
which was sold in the third quarter of 2002.

Comparison of the nine months ended September 30, 2002 to the nine months ended
September 30, 2001

Base rentals increased $1.1 million, or 2%, in the 2002 period when compared to
the same period in 2001. The increase is primarily due to the full nine months
effect of an expansion at our San Marcos, TX center which we completed during
the fourth quarter of 2001 and the acquisition of our Howell, MI center. Base
rent per weighted average GLA increased by $.08 per square foot from $10.62 per
square foot in the 2001 period compared to $10.70 per square foot in the 2002
period. The increase is the result of the addition of the San Marcos expansion
to the portfolio which had a higher average base rent per square foot compared
to the portfolio average. While the overall portfolio occupancy at September 30,
2002 increased 1% from 95% to 96% compared with the prior year quarter, two
centers experienced negative occupancy trends which were offset by positive
occupancy gains in other centers.

Percentage rentals, which represent revenues based on a percentage of tenants'
sales volume above predetermined levels (the "breakpoint"), increased $508,000
or 35%, and on a weighted average GLA basis, increased $.10 per square foot in
2002 compared to 2001. Reported same-space sales per square foot for the rolling
twelve months ended September 30, 2002 were $297 per square foot. This
represents a 6% increase compared to the same period in 2001. Same-space sales
is defined as the weighted average sales per square foot reported in space open
for the full duration of each comparison period. Our ability to attract high
volume tenants to many of our outlet centers continues to improve the average
sales per square foot throughout our portfolio. Reported tenant sales for the
first nine months of 2002 for all Tanger Outlet Centers increased 2% to $985
million compared to $968 million in 2001. Reported same-store sales for the nine
months ended September 30, 2002, defined as the weighted average sales per
square foot reported by tenants for stores open since January 1, 2001 were flat.
Sales in the third quarter of 2002 were adversely affected by several hurricanes
and unseasonably warm weather during the important Back to School season.


17


Expense reimbursements, which represent the contractual recovery from tenants of
certain common area maintenance, insurance, property tax, promotional,
advertising and management expenses generally fluctuates consistently with the
reimbursable property operating expenses to which it relates. Expense
reimbursements, expressed as a percentage of property operating expenses,
decreased to 85% in 2002 from 86% in 2001 primarily as a result of higher real
estate taxes due to revaluations, increases in property insurance premiums and
increases in other non-reimbursable expenses.

Other income increased $270,000, or 14%, in 2002 compared to 2001 primarily due
to increases in vending and other miscellaneous income and the recognition of
management, leasing and development fee revenue from our TWMB joint venture.

Property operating expenses increased by $227,000, or 1%, in the 2002 period as
compared to the 2001 period and, on a weighted average GLA basis, decreased $.03
per square foot from $5.03 to $5.00. The decrease on a per square foot basis is
the result of a company-wide effort to improve operating efficiencies and reduce
costs in common area maintenance partially offset by increases in real estate
taxes, property insurance and other non-reimbursable expenses.

General and administrative expenses increased $893,000, or 15%, in the 2002
period as compared to the 2001 period. The increase is primarily due to
increases in performance based bonus accruals, travel, legal and other
professional fees. Also, as a percentage of total revenues, general and
administrative expenses were 9% and 8%, respectively in the 2002 and 2001
periods and, on a weighted average GLA basis increased $.16 per square foot from
$1.19 per square foot in the 2001 period to $1.35 per square foot in the 2002
period.

Interest expense decreased $1.4 million during 2002 as compared to 2001 due
primarily to lower average interest rates during 2002 and a decrease in the
overall debt level due to the use of a portion of the proceeds from our equity
offering during the quarter to reduce outstanding debt. Also, beginning in the
fourth quarter of 2001 and continuing through the first quarter of 2002, we
purchased at par or below, approximately $19.4 million of our outstanding 7.875%
senior, unsecured public notes that mature in October 2004. The purchases were
funded by amounts available under our unsecured lines of credit. The replacement
of the 2004 bonds with funding through lines of credit provided us with a
significant interest expense reduction as the lines of credit have a lower
interest rate. Depreciation and amortization per weighted average GLA increased
slightly from $4.11 per square foot in the 2001 period to $4.12 per square foot
in the 2002 period.

Income from unconsolidated joint ventures increased $250,000 in the 2002 period
compared to the 2001 period due to the opening of the Myrtle Beach, SC outlet
center by TWMB in June of 2002.

In accordance with SFAS 144 "Accounting for the Impairment or Disposal of Long
Lived Assets," effective for financial statements issued for fiscal years
beginning after December 15, 2001, results of operations and gain/ (loss) on
sales of real estate for properties sold subsequent to December 31, 2001 are
reflected in the Consolidated Statements of Operations as discontinued
operations for both periods presented. The increase in discontinued operations
is due to the gains on sales of our Ft. Lauderdale, FL center and a leased
outparcel of land in Seymour, IN, both of which were sold in 2002 period.

The 2001 extraordinary loss relates to debt that was extinguished with a portion
of the February 2001 bond offering proceeds prior to its scheduled maturity.


18


LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities was $27.6 million and $29.0 million
for the nine months ended September 30, 2002 and 2001, respectively. The
decrease in cash provided by operating activities is due primarily to a decrease
in accounts payable in 2002 when compared to 2001 offset by an increase in
operating income. Net cash used in investing activities was $24.7 and $19.7
million during the first nine months of 2002 and 2001, respectively. Cash used
was higher in 2002 primarily due to the increase in cash paid for the
acquisition of the Howell, MI center offset by the increase in cash received for
the sale of the Fort Lauderdale, FL center in 2002. Net cash used in financing
activities was $3.2 million and $9.7 million during the first nine months of
2002 and 2001, respectively. Cash used was lower in 2002 due to the net proceeds
received from the common share offering and the incremental debt issued during
the 2002 period to fund the property acquisition and other capital expenditures
in 2002.

Acquisitions and Dispositions

On September 10, 2002, we completed the acquisition of Kensington Valley Factory
Shops, a factory outlet center in Howell, Michigan containing approximately
325,000 square feet, for an aggregate purchase price of $37.5 million. The
acquisition was funded with proceeds of $16.8 million from the sale of our Fort
Lauderdale, FL property in June 2002 and a portion of the proceeds from the
1,000,000 common share offering in September 2002.

Joint Ventures

In 2000, we formed a joint venture with C. Randy Warren Jr., former Senior Vice
President of Leasing of the Company. The new entity, Tanger-Warren Development,
LLC ("Tanger-Warren"), was formed to identify, acquire and develop sites
exclusively for us. We agreed to be co-managers of Tanger-Warren, each with 50%
ownership interest in the joint venture and any entities formed with respect to
a specific project. As of September 30, 2002, our investment in Tanger-Warren
amounted to approximately $6,500 and the impact of this joint venture on our
results of operations has been insignificant.

In September 2001, we established a the TWMB joint venture with respect to our
Myrtle Beach, South Carolina project with Rosen-Warren. We and Rosen-Warren,
each as 50% owners, contributed $4.3 million in cash for a total initial equity
in TWMB of $8.6 million. In September 2001, TWMB began construction on the first
phase of a new 400,000 square foot Tanger Outlet Center in Myrtle Beach, SC. The
first phase cost approximately $31.9 million and consists of approximately
260,000 square feet which opened on June 28, 2002 with 60 brand name outlet
tenants. We currently anticipate construction of a 140,000 square foot second,
and final phase to cost approximately $15.3 million. Prior to beginning
construction on the second phase, Rosen-Warren and we each will be required to
contribute an additional $2.55 million in cash for a total equity contribution
in phase two of TWMB of $5.1 million. Upon the opening of the center, we receive
on-going asset management fees for our services as property manager of the
Myrtle Beach center.

In conjunction with the construction of the center, TWMB closed on a
construction loan in the amount of $36.2 million with Bank of America, NA
(Agent) and SouthTrust Bank. As of September 30, 2002, the construction loan had
a $21.6 million balance. In August 2002, TWMB entered into an interest rate swap
agreement with Bank of America, NA effective through August 2004 with a notional
amount of $19 million. Under this agreement, TWMB receives a floating interest
rate based on the 30 day LIBOR index and pays a fixed interest rate of 2.49%.
This swap effectively changes the payment of interest on $19 million of variable
rate debt to fixed rate debt for the contract period at a rate of 4.49%. All
debt incurred by this unconsolidated joint venture is collateralized by its
property as well as joint and several guarantees by Rosen-Warren and us. We do
not expect events to occur that would trigger the provisions of the guarantee
because our properties have historically produced sufficient cash flow to meet
the related debt service requirements.

19


Either owner in TWMB has the right to initiate the sale or purchase of the other
party's interest no sooner than October 25, 2002. If such action is initiated,
one owner would determine the fair market value purchase price of the joint
venture and the other would determine whether they would take the role of seller
or purchaser. The owner who is to designate the fair market value purchase price
would be determined by the toss of a coin. If either Rosen-Warren or we enacted
this provision and depending on our role in the transaction as either seller or
purchaser, we could potentially incur a cash outflow for the purchase of
Rosen-Warren's interest. However, we do not expect this event to occur in the
near future based on the positive results from and continued expectations of
developing and operating an outlet center in the Myrtle Beach area.

Other Developments

On July 1, 2002, our option to purchase the retail portion of a site at the
Bourne Bridge Rotary in Cape Cod, Massachusetts was terminated due to the
seller's inability to obtain the proper approvals for the Bourne project from
the local authorities by such date. As a result of the termination, the net
carrying amount of assets remaining on this project includes a $150,000 note
receivable at 5% annual interest that becomes due from the seller and is payable
with accrued interest on July 1, 2003. At this time we believe that this note
receivable is fully collectable.

Any developments or expansions that we, or a joint venture that we are involved
in, have planned or anticipated may not be started or completed as scheduled, or
may not result in accretive funds from operations. In addition, we regularly
evaluate acquisition or disposition proposals and engage from time to time in
negotiations for acquisitions or dispositions of properties. We may also enter
into letters of intent for the purchase or sale of properties. Any prospective
acquisition or disposition that is being evaluated or which is subject to a
letter of intent may not be consummated, or if consummated, may not result in an
increase in net income or funds from operations.

Financing Arrangements

During the first quarter of 2002, we purchased at par or below, $4.9 million of
our outstanding 7.875% senior, unsecured public notes that mature in October
2004. The purchases were funded by amounts available under our unsecured lines
of credit. These purchases were in addition to $14.5 million of the notes that
were purchased in the fourth quarter of 2001 at par. Additionally, in October
2002 we purchased at par an additional $5.5 million of the notes to bring the
total of the October 2004 notes purchased in 2001 and 2002 to $24.9 million.

At September 30, 2002, approximately 50% of our outstanding long-term debt
represented unsecured borrowings and approximately 61% of the gross book value
of our real estate portfolio was unencumbered. The average interest rate,
including loan cost amortization, on average debt outstanding for the nine
months ended September 30, 2002 was 8.10%.

We intend to retain the ability to raise additional capital, including public
debt or equity, to pursue attractive investment opportunities that may arise and
to otherwise act in a manner that we believe to be in our best interest and our
shareholders' interests. During the second quarter of 2001, we amended our shelf
registration for the ability to issue up to $400 million, ($200 million in debt
and $200 million in equity securities). In July 2002, we again amended the shelf
registration to allow us to issue the $400 million in either all debt or all
equity or any combination thereof up to $400 million. On September 4, 2002, we
completed a public offering of 1,000,000 common shares at a price of $29.25 per
share, receiving net proceeds of approximately $27.96 million. We used the net
proceeds, together with other available funds, to acquire one outlet center in
Howell, Michigan, reduce the outstanding balance on our lines of credit and for
general corporate purposes. To generate capital to reinvest into other
attractive investment opportunities, we may also consider the use of operational
and developmental joint ventures, selling certain properties that do not meet
our long-term investment criteria as well as outparcels on existing properties.


20


We maintain unsecured, revolving lines of credit that provided for unsecured
borrowings up to $75 million at September 30, 2002. During 2002, we extended the
maturity of all three $25 million lines of credit to June 30, 2004. Based on
cash provided by operations, existing credit facilities, ongoing negotiations
with certain financial institutions and our ability to sell debt or equity
subject to market conditions, we believe that we have access to the necessary
financing to fund the planned capital expenditures during 2002 and 2003.

We anticipate that adequate cash will be available to fund our operating and
administrative expenses, regular debt service obligations, and the payment of
dividends in accordance with REIT requirements in both the short and long term.
Although we receive most of our rental payments on a monthly basis,
distributions to shareholders are made quarterly and interest payments on the
senior, unsecured notes are made semi-annually. Amounts accumulated for such
payments will be used in the interim to reduce the outstanding borrowings under
the existing lines of credit or invested in short-term money market or other
suitable instruments.

On October 10, 2002, our Board of Directors declared a $.6125 cash dividend per
common share payable on November 15, 2002 to each shareholder of record on
October 31, 2002, and caused a $.6125 per Operating Partnership unit cash
distribution to be paid to the minority interests. The Board of Directors also
declared a cash dividend of $.5518 per preferred depositary share payable on
November 15, 2002 to each shareholder of record on October 31, 2002.

New Accounting Pronouncements

In 2001, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standard No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" ("FAS 144"), which replaces FAS No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of" ("FAS 121"). FAS 144 retains the requirements of FAS 121 to
recognize an impairment loss only if the carrying amount of a long-lived asset
is not recoverable from its undiscounted cash flows and to measure an impairment
loss as the difference between the carrying amount and fair value of the asset.
The provisions of FAS 144 are effective for financial statements issued for
fiscal years beginning after December 15, 2001. We implemented the provisions of
FAS 144 on January 1, 2002. FAS 144 did not have an effect on our results of
operations or our financial position.

Under both FAS No. 121 and 144, real estate assets designated as held for sale
are stated at their fair value less costs to sell. We classify real estate as
held for sale when our Board of Directors approves the sale of the assets and we
have commenced an active program to sell the assets. Subsequent to this
classification, no further depreciation is recorded on the assets. Under FAS No.
121, the operating results of real estate assets held for sale are included in
continuing operations. Upon implementation of FAS No. 144 in 2002, the operating
results of newly designated real estate assets held for sale will be included in
discontinued operations in our results of operations. We currently do not have
any assets that meet these classification requirements.

In April 2002, the FASB issued FAS No. 145, "Rescission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections".
In rescinding FAS No. 4, "Reporting Gains and Losses from Extinguishment of
Debt", and FAS No. 64, "Extinguishments of Debt Made to Satisfy Sinking-Fund
Requirements", FAS 145 eliminates the requirement that gains and losses from the
extinguishment of debt be aggregated and, if material, classified as an
extraordinary item, net of the related income tax effect. FAS 145 is effective
for us for transactions occurring after January 1, 2003. Management is currently
evaluating the effects of this statement.

In June 2002 the FASB issued FAS No. 146, Accounting for Exit or Disposal
Activities. FAS 146 addresses significant issues regarding the recognition,
measurement, and reporting of costs that are associated with exit and disposal


21

activities, including restructuring activities that are currently accounted for
pursuant to the guidance that the Emerging Issues Task Force (EITF) has set
forth in EITF Issue No. 94-3, Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring). FAS 146 will be effective for exit or
disposal activities that are initiated after December 31, 2002. Management is
currently evaluating the effects of this statement.

Funds from Operations

We believe that for a clear understanding of our consolidated historical
operating results, FFO should be considered along with net income as presented
in the unaudited consolidated financial statements included 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 real
estate investment trust ("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 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 our presentation of FFO 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 generally accepted accounting principles and
should not be considered an alternative to net income as an indication of
operating performance or to cash 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.

Below is a calculation of funds from operations for the three and nine months
ended September 30, 2002 and 2001 as well as actual cash flow and other data for
those respective periods (in thousands):


Three Months Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
- ---------------------------------------------------------------------- --- ------------ ------------ ------------ -------------
Funds from Operations:

Net income $2,308 $1,770 $ 5,847 $3,963
Adjusted for:
Extraordinary item - loss on early extinguishment of debt --- --- --- 130
Minority interest 617 419 1,326 793
Minority interest, depreciation and amortization
attributable to discontinued operations 67 178 537 533
Depreciation and amortization uniquely significant to real
estate - wholly owned 7,124 7,043 21,176 20,846
Depreciation and amortization uniquely significant to real
estate - joint ventures 168 --- 168 ---
Gain on sale of real estate --- --- (460) ---
- ---------------------------------------------------------------------- --- ------------ ------------ ------------ -------------
Funds from operations before minority interest $10,284 $9,410 $28,594 $26,265
- ---------------------------------------------------------------------- --- ------------ ------------ ------------ -------------

Weighted average shares outstanding (1) 12,245 11,713 12,011 11,708
- ---------------------------------------------------------------------- --- ------------ ------------ ------------ -------------

Cash flow provided by (used in):
Operating activities $ 27,600 $ 29,005
Investing activities (24,694) (19,726)
Financing activities (3,212) (9,715)

(1) Assumes the partnership units of the Operating Partnership held by the
minority interest, preferred shares of the Company and share and unit
options are converted to common shares of the Company.


22


Economic Conditions and Outlook

The majority of our leases contain provisions designed to mitigate the impact of
inflation. Such provisions include clauses for the escalation of base rent and
clauses enabling us to receive percentage rentals based on tenants' gross sales
(above predetermined levels, which we believe often are lower than traditional
retail industry standards) that generally increase as prices rise. Most of the
leases require the tenant to pay their share of property operating expenses,
including common area maintenance, real estate taxes, insurance and advertising
and promotion, thereby reducing exposure to increases in costs and operating
expenses resulting from inflation.

While factory outlet stores continue to be a profitable and fundamental
distribution channel for brand name manufacturers, some retail formats are more
successful than others. As typical in the retail industry, certain tenants have
closed, or will close, certain stores by terminating their lease prior to its
natural expiration or as a result of filing for protection under bankruptcy
laws.

Approximately 33% of our lease portfolio is scheduled to expire during 2002 and
2003. Approximately, 935,000 square feet of space is up for renewal during 2002
and approximately 1,043,000 square feet will come up for renewal in 2003. If we
were unable to successfully renew or release a significant amount of this space
on favorable economic terms, the loss in rent could have a material, adverse
effect on our results of operations.

As of September 30, 2002, we have renewed approximately 744,000 square feet, or
80% of the square feet scheduled to expire in 2002. The existing tenants have
renewed at an average base rental rate approximately 1% higher than the expiring
rate. We also re-tenanted 191,000 square feet of vacant space during the first
nine months of 2002 at a 3% increase in the average base rental rate from that
which was previously charged. Our factory outlet centers typically include
well-known, national, brand name companies. By maintaining a broad base of
creditworthy tenants and a geographically diverse portfolio of properties
located across the United States, we reduce our operating and leasing risks. No
one tenant (including affiliates) accounted for more than 6% of our combined
base and percentage rental revenues for the nine months ended September 30,
2002. Accordingly, we do not expect any material adverse impact on our results
of operations and financial condition as a result of leases to be renewed or
stores to be released.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to various market risks, including changes in interest rates.
Market risk is the potential loss arising from adverse changes in market rates
and prices, such as interest rates. We do not enter into derivatives or other
financial instruments for trading or speculative purposes.

We negotiate long-term fixed rate debt instruments and enter into interest rate
swap agreements to manage our exposure to interest rate changes. The swaps
involve the exchange of fixed and variable interest rate payments based on a
contractual principal amount and time period. Payments or receipts on the
agreements are recorded as adjustments to interest expense. At September 30,
2002, we had an interest rate swap agreement effective through January 2003 with
a notional amount of $25 million. Under this agreement, we receive a floating
interest rate based on the 30 day LIBOR index and pay a fixed interest rate of
5.97%. This swap effectively changes our payment of interest on $25 million of
variable rate debt to fixed rate debt for the contract period at a rate of
7.72%.

The fair value of the interest rate swap agreement represents the estimated
receipts or payments that would be made to terminate the agreement. At September
30, 2002, we would have paid approximately $360,000 to terminate the agreement.
A 1% decrease in the 30 day LIBOR index would increase the amount paid by us by
$63,000 to approximately $423,000. The fair value is based on dealer quotes,
considering current interest rates and remaining term to maturity. We do not
intend to terminate our interest rate swap agreement prior to its maturity. The
fair value of this derivative is currently recorded as a liability in our
Consolidated Balance Sheet; however, if held to maturity, the value of the swap
will be zero at that time.

23


The fair market value of long-term fixed interest rate debt is subject to market
risk. Generally, the fair market value of fixed interest rate debt will increase
as interest rates fall and decrease as interest rates rise. The estimated fair
value of our total long-term debt at September 30, 2002 was $344.0 million and
its recorded value was $346.9 million. A 1% increase from prevailing interest
rates at September 30, 2002 would result in a decrease in fair value of total
long-term debt by approximately $10.8 million. Fair values were determined from
quoted market prices, where available, using current interest rates considering
credit ratings and the remaining terms to maturity.

Item 4. Controls and Procedures

The Chief Executive Officer, Stanley K. Tanger, and Chief Financial Officer,
Frank C. Marchisello, Jr., evaluated the effectiveness of the registrant's
disclosure controls and procedures on November 14, 2002 (Evaluation Date), and
concluded that, as of the Evaluation Date, the registrant's disclosure controls
and procedures were effective to ensure that information the registrant is
required to disclose in its filings with the Securities and Exchange Commission
under the Securities and Exchange Act of 1934 is recorded, processed, summarized
and reported, within the time periods specified in the Commission's rules and
forms, and to ensure that information required to be disclosed by the registrant
in the reports that it files under the Exchange Act is accumulated and
communicated to the registrant's management, including its principal executive
officer and principal financial officer, as appropriate to allow timely
decisions regarding required disclosure.

There were no significant changes in the registrant's internal controls or in
other factors that could significantly affect these controls subsequent to the
Evaluation Date.



24

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Neither the Company nor the Operating Partnership is presently involved in any
material litigation nor, to their knowledge, is any material litigation
threatened against the Company or the Operating Partnership or its properties,
other than routine litigation arising in the ordinary course of business and
which is expected to be covered by liability insurance.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

99.1 Principal Executive Officer Certification Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes
- Oxley Act of 2002.

99.2 Principal Financial Officer Certification Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes
- Oxley Act of 2002.

(b) Reports on Form 8-K

We filed the following reports on Form 8-K during the three months
ended September 30, 2002:

Current Report on Form 8-K dated July 30, 2002 to file the June 30,
2002 Supplemental Operating and Financial Data

Current Report on Form 8-K dated August 12, 2002 to file the
certifications as required by 18 U.S.C. ss. 1350, as created by
Section 906 of the Sarbanes-Oxley Act of 2002

Current Report on Form 8-K dated September 5, 2002 to file certain
exhibits related to the offering of 1,000,000 Common Shares on
September 4, 2002



25


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.
Senior Vice President, Chief Financial Officer


DATE: November 14, 2002

CERTIFICATION

I, Stanley K. Tanger certify that:

1. I have reviewed this quarterly report on Form 10Q of Tanger Factory Outlet
Centers, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of and for, the periods presented in this
quarterly report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;

b. evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and

c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing the
equivalent functions):

26


a. All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and

b. any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officer and I have indicated in this
quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.

Date: November 14, 2002 By: /s/ Stanley K. Tanger
Stanley K. Tanger
Chairman of the Board and
Chief Executive Officer

CERTIFICATION

I, Frank C. Marchisello, Jr. certify that:

1. I have reviewed this quarterly report on Form 10Q of Tanger Factory Outlet
Centers, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of and for, the periods presented in this
quarterly report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;

b. evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and

c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;



27


5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing the
equivalent functions):

a. All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and

b. any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officer and I have indicated in this
quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.

Date: November 14, 2002 By: /s/ Frank C. Marchisello, Jr.
Frank C. Marchisello, Jr.
Senior Vice President
Chief Financial Officer



28




Exhibit Index

Exhibit No. Description
- ----------- -----------------------------------------------------------------

99.1 Principal Executive Officer Certification Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes
- Oxley Act of 2002.

99.2 Principal Financial Officer Certification Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes
- Oxley Act of 2002.