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United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000
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 number: 33-99736-01
333-3526-01
333-39365-01
TANGER PROPERTIES LIMITED PARTNERSHIP
(Exact name of Registrant as specified in its charter)
North Carolina 56-1822494
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3200 Northline Avenue
Suite 360
Greensboro, NC 27408 (336) 292-3010
(Address of principal executive offices) (Registrant's telephone number)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
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
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.[ ]
Documents Incorporated By Reference
Part III incorporates certain information by reference from the Registrant's
definitive proxy statement of Tanger Factory Outlet Centers, Inc. to be filed
with respect to the Annual Meeting of Shareholders to be held May 18, 2001.
PART I
Item 1. Business
The Operating Partnership
Tanger Properties Limited Partnership (the "Operating Partnership"), a North
Carolina limited partnership, focuses exclusively on developing, acquiring,
owning and operating factory outlet centers. Since entering the factory outlet
center business 20 years ago, we have become one of the largest owners and
operators of factory outlet centers in the United States. As of December 31,
2000, we owned and operated 29 centers with a total gross leasable area ("GLA")
of approximately 5.2 million square feet. These centers were approximately 96%
occupied, contained approximately 1,100 stores representing over 250 store
brands as of such date.
We are controlled by Tanger Factory Outlet Centers, Inc. (the "Company"), a
fully-integrated, self administered, self-managed real estate investment trust
("REIT") as the sole shareholder of our general partner, Tanger GP Trust. Prior
to 1999, the Company directly owned the majority of the units of partnership
interest issued by us (the "Units") and served as our sole general partner.
During 1999, the Company transferred its ownership of Units into two
wholly-owned subsidiaries, the Tanger GP Trust and the Tanger LP Trust, with
Tanger GP Trust as the sole general partner and Tanger LP Trust as the limited
partner. The Tanger family, through its ownership of the Tanger Family Limited
Partnership ("TFLP"), holds the remaining Units. Stanley K. Tanger, the
Company's Chairman of the Board and Chief Executive Officer, is the sole general
partner of TFLP. The terms "we", "our" and "us" refer to the Operating
Partnership or the Operating Partnership and the Company together, as the text
requires.
As of December 31, 2000, the Tanger GP Trust owned 150,000 Units, the Tanger LP
Trust owned 7,768,911 Units, and 80,600 preferred Units (which are convertible
into approximately 726,203 limited partnership Units) and TFLP owned 3,033,305
Units. TFLP's Units are exchangeable, subject to certain limitations to preserve
the Company's status as a REIT, on a one-for-one basis for the Company's common
shares. Preferred Units are automatically converted into limited partnership
Units to the extent of any conversion of the Company's preferred shares into
common shares of the Company. Management of the Company beneficially owns
approximately 27% of all outstanding common shares (assuming the Series A
preferred shares and the limited partner's Units are exchanged for common shares
but without giving effect to the exercise of any outstanding stock and
partnership Unit options).
Each preferred partnership Unit entitles the Company to receive distributions
from us, in an amount equal to the distribution payable with respect to a share
of Series A preferred shares, prior to the payment by us of distributions with
respect to the general partnership Units. Preferred partnership Units will be
automatically converted by holders into limited partnership Units to the extent
that the Series A preferred shares are converted into common shares and will be
redeemed by us to the extent that the Company redeems the Series A preferred
shares.
Ownership of the Company's common and preferred shares is restricted to preserve
the Company's status as a REIT for federal income tax purposes. Subject to
certain exceptions, a person may not actually or constructively own more than 4%
of the Company's common shares (including common shares which may be issued as a
result of conversion of Series A preferred shares) or more than 29,400 Series A
preferred shares (or a lesser number in certain cases). The Company also
operates in a manner intended to enable it to preserve its status as a REIT,
including, among other things, making distributions with respect to its
outstanding common and preferred shares equal to at least 95% of its taxable
income each year. Effective January 1, 2001, the Company will distribute at
least 90% of its taxable income to its shareholders each year on a go forward
basis to qualify as a REIT under the Internal Revenue Code (the "Code"). The
minimum distribution requirements under the Code were changed through the
enactment of the Tax Relief Extension Act of 1999.
We are a North Carolina limited partnership that was formed in May 1993. The
executive offices are currently located at 3200 Northline Avenue, Suite 360,
Greensboro, North Carolina, 27408 and the telephone number is (336) 292-3010.
2
Recent Developments
At December 31, 2000, we owned 29 centers in 20 states totaling 5,179,000 square
feet of operating GLA compared to 31 centers in 22 states totaling 5,149,000
square feet of operating GLA as of December 31, 1999. The 30,000 square foot
increase in GLA is comprised primarily of a net increase of 216,000 square feet
due to expansions in five existing centers during the year offset by a decrease
of 186,000 square feet due to the sale of our Lawrence, Kansas and McMinnville,
Oregon centers in June 2000. Currently, we have approximately 97,000 square feet
of expansion space under construction in our San Marcos, Texas center, which is
scheduled to open during 2001.
In June 2000, we sold our centers in Lawrence, KS and McMinnville, OR for net
proceeds of $7.1 million. As a result of the two sales, we recognized a loss on
sale of real estate of $5.9 million. The combined net operating income of these
two centers represented approximately 1% of the total portfolio's operating
income.
In May 1999, our center in Stroud, Oklahoma was destroyed by a tornado. We
maintain full replacement cost insurance on properties as a whole and as a
result of the insurance settlement received, we recognized a gain on disposal of
the Stroud center of $4.1 million during the year ended December 31, 1999.
Approximately $1.9 million of the insurance settlement represented business
interruption insurance proceeds. The business interruption proceeds were
included in Other income and were amortized over a period of fourteen months
ending in June 2000. Approximately $985,200 of these proceeds were recognized in
2000.
In December 2000, we sold the remaining land and site improvements from our
Stroud, Oklahoma center which was destroyed by a tornado in May 1999. We
received net proceeds of approximately $723,500 in January 2001. As a result of
this sale we recognized a loss of $1,046,000 on the sale of the real estate in
the fourth quarter of 2000.
We are involved in the pre-development stage of a new 400,000 square foot outlet
center in Myrtle Beach, South Carolina. This center is being developed by
Tanger-Warren Development, LLC ("Tanger-Warren") which was formed in August 2000
to identify, acquire and develop sites for us. Based on anticipated successful
permitting and pre-leasing, we expect stores to begin opening in late 2002. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Joint Ventures" for a discussion of the formation of Tanger-Warren.
We have an option to purchase the retail portion of a site at the Bourne Bride
Rotary in Cape Cod, Massachusetts. Based on tenant demand, we plan to develop a
new 250,000 square foot outlet center. The entire site will contain more than
750,000 square feet of mixed-use entertainment, retail, office and residential
community built in the style of a Cape Cod Village. The local and state planning
authorities are currently reviewing the project and final approvals are
anticipated by the end of 2001. Due to the extensive amount of site work and
road construction, stores are not expected to open until mid 2003.
The developments or expansions that we have planned 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 also may not be consummated, or if
consummated, may not result in accretive funds from operations.
During 2000, we took a number of steps to insure access to capital sufficient to
complete our development pipeline and refinance debt maturing over the next
twelve months. These steps included the following:
o In January 2000, Fleet National Bank and Bank of America provided us with
an aggregate $20.0 million, two year, unsecured loan at a variable rate of
LIBOR plus 2.25%. At the same time, we entered into interest rate swap
agreements that effectively fixed the interest rate on this loan at 8.75%.
o In July 2000, Wells Fargo Bank provided us with a $29.5 million
collateralized loan for five years at a variable rate of LIBOR plus 1.75%.
In December 2000, we entered into an interest rate swap agreement that
effectively fixed the interest rate on $25 million of this loan at 7.72%.
o In August 2000, Woodmen of the World Life Insurance Society provided us
with a $16.7 million collateralized loan for ten years at a fixed rate of
8.86%.
o In September 2000, New York Life Insurance Company renewed a $9.2 million
collateralized loan for five years at a fixed rate of 9.125%.
3
o We extended the maturities of our four unsecured lines of credit totaling
$100.0 million with Bank of America, Bank One, Fleet National Bank and
SouthTrust Bank until at least June 30, 2002.
o In February 2001, we issued $100.0 million of 9.125% senior, unsecured
notes, maturing on February 15, 2008. The net proceeds of $97.0 million
were used to repay all of the outstanding indebtedness under the $75
million 8.75% senior, unsecured notes due March 11, 2001. The net proceeds
were also used to repay the $20.0 million Fleet National Bank and Bank of
America loan mentioned above and to terminate the related interest rate
swap agreements with notional amounts totaling $20.0 million with the same
institutions. The remaining proceeds were used for general operating
purposes.
The Factory Outlet Concept
Factory outlets are manufacturer-operated retail stores that sell primarily
first quality, branded products at significant discounts from regular retail
prices charged by department stores and specialty stores. Factory outlet centers
offer numerous advantages to both consumers and manufacturers. Manufacturers
selling in factory outlet stores are often able to charge customers lower prices
for brand name and designer products by eliminating the third party retailer.
Factory outlet centers also typically have lower operating costs than other
retailing formats. Factory outlet centers enable manufacturers to optimize the
size of production runs while continuing to maintain control of their
distribution channels. In addition, factory outlet centers benefit manufacturers
by permitting them to sell out-of-season, overstocked or discontinued
merchandise without alienating department stores or hampering the manufacturer's
brand name, as is often the case when merchandise is distributed via discount
chains.
Our factory outlet centers range in size from 11,000 to 729,366 square feet of
GLA and are typically located at least 10 miles from densely populated areas,
where major department stores and manufacturer-owned full-price retail stores
are usually located. Manufacturers prefer these locations so that they do not
compete directly with their major customers and their own stores. Many of our
factory outlet centers are located near tourist destinations to attract tourists
who consider shopping to be a recreational activity. These centers are typically
situated in close proximity to interstate highways that provide accessibility
and visibility to potential customers.
We believe that factory outlet centers continue to present attractive
opportunities for capital investment, particularly with respect to strategic
re-merchandising plans and expansions of existing centers. We believe that under
present conditions such development or expansion costs, coupled with current
market lease rates, permit attractive investment returns. We further believe,
based upon our contacts with present and prospective tenants, that many
companies, including prospective new entrants into the factory outlet business,
desire to open a number of new factory outlet stores in the next several years,
particularly where there are successful factory outlet centers in which such
companies do not have a significant presence or where there are few factory
outlet centers.
Our Factory Outlet Centers
Each of our factory outlet centers carries the Tanger brand name. We believe
that both national manufacturers and consumers recognize the Tanger brand as one
that provides outlet shopping centers where consumers can trust the brand,
quality and price of the merchandise they purchase directly from the
manufacturers.
As one of the original participants in this industry, we have developed
long-standing relationships with many national and regional manufacturers.
Because of our established relationships with many manufacturers, we believe we
are well positioned to capitalize on industry growth.
As of March 1, 2001, we had a diverse tenant base comprised of over 250
different well-known, upscale, national designer or brand name concepts, such as
Dana Buchman, Liz Claiborne, Reebok, Rockport, Coach, Polo Ralph Lauren, Polo
Jeans, GAP and Banana Republic. Most of the factory outlet stores are directly
operated by the respective manufacturer.
4
No single tenant (including affiliates) accounted for 10% or more of combined
base and percentage rental revenues during 2000, 1999 and 1998. As of March 1,
2001, our largest tenant, including all of its store concepts, accounted for
approximately 5.8% of our GLA. Because our typical tenant is a large, national
manufacturer, we have not experienced any material problems with respect to rent
collections or lease defaults.
Revenues from fixed rents and operating expense reimbursements accounted for
approximately 90% of our total revenues in 2000. Revenues from contingent
sources, such as percentage rents, which fluctuate depending on tenant's sales
performance, accounted for approximately 6% of 2000 revenues. As a result, only
small portions of our revenues are dependent on contingent revenue sources.
Business History
Stanley K. Tanger, the Company's founder, Chairman and Chief Executive Officer,
entered the factory outlet center business in 1981. Prior to founding the
Company, Stanley K. Tanger and his son, Steven B. Tanger, the Company's
President and Chief Operating Officer, built and managed a successful family
owned apparel manufacturing business, Tanger/Creighton Inc.
("Tanger/Creighton"), which business included the operation of five factory
outlet stores. Based on their knowledge of the apparel and retail industries, as
well as their experience operating Tanger/Creighton's factory outlet stores, the
Tangers recognized that there would be a demand for factory outlet centers where
a number of manufacturers could operate in a single location and attract a large
number of shoppers.
From 1981 to 1986, Stanley K. Tanger solely developed the first successful
factory outlet centers. Steven Tanger joined the Company in 1986 and by June
1993, together, the Tangers had developed 17 centers with a total GLA of
approximately 1.5 million square feet. In June of 1993, the Company completed
its initial public offering ("IPO"), making Tanger Factory Outlet Centers, Inc.
the first publicly traded outlet center company. Since the Company's IPO, we
have developed nine and acquired seven centers and, together with expansions of
existing centers net of centers disposed of, added approximately 3.7 million
square feet of GLA to our portfolio, bringing our portfolio of properties as of
December 31, 2000 to 29 centers totaling approximately 5.2 million square feet
of GLA.
Business and Operating Strategy
Our strategy is to increase revenues through new development, selective
acquisitions and expansions of factory outlet centers while minimizing our
operating expenses by designing low maintenance properties and achieving
economies of scale. We continue to focus on strengthening our tenant base in our
centers by replacing low volume tenants with high volume anchor tenants, such as
Nike, GAP, Old Navy, Banana Republic, Polo Ralph Lauren, Tommy Hilfiger and
Nautica.
We typically seek opportunities to develop or acquire new centers in locations
that have at least 5 million people residing within an hour's drive, an average
household income within a 50-mile radius of at least $35,000 per year and access
to frontage on a major or interstate highway with a traffic count of at least
50,000 cars per day. We will vary our minimum conditions based on the particular
characteristics of a site, especially if the site is located near or at a
tourist destination. Our current goal is to target sites that are large enough
to support centers with approximately 75 stores totaling at least 300,000 square
feet of GLA.
We generally prelease at least 50% of the space in each center prior to
acquiring the site and beginning construction. Construction of a new factory
outlet center has normally taken us four to six months from groundbreaking to
the opening of the first tenant store. Construction of expansions to existing
properties typically takes less time, usually between three to four months.
Capital Strategy
We intend to achieve a strong and flexible financial position by: (1)
maintaining a quality portfolio of strong income producing properties, (2)
managing our leverage position relative to our portfolio when pursuing new
development and expansion opportunities, (3) extending and sequencing debt
maturities, (4) managing our interest rate risk, (5) maintaining our liquidity
and (6) accessing internally generated sources of capital by maintaining a low
distribution payout ratio, defined as annual distributions as a percent of funds
from operations, and subsequently reinvesting a significant portion of our cash
flow into our portfolio. For a discussion of funds from operations, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Funds From Operations".
5
We have successfully increased our distribution each of our first seven years in
existence. At the same time, we continue to have one of the lowest payout ratios
in the REIT industry. The distribution payout ratio for the year ended December
31, 2000 was 71%, calculated using FFO before Asset write-down. As a result, we
retained approximately $11.7 million of our 2000 FFO. A low distribution payout
ratio allows us to retain capital to maintain the quality of our portfolio, as
well as to develop, acquire and expand properties and reduce outstanding debt.
We intend to retain the ability to raise additional capital, including public
debt as described above in ("Recent Developments"), 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 the Company's shareholders' interests. We
maintain revolving lines of credit that provide for unsecured borrowings up to
$100 million, of which $58.5 million was available for additional borrowings at
December 31, 2000.
After giving effect to the February 2001 debt offering, the Company and the
Operating Partnership under joint registration, could issue up to $100 million
in additional equity securities. We are currently in the process of restocking
our shelf registration for the ability to issue up to $200 million in debt and
equity securities, respectively. We may also consider selling certain properties
that do not meet our long-term investment criteria as well as outparcels on
existing properties to generate capital to reinvest into other attractive
investment opportunities. Based on cash provided by operations, existing credit
facilities, ongoing negotiations with certain financial institutions, the
February 2001 bond offering and funds available under the shelf registration, we
believe that we have access to the necessary financing to fund the planned
capital expenditures during 2001.
Competition
We carefully consider the degree of existing and planned competition in a
proposed area before deciding to develop, acquire or expand a new center. Our
centers compete for customers primarily with factory outlet centers built and
operated by different developers, traditional shopping malls and full- and
off-price retailers. However, we believe that the majority of our customers
visit factory outlet centers because they are intent on buying name-brand
products at discounted prices. Traditional full- and off-price retailers are
often unable to provide such a variety of name-brand products at attractive
prices.
Tenants of factory outlet centers typically avoid direct competition with major
retailers and their own specialty stores, and, therefore, generally insist that
the outlet centers be located not less than 10 miles from the nearest major
department store or the tenants' own specialty stores. For this reason, our
centers compete only to a very limited extent with traditional malls in or near
metropolitan areas.
We compete favorably with as many as three large national developers of factory
outlet centers and numerous small developers. Competition with other factory
outlet centers for new tenants is generally based on cost, location, quality and
mix of the centers' existing tenants, and the degree and quality of the support
and marketing services provided. As a result of these factors and due to the
strong tenant relationships that presently exist with the current major outlet
developers, we believe there are significant barriers to entry into the outlet
center industry by new developers. We also believe that our centers have an
attractive tenant mix, as a result of our decision to lease substantially all of
our space to manufacturer operated stores rather than to off-price retailers,
and also as a result of the strong brand identity of our major tenants.
6
Corporate and Regional Headquarters
We rent space in an office building in Greensboro, North Carolina in which our
corporate headquarters are located. In addition, we rent a regional office in
New York City, New York under a lease agreement and sublease agreement,
respectively, to better service our principal fashion-related tenants, many of
who are based in and around that area.
We maintain offices and employee on-site managers at 21 centers. The managers
closely monitor the operation, marketing and local relationships at each of
their centers.
Insurance
We believe that as a whole our properties are covered by adequate comprehensive
liability, fire, flood and extended loss insurance provided by reputable
companies with commercially reasonable and customary deductibles and limits.
Specified types and amounts of insurance are required to be carried by each
tenant under the lease agreement with us. There are however, types of losses,
like those resulting from wars or earthquakes, which may either be uninsurable
or not economically insurable in some or all of our locations. An uninsured loss
could result in a loss to us of both our capital investment and anticipated
profits from the affected property.
Employees
As of March 1, 2001, we had 153 full-time employees, located at our corporate
headquarters in North Carolina, our regional office in New York and our 21
business offices. At that date, we also employed 152 part-time employees at
various locations.
Item 2. Properties
As of March 1, 2001, our portfolio consisted of 29 centers located in 20 states.
Our centers range in size from 11,000 to 729,366 square feet of GLA. These
centers are typically strip shopping centers that enable customers to view all
of the shops from the parking lot, minimizing the time needed to shop. The
centers are generally located near tourist destinations or along major
interstate highways to provide visibility and accessibility to potential
customers.
We believe that the centers are well diversified geographically and by tenant
and that they are not dependent upon any single property or tenant. The only
center that represents more than 10% of our total assets or gross revenues as of
and for the year ended December 31, 2000 is the property in Riverhead, NY. See
"Properties - Significant Property". No other center represented more than 10%
of our total assets or gross revenues as of December 31, 2000.
We have an ongoing strategy of acquiring centers, developing new centers and
expanding existing centers. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital Resources"
for a discussion of the cost of such programs and the sources of financing
thereof.
Certain of our centers serve as collateral for mortgage notes payable. Of the 29
centers, we own the land underlying 26 and have ground leases on three. The land
on which the Pigeon Forge and Sevierville centers are located are subject to
long-term ground leases expiring in 2086 and 2046, respectively. The land parcel
on which the original Riverhead Center is located, approximately 47 acres, is
also subject to a ground lease with an initial term expiring in 2004, with
renewal at our option for up to seven additional terms of five years each. The
land parcel on which the Riverhead Center expansion is located, containing
approximately 43 acres, is owned by us.
7
The term of our typical tenant lease averages five years. Generally, leases
provide for the payment of fixed monthly rent in advance. There are often
contractual base rent increases during the initial term of the lease. In
addition, the rental payments are customarily subject to upward adjustments
based upon tenant sales volume. Most leases provide for payment by the tenant of
real estate taxes, insurance, common area maintenance, advertising and promotion
expenses incurred by the applicable center. As a result, substantially all
operating expenses for the centers are borne by the tenants.
Location of Centers (as of March 1, 2001)
Number of GLA %
State Centers (sq. ft.) of GLA
- ---------------------------------------------------------- ------------- -------------- ---------------
Georgia 4 950,590 18
New York 1 729,366 14
Texas 2 618,778 12
Tennessee 2 448,702 8
Florida 2 363,956 7
Missouri 1 277,494 5
Iowa 1 277,230 5
Pennsylvania 1 255,059 5
Louisiana 1 245,098 5
North Carolina 2 187,702 4
Arizona 1 184,768 3
Indiana 1 141,051 3
Minnesota 1 134,480 2
Michigan 1 112,420 2
California 1 105,950 2
Maine 2 84,397 2
Alabama 1 80,730 1
New Hampshire 2 61,915 1
West Virginia 1 49,252 1
Massachusetts 1 23,417 ---
- ---------------------------------------------------------- ------------- -------------- ---------------
Total 29 5,332,355 100
========================================================== ============= ============== ===============
8
The table set forth below summarizes certain information with respect to our
existing centers as of March 1, 2001.
Mortgage
Debt
GLA % Outstanding Fee or
Date Opened Location (sq. ft.) Occupied (000's) (2) Ground Lease
- ------------------- ------------------------------------------ ----------- ---- ----------- --------------- ---------------------
Jun. 1986 Kittery I, ME 59,694 100 $ 6,547 Fee
Mar. 1987 Clover, North Conway, NH 11,000 100 --- Fee
Nov. 1987 Martinsburg, WV 49,252 93 --- Fee
Apr. 1988 LL Bean, North Conway, NH 50,915 100 --- Fee
Jul. 1988 Pigeon Forge, TN 94,750 98 --- Ground Lease
Aug. 1988 Boaz, AL 80,730 99 --- Fee
Jun. 1988 Kittery II, ME 24,703 100 --- Fee
Jul. 1989 Commerce, GA 185,750 92 9,120 Fee
Oct. 1989 Bourne, MA 23,417 100 --- Fee
Feb. 1991 West Branch, MI 112,420 100 7,304 Fee
May 1991 Williamsburg, IA 277,230 98 20,080 Fee
Feb. 1992 Casa Grande, AZ 184,768 85 --- Fee
Dec. 1992 North Branch, MN 134,480 97 --- Fee
Feb. 1993 Gonzales, LA 245,098 97 --- Fee
May 1993 San Marcos, TX 441,343 (4) 98 19,543 Fee
Aug. 1994 Riverhead, NY 729,366 92 --- Ground Lease (1)
Aug. 1994 Terrell, TX 177,435 88 --- Fee
Sep. 1994 Seymour, IN 141,051 71 --- Fee
Oct. 1994 (3) Lancaster, PA 255,059 97 15,099 Fee
Nov. 1994 Branson, MO 277,494 97 --- Fee
Nov. 1994 Locust Grove, GA 248,854 95 --- Fee
Jan. 1995 Barstow, CA 105,950 72 --- Fee
Dec. 1995 Commerce II, GA 342,556 94 29,500 Fee
Feb. 1997 (3) Sevierville, TN 353,952 98 --- Ground Lease
Sept. 1997 (3) Blowing Rock, NC 105,448 99 9,898 Fee
Sep. 1997 (3) Nags Head, NC 82,254 99 6,716 Fee
Mar. 1998 (3) Dalton, GA 173,430 98 11,506 Fee
Jul. 1998 (3) Fort Meyers, FL 198,956 91 --- Fee
Nov. 1999 (3) Fort Lauderdale, FL 165,000 100 --- Fee
- ------------------- ----------------------------------------- ------------ ---- -------- --------------- ------------------------
Total 5,332,355 (4) 94 $ 135,313
=================== ========================================= ============ ==== ======== =============== ========================
(1) The original Riverhead center is subject to a ground lease which may be
renewed at our option for up to seven additional terms of five years each.
We own the land on which the Riverhead center expansion is located.
(2) As of December 31, 2000. The average interest rate, including loan cost
amortization, for average debt outstanding for the year ended December 31,
2000 was 8.6% and the weighted average maturity date was October 2004.
(3) Represents date acquired by us.
(4) GLA includes 57,887 square feet of new space not yet open as of March 1,
2001.
9
Lease Expirations
The following table sets forth, as of December 31, 2000, scheduled lease
expirations, assuming none of the tenants exercise renewal options. Most leases
are renewable for five year terms at the tenant's option.
% of Gross
Annualized
Average Base Rent
No. of Approx. Annualized Annualized Represented
Leases GLA Base Rent Base Rent by Expiring
Year Expiring(1) (sq. ft.) (1) per sq. ft. (000's) (2) Leases
- ------------------------ ----------------- ----------------- ------------- --------------- --------------
2001 123 447,000 (3) $ 12.14 $5,421 8
2002 235 868,000 15.11 13,120 19
2003 203 860,000 14.42 12,406 18
2004 220 955,000 14.79 14,117 21
2005 164 725,000 15.69 11,378 17
2006 75 361,000 14.35 5,182 7
2007 14 75,000 15.17 1,137 2
2008 9 61,000 13.77 836 1
2009 8 51,000 11.59 593 1
2010 9 50,000 13.25 664 1
2011 & thereafter 31 397,000 8.84 3,506 5
- ------------------------ ----------- ----------------------- ---------- -------------- ------------------
Total 1,091 4,850,000 $ 14.09 $ 68,360 100
======================== =========== ======================= ========== ============== ==================
(1) Excludes leases that have been entered into but which tenant has not yet
taken possession, vacant suites, space under construction and
month-to-month leases totaling in the aggregate approximately 482,000
square feet.
(2) Base rent is defined as the minimum payments due, excluding periodic
contractual fixed increases.
(3) As of March 1, 2001, approximately 47,000 square feet of the total
scheduled to expire in 2001 had already renewed.
Rental and Occupancy Rates
The following table sets forth information regarding the expiring leases during
each of the last five calendar years.
Renewed by Existing Re-leased to
Total Expiring Tenants New Tenants
----------------------------------- ---------------------------- ----------------------------
% of % of % of
GLA Total Center GLA Expiring GLA Expiring
Year (sq. ft.) GLA (sq. ft.) GLA (sq. ft.) GLA
- ---------------- --------------- ---------------- ------------- ----------- ------------ ------------
2000 690,263 13 520,030 75 67,916 10
1999 715,197 14 606,450 85 22,882 3
1998 548,504 11 407,837 74 38,526 7
1997 238,250 5 195,380 82 18,600 8
1996 149,689 4 134,639 90 15,050 10
10
The following table sets forth the average base rental rate increases per square
foot upon re-leasing stores that were turned over or renewed during each of the
last five calendar years.
Renewals of Existing Leases Stores Re-leased to New Tenants (1)
---------------------------------------------------- ------------------------------------------------------
Average Annualized Base Rents Average Annualized Base Rents
($ per sq. ft.) ($ per sq. ft.)
-------------------------------------- ----------------------------------------
GLA % GLA %
Year (sq. ft.) Expiring New Increase (sq.ft.) Expiring New Change
- --------- ---------- ----------- --------- ---------- ---------- ----------- --------- ----------
2000 520,030 $13.66 $14.18 4 302,724 $14.68 $15.64 7
1999 606,450 14.36 14.36 -- 240,851 15.51 16.57 7
1998 407,387 13.83 14.07 2 220,890 15.33 13.87 (9)
1997 195,380 14.21 14.41 1 171,421 14.59 13.42 (8)
1996 134,639 12.44 14.02 13 78,268 14.40 14.99 4
- ---------------------
(1) The square footage released to new tenants for 2000, 1999, 1998, 1997 and
1996 contains 67,916, 22,882, 38,526, 18,600 and 15,050 square feet,
respectively, that was released to new tenants upon expiration of an
existing lease during the current year.
The following table shows certain information on rents and occupancy rates for
the centers during each of the last five calendar years.
Average GLA Open at Aggregate
% Annualized Base End of Each Number of Percentage
Year Leased(1) Rent per sq. ft. (2) Year Centers Rents (000's)
- ------------ ----------- ------------------------ ------------------ ----------------- ----------------
2000 96 $13.97 5,179,000 29 $3,253
1999 97 13.85 5,149,000 31 3,141
1998 97 13.88 5,011,000 31 3,087
1997 98 14.04 4,458,000 30 2,637
1996 99 13.89 3,739,000 27 2,017
- ---------------------
(1) As of December 31st of each year shown.
(2) Represents total base rental revenue divided by Weighted Average GLA of the
portfolio, which amount does not take into consideration fluctuations in
occupancy throughout the year.
Occupancy Costs
We believe that our ratio of average tenant occupancy cost (which includes base
rent, common area maintenance, real estate taxes, insurance, advertising and
promotions) to average sales per square foot is low relative to other forms of
retail distribution. The following table sets forth, for each of the last five
years, tenant occupancy costs per square foot as a percentage of reported tenant
sales per square foot.
Occupancy Costs as a
Year % of Tenant Sales
------------------------------ --------------------------
2000 7.4
1999 7.8
1998 7.9
1997 8.2
1996 8.7
11
Tenants
The following table sets forth certain information with respect to our ten
largest tenants and their store concepts as of March 1, 2001.
Number GLA % of Total
Tenant of Stores (sq. ft.) GLA
- -------------------------------------------------------------------- ------------- ------------- ---------------------
Liz Claiborne, Inc.:
Liz Claiborne 23 255,868 4.9
Elizabeth 7 25,884 0.5
DKNY Jeans 3 8,820 0.2
Dana Buchman 3 6,600 0.1
Laundry 2 4,333 0.1
Claiborne Mens 2 3,100 0.1
-------- ---------------- -----------------------
40 304,605 5.8
Phillips-Van Heusen Corporation:
Bass 20 135,816 2.6
Van Heusen 20 85,623 1.6
Geoffrey Beene Co. Store 8 31,680 0.6
Izod 12 26,517 0.5
-------- ---------------- -----------------------
60 279,636 5.3
The Gap, Inc.:
GAP 16 140,702 2.7
Old Navy 6 91,841 1.7
Banana Republic 6 41,324 0.8
-------- ---------------- -----------------------
28 273,867 5.2
Reebok International, Ltd.:
Reebok 19 154,661 2.9
Rockport 4 11,900 0.2
Greg Norman 1 3,000 0.1
-------- ---------------- -----------------------
24 169,561 3.2
Bass Pro Outdoor World 1 165,000 3.1
Dress Barn Inc. 17 119,328 2.3
Sara Lee Corporation:
L'eggs, Hanes, Bali 24 103,809 2.0
Socks Galore 5 6,230 0.1
-------- ---------------- -----------------------
29 110,039 2.1
Polo Ralph Lauren:
Polo Ralph Lauren 9 74,366 1.4
Polo Jeans 6 21,960 0.4
Club Monaco 1 3,885 0.1
-------- ---------------- -----------------------
16 100,211 1.9
American Commercial, Inc.:
Mikasa Factory Store 12 98,000 1.9
Brown Group Retail, Inc.:
Factory Brand Shoes 14 74,580 1.4
Naturalizer 6 16,040 0.3
-------- ---------------- -----------------------
20 90,620 1.7
- -------------------------------------------------------------------- -------- ---------------- -----------------------
Total of all tenants listed in table 247 1,710,867 32.4
==================================================================== ======== ================ =======================
12
Significant Property
The center in Riverhead, New York is our only center that comprises more than
10% of total assets or total gross revenues. The Riverhead, NY center
represented 20% of our total assets and 19% of our gross revenues for the year
ended December 31, 2000. The Riverhead center was originally constructed in 1994
and now totals 729,366 square feet.
Tenants at the Riverhead center principally conduct retail sales operations. The
occupancy rate as of the end of 2000, 1999 and 1998 was 94%, 99% and 97%.
Average annualized base rental rates during 2000, 1999, and 1998 were $19.72,
$19.15, and $18.89 per weighted average GLA, respectively.
Depreciation on the Riverhead center is recognized on a straight-line basis over
33.33 years, resulting in a depreciation rate of 3% per year. At December 31,
2000, the net federal tax basis of this center was approximately $88.7 million.
Real estate taxes assessed on this center during 2000 amounted to $2.6 million.
Real estate taxes for 2001 are estimated to be approximately $2.7 million.
The following table sets forth, as of March 1, 2000, scheduled lease expirations
at the Riverhead center assuming that none of the tenants exercise renewal
options:
% of Gross
Annualized
Base Rent
No. of Annualized Annualized Represented
Leases GLA Base Rent Base Rent by Expiring
Year Expiring (1) (sq. ft.) (1) per sq. ft. (000) (2) Leases
- --------------------------- ----------------- ----------------- ------------------ ---------------- ----------------
2001 8 38,500 $ 19.41 $ 747 6
2002 58 189,865 23.17 4,400 34
2003 20 83,670 19.40 1,624 12
2004 39 160,240 19.57 3,136 24
2005 15 64,802 22.56 1,462 11
2006 3 14,710 21.44 315 2
2007 5 25,060 17.81 446 3
2008 1 7,500 18.00 135 1
2009 1 3,000 25.00 75 1
2010 -- -- -- -- --
2011 and thereafter 5 73,000 9.96 727 6
- ---------------------------- --------- --------------------- ------------------ --------------- --------------------
Total 155 660,347 $ 19.79 $ 13,067 100
============================ ========= ===================== ================== =============== ====================
(1) Excludes leases that have been entered into but which tenant has not taken
possession, vacant suites and month-to-month leases. (2) Base rent is
defined as the minimum payments due, excluding periodic contractual fixed
increases.
Item 3. Legal Proceedings
We are subject to legal proceedings and claims that have arisen in the ordinary
course of our business and have not been finally adjudicated. In our opinion,
the ultimate resolution of these matters will have no material effect on our
results of operations or financial condition.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders, through
solicitation of proxies or otherwise, during the fourth quarter of the fiscal
year ended December 31, 2000.
13
EXECUTIVE OFFICERS OF THE COMPANY
The Operating Partnership does not have any officers. The following table
sets forth certain information concerning the executive officers of the Company
which controls the Operating Partnership through its ownership of the general
partner, Tanger GP Trust:
NAME AGE POSITION
Stanley K. Tanger....... 77 Founder, Chairman of the Board of Directors and
Chief Executive Officer
Steven B. Tanger........ 52 Director, President and Chief Operating Officer
Rochelle G. Simpson .... 62 Secretary and Executive Vice President -
Administration and Finance
Willard A. Chafin, Jr... 63 Executive Vice President - Leasing, Site
Selection, Operations and Marketing
Frank C. Marchisello, Jr 42 Senior Vice President - Chief Financial Officer
Joseph H. Nehmen........ 52 Senior Vice President - Operations
Carrie A. Warren........ 38 Senior Vice President - Marketing
Virginia R. Summerell... 42 Treasurer and Assistant Secretary
Kevin M. Dillon......... 42 Vice President - Construction
The following is a biographical summary of the experience of the executive
officers of the Company:
Stanley K. Tanger. Mr. Tanger is the founder, Chief Executive Officer and
Chairman of the Board of Directors of the Company. He also served as President
from inception of the Company to December 1994. Mr. Tanger opened one of the
country's first outlet shopping centers in Burlington, North Carolina in 1981.
Before entering the factory outlet center business, Mr. Tanger was President and
Chief Executive Officer of his family's apparel manufacturing business,
Tanger/Creighton, Inc., for 30 years.
Steven B. Tanger. Mr. Tanger is a director of the Company and was named
President and Chief Operating Officer effective January 1, 1995. Previously, Mr.
Tanger served as Executive Vice President since joining the Company in 1986. He
has been with Tanger-related companies for most of his professional career,
having served as Executive Vice President of Tanger/Creighton for 10 years. He
is responsible for all phases of project development, including site selection,
land acquisition and development, leasing, marketing and overall management of
existing outlet centers. Mr. Tanger is a graduate of the University of North
Carolina at Chapel Hill and the Stanford University School of Business Executive
Program. Mr. Tanger is the son of Stanley K. Tanger.
Rochelle G. Simpson. Ms. Simpson was named Executive Vice President -
Administration and Finance in January 1999. She previously held the position of
Senior Vice President - Administration and Finance since October 1995. She is
also the Secretary of the Company and previously served as Treasurer from May
1993 through May 1995. She entered the factory outlet center business in January
1981, in general management and as chief accountant for Stanley K. Tanger and
later became Vice President - Administration and Finance of the Predecessor
Company. Ms. Simpson oversees the accounting and finance departments and has
overall management responsibility for the Company's headquarters.
Willard A. Chafin, Jr. Mr. Chafin was named Executive Vice President -
Leasing, Site Selection, Operations and Marketing of the Company in January
1999. Mr. Chafin previously held the position of Senior Vice President -
Leasing, Site Selection, Operations and Marketing since October 1995. He joined
the Company in April 1990, and since has held various executive positions where
his major responsibilities included supervising the Marketing, Leasing and
Property Management Departments, and leading the Asset Management Team. Prior to
joining the Company, Mr. Chafin was the Director of Store Development for the
Sara Lee Corporation, where he spent 21 years. Before joining Sara Lee, Mr.
Chafin was employed by Sears Roebuck & Co. for nine years in advertising/sales
promotion, inventory control and merchandising.
14
Frank C. Marchisello, Jr. Mr. Marchisello was named Senior Vice President
and Chief Financial Officer in January 1999. He was named Vice President and
Chief Financial Officer in November 1994. Previously, he served as Chief
Accounting Officer since joining the Company in January 1993 and Assistant
Treasurer since February 1994. He was employed by Gilliam, Coble & Moser,
certified public accountants, from 1981 to 1992, the last six years of which he
was a partner of the firm in charge of various real estate clients. Mr.
Marchisello is a graduate of the University of North Carolina at Chapel Hill and
is a certified public accountant.
Joseph H. Nehmen. Mr. Nehmen was named Senior Vice President of Operations
in January 1999. He joined the Company in September 1995 and was named Vice
President of Operations in October 1995. Mr. Nehmen has over 20 years experience
in private business. Prior to joining Tanger, Mr. Nehmen was owner of Merchants
Wholesaler, a privately held distribution company in St. Louis, Missouri. He is
a graduate of Washington University. Mr. Nehmen is the son-in-law of Stanley K.
Tanger and brother-in-law of Steven B. Tanger.
Carrie A. Warren. Ms. Warren was named Senior Vice President - Marketing in
May 2000. Previously, she held the position of Vice President - Marketing since
September 1996 and Assistant Vice President - Marketing since joining the
Company in December 1995. Prior to joining Tanger, Ms. Warren was with Prime
Retail, L.P. for 4 years where she served as Regional Marketing Director
responsible for coordinating and directing marketing for five outlet centers in
the southeast region. Prior to joining Prime Retail, L.P., Ms. Warren was
Marketing Manager for North Hills, Inc. for five years and also served in the
same role for the Edward J. DeBartolo Corp. for two years. Ms. Warren is a
graduate of East Carolina University.
Virginia R. Summerell. Ms. Summerell was named Treasurer of the Company in
May 1995 and Assistant Secretary in November 1994. Previously, she held the
position of Director of Finance since joining the Company in August 1992, after
nine years with NationsBank. Her major responsibilities include maintaining
banking relationships, oversight of all project and corporate finance
transactions and development of treasury management systems. Ms. Summerell is a
graduate of Davidson College and holds an MBA from the Babcock School at Wake
Forest University.
Kevin M. Dillon. Mr. Dillon was named Vice President - Construction in
October 1997. Previously, he held the position of Director of Construction from
September 1996 to October 1997 and Construction Manager from November 1993, the
month he joined the Company, to September 1996. Prior to joining the Company,
Mr. Dillon was employed by New Market Development Company for six years where he
served as Senior Project Manager. Prior to joining New Market, Mr. Dillon was
the Development Director of Western Development Company where he spent 6 years.
15
PART II
Item 5. Market For Registrant's Common Equity and Related Shareholder Matters
There is no established public trading market for our units. As of December 31,
2000, the Company's wholly-owned subsidiaries owned 7,918,911 Units, 80,600
Preferred Units (which are convertible into approximately 726,203 limited
partnership Units) and TFLP owned 3,033,305 Units as a limited partner.
We made distributions per partnership unit during 2000 and 1999 as follows:
2000 1999
----------------------------------- -------------- -----------------
First Quarter $ .6050 $ .600
Second Quarter .6075 .605
Third Quarter .6075 .605
Fourth Quarter .6075 .605
----------------------------------- -------------- -----------------
Year $ 2.4275 $ 2.415
----------------------------------- -------------- -----------------
Certain of our debt agreements limit the payment of distributions such that
distributions shall not exceed FFO, as defined in the agreements, for the prior
fiscal year on an annual basis or 95% of FFO on a cumulative basis. Based on
continuing favorable operations and available funds from operations, we intend
to continue to pay regular quarterly distributions.
16
Item 6. Selected Financial Data
2000 1999 1998 1997 1996
- ------------------------------------------- ------------ ------------- ------------ ------------ --------------
(In thousands, except per unit and center data)
OPERATING DATA
Total revenues $ 108,821 $ 104,016 $ 97,766 $ 85,271 $ 75,500
Income before (loss) gain on disposal
or sale of real estate and
extraordinary item 12,249 17,070 15,109 17,583 16,108
Income before extraordinary item 5,268 21,211 16,103 17,583 16,177
Net income 5,268 20,866 15,643 17,583 15,346
- ------------------------------------------- ------------- ------------- ------------- ------------ ------------
UNIT DATA
Basic:
Income before extraordinary item $ .32 $ 1.77 $ 1.30 $ 1.57 $ 1.46
Net income $ .32 $ 1.74 $ 1.26 $ 1.57 $ 1.37
Weighted average units 10,928 10,894 10,919 10,061 9,435
Diluted:
Income before extraordinary item $ .31 $ 1.77 $ 1.28 $ 1.54 $ 1.46
Net income $ .31 $ 1.74 $ 1.24 $ 1.54 $ 1.37
Weighted average units 10,953 10,904 11,040 10,171 9,441
Distributions Paid $ 2.43 $ 2.42 $ 2.35 $ 2.17 $ 2.06
- ------------------------------------------- ------------- ------------- ------------- ------------ ------------
BALANCE SHEET DATA
Real estate assets, before depreciation $ 584,928 $ 566,216 $ 529,247 $ 454,708 $ 358,361
Total assets 487,273 489,851 471,568 415,578 331,954
Long term debt 346,843 329,647 302,485 229,050 178,004
Partners' equity 117,974 141,054 149,363 160,525 136,256
- ------------------------------------------- ------------- ------------- ------------- ------------ ------------
OTHER DATA
EBITDA (1) $ 67,832 $ 66,133 $ 61,991 $ 52,857 $ 46,474
Funds from operations (1) $ 38,203 $ 41,673 $ 37,048 $ 35,840 $ 32,313
Cash flows provided by (used in):
Operating activities $ 38,303 $ 43,169 $ 35,791 $ 39,232 $ 38,031
Investing activities $ (25,698) $ (45,959) $ (79,236) $ (93,636) $ (36,401)
Financing activities $ (12,474) $ (3,043) $ 46,172 $ 55,444 $ (4,176)
Gross leasable area open at year end 5,179 5,149 5,011 4,458 3,739
Number of centers 29 31 31 30 27
- -----------------------
(1) EBITDA and Funds from Operations ("FFO") are widely accepted financial
indicators used by certain investors and analysts to analyze and compare
companies on the basis of operating performance. EBITDA represents earnings
before gain (loss) on sale or disposal of real estate, extraordinary item,
asset write down, interest expense, income taxes, depreciation and
amortization. FFO is defined as net income (loss), computed in accordance
with generally accepted accounting principles, before extraordinary items
and gains (losses) on sale of depreciable operating properties, plus
depreciation and amortization uniquely significant to real estate. We
caution that the calculations of EBITDA and FFO may vary from entity to
entity and as such the presentation of EBITDA and FFO by us may not be
comparable to other similarly titled measures of other reporting companies.
EBITDA and FFO are not intended to represent cash flows for the period.
EBITDA and FFO have not been presented as an alternative to operating
income or as an indicator of operating performance, and should not be
considered in isolation or as a substitute for measures of performance
prepared in accordance with generally accepted accounting principles.
17
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion should be read in conjunction with the financial
statements appearing elsewhere in this report. Historical results and percentage
relationships set forth in the 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 statements of
operations compares the years ended December 31, 2000 and 1999, as well as
December 31, 1999 and 1998. Certain comparisons between the periods are made on
a percentage basis as well as on a weighted average 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 that 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 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:
o general economic and local real estate conditions could change (for
example, our tenant's business may change if the economy changes, which
might effect (1) the amount of rent they pay us or their ability to pay
rent to us, (2) their demand for new space, or (3) our ability to renew or
re-lease a significant amount of available space on favorable terms);
o the laws and regulations that apply to us could change (for instance, a
change in the tax laws that apply to REITs could result in unfavorable tax
treatment for us);
o availability and cost of capital (for instance, financing opportunities may
not be available to us, or may not be available to us on favorable terms);
o our operating costs may increase or our costs to construct or acquire new
properties or expand our existing properties may increase or exceed our
original expectations.
General Overview
At December 31, 2000, we owned 29 centers in 20 states totaling 5,179,000 square
feet of operating GLA compared to 31 centers in 22 states totaling 5,149,000
square feet of operating GLA as of December 31, 1999. The 30,000 square foot
increase in GLA is comprised primarily of a net increase of 216,000 square feet
due to expansions in five existing centers during the year offset by a decrease
of 186,000 square feet due to the sale of our Lawrence, Kansas and McMinnville,
Oregon centers in June 2000. We have approximately 97,000 square feet of
expansion space under construction in our San Marcos, Texas center, which is
scheduled to open during 2001.
18
In June 2000, we sold our centers in Lawrence, KS and McMinnville, OR for net
proceeds of $7.1 million. As a result of the two sales, we recognized a loss on
sale of real estate of $5.9 million. The combined net operating income of these
two centers represented approximately 1% of the total portfolio's operating
income. During 2000, we also sold four land outparcels for net proceeds of $1.5
million and have included in Other income a gain on sale of $908,000.
In May 1999, our center in Stroud, Oklahoma was destroyed by a tornado. We
maintain full replacement cost insurance on properties as a whole and as a
result of the insurance settlement received, we recognized a gain on disposal of
the Stroud center of $4.1 million during the year ended December 31, 1999.
Approximately $1.9 million of the insurance settlement represented business
interruption insurance proceeds. The business interruption proceeds were
included in Other income and were amortized over a period of fourteen months
ending in June 2000. Approximately $985,200 of these proceeds were recognized in
2000.
In December 2000, we sold the remaining Stroud land and site improvements and
received net proceeds of approximately $723,500 in January 2001. As a result of
this sale, we recognized a loss of $1,046,000 on the sale of the real estate in
the fourth quarter of 2000.
A summary of the operating results for the years ended December 31, 2000, 1999
and 1998 is presented in the following table, expressed in amounts calculated on
a weighted average GLA basis.
2000 1999 1998
- --------------------------------------------------------- -------------- -------------- ------------
GLA open at end of period (000's) 5,179 5,149 5,011
Weighted average GLA (000's) (1) 5,115 4,996 4,768
Outlet centers in operation 29 31 31
New centers acquired --- 1 2
Centers disposed of or sold 2 1 1
Centers expanded 5 5 1
States operated in at end of period 20 22 23
Occupancy percentage at end of period 96 97 97
Per square foot
Revenues
Base rentals $13.97 $13.85 $13.88
Percentage rentals .64 .63 .65
Expense reimbursements 5.87 5.59 5.63
Other income .79 .76 .34
- --------------------------------------------------------- -------------- -------------- ------------
Total revenues 21.27 20.83 20.50
- --------------------------------------------------------- -------------- -------------- ------------
Expenses
Property operating 6.57 6.12 6.10
General and administrative 1.44 1.46 1.40
Interest 5.39 4.85 4.62
Depreciation and amortization 5.13 4.97 4.65
- --------------------------------------------------------- -------------- -------------- ------------
Total expenses 18.53 17.40 16.77
- --------------------------------------------------------- -------------- -------------- ------------
Income before (loss) gain on disposal or sale of real
estate and extraordinary item $ 2.74 $ 3.43 $ 3.73
- --------------------------------------------------------- -------------- -------------- ------------
(1) GLA weighted by months of operations. GLA is not adjusted for fluctuations
in occupancy that may occur subsequent to the original opening date.
19
Results of Operations
2000 Compared to 1999
Base rentals increased $2.3 million, or 3%, in the 2000 period when compared to
the same period in 1999. The increase is primarily due to the effect of the
expansions during 2000 and the fourth quarter of 1999 plus the acquisition of
the Ft. Lauderdale, FL center in November of 1999, offset by the loss of rent
from the sales of the centers in Lawrence, KS and McMinnville, OR and the full
year effect of the loss of the Stroud, Oklahoma center, as mentioned in the
General Overview above. Base rentals per weighted average GLA increased $.12 per
square foot due to the sale of the Lawrence and McMinnville centers and the loss
of the Stroud center, all of which had lower average base rentals per square
foot than the portfolio average.
Percentage rentals, which represent revenues based on a percentage of tenants'
sales volume above predetermined levels, increased by $112,000 and on a weighted
average GLA basis, increased $.01 per square foot in 2000 compared to 1999. For
the year ended December 31, 2000, reported same-store sales, defined as the
weighted average sales per square foot reported by tenants for stores open since
January 1, 1999, were flat compared with the previous year. However, same-space
sales for the year ended December 31, 2000, defined as the weighted average
sales per square foot reported in space open for the full duration of each
comparison period, actually increased 7% to $281 per square foot due to our
efforts to re-merchandise selected centers by replacing low volume tenants with
high volume tenants.
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 89% in 2000 from 91% in 1999 primarily as a result of a lower
average occupancy rate and higher operating expenses in the 2000 period compared
to the 1999 period.
Other income increased $280,000 in 2000 as compared to 1999. The increase is
primarily due to gains on sale of out parcels of land totaling $908,000 during
2000 as compared to $687,000 in 1999.
Property operating expenses increased by $3.0 million, or 10%, in 2000 as
compared to 1999. On a weighted average GLA basis, property operating expenses
increased from $6.12 to $6.57 per square foot. The increases are the result of
certain real estate tax assessments and higher common area maintenance expenses.
General and administrative expenses increased $68,000, or 1%, in 2000 as
compared to 1999. As a percentage of revenues, general and administrative
expenses were approximately 6.8% of revenues in 2000 and 7.0% in 1999. On a
weighted average GLA basis, general and administrative expenses decreased $.02
per square foot from $1.46 in 1999 to $1.44 in 2000. The decrease in general and
administrative expenses per square foot reflects our efforts to control general
and administrative expenditures.
Interest expense increased $3.3 million during 2000 as compared to 1999 due to
additional financing necessary to fund the expansions described in the General
Overview above, the acquisition in Fort Lauderdale, FL, higher average interest
rates and additional amortization of deferred financing charges incurred during
the year for the more than $75 million in long-term debt obtained during 2000.
Depreciation and amortization per weighted average GLA increased from $4.97 per
square foot in 1999 to $5.13 per square foot in the 2000 period due to a higher
mix of tenant finishing allowances included in buildings and improvements which
are depreciated over shorter lives (i.e., over lives generally ranging from 3 to
10 years as opposed to other construction costs which are depreciated over lives
ranging from 15 to 33 years).
The asset write-down recognized in 2000 represents the write off of all
development costs associated with the expansion of our site in Ft. Lauderdale,
FL, as well as additional costs associated with various other non-recurring
development activities at other sites which were discontinued. The costs
associated with the Ft. Lauderdale site were written off because we terminated
our contract to purchase an additional twelve acres of land in Dania Beach/Ft.
Lauderdale, FL.
The loss on sale of real estate during 2000 represents the loss recognized on
the sale of our centers in Lawrence, KS, McMinnville, OR and the remaining
Stroud, OK land and site improvements. Net proceeds received from the sale of
the centers totaled $7.1 million. As a result of the two center sales, we
recognized a loss on sale of real estate of $5.9 million. The combined net
operating income of these two centers represented approximately 1% of the total
portfolio's operating income. We sold the Stroud land and site improvements in
December 2000 and received net proceeds of approximately $723,500 for the Stroud
land and site improvements in January 2001. As a result of this sale, we
recognized a loss of $1,046,000 on the sale of the real estate in the fourth
quarter of 2000.
20
1999 Compared to 1998
Base rentals increased $3.0 million, or 5%, in 1999 when compared to the same
period in 1998. The increase is primarily due to the effect of a full year of
rent in 1999 from the Dalton, GA center acquired on March 31, 1998 and the
Sanibel, FL center acquired on July 31, 1998 as well as the expansions at
five existing centers of 176,000 square feet, offset by the loss of rent from
the center in Stroud, OK. Base rent per weighted average GLA decreased
$.03 per foot due to the portfolio of properties having a lower overall average
occupancy rate during 1999 compared to 1998. Base rent per square foot, however,
was favorably impacted during the year due to the loss of the Stroud center
which had a lower average base rent per square foot than the portfolio average.
Percentage rentals increased by $54,000 and on a weighted average GLA basis,
decreased $.02 per square foot in 1999 compared to 1998. For the year ended
December 31, 1999, reported same-store sales, defined as the weighted average
sales per square foot reported by tenants for stores open since January 1, 1998,
were down approximately 1% with that of the previous year. However, same-space
sales for the year ended December 31, 1999 actually increased 5% to $261 per
square foot due to the our efforts to re-merchandise selected centers by
replacing low volume tenants with high volume tenants.
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 91% in 1999 from 92% in 1998 primarily as a result of a lower
average occupancy rate in the 1999 period compared to the 1998 period.
Other income increased $2.1 million in 1999 as compared to 1998. The increase is
primarily due to gains on sale of out parcels of land totaling $687,000 during
1999 as well as to the recognition of $880,000 of business interruption
insurance proceeds relating to the Stroud center.
Property operating expenses increased by $1.5 million, or 5%, in 1999 as
compared to 1998. On a weighted average GLA basis, property operating expenses
increased slightly from $6.10 to $6.12 per square foot. Higher real estate taxes
per square foot were offset by decreases in advertising and promotion expenses
per square foot and lower common area maintenance expenses per square foot.
General and administrative expenses increased $629,000, or 9%, in 1999 as
compared to 1998. As a percentage of revenues, general and administrative
expenses were approximately 7.0% of revenues in 1999 and 6.8% in 1998. On a
weighted average GLA basis, general and administrative expenses increased $.06
per square foot from $1.40 in 1998 to $1.46 in 1999. The increase in general and
administrative expenses per square foot reflects the rental and related expenses
for the new corporate office space to which we relocated our corporate
headquarters in April 1999.
Interest expense increased $2.2 million during 1999 as compared to 1998 due to
financing the 1998 acquisitions and the 1998 and 1999 expansions. However,
interest expense was favorably impacted by the insurance proceeds received from
the loss of the Stroud center that were used to immediately reduce outstanding
amounts under our lines of credit. Depreciation and amortization per weighted
average GLA increased from $4.65 per square foot in 1998 to $4.97 per square
foot in the 1999 period due to a higher mix of tenant finishing allowances
included in buildings and improvements which are depreciated over shorter lives.
21
The gain on disposal of real estate during 1999 represents the amount of
insurance proceeds from the loss of the Stroud center in excess of the carrying
amount for the portion of the related assets destroyed by the tornado. The gain
on sale of real estate during 1998 is due primarily to the sale of an 8,000
square foot, single tenant property in Manchester, VT.
The extraordinary losses recognized in each year represent the write-off of
unamortized deferred financing costs related to debt that was extinguished
during each period prior to its scheduled maturity.
Liquidity and Capital Resources
Net cash provided by operating activities was $38.3, $43.2 and $35.8 million for
the years ended December 31, 2000, 1999 and 1998, respectively. The decrease in
cash provided by operating activities in 2000 compared to 1999 is primarily due
to a decrease in net income due to higher interest rate costs and a decrease in
accounts payable and other assets. Net cash provided by operating activities
increased $7.4 million in 1999 compared to 1998 due to increases in operating
income from the 1998 and 1999 acquisitions and expansions and increases in
accounts payable. Net cash used in investing activities amounted to $25.7, $46.0
and $79.2 million during 2000, 1999 and 1998, respectively, and reflects the
acquisitions, expansions and dispositions of real estate during each year. Net
cash used in investing activities also decreased in 2000 and 1999 compared to
1998 due to approximately $4.0 and $6.5 million in net insurance proceeds
received from the loss of the Stroud center in those years respectively. Cash
provided by (used in) financing activities of $(12.5), $(3.0) and $46.2 million
in 2000, 1999 and 1998, respectively, has fluctuated consistently with the
capital needed to fund the current development and acquisition activity and
reflects increases in dividends paid during 2000, 1999 and 1998.
During 2000, we added a net of approximately 216,000 square feet of expansions
in five existing centers. In addition, we have approximately 97,000 square feet
of expansion space under construction at our San Marcos center, which is
scheduled to open in 2001. Commitments for construction of this project (which
represent only those costs contractually required to be paid by us) amounted to
$4.0 million at December 31, 2000.
We are involved in the pre-development stage of a new 400,000 square foot outlet
center in Myrtle Beach, South Carolina. This center is being developed by
Tanger-Warren Development, LLC ("Tanger-Warren") which was formed in August 2000
to identify, acquire and develop sites for us. Based on anticipated successful
permitting and pre-leasing, we expect stores to begin opening in late 2002. See
"Joint Ventures" for discussion of the formation of Tanger-Warren.
We have an option to purchase the retail portion of a site at the Bourne Bridge
Rotary in Cape Cod, Massachusetts. Based on tenant demand, we plan to develop a
new 250,000 square foot outlet center. The entire site will contain more than
750,000 square feet of mixed-use entertainment, retail, office and residential
community built in the style of a Cape Cod Village. The local and state planning
authorities are currently reviewing the project and final approvals are
anticipated by the end of 2001. Due to the extensive amount of site work and
road construction, stores are not expected to be open until mid 2003.
The developments or expansions that we 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 accretive funds from
operations.
In November 2000, we terminated our contract to purchase an additional twelve
acres of land in Dania Beach/Ft. Lauderdale, Florida. Because of this event, we
have written off all development costs associated with the expansion of our site
in Ft. Lauderdale, as well as additional costs associated with various other
non-recurring development activities at other sites which were discontinued. The
total non-cash, non-recurring charge for abandoned development costs in the
fourth quarter of 2000 was $1.8 million.
22
In May 2000, the demand notes receivable totaling $3.4 million from Stanley K.
Tanger, the Company's Chairman of the Board and Chief Executive Officer, were
converted into two separate term notes of which $2.5 million is due from Stanley
K. Tanger and $845,000 is due from Steven B. Tanger, the Company's President and
Chief Operating Officer. The notes amortize evenly over five years with
principal and interest at a rate of 8% per annum due quarterly. The balances of
these notes at December 31, 2000 were $2.1 million and $773,000, respectively.
Debt Financings
On January 25, 2000, we entered into a two year unsecured loan with Fleet
National Bank and Bank of America for an aggregate of $20.0 million with
interest payable at LIBOR plus 2.25%. At the same time, we entered into interest
rate swap agreements on notional amounts totaling $20.0 million with the same
institutions that effectively fixed the interest rate on this loan at 8.75%. The
proceeds were used to reduce amounts outstanding under the existing lines of
credit.
On July 28, 2000, we entered into a five year collateralized term loan with
Wells Fargo Bank for $29.5 million with interest payable at LIBOR plus 1.75%.
The proceeds were used to reduce amounts outstanding under the existing lines of
credit.
On August 29, 2000, we entered into a ten year collateralized term loan with
Woodmen of the World Life Insurance Society for $16.7 million with interest
payable at a fixed rate of 8.86%. The proceeds were used to reduce amounts
outstanding under the existing lines of credit.
On September 8, 2000, we renewed a $9.2 million collateralized loan with New
York Life Insurance Company for five years at a fixed interest rate of 9.125%.
At December 31, 2000, approximately 61% of the outstanding long-term debt
represented unsecured borrowings and approximately 70% of our real estate
portfolio was unencumbered. The average interest rate, including loan
amortization, on average debt outstanding for the year ended December 31, 2000
was 8.6%.
We extended the maturities of our four unsecured lines of credit totaling $100.0
million with Bank of America, Bank One, Fleet National Bank and SouthTrust Bank
until at least June 30, 2002.
On February 9, 2001, we issued $100 million of 9.125% senior, unsecured notes,
maturing on February 15, 2008. The net proceeds of $97 million were used to
repay all of the outstanding indebtedness under the $75 million 8.75% senior,
unsecured notes which were due March 11, 2001. The net proceeds were also used
to repay the $20 million LIBOR plus 2.25% term loan due January 2002 and to
terminate related interest rate swap agreements with notional amounts of $20.0
million with the same institutions, which we entered into in January 2000. The
remaining proceeds were used for general operating purposes.
We intend to retain the ability to raise additional capital, including public
debt as described above, 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. We maintain revolving lines of credit
that provide for unsecured borrowings up to $100 million, of which $58.5 million
was available for additional borrowings at December 31, 2000.
After giving effect to the February 2001 debt offering, we and the Company under
joint registration, could issue up to $100 million in additional equity
securities. We are currently in the process of restocking our shelf registration
for the ability to issue up to $200 million in debt and equity securities,
respectively. We may also consider selling certain properties that do not meet
our long-term investment criteria as well as outparcels on existing properties
to generate capital to reinvest into other attractive investment opportunities.
Based on cash provided by operations, existing credit facilities, ongoing
negotiations with certain financial institutions, the February 2001 bond
offering and funds available under the shelf registration, we believe that we
have access to the necessary financing to fund the planned capital expenditures
during 2001.
23
We anticipate that adequate cash will be available to fund our operating and
administrative expenses, regular debt service obligations, and the payment of
distributions 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 unitholders 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. Certain of our debt agreements limit the payment of
distributions such that distributions will not exceed funds from operations, as
defined in the agreements, for the prior fiscal year on an annual basis or 95%
of FFO on a cumulative basis from the date of the agreement.
Joint Ventures
Effective August 7, 2000, we announced the formation of 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 for us. We agreed to be co-managing general
partners, each with 50% ownership interest in the joint venture and any entities
formed with respect to a specific project. The investment in Tanger-Warren is
accounted for under the equity method of accounting. Equity in earnings was not
significant in 2000. At December 31, 2000 our investment in Tanger-Warren was
approximately $116,000.
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 on our floating
rate debt. 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. In
January 2000, we entered into interest rate swap agreements on notional amounts
totaling $20.0 million. In order to fix the interest rate at 8.75%, we paid
$162,000. As mentioned in "Debt Financings" above, these agreements subsequently
were terminated in February 2001 at a cost of $295,200. In addition,
approximately $77,000 of unamortized costs related to fixing the interest rate
and $103,000 of unamortized debt issuance costs were written off in February
2001. In December 2000, we entered into another interest rate swap agreement
with a notional amount of $25.0 million. This agreement fixes the 30-day LIBOR
index at 5.97% through January 2003. At December 31, 2000, we would have had to
pay $152,800 to terminate this agreement. A 1% decrease in the 30-day LIBOR
index would increase this amount by approximately $475,000. The fair value is
based on dealer quotes, considering current interest rates.
The fair market value of long-term fixed interest rate debt is subject to
interest rate 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 December 31, 2000 was $346.1
million while the recorded value was $346.8 million, respectively. A 1% increase
from prevailing interest rates at December 31, 2000 would result in a decrease
in fair value of total long-term debt by approximately $5.1 million. Fair values
were determined from quoted market prices, where available, using current
interest rates considering credit ratings and the remaining terms to maturity.
24
Funds from Operations
We believe that for a clear understanding of our historical operating results,
FFO should be considered along with net income as presented in the audited
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 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 of depreciable operating
properties, plus depreciation and amortization uniquely significant to real
estate. 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 generally accepted
accounting principles 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 distributions to unitholders and other cash needs.
In October 1999, the National Association of Real Estate Investment Trusts
("NAREIT") issued interpretive guidance regarding the calculation of FFO.
NAREIT's leadership determined that FFO should include both recurring and
non-recurring operating results, except those results defined as extraordinary
items under generally accepted accounting principles and gains and losses from
sales of depreciable operating property. All REITS were encouraged to implement
the recommendations of this guidance effective for fiscal periods beginning in
2000 for all periods presented in financial statements or tables. We adopted the
new NAREIT clarification beginning January 1, 2000. The adoption of the new
method had the impact of reducing FFO from the amount originally reported of
$39,748 in 1998 to $37,048 as a result of an asset write down of $2.7 million.
Below is a calculation of FFO under the new method for the years ended December
31, 2000, 1999 and 1998 as well as actual cash flow and other data for those
years, respectively (in thousands).
2000 1999 1998
- -------------------------------------------------------------- ------------ -------------- -------------
Funds from Operations:
Net income $ 5,268 $ 20,866 $ 15,643
Adjusted for:
Extraordinary item-loss on early extinguishment of debt --- 345 460
Depreciation and amortization uniquely significant
to real estate 25,954 24,603 21,939
Loss (gain) on disposal or sale of real estate 6,981 (4,141) (994)
- -------------------------------------------------------------- ------------ -------------- -------------
Funds from operations (1) $ 38,203 $ 41,673 $ 37,048
Cash flow provided by (used in):
Operating activities 38,303 43,169 35,791
Investing activities (25,698) (45,959) (79,236)
Financing activities (12,474) (3,043) 46,172
Weighted average units outstanding (2) 11,704 11,697 11,844
- -------------------------------------------------------------- ------------ -------------- -------------
(1) For the years ended December 31, 2000 and 1999, includes $908 and $687 in
gains on sales of outparcels of land.
(2) Assumes preferred units of the Operating Partnership and unit options are
all converted to limited partnership units.
New Accounting Pronouncements
The Financial Accounting Standards Board ("FASB") has issued 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"). FAS 133 is effective for all fiscal quarters of all fiscal years
beginning after June 15, 2000; accordingly, we adopted FAS 133 on January 1,
2001. Upon adoption on January 1, 2001, we recorded a cumulative effect
adjustment of $299,500 loss, in Other comprehensive income (loss).
25
During 2000, the American Institute of Certified Public Accountants' Accounting
Standards Executive Committee issued an exposure draft Statement of Position
("SOP") regarding the capitalization of costs associated with property, plant
and equipment. Under the proposed SOP, all property, plant and equipment related
costs would be expensed unless the costs are directly identifiable with specific
projects and general and administrative and overhead costs which are not payroll
or payroll related and not directly related to the project would be expensed as
incurred. The expected effective date of the final SOP is expected in 2002 and
currently we are evaluating the effects it may have on our results of operations
and financial position.
In December 1999, the Securities Exchange Commission ("SEC") staff issued Staff
Accounting Bulletin 101 ("SAB 101"), "Revenue Recognition in Financial
Statements". SAB 101 discusses the SEC staff's views on certain revenue
recognition transactions. The adoption of this SAB had no material effect on our
results of operations or financial position.
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) which 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.
As part of our strategy of aggressively managing our assets, we are
strengthening the tenant base in several of our centers by adding strong new
anchor tenants, such as Polo Ralph Lauren, Nike, GAP, Tommy Hilfiger and
Nautica. To accomplish this goal, stores may remain vacant for a longer period
of time in order to recapture enough space to meet the size requirement of these
upscale, high volume tenants. Consequently, we anticipate that our average
occupancy level will remain strong, but may be more in line with the industry
average.
Approximately 30% of our lease portfolio is scheduled to expire during the next
two years. Approximately 701,000 square feet of space is up for renewal during
2001 and approximately 868,000 square feet will come up for renewal in 2002. 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.
Existing tenants' sales have remained stable and renewals by existing tenants
have remained strong. The existing tenants have already renewed approximately
254,000, or 36%, of the square feet scheduled to expire in 2001. In addition, we
continue to attract and retain additional tenants. 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) accounts for more than 6% of our
combined base and percentage rental revenues. Accordingly, we do not expect any
material adverse impact on our results of operation and financial condition as a
result of leases to be renewed or stores to be released.
Item 8. Financial Statements and Supplementary Data
The information required by this Item is set forth at the pages indicated in
Item 14(a) below.
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
Not applicable.
26
PART III
Certain information required by Part III is omitted from this Report in that the
registrant's majority owner, the Company, will file a definitive proxy statement
pursuant to Regulation 14A (the "Proxy Statement") not later than 120 days after
the end of the fiscal year covered by this Report, and certain information
included therein is incorporated herein by reference. Only those sections of the
Proxy Statement which specifically address the items set forth herein are
incorporated by reference.
Item 10. Directors and Executive Officers of the Registrant
The Operating Partnership does not have any directors or officers. The
information concerning the Company's directors required by this Item is
incorporated by reference to the Company's Proxy Statement.
The information concerning the Company's executive officers required by this
Item is incorporated by reference herein to the section in Part I, Item 4,
entitled "Executive Officers of the Company".
The information regarding compliance with Section 16 of the Securities and
Exchange Act of 1934 is to be set forth in the Company's Proxy Statement and is
hereby incorporated by reference.
Item 11. Executive Compensation
The information required by this Item is incorporated by reference to the
Company's Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required by this Item is incorporated by reference to the
Company's Proxy Statement.
Item 13. Certain Relationships and Related Transactions
The information required by this Item is incorporated by reference to the
Company's Proxy Statement.
PART IV
Item 14. Exhibits, Financial Statements Schedules, and Reports on Form 8-K
(a) Documents filed as a part of this report:
1. Financial Statements
Report of Independent Accountants F-1
Balance Sheets-December 31, 2000 and 1999 F-2
Statements of Operations-
Years Ended December 31, 2000, 1999 and 1998 F-3
Statements of Partners' Equity-
For the Years Ended December 31, 2000, 1999 and 1998 F-4
Statements of Cash Flows-
Years Ended December 31, 2000, 1999 and 1998 F-5
Notes to Financial Statements. F-6 to F-14
2. Financial Statement Schedule
Schedule III
Report of Independent Accountants F-15
Real Estate and Accumulated Depreciation F-16 to F-17
27
All other schedules have been omitted because of the absence of
conditions under which they are required or because the required
information is given in the above-listed financial statements or notes
thereto.
3. Exhibits
Exhibit No. Description
3.3 Amended and Restated Agreement of Limited Partnership for
the Operating Partnership. (Note 8)
10.1 Amended and Restated Unit Option Plan. (Note 6)
10.4 Form of Unit Option Agreement between the Operating
Partnership and certain employees. (Note 2)
10.5 Amended and Restated Employment Agreement for Stanley K.
Tanger, as of January 1, 1998. (Note 6)
10.6 Amended and Restated Employment Agreement for Steven B.
Tanger, as of January 1, 1998. (Note 6)
10.7 Amended and Restated Employment Agreement for Willard Albea
Chafin, Jr., as of January 1, 1999. (Note 6)
10.8 Amended and Restated Employment Agreement for Rochelle
Simpson, as of January 1, 1999. (Note 6)
10.9 Not applicable.
10.10 Amended and Restated Employment Agreement for Frank C.
Marchisello, Jr., as of January 1, 1999 (Note 8).
10.11 Registration Rights Agreement among the Company, the Tanger
Family Limited Partnership and Stanley K. Tanger. (Note 1)
10.11A Amendment to Registration Rights Agreement among the
Company, the Tanger Family Limited Partnership and Stanley
K. Tanger. (Note 3)
10.12 Agreement Pursuant to Item 601(b)(4)(iii)(A) of Regulation
S-K. (Note 1)
10.13 Assignment and Assumption Agreement among Stanley K. Tanger,
Stanley K. Tanger & Company, the Tanger Family Limited
Partnership, the Operating Partnership and the Company.
(Note 1)
10.14 Promissory Notes by and between the Operating Partnership
and John Hancock Mutual Life Insurance Company aggregating
$66,500,000. (Note 7)
10.15 Form of Senior Indenture. (Note 4)
10.16 Form of First Supplemental Indenture (to Senior Indenture).
(Note 4)
10.16A Form of Second Supplemental Indenture (to Senior Indenture)
dated October 24, 1997 among Tanger Properties Limited
Partnership, Tanger Factory Outlet Centers, Inc. and State
Street Bank & Trust Company. (Note 5)
10.17 Promissory Note 04/16/2000. (Note 9)
10.18 Promissory Note 04/16/2000. Note (9)
21.1 List of Subsidiaries. (Note 1)
23.1 Consent of PricewaterhouseCoopers LLP.
28
Notes to Exhibits:
1. Incorporated by reference to the exhibits to the Company's
Registration Statement on Form S-11 filed May 27, 1993, as amended.
2. Incorporated by reference to the exhibits to the Company's Annual
Report on Form 10-K for the year ended December 31, 1993.
3. Incorporated by reference to the exhibits to the Company's Annual
Report on Form 10-K for the year ended December 31, 1995.
4. Incorporated by reference to the exhibits to the Company's Current
Report on Form 8-K dated March 6, 1996.
5. Incorporated by reference to the exhibits to the Company's Current
Report on Form 8-K dated October 24, 1997.
6. Incorporated by reference to the exhibits to the Company's Annual
Report on Form 10-K for the year ended December 31, 1998.
7. Incorporated by reference to the exhibit to the Company's Quarterly
Report on 10-Q for the quarter ended March 31, 1999.
8. Incorporated by reference to the exhibits to the Company's Annual
Report on Form 10-K for the year ended December 31, 1999.
9. Incorporated by reference to the exhibits to the Company's Annual
Report on Form 10-K for the year ended December 31, 2000.
(b) Reports on Form 8-K - none.
29
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
TANGER PROPERTIES LIMITED PARTNERSHIP
By: Tanger GP Trust, its sole general partner
/s/ Stanley K. Tanger
By: -----------------------------------------
Stanley K. Tanger
Chairman of the Board and
Chief Executive Officer
March 30, 2001
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities as officers or directors of the general partner
and on the dates indicated:
Signature Title Date
/s/ Stanley K. Tanger
- --------------------- Chairman of the Board and Chief March 30, 2001
Stanley K. Tanger Executive Officer (Principal
Executive Officer)
/s/ Steven B. Tanger
- --------------------- Trustee and President March 30, 2001
Steven B. Tanger
/s/ Frank C. Marchisello. Jr.
- ---------------------------- Trustee and Treasurer March 30, 2001
Frank C. Marchisello, Jr. (Principal Financial and
Accounting Officer)
/s/ Jack Africk
- --------------------- Trustee March 30, 2001
Jack Africk
/s/ William G. Benton
- --------------------- Trustee March 30, 2001
William G. Benton
/s/ Thomas E. Robinson
- ---------------------- Trustee March 30, 2001
Thomas E. Robinson
30
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of TANGER PROPERTIES LIMITED PARTNERSHIP:
In our opinion, the accompanying balance sheets and the related statements of
operations, partners' equity and cash flows present fairly, in all material
respects, the financial position of Tanger Properties Limited Partnership at
December 31, 2000 and 1999, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 2000, in
conformity with accounting principles generally accepted in the United States of
America. These financial statements are the responsibility of the Partnership's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the United States of
America, which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statements presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Greensboro, NC
January 18, 2001, except for the information presented in Note 15 for which the
date is March 12, 2001
F-1
TANGER PROPERTIES LIMITED PARTNERSHIP
BALANCE SHEETS
(In thousands)
December 31,
2000 1999
- -----------------------------------------------------------------------------------------------------------
ASSETS
Rental Property
Land $ 59,858 $ 63,045
Buildings, improvements and fixtures 505,554 484,277
Developments under construction 19,516 18,894
- -----------------------------------------------------------------------------------------------------------
584,928 566,216
Accumulated depreciation (122,365) (104,511)
- -----------------------------------------------------------------------------------------------------------
Rental property, net 462,563 461,705
Cash and cash equivalents 632 501
Deferred charges, net 8,566 8,176
Other assets 15,512 19,469
- -----------------------------------------------------------------------------------------------------------
Total assets $ 487,273 $ 489,851
===========================================================================================================
LIABILITIES AND PARTNERS' EQUITY
Liabilites
Long-term debt
Senior, unsecured notes $ 150,000 $ 150,000
Mortgages payable 135,313 90,652
Term note, unsecured 20,000 -
Lines of credit 41,530 88,995
- -----------------------------------------------------------------------------------------------------------
346,843 329,647
Construction trade payables 9,784 6,287
Accounts payable and accrued expenses 12,672 12,863
- -----------------------------------------------------------------------------------------------------------
Total liabilities 369,299 348,797
- -----------------------------------------------------------------------------------------------------------
Commitments
Partners' Equity
General partner 1,611 1,927
Limited partner 116,363 139,127
- -----------------------------------------------------------------------------------------------------------
Total partners' equity 117,974 141,054
- -----------------------------------------------------------------------------------------------------------
Total liabilities and partners' equity $ 487,273 $ 489,851
===========================================================================================================
The accompanying notes are an integral part of these financial statements.
F-2
TANGER PROPERTIES LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(In thousands, except per unit data)
Year Ended December 31,
2000 1999 1998
- ------------------------------------------------------------------------------------------------------------------
REVENUES
Base rentals $ 71,457 $ 69,180 $ 66,187
Percentage rentals 3,253 3,141 3,087
Expense reimbursements 30,046 27,910 26,852
Other income 4,065 3,785 1,640
- ------------------------------------------------------------------------------------------------------------------
Total revenues 108,821 104,016 97,766
- ------------------------------------------------------------------------------------------------------------------
EXPENSES
Property operating 33,623 30,585 29,106
General and administrative 7,366 7,298 6,669
Interest 27,565 24,239 22,028
Depreciation and amortization 26,218 24,824 22,154
Asset write-down 1,800 --- 2,700
- ------------------------------------------------------------------------------------------------------------------
Total expenses 96,572 86,946 82,657
- ------------------------------------------------------------------------------------------------------------------
Income before (loss) gain on disposal or sale of real estate
and extraordinary item 12,249 17,070 15,109
(Loss) gain on disposal or sale of real estate (6,981) 4,141 994
- ------------------------------------------------------------------------------------------------------------------
Income before extraordinary item 5,268 21,211 16,103
Extraordinary item - Loss on early extinguishment of debt --- (345) (460)
- ------------------------------------------------------------------------------------------------------------------
Net income 5,268 20,866 15,643
Less applicable preferred unit distributions (1,823) (1,917) (1,911)
- ------------------------------------------------------------------------------------------------------------------
Income available to partners 3,445 18,949 13,732
Income allocated to the limited partners (3,397) (5,278) (3,816)
- ------------------------------------------------------------------------------------------------------------------
Income allocated to the general partner 48 13,671 9,916
==================================================================================================================
Basic earnings per unit:
Income before extraordinary item $ 0.32 $ 1.77 $ 1.30
Extraordinary item --- (0.03) (0.04)
- ------------------------------------------------------------------------------------------------------------------
Net income $ 0.32 $ 1.74 $ 1.26
==================================================================================================================
Diluted earnings per unit:
Income before extraordinary item $ 0.31 $ 1.77 $ 1.28
Extraordinary item --- (0.03) (0.04)
- ------------------------------------------------------------------------------------------------------------------
Net income $ 0.31 $ 1.74 $ 1.24
==================================================================================================================
The accompanying notes are an integral part of these financial statements.
F-3
TANGER PROPERTIES LIMITED PARTNERSHIP
STATEMENTS OF PARTNERS' EQUITY
For the Years Ended December 31, 2000, 1999, and 1998
(In thousands, except unit data)
General Limited Total Partners'
Partners Partners Equity
- ------------------------------------------------------------------------------------------------
Balance, December 31, 1997 $ 136,649 $ 23,876 $ 160,525
Conversion of 2,419 preferred units
into 21,790 partnership units --- --- ---
Issuance of 31,880 units upon exercise
exercise of share and unit options 762 --- 762
Repurchase and retirement of 10,000
partnership units (216) --- (216)
Compensation under unit Option Plan 142 53 195
Net income 11,827 3,816 15,643
Preferred distributions ($21.17 per unit) (1,894) --- (1,894)
Distributions to partners ($2.35 per unit) (18,524) (7,128) (25,652)
- ------------------------------------------------------------------------------------------------
Balance, December 31, 1998 128,746 20,617 149,363
Conversion of 3,000 preferred units
into 27,029 partnership units --- --- ---
Issuance of 500 units upon
exercise of unit options 12 --- 12
Repurchase and retirement of 48,300
partnership units (958) --- (958)
Transfer of partnership interest (120,557) 120,557 ---
Net income 15,588 5,278 20,866
Preferred distributions ($21.76 per unit) (1,918) --- (1,918)
Distributions to partners ($2.42 per unit) (18,986) (7,325) (26,311)
- ------------------------------------------------------------------------------------------------
Balance, December 31, 1999 1,927 139,127 141,054
Conversion of 4,670 preferred units
into 42,076 partnership units --- --- ---
Net income 48 5,220 5,268
Preferred distributions ($21.87 per unit) --- (1,840) (1,840)
Distributions to partners ($2.43 per unit) (364) (26,144) (26,508)
- ------------------------------------------------------------------------------------------------
Balance, December 31, 2000 $ 1,611 $ 116,363 $ 117,974
================================================================================================
The accompanying notes are an integral part of these financial statements.
F-4
TANGER PROPERTIES LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended December 31,
2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
Net income $ 5,268 $ 20,866 $ 15,643
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 26,218 24,824 22,154
Amortization of deferred financing costs 1,264 1,005 1,076
Loss on early extinguishment of debt --- 345 460
Asset write-down 1,800 --- 2,700
Loss (gain) on disposal or sale of real estate 6,981 (4,141) (994)
Gain on sale of outparcels of land (908) (687) ---
Straight-line base rent adjustment 92 (214) (688)
Compensation under Unit Option Plan --- --- 195
Increase (decrease) due to changes in:
Other assets (2,221) (1,196) (2,161)
Accounts payable and accrued expenses (191) 2,367 (2,594)
- ---------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activites 38,303 43,169 35,791
- ---------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Acquisition of rental properties --- (15,500) (44,650)
Additions to rental properties (36,056) (34,224) (35,252)
Additions to deferred lease costs (2,238) (1,862) (1,895)
Net proceeds from sale of real estate 8,598 1,987 2,561
Net insurance proceeds from property losses 4,046 6,451 ---
Advances to officer, net (48) (2,811) ---
- ---------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (25,698) (45,959) (79,236)
- ---------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Repurchase of partnership units --- (958) (216)
Cash distributions paid (28,348) (28,229) (27,546)
Proceeds from mortgages payable 46,160 66,500 ---
Repayments on mortgages payable (1,499) (48,638) (1,260)
Proceeds from revolving lines of credit 126,435 118,555 152,760
Repayments on revolving lines of credit (153,900) (109,255) (78,065)
Additions to deferred financing costs (1,322) (1,030) (263)
Proceeds from exercise of unit options --- 12 762
- ---------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (12,474) (3,043) 46,172
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 131 (5,833) 2,727
Cash and cash equivalents, beginning of period 501 6,334 3,607
- ---------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 632 $ 501 $ 6,334
===========================================================================================================================
The accompanying notes are an integral part of these financial statements.
F-5
NOTES TO FINANCIAL STATEMENTS
1. Organization of the Operating Partnership
Tanger Properties Limited Partnership (the "Operating Partnership"), a North
Carolina limited partnership, develops, owns and operates factory outlet
centers. Recognized as one of the largest owners and operators of factory outlet
centers in the United States, the Operating Partnership owned and operated 29
factory outlet centers located in 20 states with a total gross leasable area of
approximately 5.2 million square feet at the end of 2000. The Operating
Partnership provides all development, leasing and management services for its
centers.
The Operating Partnership is controlled by Tanger Factory Outlet Centers, Inc.
(the "Company"), a fully-integrated, self-administered, self-managed real estate
investment trust ("REIT") as the sole shareholder of the Operating Partnership's
general partner, Tanger GP Trust. Prior to 1999, the Company owned the majority
of the units of partnership interest issued by the Operating Partnership (the
"Units") and served as its sole general partner. During 1999, the Company
transferred its ownership of Units into two wholly owned subsidiaries, the
Tanger GP Trust and the Tanger LP Trust. The Tanger GP Trust controls the
Operating Partnership as its sole general partner. The Tanger LP Trust holds a
limited partnership interest. The Tanger family, through its ownership of the
Tanger Family Limited Partnership ("TFLP") holds the remaining units. TFLP holds
a limited partnership interest in and is a minority owner of the Operating
Partnership. Stanley K. Tanger, the Company's Chairman of the Board and Chief
Executive Officer, is the sole general partner of TFLP.
As of December 31, 2000, the Tanger GP Trust owned 150,000 Units, the Tanger LP
Trust owned 7,768,911 and 80,600 Preferred Units (which are convertible into
approximately 726,203 limited partnership Units) and TFLP owned 3,033,305 Units.
TFLP's Units are exchangeable, subject to certain limitations to preserve the
Company's status as a REIT, on a one-for-one basis for common shares of the
Company. Preferred Units are automatically converted into limited partnership
Units to the extent of any conversion of preferred shares of the Company into
common shares of the Company.
2. Summary of Significant Accounting Policies
Basis of Presentation - Allocation of income to the partners is based on
each partner's respective ownership of Units issued by the Operating
Partnership.
Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Operating Segments - The Operating Partnership aggregates the financial
information of all its centers into one reportable operating segment because the
centers all have similar economic characteristics and provide similar products
and services to similar types and classes of customers.
Rental Properties - Rental properties are recorded at cost less
accumulated depreciation. Costs incurred for the acquisition, construction, and
development of properties are capitalized. Depreciation is computed on the
straight-line basis over the estimated useful lives of the assets. The Operating
Partnership generally uses estimated lives ranging from 25 to 33 years for
buildings, 15 years for land improvements and seven years for equipment.
Expenditures for ordinary maintenance and repairs are charged to operations as
incurred while significant renovations and improvements, including tenant
finishing allowances, that improve and/or extend the useful life of the asset
are capitalized and depreciated over their estimated useful life.
F-6
Buildings, improvements and fixtures consist primarily of permanent
buildings and improvements made to land such as landscaping and infrastructure
and costs incurred in providing rental space to tenants. Interest costs
capitalized during 2000, 1999 and 1998 amounted to $1,020,000, $1,242,000, and
$762,000, and development costs capitalized amounted to $843,000, $1,711,000,
and $1,903,000, respectively. Depreciation expense for each of the years ended
December 31, 2000, 1999 and 1998 was $24,239,000, $23,095,000, and $20,873,000,
respectively.
The pre-construction stage of project development involves certain costs to
secure land control and zoning and complete other initial tasks essential to the
development of the project. These costs are transferred from other assets to
developments under construction when the pre-construction tasks are completed.
Costs of potentially unsuccessful pre-construction efforts are charged to
operations when the project is abandoned.
Cash and Cash Equivalents - All highly liquid investments with an original
maturity of three months or less at the date of purchase are considered to be
cash and cash equivalents. Cash balances at a limited number of banks may
periodically exceed insurable amounts. The Operating Partnership believes that
it mitigates its risk by investing in or through major financial institutions.
Recoverability of investments is dependent upon the performance of the issuer.
Accounting for Joint Ventures - Effective August 7, 2000, the Operating
Partnership announced it entered into a joint venture with C. Randy Warren Jr.,
former Senior Vice President of Leasing of the Operating Partnership. The new
entity, Tanger-Warren Development, LLC ("Tanger-Warren"), was formed to
identify, acquire and develop sites for the Operating Partnership. The Operating
Partnership and Mr. Warren agreed to be co-managing general partners, each with
50% ownership interest in the joint venture and any entities formed with respect
to a specific project. The investment in Tanger-Warren is accounted for under
the equity method of accounting. Equity in earnings was insignificant in 2000.
At December 31, 2000 the Operating Partnership's investment in Tanger-Warren was
approximately $116,000.
Deferred Charges - Deferred lease costs consist of fees and costs incurred
to initiate operating leases and are amortized over the average minimum lease
term. Deferred financing costs include fees and costs incurred to obtain
long-term financing and are being amortized over the terms of the respective
loans. Unamortized deferred financing costs are charged to expense when debt is
retired before the maturity date.
Impairment of Long-Lived Assets - Rental property held and used by an
entity is reviewed for impairment in the event that facts and circumstances
indicate the carrying amount of an asset may not be recoverable. In such an
event, the Company compares the estimated future undiscounted cash flows
associated with the asset to the asset's carrying amount, and if less,
recognizes an impairment loss in an amount by which the carrying amount exceeds
its fair value. The Operating Partnership believes that no material impairment
existed at December 31, 2000.
Derivatives - The Operating Partnership selectively enters into interest
rate protection agreements to mitigate changes in interest rates on its variable
rate borrowings. The notional amounts of such agreements are used to measure the
interest to be paid or received and do not represent the amount of exposure to
loss. None of these agreements are used for speculative or trading purposes. The
cost of these agreements is included in deferred financing costs and is
amortized on a straight-line basis over the life of the agreements.
The Financial Accounting Standards Board ("FASB") has issued 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"). FAS 133 is effective for all fiscal quarters of all fiscal years
beginning after June 15, 2000; accordingly, the Operating Partnership adopted
FAS 133 on January 1, 2001. Upon adoption on January 1, 2001, the Operating
Partnership recorded a cumulative effect adjustment of $299,500 loss in Other
comprehensive income (loss).
F-7
Revenue Recognition - Base rentals are recognized on a straight line basis
over the term of the lease. Substantially all leases contain provisions which
provide additional rents based on tenants' sales volume ("percentage rentals")
and reimbursement of the tenants' share of advertising and promotion, common
area maintenance, insurance and real estate tax expenses. Percentage rentals are
recognized when specified targets that trigger the contingent rent are met.
Expense reimbursements are recognized in the period the applicable expenses are
incurred. Payments received from the early termination of leases are recognized
when the applicable space is released, or, otherwise are amortized over the
remaining lease term. Business interruption insurance proceeds received are
recognized as other income over the estimated period of interruption.
Income Taxes - As a partnership, the allocated share of income or loss for
the year is included in the income tax returns of the partners; accordingly, no
provision has been made for Federal income taxes in the accompanying financial
statements.
Concentration of Credit Risk - The Operating Partnership's management
performs ongoing credit evaluations of its tenants. Although the tenants operate
principally in the retail industry, the properties are geographically diverse.
No single tenant accounted for 10% or more of combined base and percentage
rental income during 2000, 1999 or 1998.
Supplemental Cash Flow Information - The Operating Partnership purchases
capital equipment and incurs costs relating to construction of new facilities,
including tenant finishing allowances. Expenditures included in construction
trade payables as of December 31, 2000, 1999 and 1998 amounted to $9,784,000,
$6,287,000, and $9,224,000, respectively. Interest paid, net of interest
capitalized, in 2000, 1999 and 1998 was $25,644,000, $23,179,000, and
$20,690,000, respectively.
Other assets include a receivable from the sale of real estate of $723,500
as of December 31, 2000 and a property loss receivable of $4.2 million from the
Operating Partnership's property insurance carrier at December 31, 1999.
3. Disposition of Properties
In June 2000, the Operating Partnership sold its centers in Lawrence, KS and
McMinnville, OR. Net proceeds received from the sales totaled $7.1 million. As a
result of the sales, the Operating Partnership recognized a loss on sale of real
estate of $5.9 million. The combined net operating income of these two centers
represented approximately 1% of the total portfolio's operating income.
In December 2000, the Operating Partnership sold the land the Stroud, OK center
was located on prior to its destruction in May 1999 by a tornado. The net
proceeds for the property of approximately $723,500 were received in January
2001. The land and site work had a net book value of $1.8 million and the
Operating Partnership recognized a loss on sale of real estate of $1,046,000.
4. Deferred Charges
Deferred charges as of December 31, 2000 and 1999 consist of the following (in
thousands):
2000 1999
- -------------------------------- -------------- ---------------
Deferred lease costs $12,849 $11,110
Deferred financing costs 6,697 5,866
- -------------------------------- -------------- ---------------
19,546 16,976
Accumulated amortization 10,980 8,800
- -------------------------------- -------------- ---------------
$ 8,566 $ 8,176
- -------------------------------- -------------- ---------------
F-8
Amortization of deferred lease costs for the years ended December 31, 2000, 1999
and 1998 was $1,578,000, $1,459,000, and $1,019,000, respectively. Amortization
of deferred financing costs, included in interest expense in the accompanying
statements of operations, for the years ended December 31, 2000, 1999 and 1998
was $1,264,000, $1,005,000, and $1,076,000 respectively. During 1999 and 1998,
the Operating Partnership expensed the remaining unamortized financing costs
totaling $345,000 and $460,000 related to debt extinguished prior to its
respective maturity date. Such amounts are shown as an extraordinary item in the
accompanying statements of operations.
5. Related Party Notes Receivable
In May 2000, the demand notes receivable totaling $3.4 million from Stanley K.
Tanger, the Company's Chairman of the Board and Chief Executive Officer, were
converted into two separate term notes of which $2.5 million is due from Mr.
Tanger and $845,000 is due from Steven B. Tanger, the Company's President and
Chief Operating Officer. The notes amortize evenly over five years with
principal and interest at a rate of 8% per annum due quarterly. The balances of
these notes at December 31, 2000 were $2.1 million and $773,000, respectively.
6. Asset Write-Down
During November 2000, the Operating Partnership terminated its contract to
purchase an additional twelve acres of land in Dania Beach/Ft. Lauderdale,
Florida. Because of this event, the Operating Partnership wrote off all
development costs associated with the expansion of its site in Ft. Lauderdale,
as well as additional costs associated with various other non-recurring
development activities at other sites which were discontinued. The total
non-cash, non-recurring charge for abandoned development costs in the fourth
quarter of 2000 was $1.8 million.
During 1998, the Operating Partnership discontinued the development of its
Concord, North Carolina, Romulus, Michigan and certain other projects as the
economics of these transactions did not meet an adequate return on investment
for the Operating Partnership. As a result, the Operating Partnership recorded a
$2.7 million charge in the fourth quarter of 1998 to write-off the carrying
amount of these projects, net of proceeds received from the sale of the
Operating Partnership's interest in the Concord project to an unrelated third
party.
7. Long-term Debt
Long-term debt at December 31, 2000 and 1999 consists of the following (in thousands):
2000 1999
- ------------------------------------------------------------------------- -------------- ---------------
8.75% Senior, unsecured notes, maturing March 2001 $ 75,000 $ 75,000
7.875% Senior, unsecured notes, maturing October 2004 75,000 75,000
Mortgage notes with fixed interest:
9.77%, maturing April 2005 15,099 15,351
9.125%, maturing September 2005 9,120 9,460
7.875%, maturing April 2009 64,980 65,841
8.86%, maturing September 2010 16,614 ---
Mortgage note with variable interest:
LIBOR plus 1.75%, maturing July 2005 29,500 ---
Term note, unsecured, with variable interest:
LIBOR plus 2.25%, maturing January 2002 20,000 ---
Revolving lines of credit with variable interest rates ranging
.....from either prime less .25% to prime or from LIBOR plus
1.60% to LIBOR plus 1.80% 41,530 88,995
- ------------------------------------------------------------------------- -------------- ---------------
$ 346,843 $ 329,647
- ------------------------------------------------------------------------- -------------- ---------------
The Operating Partnership maintains revolving lines of credit, which provide for
borrowing up to $100 million. The agreements expire at various times through the
year 2002. Interest is payable based on alternative interest rate bases at the
Operating Partnership's option. Amounts available under these facilities at
December 31, 2000 totaled $58.5 million. Certain of the Operating Partnership's
properties, which had a net book value of approximately $137.8 million at
December 31, 2000, serve as collateral for the fixed and variable rate
mortgages.
F-9
The credit agreements require the maintenance of certain ratios, including debt
service coverage and leverage, and limit the payment of dividends such that
dividends and distributions will not exceed funds from operations, as defined in
the agreements, for the prior fiscal year on an annual basis or 95% of funds
from operations on a cumulative basis. All four existing fixed rate mortgage
notes are with insurance companies and contain prepayment penalty clauses.
In January 2000, the Operating Partnership entered into a $20.0 million two year
unsecured term loan with interest payable at LIBOR plus 2.25%. The proceeds were
used to reduce amounts outstanding under the existing lines of credit.
On July 28, 2000, the Operating Partnership entered into a five year
collateralized term loan with Wells Fargo Bank for $29.5 million with interest
payable at LIBOR plus 1.75%. The proceeds were used to reduce amounts
outstanding under the existing lines of credit.
On August 29, 2000, the Operating Partnership entered into a ten year
collateralized term loan with Woodmen of the World Life Insurance Society for
$16.7 million with interest payable at a fixed rate of 8.86%. The proceeds were
used to reduce amounts outstanding under the existing lines of credit.
On September 8, 2000, the Operating Partnership renewed a $9.2 million
collateralized loan with New York Life Insurance Company for five years at a
fixed interest rate of 9.125%.
Maturities of the existing long-term debt are as follows (in thousands):
Year Amount %
---------------------------------- ------------- ------------
2001 $ 76,880 22
2002 63,696 18
2003 2,596 1
2004 77,826 22
2005 51,376 15
Thereafter 74,469 22
---------------------------------- ------------- ------------
$ 346,843 100
---------------------------------- ------------- ------------
8. Derivatives and Fair Value of Financial Instruments
In December 2000, the Operating Partnership entered an interest rate swap
agreement effective through January 2003 with a notional amount of $25 million
that fixed the 30 day LIBOR index at 5.97%. At December 31, 2000, the Operating
Partnership would have had to pay $152,800 to terminate the agreement.
In January 2000, the Operating Partnership entered into interest rate swap
agreements on notional amounts totaling $20.0 million. These agreements mature
in January 2002. In order to fix the interest rate at 8.75%, the Operating
Partnership paid $162,000. At December 31, 2000, the Operating Partnership would
have had to pay $146,700 to terminate these agreements.
In June 1999, the Operating Partnership terminated an interest rate swap
agreement made in October 1998 effective through October 2001 with a notional
amount of $20 million that fixed the 30 day LIBOR index at 5.47%.
The impact of all of the above agreements had an insignificant impact on
interest expense during 2000, 1999 and 1998.
The carrying amount of cash equivalents approximates fair value due to the
short-term maturities of these financial instruments. The fair value of
long-term debt at December 31, 2000, which estimated as present value of future
cash flows, discounted at interest rates available at the reporting date for new
debt of similar type and remaining maturity, was approximately $346.1 million.
F-10
9. Partnership Equity
At December 31, 2000 and 1999, the ownership interests of the Operating
Partnership consisted of the following:
2000 1999
- --------------------------------------------------------
Preferred Units 80,600 85,270
========================================================
Partnership Units:
General partner 150,000 150,000
Limited partners 10,802,216 10,760,140
- --------------------------------------------------------
- --------------------------------------------------------
Total 10,952,216 10,910,140
- --------------------------------------------------------
The Company's Series A Cumulative Convertible Redeemable Preferred Shares (the
"Preferred Shares") were sold to the public during 1993 in the form of
Depositary Shares, each representing 1/10 of a Preferred Share. Proceeds from
this offering, net of underwriters discount and estimated offering expenses,
were contributed to the Operating Partnership in return for preferred
partnership Units. The Preferred Shares have a liquidation preference equivalent
to $25 per Depositary Share and dividends accumulate per Depositary Share equal
to the greater of (i) $1.575 per year or (ii) the dividends on the common shares
or portion thereof, into which a depositary share is convertible. The Preferred
Shares rank senior to the common shares in respect of dividend and liquidation
rights.
The Preferred Shares are convertible at the option of the holder at any time
into common shares at a rate equivalent to .901 common shares for each
Depositary Share. Preferred partnership Units are automatically converted into
limited partnership Units to the extent of any conversion of the Company's
Series A Preferred Shares into the Company's common shares. At December 31,
2000, 726,203 common shares of the Company (and 726,203 Units of the Operating
Partnership) were reserved for the conversion of Depositary Shares (and
Preferred Units). The Preferred Shares and Depositary Shares may be redeemed at
the option of the Company, in whole or in part, at a redemption price of $25 per
Depositary Share, plus accrued and unpaid dividends.
The Company's Board of Directors has authorized the repurchase of up to $6
million of the Company's common shares. Proceeds required to repurchase these
common shares are funded by the Operating Partnership in exchange for an
equivalent number of partnership units in the Operating Partnership. The timing
and amount of purchases will be at the discretion of management. The Company
purchased no common shares during 2000. During 1999 and 1998, the Company
purchased and retired 48,300 and 10,000 common shares at a price of $958,000 and
$216,000, respectively. The amount authorized for future repurchases remaining
at December 31, 2000 totaled $4.8 million.
F-11
10. Earnings Per Unit
A reconciliation of the numerators and denominators in computing earnings per
unit in accordance with Statement of Financial Accounting Standards No. 128,
Earnings per Share, for the years ended December 31, 2000, 1999 and 1998 is set
forth as follows (in thousands, except per unit amounts):
2000 1999 1998
- --------------------------------------------------------------------------------------------------------------
Numerator:
Income before extraordinary item $ 5,268 $ 21,211 $ 16,103
Less applicable preferred unit distributions (1,823) (1,917) (1,911)
- --------------------------------------------------------------------------------------------------------------
Income available to the general and limited partners-
numerator for basic and diluted earnings per unit 3,445 19,294 14,192
- --------------------------------------------------------------------------------------------------------------
Denominator:
Basic weighted average partnership units 10,928 10,894 10,919
Effect of outstanding unit options 25 10 121
- --------------------------------------------------------------------------------------------------------------
Diluted weighted average partnership units 10,953 10,904 11,040
- --------------------------------------------------------------------------------------------------------------
Basic earnings per unit before extraordinary item $ 0.32 $ 1.77 $ 1.30
- --------------------------------------------------------------------------------------------------------------
Diluted earnings per unit before extaordinary item $ 0.31 $ 1.77 $ 1.28
- --------------------------------------------------------------------------------------------------------------
Options to purchase units excluded from the computation of diluted earnings per
unit during 2000, 1999 and 1998 because the exercise price was greater than the
average market price of the common shares totaled 1,197,796, 651,418, and
244,775 units. The assumed conversion of the preferred units as of the beginning
of the year would have been anti-dilutive.
11. Employee Benefit Plans
The Company has a non-qualified and incentive share option plan ("The Share
Option Plan") and the Operating Partnership has a non-qualified Unit option plan
("The Unit Option Plan"). Units received upon exercise of Unit options are
exchangeable for common shares of the Company. The Operating Partnership
accounts for these plans under APB Opinion No. 25, under which no compensation
cost has been recognized.
Had compensation cost for these plans been determined for options granted since
January 1, 1995 consistent with Statement of Financial Accounting Standards No.
123, Accounting for Stock-Based Compensation (SFAS 123), the Operating
Partnership's net income and earnings per unit would have been reduced to the
following pro forma amounts (in thousands, except per unit amounts):
2000 1999 1998
- ------------------ ---------------- ------------ ----------------- ----------------
Net income: As reported $5,268 $20,866 $15,643
Pro forma 4,985 20,599 $15,409
Basic EPS: As reported $ .32 $ 1.74 $ 1.26
Pro forma $ .29 $ 1.71 $ 1.24
Diluted EPS: As reported $ .31 $ 1.74 $ 1.24
Pro forma $ .29 $ 1.71 $ 1.23
F-12
Because the SFAS 123 method of accounting has not been applied to options
granted prior to January 1, 1995, the resulting pro forma compensation cost may
not be representative of that to be expected in future years. The fair value of
each option grant is estimated on the date of grant using the Black-Scholes
option pricing model with the following weighted-average assumptions used for
grants in 2000, 1999 and 1998, respectively: expected dividend yields ranging
from 10% to 11%; expected lives ranging from 5 years to 7 years; expected
volatility ranging from 20% to 23%; and risk-free interest rates ranging from
4.72% to 6.61%.
The Company and the Operating Partnership may issue up to a combined 1,750,000
shares and units under The Share Option Plan and The Unit Option Plan. The
Company and the Operating Partnership have granted 1,537,950 options, net of
options forfeited, through December 31, 2000. Under both plans, the option
exercise price is determined by the Share and Unit Option Committee of the Board
of Directors. Non-qualified share and Unit options granted expire 10 years from
the date of grant and 20% of the options become exercisable in each of the first
five years commencing one year from the date of grant.
Options outstanding at December 31, 2000 have exercise prices between $18.625
and $31.25, with a weighted average exercise price of $23.63 and a weighted
average remaining contractual life of 5.7 years.
Unamortized share compensation, which relates to options that were granted at an
exercise price below the fair market value at the time of grant, was fully
amortized in 1998. Compensation expense recognized during 1998 was $195,000.
A summary of the status of the Operating Partnership's plan at December 31,
2000, 1999 and 1998 and changes during the years then ended is presented in the
table and narrative below:
2000 1999 1998
-------------------- --------------------- --------- ------------
Units Wtd Avg Units Wtd Avg Units Wtd Avg
Ex Price Ex Price Ex Price
- ------------------------------------- ------------- ------------- ------------ ------------- ----------- -----------
Outstanding at beginning 1,227,490 $ 24.55 1,030,660 $ 25.16 847,230 $ 23.67
of year
Granted 225,200 18.63 226,800 22.13 262,600 30.15
Exercised --- (500) 23.80 (28,280) 23.94
---
Forfeited (45,820) 23.72 (29,470) 26.94 (50,890) 26.94
- ------------------------------------- -------------- ---------- -------------- ----------- ------------- -----------
Outstanding at end of year 1,406,870 $ 23.63 1,227,490 $ 24.55 1,030,660 $ 25.16
- ------------------------------------- -------------- ---------- -------------- ----------- ------------- -----------
Exercisable at end of year 858,230 $ 24.19 718,630 $ 23.97 592,320 $ 23.41
Weighted average fair value
of options granted $ 1.20 $ 1.05 $ 1.60
The Operating Partnership has a qualified retirement plan, with a salary
deferral feature designed to qualify under Section 401 of the Code (the "401(k)
Plan"), which covers substantially all officers and employees of the Operating
Partnership. The 401(k) Plan permits employees of the Operating Partnership, in
accordance with the provisions of Section 401(k) of the Code, to defer up to 20%
of their eligible compensation on a pre-tax basis subject to certain maximum
amounts. Employee contributions are fully vested and are matched by the
Operating Partnership at a rate of compensation deferred to be determined
annually at the Operating Partnership's discretion. The matching contribution is
subject to vesting under a schedule providing for 20% annual vesting starting
with the third year of employment and 100% vesting after seven years of
employment. The employer matching contribution expense for the years 2000, 1999
and 1998 was immaterial.
F-13
12. Supplementary Income Statement Information
The following amounts are included in property operating expenses for the years
ended December 31, 2000, 1999 and 1998 (in thousands):
2000 1999 1998
- -------------------------------- ------------- ------------ ------------
Advertising and promotion $ 9,114 $ 8,579 $ 9,069
Common area maintenance 13,777 12,296 11,929
Real estate taxes 7,434 7,396 6,202
Other operating expenses 3,298 2,314 1,906
- -------------------------------- ------------- ------------ ------------
$ 33,623 $ 30,585 $ 29,106
- -------------------------------- ------------- ------------ ------------
13. Lease Agreements
The Operating Partnership is the lessor of a total of 1,165 stores in 29 factory
outlet centers, under operating leases with initial terms that expire from 2001
to 2018. Most leases are renewable for five years at the lessee's option. Future
minimum lease receipts under noncancellable operating leases as of December 31,
2000 are as follows (in thousands):
2001 $ 67,633
2002 58,755
2003 44,518
2004 32,396
2005 18,855
Thereafter 42,782
-------------------- --------------------
$ 264,939
-------------------- --------------------
14. Commitments and Contingencies
At December 31, 2000, commitments for construction of new developments and
additions to existing properties amounted to $4.0 million. Commitments for
construction represent only those costs contractually required to be paid by the
Operating Partnership.
The Operating Partnership purchased the rights to lease land on which two of the
outlet centers are situated for $1,520,000. These leasehold rights are being
amortized on a straight-line basis over 30 and 40 year periods. Accumulated
amortization was $615,000 and $566,000 at December 31, 2000 and 1999,
respectively.
The Operating Partnership's noncancellable operating leases, with initial terms
in excess of one year, have terms that expire from 2000 to 2085. Annual rental
payments for these leases aggregated $2,023,000, $1,481,000, and $1,090,000, for
the years ended December 31, 2000, 1999 and 1998, respectively. Minimum lease
payments for the next five years and thereafter are as follows (in thousands):
2001 $ 2,131
2002 2,073
2003 1,877
2004 1,813
2005 1,806
Thereafter 66,210
- ------------------- ---------------------
$ 75,910
- ------------------- ---------------------
The Operating Partnership is also subject to legal proceedings and claims which
have arisen in the ordinary course of its business and have not been finally
adjudicated. In management's opinion, the ultimate resolution of these matters
will have no material effect on the Operating Partnership's results of
operations or financial condition.
F-14
15. Subsequent Event
On February 9, 2001, the Operating Partnership issued $100 million of 9.125%
senior, unsecured notes, maturing on February 15, 2008. The net proceeds of $97
million were used to repay all of the outstanding indebtedness under our $75
million 8.75% senior, unsecured notes which were due March 11, 2001. The net
proceeds were also used to repay the $20 million LIBOR plus 2.25% term loan due
January 2002. The interest rate swap agreements associated with this debt were
terminated in February 2001 at a cost of $295,200. In addition, approximately
$77,000 of unamortized costs related to fixing the interest rate and $103,000 of
unamortized debt issuance costs were written off in February 2001. The remaining
proceeds were used for general operating purposes.
F-15
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
To the Partners of Tanger Properties
Limited Partnership
Our audits of the financial statements referred to in our report dated January
18, 2001, except for the information presented in Note 15, for which the date is
March 12, 2001, appearing in the 2000 Form 10-K of Tanger Properties Limited
Partnership also include an audit of the financial statement schedule, listed in
Item 14(a)(2) of this Form 10-K in our opinion, this financial statement
schedule presents fairly in all material respects the information set forth
therein when read in conjunction with the related financial statements.
PricewaterhouseCoopers LLP
Greensboro, North Carolina
January 18, 2001, except for the information presented in Note 15 for which the
date is March 12, 2001
F-16
F - 18
TANGER PROPERTIES LIMITED PARTNERSHIP
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
For the Year Ended December 31, 2000
(In thousands)
- ------------------------------------- ----------- ----------------------- ----- -------------- ------------------------------------
Costs Capitalized Gross Amount Carried
Subsequent to at Close of
Initial cost Acquisition Period
Description to Company (Improvements) 12/31/00 (1)
- ------------------------------------- ----------- ----------------------- -------------------- ------------------------------------
Buildings, Buildings, Buildings,
Outlet Center Improvements Improvements Improvements
Name Location Encumbrances Land & Fixtures Land & Fixtures Land & Fixtures Total
- ----------------- ------------------- ----------- --------- ------------- -------- ----------- --------- --------------- ----------
Barstow Barstow, CA -- $3,941 $ 12,533 $ --- $1,101 $3,941 $13,634 $17,575
- ----------------- ------------------- ----------- --------- ------------- -------- ----------- --------- --------------- ----------
Blowing Rock Blowing Rock, NC $ 9,898 1,963 9,424 --- 2,063 1,963 11,487 13,450
- ----------------- ------------------- ----------- --------- ------------- -------- ----------- --------- --------------- ----------
Boaz Boaz, AL --- 616 2,195 --- 2,020 616 4,215 4,831
- ----------------- ------------------- ----------- --------- ------------- -------- ----------- --------- --------------- ----------
Bourne Bourne, MA --- 899 1,361 --- 284 899 1,645 2,544
- ----------------- ------------------- ----------- --------- ------------- -------- ----------- --------- --------------- ----------
Branch North Branch, MN --- 247 5,644 249 3,320 496 8,964 9,460
- ----------------- ------------------- ----------- --------- ------------- -------- ----------- --------- --------------- ----------
Branson Branson, MO --- 4,557 25,040 --- 6,973 4,557 32,013 36,570
- ----------------- ------------------- ----------- --------- ------------- -------- ----------- --------- --------------- ----------
Casa Grande Casa Grande, AZ --- 753 9,091 --- 1,790 753 10,881 11,634
- ----------------- ------------------- ----------- --------- ------------- -------- ----------- --------- --------------- ----------
Clover North Conway, NH --- 393 672 --- 246 393 918 1,311
- ----------------- ------------------- ----------- --------- ------------- -------- ----------- --------- --------------- ----------
Commerce I Commerce, GA 9,120 755 3,511 492 9,277 1,247 12,788 14,035
- ----------------- ------------------- ----------- --------- ------------- -------- ----------- --------- --------------- ----------
Commerce II Commerce, GA 29,500 1,262 14,046 541 17,527 1,803 31,573 33,376
- ----------------- ------------------- ----------- --------- ------------- -------- ----------- --------- --------------- ----------
Dalton Dalton, GA 11,506 1,641 15,596 --- 64 1,641 15,660 17,301
- ----------------- ------------------- ----------- --------- ------------- -------- ----------- --------- --------------- ----------
Ft. Lauderdale Ft. Lauderdale, FL 9,412 6,986 --- 17 9,412 7,003 16,415
- ----------------- ------------------- ----------- --------- ------------- -------- ----------- --------- --------------- ----------
Gonzales Gonzales, LA --- 876 15,895 17 5,008 893 20,903 21,796
- ----------------- ------------------- ----------- --------- ------------- -------- ----------- --------- --------------- ----------
Kittery-I Kittery, ME 6,547 1,242 2,961 229 1,297 1,471 4,258 5,729
- ----------------- ------------------- ----------- --------- ------------- -------- ----------- --------- --------------- ----------
Kittery-II Kittery, ME --- 921 1,835 529 495 1,450 2,330 3,780
- ----------------- ------------------- ----------- --------- ------------- -------- ----------- --------- --------------- ----------
Lancaster Lancaster, PA 15,099 3,691 19,907 --- 11,110 3,691 31,017 34,708
- ----------------- ------------------- ----------- --------- ------------- -------- ----------- --------- --------------- ----------
LL Bean North Conway, NH --- 1,894 3,351 --- 1,037 1,894 4,388 6,282
- ----------------- ------------------- ----------- --------- ------------- -------- ----------- --------- --------------- ----------
Locust Grove Locust Grove, GA --- 2,558 11,801 --- 7,822 2,558 19,623 22,181
- ----------------- ------------------- ----------- --------- ------------- -------- ----------- --------- --------------- ----------
Martinsburg Martinsburg, WV --- 800 2,812 --- 1,256 800 4,068 4,868
- ----------------- ------------------- ----------- --------- ------------- -------- ----------- --------- --------------- ----------
Nags Head Nags Head, NC 6,716 1,853 6,679 --- 1,433 1,853 8,112 9,965
- ----------------- ------------------- ----------- --------- ------------- -------- ----------- --------- --------------- ----------
Pigeon Forge Pigeon Forge, TN --- 299 2,508 --- 2,007 299 4,515 4,814
- ----------------- ------------------- ----------- --------- ------------- -------- ----------- --------- --------------- ----------
Riverhead Riverhead, NY --- --- 36,374 6,152 70,854 6,152 107,228 113,380
- ----------------- ------------------- ----------- --------- ------------- -------- ----------- --------- --------------- ----------
San Marcos San Marcos, TX 19,543 1,801 9,440 17 30,202 1,818 39,642 41,460
- ----------------- ------------------- ----------- --------- ------------- -------- ----------- --------- --------------- ----------
Sanibel Sanibel, FL --- 4,916 23,196 --- 2,524 4,916 25,720 30,636
- ----------------- ------------------- ----------- --------- ------------- -------- ----------- --------- --------------- ----------
Sevierville Sevierville, TN --- --- 18,495 --- 25,713 --- 44,208 44,208
- ----------------- ------------------- ----------- --------- ------------- -------- ----------- --------- --------------- ----------
Seymour Seymour, IN --- 1,671 13,249 --- 693 1,671 13,942 15,613
- ----------------- ------------------- ----------- --------- ------------- -------- ----------- --------- --------------- ----------
Terrell Terrell, TX --- 778 13,432 --- 4,742 778 18,174 18,952
- ----------------- ------------------- ----------- --------- ------------- -------- ----------- --------- --------------- ----------
West Branch West Branch, MI 7,304 350 3,428 121 4,507 471 7,935 8,406
- ----------------- ------------------- ----------- --------- ------------- -------- ----------- --------- --------------- ----------
Williamsburg Williamsburg, IA 20,080 706 6,781 716 11,445 1,422 18,226 19,648
- ----------------- ------------------- ----------- --------- ------------- -------- ----------- --------- --------------- ----------
$ 135,313 $ 50,795 $298,243 $9,063 $226,827 $59,858 $525,070 $584,928
- ----------------- ------------------- ----------- --------- ------------- -------- ----------- --------- --------------- ----------
TANGER PROPERTIES LIMITED PARTNERSHIP
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
For the Year Ended December 31, 2000
(In thousands)
Life Used to
Compute
Depreciation
Outlet Center Accumulated Date of in Income
Name Depreciation Construction Statement
- ------------------------------ ------------- --------------
Barstow $4,103 1995 (2)
- ------------------------------ ------------- --------------
Blowing Rock 1,236 1997 (3) (2)
- ------------------------------ ------------- --------------
Boaz 1,863 1988 (2)
- ------------------------------ ------------- --------------
Bourne 825 1989 (2)
- ------------------------------ ------------- --------------
Branch 3,417 1992 (2)
- ------------------------------ ------------- --------------
Branson 9,423 1994 (2)
- ------------------------------ ------------- --------------
Casa Grande 4,639 1992 (2)
- ------------------------------ ------------- --------------
Clover 476 1987 (2)
- ------------------------------ ------------- --------------
Commerce I 4,480 1989 (2)
- ------------------------------ ------------- --------------
Commerce II 6,261 1995 (2)
- ------------------------------ ------------- --------------
Dalton 1,466 1998 (3) (2)
- ------------------------------ ------------- --------------
Ft. Lauderdale 307 1999 (3) (2)
- ------------------------------ ------------- --------------
Gonzales 7,624 1992 (2)
- ------------------------------ ------------- --------------
Kittery-I 2,375 1986 (2)
- ------------------------------ ------------- --------------
Kittery-II 1,019 1989 (2)
- ------------------------------ ------------- --------------
Lancaster 7,310 1994 (3) (2)
- ------------------------------ ------------- --------------
LL Bean 2,001 1988 (2)
- ------------------------------ ------------- --------------
Locust Grove 5,464 1994 (2)
- ------------------------------ ------------- --------------
Martinsburg 2,063 1987 (2)
- ------------------------------ ------------- --------------
Nags Head 1,097 1997 (3) (2)
- ------------------------------ ------------- --------------
Pigeon Forge 1,995 1988 (2)
- ------------------------------ ------------- --------------
Riverhead 19,150 1993 (2)
- ------------------------------ ------------- --------------
San Marcos 6,110 1993 (2)
- ------------------------------ ------------- --------------
Sanibel 1,956 1998 (3) (2)
- ------------------------------ ------------- --------------
Sevierville 4,750 1997 (3) (2)
- ------------------------------ ------------- --------------
Seymour 4,646 1994 (2)
- ------------------------------ ------------- --------------
Terrell 5,699 1994 (2)
- ------------------------------ ------------- --------------
West Branch 3,054 1991 (2)
- ------------------------------ ------------- --------------
Williamsburg 7,556 1991 (2)
- ------------------------------ ------------- --------------
$122,365
- ------------------------------ ------------- --------------
F-17
(1) Aggregate cost for federal income tax purposes is approximately
$583,251,000
(2) The Company generally uses estimated lives ranging from 25 to 33 years for
buildings and 15 years for land improvements. Tenant finishing allowances
are depreciated over the initial lease term.
(3) Represents year acquired
F-18
TANGER PROPERTIES LIMITED PARTNERSHIP
SCHEDULE III - (Continued)
REAL ESTATE AND ACCUMULATED DEPRECIATION
For the Year Ended December 31, 2000
(In Thousands)
The changes in total real estate for the three years ended December 31, 2000 are
as follows:
2000 1999 1998
-------------- ---------------- -----------------
Balance, beginning of year $566,216 $529,247 $ 454,708
Acquisition of real estate --- 15,500 44,650
Improvements 39,701 31,343 31,599
Dispositions and other (20,989) (9,874) (1,710)
-------------- ---------------- -----------------
Balance, end of year $584,928 $566,216 $ 529,247
============== ================ =================
The changes in accumulated depreciation for the three years ended December 31,
2000 are as follows:
2000 1999 1998
-------------- ---------------- ----------------
Balance, beginning of year $ 104,511 $84,685 $ 64,177
Depreciation for the period 24,239 23,095 20,873
Dispositions and other (6,385) (3,269) (365)
-------------- ---------------- ----------------
Balance, end of year $122,365 $104,511 $ 84,685
============== ================ ================