TANGER FACTORY OUTLET CENTERS, INC - FORM 8-K - EX-99.2 - EXHIBIT 99.2 - July 26, 2016

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Exhibit 99.2
Tanger Factory Outlet Centers, Inc.
  
Supplemental Operating and Financial Data
June 30, 2016


1
Supplemental Operating and Financial Data for the
Quarter Ended 6/30/2016


Notice
  
  
For a more detailed discussion of the factors that affect our operating results, interested parties should review the Tanger Factory Outlet Centers, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 2015.
  
This Supplemental Portfolio and Financial Data is not an offer to sell or a solicitation to buy any securities of the Company. Any offers to sell or solicitations to buy any securities of the Company shall be made only by means of a prospectus.


2
Supplemental Operating and Financial Data for the
Quarter Ended 6/30/2016


Table of Contents
Section
 
 
 
Portfolio Data:
 
 
 
Geographic Diversification
Property Summary - Occupancy at End of Each Period Shown
Portfolio Occupancy at the End of Each Period
Average Tenant Sales Per Square Foot by Outlet Center Ranking
Major Tenants
Lease Expirations as of June 30, 2016
Leasing Activity
Development Summary
 
 
Financial Data:
 
 
 
Consolidated Balance Sheets
Consolidated Statements of Operations
Unconsolidated Joint Venture Information
Debt Outstanding Summary
Future Scheduled Principal Payments
Senior Unsecured Notes Financial Covenants
 
 
Non-GAAP Supplemental Measures:
 
 
 
Non-GAAP Definitions
FFO and FAD Analysis
Portfolio NOI and Same Center NOI
Pro Rata Balance Sheet
Pro Rata Statement of Operations
 
 
Investor Information


3
Supplemental Operating and Financial Data for the
Quarter Ended 6/30/2016


Geographic Diversification

Consolidated Properties
As of June 30, 2016
State
# of Centers
 
GLA
 
% of GLA
South Carolina
5

 
1,598,375

 
13
%
New York
2

 
1,478,808

 
12
%
Pennsylvania
3

 
867,460

 
7
%
Georgia
2

 
692,478

 
6
%
Michigan
2

 
671,539

 
6
%
Texas
2

 
643,497

 
5
%
Connecticut
2

 
601,512

 
5
%
Alabama
1

 
556,984

 
5
%
Delaware
1

 
556,405

 
5
%
North Carolina
3

 
505,123

 
4
%
New Jersey
1

 
489,706

 
4
%
Tennessee
1

 
448,335

 
4
%
Ohio
1

 
411,776

 
3
%
Arizona
1

 
410,673

 
3
%
Missouri
1

 
329,861

 
3
%
Mississippi
1

 
320,337

 
3
%
Utah
1

 
319,661

 
3
%
Louisiana
1

 
318,666

 
3
%
Iowa
1

 
276,331

 
2
%
New Hampshire
1

 
245,698

 
2
%
Maryland
1

 
198,840

 
2
%
Total
34

 
11,942,065

 
100
%
Unconsolidated Joint Venture Properties
 
# of Centers
 
GLA
 
Ownership %
Savannah, GA
1

 
419,197

 
50.00
%
Charlotte, NC
1

 
397,839

 
50.00
%
Columbus, OH
1

 
355,220

 
50.00
%
Texas City, TX
1

 
352,705

 
50.00
%
National Harbor, MD
1

 
338,786

 
50.00
%
Ottawa, ON
1

 
316,494

 
50.00
%
Cookstown, ON
1

 
308,517

 
50.00
%
Bromont, QC
1

 
161,307

 
50.00
%
Saint-Sauveur, QC
1

 
115,771

 
50.00
%
Total
9

 
2,765,836

 
 


4
Supplemental Operating and Financial Data for the
Quarter Ended 6/30/2016


Property Summary - Occupancy at End of Each Period Shown
Consolidated properties
 
 
 
 
 
 
 
 
 
 
 
Location
Total GLA
6/30/16
 
% Occupied
6/30/16
 
% Occupied
3/31/16
 
% Occupied
12/31/15
 
% Occupied
9/30/15
 
% Occupied
6/30/15
 
Deer Park, NY
749,074

 
96
%
 
96
%
 
95
%
 
95
%
 
94
%
 
Riverhead, NY
729,734

 
99
%
 
99
%
 
99
%
 
98
%
 
97
%
 
Foley, AL
556,984

 
96
%
 
94
%
 
96
%
 
93
%
 
96
%
 
Rehoboth Beach, DE
556,405

 
100
%
 
99
%
 
100
%
 
100
%
 
99
%
 
Atlantic City, NJ
489,706

 
92
%
 
91
%
 
91
%
 
94
%
 
95
%
 
San Marcos, TX
465,697

 
98
%
 
98
%
 
98
%
 
98
%
 
95
%
 
Sevierville, TN
448,335

 
99
%
 
100
%
 
100
%
 
100
%
 
100
%
 
Myrtle Beach Hwy 501, SC
425,247

 
97
%
 
96
%
 
95
%
 
97
%
 
98
%
 
Jeffersonville, OH
411,776

 
98
%
 
98
%
 
100
%
 
99
%
 
97
%
 
Glendale, AZ (Westgate)
410,673

 
97
%
 
N/A

 
N/A

 
N/A

 
N/A

 
Myrtle Beach Hwy 17, SC
402,797

 
100
%
 
98
%
 
100
%
 
99
%
 
100
%
 
Charleston, SC
382,117

 
98
%
 
98
%
 
99
%
 
99
%
 
99
%
 
Pittsburgh, PA
372,958

 
100
%
 
100
%
 
100
%
 
100
%
 
99
%
 
Commerce, GA
371,408

 
99
%
 
94
%
 
97
%
 
97
%
 
96
%
 
Grand Rapids, MI
357,080

 
94
%
 
94
%
 
95
%
 
93
%
 
N/A

 
Branson, MO
329,861

 
100
%
 
100
%
 
100
%
 
100
%
 
99
%
 
Locust Grove, GA
321,070

 
100
%
 
100
%
 
100
%
 
100
%
 
99
%
 
Southaven, MS
320,337

 
96
%
 
97
%
 
96
%
 
N/A

 
N/A

 
Park City, UT
319,661

 
97
%
 
98
%
 
100
%
 
99
%
 
99
%
 
Mebane, NC
318,910

 
97
%
 
98
%
 
100
%
 
95
%
 
100
%
 
Gonzales, LA
318,666

 
98
%
 
98
%
 
99
%
 
100
%
 
100
%
 
Howell, MI
314,459

 
92
%
 
92
%
 
94
%
 
94
%
 
93
%
 
Mashantucket, CT (Foxwoods)
311,614

 
96
%
 
96
%
 
95
%
 
94
%
 
91
%
 
Westbrook, CT
289,898

 
87
%
 
92
%
 
94
%
 
93
%
 
95
%
 
Williamsburg, IA
276,331

 
97
%
 
95
%
 
99
%
 
99
%
 
97
%
 
Hershey, PA
247,500

 
100
%
 
99
%
 
100
%
 
98
%
 
95
%
 
Lancaster, PA
247,002

 
97
%
 
97
%
 
99
%
 
99
%
 
99
%
 
Tilton, NH
245,698

 
97
%
 
97
%
 
98
%
 
98
%
 
96
%
 
Hilton Head II, SC
206,544

 
94
%
 
95
%
 
97
%
 
95
%
 
95
%
 
Ocean City, MD
198,840

 
81
%
 
79
%
 
79
%
 
99
%
 
99
%
 
Hilton Head I, SC
181,670

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

 
98
%
 
98
%
 
98
%
 
97
%
 
95
%
 
Blowing Rock, NC
104,052

 
99
%
 
100
%
 
100
%
 
100
%
 
97
%
 
Nags Head, NC
82,161

 
100
%
 
97
%
 
97
%
 
100
%
 
100
%
 
Barstow, CA (2)
N/A

 
N/A

 
N/A

 
N/A

 
100
%
 
100
%
 
Fort Myers, FL (2)
N/A

 
N/A

 
N/A

 
91
%
 
90
%
 
91
%
 
Kittery I, ME(2)
N/A

 
N/A

 
N/A

 
N/A

 
N/A

 
100
%
 
Kittery II, ME(2)
N/A

 
N/A

 
N/A

 
N/A

 
N/A

 
92
%
 
Tuscola, IL(2)
N/A

 
N/A

 
N/A

 
N/A

 
N/A

 
88
%
 
West Branch, MI(2)
N/A

 
N/A

 
N/A

 
N/A

 
N/A

 
88
%
 
Total
11,942,065

 
97
%
(1) 
97
%
(1) 
98
%
(1),(3) 
97
%
(1),(4) 
97
%
(1) 
(1)
Excludes the occupancy rate at our Foxwoods, Grand Rapids and Southaven centers which opened during the second, third and fourth quarters of 2015, respectively, and have not yet stabilized.
(2)
Sold the Kittery I, Kittery II, Tuscola, and West Branch centers in September 2015, sold the Barstow center in October 2015 and sold Fort Myers center in January 2016.
(3)
Excludes the occupancy rate of the Fort Myers center which was sold on January 12, 2016.
(4)
Excludes the occupancy rate at our Barstow center which was sold on October 5, 2015.

5
Supplemental Operating and Financial Data for the
Quarter Ended 6/30/2016


Unconsolidated joint venture properties
 
 
 
 
 
 
 
 
 
 
 
Location
Total GLA
6/30/16
 
% Occupied
6/30/16
 
% Occupied
3/31/16
 
% Occupied
12/31/15
 
% Occupied
9/30/15
 
% Occupied
6/30/15
 
Savannah, GA
419,197

 
99
%
 
99
%
 
99
%
 
99
%
 
96
%
 
Charlotte, NC
397,839

 
97
%
 
98
%
 
99
%
 
99
%
 
99
%
 
Columbus, OH (1)
355,220

 
95
%
 
N/A

 
N/A

 
N/A

 
N/A

 
Texas City, TX (Galveston/Houston)
352,705

 
99
%
 
97
%
 
99
%
 
99
%
 
100
%
 
National Harbor, MD
338,786

 
98
%
 
99
%
 
99
%
 
99
%
 
99
%
 
Ottawa, ON
316,494

 
95
%
 
95
%
 
97
%
 
97
%
 
95
%
 
Cookstown, ON
308,517

 
99
%
 
99
%
 
100
%
 
100
%
 
93
%
 
Bromont, QC
161,307

 
72
%
 
74
%
 
75
%
 
74
%
 
74
%
 
Saint-Sauveur, QC
115,771

 
97
%
 
97
%
 
97
%
 
97
%
 
97
%
 
Glendale, AZ (Westgate) (2)
N/A

 
N/A

 
96
%
 
100
%
 
100
%
 
99
%
 
Total
2,765,836

 
96
%
(3) 
96
%
 
98
%
 
97
%
 
96
%
 
(1)
Center opened in June 2016.
(2)
The Company acquired our partners' interest in the Westgate outlet center on June 30, 2016. The center is now reported above in the section labeled consolidated properties.
(3)
Excludes the occupancy rate at our Columbus center which opened on June 24, 2016 and has not yet stabilized.






6
Supplemental Operating and Financial Data for the
Quarter Ended 6/30/2016


Portfolio Occupancy at the End of Each Period (1) 

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




7
Supplemental Operating and Financial Data for the
Quarter Ended 6/30/2016


Average Tenant Sales Per Square Foot by Outlet Center Ranking As of June 30, 2016(1) 
 
 
 
 12 Months
 Period End
 Sq Ft
% of
% of
Portfolio
NOI, as
 Ranking (2)
 SPSF
 Occupancy
 (thousands)
 Square Feet
adjusted (3)
Consolidated Centers
 
 
 
 
Centers 1 - 5
$
529

98
%
2,803

26
%
33
%
Centers 6 - 10
$
441

99
%
1,472

13
%
13
%
Centers 11 - 15
$
397

97
%
1,622

15
%
15
%
Centers 16 - 20
$
357

97
%
1,791

16
%
17
%
Centers 21 - 25
$
311

95
%
1,785

16
%
13
%
Centers 26 - 31
$
273

95
%
1,480

14
%
9
%
 
 
 
 
 
 
 
 
 
 
 
 Cumulative
 Cumulative
 Cumulative
 Cumulative
 Cumulative
% of
Portfolio
 
 
 
 12 Months
 Period End
 Sq Ft
% of
NOI, as
 Ranking (2)
 SPSF
 Occupancy
 (thousands)
 Square Feet
adjusted (3)
Consolidated Centers
 
 
 
 
Centers 1 - 5
$
529

98
%
2,803

26
%
33
%
Centers 1 - 10
$
495

98
%
4,275

39
%
46
%
Centers 1 - 15
$
466

98
%
5,897

54
%
61
%
Centers 1 - 20
$
438

98
%
7,688

70
%
78
%
Centers 1 - 25
$
415

97
%
9,473

86
%
91
%
Centers 1 - 31
$
395

97
%
10,953

100
%
100
%
 
 
 





Unconsolidated centers (4)
$
398

98
%
1,509

n/a

n/a

 
 
 
 
 
 
 
 
(1)
Sales are based on reports by retailers leasing outlet center stores for the trailing 12 months for tenants which have occupied such stores for a minimum of 12 months. Sales per square foot are based on all stores less than 20,000 square feet in size. Centers are ranked by sales per square foot for the twelve months ended June 30, 2016.
 
 
 
 
 
 
 
 
(2)
Outlet centers included in each ranking group above are as follows (in alphabetical order):
 
Centers 1 - 5:
Deer Park, NY
Mebane, NC
Rehoboth Beach, DE
Riverhead, NY
Sevierville, TN
 
 
Centers 6 - 10:
Branson, MO
Glendale, AZ
Lancaster, PA
Myrtle Beach 17, SC
Nags Head, NC
 
 
Centers 11 - 15:
Atlantic City, NJ
Charleston, SC
Hershey, PA
Hilton Head I, SC
Locust Grove, GA
 
 
Centers 16 - 20:
Gonzales, LA
Howell, MI
Park City, UT
Pittsburgh, PA
San Marcos, TX
 
 
Centers 21 - 25:
Commerce, GA
Foley, AL
Jeffersonville, OH
Ocean City, MD
Tilton, NH
 
 
Centers 26 - 31:
Blowing Rock, NC
Hilton Head II, SC
Myrtle Beach 501, SC
Terrell, TX
Westbrook, CT
Williamsburg, IA
 
 
 
 
Excludes outlet centers not open for 12 full calendar months and the Mashantucket, CT (Foxwoods) center which opened in the second quarter of 2015 and has not yet stabilized.
 
 
 
 
 
 
 
 
(3)
Based on the Company’s forecast of 2016 Portfolio NOI (see Non-GAAP Definitions), as adjusted to include the Glendale, AZ (Westgate) center, which became a wholly-owned property on June 30, 2016. The Company’s forecast is based on management’s estimates as of June 30, 2016 and may be considered a forward-looking statement which is subject to risks and uncertainties. Actual results could differ materially from those projected due to various factors including, but not limited to, the risks associated with general economic and real estate conditions. For a more detailed discussion of the factors that affect our operating results, interested parties should review the Tanger Factory Outlet Centers, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 2015.
 
 
 
 
 
 
 
 
(4)
Includes domestic outlet centers open 12 full calendar months (in alphabetical order):
 
Unconsolidated:
Charlotte, NC
National Harbor, MD
Savannah, GA
Texas City, TX
 
 

8
Supplemental Operating and Financial Data for the
Quarter Ended 6/30/2016


Major Tenants (1) 
Ten Largest Tenants as of June 30, 2016
Tenant
# of
Stores

 
GLA

 
% of
Total GLA

The Gap, Inc.
86

 
914,368

 
7.7
%
Ascena Retail Group, Inc.
138

 
839,921

 
7.0
%
Nike, Inc.
38

 
404,413

 
3.4
%
PVH Corp.
65

 
390,892

 
3.3
%
V. F. Corporation
38

 
343,807

 
2.9
%
Ralph Lauren Corporation
36

 
338,266

 
2.8
%
G-III Apparel Group, Ltd.
65

 
304,111

 
2.5
%
Carter's, Inc.
59

 
262,388

 
2.2
%
Adidas AG
36

 
226,469

 
1.9
%
Hanes Brands
40

 
221,229

 
1.9
%
Total of All Listed Above
601

 
4,245,864

 
35.6
%
(1)
Excludes unconsolidated outlet centers. See table on page 4.


9
Supplemental Operating and Financial Data for the
Quarter Ended 6/30/2016


Lease Expirations as of June 30, 2016



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


10
Supplemental Operating and Financial Data for the
Quarter Ended 6/30/2016


Leasing Activity (1) (2)  
 
3/31/2016
 
6/30/2016
 
9/30/2016
 
12/31/2016
 
Year to Date
 
Prior
Year to
Date(3)
Re-tenanted Space :
 
 
 

 
 
 
 
 
 

 
 

Number of leases
63

 
35

 

 

 
98

 
95

Gross leasable area
188,245

 
113,911

 

 

 
302,156

 
356,268

New initial base rent per square foot
$
29.80

 
$
27.62

 

 

 
$
28.98

 
$
28.30

Prior expiring base rent per square foot
$
25.95

 
$
25.87

 

 

 
$
25.92

 
$
24.67

Percent increase
14.8
%
 
6.8
%
 

 

 
11.8
%
 
14.7
%
 
 
 
 
 
 
 
 
 
 
 


New straight line base rent per square foot
$
32.84

 
$
30.54

 

 

 
$
31.97

 
$
31.86

Prior straight line base rent per square foot
$
25.19

 
$
24.67

 

 

 
$
25.00

 
$
24.35

Percent increase
30.4
%
 
23.8
%
 

 

 
27.9
%
 
30.8
%
 
 
 
 
 
 
 
 
 
 
 


Renewed Space:
 
 
 
 
 
 
 
 
 
 


Number of leases
166

 
34

 

 

 
200

 
215

Gross leasable area
762,300

 
171,736

 

 

 
934,036

 
1,017,883

New initial base rent per square foot
$
24.69

 
$
24.86

 

 

 
$
24.72

 
$
25.20

Prior expiring base rent per square foot
$
22.78

 
$
23.50

 

 

 
$
22.91

 
$
22.43

Percent increase
8.4
%
 
5.8
%
 

 

 
7.9
%
 
12.4
%
 
 
 
 
 
 
 
 
 
 
 


New straight line base rent per square foot
$
25.91

 
$
26.18

 

 

 
$
25.96

 
$
26.72

Prior straight line base rent per square foot
$
21.96

 
$
22.82

 

 

 
$
22.12

 
$
21.79

Percent increase
18.0
%
 
14.7
%
 

 

 
17.4
%
 
22.6
%
 
 
 
 
 
 
 
 
 
 
 


Total Re-tenanted and Renewed Space (3):
 
 
 
 
 
 
 
 
 
 


Number of leases
229

 
69

 

 

 
298

 
310

Gross leasable area
950,545

 
285,647

 

 

 
1,236,192

 
1,374,151

New initial base rent per square foot
$
25.70

 
$
25.96

 

 

 
$
25.76

 
$
26.00

Prior expiring base rent per square foot
$
23.41

 
$
24.45

 

 

 
$
23.65

 
$
23.01

Percent increase
9.8
%
 
6.2
%
 

 

 
8.9
%
 
13.0
%
 
 
 
 
 
 
 
 
 
 
 


New straight line base rent per square foot
$
27.28

 
$
27.92

 

 

 
$
27.43

 
$
28.05

Prior straight line base rent per square foot
$
22.60

 
$
23.56

 

 

 
$
22.82

 
$
22.45

Percent increase
20.7
%
 
18.5
%
 

 

 
20.2
%
 
24.9
%
(1)
Excludes unconsolidated outlet centers. See table on page 4.
(2)
All 2016 information excludes the outlet center in Fort Myers, FL, which was sold on January 12, 2016 and includes the Westgate outlet center, which is consolidated as of June 30, 2016 due to our acquisition of our partners' interest.
(3)
All 2015 information excludes the outlet centers in Kittery I & II, ME; Tuscola, IL; and West Branch, MI, which were sold on September 30, 2015, and Barstow, CA, which was sold on October 5, 2015.



11
Supplemental Operating and Financial Data for the
Quarter Ended 6/30/2016


External Growth Pipeline Summary as of June 30, 2016

Project/Market
Projected
Opening
Approx Size in
Sq Ft (000s)
Est
Total Net Cost
(millions)
Cost to Date
(millions)
Tanger Ownership Percentage
Est Total Construction Loan (millions)
Amount Drawn
(millions)
Est Future Tanger Capital Requirement (millions)
Projected Stabilized Yield
 
 
 
 
 
 
 
 
 
 
 
Under construction:
 
 
 
 
 
 
 
 
 
New Developments
 
 
 
 
 
 
 
 
 
Daytona Beach, FL
November 2016
352

91.3

41.9

100%
—

—

49.4

9.5% - 10.5%
Total New Developments
 
352

$
91.3

$
41.9

 
$
—

$
—

$
49.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The company's estimates, projections and judgments with respect to projected opening date, approximate size, estimated total net cost, Tanger ownership percentage, estimated total construction loan, estimated future Tanger capital requirement and projected stabilized yield for new development and expansion projects are subject to adjustment prior to and during the development process. Estimated total net cost shown net of outparcel sales and public financing. There are risks inherent to real estate development, some of which are not under the direct control of the company. Please refer to the company's filings with the Securities and Exchange Commission on Form10-K and Form 10-Q for a discussion of these risks.


12
Supplemental Operating and Financial Data for the
Quarter Ended 6/30/2016

Consolidated Balance Sheets (dollars in thousands)
 
6/30/2016
 
3/31/2016
 
12/31/2015
 
9/30/2015
 
6/30/2015
Assets
 
 
 
 
 
 
 
 
 
Rental property
 
 
 
 
 
 
 
 
 
Land
$
254,809

 
$
235,622

 
$
240,267

 
$
225,306

 
$
217,994

Buildings, improvements and fixtures
2,377,765

 
2,219,955

 
2,249,417

 
2,173,499

 
2,078,946

Construction in progress
61,038

 
42,287

 
23,533

 
63,445

 
95,167

 
2,693,612

 
2,497,864

 
2,513,217

 
2,462,250

 
2,392,107

Accumulated depreciation
(769,777
)
 
(749,325
)
 
(748,341
)
 
(727,921
)
 
(699,836
)
Total rental property, net
1,923,835

 
1,748,539

 
1,764,876

 
1,734,329

 
1,692,271

Cash and cash equivalents
27,107

 
18,877

 
21,558

 
20,661

 
16,949

Restricted cash
—

 
—

 
121,306

 
42,904

 
—

Rental property held for sale
—

 
—

 
—

 
19,286

 
46,862

Investments in unconsolidated joint ventures
210,486

 
218,732

 
201,083

 
197,964

 
212,939

Deferred lease costs and other intangibles, net
133,578

 
123,404

 
127,089

 
130,390

 
133,909

Prepaids and other assets
84,346

 
81,054

 
78,913

 
74,577

 
74,393

Total assets (a)
$
2,379,352

 
$
2,190,606

 
$
2,314,825

 
$
2,220,111

 
$
2,177,323

Liabilities and Equity
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
Debt
 
 
 
 
 
 
 
 
 
Senior, unsecured notes, net
$
789,991

 
$
789,635

 
$
789,285

 
$
788,930

 
$
788,577

Unsecured term loans, net
321,980

 
258,540

 
265,832

 
265,674

 
265,500

Mortgages payable, net
235,215

 
167,603

 
310,587

 
280,594

 
275,463

Unsecured lines of credit, net
255,661

 
259,890

 
186,220

 
193,338

 
173,533

Total debt (a)
1,602,847

 
1,475,668

 
1,551,924

 
1,528,536

 
1,503,073

Accounts payable and accruals
62,658

 
67,608

 
97,396

 
90,506

 
83,787

Deferred financing obligation
—

 
—

 
28,388

 
28,388

 
28,388

Other liabilities
53,433

 
31,758

 
31,085

 
31,405

 
30,639

Total liabilities
1,718,938

 
1,575,034

 
1,708,793

 
1,678,835

 
1,645,887

Commitments and contingencies
—

 
—

 
—

 
—

 
—

Equity
 
 
 
 
 
 
 
 
 
Tanger Factory Outlet Centers, Inc.
 
 
 
 
 
 
 
 
 
Common shares
960

 
961

 
959

 
958

 
958

Paid in capital
811,853

 
808,779

 
806,379

 
802,638

 
798,587

Accumulated distributions in excess of net income
(153,465
)
 
(195,654
)
 
(195,486
)
 
(256,180
)
 
(272,948
)
Accumulated other comprehensive loss
(32,090
)
 
(29,814
)
 
(36,715
)
 
(33,943
)
 
(22,470
)
  Equity attributable to Tanger Factory Outlet
  Centers, Inc.
627,258

 
584,272

 
575,137

 
513,473

 
504,127

Equity attributable to noncontrolling interests
 
 
 
 
 
 
 
 
 
Noncontrolling interests in Operating Partnership
32,996

 
30,711

 
30,309

 
27,207

 
26,712

Noncontrolling interest in other consolidated partnerships
160

 
589

 
586

 
596

 
597

Total equity
660,414

 
615,572

 
606,032

 
541,276

 
531,436

Total liabilities and equity
$
2,379,352

 
$
2,190,606

 
$
2,314,825

 
$
2,220,111

 
$
2,177,323

(a)
In accordance with recent accounting guidance, "Simplifying the Presentation of Debt Issuance Costs", our deferred debt origination costs and related accumulated amortization previously recorded in the line item “deferred debt origination costs, net” have been reclassified from assets to the respective debt line items within the liabilities section in the consolidated balance sheet as of December 31, 2015.

13
Supplemental Operating and Financial Data for the
Quarter Ended 6/30/2016


Consolidated Statements of Operations (dollars and shares in thousands)
 
 
 
Three Months Ended
 
YTD
 
6/30/16
 
3/31/16
 
12/31/15
 
9/30/15
 
6/31/15
 
 
6/30/16
 
6/30/15
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Base rentals
$
75,003

 
$
72,623

 
$
73,889

 
$
75,841

 
$
72,329

 
 
$
147,626

 
$
139,958

Percentage rentals
2,326

 
2,150

 
3,261

 
2,625

 
2,042

 
 
4,476

 
4,271

Expense reimbursements
30,754

 
33,242

 
32,653

 
30,542

 
29,909

 
 
63,996

 
63,273

Management, leasing and other services
1,332

 
1,121

 
1,163

 
1,253

 
1,727

 
 
2,453

 
3,010

Other income
1,918

 
1,669

 
1,835

 
2,645

 
1,729

 
 
3,587

 
3,150

Total revenues
111,333

 
110,805

 
112,801

 
112,906

 
107,736

 
 
222,138

 
213,662

Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property operating
35,012

 
37,874

 
37,582

 
36,231

 
34,958

 
 
72,886

 
72,690

General and administrative
11,675

 
11,565

 
10,038

 
11,514

 
11,612

 
 
23,240

 
22,917

Depreciation and amortization
26,306

 
26,567

 
26,890

 
28,785

 
24,272

 
 
52,873

 
48,261

Total expenses
72,993

 
76,006

 
74,510

 
76,530

 
70,842

 
 
148,999

 
143,868

Operating income
38,340

 
34,799

 
38,291

 
36,376

 
36,894

 
 
73,139

 
69,794

Other income/(expense)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense
(13,800
)
 
(14,884
)
 
(14,078
)
 
(13,933
)
 
(13,088
)
 
 
(28,684
)
 
(26,177
)
Gain on sale of assets and interests in unconsolidated entities
—

 
4,887

 
86,506

 
20,215

 
—

 
 
4,887

 
13,726

Gain on previously held interest in acquired joint venture
49,258

 
—

 
—

 
—

 
—

 
 
49,258

 
—

Other nonoperating income (expense)
38

 
316

 
62

 
89

 
(493
)
 
 
354

 
(187
)
Income before equity in earnings of unconsolidated joint ventures
73,836

 
25,118

 
110,781

 
42,747

 
23,313

 
 
98,954

 
57,156

Equity in earnings of unconsolidated joint ventures
3,466

 
3,499

 
3,182

 
3,713

 
2,046

 
 
6,965

 
4,589

Net income
77,302

 
28,617

 
113,963

 
46,460

 
25,359

 
 
105,919

 
61,745

Noncontrolling interests in Operating Partnership
(3,897
)
 
(1,444
)
 
(5,799
)
 
(2,364
)
 
(1,313
)
 
 
(5,341
)
 
(3,168
)
Noncontrolling interests in other consolidated partnerships
12

 
(23
)
 
(32
)
 
(21
)
 
435

 
 
(11
)
 
416

Net income attributable to Tanger Factory Outlet Centers, Inc.
73,417

 
27,150

 
108,132

 
44,075

 
24,481

 
 
100,567

 
58,993

Allocation to participating securities
(725
)
 
(294
)
 
(1,198
)
 
(494
)
 
(308
)
 
 
(1,019
)
 
(716
)
Net income available to common shareholders
$
72,692

 
$
26,856

 
$
106,934

 
$
43,581

 
$
24,173

 
 
$
99,548

 
$
58,277

Basic earnings per common share
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
$
0.76

 
$
0.28

 
$
1.13

 
$
0.46

 
$
0.26

 
 
$
1.05

 
$
0.62

Diluted earnings per common share
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
$
0.76

 
$
0.28

 
$
1.13

 
$
0.46

 
$
0.26

 
 
$
1.04

 
$
0.62

Weighted average common shares
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
95,124

 
94,944

 
94,768

 
94,746

 
94,741

 
 
95,034

 
94,639

Diluted
95,375

 
95,003

 
94,827

 
94,799

 
94,795

 
 
95,265

 
94,705


14
Supplemental Operating and Financial Data for the
Quarter Ended 6/30/2016


Unconsolidated Joint Venture Information (1) 

The following table details certain information as of June 30, 2016, except for Net Operating Income ("NOI") which is for the six months ended June 30, 2016, about various unconsolidated real estate joint ventures in which we have an ownership interest (dollars in millions):
Joint Venture
 
Center Location
 
Tanger's Ownership %
 
Square Feet
 
Tanger's Share of Total Assets
 
Tanger's Share of NOI
 
Tanger's Share of Net Debt (2)
Charlotte
 
Charlotte, NC
 
50.0
%
 
397,839

 
$
43.2

 
$
3.6

 
$
44.8

 
 
 
 
 
 
 
 
 
 
 
 
 
Columbus (3)
 
Columbus, OH
 
50.0
%
 
355,220

 
43.4

 
(0.1
)
 
—

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

 
29.8

 
2.3

 
32.4

 
 
 
 
 
 
 
 
 
 
 
 
 
National Harbor
 
National Harbor, MD
 
50.0
%
 
338,786

 
49.0

 
2.7

 
43.0

 
 
 
 
 
 
 
 
 
 
 
 
 
RioCan Canada (4)
 
Various
 
50.0
%
 
902,089

 
133.7

 
3.2

 
5.9

 
 
 
 
 
 
 
 
 
 
 
 
 
Savannah (5)
 
Savannah, GA
 
50.0
%
 
419,197

 
97.1

 
6.7

 
47.8

 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
 
 
 
 
 
 
$
396.2

 
$
18.4

 
$
173.9

(1)
Excludes the Westgate joint venture as we acquired our partners' interest in the center on June 30, 2016. Our share of the joint venture's NOI for the six months ended June 30, 2016 was $3.0 million.
(2)
Net of debt origination costs and premiums
(3)
Center opened in June 2016.
(4)
Includes a 161,307 square foot center in Bromont, Quebec; a 308,517 square foot center in Cookstown, Ontario; a 316,494 square foot center in Ottawa, Ontario; a 115,771 square foot center in Saint-Sauveur, Quebec; as well as due diligence costs for additional potential sites in Canada.
(5)
Based on capital contribution and distribution provisions in the joint venture agreement, we expect our economic interest in the venture's cash flow to be greater than indicated in the Tanger's Ownership % column, which states our legal interest in this venture. As of June 30, 2016, based upon the liquidation proceeds we would receive from a hypothetical liquidation of our investment based on depreciated book value, our estimated economic interest in the venture was approximately 98%. Our economic interest may fluctuate based on a number of factors, including mortgage financing, partnership capital contributions and distributions, and proceeds from gains or losses of asset sales.










15
Supplemental Operating and Financial Data for the
Quarter Ended 6/30/2016


Debt Outstanding Summary (dollars in thousands)
As of June 30, 2016
 
Principal
Balance
 
Stated
Interest Rate
 
Effective(1) Interest Rate
 
Maturity
Date
Unsecured debt:
 

 
 
 
 
 
 
Unsecured lines of credit (2)
$
259,200

 
LIBOR + 0.90%

 
 
 
10/29/2019
2020 Senior unsecured notes
300,000

 
6.125%

 
6.219%

 
6/1/2020
2023 Senior unsecured notes
250,000

 
3.875%

 
4.076%

 
12/1/2023
2024 Senior unsecured notes
250,000

 
3.75
%
 
3.819%

 
12/1/2024
Unsecured term loan (3)
325,000

 
LIBOR + 0.95%

 
 
 
4/13/2021
Net debt discounts and debt origination costs
(16,568
)
 
 

 
 
 
 
Total unsecured debt
$
1,367,632

 
 

 
 
 
 
Secured mortgage debt:
 
 
 
 
 
 
 
Atlantic City, NJ (4)
$
41,911

 
5.14% - 7.65%

 
5.05%

 
11/15/2021 - 12/8/2026
Foxwoods, CT (5)
70,250

 
LIBOR + 1.65%

 
 
 
12/5/2017
Southaven, MS (6)
58,989

 
LIBOR + 1.75%

 
 
 
4/29/2018
Westgate, AZ (7)
62,000

 
LIBOR + 1.75%

 
 
 
6/27/2017
Debt premium and debt origination costs
2,065

 
 
 
 
 
 
Total secured mortgage debt
$
235,215

 
 
 
 
 
 
Tanger's share of unconsolidated JV debt:
 

 
 

 
 
 
 
Charlotte (8)
$
45,000

 
LIBOR + 1.45%

 
 
 
11/24/2018
Galveston/Houston (9)
32,500

 
LIBOR + 1.50%

 
 
 
7/1/2017
National Harbor (10)
43,500

 
LIBOR + 1.65%

 
 
 
11/13/2019
RioCan Canada(11)
5,610

 
5.75
%
 
4.18
%
 
5/10/2020
Savannah (12)
48,469

 
LIBOR + 1.65%

 
 
 
5/21/2017
Debt premium and debt origination costs
(1,134
)
 
 
 
 
 
 
Total Tanger's share of unconsolidated JV debt
$
173,945

 
 

 
 
 
 
(1)
The effective interest rate excludes interest rate swap agreements that fix the base LIBOR rate at an average of 1.16% on notional amounts aggregating $325.0 million as follows:
(a)
Interest rate swaps entered into in October 2013 to hedge our variable interest rate exposure on notional amounts aggregating $150.0 million. These interest rate swap agreements fix the base LIBOR rate at an average of 1.30% through August 14, 2018, and
(b)
Interest rate swaps entered into in April 2016 to hedge our variable interest rate exposure on notional amounts aggregating $175.0 million. These interest rate swap agreements fix the base LIBOR rate at an average of 1.03% through January 1, 2021.



16
Supplemental Operating and Financial Data for the
Quarter Ended 6/30/2016


(2)
The company has an unsecured, syndicated credit line with a borrowing capacity totaling $500.0 million and a separate cash management line of credit with a borrowing capacity of $20.0 million with one of the participants in the syndication. The syndicated credit line may be increased to $1.0 billion through an accordion feature in certain circumstances. The unsecured lines of credit have an expiration date of October 29, 2019 with an option for a one year extension.

(3)
On April 13, 2016, the company amended the unsecured term loan to increase the size of the loan from $250 million to $325 million, extend the maturity date from February 23, 2019 to April 13, 2021, and reduce the LIBOR spread from LIBOR plus 105 basis points to LIBOR plus 95 basis points. The additional loan proceeds of $75 million were used to pay down balances under the Operating Partnership's unsecured lines of credit.

(4)
Represents mortgages assumed in the acquisition of this property.

(5)
Represents a mortgage loan with the ability to borrow up to $70.3 million. The loan initially matures on December 5, 2017, with two one -year extension options.

(6)
Represents a mortgage loan with the ability to borrow up to $60.0 million. The loan initially matures on April 29, 2018, with one two-year extension option. The additional $1.0 million is available to fund the remaining construction costs to complete the center which opened in November 2015.

(7)
Represents a mortgage loan with with the ability to borrow up to $62.0 million. On April 1, 2015, the joint venture exercised the option to extend the maturity date of the loan to June 27, 2017.

(8)
Represents a mortgage loan of $90.0 million. The loan initially matures on November 24, 2018, with one one -year extension option. As of June 30, 2016, the principal balance on the loan was $90.0 million.

(9)
Represents a mortgage loan with the ability to borrow up to $70.0 million with a maturity date of July 1, 2017 and the option to extend the maturity for one additional year. As of June 30, 2016, the principal balance on the loan was $65.0 million. The additional $5.0 million is available for future expansion.

(10)
Represents a mortgage loan with with the ability to borrow up to $87.0 million. As of June 30, 2016, the principal balance on the loan was $87.0 million.

(11)
Represents the mortgage assumed related to the acquisition of the Saint-Sauveur, Quebec property by the RioCan co-owners in November 2012. The mortgage has a principal balance of $11.2 million and matures on May 10, 2020.

(12)
Represents a mortgage loan with a with the ability to borrow up to $100.9 million. The mortgage loan has a maturity date of May 21, 2017, with two options to extend the maturity date each for one additional year. As of June 30, 2016, the principal balance on the loan was $96.9 million. The additional $4.0 million is available for future expansion.



17
Supplemental Operating and Financial Data for the
Quarter Ended 6/30/2016


Future Scheduled Principal Payments (dollars in thousands)
As of June 30, 2016
Year
Tanger
Consolidated
Payments
 
Tanger's Share
of Unconsolidated
JV Payments
 
Total
Scheduled
Payments
2016
$
1,442

 
$
134

 
$
1,576

2017
135,258

 
81,247

 
216,505

2018
62,172

 
45,294

 
107,466

2019 (1)
262,569

 
43,811

 
306,380

2020
303,566

 
4,593

 
308,159

2021
330,793

 
—

 
330,793

2022
4,436

 
—

 
4,436

2023
254,768

 
—

 
254,768

2024
255,140

 
—

 
255,140

2025
1,501

 
—

 
1,501

2026 & thereafter
5,705

 
—

 
5,705

 
$
1,617,350

 
$
175,079

 
$
1,792,429

Net debt discounts and debt origination costs
(14,503
)
 
(1,134
)
 
(15,637
)
 
$
1,602,847

 
$
173,945

 
$
1,776,792

(1)
Includes principal balance of $259.2 million outstanding under the company's unsecured lines of credit.
Senior Unsecured Notes Financial Covenants (1) 
As of June 30, 2016
 
Required
 
Actual
 
Compliance
Total Consolidated Debt to Adjusted Total Assets
<60%
 
50
%
 
Yes
Total Secured Debt to Adjusted Total Assets
<40%
 
7
%
 
Yes
Total Unencumbered Assets to Unsecured Debt
>150%
 
178
%
 
Yes
Consolidated Income Available for Debt Service to Annual Debt Service Charge
>1.5
 
5.49

 
Yes
(1)
For a complete listing of all debt covenants related to the company's Senior Unsecured Notes, as well as definitions of the above terms, please refer to the company's filings with the Securities and Exchange Commission.


18
Supplemental Operating and Financial Data for the
Quarter Ended 6/30/2016


NON-GAAP SUPPLEMENTAL MEASURES

Funds From Operations

Funds From Operations ("FFO") is a widely used measure of the operating performance for real estate companies that supplements net income (loss) determined in accordance with GAAP. We determine FFO based on the definition set forth by the National Association of Real Estate Investment Trusts ("NAREIT"), of which we are a member. FFO represents net income (loss) (computed in accordance with GAAP) before extraordinary items and gains (losses) on sale or disposal of depreciable operating properties, plus depreciation and amortization of real estate assets, impairment losses on depreciable real estate of consolidated real estate and after adjustments for unconsolidated partnerships and joint ventures, including depreciation and amortization, and impairment losses on investments in unconsolidated joint ventures driven by a measurable decrease in the fair value of depreciable real estate held by the unconsolidated joint ventures.

FFO is intended to exclude historical cost depreciation of real estate as required by GAAP which assumes that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO excludes depreciation and amortization of real estate assets, gains and losses from property dispositions and extraordinary items, it provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities and interest costs, providing perspective not immediately apparent from net income.

We present FFO because we consider it an important supplemental measure of our operating performance. In addition, a portion of cash bonus compensation to certain members of management is based on our FFO or Adjusted Funds From Operations ("AFFO"), which is described in the section below. We believe it is useful for investors to have enhanced transparency into how we evaluate our performance and that of our management. In addition, FFO is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO when reporting their results. FFO is also widely used by us and others in our industry to evaluate and price potential acquisition candidates. NAREIT has encouraged its member companies to report their FFO as a supplemental, industry-wide standard measure of REIT operating performance.

FFO has significant limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

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

•
FFO does not reflect changes in, or cash requirements for, our working capital needs;

•
Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and FFO does not reflect any cash requirements for such replacements;

•
FFO, which includes discontinued operations, may not be indicative of our ongoing operations; and

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

Because of these limitations, FFO should not be considered as a measure of discretionary cash available to us to invest in the growth of our business or our dividend paying capacity. We compensate for these limitations by relying primarily on our GAAP results and using FFO only as a supplemental measure.

Adjusted Funds From Operations

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

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

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

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

•
AFFO does not reflect changes in, or cash requirements for, our working capital needs;


19
Supplemental Operating and Financial Data for the
Quarter Ended 6/30/2016


•
Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and AFFO does not reflect any cash requirements for such replacements;

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

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

Because of these limitations, AFFO should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using AFFO only as a supplemental measure.

Funds Available for Distribution

Funds Available for Distribution ("FAD") is a non-GAAP financial measure that we define as FFO, excluding corporate depreciation, amortization of finance costs, amortization of net debt discount (premium), amortization of share-based compensation, straight line rent amounts, market rent amounts, less 2nd generation tenant allowances, capital improvement expenditures, and our share of the items listed above for our unconsolidated joint ventures. Investors, analysts and the Company utilize FAD as an indicator of common dividend potential. The FAD payout ratio, which represents regular distributions to common shareholders and unit holders of the Operating Partnership expressed as a percentage of FAD, facilitates the comparison of dividend coverage between REITs.

We believe that net income (loss) is the most directly comparable GAAP financial measure to FAD. FAD does not represent cash generated from operating activities in accordance with GAAP and should not be considered as an alternative to net income (loss) as an indication of our performance or to cash flows as a measure of liquidity or our ability to make distributions. Other companies in our industry may calculate FAD differently than we do, limiting its usefulness as a comparative measure.

Portfolio Net Operating Income and Same Center NOI

We present portfolio net operating income ("Portfolio NOI") and same center net operating income ("Same Center NOI") as supplemental measures of our operating performance. Portfolio NOI represents our property level net operating income which is defined as total operating revenues less property operating expenses and excludes termination fees and non-cash adjustments including straight-line rent, net above and below market rent amortization and gains or losses on the sale of outparcels recognized during the periods presented. Same Center NOI is calculated using Portfolio NOI for the properties that were operational for the entire portion of both comparable reporting periods and which were not acquired, renovated or subject to a material non-recurring event, such as a natural disaster, during the comparable reporting periods.

We believe Portfolio NOI and Same Center NOI are non-GAAP metrics used by industry analysts, investors and management to measure the operating performance of our properties because it provides a performance measure directly related to the revenues and expenses involved in owning and operating real estate assets and provides a perspective not immediately apparent from net income, FFO or AFFO. Because Same Center NOI excludes properties developed, redeveloped, acquired and sold; as well as non-cash adjustments, gains or losses on the sale of outparcels and termination rents; it highlights operating trends such as occupancy levels, rental rates and operating costs on properties that were operational for both comparable periods. Other REITs may use different methodologies for calculating Portfolio NOI and Same Center NOI, and accordingly, our Portfolio NOI and Same Center NOI may not be comparable to other REITs.

Portfolio NOI and Same Center NOI should not be considered alternatives to net income (loss) or as an indicator of our financial performance since they do not reflect the entire operations of our portfolio, nor do they reflect the impact of general and administrative expenses, acquisition-related expenses, interest expense, depreciation and amortization costs, other non-property income and losses, the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties, or trends in development and construction activities which are significant economic costs and activities that could materially impact our results from operations. Because of these limitations, Portfolio NOI and Same Center NOI should not be viewed in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using Portfolio NOI and Same Center NOI only as supplemental measures.

Non-GAAP Pro Rata Balance Sheet and Income Statement

The pro rata balance sheet and pro rata income statement data is not, and is not intended to be, a presentation in accordance with GAAP. The pro rata balance sheet and pro rata income statement data reflect our proportionate economic ownership of each asset in our portfolio that we do not wholly own. These assets may be found in the table found earlier in this report entitled, “Unconsolidated Joint Venture Information.” The amounts shown in the column labeled “Consolidated” were prepared on a basis consistent with the Company’s consolidated financial statements as filed with the SEC on the most recent Form 10-Q or 10-K, as applicable. The amounts in the column labeled “Pro Rata Portion Unconsolidated Joint Ventures” were derived on a property-by-property basis by applying to each financial statement line item the ownership percentage interest used to arrive at our share of net income or loss during the period when applying the equity method of accounting. A similar calculation was performed for the amounts in the column labeled “Pro Rata Portion Noncontrolling interests.”


20
Supplemental Operating and Financial Data for the
Quarter Ended 6/30/2016


We do not control the unconsolidated joint ventures and the presentations of the assets and liabilities and revenues and expenses do not represent our legal claim to such items. The operating agreements of the unconsolidated joint ventures generally provide that partners may receive cash distributions (1) quarterly, to the extent there is available cash from operations, (2) upon a capital event, such as a refinancing or sale or (3) upon liquidation of the venture. The amount of cash each partner receives is based upon specific provisions of each operating agreement and vary depending on factors including the amount of capital contributed by each partner and whether any contributions are entitled to priority distributions. Upon liquidation of the joint venture and after all liabilities, priority distributions and initial equity contributions have been repaid, the partners generally would be entitled to any residual cash remaining based on the legal ownership percentage shown in the table found earlier in this report entitled “Unconsolidated Joint Venture Information”.

We provide pro rata balance sheet and income statement information because we believe it assists investors and analysts in estimating our economic interest in our unconsolidated joint ventures when read in conjunction with the Company’s reported results under GAAP. The presentation of pro rata financial statements has limitations as an analytical tool. Some of these limitations include:

•
The amounts shown on the individual line items were derived by applying our overall economic ownership interest percentage determined when applying the equity method of accounting and do not necessarily represent our legal claim to the assets and liabilities, or the revenues and expenses; and
•
Other companies in our industry may calculate their pro rata interest differently than we do, limiting the usefulness as a comparative measure.

Because of these limitations, the pro rata balance sheet and income statement should not be considered in isolation or as a substitute for our financial statements as reported under GAAP. We compensate for these limitations by relying primarily on our GAAP results and using the pro rata balance sheet and income statement only supplementally.


21
Supplemental Operating and Financial Data for the
Quarter Ended 6/30/2016


Reconciliation of Net Income to FFO and AFFO (dollars and shares in thousands):
 
 
 
Three Months Ended
 
YTD
 
6/30/16
 
3/31/16
 
12/31/15
 
9/30/15
 
6/30/15
 
 
6/30/16
 
6/30/15
Net income
$
77,302

 
$
28,617

 
$
113,963

 
$
46,460

 
$
25,359

 
 
$
105,919

 
$
61,745

Adjusted for -
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization of real estate assets - consolidated
25,937

 
26,205

 
26,531

 
28,428

 
23,919

 
 
52,142

 
47,556

Depreciation and amortization of real estate assets - unconsolidated joint ventures
5,808

 
5,339

 
5,528

 
5,411

 
5,038

 
 
11,147

 
9,114

Gain on sale of assets and interests in unconsolidated entities
—

 
(4,887
)
 
(86,506
)
 
(20,215
)
 
—

 
 
(4,887
)
 
(13,726
)
Gain on previously held interest in acquired joint venture
(49,258
)
 
—

 
—

 
—

 
—

 
 
(49,258
)
 
—

FFO
59,789

 
55,274

 
59,516

 
60,084

 
54,316

 
 
115,063

 
104,689

FFO attributable to noncontrolling interests in other consolidated partnerships
(12
)
 
(47
)
 
(57
)
 
(45
)
 
412

 
 
(59
)
 
370

Allocation to participating securities
(564
)
 
(569
)
 
(625
)
 
(640
)
 
(583
)
 
 
(1,133
)
 
(1,143
)
FFO available to common shareholders (1)
$
59,213

 
$
54,658

 
$
58,834

 
$
59,399

 
$
54,145

 
 
$
113,871

 
$
103,916

As further adjusted for:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acceleration (reversal) of share-based compensation (2) (3)
—

 
293

 
(731
)
 
—

 
—

 
 
293

 
—

Demolition costs
182

 
—

 
—

 
—

 
—

 
 
182

 
—

Write-off of debt discount due to repayment of debt prior to maturity (4)
—

 
882

 
—

 
—

 
—

 
 
882

 
—

Impact of above adjustments to the allocation of earnings to participating securities
(1
)
 
(12
)
 
8

 
—

 
—

 
 
(13
)
 
—

AFFO available to common shareholders (1)
$
59,394

 
$
55,821

 
$
58,111

 
$
59,399

 
$
54,145

 
 
$
115,215

 
$
103,916

FFO per common share - diluted (1)
$
0.59

 
$
0.55

 
$
0.59

 
$
0.59

 
$
0.54

 
 
$
1.14

 
$
1.04

AFFO per common share - diluted (1)
$
0.59

 
$
0.56

 
$
0.58

 
$
0.59

 
$
0.54

 
 
$
1.15

 
$
1.04

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted Average Shares
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic weighted average common shares
95,124

 
94,944

 
94,768

 
94,746

 
94,741

 
 
95,034

 
94,639

Effect of notional units
183

 
—

 
—

 
—

 
—

 
 
167

 
—

Effect of outstanding options and restricted common shares
68

 
59

 
59

 
53

 
54

 
 
64

 
66

Diluted weighted average common shares (for earnings per share computations)
95,375

 
95,003

 
94,827

 
94,799

 
94,795

 
 
95,265

 
94,705

Exchangeable operating partnership units
5,053

 
5,053

 
5,078

 
5,078

 
5,078

 
 
5,053

 
5,078

Diluted weighted average common shares (for FFO and AFFO per share computations) (1)
100,428

 
100,056

 
99,905

 
99,877

 
99,873

 
 
100,318

 
99,783





22
Supplemental Operating and Financial Data for the
Quarter Ended 6/30/2016


Reconciliation of FFO to FAD (dollars and shares in thousands):
 
 
 
Three Months Ended
 
YTD
 
6/30/16
 
3/31/16
 
12/31/15
 
9/30/15
 
6/30/15
 
 
6/30/16
 
6/30/15
FFO available to common shareholders
$
59,213

 
$
54,658

 
$
58,834

 
$
59,399

 
$
54,145

 
 
$
113,871

 
$
103,916

Adjusted for -
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate depreciation excluded above
369

 
362

 
359

 
357

 
353

 
 
731

 
705

Amortization of finance costs
761

 
744

 
835

 
694

 
603

 
 
1,505

 
1,202

Amortization of net debt discount (premium)
117

 
959

 
191

 
139

 
(88
)
 
 
1,076

 
(74
)
Amortization of share-based compensation
3,654

 
4,001

 
3,152

 
3,994

 
3,953

 
 
7,655

 
7,566

Straight line rent adjustment
(1,713
)
 
(1,607
)
 
(1,605
)
 
(1,924
)
 
(1,549
)
 
 
(3,320
)
 
(2,818
)
Market rent adjustment
641

 
663

 
337

 
825

 
383

 
 
1,304

 
1,299

2nd generation tenant allowances
(2,804
)
 
(1,671
)
 
(3,960
)
 
(1,428
)
 
(4,128
)
 
 
(4,475
)
 
(5,084
)
Capital improvements
(8,391
)
 
(3,043
)
 
(1,231
)
 
(3,555
)
 
(4,558
)
 
 
(11,434
)
 
(7,296
)
Adjustments from unconsolidated joint ventures
(504
)
 
(384
)
 
(196
)
 
(506
)
 
(399
)
 
 
(888
)
 
(878
)
FAD available to common shareholders (1)
$
51,343

 
$
54,682

 
$
56,716

 
$
57,995

 
$
48,715

 
 
$
106,025

 
$
98,538

Dividends per share
$
0.325

 
$
0.285

 
$
0.285

 
$
0.285

 
$
0.285

 
 
$
0.610

 
$
0.525

Special dividends per share
—

 
—

 
0.210

 
—

 
—

 
 
—

 
—

Total dividends per share
$
0.325

 
$
0.285

 
$
0.495

 
$
0.285

 
$
0.285

 
 
$
0.610

 
$
0.525

FFO payout ratio (5)
55
%
 
52
%
 
48
%
 
48
%
 
53
%
 
 
54
%
 
50
%
FAD payout ratio (5)
64
%
 
52
%
 
50
%
 
49
%
 
58
%
 
 
58
%
 
53
%
Diluted weighted average common shares
100,428

 
100,056

 
99,905

 
99,877

 
99,873

 
 
100,318

 
99,783

(1)
Assumes the Class A common limited partnership units of the Operating Partnership held by the noncontrolling interests are exchanged for common shares of the Company. Each Class A common limited partnership unit is exchangeable for one of the Company's common shares, subject to certain limitations to preserve the Company's REIT status.
(2)
Represents restricted shares that vested immediately upon the death of Director Donald Drapkin for the three months ended March 31, 2016 and six months ended June 30, 2016.
(3)
The reversal of certain share-based compensation awards during the three months ended December 31, 2015 previously recognized on awards not expected to vest due to the announcement of the Company’s Chief Financial Officer's retirement in May 2016.
(4)
Due to the January 28, 2016 early repayment of the $150 million mortgage secured by the Deer Park, New York property, which was scheduled to mature August 30, 2018.
(5)
Excludes the special dividend of $0.21 per share paid on January 15, 2016 to holders of record on December 31, 2015.


23
Supplemental Operating and Financial Data for the
Quarter Ended 6/30/2016



Reconciliation of Net Income to Portfolio NOI and Same Center NOI for the consolidated portfolio (in thousands):
 
 
Three months ended
 
Six months ended
 
 
June 30,
 
June 30,
 
 
2016
 
2015
 
2016
 
2015
Net income
 
$
77,302

 
$
25,359

 
$
105,919

 
$
61,745

Adjusted to exclude:
 
 
 
 
 
 
 
 
Equity in earnings of unconsolidated joint ventures
 
$
(3,466
)
 
$
(2,046
)
 
$
(6,965
)
 
$
(4,589
)
Interest expense
 
13,800

 
13,088

 
28,684

 
26,177

Gain on sale of assets and interests in unconsolidated entities
 
—

 
—

 
(4,887
)
 
(13,726
)
Gain on previously held interest in acquired joint venture
 
(49,258
)
 
—

 
(49,258
)
 
—

Other nonoperating income (expense)
 
(38
)
 
493

 
(354
)
 
187

Depreciation and amortization
 
26,306

 
24,272

 
52,873

 
48,261

Other non-property income and losses
 
(379
)
 
(590
)
 
(560
)
 
(1,020
)
Demolition Costs
 
182

 
—

 
182

 
—

Corporate general and administrative expenses
 
11,448

 
11,357

 
22,913

 
22,622

Non-cash adjustments (1)
 
(1,049
)
 
(1,142
)
 
(1,971
)
 
(1,471
)
Termination rents
 
(1,487
)
 
(1,698
)
 
(2,042
)
 
(2,836
)
Portfolio NOI
 
73,361

 
69,093

 
144,534

 
135,350

Non-same center NOI (2)
 
(5,721
)
 
(3,909
)
 
(11,261
)
 
(7,328
)
Same Center NOI
 
$
67,640

 
$
65,184

 
$
133,273

 
$
128,022


(1)
Non-cash items include straight-line rent, above and below market rent amortization and gains or losses on outparcel sales.
(2)
Excluded from Same Center NOI: Foxwoods outlet center, which opened in May of 2015; Grand Rapids outlet center, which opened in July of 2015; Southaven outlet center, which opened in November 2015; Kittery I & II, Tuscola and West Branch outlet centers, which were sold in September 2015; Barstow outlet center, which was sold in October 2015; Fort Myers outlet center, which was sold in January 2016; and Glendale outlet center (Westgate), which was acquired in June 2016.


24
Supplemental Operating and Financial Data for the
Quarter Ended 6/30/2016


Non-GAAP Pro Rata Balance Sheet as of June 30, 2016 (dollars in thousands)
 
 
 
Non-GAAP Pro Rata Adjustments
 
 
 
GAAP Consolidated
 
Pro Rata Portion Noncontrolling Interests
 
Pro Rata Portion Unconsolidated Joint Ventures
 
Non-GAAP
Pro Rata Balance Sheet
Assets
 
 
 
 
 
 
 
Rental property
 
 
 
 
 
 
 
Land
$
254,809

 
$
—

 
$
54,147

 
$
308,956

Buildings, improvements and fixtures
2,377,765

 
(160
)
 
340,128

 
2,717,733

Construction in progress
61,038

 
—

 
4,221

 
65,259

 
2,693,612

 
(160
)
 
398,496

 
3,091,948

Accumulated depreciation
(769,777
)
 
—

 
(33,644
)
 
(803,421
)
Total rental property, net
1,923,835

 
(160
)
 
364,852

 
2,288,527

Cash and cash equivalents
27,107

 
—

 
12,780

 
39,887

Investments in unconsolidated joint ventures
210,486

 
—

 
(210,486
)
 
—

Deferred lease costs and other intangibles, net
133,578

 
—

 
10,005

 
143,583

Prepaids and other assets
84,346

 
—

 
6,546

 
90,892

Total assets
$
2,379,352

 
$
(160
)
 
$
183,697

 
$
2,562,889

Liabilities and Equity
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
Debt
 
 
 
 
 
 
 
Senior, unsecured notes, net
$
789,991

 
$
—

 
$
—

 
$
789,991

Unsecured term loans, net
321,980

 
—

 
—

 
321,980

Mortgages payable, net
235,215

 
—

 
173,945

 
409,160

Unsecured lines of credit, net
255,661

 
—

 
—

 
255,661

Total debt
1,602,847

 
—

 
173,945

 
1,776,792

Accounts payable and accruals
62,658

 
—

 
14,308

 
76,966

Other liabilities
53,433

 
—

 
(4,556
)
 
48,877

Total liabilities
1,718,938

 
—

 
183,697

 
1,902,635

Commitments and contingencies
—

 
—

 
—

 
—

Equity
 
 
 
 
 
 
 
Tanger Factory Outlet Centers, Inc.
 
 
 
 
 
 
 
Common shares
960

 
—

 
—

 
960

Paid in capital
811,853

 
—

 
—

 
811,853

Accumulated distributions in excess of net income
(153,465
)
 
—

 
—

 
(153,465
)
Accumulated other comprehensive loss
(32,090
)
 
—

 
—

 
(32,090
)
Equity attributable to Tanger Factory Outlet Centers, Inc.
627,258

 
—

 
—

 
627,258

Equity attributable to noncontrolling interests
 
 
 
 
 
 
 
Noncontrolling interests in Operating Partnership
32,996

 
—

 
—

 
32,996

Noncontrolling interest in other consolidated partnerships
160

 
(160
)
 
—

 
—

Total equity
660,414

 
(160
)
 
—

 
660,254

Total liabilities and equity
$
2,379,352

 
$
(160
)
 
$
183,697

 
$
2,562,889




25
Supplemental Operating and Financial Data for the
Quarter Ended 6/30/2016


Non-GAAP Pro Rata Statement of Operations year to date June 30, 2016 (dollars in thousands)
 
 
 
Non-GAAP Pro Rata Adjustments
 
 
 
GAAP Consolidated
 
Pro Rata Portion Noncontrolling Interests
 
Pro Rata Portion Unconsolidated Joint Ventures
 
Non-GAAP
Pro Rata Statement of Operations
Revenues
 
 
 
 
 
 
 
Base rentals
$
147,626

 
$
(6
)
 
$
20,682

 
$
168,302

Percentage rentals
4,476

 
—

 
1,008

 
5,484

Expense reimbursements
63,996

 
(3
)
 
10,933

 
74,926

Management, leasing and other services
2,453

 
—

 
—

 
2,453

Other income
3,587

 
—

 
844

 
4,431

Total revenues
222,138

 
(9
)
 
33,467

 
255,596

Expense
 
 
 
 
 
 
 
Property operating
72,886

 
(2
)
 
11,923

 
84,807

General and administrative
23,240

 
—

 
161

 
23,401

Depreciation and amortization
52,873

 
(3
)
 
11,102

 
63,972

Total expenses
148,999

 
(5
)
 
23,186

 
172,180

Operating income
73,139

 
(4
)
 
10,281

 
83,416

Other income/(expense)
 
 
 
 
 
 
 
Interest expense
(28,684
)
 
2

 
(3,363
)
 
(32,045
)
Gain on sale of assets and interests in unconsolidated entities
4,887

 
—

 
—

 
4,887

Gain on previously held interest in acquired joint venture
49,258

 
—

 
—

 
49,258

Other nonoperating income (expense)
354

 
—

 
2

 
356

Income before equity in earnings of unconsolidated joint ventures
98,954

 
(2
)
 
6,920

 
105,872

Equity in earnings of unconsolidated joint ventures
6,965

 
(9
)
 
(6,956
)
 
—

Net income
105,919

 
(11
)
 
(36
)
 
105,872

Noncontrolling interests in Operating Partnership
(5,341
)
 
—

 
—

 
(5,341
)
Noncontrolling interests in other consolidated partnerships
(11
)
 
11

 
—

 
—

Net income attributable to Tanger Factory Outlet Centers, Inc.
100,567

 
—

 
(36
)
 
100,531

Allocation to participating securities
(1,019
)
 
—

 
—

 
(1,019
)
Net income available to common shareholders
$
99,548

 
$
—

 
$
(36
)
 
$
99,512



26
Supplemental Operating and Financial Data for the
Quarter Ended 6/30/2016


Investor Information
  
Tanger Outlet Centers welcomes any questions or comments from shareholders, analysts, investment managers, media and prospective investors. Please address all inquiries to our Investor Relations Department.
Tanger Factory Outlet Centers, Inc.
Investor Relations
Phone:
(336) 834-6892
Fax:
(336) 297-0931
e-mail:
tangerir@tangeroutlet.com
Mail:
Tanger Factory Outlet Centers, Inc.
 
3200 Northline Avenue
 
Suite 360
 
Greensboro, NC 27408


27
Supplemental Operating and Financial Data for the
Quarter Ended 6/30/2016

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TANGER FACTORY OUTLET CENTERS, INC Reports