NAREIT Presentation June 9th and 10th, 2010
Tanger Outlets at the Arches – Deer Park, NY
2010 YTD Summary
Historyy of Consistent Success
State of the Industry
¾ Industry consolidation continues to benefit owners of larger centers.
¾ Tanger, Simon, and Prime Retail combined own approximately 60% of
the total outlet gross leasable area.
¾ New supply continues to be limited.
¾ Each year new brand name manufacturers are opening stores and
existing manufacturers are opening new concepts
¾ Outlet center occupancy levels have not been
impacted to the same extent as other retail
properties by recent bankruptcy and store closing
announcements among retailers.
¾ In a challenging retail environment, outlet stores
be a viable
i bl and
fit bl channel
distribution for retailers and manufacturers.
¾ Landlord revenues are protected by the relatively
long-term nature of tenant leases.
Tanger – Charleston, SC
f l in
bt i i iincreases iin rental
t l rates
on renewals and releasing of space.
¾ New development opportunities exist as there is still tenant demand for
¾ Acquisition opportunities still exist but are limited and timing is unknown.
¾ Tanger divests itself of under
smaller assets and reinvests the proceeds
in new developments and expansions or
Tanger – Washington, PA
2010 YTD Hi
¾ Moody’s upgrade to Baa2 from Baa3 on May 20, 2010
¾ Successfully closed a $300 million 10 year bond offering with a 6.125%
coupon (priced at 99.3% of par to yield 6.219%) on June 7, 2010. Proceeds
used to repay $235 million unsecured term loan, terminate underlying
interest rate swaps, and pay down outstanding balances under unsecured
revolving lines of credit.
¾ Saks Off Fifth opened in our Washington, PA bringing occupancy at the
center to 94%
1Q 2010 Highlights
¾ 0.7% increase in same center net operating income.
8 8% iincrease iin average b
base rentt on lleases renewed.
¾ 22.5% increase in average base rent on released space.
94 8% occupancy rate for wholly
owned portfolio as of March 31
¾ Tenant comparable sales of $342 per square foot for the rolling 12 months
ended March 31, 2010.
¾ Year end occupancy of 96% for stabilized, wholly-owned properties,
representing the 29th consecutive year of year-end average occupancy of
95% or greater.
¾ Increased common dividend as we have each year since our IPO.
¾ Only 2.5% of revenues came from overage rent based upon tenant sales.
l d exchange
l d to 3
which reduced outstanding debt by $142.3 million, in exchange for
approximately 4.9 million common shares.
4 0 000 common share
ff i at a price
i off $3
share, with net proceeds amounting to approximately $116.8 million.
¾ Moody’s rating upgraded from Baa3 stable to Baa3 positive in September.
¾ Welcomed to our portfolio 32 new tenants, including: Express, Talbots,
Dooney & Bourke, BCBG Girls, Papaya Clothiers, and QVC.
¾ Commenced construction on a 317,000
317 000 sf wholly-owned
wholly owned new development
in Mebane, NC in October.
Note: As of March 31, 2010
Well positioned portfolio of 31 wholly-owned properties throughout 21
states, plus ownership interests in 2 joint venture properties.
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Summary Financial Results for the
Year Ended 12/31/09
FFO ((in millions))
Excludes $2.9 million termination rents, $3.3 million abandonment of due diligence costs, $8.9 million charge for
settlement of T-locks, $406,000 debt prepayment premium.
Excludes $1.5 million lease termination fees, $800,000 abandonment of due diligence costs, $10.3 million charge for
executive severance, $5.2 million impairment charge for Commerce I, and $3.3 million gain on sale of Washington, PA
Represents the midpoint of $2.37 to $2.47 revised guidance range (See Appendix), adjusted to exclude $6.7 million
charge for write-off of unamortized loan costs and settlement of interest rate swaps associated with prepayment of
$235 million term loan.
FFO per share
2008 Adj. (1)
2009 Adj. (2)
2010E Adj. (3)
Excludes $0.11/share termination rents, $.08/share abandonment of due diligence costs, $0.24/share charge for settlement of Tlocks & debt prepayment premium.
Excludes $0.04/share lease termination fees, $0.02/share abandonment of due diligence costs, $0.25/share charge for
executive severance, $0.12/share impairment charge for Commerce I, and $0.08/share gain on sale of Washington, PA
Represents the midpoint of $2.37 to $2.47 revised guidance range (see Appendix), adjusted to exclude $0.14 charge for write14
off of unamortized loan costs and settlement of interest rate swaps associated with prepayment of $235 million term loan.
Total Enterprise Value
(as of March 31, 2010)
Summary Operating Results
Growth in Same Center NOI
Rental Rate Increases on Renewals and Releasing
Straight-line releasing spreads =
22.5% in 1Q2010, 30.9% in 2009,
44.1% in 2008
(On a cash basis)
Straight-line renewal spreads =
8.8% in 1Q2010, 9.7% in 2009,
17.5% in 2008
5 5% 6.3%
Average Tenant Sales Per Square Foot
(3% compound annual increase)
¾ 317,000 sf development
$64 9 million budget
¾ Projected opening in time for 2010
holiday shopping season
or out for signature
¾ Leases signed
approximately 86% of GLA as of
June 1, 2010
¾ Tenants include Saks Off Fifth, Coach,
GAP, Banana Republic,
Tommy Hilfiger, & more
Hilton Head I, SC
¾ Currentlyy 162,000
¾ Shopper unfriendly design
Hilton Head I, SC
¾ 176,000 sf GLA plus 4 outparcel pads when redeveloped
¾ Shopper-friendly redevelopment will be 1st LEED certified green shopping
center in Beaufort
¾ $50 million investment
¾ Projected opening in second half of 2011
Internal Criteria for Development
¾Predevelopment costs are limited to those associated with:
¾ Costs to control the land (option contract costs)
¾ Pre-leasing costs
¾ Due diligence costs
¾Criteria required to purchase land and begin development
¾ Positive results of the due diligence process
¾ Pre-leasing of 50% or greater with an acceptable tenant mix and visibility of
leasing of the remaining leasable space to 75%
¾ Receipt of all non-appealable permits required to obtain a building permit.
¾ Acceptable return on cost analysis
Summary of Financial
The following are strategic objectives of Tanger’s financial decision
¾ Focus on improving investment grade rating
g and leverage
¾ Maintain q
¾ Continue the use of unsecured financing
g on lines of credit
¾ Maintain relativelyy low usage
¾ Use off balance sheet joint ventures only when necessary
¾ Maintain manageable levels of debt maturities
¾ Recycle capital through the sale of non-core assets and land
¾ Generate capital internally (cash flow in excess of dividends paid)
g Interest Rates
As of March 31, 2010,
only 16% of total debt at
$93 400 000
$491 529 000
Current capacity of $325 million under lines of credit
¾ Bank of America, $100 million, 06/30/2011 maturity
¾ Wells Fargo, $125 million, 06/30/2011 maturity
¾ SunTrust, $40 million, 08/31/2011 maturity
¾ BB&T, $35 million, 06/30/2011 maturity
¾ Citicorp, $25 million, 06/30/2011 maturity
As of March 31
Tanger s usage was only 29% of total
available capacity under lines of credit. On a proforma basis after
use of proceeds from the $300 million bond issuance on June 7th,
o ld ha
e been onl
Proforma Maturities of Debt Outstanding as of 3/31/10 ((1))
Assumes use of proceeds of $300M bond offering on March 31, 2010 for repayment of $235M term loan
due June 2011 and reduction of line of credit balances.
Represents convertible debt, which is puttable at holders’ option beginning 08/15/2011.
Reinvesting in the Company
Excess cash flow over the dividend is reinvested
in existing centers, new expansions, new
developments, acquisitions or to pay down debt
– 2009 payout ratio of 56%
$56.4 Million Dividends
$56.4 Million Dividends
Key Financial Ratios as of March 31, 2010:
Key Bond Covenants (based on GAAP consolidation):
• Total debt to adjusted total assets
• Unencumbered assets to unsecured debt
• Interest coverage
• Secured debt to adjusted total assets
History of Consistent Results and
Only public REIT with pure outlet portfolio
¾Conservatively Structured Balance Sheet
22% debt to market cap at March 31, 2010
100% unencumbered portfolio
Recognized & respected by tenants and shoppers alike
¾Tenured Management Team
Executives average 15 years of Tanger service
Will not build on speculation
¾Strong Portfolio of Operating Properties
High credit quality tenants
Stable annual lease rollover
Properties built to easily reconfigure
No big boxes
Estimates of future net income per share and FFO per share are by
definition, and certain other matters discussed in this press release
regarding our remerchandising strategy
strategy, the renewal and re
space, the development of new centers and redevelopment of existing
centers, tenant sales and sales trends, interest rates, funds from
operations and coverage of the current dividend may be forward-looking
statements within the meaning of the federal securities laws. These
forward-looking statements are subject to risks and uncertainties. Actual
results could differ materially from those projected due to various factors
including but not limited to
to, the risks associated with general economic
and local real estate conditions, the company’s ability to meet its
obligations on existing indebtedness or refinance existing indebtedness on
favorable terms, the availability and cost of capital, the company’s ability to
bilit tto collect
ll t rentt d
due tto th
bankruptcy or insolvency of tenants or otherwise, and competition. For a
more detailed discussion of the factors that affect our operating results,
interested parties should review the Tanger Factory Outlet Centers, Inc.
Annual Report on Form 10-K for the fiscal year ended December 31, 2009.
ili ti off Guidance
Net income to FFO
Estimated diluted net income per common share
Noncontrolling interest, gain/loss on the sale of real
estate, depreciation and amortization
uniquely significant to real estate including
noncontrolling interest share, and our share
of joint ventures
Estimated diluted FFO per share
Includes $0.14 charge for write-off of unamortized loan costs and settlement of interest rate swaps associated
with prepayment of $235 million term loan.