United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
 
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended June 30, 2012
OR
 
o
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 1-11986 (Tanger Factory Outlet Centers, Inc.)
Commission file number 333-3526-01 (Tanger Properties Limited Partnership)

TANGER FACTORY OUTLET CENTERS, INC.
TANGER PROPERTIES LIMITED PARTNERSHIP
(Exact name of Registrant as specified in its charter)
North Carolina (Tanger Factory Outlet Centers, Inc.)
56-1815473
North Carolina (Tanger Properties Limited Partnership)
56-1822494
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
 
 
3200 Northline Avenue, Suite 360, Greensboro, NC 27408
(Address of principal executive offices)
 
 
(336) 292-3010
(Registrant's telephone number)
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.
Tanger Factory Outlet Centers, Inc.
Yes x   No o
Tanger Properties Limited Partnership
Yes x   No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Tanger Factory Outlet Centers, Inc.
Yes x   No o
Tanger Properties Limited Partnership
Yes x   No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer: and “smaller reporting company” (as defined in Rule 12b-2 of the Securities and Exchange Act of 1934).
Tanger Factory Outlet Centers, Inc.
 
 
 
 
x Large accelerated filer
 
o Accelerated filer
 
o Non-accelerated filer
 
o Smaller reporting company
Tanger Properties Limited Partnership
 
 
 
 
o Large accelerated filer
 
o Accelerated filer
 
x Non-accelerated filer
 
o Smaller reporting company





Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Act).
Tanger Factory Outlet Centers, Inc.
Yes o   No x
Tanger Properties Limited Partnership
Yes o   No x

As of August 3, 2012, there were 93,883,788 common shares of Tanger Factory Outlet Centers, Inc. outstanding, $.01 par value.




EXPLANATORY NOTE
This report combines the quarterly reports on Form 10-Q for the quarter ended June 30, 2012 of Tanger Factory Outlet Centers, Inc. and Tanger Properties Limited Partnership. Unless the context indicates otherwise, the term, Company, refers to Tanger Factory Outlet Centers, Inc. and subsidiaries and the term, Operating Partnership, refers to Tanger Properties Limited Partnership and subsidiaries. The terms "we", "our" and "us" refer to the Company or the Company and the Operating Partnership together, as the text requires.

Tanger Factory Outlet Centers, Inc. and subsidiaries is one of the largest owners and operators of outlet centers in the United States. The Company is a fully-integrated, self-administered and self-managed real estate investment trust ("REIT") which, through its controlling interest in the Operating Partnership, focuses exclusively on developing, acquiring, owning, operating and managing outlet shopping centers. The outlet centers and other assets are held by, and all of the operations are conducted by, the Operating Partnership and its subsidiaries. Accordingly, the descriptions of the business, employees and properties of the Company are also descriptions of the business, employees and properties of the Operating Partnership.

The Company owns the majority of the units of partnership interest issued by the Operating Partnership through its two wholly-owned subsidiaries, Tanger GP Trust and Tanger LP Trust. Tanger GP Trust controls the Operating Partnership as its sole general partner. Tanger LP Trust holds a limited partnership interest. Through May 31, 2011, the Tanger family, through its ownership of the Tanger Family Limited Partnership, held the remaining units as a limited partner. On June 1, 2011, the Tanger Family Limited Partnership was dissolved, and the units of the Operating Partnership owned by the Tanger Family Limited Partnership were distributed to the individual beneficial owners of the Tanger Family Limited Partnership, making each such individual beneficial owner an individual limited partner of the Operating Partnership (collectively the "Family Limited Partners").

As of June 30, 2012, the Company, through its ownership of Tanger GP Trust and Tanger LP Trust, owned 23,370,997 units of the Operating Partnership and the Family Limited Partners collectively owned 1,330,440 units. Each unit held by the Family Limited Partners is exchangeable for four of the Company's common shares, subject to certain limitations to preserve the Company's REIT status. Prior to the Company's 2 for 1 splits of its common shares on January 24, 2011 and December 28, 2004, respectively, the exchange ratio was one for one.

Management operates the Company and the Operating Partnership as one enterprise. The management of the Company consists of the same members as the management of the Operating Partnership. These individuals are officers of the Company and employees of the Operating Partnership. The individuals that comprise the Company's Board of Directors are also the same individuals that make up the Tanger GP Trust's Board of Trustees.

We believe combining the quarterly reports on Form 10-Q of the Company and the Operating Partnership into this single report results in the following benefits:

enhancing investors' understanding of the Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;
eliminating duplicative disclosure and providing a more streamlined and readable presentation since a substantial portion of the disclosure applies to both the Company and the Operating Partnership; and
creating time and cost efficiencies through the preparation of one combined report instead of two separate reports.

3



There are a few differences between the Company and the Operating Partnership, which are reflected in the disclosure in this report. We believe it is important to understand the differences between the Company and the Operating Partnership in the context of how the Company and the Operating Partnership operate as an interrelated consolidated company. As stated above, the Company is a REIT, whose only material asset is its ownership of partnership interests of the Operating Partnership through its wholly-owned subsidiaries, Tanger GP Trust and Tanger LP Trust. As a result, the Company does not conduct business itself, other than issuing public equity from time to time and incurring expenses required to operate as a public company. However, all operating expenses incurred by the Company are reimbursed by the Operating Partnership, thus the only material item on the Company's income statement is its equity in the earnings of the Operating Partnership. Therefore, the assets and liabilities and the revenues and expenses of the Company and the Operating Partnership are the same on their respective financial statements, except for immaterial differences related to cash, other assets and accrued liabilities that arise from public company expenses paid by the Company. The Company itself does not hold any indebtedness but does guarantee certain debt of the Operating Partnership, as disclosed in this report. The Operating Partnership holds substantially all the assets of the Company and holds the ownership interests in the Company's consolidated and unconsolidated joint ventures. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity. Except for net proceeds from public equity issuances by the Company, which are required to be contributed to the Operating Partnership in exchange for partnership units, the Operating Partnership generates the capital required through its operations, its incurrence of indebtedness or through the issuance of partnership units.

Noncontrolling interests, shareholder's equity and partners' capital are the main areas of difference between the consolidated financial statements of the Company and those of the Operating Partnership. The limited partnership interests in the Operating Partnership held by the Family Limited Partners are accounted for as partners' capital in the Operating Partnership's financial statements and as noncontrolling interests in the Company's financial statements.
To help investors understand the significant differences between the Company and the Operating Partnership, this report presents the following separate sections for each of the Company and the Operating Partnership:
Consolidated financial statements;
The following notes to the consolidated financial statements:
Debt;
Share-Based Compensation of the Company and Equity-Based Compensation of the Operating Partnership;
Earnings Per Share and Earnings Per Unit and
Liquidity and Capital Resources in the Management's Discussion and Analysis of Financial Condition and Results of Operations.
This report also includes separate Item 4. Controls and Procedures sections and separate Exhibit 31 and 32 certifications for each of the Company and the Operating Partnership in order to establish that the Chief Executive Officer and the Chief Financial Officer of each entity have made the requisite certifications and that the Company and Operating Partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934 and 18 U.S.C. §1350.
In order to highlight the differences between the Company and the Operating Partnership, the separate sections in this report for the Company and the Operating Partnership specifically refer to the Company and the Operating Partnership. In the sections that combine disclosure of the Company and the Operating Partnership, this report refers to actions or holdings as being actions or holdings of the Company. Although the Operating Partnership is generally the entity that enters into contracts and joint ventures and holds assets and debt, reference to the Company is appropriate because the business is one enterprise and the Company operates the business through the Operating Partnership.

As the 100% owner of Tanger GP Trust, the general partner with control of the Operating Partnership, the Company consolidates the Operating Partnership for financial reporting purposes. The separate discussions of the Company and the Operating Partnership in this report should be read in conjunction with each other to understand the results of the Company on a consolidated basis and how management operates the Company.

4



TANGER FACTORY OUTLET CENTERS, INC. AND TANGER PROPERTIES LIMITED PARTNERSHIP
Index
 
Page Number
Part I. Financial Information
Item 1.
 
FINANCIAL STATEMENTS OF TANGER FACTORY OUTLET CENTERS, INC. (Unaudited)
 
Consolidated Balance Sheets - as of June 30, 2012 and December 31, 2011
Consolidated Statements of Operations - for the three and six months ended June 30, 2012 and 2011
Consolidated Statements of Comprehensive Income - for the three and six months ended June 30, 2012 and 2011
Consolidated Statements of Equity - for the six months ended June 30, 2012 and 2011
Consolidated Statements of Cash Flows - for the six months ended June 30, 2012 and 2011
 
 
FINANCIAL STATEMENTS OF TANGER PROPERTIES LIMITED PARTNERSHIP (Unaudited)
 
Consolidated Balance Sheets - as of June 30, 2012 and December 31, 2011
Consolidated Statements of Operations - for the three and six months ended June 30, 2012 and 2011
Consolidated Statements of Comprehensive Income - for the three and six months ended June 30, 2012 and 2011
Consolidated Statements of Equity - for the six months ended June 30, 2012 and 2011
Consolidated Statements of Cash Flows - for the six months ended June 30, 2012 and 2011
 
 
Notes to Consolidated Financial Statements of Tanger Factory Outlet Centers, Inc. and Tanger Properties Limited Partnership
 
 
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
 
 
Item 3. Quantitative and Qualitative Disclosures about Market Risk
 
 
Item 4. Controls and Procedures (Tanger Factory Outlet Centers, Inc. and Tanger Properties Limited Partnership)
 
Part II. Other Information
 
 
Item 1. Legal Proceedings
 
 
Item 1A. Risk Factors
 
 
Item 6. Exhibits
 
 
Signatures


5



PART I. - FINANCIAL INFORMATION

Item 1 - Financial Statements of Tanger Factory Outlet Centers, Inc.

TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data, unaudited)
 
 
June 30,
2012
 
December 31,
2011
ASSETS
 
 

 
 

Rental property
 
 

 
 

Land
 
$
148,002

 
$
148,002

Buildings, improvements and fixtures
 
1,787,050

 
1,764,494

Construction in progress
 

 
3,549

 
 
1,935,052

 
1,916,045

Accumulated depreciation
 
(547,167
)
 
(512,485
)
Total rental property, net
 
1,387,885

 
1,403,560

Cash and cash equivalents
 
11,855

 
7,894

Investments in unconsolidated joint ventures, net
 
72,394

 
28,481

Deferred lease costs and other intangibles, net
 
109,850

 
120,636

Deferred debt origination costs, net
 
10,219

 
8,861

Prepaids and other assets
 
50,172

 
52,383

Total assets
 
$
1,642,375

 
$
1,621,815

LIABILITIES AND EQUITY
 
 
 
 
Liabilities
 
 

 
 

Debt
 
 

 
 

Senior, unsecured notes (net of discount of $2,104 and $2,237, respectively)
 
$
547,896

 
$
547,763

Unsecured term loans (net of discount of $620 and $692, respectively)
 
259,380

 
9,308

Mortgages payable (including premiums of $6,902 and $7,434, respectively)
 
109,583

 
111,379

Unsecured lines of credit
 
141,224

 
357,092

Total debt
 
1,058,083

 
1,025,542

Construction trade payables
 
14,746

 
13,656

Accounts payable and accrued expenses
 
38,011

 
37,757

Other liabilities
 
16,283

 
16,428

Total liabilities
 
1,127,123

 
1,093,383

Commitments and contingencies
 


 


Equity
 
 

 
 

Tanger Factory Outlet Centers, Inc.
 
 

 
 

Common shares, $.01 par value, 300,000,000 shares authorized, 93,483,988 and 86,727,656 shares issued and outstanding at June 30, 2012 and December 31, 2011, respectively
 
935

 
867

Paid in capital
 
758,381

 
720,073

Accumulated distributions in excess of net income 
 
(279,657
)
 
(261,913
)
Accumulated other comprehensive income
 
1,405

 
1,535

Equity attributable to Tanger Factory Outlet Centers, Inc.
 
481,064

 
460,562

Equity attributable to noncontrolling interests
 
 
 
 
Noncontrolling interests in Operating Partnership
 
27,386

 
61,027

Noncontrolling interests in other consolidated partnerships
 
6,802

 
6,843

Total equity
 
515,252

 
528,432

Total liabilities and equity
 
$
1,642,375

 
$
1,621,815


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

6



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

 
 
Three months ended
June 30,
 
Six months ended
June 30,
 
 
2012
 
2011
 
2012
 
2011
Revenues
 
 
 
 
 
 

 
 
Base rentals
 
$
58,583

 
$
48,393

 
$
115,802

 
$
94,612

Percentage rentals
 
1,618

 
1,137

 
3,362

 
2,528

Expense reimbursements
 
24,989

 
20,616

 
48,465

 
41,821

Other income
 
2,145

 
1,955

 
3,949

 
3,879

Total revenues
 
87,335

 
72,101

 
171,578

 
142,840

Expenses
 
 
 


 
 
 
 

Property operating
 
27,977

 
23,765

 
54,065

 
47,873

General and administrative
 
8,699

 
7,185

 
18,719

 
13,952

Acquisition costs
 

 
974

 

 
1,541

Abandoned development costs
 

 

 

 
158

Depreciation and amortization
 
24,923

 
17,858

 
50,438

 
35,823

Total expenses
 
61,599

 
49,782

 
123,222

 
99,347

Operating income
 
25,736

 
22,319

 
48,356

 
43,493

Interest expense
 
12,411

 
10,713

 
24,745

 
21,038

Income before equity in losses of unconsolidated joint ventures
 
13,325

 
11,606

 
23,611

 
22,455

Equity in losses of unconsolidated joint ventures
 
(867
)
 
(764
)
 
(2,319
)
 
(796
)
Net income
 
12,458

 
10,842

 
21,292

 
21,659

Noncontrolling interests in Operating Partnership
 
(766
)
 
(1,420
)
 
(1,479
)
 
(2,839
)
Noncontrolling interests in other consolidated partnerships
 
25

 

 
32

 

Net income attributable to Tanger Factory Outlet Centers, Inc.
 
$
11,717

 
$
9,422

 
$
19,845

 
$
18,820

 
 
 
 
 
 
 
 
 
Basic earnings per common share:
 
 
 
 
 
 

 
 

Net income
 
$
0.13

 
$
0.11

 
$
0.21

 
$
0.23

Diluted earnings per common share:
 
 
 
 
 
 
 
 
Net income
 
$
0.12

 
$
0.11

 
$
0.21

 
$
0.23

 
 
 
 
 
 
 
 
 
Dividends paid per common share
 
$
0.2100

 
$
0.2000

 
$
0.4100

 
$
0.3938

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

7



TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands, unaudited)
 
 
Three months ended
June 30,
 
Six months ended
June 30,
 
 
2012
 
2011
 
2012
 
2011
Net income
 
$
12,458

 
$
10,842

 
$
21,292

 
$
21,659

Other comprehensive loss
 
 
 
 
 
 
 

Reclassification adjustment for amortization of gain on settlement of US treasury rate lock included in net income
 
(87
)
 
(82
)
 
(173
)
 
(163
)
Foreign currency translation adjustments
 
39

 

 
34

 

Changes in fair value of our portion of our unconsolidated joint ventures' cash flow hedges
 

 

 

 
46

Other comprehensive loss
 
(48
)
 
(82
)
 
(139
)
 
(117
)
Comprehensive income
 
12,410

 
10,760

 
21,153

 
21,542

Comprehensive income attributable to noncontrolling interests
 
(738
)
 
(1,409
)
 
(1,438
)
 
(2,823
)
Comprehensive income attributable to Tanger Factory Outlet Centers, Inc.
 
$
11,672

 
$
9,351

 
$
19,715

 
$
18,719

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


8



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


 
 
Common shares
Paid in capital
Accumulated distributions in excess of earnings
Accumulated other comprehensive income
Total Tanger Factory Outlet Centers, Inc. equity
Noncontrolling interests in Operating Partnership
Noncontrolling
interests in
other consolidated partnerships
Total
 equity
Balance,
December 31, 2011
 
$
867

$
720,073

$
(261,913
)
$
1,535

$
460,562

$
61,027

$
6,843

$
528,432

Net income
 


19,845


19,845

1,479

(32
)
21,292

Other comprehensive loss
 



(130
)
(130
)
(9
)

(139
)
Compensation under Incentive Award Plan
 

5,797



5,797



5,797

Issuance of 20,200 common shares upon exercise of options
 

241



241



241

Grant of 566,000 restricted shares, net of forfeitures
 
6

(6
)






Adjustment for noncontrolling interests in Operating Partnership
 

32,329



32,329

(32,329
)


Adjustment for noncontrolling interests in other consolidated partnerships
 

9



9


(9
)

Exchange of 1,542,533 Operating Partnership units for 6,170,132 common shares
 
62

(62
)






Common dividends ($.41 per share)
 


(37,589
)

(37,589
)


(37,589
)
Distributions to noncontrolling interests in Operating Partnership
 





(2,782
)

(2,782
)
Balance,
June 30, 2012
 
$
935

$
758,381

$
(279,657
)
$
1,405

$
481,064

$
27,386

$
6,802

$
515,252


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


9



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

 
 
Common shares
Paid in capital
Accumulated distributions in excess of earnings
Accumulated other comprehensive income
Total Tanger Factory Outlet Centers, Inc. equity
Noncontrolling interests in Operating Partnership
Total
 equity
Balance, December 31, 2010
 
$
810

$
604,359

$
(240,024
)
$
1,784

$
366,929

$
54,966

$
421,895

Net income
 


18,820


18,820

2,839

21,659

Other comprehensive loss
 



(101
)
(101
)
(16
)
(117
)
Compensation under Incentive Award Plan
 

3,618



3,618


3,618

Grant of 312,400 restricted shares, net of forfeitures
 
3

(3
)





Issuance of 4,500 common shares upon exercise of options
 

43



43


43

Adjustment for noncontrolling interests in Operating Partnership
 

(261
)


(261
)
261


Common dividends ($.3938 per share)
 


(32,009
)

(32,009
)

(32,009
)
Distributions to noncontrolling interests in Operating Partnership
 





(4,776
)
(4,776
)
Balance, June 30, 2011
 
$
813

$
607,756

$
(253,213
)
$
1,683

$
357,039

$
53,274

$
410,313


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



10



TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
 
 
Six Months Ended
June 30,
 
 
2012
 
2011
OPERATING ACTIVITIES
 
 
 
 

Net income
 
$
21,292

 
$
21,659

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
50,438

 
35,823

Amortization of deferred financing costs
 
1,146

 
948

Equity in losses of unconsolidated joint ventures
 
2,319

 
796

Share-based compensation expense
 
5,797

 
3,618

Amortization of debt (premiums) and discounts, net
 
(499
)
 
45

Distributions of cumulative earnings from unconsolidated joint ventures
 
466

 
156

Net accretion of market rent rate adjustments
 
(430
)
 
(357
)
Straight-line rent adjustments
 
(1,789
)
 
(2,033
)
Changes in other assets and liabilities:
 
 
 
 
Other assets
 
3,956

 
4,295

Accounts payable and accrued expenses
 
113

 
(5,081
)
Net cash provided by operating activities
 
82,809

 
59,869

INVESTING ACTIVITIES
 
 
 
 
Additions to rental property
 
(19,945
)
 
(30,031
)
Acquisition of rental property
 

 
(134,000
)
Additions to investments in unconsolidated joint ventures
 
(46,893
)


Distributions in excess of cumulative earnings from unconsolidated joint ventures
 
310

 
444

Increases in escrow deposits
 

 
(13,089
)
Net proceeds from sale of real estate
 

 
724

Additions to deferred lease costs
 
(2,531
)
 
(6,166
)
Net cash used in investing activities
 
(69,059
)
 
(182,118
)
FINANCING ACTIVITIES
 
 
 
 
Cash dividends paid
 
(37,589
)
 
(32,009
)
Distributions to noncontrolling interests in Operating Partnership
 
(2,782
)
 
(4,776
)
Proceeds from debt issuances
 
432,732

 
306,850

Repayments of debt
 
(399,864
)
 
(135,030
)
Additions to deferred financing costs
 
(2,527
)
 
(149
)
Proceeds from exercise of options
 
241

 
43

Net cash (used in) provided by financing activities
 
(9,789
)
 
134,929

Net increase in cash and cash equivalents
 
3,961

 
12,680

Cash and cash equivalents, beginning of period
 
7,894

 
5,758

Cash and cash equivalents, end of period
 
$
11,855

 
$
18,438

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

11



Item 1 - Financial Statements of Tanger Properties Limited Partnership

TANGER PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)
 
 
June 30,
2012
 
December 31,
2011
ASSETS
 
 

 
 

Rental property
 
 

 
 

Land
 
$
148,002

 
$
148,002

Buildings, improvements and fixtures
 
1,787,050

 
1,764,494

Construction in progress
 

 
3,549

 
 
1,935,052

 
1,916,045

Accumulated depreciation
 
(547,167
)
 
(512,485
)
Total rental property, net
 
1,387,885

 
1,403,560

Cash and cash equivalents
 
11,723

 
7,866

Investments in unconsolidated joint ventures, net
 
72,394

 
28,481

Deferred lease costs and other intangibles, net
 
109,850

 
120,636

Deferred debt origination costs, net
 
10,219

 
8,861

Prepaids and other assets
 
49,950

 
52,059

Total assets
 
$
1,642,021

 
$
1,621,463

LIABILITIES AND EQUITY
 
 
 
 
Liabilities
 
 
 
 
Debt
 
 
 
 
Senior, unsecured notes (net of discount of $2,104 and $2,237, respectively)
 
$
547,896

 
$
547,763

Unsecured term loans (net of discount of $620 and $692, respectively)
 
259,380

 
9,308

Mortgages payable (including premiums of $6,902 and $7,434, respectively)
 
109,583

 
111,379

Unsecured lines of credit
 
141,224

 
357,092

Total debt
 
1,058,083

 
1,025,542

Construction trade payables
 
14,746

 
13,656

Accounts payable and accrued expenses
 
37,657

 
37,405

Other liabilities
 
16,283

 
16,428

Total liabilities
 
1,126,769

 
1,093,031

Commitments and contingencies
 
 
 
 
Equity
 
 
 
 
Partners' Equity
 
 
 
 
General partner
 
4,781

 
4,972

Limited partners
 
502,345

 
515,154

Accumulated other comprehensive income
 
1,324

 
1,463

Total partners' equity
 
508,450

 
521,589

Noncontrolling interests in consolidated partnerships
 
6,802

 
6,843

Total equity
 
515,252

 
528,432

Total liabilities and equity
 
$
1,642,021

 
$
1,621,463

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

12



TANGER PROPERITES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per unit data, unaudited)
 
 
Three months ended,
June 30,
 
Six months ended
June 30,
 
 
2012
 
2011
 
2012
 
2011
Revenues
 
 
 
 
 
 

 
 
Base rentals
 
$
58,583

 
$
48,393

 
$
115,802

 
$
94,612

Percentage rentals
 
1,618

 
1,137

 
3,362

 
2,528

Expense reimbursements
 
24,989

 
20,616

 
48,465

 
41,821

Other income
 
2,145

 
1,955

 
3,949

 
3,879

Total revenues
 
87,335

 
72,101

 
171,578

 
142,840

Expenses
 


 


 


 
 
Property operating
 
27,977

 
23,765

 
54,065

 
47,873

General and administrative
 
8,699

 
7,185

 
18,719

 
13,952

Acquisition costs
 

 
974

 

 
1,541

Abandoned development costs
 

 

 

 
158

Depreciation and amortization
 
24,923

 
17,858

 
50,438

 
35,823

Total expenses
 
61,599

 
49,782

 
123,222

 
99,347

Operating income
 
25,736

 
22,319

 
48,356

 
43,493

Interest expense
 
12,411

 
10,713

 
24,745

 
21,038

Income before equity in losses of unconsolidated joint ventures
 
13,325

 
11,606

 
23,611

 
22,455

Equity in losses of unconsolidated joint ventures
 
(867
)
 
(764
)
 
(2,319
)
 
(796
)
Net income
 
12,458

 
10,842

 
21,292

 
21,659

Noncontrolling interests in consolidated partnerships
 
25

 

 
32

 

Net income available to partners
 
12,483

 
10,842

 
21,324

 
21,659

Net income available to limited partners
 
12,355

 
10,731

 
21,105

 
21,437

Net income available to general partner
 
$
128

 
$
111

 
$
219

 
$
222

 
 
 
 
 
 
 
 
 
Basic earnings per common unit:
 
 
 
 
 
 
 
 

Net income
 
$
0.50

 
$
0.46

 
$
0.86

 
$
0.92

Diluted earnings per common unit:
 
 
 
 
 
 
 
 

Net income
 
$
0.50

 
$
0.46

 
$
0.85

 
$
0.91

 
 
 
 
 
 
 
 
 
Distribution paid per common unit
 
0.8400

 
0.8000

 
1.6400

 
1.5752

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

13



TANGER PROPERITES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands, unaudited)

 
 
Three months ended
June 30,
 
Six months ended
June 30,
 
 
2012
 
2011
 
2012
 
2011
Net income
 
$
12,458

 
$
10,842

 
$
21,292

 
$
21,659

Other comprehensive loss
 
 
 
 
 
 
 
 
Reclassification adjustment for amortization of gain on settlement of US treasury rate lock included in net income
 
(87
)
 
(82
)
 
(173
)
 
(163
)
Foreign currency translation adjustments
 
39

 

 
34

 

Changes in fair value of our portion of our unconsolidated joint ventures' cash flow hedges
 

 

 

 
46

Other comprehensive loss
 
(48
)
 
(82
)
 
(139
)
 
(117
)
Comprehensive income
 
12,410

 
10,760

 
21,153

 
21,542

Comprehensive income attributable to noncontrolling interests in consolidated partnerships
 
25

 

 
32

 

Comprehensive income attributable to the Operating Partnership
 
$
12,435

 
$
10,760

 
$
21,185

 
$
21,542

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


14



TANGER PROPERITES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
(In thousands, except unit and per unit data, unaudited)

 
 
General partner
Limited partners
Accumulated other comprehensive income
Total partners' equity
Noncontrolling interests in consolidated partnerships
Total equity
Balance, December 31, 2011
 
$
4,972

$
515,154

$
1,463

$
521,589

$
6,843

$
528,432

Net income
 
219

21,105


21,324

(32
)
21,292

Other comprehensive loss
 


(139
)
(139
)

(139
)
Compensation under Incentive Award Plan
 

5,797


5,797


5,797

Issuance of 5,050 common units upon exercise of options
 

241


241


241

Adjustments for noncontrolling interests in consolidated partnerships
 

9


9

(9
)

Common distributions ($1.64 per unit)
 
(410
)
(39,961
)

(40,371
)

(40,371
)
Balance, June 30, 2012
 
$
4,781

$
502,345

$
1,324

$
508,450

$
6,802

$
515,252

 
 
 
 
 
 
 
 

 
 
General partner
Limited partners
Accumulated other comprehensive income
Total equity
Balance, December 31, 2010
 
$
5,221

$
414,926

$
1,748

$
421,895

Net income
 
222

21,437


21,659

Other comprehensive loss
 


(117
)
(117
)
Compensation under Incentive Award Plan
 

3,618


3,618

Issuance of 1,125 common units upon exercise of options
 

43


43

Common distributions ($1.575 per unit)
 
(373
)
(36,412
)

(36,785
)
Balance, June 30, 2011
 
5,070

403,612

1,631

410,313

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



15



TANGER PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
 
 
Six Months Ended
June 30,
 
 
2012
 
2011
OPERATING ACTIVITIES
 
 

 
 

Net income
 
$
21,292

 
$
21,659

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 


Depreciation and amortization
 
50,438

 
35,823

Amortization of deferred financing costs
 
1,146

 
948

Equity in losses of unconsolidated joint ventures
 
2,319

 
796

Equity-based compensation expense
 
5,797

 
3,618

Amortization of debt (premiums) and discounts, net
 
(499
)
 
45

Distributions of cumulative earnings from unconsolidated joint ventures
 
466

 
156

Net accretion of market rent rate adjustments
 
(430
)
 
(357
)
Straight-line rent adjustments
 
(1,789
)
 
(2,033
)
Changes in other assets and liabilities:
 
 
 
 
Other assets
 
3,854

 
4,256

Accounts payable and accrued expenses
 
111

 
(5,027
)
Net cash provided by operating activities
 
82,705

 
59,884

INVESTING ACTIVITIES
 
 
 
 
Additions to rental property
 
(19,945
)
 
(30,031
)
Acquisition of rental property
 

 
(134,000
)
Additions to investments in unconsolidated joint ventures
 
(46,893
)
 

Distributions in excess of cumulative earnings from unconsolidated joint ventures
 
310

 
444

Increase in escrow deposits
 

 
(13,089
)
Net proceeds from the sale of real estate
 

 
724

Additions to deferred lease costs
 
(2,531
)
 
(6,166
)
Net cash used in investing activities
 
(69,059
)
 
(182,118
)
FINANCING ACTIVITIES
 
 
 
 
Cash distributions paid
 
(40,371
)
 
(36,785
)
Proceeds from debt issuances
 
432,732

 
306,850

Repayments of debt
 
(399,864
)
 
(135,030
)
Additions to deferred financing costs
 
(2,527
)
 
(149
)
Proceeds from exercise of options
 
241

 
43

Net cash (used in) provided by financing activities
 
(9,789
)
 
134,929

Net increase in cash and cash equivalents
 
3,857

 
12,695

Cash and cash equivalents, beginning of period
 
7,866

 
5,671

Cash and cash equivalents, end of period
 
$
11,723

 
$
18,366

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

16



TANGER FACTORY OUTLET CENTERS INC. AND SUBSIDIARIES
TANGER PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIAIRES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Business
Tanger Factory Outlet Centers, Inc. and subsidiaries is one of the largest owners and operators of outlet centers in the United States. We are a fully-integrated, self-administered and self-managed real estate investment trust ("REIT") which, through our controlling interest in the Operating Partnership, focuses exclusively on developing, acquiring, owning, operating and managing outlet shopping centers. As of June 30, 2012, we owned and operated 36 outlet centers, with a total gross leasable area of approximately 10.7 million square feet. We also had partial ownership interests in 3 outlet centers totaling approximately 1.2 million square feet, including one outlet center in Ontario, Canada.
Our outlet centers and other assets are held by, and all of our operations are conducted by, Tanger Properties Limited Partnership and subsidiaries. Accordingly, the descriptions of our business, employees and properties are also descriptions of the business, employees and properties of the Operating Partnership. Unless the context indicates otherwise, the term, "Company", refers to Tanger Factory Outlet Centers, Inc. and subsidiaries and the term, "Operating Partnership", refers to Tanger Properties Limited Partnership and subsidiaries. The terms "we", "our" and "us" refer to the Company or the Company and the Operating Partnership together, as the text requires.
The Company owns the majority of the units of partnership interest issued by the Operating Partnership through its two wholly-owned subsidiaries, Tanger GP Trust and Tanger LP Trust. Tanger GP Trust controls the Operating Partnership as its sole general partner. Tanger LP Trust holds a limited partnership interest. In addition, the Family Limited Partners own the remaining Operating Partnership units.

2. Basis of Presentation
The unaudited consolidated financial statements included herein have been prepared pursuant to accounting principles generally accepted in the United States of America and should be read in conjunction with the consolidated financial statements and notes thereto of the Company's and the Operating Partnership's combined Annual Report on Form 10-K for the year ended December 31, 2011. The December 31, 2011 balance sheet data in this Form 10-Q was derived from audited financial statements. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the SEC's rules and regulations, although management believes that the disclosures are adequate to make the information presented not misleading.
Investments in real estate joint ventures that we do not control are accounted for using the equity method of accounting. These investments are recorded initially at cost and subsequently adjusted for our equity in the venture's net income (loss), cash contributions, distributions and other adjustments required under the equity method of accounting. These investments are evaluated for impairment when necessary. Control is determined using an evaluation based on accounting standards related to the consolidation of voting interest entities and variable interest entities. For joint ventures that are determined to be variable interest entities, the primary beneficiary consolidates the entity.

17



3. Investments in Unconsolidated Real Estate Joint Ventures
Our investments in unconsolidated joint ventures as of June 30, 2012 and December 31, 2011 aggregated $72.4 million and $28.5 million, respectively. We have concluded based on the current facts and circumstances that the equity method of accounting should be used to account for each of the individual joint ventures below. At June 30, 2012, we were members of the following unconsolidated real estate joint ventures:
Joint Venture
 
Center Location
 
Ownership %
 
Square Feet
 
Carrying Value of Investment
 (in millions)
 
Total Joint Venture Debt
 (in millions)
Deer Park
 
Deer Park, Long Island NY
 
33.3
%
 
741,976

 
$
4.1

 
$
246.9

Deer Park Warehouse
 
Deer Park, Long Island NY
 
33.3
%
 
29,253

 

 
1.8

Galveston/Houston
 
Texas City, Texas
 
50.0
%
 

 
21.0

 

National Harbor
 
Washington D.C. Metro Area
 
50.0
%
 

 
0.9

 

RioCan Canada
 
Various
 
50.0
%
 
155,522

 
24.0

 

Westgate
 
Phoenix, Arizona
 
58.0
%
 

 
18.3

 

Wisconsin Dells
 
Wisconsin Dells, Wisconsin
 
50.0
%
 
265,086

 
3.9

 
24.3

Other
 
 
 
50.0
%
 

 
0.2

 

Total
 
 
 
 
 
 
 
$
72.4

 
$
273.0

These investments are recorded initially at cost and subsequently adjusted for our equity in the venture's net income (loss), cash contributions, distributions and other adjustments required by the equity method of accounting as discussed below.
Management, leasing and marketing fees earned from services provided to our unconsolidated joint ventures were recognized as follows (in thousands):
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
 
2012
 
2011
 
2012
 
2011
Fee:
 
 
 
 
 
 

 
 

Management and leasing
 
$
474

 
$
469

 
$
953

 
$
973

Marketing
 
47

 
44

 
100

 
88

Total Fees
 
$
521

 
$
513

 
$
1,053

 
$
1,061

Our investments in real estate joint ventures are reduced by the percentage of the profits earned for leasing and development services associated with our ownership interest in each joint venture. Our carrying value of investments in unconsolidated joint ventures differs from our share of the assets reported in the "Summary Balance Sheets - Unconsolidated Joint Ventures" shown below due to adjustments to the book basis, including intercompany profits on sales of services that are capitalized by the unconsolidated joint ventures. The differences in basis are amortized over the various useful lives of the related assets.

18



Deer Park Warehouse, Long Island, New York
In June 2008, we, along with our partners in Deer Park, entered into a joint venture to purchase a warehouse adjacent to the Tanger Outlet Center located in Deer Park, NY for a total purchase price of $3.3 million and obtained mortgage financing of $2.3 million. The interest only mortgage loan secured by the warehouse matured on May 17, 2011 and the joint venture did not qualify for the one-year extension option. As a result, in June 2012 the joint venture reduced the outstanding principal balance by $500,000 to $1.8 million and entered into a loan forbearance agreement with the lender whereby the lender agreed that it will not enforce its rights under the loan until the forbearance termination date of October 1, 2012 unless extended. Additional interest expense accrues at a rate of Prime + 5.5% less the amount paid. During this time, the joint venture committed to continue making monthly debt service payments pursuant to the forbearance and the loan agreement at a pay rate of LIBOR + 1.85%, to maintain the property, and to list the property for sale. In June 2012, the joint venture recorded an impairment charge of approximately $420,000 to lower the basis of the warehouse to its estimated fair market value.
Galveston/Houston, Texas

In June 2011, we announced the formation of a joint venture for the development of a Tanger Outlet Center south of Houston in Texas City, TX. We expect the center to be completed in time for a grand opening on October 19, 2012 and to feature over 85 brand name and designer outlet stores in the first phase of approximately 350,000 square feet, with room for expansion for a total build out of approximately 470,000 square feet. In July 2011, the joint venture acquired the land underlying the site for approximately $5.6 million. As of June 30, 2012, we have contributed $20.6 million in cash to the joint venture to fund development activities. We will provide property management and marketing services to the center; and with our partner, are jointly providing development and leasing services.

National Harbor, Washington, D.C. Metro Area

In May 2011, we announced the formation of a joint venture for the development of a Tanger Outlet Center at National Harbor in the Washington, D.C. Metro area. The resulting Tanger Outlet Center is expected to contain approximately 80 brand name and designer outlet stores in a center measuring up to 350,000 square feet. The project is currently in the pre-development phase and in December 2011, both parties each made initial equity contributions of $850,000 to fund certain pre-development costs. We will provide property management, leasing and marketing services to the joint venture. We and our partner will jointly provide site development and construction supervision services to the joint venture.

RioCan Canada

On December 9, 2011, the RioCan Canadian Joint Venture purchased the Cookstown Outlet Mall. The existing outlet center was acquired for $47.4 million, plus an additional $13.8 million for excess land upon the seller meeting certain conditions, for an aggregate purchase price of $61.2 million. RioCan is providing development and property management services to this existing outlet center and we are providing leasing and marketing services. In connection with the purchase, the joint venture assumed the in place financing of $29.6 million which carried an interest rate of 5.10% and had an original maturity date of June 21, 2014. In March 2012, the joint venture retired the outstanding loan and we contributed an additional $15.1 million to the joint venture to fund the payment.

During the first quarter of 2012, the joint venture terminated an option contract to develop a center in Halton Hills, Ontario and accordingly wrote-off pre-development costs of approximately $1.3 million.

Westgate, Glendale, Arizona

On May 4, 2012, we closed on the formation of a joint venture for the development of a Tanger Outlet Center in Glendale, Arizona. Construction of the center began in February 2012. Situated on 38-acres, the outlet center is located on Loop 101 and Glendale Avenue in Western Phoenix. We currently expect this center to be completed in time for a November 15, 2012 grand opening and will have approximately 80 brand name and designer outlet stores in the first phase which will contain approximately 330,000 square feet. As of June 30, 2012, we have contributed $18.1 million in cash to the joint venture to fund development activities. We are providing property management, construction supervision, leasing and marketing services to the joint venture.
 

19



On June 27, 2012, the joint venture closed on a construction loan with the ability to borrow up to $43.8 million (our share $25.4 million), which carries an interest rate of LIBOR + 1.75%. As of June 30, 2012 the balance on the loan was zero and no draws were made during the second quarter of 2012.

We evaluate our real estate joint ventures in accordance with the Consolidation guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC"). As a result of our qualitative assessment, we concluded that our Westgate and Deer Park joint ventures are Variable Interest Entities ("VIEs") and all of our other joint ventures are not VIEs. Westgate is considered a VIE because the voting rights are disproportionate to the economic interests. Deer Park is considered a VIE because it does not meet the criteria of the members having a sufficient equity investment at risk. Investments in real estate joint ventures in which we have a non-controlling ownership interest are accounted for using the equity method of accounting.

After making the determination that Westgate and Deer Park were VIEs, we performed an assessment to determine if we would be considered the primary beneficiary and thus be required to consolidate their balance sheets and results of operations. This assessment was based upon whether we had the following:

a.
The power to direct the activities of the VIE that most significantly impact the entity's economic performance

b.
The obligation to absorb losses of the entity that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be significant to the VIE

Based on the provisions of the operating, development, leasing, and management agreements of Westgate and Deer Park, we determined that neither member has the power to direct the significant activities that affect the economic performance of Westgate or Deer Park.

We have determined that the partners at both Westgate and Deer Park share power in the decisions that most significantly impact the respective joint ventures, and therefore we are not required to consolidate Westgate or Deer Park. Our equity method investments in Westgate and Deer Park as of June 30, 2012 were approximately $18.3 million and $4.1 million, respectively. We are unable to estimate our maximum exposure to loss at this time because our guarantees are limited and based on the future operating performance of Westgate and Deer Park.









20



Condensed combined summary financial information of unconsolidated joint ventures accounted for using the equity method is as follows (in thousands):
Summary Balance Sheets - Unconsolidated Joint Ventures
 
As of
June 30,
2012
 
As of
December 31,
2011
Assets
 
 

 
 

Investment properties at cost, net
 
$
338,144

 
$
332,822

Construction in progress
 
66,263

 
11,276

Assets held for sale (1)
 
1,800

 

Cash and cash equivalents
 
16,855

 
7,582

Deferred lease costs, net
 
13,514

 
14,815

Deferred debt origination costs, net
 
6,566

 
7,566

Prepaids and other assets
 
16,386

 
11,687

Total assets
 
$
459,528

 
$
385,748

Liabilities and Owners' Equity
 
 

 
 

Mortgages payable
 
$
273,034

 
$
303,230

Construction trade payables
 
23,135

 
2,669

Accounts payable and other liabilities
 
25,641

 
27,246

Total liabilities
 
321,810

 
333,145

Owners' equity
 
137,718

 
52,603

Total liabilities and owners' equity
 
$
459,528

 
$
385,748

(1) Assets related to our Deer Park Warehouse joint venture, which is currently for sale.
 
 
Three Months Ended
 
Six Months Ended
Summary Statements of Operations
 
June 30,
 
June 30,
 - Unconsolidated Joint Ventures
 
2012
 
2011
 
2012
 
2011
Revenues
 
$
11,606

 
$
9,752

 
$
23,264

 
$
19,314

Expenses
 
 
 
 
 
 

 
 

Property operating
 
5,083

 
4,473

 
9,974

 
8,574

General and administrative
 
237

 
(131
)
 
400

 
56

Acquisition costs
 

 

 
704

 

Abandoned development costs
 
436

 

 
1,310

 

Impairment charge
 
420

 

 
420

 

Depreciation and amortization
 
4,300

 
3,627

 
8,908

 
7,238

Total expenses
 
10,476

 
7,969

 
21,716

 
15,868

Operating income
 
1,130

 
1,783

 
1,548

 
3,446

Interest expense
 
3,598

 
4,126

 
7,427

 
5,929

Net loss
 
$
(2,468
)
 
$
(2,343
)
 
$
(5,879
)
 
$
(2,483
)
 
 
 
 
 
 
 
 
 
The Company and Operating Partnership's share of:
 
 

 
 

Net loss
 
$
(867
)
 
$
(764
)
 
$
(2,319
)
 
$
(796
)
Depreciation and impairment charge (real estate related)
 
$
1,793

 
$
1,336

 
$
3,608

 
$
2,642



21



4. Debt of the Company
All of the Company's debt is held directly by the Operating Partnership.
The Company guarantees the Operating Partnership's obligations with respect to its unsecured lines of credit which have a total borrowing capacity of $520.0 million. As of June 30, 2012 and December 31, 2011, the Operating Partnership had amounts outstanding on these lines totaling $141.2 million and $357.1 million, respectively.
The Company also guarantees the Operating Partnership's unsecured term loan in the amount of $250.0 million as well as its obligation with respect to the mortgage assumed in connection with the acquisition of the outlet center in Ocean City, Maryland in July 2011.
5. Debt of the Operating Partnership
The debt of the Operating Partnership consisted of the following (in thousands):
 
 
 
 
 
 
As of
 
As of
 
 
 
 
 
 
June 30, 2012
 
December 31, 2011
 
 
Stated Interest Rate(s)
 
Maturity Date
 
Principal
 
Premium
 (Discount)
 
Principal
 
Premium
 (Discount)
Senior, unsecured notes:
 
 
 
 
 
 

 
 
 
 
 
 

Senior notes
 
6.15
%
 
November 2015
 
$
250,000

 
(368
)
 
$
250,000

 
$
(417
)
Senior notes
 
6.125
%
 
June 2020
 
300,000

 
(1,736
)
 
300,000

 
(1,820
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgages payable (1):
 
 
 
 
 
 
 
 
 
 
 
 
Atlantic City
 
5.14%-7.65%

 
November 2021- December 2026
 
53,030

 
4,697

 
53,826

 
4,894

Ocean City
 
5.24
%
 
January 2016
 
18,705

 
331

 
18,867

 
375

Hershey
 
5.17%-8.00%

 
August 2015
 
30,946

 
1,874

 
31,252

 
2,165

Note payable (1)
 
1.50
%
 
June 2016
 
10,000

 
(620
)
 
10,000

 
(692
)
Unsecured term loan (2)
 
LIBOR + 1.80%

 
February 2019
 
250,000

 

 

 

Unsecured lines of credit (3)
 
LIBOR + 1.25%

 
November 2015
 
141,224

 

 
357,092

 

 
 
 
 
 
 
$
1,053,905

 
$
4,178

 
$
1,021,037

 
$
4,505

(1)
The effective interest rates assigned during the purchase price allocation to these assumed mortgages and note payable during acquisitions in 2011 were as follows: Atlantic City 5.05%, Ocean City 4.68%, Hershey 3.40% and note payable 3.15%.

(2)
Our term loan is pre-payable without penalty beginning in February of 2015.

(3)
We have the option to extend the lines for an additional one year to November 10, 2016. These lines require a facility fee payment of 0.25% annually based on the total amount of the commitment. The credit spread and facility fee can vary depending on our investment grade rating.
2012 Transactions
On February 24, 2012, the Operating Partnership closed on a seven-year $250.0 million unsecured term loan. The term loan is interest only, matures in the first quarter of 2019 and is pre-payable without penalty beginning in February of 2015. Based on our current credit ratings, the loan has an interest rate of LIBOR + 1.80%. We used the net proceeds of the term loan to reduce the outstanding balances on our unsecured lines of credit.


22



Debt Maturities
Maturities of the existing long-term debt as of June 30, 2012 are as follows (in thousands):
Calendar Year
 
Amount

2012
 
$
1,298

2013
 
4,633

2014
 
3,599

2015
 
423,563

2016
 
30,279

Thereafter
 
590,533

Subtotal
 
1,053,905

Net premiums
 
4,178

Total
 
$
1,058,083

  
6. Shareholders' Equity of the Company

Throughout the first six months of 2012, various Family Limited Partners exchanged a total of 1,542,533 Operating Partnership units for 6,170,132 common shares of the Company. After the above described exchanges, the Family Limited Partners owned 1,330,440 Operating Partnership units which were exchangeable for 5,321,760 common shares of the Company.

7. Partners' Equity of the Operating Partnership
When the Company issues common shares upon exercise of options or issues restricted share awards, the Operating Partnership issues one corresponding unit of partnership interest to the Company for every four common shares issued. The ownership interests of the Operating Partnership consisted of the following:
 
 
As of
 
As of
 
 
June 30,
2012
 
December 31,
2011
Common units:
 
 

 
 

General partner
 
250,000

 
250,000

Limited partners
 
24,451,437

 
24,304,887

Total common units
 
24,701,437

 
24,554,887


8. Noncontrolling Interests
Noncontrolling interests relate to the interests in the Operating Partnership owned by Family Limited Partners, as discussed in Note 1, and interests in consolidated partnerships not wholly-owned by the Company or the Operating Partnership. Family Limited Partners are holders of Operating Partnership units that may be exchanged for the Company's common shares in a ratio of one unit for four common shares. The noncontrolling interests in other consolidated partnerships consist of outside equity interests in partnerships that are consolidated with the financial results of the Company and Operating Partnership because the Operating Partnership exercises control over the entities that own the properties.


23



As discussed in Note 6, various Family Limited Partners exchanged a total of 1,542,533 Operating Partnership units for 6,170,132 common shares of the Company. Therefore, the Company recorded an increase to additional paid-in capital of $32.3 million during the first six months of 2012 related to these exchanges. The changes in the Company's ownership interests in the subsidiaries impacted consolidated equity during the periods shown as follows:
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
 
2012
 
2011
 
2012
 
2011
Net income attributable to Tanger Factory Outlet Centers, Inc.
 
$
11,717

 
$
9,422

 
$
19,845

 
$
18,820

Increase (decrease) in Tanger Factory Outlet Centers, Inc. paid-in-capital adjustments to noncontrolling interests (1) 
 
4,151

 
(228
)
 
32,329

 
(261
)
Changes from net income attributable to Tanger Factory Outlet Centers, Inc. and transfers from noncontrolling interest
 
$
15,868

 
$
9,194

 
$
52,174

 
$
18,559

1) In 2012 and 2011, adjustments of the noncontrolling interest were made as a result of changes in the Company's ownership of the Operating Partnership in connection with the Company's issuance of common shares upon exercise of options, share-based compensation and the issuance of common shares upon exchange of Operating Partnership units by Family Limited Partners.

9. Share-Based Compensation of the Company
We have a shareholder approved share-based compensation plan, the Amended and Restated Incentive Award Plan of Tanger Factory Outlet Centers, Inc. and Tanger Properties Limited Partnership (the "Plan"), which covers our independent directors, officers and our employees. During the first three months of 2012, the Company's Board of Directors approved grants of 346,000 restricted common shares to the Company's independent directors and the Company's senior executive officers. The grant date fair value of the awards was $29.50 per share. The independent directors' restricted common shares vest ratably over a three year period and the senior executive officers' restricted shares vest ratably over a five year period. Compensation expense related to the amortization of the deferred compensation is being recognized in accordance with the vesting schedule of the restricted shares.
In addition, the Board of Directors approved the grant of 225,000 restricted common shares with a grant date fair value of $25.44 to Steven B. Tanger, our President and Chief Executive Officer, under the terms of his amended and restated Employment Agreement (the "Employment Agreement") signed on February 28, 2012. Under the terms of the Employment Agreement, the Company granted Mr. Tanger the following: 45,000 fully-vested common shares; 90,000 restricted common shares that vest ratably over five years based on Mr. Tanger's continued employment with the Company and 90,000 restricted common shares that vest ratably over five years based on Mr. Tanger's continued employment with the Company and the Company achieving certain minimum total returns to shareholders.
We recorded share-based compensation expense in general and administrative expenses in our consolidated statements of operations as follows (in thousands):
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
 
2012
 
2011
 
2012
 
2011
Restricted common shares (1)
 
$
1,864

 
$
1,266

 
$
4,714

 
$
2,533

Notional unit performance awards
 
490

 
507

 
979

 
1,013

Options
 
52

 
47

 
104

 
72

Total share-based compensation
 
$
2,406

 
$
1,820

 
$
5,797

 
$
3,618

(1) For the six months ended June 30, 2012, includes approximately $1.3 million of compensation expense related to 45,000 shares that vested immediately upon grant related to the Employment Agreement described above.


24



The following table summarizes information related to unvested restricted common shares outstanding as of June 30, 2012:
Unvested Restricted Common Shares
 
Number of shares
 
Weighted-average grant date fair value
Unvested at December 31, 2011
 
791,337

 
$
20.93

Granted
 
571,000

 
27.90

Vested
 
(273,800
)
 
21.44

Forfeited
 
(5,000
)
 
29.50

Unvested at June 30, 2012
 
1,083,537

 
$
24.43


The total value of restricted common shares vested during the six months ended June 30, 2012 and June 30, 2011 was $7.9 million and $5.5 million, respectively.
As of June 30, 2012, there was $29.4 million of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted-average period of 3.6 years.
10. Equity-Based Compensation of the Operating Partnership
As discussed in Note 9, the Operating Partnership and the Company have a joint plan whereby equity based and performance based awards may be granted to directors, officers and employees. When shares are issued by the Company, the Operating Partnership issues corresponding units to the Company based on the current exchange ratio as provided by the Operating Partnership agreement. Based on the current exchange ratio, each unit in the Operating Partnership is equivalent to four common shares of the Company. Therefore, when the Company grants an equity based award, the Operating Partnership treats each award as having been granted by the Operating Partnership.

The tables below set forth the equity based compensation expense and other related information as recognized in the Operating Partnership's consolidated financial statements.
We recorded equity-based compensation expense in general and administrative expenses in our consolidated statements of operations as follows (in thousands):
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
Restricted units (1)
 
2012
 
2011
 
2012
 
2011
Restricted units (1)
 
$
1,864

 
$
1,266

 
$
4,714

 
$
2,533

Notional unit performance awards
 
490

 
507

 
979

 
1,013

Options
 
52

 
47

 
104

 
72

Total equity-based compensation
 
$
2,406

 
$
1,820

 
$
5,797

 
$
3,618

(1) For the six months ended June 30, 2012, includes approximately $1.3 million of compensation expense related to 11,250 units issued related to a restricted share grant that vested immediately pursuant to the Employment Agreement as described in footnote 9.


25



The following table summarizes information related to unvested restricted units outstanding as of June 30, 2012:
Unvested Restricted Units
 
Number of units
 
Weighted-average grant date fair value
Unvested at December 31, 2011
 
197,834

 
$
83.70

Granted
 
142,750

 
111.60

Vested
 
(68,450
)
 
85.75

Forfeited
 
(1,250
)
 
118.00

Unvested at June 30, 2012
 
270,884

 
$
93.73


The total value of restricted units vested during the six months ended June 30, 2012 and June 30, 2011 was $7.9 million and $5.5 million, respectively.
As of June 30, 2012, there was $29.4 million of total unrecognized compensation cost related to unvested equity-based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted-average period of 3.6 years.
11. Earnings Per Share of the Company
The following table sets forth a reconciliation of the numerators and denominators in computing the Company's earnings per share (in thousands, except per share data):
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,