SKT 10Q 9/30/12

Tanger Factory Outlet Centers, Inc.

x Large accelerated filer

o Accelerated filer

o Non-accelerated filer

o Smaller reporting company

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 September 30, 2012



	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).

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 October 31, 2012, there were 93,907,284 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 September 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 September 30, 2012, the Company, through its ownership of Tanger GP Trust and Tanger LP Trust, owned 23,473,147 units of the Operating Partnership and the Family Limited Partners collectively owned 1,230,490 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.

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.

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 September 30, 2012 and December 31, 2011	6
Consolidated Statements of Operations - for the three and nine months ended September 30, 2012 and 2011	7
Consolidated Statements of Comprehensive Income - for the three and nine months ended September 30, 2012 and 2011	8
Consolidated Statements of Equity - for the nine months ended September 30, 2012 and the year ended December 31, 2011	9
Consolidated Statements of Cash Flows - for the nine months ended September 30, 2012 and 2011	11

FINANCIAL STATEMENTS OF TANGER PROPERTIES LIMITED PARTNERSHIP (Unaudited)
Consolidated Balance Sheets - as of September 30, 2012 and December 31, 2011	12
Consolidated Statements of Operations - for the three and nine months ended September 30, 2012 and 2011	13
Consolidated Statements of Comprehensive Income - for the three and nine months ended September 30, 2012 and 2011	14
Consolidated Statements of Equity - for the nine months ended September 30, 2012 and the year ended December 31, 2011	15
Consolidated Statements of Cash Flows - for the nine months ended September 30, 2012 and 2011	16

Notes to Consolidated Financial Statements of Tanger Factory Outlet Centers, Inc. and Tanger Properties Limited Partnership	17

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	30

Item 3. Quantitative and Qualitative Disclosures about Market Risk	49

Item 4. Controls and Procedures (Tanger Factory Outlet Centers, Inc. and Tanger Properties Limited Partnership)	50

Part II. Other Information

Item 1. Legal Proceedings	50

Item 1A. Risk Factors	50

Item 6. Exhibits	51

Signatures	52

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)



	September 30, 2012			December 31, 2011
ASSETS
Rental property
Land	$	148,002		$	148,002
Buildings, improvements and fixtures	1,793,963			1,764,494
Construction in progress	—			3,549
	1,941,965			1,916,045
Accumulated depreciation	(565,521		)	(512,485		)
Total rental property, net	1,376,444			1,403,560
Cash and cash equivalents	9,511			7,894
Investments in unconsolidated joint ventures, net	82,676			28,481
Deferred lease costs and other intangibles, net	104,496			120,636
Deferred debt origination costs, net	9,619			8,861
Prepaids and other assets	56,211			52,383
Total assets	$	1,638,957		$	1,621,815
LIABILITIES AND EQUITY
Liabilities
Debt
Senior, unsecured notes (net of discount of $2,036 and $2,237, respectively)	$	547,964		$	547,763
Unsecured term loans (net of discount of $584 and $692, respectively)	259,416			9,308
Mortgages payable (including premiums of $6,631 and $7,434, respectively)	108,672			111,379
Unsecured lines of credit	136,769			357,092
Total debt	1,052,821			1,025,542
Construction trade payables	10,525			13,656
Accounts payable and accrued expenses	46,087			37,757
Other liabilities	16,429			16,428
Total liabilities	1,125,862			1,093,383
Commitments and contingencies
Equity
Tanger Factory Outlet Centers, Inc.
Common shares, $.01 par value, 300,000,000 shares authorized, 93,892,588 and 86,727,656 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively	939			867
Paid in capital	762,821			720,073
Accumulated distributions in excess of net income	(283,943		)	(261,913		)
Accumulated other comprehensive income	1,252			1,535
Equity attributable to Tanger Factory Outlet Centers, Inc.	481,069			460,562
Equity attributable to noncontrolling interests
Noncontrolling interests in Operating Partnership	25,218			61,027
Noncontrolling interests in other consolidated partnerships	6,808			6,843
Total equity	513,095			528,432
Total liabilities and equity	$	1,638,957		$	1,621,815

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

TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data, unaudited)



	Three months ended September 30,						Nine months ended September 30,
	2012			2011			2012			2011
Revenues
Base rentals	$	59,662		$	55,018		$	175,464		$	149,630
Percentage rentals	3,180			2,684			6,542			5,212
Expense reimbursements	24,646			22,973			73,111			64,794
Other income	2,995			2,568			6,944			6,447
Total revenues	90,483			83,243			262,061			226,083
Expenses
Property operating	27,614			25,181			81,679			73,054
General and administrative	9,018			7,943			27,737			21,895
Acquisition costs	—			978			—			2,519
Abandoned development costs	—			—			—			158
Depreciation and amortization	24,809			22,964			75,247			58,787
Total expenses	61,441			57,066			184,663			156,413
Operating income	29,042			26,177			77,398			69,670
Interest expense	12,317			11,958			37,062			32,996
Income before equity in losses of unconsolidated joint ventures	16,725			14,219			40,336			36,674
Equity in losses of unconsolidated joint ventures	(555		)	(27		)	(2,874		)	(823		)
Net income	16,170			14,192			37,462			35,851
Noncontrolling interests in Operating Partnership	(836		)	(1,730		)	(2,315		)	(4,569		)
Noncontrolling interests in other consolidated partnerships	(7		)	2			25			2
Net income attributable to Tanger Factory Outlet Centers, Inc.	$	15,327		$	12,464		$	35,172		$	31,284

Basic earnings per common share:
Net income	$	0.16		$	0.14		$	0.38		$	0.38
Diluted earnings per common share:
Net income	$	0.16		$	0.14		$	0.37		$	0.37

Dividends paid per common share	$	0.2100		$	0.2000		$	0.6200		$	0.5938

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

TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, unaudited)



	Three months ended September 30,						Nine months ended September 30,
	2012			2011			2012			2011
Net income	$	16,170		$	14,192		$	37,462		$	35,851
Other comprehensive loss
Reclassification adjustment for amortization of gain on settlement of US treasury rate lock included in net income	(88		)	(83		)	(261		)	(246		)
Foreign currency translation adjustments	(73		)	(107		)	(39		)	(107		)
Changes in fair value of our portion of our unconsolidated joint ventures' cash flow hedges	—			—			—			46
Other comprehensive loss	(161		)	(190		)	(300		)	(307		)
Comprehensive income	16,009			14,002			37,162			35,544
Comprehensive income attributable to noncontrolling interests	(835		)	(1,705		)	(2,273		)	(4,528		)
Comprehensive income attributable to Tanger Factory Outlet Centers, Inc.	$	15,174		$	12,297		$	34,889		$	31,016

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

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, 2010	$	810	$	604,359		$	(240,024	)	$	1,784		$	366,929		$	54,966		$	—		$	421,895
Net income	—		—			44,641			—			44,641			6,356			(8		)	50,989
Other comprehensive loss	—		—			—			(249		)	(249		)	(36		)	—			(285		)
Compensation under Incentive Award Plan	—		7,291			—			—			7,291			—			—			7,291
Issuance of 4,600,000 common shares, net of issuance costs of $670,000	46		117,329			—			—			117,375			—			—			117,375
Issuance of 36,500 common shares upon exercise of options	—		353			—			—			353			—			—			353
Grant of 317,400 restricted shares, net of forfeitures	3		(3		)	—			—			—			—			—			—
Adjustment for noncontrolling interests in Operating Partnership	—		(9,242		)	—			—			(9,242		)	9,242			—			—
Adjustment for noncontrolling interests in other consolidated partnerships	—		(6		)	—			—			(6		)	—			6,851			6,845
Exchange of 160,332 Operating Partnership units for 641,328 common shares	7		(7		)	—			—			—			—			—			—
Issuance of 136,360 common shares upon exchange of exchangeable notes	1		(1		)	—			—			—			—			—			—
Common dividends ($0.7938 per share)	—		—			(66,530		)	—			(66,530		)	—			—			(66,530		)
Distributions to noncontrolling interest in Operating Partnership	—		—			—			—			—			(9,501		)	—			(9,501		)
Balance, December 31, 2011	$	867	$	720,073		$	(261,913	)	$	1,535		$	460,562		$	61,027		$	6,843		$	528,432
Net income	—		—			35,172			—			35,172			2,315			(25		)	37,462
Other comprehensive loss	—		—			—			(283		)	(283		)	(17		)	—			(300		)
Compensation under Incentive Award Plan	—		8,231			—			—			8,231			—			—			8,231
Issuance of 29,000 common shares upon exercise of options	—		372			—			—			372			—			—			372



TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EQUITY (In thousands, except share and per share data, unaudited) (Continued)
	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
Grant of 566,000 restricted shares, net of forfeitures	6		(6		)	—			—		—			—			—			—
Adjustment for noncontrolling interests in Operating Partnership	—		34,207			—			—		34,207			(34,207		)	—			—
Adjustment for noncontrolling interests in other consolidated partnerships	—		10			—			—		10			—			(10		)	—
Exchange of 1,642,483 Operating Partnership units for 6,569,932 common shares	66		(66		)	—			—		—			—			—			—
Common dividends ($.62 per share)	—		—			(57,202		)	—		(57,202		)	—			—			(57,202		)
Distributions to noncontrolling interests in Operating Partnership	—		—			—			—		—			(3,900		)	—			(3,900		)
Balance, September 30, 2012	$	939	$	762,821		$	(283,943	)	$	1,252	$	481,069		$	25,218		$	6,808		$	513,095

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

TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)



	Nine months ended September 30,
	2012			2011
OPERATING ACTIVITIES
Net income	$	37,462		$	35,851
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	75,247			58,787
Amortization of deferred financing costs	1,722			1,540
Equity in losses of unconsolidated joint ventures	2,874			823
Share-based compensation expense	8,231			5,458
Amortization of debt (premiums) and discounts, net	(753		)	(54		)
Distributions of cumulative earnings from unconsolidated joint ventures	740			315
Net accretion of market rent rate adjustments	(489		)	(278		)
Straight-line rent adjustments	(2,866		)	(3,041		)
Changes in other assets and liabilities:
Other assets	(1,336		)	(6,377		)
Accounts payable and accrued expenses	8,331			11,786
Net cash provided by operating activities	129,163			104,810
INVESTING ACTIVITIES
Additions to rental property	(31,157		)	(44,911		)
Acquisition of rental property	—			(262,488		)
Additions to investments in unconsolidated joint ventures	(57,810		)	(5,424		)
Distributions in excess of cumulative earnings from unconsolidated joint ventures	336			585
Increases in escrow deposits	—			(1,500		)
Net proceeds from sale of real estate	—			723
Additions to deferred lease costs	(3,430		)	(9,570		)
Net cash used in investing activities	(92,061		)	(322,585		)
FINANCING ACTIVITIES
Cash dividends paid	(57,202		)	(49,192		)
Distributions to noncontrolling interests in Operating Partnership	(3,900		)	(7,203		)
Proceeds from issuance of common shares	—			117,539
Proceeds from debt issuances	491,477			485,350
Repayments of debt	(463,705		)	(330,566		)
Additions to deferred financing costs	(2,527		)	(289		)
Proceeds from exercise of options	372			72
Net cash (used in) provided by financing activities	(35,485		)	215,711
Net increase in cash and cash equivalents	1,617			(2,064		)
Cash and cash equivalents, beginning of period	7,894			5,758
Cash and cash equivalents, end of period	$	9,511		$	3,694

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

Item 1 - Financial Statements of Tanger Properties Limited Partnership

TANGER PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, unaudited)



	September 30, 2012			December 31, 2011
ASSETS
Rental property
Land	$	148,002		$	148,002
Buildings, improvements and fixtures	1,793,963			1,764,494
Construction in progress	—			3,549
	1,941,965			1,916,045
Accumulated depreciation	(565,521		)	(512,485		)
Total rental property, net	1,376,444			1,403,560
Cash and cash equivalents	9,504			7,866
Investments in unconsolidated joint ventures, net	82,676			28,481
Deferred lease costs and other intangibles, net	104,496			120,636
Deferred debt origination costs, net	9,619			8,861
Prepaids and other assets	55,825			52,059
Total assets	$	1,638,564		$	1,621,463
LIABILITIES AND EQUITY
Liabilities
Debt
Senior, unsecured notes (net of discount of $2,036 and $2,237, respectively)	$	547,964		$	547,763
Unsecured term loans (net of discount of $584 and $692, respectively)	259,416			9,308
Mortgages payable (including premiums of $6,631 and $7,434, respectively)	108,672			111,379
Unsecured lines of credit	136,769			357,092
Total debt	1,052,821			1,025,542
Construction trade payables	10,525			13,656
Accounts payable and accrued expenses	45,694			37,405
Other liabilities	16,429			16,428
Total liabilities	1,125,469			1,093,031
Commitments and contingencies
Equity
Partners' Equity
General partner	4,736			4,972
Limited partners	500,388			515,154
Accumulated other comprehensive income	1,163			1,463
Total partners' equity	506,287			521,589
Noncontrolling interests in consolidated partnerships	6,808			6,843
Total equity	513,095			528,432
Total liabilities and equity	$	1,638,564		$	1,621,463

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

TANGER PROPERITES LIMITED PARTNERSHIP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per unit data, unaudited)



	Three months ended September 30,						Nine months ended September 30,
	2012			2011			2012			2011
Revenues
Base rentals	$	59,662		$	55,018		$	175,464		$	149,630
Percentage rentals	3,180			2,684			6,542			5,212
Expense reimbursements	24,646			22,973			73,111			64,794
Other income	2,995			2,568			6,944			6,447
Total revenues	90,483			83,243			262,061			226,083
Expenses
Property operating	27,614			25,181			81,679			73,054
General and administrative	9,018			7,943			27,737			21,895
Acquisition costs	—			978			—			2,519
Abandoned development costs	—			—			—			158
Depreciation and amortization	24,809			22,964			75,247			58,787
Total expenses	61,441			57,066			184,663			156,413
Operating income	29,042			26,177			77,398			69,670
Interest expense	12,317			11,958			37,062			32,996
Income before equity in losses of unconsolidated joint ventures	16,725			14,219			40,336			36,674
Equity in losses of unconsolidated joint ventures	(555		)	(27		)	(2,874		)	(823		)
Net income	16,170			14,192			37,462			35,851
Noncontrolling interests in consolidated partnerships	(7		)	2			25			2
Net income available to partners	16,163			14,194			37,487			35,853
Net income available to limited partners	15,998			14,048			37,103			35,485
Net income available to general partner	$	165		$	146		$	384		$	368

Basic earnings per common unit:
Net income	$	0.65		$	0.58		$	1.51		$	1.50
Diluted earnings per common unit:
Net income	$	0.65		$	0.57		$	1.50		$	1.49

Distribution paid per common unit	$	0.8400		$	0.8000		$	2.4800		$	2.3750

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

TANGER PROPERITES LIMITED PARTNERSHIP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, unaudited)



	Three months ended September 30,						Nine months ended September 30,
	2012			2011			2012			2011
Net income	$	16,170		$	14,192		$	37,462		$	35,851
Other comprehensive loss
Reclassification adjustment for amortization of gain on settlement of US treasury rate lock included in net income	(88		)	(83		)	(261		)	(246		)
Foreign currency translation adjustments	(73		)	(107		)	(39		)	(107		)
Changes in fair value of our portion of our unconsolidated joint ventures' cash flow hedges	—			—			—			46
Other comprehensive loss	(161		)	(190		)	(300		)	(307		)
Comprehensive income	16,009			14,002			37,162			35,544
Comprehensive income attributable to noncontrolling interests in consolidated partnerships	(7		)	—			25			—
Comprehensive income attributable to the Operating Partnership	$	16,002		$	14,002		$	37,187		$	35,544

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

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, 2010	$	5,221		$	414,926		$	1,748		$	421,895		$	—		$	421,895
Net income	524			50,473			—			50,997			(8		)	50,989
Other comprehensive loss	—			—			(285		)	(285		)	—			(285		)
Compensation under Incentive Award Plan	—			7,291			—			7,291			—			7,291
Issuance of 13,000 general partner common units and 1,137,000 limited partner common units, net of issuance costs of $670,000	—			117,375			—			117,375			—			117,375
Issuance of 9,125 common units upon exercise of options	—			353			—			353			—			353
Grant of 79,350 restricted units, net of forfeitures	—			—			—			—			—			—
Adjustments for noncontrolling interests in consolidated partnerships	—			(6		)	—			(6		)	6,851			6,845
Common distributions ($3.175 per unit)	(773		)	(75,258		)	—			(76,031		)	—			(76,031		)
Balance, December 31, 2011	4,972			515,154			1,463			521,589			6,843			528,432
Net income	384			37,103			—			37,487			(25		)	37,462
Other comprehensive loss	—			—			(300		)	(300		)	—			(300		)
Compensation under Incentive Award Plan	—			8,231			—			8,231			—			8,231
Issuance of 7,250 common units upon exercise of options	—			372			—			372			—			372
Grant of 141,500 restricted units, net of forfeitures	—			—			—			—			—			—
Adjustments for noncontrolling interests in consolidated partnerships	—			10			—			10			(10		)	—
Common distributions ($2.48 per unit)	(620		)	(60,482		)	—			(61,102		)	—			(61,102		)
Balance, September 30, 2012	$	4,736		$	500,388		$	1,163		$	506,287		$	6,808		$	513,095

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

TANGER PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)



	Nine months ended September 30,
	2012			2011
OPERATING ACTIVITIES
Net income	$	37,462		$	35,851
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	75,247			58,787
Amortization of deferred financing costs	1,722			1,540
Equity in losses of unconsolidated joint ventures	2,874			823
Equity-based compensation expense	8,231			5,458
Amortization of debt (premiums) and discounts, net	(753		)	(54		)
Distributions of cumulative earnings from unconsolidated joint ventures	740			315
Net accretion of market rent rate adjustments	(489		)	(278		)
Straight-line rent adjustments	(2,866		)	(3,041		)
Changes in other assets and liabilities:
Other assets	(1,274		)	(6,460		)
Accounts payable and accrued expenses	8,290			11,888
Net cash provided by operating activities	129,184			104,829
INVESTING ACTIVITIES
Additions to rental property	(31,157		)	(44,911		)
Acquisition of rental property	—			(262,488		)
Additions to investments in unconsolidated joint ventures	(57,810		)	(5,424		)
Distributions in excess of cumulative earnings from unconsolidated joint ventures	336			585
Increase in escrow deposits	—			(1,500		)
Net proceeds from the sale of real estate	—			723
Additions to deferred lease costs	(3,430		)	(9,570		)
Net cash used in investing activities	(92,061		)	(322,585		)
FINANCING ACTIVITIES
Cash distributions paid	(61,102		)	(56,395		)
Contributions from partners	—			117,539
Proceeds from debt issuances	491,477			485,350
Repayments of debt	(463,705		)	(330,566		)
Additions to deferred financing costs	(2,527		)	(289		)
Proceeds from exercise of options	372			72
Net cash (used in) provided by financing activities	(35,485		)	215,711
Net increase in cash and cash equivalents	1,638			(2,045		)
Cash and cash equivalents, beginning of period	7,866			5,671
Cash and cash equivalents, end of period	$	9,504		$	3,626

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

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 September 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.

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.

3. Investments in Unconsolidated Real Estate Joint Ventures

Our investments in unconsolidated joint ventures as of September 30, 2012 and December 31, 2011 aggregated $82.7 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 September 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	%	741,981	$	3.5	$	246.9
Deer Park Warehouse	Deer Park, Long Island NY	33.3	%	29,253	—		1.8
Galveston/Houston ⁽¹⁾	Texas City, Texas	50.0	%	352,705	28.5		—
National Harbor	Washington D.C. Metro Area	50.0	%	—	1.2		—
RioCan Canada	Various	50.0	%	155,522	25.9		—
Westgate	Glendale, Arizona	58.0	%	—	19.5		15.9
Wisconsin Dells	Wisconsin Dells, Wisconsin	50.0	%	265,086	3.9		24.3
Other				—	0.2		—
Total					$	82.7	$	288.9

(1) Outlet center opened on October 19, 2012.

Management, leasing and marketing fees earned from services provided to our unconsolidated joint ventures were recognized in other income as follows (in thousands):



	Three months ended September 30,				Nine months ended September 30,
	2012		2011		2012		2011
Fee:
Management and leasing	$	571	$	716	$	1,524	$	1,689
Marketing	61		37		161		125
Total Fees	$	632	$	753	$	1,685	$	1,814

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.

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, on June 1, 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 would not enforce its rights under the loan documents until the trigger date of October 1, 2012 unless extended. Extension of the trigger date was contingent among other things upon delivering a fully executed contract to sell the property to an unaffiliated third-party purchaser. Although the joint venture did not meet all of the requirements for extending the trigger date, it has delivered a fully executed contract to sell the property which has been approved by the lender. Through closing, the joint venture is committed to make monthly debt service payments at an interest rate of LIBOR + 1.85%. Additional interest accrues at a rate of Prime + 5.5% less the amount paid.

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. The center grand opening occurred on October 19, 2012 and featured over 85 brand name and designer outlet stores in the first phase of approximately 353,000 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 September 30, 2012, we and our partner had each contributed $27.8 million in cash to the joint venture to fund development activities. The joint venture's remaining commitments to complete construction of the outlet center amounted to approximately $17.0 million at September 30, 2012. We 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 both parties have made initial equity contributions of $1.2 million 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 our portion of 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 September 30, 2012, we had contributed $19.4 million in cash to the joint venture to fund development activities. The joint venture's remaining commitments to complete construction of the outlet center amounted to approximately $17.6 million at September 30, 2012. We are providing property management, construction supervision, leasing and marketing services to the joint venture.

On June 27, 2012, the joint venture closed on a construction loan with the ability to borrow up to $43.8 million, which carries an interest rate of LIBOR + 1.75%. As of September 30, 2012, the joint venture's balance on the loan was $15.9 million.

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 the ventures and therefore, we are not required to consolidate Westgate or Deer Park. Our equity method investments in Westgate and Deer Park as of September 30, 2012 were approximately $19.5 million and $3.5 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.

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 September 30, 2012			As of December 31, 2011
Assets
Land	$	78,531		$	77,864
Buildings, improvements and fixtures	295,593			288,934
Construction in progress, including land	113,169			23,545
	487,293			390,343
Accumulated depreciation	(57,067		)	(46,245		)
Total rental property, net	430,226			344,098
Assets held for sale ⁽¹⁾	1,821			—
Cash and cash equivalents	10,778			7,582
Deferred lease costs, net	13,586			14,815
Deferred debt origination costs, net	5,773			7,566
Prepaids and other assets	21,396			11,687
Total assets	$	483,580		$	385,748
Liabilities and Owners' Equity
Mortgages payable	$	288,978		$	303,230
Construction trade payables	14,506			2,669
Accounts payable and other liabilities	26,125			27,246
Total liabilities	329,609			333,145
Owners' equity	153,971			52,603
Total liabilities and owners' equity	$	483,580		$	385,748

(1) Assets related to our Deer Park Warehouse joint venture, which is currently under contract to be sold.



	Three months ended						Nine months ended
Summary Statements of Operations	September 30,						September 30,
- Unconsolidated Joint Ventures	2012			2011			2012			2011
Revenues	$	11,985		$	9,488		$	35,249		$	28,802
Expenses
Property operating	5,521			4,718			15,495			13,292
General and administrative	365			58			765			114
Acquisition costs	—			—			704			—
Abandoned development costs	—			—			1,390			—
Impairment charge	—			—			420			—
Depreciation and amortization	4,283			3,534			13,191			10,772
Total expenses	10,169			8,310			31,965			24,178
Operating income	1,816			1,178			3,284			4,624
Interest expense	3,540			1,381			10,967			7,310
Net loss	$	(1,724	)	$	(203	)	$	(7,683	)	$	(2,686	)

The Company and Operating Partnership's share of:
Net loss	$	(555	)	$	(27	)	$	(2,874	)	$	(823	)
Depreciation and impairment charge (real estate related)	$	1,641		$	1,280		$	5,249		$	3,922

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 September 30, 2012 and December 31, 2011, the Operating Partnership had amounts outstanding on these lines totaling $136.8 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, which at September 30, 2012 had a balance of $18.3 million including the debt premium.

5. Debt of the Operating Partnership

The debt of the Operating Partnership consisted of the following (in thousands):



			As of					As of
			September 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	$	(343	)	$	250,000	$	(417	)
Senior notes	6.125%	June 2020	300,000		(1,693		)	300,000		(1,820		)

Mortgages payable⁽¹⁾:
Atlantic City	5.14%-7.65%	November 2021- December 2026	52,624		4,596			53,826		4,894
Ocean City	5.24%	January 2016	18,625		308			18,867		375
Hershey	5.17%-8.00%	August 2015	30,792		1,727			31,252		2,165
Note payable ⁽¹⁾	1.50%	June 2016	10,000		(584		)	10,000		(692		)
Unsecured term loan ⁽²⁾	LIBOR + 1.80%	February 2019	250,000		—			—		—
Unsecured lines of credit ⁽³⁾	LIBOR + 1.25%	November 2015	136,769		—			357,092		—
			$	1,048,810	$	4,011		$	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 one additional 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.

Debt Maturities

Maturities of the existing long-term debt as of September 30, 2012 are as follows (in thousands):



Calendar Year	Amount
2012	$	657
2013	4,633
2014	3,600
2015	419,108
2016	30,279
Thereafter	590,533
Subtotal	1,048,810
Net premiums	4,011
Total	$	1,052,821

6. Shareholders' Equity of the Company

Throughout the first nine months of 2012, various Family Limited Partners exchanged a total of 1,642,483 Operating Partnership units for 6,569,932 common shares of the Company. After the above described exchanges, the Family Limited Partners owned 1,230,490 Operating Partnership units which were exchangeable for 4,921,960 common shares of the Company.

7. Partners' Equity of the Operating Partnership

The ownership interests of the Operating Partnership consisted of the following:



	As of	As of
	September 30, 2012	December 31, 2011
Common units:
General partner	250,000	250,000
Limited partners	24,453,637	24,304,887
Total common units	24,703,637	24,554,887

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.

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 partnerships.

As discussed in Note 6, various Family Limited Partners exchanged during the first nine months of 2012 a total of 1,642,483 Operating Partnership units for 6,569,932 common shares of the Company. Therefore, the Company recorded an increase to additional paid-in capital of $34.2 million during the first nine 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 September 30,					Nine months ended September 30,
	2012		2011			2012		2011
Net income attributable to Tanger Factory Outlet Centers, Inc.	$	15,327	$	12,464		$	35,172	$	31,284
Increase (decrease) in Tanger Factory Outlet Centers, Inc. paid-in-capital adjustments to noncontrolling interests ⁽¹⁾	1,878		(8,792		)	34,207		(9,053		)
Changes from net income attributable to Tanger Factory Outlet Centers, Inc. and transfers from noncontrolling interest	$	17,205	$	3,672		$	69,379	$	22,231

1) In 2012 and 2011, adjustments of the noncontrolling interest were made as a result of increases in the Company's ownership of the Operating Partnership from additional units received 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 September 30,				Nine months ended September 30,
	2012		2011		2012		2011
Restricted common shares ⁽¹⁾	$	1,886	$	1,410	$	6,600	$	3,942
Notional unit performance awards	495		377		1,475		1,390
Options	53		53		156		126
Total share-based compensation	$	2,434	$	1,840	$	8,231	$	5,458

(1) For the nine months ended September 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.

The following table summarizes information related to unvested restricted common shares outstanding as of September 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	(275,800	)	21.44
Forfeited	(5,000	)	29.50
Unvested at September 30, 2012	1,081,537		$	24.43

The total value of restricted common shares vested during the nine months ended September 30, 2012 and September 30, 2011 was $8.0 million and $5.7 million, respectively.

As of September 30, 2012, there w