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 March 31, 2015
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, including area code)
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 April 30, 2015, there were 95,836,347 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 March 31, 2015 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 and Canada. 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. As of March 31, 2015, the Company, through its ownership of Tanger GP Trust and Tanger LP Trust, owned 95,836,347 units of the Operating Partnership and other limited partners (the "Non-Company LPs") collectively owned 5,078,406 Class A common limited partnership units. Each Class A common limited partnership unit held by the Non-Company LPs is exchangeable for one of the Company's common shares, subject to certain limitations to preserve the Company's status as a REIT. Class B common limited partnership units, which are held by Tanger LP Trust, are not exchangeable for common shares of the Company.

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 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.


2


There are only a few differences between the Company and the Operating Partnership, which are reflected in the disclosure in this report. We believe it is important, however to understand these 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, the 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 all of the outlet centers and other assets, including the ownership interests in 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 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 Non-Company LPs 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 of the Company and the Operating Partnership;

•
Shareholders' Equity and Partners' Equity;

•
Earnings Per Share and Earnings Per Unit;

•
Accumulated Other Comprehensive Income of the Company and the Operating Partnership;

•
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.

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.


3


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 March 31, 2015 and December 31, 2014
Consolidated Statements of Operations - for the three months ended March 31, 2015 and 2014
Consolidated Statements of Comprehensive Income - for the three months ended March 31, 2015 and 2014
Consolidated Statements of Shareholders' Equity - for the three months ended March 31, 2015 and 2014
Consolidated Statements of Cash Flows - for the three months ended March 31, 2015 and 2014
 
 
FINANCIAL STATEMENTS OF TANGER PROPERTIES LIMITED PARTNERSHIP (Unaudited)
 
Consolidated Balance Sheets - as of March 31, 2015 and December 31, 2014
Consolidated Statements of Operations - for the three months ended March 31, 2015 and 2014
Consolidated Statements of Comprehensive Income - for the three months ended March 31, 2015 and 2014
Consolidated Statements of Equity - for the three months ended March 31, 2015 and 2014
Consolidated Statements of Cash Flows - for the three months ended March 31, 2015 and 2014
 
 
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 4. Mine Safety Disclosure
 
 
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 data, unaudited)
 
 
March 31, 2015
 
December 31, 2014
ASSETS
 
 

 
 

Rental property
 
 

 
 

Land
 
$
217,994

 
$
217,994

Buildings, improvements and fixtures
 
1,950,092

 
1,947,083

Construction in progress
 
154,328

 
98,526

 
 
2,322,414

 
2,263,603

Accumulated depreciation
 
(680,739
)
 
(662,236
)
Total rental property, net
 
1,641,675

 
1,601,367

Cash and cash equivalents
 
14,661

 
16,875

Rental property held for sale
 
46,530

 
46,005

Investments in unconsolidated joint ventures
 
205,083

 
208,050

Deferred lease costs and other intangibles, net
 
137,478

 
140,883

Deferred debt origination costs, net
 
11,606

 
12,126

Prepaids and other assets
 
71,924

 
72,354

Total assets
 
$
2,128,957

 
$
2,097,660

LIABILITIES AND EQUITY
 
 
 
 
Liabilities
 
 

 
 

Debt
 
 

 
 

Senior, unsecured notes (net of discount of $6,259 and $6,426, respectively)
 
$
793,741

 
$
793,574

Unsecured term loans (net of discount of $202 and $241, respectively)
 
267,298

 
267,259

Mortgages payable (including premiums of $2,838 and $3,031, respectively)
 
285,068

 
271,361

Unsecured lines of credit
 
115,700

 
111,000

Total debt
 
1,461,807

 
1,443,194

Accounts payable and accrued expenses
 
80,835

 
69,558

Deferred financing obligation
 
28,388

 
28,388

Other liabilities
 
31,076

 
32,634

Total liabilities
 
1,602,106

 
1,573,774

Commitments and contingencies
 
—

 
—

Equity
 
 

 
 

Tanger Factory Outlet Centers, Inc.
 
 

 
 

Common shares, $.01 par value, 300,000,000 shares authorized, 95,836,347 and 95,509,781 shares issued and outstanding at March 31, 2015 and December 31, 2014, respectively
 
958

 
955

Paid in capital
 
794,652

 
791,566

Accumulated distributions in excess of net income 
 
(270,124
)
 
(281,679
)
Accumulated other comprehensive loss
 
(25,755
)
 
(14,023
)
Equity attributable to Tanger Factory Outlet Centers, Inc.
 
499,731

 
496,819

Equity attributable to noncontrolling interests
 
 
 
 
Noncontrolling interests in Operating Partnership
 
26,481

 
26,417

Noncontrolling interests in other consolidated partnerships
 
639

 
650

Total equity
 
526,851

 
523,886

Total liabilities and equity
 
$
2,128,957

 
$
2,097,660


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 share data, unaudited)

 
 
Three months ended March 31,
 
 
 
2015
 
2014
 
Revenues
 
 
 
 
 
Base rentals
 
$
67,629

 
$
66,976

 
Percentage rentals
 
2,229

 
2,083

 
Expense reimbursements
 
33,364

 
31,542

 
Management, leasing and other services
 
1,283

 
566

 
Other income
 
1,421

 
1,615

 
Total revenues
 
105,926

 
102,782

 
Expenses
 
 
 


 
Property operating
 
37,732

 
36,027

 
General and administrative
 
11,305

 
10,722

 
Acquisition costs
 
—

 
7

 
Abandoned pre-development costs
 
—

 
1,596

 
Depreciation and amortization
 
23,989

 
26,063

 
Total expenses
 
73,026

 
74,415

 
Operating income
 
32,900

 
28,367


 
 
 
 
 
 
Other income/(expense)
 
 
 
 
 
Interest expense
 
(13,089
)
 
(14,920
)
 
Gain on sale of assets and interests in unconsolidated entities
 
13,726

 
—

 
Interest and other income
 
306

 
60

 
Income before equity in earnings of unconsolidated joint ventures
 
33,843

 
13,507

 
Equity in earnings of unconsolidated joint ventures
 
2,543

 
1,933

 
Net income
 
36,386

 
15,440


Noncontrolling interests in Operating Partnership
 
(1,855
)
 
(803
)
 
Noncontrolling interests in other consolidated partnerships
 
(19
)
 
(21
)
 
Net income attributable to Tanger Factory Outlet Centers, Inc.
 
$
34,512

 
$
14,616


 
 
 
 
 
 
Basic earnings per common share
 
 
 
 
 
Net income
 
$
0.36

 
$
0.15

 
Diluted earnings per common share
 
 
 
 
 
Net income
 
$
0.36

 
$
0.15

 
 
 
 
 
 
 
Dividends paid per common share
 
$
0.240

 
$
0.225

 
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
 
 
 
March 31,
 
 
 
2015
 
2014
 
Net income
 
$
36,386

 
$
15,440

 
Other comprehensive loss
 
 
 
 
 
Reclassification adjustments for amounts recognized in net income
 
—

 
(96
)
 
Foreign currency translation adjustments
 
(11,076
)
 
(2,840
)
 
Change in fair value of cash flow hedges
 
(1,287
)
 
(320
)
 
Other comprehensive loss
 
(12,363
)
 
(3,256
)
 
Comprehensive income
 
24,023

 
12,184

 
Comprehensive income attributable to noncontrolling interests
 
(1,243
)
 
(655
)
 
Comprehensive income attributable to Tanger Factory Outlet Centers, Inc.
 
$
22,780

 
$
11,529

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


8


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


 
 
Common shares
Paid in capital
Accumulated distributions in excess of earnings
Accumulated other comprehensive loss
Total Tanger Factory Outlet Centers, Inc. equity
Noncontrolling interests in Operating Partnership
Noncontrolling
interests in
other consolidated partnerships
Total
 equity
Balance,
December 31, 2013
 
$
945

$
788,984

$
(265,242
)
$
(2,428
)
$
522,259

$
28,432

$
6,904

$
557,595

Net income
 
—

—

14,616

—

14,616

803

21

15,440

Other comprehensive loss
 
—

—

—

(3,087
)
(3,087
)
(169
)
—

(3,256
)
Compensation under Incentive Award Plan
 
—

3,525

—

—

3,525

—

—

3,525

Issuance of 15,800 common shares upon exercise of options
 
—

261

—

—

261

—

—

261

Issuance of 1,302,729 restricted common shares, net of forfeitures
 
13

(13
)
—

—

—

—

—

—

Adjustment for noncontrolling interests in Operating Partnership
 
—

302

—

—

302

(302
)
—

—

Adjustment for noncontrolling interests in other consolidated partnerships
 
—

—

—

—

—

—

903

903

Exchange of 21,500 Operating Partnership units for 21,500 common shares
 
—

—

—

—

—

—

—

—

Common dividends ($0.225 per share)
 
—

—

(21,459
)
—

(21,459
)
—

—

(21,459
)
Distributions to noncontrolling interests
 
—

—

—

—

—

(1,158
)
(26
)
(1,184
)
Balance, March 31, 2014
 
$
958

$
793,059

$
(272,085
)
$
(5,515
)
$
516,417

$
27,606

$
7,802

$
551,825

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











 
 








 
 
 
 
 
 
 
 
 
 
 

9


TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands, except share and per share data, unaudited)
 
 
Common shares
Paid in capital
Accumulated distributions in excess of earnings
Accumulated other comprehensive loss
Total Tanger Factory Outlet Centers, Inc. equity
Noncontrolling interests in Operating Partnership
Noncontrolling
interests in
other consolidated partnerships
Total
 equity
Balance, December 31, 2014
 
$
955

$
791,566

$
(281,679
)
$
(14,023
)
$
496,819

$
26,417

$
650

$
523,886

Net income
 
—

—

34,512

—

34,512

1,855

19

36,386

Other comprehensive loss
 
—

—

—

(11,732
)
(11,732
)
(631
)
—

(12,363
)
Compensation under Incentive Award Plan
 
—

3,801

—

—

3,801

—

—

3,801

Issuance of 8,300 common shares upon exercise of options
 
—

233

—

—

233

—

—

233

Issuance of 348,844 restricted common shares, net of forfeitures
 
3

(3
)
—

—

—

—

—

—

Withholding of 30,578 common shares for employee income taxes
 
—

(1,084
)
—

—

(1,084
)
—

—

(1,084
)
Adjustment for noncontrolling interests in Operating Partnership
 
—

(59
)
—

—

(59
)
59

—

—

Adjustment for noncontrolling interests in other consolidated partnerships
 
—

198

—

—

198

—

(1
)
197

Common dividends ($.240 per share)
 
—

—

(22,957
)
—

(22,957
)
—

—

(22,957
)
Distributions to noncontrolling interests
 
—

—

—

—

—

(1,219
)
(29
)
(1,248
)
Balance,
March 31, 2015
 
$
958

$
794,652

$
(270,124
)
$
(25,755
)
$
499,731

$
26,481

$
639

$
526,851


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)

 
 
Three months ended
 
 
March 31,
 
 
2015
 
2014
OPERATING ACTIVITIES
 
 
 
 

Net income
 
$
36,386

 
$
15,440

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
23,989

 
26,063

Amortization of deferred financing costs
 
599

 
553

Abandoned pre-development costs
 
—

 
1,596

Gain on sale of assets and interests in unconsolidated entities
 
(13,726
)
 
—

Equity in earnings of unconsolidated joint ventures
 
(2,543
)
 
(1,933
)
Share-based compensation expense
 
3,613

 
3,366

Amortization of debt (premiums) and discounts, net
 
14

 
(89
)
Net amortization (accretion) of market rent rate adjustments
 
916

 
669

Straight-line rent adjustments
 
(1,269
)
 
(1,838
)
Distributions of cumulative earnings from unconsolidated joint ventures
 
2,719

 
1,363

Changes in other assets and liabilities:
 
 
 
 
Other assets
 
1,885

 
587

Accounts payable and accrued expenses
 
1,806

 
(3,275
)
Net cash provided by operating activities
 
54,389

 
42,502

INVESTING ACTIVITIES
 
 
 
 
Additions to rental property
 
(51,044
)
 
(13,269
)
Additions to investments in and notes receivable from unconsolidated joint ventures
 
(16,419
)
 
(33,679
)
Net proceeds on sale of interests in unconsolidated entities
 
15,495

 
—

Proceeds from insurance reimbursements
 
103

 
—

Additions to non-real estate assets
 
(208
)
 
(705
)
Distributions in excess of cumulative earnings from unconsolidated joint ventures
 
4,837

 
1,320

Additions to deferred lease costs
 
(2,338
)
 
(1,874
)
Net cash used in investing activities
 
(49,574
)
 
(48,207
)
FINANCING ACTIVITIES
 
 
 
 
Cash dividends paid
 
(22,957
)
 
(21,459
)
Distributions to noncontrolling interests in Operating Partnership
 
(1,219
)
 
(1,158
)
Proceeds from debt issuances
 
118,341

 
133,100

Repayments of debt
 
(99,742
)
 
(103,291
)
Employee income taxes paid related to shares withheld upon vesting of equity awards
 
(1,084
)
 
—

Distributions to noncontrolling interests in other consolidated partnerships
 
(29
)
 
(26
)
Additions to deferred financing costs
 
(191
)
 
(43
)
Proceeds from exercise of options
 
233

 
261

Net cash provided by (used in) financing activities
 
(6,648
)
 
7,384

Effect of foreign currency rate changes on cash and cash equivalents
 
(381
)
 
(14
)
Net increase (decrease) in cash and cash equivalents
 
(2,214
)
 
1,665

Cash and cash equivalents, beginning of period
 
16,875

 
15,241

Cash and cash equivalents, end of period
 
$
14,661

 
$
16,906

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, except unit data, unaudited)
 
 
March 31, 2015
 
December 31, 2014
ASSETS
 
 

 
 

Rental property
 
 

 
 

Land
 
$
217,994

 
$
217,994

Buildings, improvements and fixtures
 
1,950,092

 
1,947,083

Construction in progress
 
154,328

 
98,526

 
 
2,322,414

 
2,263,603

Accumulated depreciation
 
(680,739
)
 
(662,236
)
Total rental property, net
 
1,641,675

 
1,601,367

Cash and cash equivalents
 
14,583

 
15,806

Rental property held for sale
 
46,530

 
46,005

Investments in unconsolidated joint ventures
 
205,083

 
208,050

Deferred lease costs and other intangibles, net
 
137,478

 
140,883

Deferred debt origination costs, net
 
11,606

 
12,126

Prepaids and other assets
 
71,475

 
71,848

Total assets
 
$
2,128,430

 
$
2,096,085

LIABILITIES AND EQUITY
 

 
 
Liabilities
 
 
 
 
Debt
 
 
 
 
Senior, unsecured notes (net of discount of $6,259 and $6,426, respectively)
 
$
793,741

 
$
793,574

Unsecured term loans (net of discount of $202 and $241, respectively)
 
267,298

 
267,259

Mortgages payable (including premiums of $2,838 and $3,031, respectively)
 
285,068

 
271,361

Unsecured lines of credit
 
115,700

 
111,000

Total debt
 
1,461,807

 
1,443,194

Accounts payable and accrued expenses
 
80,308

 
67,983

Deferred financing obligation
 
28,388

 
28,388

Other liabilities
 
31,076

 
32,634

Total liabilities
 
1,601,579

 
1,572,199

Commitments and contingencies
 
—

 
—

Equity
 
 
 
 
Partners' Equity
 
 
 
 
General partner, 1,000,000 units outstanding at March 31, 2015 and December 31, 2014
 
4,948

 
4,828

Limited partners, 5,078,406 and 5,078,406 Class A units and 94,836,347 and 94,509,781 Class B units outstanding at March 31, 2015 and December 31, 2014, respectively
 
548,418

 
533,199

Accumulated other comprehensive loss
 
(27,154
)
 
(14,791
)
Total partners' equity
 
526,212

 
523,236

Noncontrolling interests in consolidated partnerships
 
639

 
650

Total equity
 
526,851

 
523,886

Total liabilities and equity
 
$
2,128,430

 
$
2,096,085

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

12


TANGER PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per unit data, unaudited)
 
 
Three months ended March 31,
 
 
 
2015
 
2014
 
Revenues
 
 
 
 
 
Base rentals
 
$
67,629

 
$
66,976

 
Percentage rentals
 
2,229

 
2,083

 
Expense reimbursements
 
33,364

 
31,542

 
Management, leasing and other services
 
1,283

 
566

 
Other income
 
1,421

 
1,615

 
Total revenues
 
105,926

 
102,782


Expenses
 


 


 
Property operating
 
37,732

 
36,027

 
General and administrative
 
11,305

 
10,722

 
Acquisition costs
 
—

 
7

 
Abandoned pre-development costs
 
—

 
1,596

 
Depreciation and amortization
 
23,989

 
26,063

 
Total expenses
 
73,026

 
74,415


Operating income
 
32,900

 
28,367


 
 
 
 
 
 
Other income/(expense)
 
 
 
 
 
Interest expense
 
(13,089
)
 
(14,920
)
 
Gain on sale of assets and interests in unconsolidated entities
 
13,726

 
—

 
Interest and other income
 
306

 
60

 
Income before equity in earnings of unconsolidated joint ventures
 
33,843

 
13,507


Equity in earnings of unconsolidated joint ventures
 
2,543

 
1,933

 
Net income
 
36,386

 
15,440


Noncontrolling interests in consolidated partnerships
 
(19
)
 
(21
)
 
Net income available to partners
 
36,367

 
15,419


Net income available to limited partners
 
36,007

 
15,263

 
Net income available to general partner
 
$
360

 
$
156


 
 
 
 
 
 
Basic earnings per common unit
 
 
 
 
 
Net income
 
$
0.36

 
$
0.15

 
Diluted earnings per common unit
 
 
 
 
 
Net income
 
$
0.36

 
$
0.15

 
 
 
 
 
 
 
Distribution paid per common unit
 
$
0.240

 
$
0.225

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

13


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

 
 
Three months ended
 
 
 
March 31,
 
 
 
2015
 
2014
 
Net income
 
$
36,386

 
$
15,440

 
Other comprehensive loss
 
 
 
 
 
Reclassification adjustments for amounts recognized in net income
 
—

 
(96
)
 
Foreign currency translation adjustments
 
(11,076
)
 
(2,840
)
 
Changes in fair value of cash flow hedges
 
(1,287
)
 
(320
)
 
Other comprehensive loss
 
(12,363
)
 
(3,256
)
 
Comprehensive income
 
24,023

 
12,184

 
Comprehensive income attributable to noncontrolling interests in consolidated partnerships
 
(19
)
 
(21
)
 
Comprehensive income attributable to the Operating Partnership
 
$
24,004

 
$
12,163

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


14


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

 
 
General partner
Limited partners
Accumulated other comprehensive loss
Total partners' equity
Noncontrolling interests in consolidated partnerships
Total equity
Balance, December 31, 2013
 
$
4,988

$
548,424

$
(2,721
)
$
550,691

$
6,904

$
557,595

Net income
 
156

15,263

—

15,419

21

15,440

Other comprehensive loss
 
—

—

(3,256
)
(3,256
)
—

(3,256
)
Compensation under Incentive Award Plan
 
—

3,525

—

3,525

—

3,525

Issuance of 15,800 common units upon exercise of options
 
—

261

—

261

—

261

Issuance of 1,302,729 restricted common units, net of forfeitures
 
—

—

—

—

—

—

Adjustments for noncontrolling interests in consolidated partnerships
 
—

—

—

—

903

903

Common distributions ($.225 per common unit)
 
(225
)
(22,392
)
—

(22,617
)
—

(22,617
)
Distributions to noncontrolling interests
 
—

—

—

—

(26
)
(26
)
Balance, March 31, 2014
 
$
4,919

$
545,081

$
(5,977
)
$
544,023

$
7,802

$
551,825

 
 
 
 
 
 
 
 
 
 
General partner
Limited partners
Accumulated other comprehensive loss
Total partners' equity
Noncontrolling interests in consolidated partnerships
Total equity
Balance, December 31, 2014
 
$
4,828

$
533,199

$
(14,791
)
$
523,236

$
650

$
523,886

Net income
 
360

36,007

—

36,367

19

36,386

Other comprehensive loss
 
—

—

(12,363
)
(12,363
)
—

(12,363
)
Compensation under Incentive Award Plan
 
—

3,801

—

3,801

—

3,801

Issuance of 8,300 common units upon exercise of options
 
—

233

—

233

—

233

Issuance of 348,844 restricted common units, net of forfeitures
 
—

—

—

—

—

—

Withholding of 30,578 common units for employee income taxes
 
—

(1,084
)
—

(1,084
)
—

(1,084
)
Adjustment for noncontrolling interests in consolidated partnerships
 
—

198

—

198

(1
)
197

Common distributions ($.240 per common unit)
 
(240
)
(23,936
)
—

(24,176
)
—

(24,176
)
Distributions to noncontrolling interests
 
—

—

—

—

(29
)
(29
)
Balance, March 31, 2015
 
$
4,948

$
548,418

$
(27,154
)
$
526,212

$
639

$
526,851

 
 
 
 
 
 
 
 
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)
 
 
Three months ended
 
 
March 31,
 
 
2015
 
2014
OPERATING ACTIVITIES
 
 

 
 

Net income
 
$
36,386

 
$
15,440

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


Depreciation and amortization
 
23,989

 
26,063

Amortization of deferred financing costs
 
599

 
553

Abandoned pre-development costs
 
—

 
1,596

Gain on sale of assets and interests in unconsolidated entities
 
(13,726
)
 
—

Equity in earnings of unconsolidated joint ventures
 
(2,543
)
 
(1,933
)
Equity-based compensation expense
 
3,613

 
3,366

Amortization of debt (premiums) and discounts, net
 
14

 
(89
)
Net amortization (accretion) of market rent rate adjustments
 
916

 
669

Straight-line rent adjustments
 
(1,269
)
 
(1,838
)
Distributions of cumulative earnings from unconsolidated joint ventures
 
2,719

 
1,363

Changes in other assets and liabilities:
 
 
 
 
Other assets
 
1,828

 
840

Accounts payable and accrued expenses
 
2,854

 
(3,330
)
Net cash provided by operating activities
 
55,380

 
42,700

INVESTING ACTIVITIES
 
 
 
 
Additions to rental property
 
(51,044
)
 
(13,269
)
Additions to investments in and notes receivable from unconsolidated joint ventures
 
(16,419
)
 
(33,679
)
Net proceeds on sale of interests in unconsolidated entities
 
15,495

 
—

Proceeds from insurance reimbursements
 
103

 
—

Additions to non-real estate assets
 
(208
)
 
(705
)
Distributions in excess of cumulative earnings from unconsolidated joint ventures
 
4,837

 
1,320

Additions to deferred lease costs
 
(2,338
)
 
(1,874
)
Net cash used in investing activities
 
(49,574
)
 
(48,207
)
FINANCING ACTIVITIES
 
 
 
 
Cash distributions paid
 
(24,176
)
 
(22,617
)
Proceeds from debt issuances
 
118,341

 
133,100

Repayments of debt
 
(99,742
)
 
(103,291
)
Employee income taxes paid related to shares withheld upon vesting of equity awards
 
(1,084
)
 
—

Distributions to noncontrolling interests in consolidated partnerships
 
(29
)
 
(26
)
Additions to deferred financing costs
 
(191
)
 
(43
)
Proceeds from exercise of options
 
233

 
261

Net cash provided by (used in) financing activities
 
(6,648
)
 
7,384

Effect of foreign currency on cash and cash equivalents
 
(381
)
 
(14
)
Net increase (decrease) in cash and cash equivalents
 
(1,223
)
 
1,863

Cash and cash equivalents, beginning of period
 
15,806

 
14,984

Cash and cash equivalents, end of period
 
$
14,583

 
$
16,847

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 SUBSIDIARIES
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 and Canada. 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 March 31, 2015, we owned and operated 36 outlet centers, with a total gross leasable area of approximately 11.3 million square feet. We also had partial ownership interests in 8 outlet centers totaling approximately 2.4 million square feet, including 4 outlet centers in 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. As of March 31, 2015, the Company, through its ownership of Tanger GP Trust and Tanger LP Trust, owned 95,836,347 units of the Operating Partnership and other limited partners (the "Non-Company LPs") collectively owned 5,078,406 Class A common limited partnership units. Each Class A common limited partnership unit held by the Non-Company LPs is exchangeable for one of the Company's common shares, subject to certain limitations to preserve the Company's REIT status. Class B common limited partnership units, which are held by Tanger LP Trust, are not exchangeable for common shares of the Company.

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, 2014. The December 31, 2014 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. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the financial statements for the interim periods have been made. The results of interim periods are not necessarily indicative of the results for a full year.

We consolidate properties that are wholly owned or properties where we own less than 100% but we control. Control is determined using an evaluation based on accounting standards related to the consolidation of voting interest entities and variable interest entities ("VIE"). For joint ventures that are determined to be a VIE, we consolidate the entity where we are deemed to be the primary beneficiary. Determination of the primary beneficiary is based on whether an entity has (1) the power to direct the activities of the VIE that most significantly impact the entity's economic performance, and (2) 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. Our determination of the primary beneficiary considers all relationships between us and the VIE, including management agreements and other contractual arrangements.


17


Investments in real estate joint ventures that we do not control but may exercise significant influence 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 or loss, cash contributions, distributions and other adjustments required under the equity method of accounting. These investments are evaluated for impairment when necessary.

Allocation provisions within our partnership or joint venture agreements are not always consistent with the legal ownership interests held by each partner or joint venture investee primarily due to partner preferences. We separately report investments in joint ventures for which accumulated distributions have exceeded investments in and our share of net income or loss of the joint ventures within other liabilities in the consolidated balance sheets. The net equity of our Charlotte joint ventures is less than zero because of financing or operating distributions that were greater than net income, as net income includes non-cash charges for depreciation and amortization.

We have concluded that our Westgate, Savannah and Southaven joint ventures are each considered a VIE because our voting rights are disproportionate to our economic interests. The operating, development, leasing, and management agreements of Westgate and Savannah provide that the activities that most significantly impact the economic performance of the ventures require unanimous consent. Accordingly, we determined that we are not the primary beneficiary in either instance, since we do not have the power to direct the significant activities that affect the economic performance of the ventures, and have applied the equity method of accounting. Our investment in Westgate was approximately $13.9 million and in Savannah was approximately $47.4 million as of March 31, 2015. 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 Savannah.

The management agreement and other contractual arrangements for Southaven give us, but not necessarily our joint venture partner, significant participating rights over activities that most significantly impact the economic performance of the ventures, thus we have concluded that we are the primary beneficiary and have consolidated the venture's balance sheet and results of operations. At March 31, 2015, total assets of this venture, which is currently under construction, were $19.3 million and total liabilities were $2.0 million. The primary classification of these assets on the consolidated balance sheets are within total rental property, net and the classification of liabilities is within accounts payable and accrued expenses. These assets include only those assets that can be used to settle obligations of the VIE. The liabilities include third party liabilities and exclude intercompany balances that are eliminated in consolidation.

"Noncontrolling interests in the Operating Partnership" reflects the Non-Company LP's percentage ownership of the Operating Partnership's units. "Noncontrolling interests in other consolidated partnerships" consist of outside equity interests in partnerships or joint ventures not wholly owned by the Company or the Operating Partnership 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. Noncontrolling interests are initially recorded in the consolidated balance sheets at fair value based upon purchase price allocations. Income is allocated to the noncontrolling interests based on the allocation provisions within the partnership or joint venture agreements..

We have reclassified $566,000 related to management, leasing and other services in the consolidated statement of operations for the three ended March 31, 2014, to the caption "management, leasing and other services" from the caption "other income" to conform to the presentation of the consolidated statement of operations for the three months ended March 31, 2015.

In addition, we have reclassified certain amounts related to interest income and other income (expense) in the consolidated statement of operations for the three months ended March 31, 2014 to the caption "interest and other income" from the caption "other income" to conform to the presentation of the consolidated statement of operations for the three months ended March 31, 2015.

3. Disposition of Properties and Properties Held for Sale

In the fourth quarter of 2014, we entered into an agreement with a private buyer to acquire our outlet center in Lincoln City, Oregon along with an option agreement to purchase an additional four properties. Subsequently, the buyer purchased the Lincoln City outlet center in December 2014. The buyer had the option to purchase three properties during the first quarter of 2015 and one additional property during the first quarter of 2016. When the buyer did not close on the terms set forth in the agreement, the buyer's option expired. On April 1, 2015, we entered into a letter of intent with a private buyer for the sale of the four outlet centers that are currently classified as rental properties held for sale. The buyer is currently conducting due diligence. Should the buyer choose to move forward, the transaction is currently expected to close in the third quarter of 2015.

18



The four properties total approximately 712,000 square feet and have been classified as rental property held for sale as of March 31, 2015 on the consolidated balance sheets. The results of operations for these properties are included in continuing operations as the potential sale did not meet the criteria set forth in the recently-adopted guidance requiring the result of operations to be separately set forth as discontinued operations.

The carrying values of the rental properties held for sale were comprised of the following (in thousands):

 
 
March 31, 2015
 
December 31, 2014
Rental property, net
 
$
43,982

 
$
43,532

Deferred lease costs and other intangibles, net
 
834

 
757

Prepaids and other assets
 
1,714

 
1,716

Rental property held for sale
 
$
46,530

 
$
46,005



4. Developments of Consolidated Outlet Centers

Development continues for the following consolidated outlet centers as of March 31, 2015:
Project
Approximate square feet
(in 000's)
Costs Incurred to Date
(in millions)
Borrowed to date
(in millions)
Projected Opening
Foxwoods, Connecticut
313

$
86.0

$
40.1

05/21/15
Grand Rapids, Michigan
350

32.5

—

07/31/15
Southaven, Mississippi
320

16.6

—

4Q15
Total
983

$
135.1

$
40.1

 

Southaven, Mississippi

In January 2015, we purchased land for approximately $14.8 million and commenced construction on the development of an approximately 320,000 square foot outlet center in Southaven, Mississippi. Tanger Outlets Southaven will be located less than five miles south of Memphis, Tennessee. The outlet center is being developed through a joint venture in which we own a controlling interest and is consolidated for financial reporting purposes.

On April 29, 2015, the joint venture closed on a mortgage loan with the ability to borrow up to $60.0 million at an interest rate of LIBOR +1.75%. The loan initially matures on April 29, 2018, with one two-year extension option.


19


5. Investments in Unconsolidated Real Estate Joint Ventures
The equity method of accounting is used to account for each of the individual joint ventures. We have an ownership interest in the following unconsolidated real estate joint ventures:

As of March 31, 2015
Joint Venture
 
Outlet Center Location
 
Ownership %
 
Square Feet
(in 000's)
 
Carrying Value of Investment (in millions)
 
Total Joint Venture Debt
(in millions)
Columbus
 
Columbus, OH
 
50.0
%
 
—

 
$
2.0

 
$
—

Galveston/Houston
 
Texas City, TX
 
50.0
%
 
353

 
0.6

 
65.0

National Harbor
 
National Harbor, MD
 
50.0
%
 
339

 
9.1

 
83.7

RioCan Canada
 
Various
 
50.0
%
 
870

 
132.0

 
14.3

Savannah (1)
 
Savannah, GA
 
50.0
%
 
—

 
47.4

 
55.2

Westgate
 
Glendale, AZ
 
58.0
%
 
411

 
13.9

 
62.0

Other
 
 
 
 
 
—

 
0.1

 
—

 
 
 
 
 
 
 
 
$
205.1

 
$
280.2

 
 
 
 
 
 
 
 
 
 
 
Charlotte(2)
 
Charlotte, NC
 
50.0
%
 
398

 
$
(0.6
)
 
$
90.0

 
 
 
 
 
 
 
 
$
(0.6
)
 
$
90.0


As of December 31, 2014
Joint Venture
 
Center Location
 
Ownership %
 
Square Feet
(in 000's)
 
Carrying Value of Investment
(in millions)
 
Total Joint Venture Debt
(in millions)
Galveston/Houston
 
Texas City, TX
 
50.0
%
 
353

 
$
1.3

 
$
65.0

National Harbor
 
National Harbor, MD
 
50.0
%
 
339

 
9.5

 
83.7

RioCan Canada
 
Various
 
50.0
%
 
870

 
132.5

 
15.7

Savannah (1)
 
Savannah, GA
 
50.0
%
 
—

 
46.5

 
25.5

Westgate
 
Glendale, AZ
 
58.0
%
 
381

 
14.3

 
54.0

Wisconsin Dells
 
Wisconsin Dells, WI
 
50.0
%
 
265

 
2.4

 
24.3

Other
 
 
 
 
 
—

 
1.5

 
—

 
 
 
 
 
 
 
 
$
208.0

 
$
268.2

 
 
 
 
 
 
 
 
 
 
 
Charlotte(2)
 
Charlotte, NC
 
50.0
%
 
398

 
$
(2.2
)
 
$
90.0

 
 
 
 
 
 
 
 
$
(2.2
)
 
$
90.0

(1)
Based on capital contribution and distribution provisions in the joint venture agreement, we expect our economic interest in the venture's cash flow to be greater than the ownership percentage indicated above, which in this case, states our legal interest in this venture. Our economic interest may fluctuate based on a number of factors, including mortgage financing, partnership capital contributions and distributions, and proceeds from gains or losses of asset sales.
(2)
The negative carrying value is due to the distributions of proceeds from a mortgage loan, as well as quarterly distributions of excess cash flow, exceeding the original contributions from the partners.



20


Fees we received for various services provided to our unconsolidated joint ventures were recognized in management, leasing and other services as follows (in thousands):
 
 
Three months ended
 
 
March 31,
 
 
2015
 
2014
Fee:
 
 
 
 
Development and leasing
 
$
581

 
$
8

Loan guarantee
 
196

 
40

Management and marketing
 
506

 
518

Total Fees
 
$
1,283

 
$
566


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 (totaling $4.4 million as of March 31, 2015 and December 31, 2014) are amortized over the various useful lives of the related assets.

Columbus, Ohio

We and our joint venture partner closed on the acquisition of land on April 29, 2015 and plan to start building imminently in the Columbus, Ohio market. The partners currently expect to complete construction in time to open the center during the second quarter of 2016. We are providing property management, marketing and leasing services to the outlet center.

Savannah, Georgia

In January 2014, we announced a joint venture arrangement to develop Tanger Outlets Savannah. The center, which opened on April 16, 2015, includes approximately 377,000 square feet, and is located on I-95 at the Savannah/Hilton Head International Airport interchange. As of March 31, 2015, our equity contributions totaled $45.2 million and our partner’s equity contributions totaled $8.3 million. Contributions we make in excess of our partners' equity contributions will earn a preferred rate of return equal to 8% from the date the contributions are made until the outlet center’s grand opening date, and then 10% annually thereafter.

The joint venture has an interest only mortgage loan with the ability to borrow up to $97.7 million, of which $4.7 million will be available for future expansion, at an interest rate of LIBOR + 1.65%. The loan initially matures on May 21, 2017, with two, one -year extension options. As of March 31, 2015, the balance on the loan was $55.2 million. We are providing development, management and marketing services to the joint venture; and with our partner, are jointly providing leasing services to the outlet center.

Westgate, Glendale, Arizona

During the first quarter, the joint venture completed the remaining 28,000 square feet of a 78,000 square foot expansion of the existing property which brought the size of the outlet center to approximately 411,000 square feet. Construction commenced on the expansion during the second quarter of 2014 and was funded with borrowings under the amended Westgate mortgage loan. The joint venture's amended and restated construction loan has the ability to borrow up to $62.0 million and matures in June 2015 with the option to extend the maturity date for two additional years. On April 1, 2015, the joint venture exercised the option to extend the maturity date of the loan to June 27, 2017. As of March 31, 2015, the balance on the loan was $62.0 million.

Tanger Outlets Westgate opened in November 2012 and was developed through, and currently owned by, a joint venture that was formed in May 2012. We are providing property management, construction supervision, marketing and leasing services to the joint venture.

21


Wisconsin Dells, Wisconsin

In February 2015, we sold our equity interest in the joint venture that owned an outlet center in Wisconsin Dells, Wisconsin for approximately $15.6 million, representing our share of the sales price totaling $27.7 million less our share of the outstanding debt, which totaled $12.1 million. As a result of this transaction, we recorded a gain of approximately $13.7 million in the first quarter of 2015, which represents the difference between the carrying value of our equity method investment and the net proceeds received.

Condensed combined summary financial information of unconsolidated joint ventures accounted for using the equity method is as follows (in thousands):
Condensed Combined Balance Sheets - Unconsolidated Joint Ventures
 
March 31, 2015
 
December 31, 2014
Assets
 
 

 
 

Land
 
$
91,922

 
$
102,601

Buildings, improvements and fixtures
 
496,201

 
542,501

Construction in progress, including land
 
128,529

 
104,780

 
 
716,652

 
749,882

Accumulated depreciation
 
(38,236
)
 
(48,233
)
Total rental property, net
 
678,416

 
701,649

Cash and cash equivalents
 
56,119

 
46,917

Deferred lease costs, net
 
19,345

 
21,234

Deferred debt origination costs, net
 
5,256

 
5,995

Prepaids and other assets
 
14,648

 
12,766

Total assets
 
$
773,784

 
$
788,561

Liabilities and Owners' Equity
 
 

 
 

Mortgages payable
 
$
370,244

 
$
358,219

Accounts payable and other liabilities
 
46,971

 
70,795

Total liabilities
 
417,215

 
429,014

Owners' equity
 
356,569

 
359,547

Total liabilities and owners' equity
 
$
773,784

 
$
788,561


 
 
Three months ended
Condensed Combined Statements of Operations
 
March 31,
 - Unconsolidated Joint Ventures
 
2015
 
2014
Revenues
 
$
23,965

 
$
16,755

Expenses
 
 
 
 
Property operating
 
9,144

 
6,646

General and administrative
 
218

 
129

Depreciation and amortization
 
7,822

 
4,974

Total expenses
 
17,184

 
11,749

Operating income
 
6,781

 
5,006

Interest expense
 
(1,770
)
 
(1,226
)
Interest and other income
 
8

 
—

Net income
 
$
5,019

 
$
3,780

 
 
 
 
 
The Company and Operating Partnership's share of:
Net income
 
$
2,543

 
$
1,933

Depreciation and impairment charge (real estate related)
 
$
4,076

 
$
2,605


22



6. Debt of the Company

All of the Company's debt is held by the Operating Partnership and its consolidated subsidiaries.

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. The Company also guarantees the Operating Partnership's unsecured term loan 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.

The Operating Partnership had the following amounts outstanding on the debt guaranteed by the Company (in thousands):
 
 
March 31, 2015
 
December 31, 2014
Unsecured lines of credit
 
$
115,700

 
$
111,000

Unsecured term loan
 
250,000

 
250,000

Ocean City mortgage
 
17,804

 
17,827



7. Debt of the Operating Partnership

The debt of the Operating Partnership consisted of the following (in thousands):
 
 
 
 
 
 
As of
 
As of
 
 
 
 
 
 
March 31, 2015
 
December 31, 2014
 
 
Stated Interest Rate(s)
 
Maturity Date
 
Principal
 
Premium
 (Discount)
 
Principal
 
Premium
 (Discount)
Senior, unsecured notes:
 
 
 
 
 
 

 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
Senior notes
 
6.125
%
 
June 2020
 
$
300,000

 
$
(1,226
)
 
$
300,000

 
$
(1,276
)
Senior notes
 
3.875
%
 
December 2023
 
250,000

 
(3,645
)
 
250,000

 
(3,732
)
Senior notes
 
3.750
%
 
December 2024
 
250,000

 
(1,388
)
 
250,000

 
(1,418
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgages payable:
 
 
 
 
 
 
 
 
 
 
 
 
Atlantic City (1)
 
5.14%-7.65%

 
November 2021- December 2026
 
45,340

 
3,594

 
45,997

 
3,694

Deer Park
 
LIBOR + 1.50%

 
August 2018
 
150,000

 
(1,082
)
 
150,000

 
(1,161
)
     Foxwoods
 
LIBOR + 1.65%

 
December 2017
 
40,076

 
—

 
25,235

 
—

Hershey (1)
 
5.17%-8.00%

 
August 2015
 
29,085

 
251

 
29,271

 
399

Ocean City (1)
 
5.24
%
 
January 2016
 
17,729

 
75

 
17,827

 
99

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

 
(202
)
 
10,000

 
(241
)
Unsecured term loan
 
LIBOR + 1.05%

 
February 2019
 
250,000

 
—

 
250,000

 
—

Unsecured term note
 
LIBOR + 1.30%

 
August 2017
 
7,500

 
—

 
7,500

 
—

Unsecured lines of credit
 
LIBOR + 1.00%

 
October 2017
 
115,700

 
—

 
111,000

 
—

 
 
 
 
 
 
$
1,465,430

 
$
(3,623
)
 
$
1,446,830

 
$
(3,636
)
(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%, Hershey 3.40%, Ocean City 4.68%, and note payable 3.15%.

Certain of our properties, which had a net book value of approximately $690.1 million at March 31, 2015 and $602.7 million at December 31, 2014, serve as collateral for mortgages payable. We maintain unsecured lines of credit that provide for borrowings of up to $520.0 million. The unsecured lines of credit include a $20.0 million liquidity line and a $500.0 million syndicated line. The syndicated line may be increased to $750.0 million through an accordion feature in certain circumstances.

23



We provide guarantees to lenders for our joint ventures which include standard non-recourse carve out indemnifications for losses arising from items such as but not limited to fraud, physical waste, payment of taxes, environmental indemnities, misapplication of insurance proceeds or security deposits and failure to maintain required insurance. For construction and term loans, we may include a guaranty of completion as well as a principal guaranty ranging from 5% to 100% of principal.  The principal guarantees include terms for release or reduction based upon satisfactory completion of construction and performance targets including occupancy thresholds and minimum debt service coverage tests.

The unsecured lines of credit and senior unsecured notes include covenants that require the maintenance of certain ratios, including debt service coverage and leverage, and limit the payment of dividends such that dividends and distributions will not exceed funds from operations, as defined in the agreements, for the prior fiscal year on an annual basis or 95% of funds from operations on a cumulative basis. As of March 31, 2015, we were in compliance with all of our debt covenants.

Debt Maturities

Maturities of the existing long-term debt as of March 31, 2015 are as follows (in thousands):
Calendar Year
 
Amount

2015
 
$
31,402

2016
 
30,283

2017
 
166,284

2018
 
153,183

2019
 
253,369

Thereafter
 
830,909

Subtotal
 
1,465,430

Net discount
 
(3,623
)
Total
 
$
1,461,807

  
8. Derivative Financial Instruments

The following table summarizes the terms and fair values of our derivative financial instruments, as well as their classifications within the consolidated balance sheets (in thousands):
 
 
 
 
 
 
 
 
 
 
Fair Value
Effective Date
 
Maturity Date
 
Notional Amount
 
Bank Pay Rate
 
Company Fixed Pay Rate
 
March 31, 2015
 
December 31, 2014
Assets (Liabilities):
 
 
 
 
 
 
 
 
 
 
 
 
November 14, 2013
 
August 14, 2018
 
$
50,000

 
1 month LIBOR
 
1.3075
%
 
$
(406
)
 
$
26

November 14, 2013
 
August 14, 2018
 
50,000

 
1 month LIBOR
 
1.2970
%
 
(388
)
 
40

November 14, 2013
 
August 14, 2018
 
50,000

 
1 month LIBOR
 
1.3025
%
 
(398
)
 
29

Total