DISCLAIMER 2
This presentation includes time-sensitive information that may be accurate only as of today’s date, July 31, 2012. Estimates of future net income per share and funds from operations per share are, and certain other matters discussed in this presentation regarding the state of the industry, our growth expectations and prospects, our development, remerchandising and financial strategies, the renewal and re-tenanting of space, tenant demand for outlet space in the US and Canada, access to capital, ability to acquire assets opportunistically, synergies expected to be achieved in acquiring centers in close proximity to existing Tanger centers, interest rates, funds from operations and coverage of the current dividend may be, forward-looking statements within the meaning of the federal securities laws. These forward-looking statements are subject to risks and uncertainties. Actual results could differ materially from those projected due to various factors including, but not limited to, the risks associated with general economic and local real estate conditions in the US and Canada, the company’s ability to meet its obligations on existing indebtedness or refinance existing indebtedness on favorable terms, the availability and cost of capital, the company’s ability to lease its properties, the company’s ability to implement its plans and strategies for joint venture properties that it does not fully control, the company’s inability to collect rent due to the bankruptcy or insolvency of tenants or otherwise, working with joint venture partners, and competition. For a more detailed discussion of the factors that affect our operating results, interested parties should review the Tanger Factory Outlet Centers, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 2011. why TANGER? 3
• Well-positioned for growth • Financial stewardship • Recession resiliency • Outlet expertise & focus • Proven record of value creation four-legged GROWTH 4
Opportunistic Existing Acquisitions Portfolio
Canadian Growth US Development Opportunities Opportunities organic GROWTH 5
Same Center NOI Straight-line Blended Growth Rental Increases
23.7% 1H12 6.9% 1H12 1H11 25.5% 1H11 4.9% 2011 23.4% 2011 5.3% 2010 13.8% 2010 2.6% 2009 14.3% 1.4% 2009 2008 25.9% 2008 4.1% 2007 22.6% 2007 5.3% 2006 14.2%
Tenant occupancy cost ratio has increased 100 basis points to 8.4% for 2011 from 7.4% for 2006 (see page 32 of appendix) domestic RUNWAY 6
The outlet industry is small – about 50 million square feet, which is smaller than the retail space in the city of Chicago
Attractive Supply Dynamic – Recently Completed: • Hilton Head I, SC – opened March 31, 2011 Tenant demand for outlet • Mebane, NC – opened November 5, 2010 space continues and new Under Construction: supply is limited, with only a few disciplined public REIT • Houston, Texas market near Galveston Tanger Outlets Westgate in Glendale, Arizona developers that have access • to capital and the expertise to Pre-development: deliver new outlet projects • Washington, DC market at National Harbor • East of Phoenix in Scottsdale, AZ • Foxwoods Resort in Mashantucket, CT Shadow Pipeline: • Site selection continues in other identified markets that are not served or underserved by the outlet industry
canadian PLATFORM 7
The Next Frontier: US style outlet shopping is unrepresented in Canada. Relative to the US (24.5 retail sf/person), Canada is under-retailed (16 retail sf/person). Canadian consumers and retailers on both sides of the border are driving the demand for outlet expansion into Canada.
December 2011 Acquisition: • Cookstown – 30 miles north of Toronto in Innisfil, Ontario
Pre-development: • Cookstown – expansion to approximately 320,000 sf • Heartland Town Centre – 20 miles northwest of Toronto & 45 miles from Cookstown • Kanata – a suburban Ottawa market Shadow Pipeline: • Site selection continues in other identified markets with the objective of providing tenants a platform of approximately 10 outlet centers over the next 5 – 7 years
opportunistic ACQUISTIONS 8
The outlet industry is largely consolidated. Tanger estimates that Tanger & Simon collectively own more than 80% of all quality outlet assets, and benefit from the scale of their portfolios.
Acquisition opportunities are limited, but Tanger has sufficient access to capital to acquire quality assets opportunistically.
2011 acquisitions expanded footprint by approximately 15%: • Tanger Outlets Hershey (formerly The Outlets at Hershey) • Tanger Outlets Atlantic City (formerly The Walk) • Tanger Outlets Ocean City (formerly Ocean City Factory Outlets) • Tanger Outlets Jeffersonville (formerly Prime Outlets Jeffersonville) • Tanger Outlets Cookstown (formerly Cookstown Outlet Mall)
financial STEWARDSHIP 9
Investment Grade Funding Preference Generate Capital Rated & Focused on for Unsecured Internally Moving Up the Financing – Limited (Cash Flow in Excess Ratings Scale Secured Financing of Dividends Paid)
Maintain Significant Maintain Disciplined Unused Capacity Manageable Development Under Lines of Credit Schedule of Debt Approach – Will Not Maturities Build on Spec
Use Joint Ventures Limit Floating Rate Solid Coverage & Only When Exposure Leverage Ratios Necessary quality Ratios 10
Key Bond Covenants As of 6/30/2012 Actual Limit
Total debt to adjusted total assets 47% < 60%
Secured debt to adjusted total assets 5% < 40%
Unencumbered assets to unsecured debt 204% > 135%
Interest coverage 4.4 x > 1.5 x
S&P – BBB Moody’s – Baa2 Most recent ratings agency action: Moody’s revision of outlook to positive from stable on June 8, 2012 strong BALANCE SHEET 11
Limited Use of Secured Line of Credit 1 Financing Capacity 8% 73% 27% 92%
GLA encumbered Outstanding ($141.2 million)
GLA unencumbered Unused Capacity ($378.8 million)
1. Consolidated properties
As of June 30, 2012 manageable MATURITIES 12
$300.0 $250.0 $250.0
$141.2 $141.2 $21.8 $21.8 $30.9 $30.9 $20.6 $20.6 $10.0 $18.7 $18.7 $10.6 $10.6
'12 '13 '14 '25 '19 '23 Jan '16 '17 - '22 - Feb '19 Dec '24 Dec '26 Aug '15 Aug Nov '15 Nov '16 Nov '21 June '16 June '20
Lines of Credit Lines of Credit Commitment Mortgage Debt Term Loan (3) Bond Debt Other Unsecured Debt
1. In millions as of June 30, 2012 & assuming all extension options exercised; although some mortgage debt is amortizing, outstanding balance is shown in the month of final maturity 2. Excludes debt discount/premium 3. Excludes pro-rata of share debt maturities related to unconsolidated joint ventures conservative STRATEGIES 13
Limited Floating Rate Reinvesting in the Exposure Company
Outstanding Debt 2011 FFO
$391.2 million 37% $63.7 63% $76.0
$666.9 million Excess Cash Flow Variable Rate Fixed Rate Common Dividends
As of June 30, 2012 In millions disciplined DEVELOPMENT 14
Internal Guidelines for Buying Land: Predevelopment Costs are Limited to:
• Positive due diligence results • Costs to control the land (option contract costs) • 50% or greater preleasing with acceptable tenant mix & visibility of • Pre-leasing costs reaching 75% • Due diligence costs • Receipt of all non-appealable permits required to obtain building permit
• Acceptable return on cost analysis
recession RESILIENCY 15
“In good times people love a bargain, and in tough times, people need a bargain.”
~ Steven B. Tanger, CEO & President sustained OCCUPANCY 16
Have Ended Each Year Since IPO With Occupancy of 95% or Greater
98% 99% 99% 99% 98% 97% 97% 96% 96% 98% 96% 97% 97% 98% 98% 97% 96% 98% 99% 98% 98%
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2Q 11 2Q 12 2Q Represents period end occupancy
steady SALES GROWTH 17
For over 30+ years of economic cycles and the related peaks and valleys, tenant sales have trended positively
3% $366 $361 $375 CAGR $354 $339
$281
$226
1995 2000 2009 2010 2011 June June 2011 2012 Represents tenant comparable sales for rolling 12 months stable EXPIRATIONS 18
Percentage of Annual Percentage of Total GLA Base Rent 2012 3% 3% 2012 2013 16% 2013 16% 2014 14% 2014 13% 2015 13% 2015 13% 2016 13% 2016 14% 12% 2017 11% 2017 7% 2018 8% 2018 2019 3% 2019 3% 2020 5% 2020 6% 2021 8% 2021 8% 2022+ 6% 2022+ 5%
2012 expirations shown net of renewals executed through June 30, 2012 geographic DIVERSIFICATION 19
Well-positioned portfolio of 39 outlet centers in 25 states coast to coast & in Canada, totaling approximately 11.9 million square feet strong TENANT MIX 20
Diversified tenant base, the majority of which are publicly-held, high credit quality retailers
62.5%
7.9% 6.3% 3.5% 3.4% 3.1% 3.0% 2.7% 2.7% 2.6% 2.3%
Properties are easily reconfigured to minimize tenant turnover downtime
Chart is in terms of GLA as of June 30, 2012 & includes all retail concepts of each tenant group outlet EXPERTISE 21
30+ years outlet industry experience and Tanger executives average 15 years of strong tenant relationships service to the Company, and even more in the industry
In this competitive environment, THE OUTLET SKILL SET retailers want to work with a trusted • Site selection – typically, sites are partner that they know can: outside of major metropolitan areas • Secure the best sites • Leasing – smaller spaces and no/few • Secure financing, if needed anchors means many more leases per property • Construct a quality property on time • Marketing – landlord must establish • Complete lease-up timely and programs to drive traffic to outlet effectively centers from metropolitan areas and • Market and operate the center for to cultivate loyalty for its own brand years to come
only PURE PLAY 22
Targeted focus – single property type
• Tanger has established a reputation as an outlet industry leader
• As the only public pure play outlet center REIT, SKT equity provides portfolio diversification to investors proven RECORD 23
Total Return to Shareholders 200 150 100 50 0 2006 2007 2008 2009 2010 2011
Tanger NAREIT All Equity REIT Index SNL REIT Retail Shopping Ctr Index
Ranked #1 among mall REITs in total return for the 5 year (81%) & 10 year (831%) categories ~ Keybanc Leaderboard Report, 12/31/2011
Ranked #2 among all REITs in 15 year total return ~ REIT Wrap, 4/22/2012, data as of 3/31/2012 dividend GROWTH 24
Tanger has increased its dividend each year and has paid a cash dividend every quarter since its IPO
$0.8400 $0.8400
$0.8000 $0.8000 $0.7752 $0.7752 $0.7652 $0.7652 $0.7600 $0.7600
$0.7200 $0.7200
$0.6800 $0.6800
$0.6452 $0.6452 $0.6252 $0.6252 $0.6158 $0.6158 $0.6128 $0.6128 $0.6100 $0.6100 $0.6076 $0.6076 $0.6052 $0.6052 $0.6000 $0.6000 $0.5500 $0.5500 $0.5200 $0.5200 $0.5000 $0.5000 $0.4600 $0.4600
$0.2388 $0.2388 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Dividend increased 5% in 2012 to $0.84 per share annually from $0.80 Split-adjusted growing ENTERPRISE 25
13% CAGR
$3.9 $4.2 $3.1
$2.5 $2.2 $2.2 $2.3 $1.8
2005 2006 2007 2008 2009 2010 2011 June 2012 Total market capitalization in billions ffo GROWTH 26
Million $$ $$ Per Share $158.7 $1.61 $141.3 $1.47 $1.33 $123.2
13% Increase 15% increase 12 % increase 96,021,000 96,021,000 shares 92,523,000 92,523,000 shares 98,557,000 shares
2010 Adj. (1) 2011 Adj. (2) 2012E Adj. (3) 2010 Adj. (1) 2011 Adj. (2) 2012E Adj. (3)
1. Excludes $6.7 million charge for write-off of unamortized loan costs and settlement of interest rate swaps associated with the prepayment of a $235 million term loan, $2.5 million reduction in net income related to the redemption of preferred shares and $0.9 million in other charges related to impairment, demolition, and gain on sale of outparcels that we believe are not indicative of our ongoing operations (collectively $0.11 per share)
2. Excludes $2.7 million in charges related to acquisition costs and $0.2 million of abandoned development costs that we believe are not indicative of our ongoing operations (collectively $0.03 per share)
3. Per share amount assumes midpoint of guidance; Dollar amount represents per share amount multiplied by the weighted average budgeted common shares outstanding for 2012 investment HIGHLIGHTS 27
• Well-positioned for growth • Financial stewardship • Recession resiliency • Outlet expertise & focus • Proven record of value creation
APPENDIX 28
Financial earnings GUIDANCE 29
Low High Range Range
Estimated diluted net income per common share $0.58 $0.62
Non-controlling interest, gain/loss on the sale of real estate, depreciation and amortization uniquely significant to real estate including non-controlling interest share, and our share of joint ventures 1.01 1.01
Estimated diluted FFO per share $1.59 $1.63
Guidance last revised in connection with July 31, 2012 earnings release 2012 FINANCINGS 30
• On February 24, closed on a seven-year $250 million unsecured term loan, using proceeds to repay borrowings under unsecured lines of credit • Priced at L + 180 bps • February 2019 maturity • Pre-payable without penalty beginning February 2015
2011 FINANCINGS 31
• On November 10, completed the recast of our unsecured lines of credit, using proceeds to repay $150.0 million bridge loan in full • Increased capacity from $400 million to $520 million (with accordion for expansion to $770 million) • Extended maturity from November 2013 to November 2015 plus a one year extension option • Improved pricing from LIBOR + 190 plus 40 bps annual facility fee to L +125 bps plus 25 bps facility fee • On July 6, completed a public offering of 4.6 million shares at a price of $25.662 per share, using proceeds of $117.4 million, net of offering expenses, to repay borrowings under unsecured lines of credit • On June 27, closed on a $150 million unsecured 90-day bridge loan with Wells Fargo, priced at L + 160 bps, which included three 90-day extension options, using proceeds to fund the acquisition of the 410,000 sf outlet center in Jeffersonville, OH
tenant OCCUPANCY COST 32
8.2% 8.5% 8.3% 8.4% 7.7% 7.4%
2006 2007 2008 2009 2010 2011 APPENDIX 33
New Developments, Projects Under Development, & Pre-development MEBANE, NC 34
• 319,000 sf development • $64.9 million investment • Grand opening November 5, 2010 • Opened fully leased • Tenants include Saks Off Fifth, Coach, Polo, J.Crew, Gap, Banana Republic, Nike, Tommy Hilfiger & more
HILTON HEAD I, SC 35
• 177,000 sf GLA plus 4 outparcel pads • $43 million investment • Shopper-friendly redevelopment is the 1st LEED® certified green shopping center in Beaufort County, SC • Grand opening March 31, 2011 • 100% occupied as of June 30, 2012 • Tenants include Adidas, BCBG, Brooks Brothers, J. Crew, Joe’s Jeans, Kenneth Cole, New Balance, Saks Off Fifth, Talbots, Theory, Under Armour, & more
HOUSTON, TX 36
• 50/50 joint venture to develop a Tanger Outlet Center
• 350,000 sf development
• Approximate total investment of $66 million
• 30 miles south of Houston and 20 miles north of Galveston in Texas City, TX on Interstate 45
• Grand opening planned for October 19, 2012
fut WESTGATE/GLENDALE, AZ 37
• 58/42 joint venture to develop a Tanger Outlet Center
• 330,000 sf development
• Approximate total investment of $79 million
• Just off I-10 at the loop 101, adjacent to Westgate City Center, Jobing.com arena, University of Phoenix Stadium and Renaissance Hotel & Convention Center
• Grand opening planned for November 15, 2012
canadian PLATFORM 38
• 50/50 co-ownership agreement to establish an outlet platform in Canada • Properties will be branded as Tanger Outlet Centers • Potential openings of 10 outlet centers over the next 5 – 7 years • Tanger will be responsible for leasing & marketing • Riocan will be responsible for development & management
Pre -development/Expansion Sites: • Heartland – potential development site within Heartland Town Centre located approximately 20 miles northwest of Toronto with access to Highway 401; partners for project are Tanger, RioCan, and Orlando Corporation • Kanata – potential development site identified in a suburban market of Ottawa • Cookstown – recently acquired property in Innisfil approximately 30 miles north of Toronto with 156,000 sf and may be expanded to approximately 320,000 sf
what OVERBUILDING? 39
• Strong performance relative to other retail property types has resulted in outlet project development announcements by new entrants to the outlet space • Excluding Tanger and Simon, few projects that are announced ever open for business • February 2002 Value Retail News : 12 announced, 1 completed • February 2007 VRN: 12 announced, 2 completed • May 2011 VRN: 38 announced, 2 completed • August 2011 VRN data supports thesis of disciplined development in the outlet industry • Single digit grand openings per year since 1997 • All outlet centers opened since 2001 are still open and operating as outlet centers • Tenants want a developer that can deliver, and Tanger has a proven, 30 plus year track record of delivering quality outlet centers
APPENDIX 40
Acquisitions 2011 ACQUISITIONS 41
Expanded geographic reach into 3 additional states and increased portfolio size by 1.5 million square feet with the transactions listed below
• On June 28, closed on the acquisition of Prime Outlets at Jeffersonville in Jeffersonville, OH for $134.0 million in cash
• On July 15, announced closing on Tanger’s admission as a member into 3 existing entities, which resulted in our acquisition of substantially all of the economic interests in Ocean City Factory Outlets and phases I & II of Atlantic City Outlets The Walk (Atlantic City phase III closed in November 2011)
• Combined purchase price for all phases of Atlantic City & Ocean City is expected to be approximately $200.3 million, consisting of $116.8 million in cash (of which $3.0 million is currently contingent consideration) and the assumption of $83.5 million of debt
• On September 30, closed on the acquisition of substantially all of the economic interests in The Outlets at Hershey for $56.0 million, including approximately $24.6 million in cash and the assumption of approximately $31.4 million of indebtedness
• On December 9, with RioCan under a 50/50 co-ownership agreement, closed on the acquisition of Cookstown Outlet Mall for $47.4 million (for 100% in USD) plus an additional $13.8 million for excess land payable upon the seller meeting certain conditions, for an aggregate purchase price of $61.2 million, including the assumption of $29.6 million of debt
JEFFERSONVILLE, OH 42
• Formerly Prime Outlets – Jeffersonville • 407,000 sf • June 28, 2011 acquisition date • 99% occupancy upon acquisition • Over 90 brands including: Ann Taylor, Banana Republic, Brooks Brothers, Coach, J. Crew, Gap, Kate Spade, Nike, Polo, Pottery Barn, Under Armour, and more • Located in the tri-city area of Cincinnati, Columbus, & Dayton • 4.4 million population within a 60 mile radius
ATLANTIC CITY, NJ 43
• Formerly known as The Walk • 3 phases totaling 490,000 sf • July 15, 2011 acquisition date for phases I & II, November 1 acquisition date for phase III • Occupancy upon acquisition: • Phases I & II – 99% • Phase III – 100% • Over 100 brands including: Adidas, Banana Republic, Brooks Brothers, Calvin Klein, Coach, Donna Karan, Gap Generation, H&M, J. Crew, Kenneth Cole, Nike, Polo, St. John, and more • Streetscape center is spread out across 3 city blocks and located across from The Boardwalk • Atlantic City welcomes 34 million tourists annually
OCEAN CITY, MD 44
• 199,000 sf • July 15, 2011 acquisition date • 93% occupancy upon acquisition • Located along Route 50 in Ocean City, a popular vacation destination for the DC & Baltimore areas • Approximately 40 brands including: Aeropostale, Calvin Klein, Carter’s, The Children’s Place, Gap, Izod, Jos. A. Bank, Justice, Oshkosh B’Gosh, Reebok, Rue21, Tommy Hilfiger, and more • Synergies expected as a result of close proximity to Tanger Outlets Rehoboth, located approximately 30 miles away in Rehoboth, MD
HERSHEY, PA 45
• Formerly The Outlets at Hershey • 247,000 sf • September 30, 2011 acquisition date • 100% occupancy upon acquisition • Located adjacent to Hershey Chocolate World & Amusement Park on Route 39 near interstate 81 • Nearly 60 brands including: Aeropostale, Brooks Brothers, Calvin Klein, Coach, Gap, J. Crew, Nautica, Nine West, Oshkosh B’Gosh, Polo Ralph Lauren, Under Armour and more • Synergies expected as a result of close proximity to Tanger Outlets Lancaster located approximately 30 miles away in Lancaster, PA
COOKSTOWN 46
• Innisfil, Ontario • Formerly Cookstown Outlet Mall • Currently 156,000 sf expandable to 320,000 sf • December 8, 2011 acquisition date, co-owned 50/50 with RioCan • 100% occupancy upon acquisition • Tenants include Coach, Tommy Hilfiger, Toys R Us, Rockport and more • Located 30 miles north of the Greater Toronto Area, directly off Highway 400 and approximately 45 miles from Heartland site • Providing traction to the Canadian Tanger Outlet Center platform/co- ownership agreement with RioCan