think outlets. think tanger. - .tanger outlets 2012 think outlets. think tanger. annual report 2012

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    ANNUAL REPORT

    2012

    TANGER FACTORY OUTLET CENTERS, INC.3200 Northline Avenue, Suite 360 x Greensboro, NC 27408

    Phone: (336) 292-3010 x Fax: (336) 297-0931 x 1-800-4-TANGER x www.tangeroutlet.com 002CS-I1483

  • glendale, az

    charleston, sc

    deer park, ny

    texas city, tx

  • COMPANY PROFILE

    Tangers commitment to creating the ultimate customer experience in outlet shopping began in 1981 when our founder, Stanley K. Tanger, created Tanger Outlet Centers and pioneered the dynamic outlet industry. Today, Tanger Factory Outlet Centers, Inc. is one of the largest owners and developers of outlet shopping centers in the United States and Canada.

    Tanger Outlets currently owns or has an ownership interest in a portfolio of 43 upscale outlet centers in 26 states and Canada, in close proximity to interstate highways and near vacation and resort destinations. The portfolio represents 12.9 million square feet of the top brand retailers and manufacturers in the United States and Canada. Tangers outlet shopping destinations welcome more than 180 million shoppers each year.

    Tanger is headquartered in Greensboro, North Carolina and is a self-administered, self-managed real estate investment trust focused on the acquisition, development, leasing and management of upscale outlet shopping centers. The Company became the first publicly held outlet center developer in May 1993. Tanger will celebrate 20 years as a publicly traded company, with Tanger shares proudly traded on the New York Stock Exchange under the ticker symbol SKT.

    As the leading outlet center developer, Tanger specializes in providing innovative retail development and management solutions to our clients and partners. We deliver an entrepreneurial approach and creative thinking. North American in scope, we possess unparalleled experience in developing, merchandising, leasing and operating upscale outlet centers.

    For 32 years, we have demonstrated integrity and earned our reputation one success at a time. Tanger has a vision and a conservative strategic plan, which is innovative and achievable. We build and maintain strong relationships with premier retail entities that meet the needs of the consumer. These core initiatives are designed with the primary objective of delivering long-term value to our shareholders.

    Think OuTleTs. Think Tanger.

  • glendale, az

  • FOR THE YEAR 2012 2011 % CHANGE

    Total revenues $356,997 $315,223 +13Operating income $109,585 $97,936 +12Funds from operations (1) $160,879 $138,462 +16Dividends and distributions $81,834 $76,031 +8average common shares outstanding (2) 98,605 96,021 +3average sales per square foot $376 $366 +3

    PER SHARE

    Funds from operationsavailable to common shareholders (1) $1.63 $1.44 +13Dividends (3) $0.8300 $0.7938 +5Dividend payout ratio (4) 51% 55% 7

    AT YEAR-END

    real estate assets, before depreciation $1,947,352 $1,916,045 +2Total assets $1,672,425 $1,621,815 +3Common shares outstanding 94,061 86,728 +8square feet Consolidated 10,737 10,724 Partially-owned 2,156 1,110 +94Occupancy rate (5) 98.9% 98.8%

    (1) Funds from operations is defined as net income (loss) available to common shareholders before extraordinary items and gains (losses) on sale or disposal of depreciable operating properties, plus depreciation and amortization uniquely significant to real estate, impairment losses on depreciable real estate of consolidated real estate and after adjustments for unconsolidated partnerships and joint ventures.

    (2) includes the dilutive effect of options, notional units and exchangeable notes and assumes the partnership units of the Operating Partnership held by the noncontrolling interests are converted to common shares of the Company.

    (3) represents per share amounts to common shareholders.

    (4) annual dividends and distributions as a percent of funds from operations available to common shareholders for such year.

    (5) represents occupancy at consolidated, stabilized centers.

    (in thousands, except per share and percent data)

    FINANCIAL hIghLIghts

    3

  • myrtle beach, sc

    san marcos, tx

    mebane, nc

    ocean city, md

  • In 2012, the strength of the Tanger brand and its loyal

    following of bargain-hunting, brand-seeking shoppers

    continued to drive tenant demand for space in our outlet

    centers. Retail distribution continues to thrive in the outlet

    space, which is the most profitable channel for most

    retailers. The old adage is true. In good times people

    love a bargain and in tough times people need a bargain.

    Todays value-oriented consumer shops at Tanger Outlet

    Centers for great deals on top brands in an upscale

    shopping environment in 26 states and in Canada.

    Stakeholders were rewarded with another great year in

    2012. We set several records during the year, all of which

    point to the continued popularity of Tanger Outlet Centers.

    At year-end, occupancy within our consolidated portfolio

    was 98.9%, marking our 32nd consecutive year-end with

    occupancy of 95% or greater. Same center net operating

    income increased 6% in 2012. The fourth quarter of 2012

    marked our 32nd consecutive quarter of same center net

    operating income growth, dating back to 2005 when we

    first began tracking this metric. Our year-end debt to total

    market capitalization rate was only 24.4%. Each of these

    data points is best in class for the mall sector in 2012.

    Our company generated a 19.8% total return to

    shareholders in 2012, topping both the NAREIT All Equity

    REIT Index and the S&P 500. As of December 31, 2012,

    Tanger ranked #2 among all mall REITs in total return to

    shareholders in both the 5 and 10-year categories, with

    cumulative total shareholder returns of 117% and 584%,

    respectively. Obviously, this is a tough act to follow, but

    I am convinced that our team of seasoned professionals,

    our portfolio, our pipeline for growth, and our fortress

    balance sheet have us poised for continued success.

    At Tanger Outlets, our ability to innovate has allowed us

    to remain at the forefront of the evolution and growth of

    this industry that we pioneered. Since we opened our

    first outlet shopping center in 1981, the outlet shopping

    environment has changed dramatically. In the beginning,

    outlets were a relatively bare bones clearance vehicle

    for tenants to rid themselves of returned merchandise

    and irregulars. The outlet industry has evolved into an

    upscale, profitable channel of distribution featuring the

    latest fashions, accessories, and other first quality brand

    name merchandise at a significant savings.

    Over time, outlet centers have moved closer in to major

    metropolitan markets, and have become larger and more

    aesthetically appealing. Loyal outlet shoppers also enjoy

    the architectural features and other shopping amenities.

    We have adapted to market conditions, enabling us to

    achieve our goals for the growth of Tanger Outlets and

    to maintain our leadership position in the market with a

    reputation as a first choice partner.

    Our proven track record and access to capital have

    allowed us to seize opportunities that others could not.

    Competition in outlet center development became intense

    during 2011 and 2012. Yet, during this two year period, our

    overall footprint expanded by approximately 27% and our

    total market capitalization increased approximately 45%.

    Steven B. tangerPresidenT &Chief exeCuTive OffiCer

    A MEssAgE tO OuR shAREhOLdERs

    5

    2012 annual rePOrT

  • We pride ourselves on the lasting relationships, based on

    mutual trust and respect, that we have been able to build

    during the last 32 years with our more than 460 retail

    partners. These relationships have allowed us to provide

    our 180 million annual shoppers with more than 2,700 of

    the most popular brand names and designer outlet stores.

    Our tenant relationships, industry expertise in selecting

    the best development sites and navigating the land

    permitting and entitlement process, our ongoing

    interaction with our large base of loyal shoppers, our

    operational and customer service excellence, and a

    fortress balance sheet, have provided a true competitive

    advantage. As a result, we have been able to effectively

    negotiate land option contracts, acquisition agreements,

    or joint venture arrangements that have provided us

    ownership interests in the best properties or development

    sites in several competitive markets.

    We will partner with others when strategically rational.

    By partnering, we have been able to reduce risk by

    securing the most desirable locations, expediting leasing

    and development, more efficiently allocating capital

    and human resources, and achieving our targeted

    development yields.

    We continue to actively pursue our strategy for sustained,

    long-term growth. Our experience, knowledge and

    business savvy provide the foundation necessary for

    Tanger to continue being a leader in this growing industry

    for many years to come.

    Based upon our long history of successfully managing

    this business, we know that a strong balanc

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