tfoc8k03312009filed.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

___________

FORM 8-K

Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934


Date of Report (date of earliest event reported):  April 23, 2009


TANGER FACTORY OUTLET CENTERS, INC.
 
_________________________________________
(Exact name of registrant as specified in its charter)


                           
             North Carolina
(State or other jurisdiction of Incorporation)
 
1-11986
(Commission File Number)
 
                56-1815473                
(I.R.S. Employer Identification Number)


             3200 Northline Avenue, Greensboro, North Carolina 27408             
(Address of principal executive offices) (Zip Code)
                           (336) 292-3010                                
(Registrants’ telephone number, including area code)
 
                           N/A                                
(former name or former address, if changed since last report)
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

ýWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 Soliciting material pursuant to Rule 14a-12 under the Exchange
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 


 
 
 


 
Item 8.01                      Other Matters
 
On April 23, 2009, we issued a press release entitled "Tanger Reports First Quarter 2009 Results", which included the following disclosure regarding our results of operations for the quarter ended March 31, 2009, which disclosure is hereby filed:  

 
TANGER REPORTS FIRST QUARTER 2009 RESULTS
Funds From Operation Increases 12.8%, Same Center Net Operating Income Up 2.4%

Greensboro, NC, April 23, 2009, Tanger Factory Outlet Centers, Inc. (NYSE:SKT) today reported funds from operations (“FFO”) available to common shareholders, a widely accepted supplemental measure of REIT performance, for the three months ended March 31, 2009 was $24.7 million, or $0.66 per share, as compared to FFO of $21.9 million, or $0.59 per share, for the three months ended March 31, 2008, representing a 12.8% increase in total FFO and a 11.9% increase in FFO per share.  Net income available to common shareholders for the three months ended March 31, 2009 was $28.9 million, or $0.92 per share, as compared to net income of $4.9 million, or $0.16 per share, for the first quarter of 2008.

Net income and FFO per share amounts above are on a diluted basis.  FFO is a supplemental non-GAAP financial measure used as a standard in the real estate industry to measure and compare the operating performance of real estate companies. A complete reconciliation containing adjustments from GAAP net income to FFO is included in this release.

 
First Quarter Highlights
 
 
·  
Dividend increase approved by Board of Directors to raise the quarterly common share cash dividend from $0.38 to $0.3825 per share, $1.53 per share annualized, representing the 16th consecutive year of increased dividends
 
·  
Announced exchange offer for 3.75% Exchangeable Senior Notes
 
·  
2.4% increase in same center net operating income
 
·  
14.5% increase in average base rental rates on leases renewed during the quarter, compared to 17.9% last year
 
·  
42.4% increase in average base rental rates on released space during the quarter, compared to 41.7% last year
 
·  
93.5% period-end wholly-owned portfolio occupancy rate, compared to 95.3% last year
 
·  
$338 per square foot in reported tenant comparable sales for the rolling twelve months ended March 31, 2009
 

 
 
Portfolio Operating Results
 
During the first quarter of 2009, Tanger executed 213 leases, totaling 994,000 square feet throughout its wholly-owned portfolio.  Lease renewals during the first quarter accounted for 806,000 square feet, generated a 14.5% increase in average base rental rates and represented 53.8% of the square feet originally scheduled to expire during 2009.  Average base rental increases on re-tenanted space during the first quarter averaged 42.4% and accounted for the remaining 188,000 square feet.

Same center net operating income increased 2.4% for the first quarter of 2009 compared to 2.5% in the fourth quarter of 2008 and 5.7% in the first quarter of 2008.  Reported tenant comparable sales for our wholly owned properties for the rolling twelve months ended March 31, 2009 decreased 3.2% to $338 per square foot due to the current downturn in the economy. Reported tenant comparable sales numbers exclude our centers in Foley, Alabama and on Highway 501 in Myrtle Beach, South Carolina, both of which underwent major renovations during last year.
 
Balance Sheet Summary

As of March 31, 2009, Tanger had a total market capitalization of approximately $2.1 billion including $849.2 million of debt outstanding, equating to a 40.5% debt-to-total market capitalization ratio.  As of March 31, 2009, 77.8% of Tanger’s debt was at fixed interest rates and the company had $188.4 million outstanding on its $325.0 million in available unsecured lines of credit.  During the first quarter of 2009, Tanger continued to maintain a strong interest coverage ratio of 3.34 times, compared to 3.22 times during the first quarter of last year.


 
3
 

TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
   
                    Three Months Ended
  
   
                    March 31,
  
   
2009
    
2008
  
Revenues
                
 
Base rentals (a)
  
$
42,927
    
$
37,232
  
 
Percentage rentals
    
1,308
      
1,178
  
 
Expense reimbursements
    
19,219
      
17,478
  
 
Other income
    
1,704
      
1,388
  
     
 Total revenues
    
65,158
      
57,276
  
Expenses
                
 
Property operating
    
21,748
      
19,219
  
 
General and administrative
    
5,935
      
5,271
  
 
Depreciation and amortization (b)
    
20,397
      
15,583
  
     
Total expenses
    
48,080
      
40,073
  
Operating income
    
17,078
      
17,203
  
 
Interest expense (c)
    
11,210
      
10,199
  
Income before equity in earnings (loss) of unconsolidated joint
                
 
ventures and gain on fair value measurement of previously held
               
 
interest in acquired joint venture
    
5,868
      
7,004
  
Equity in earnings (loss) of unconsolidated joint ventures (d)
    
(897
)
    
394
  
Income from continuing operations
    
4,971
      
7,398
  
Gain on fair value measurement of previously held interest in acquired
                
 
joint venture (e)
    
31,497
      
---
  
Net income
    
36,468
      
7,398
  
Preferred share dividends
    
(1,406
)
    
(1,406
)
Non-controlling interest in operating partnership
    
(5,698
)
    
(981
)
Allocation to participating securities (f)
    
(437
)
    
(139
)
Net income available to common shareholders
  
$
28,927
    
$
4,872
  
                   
Basic earnings per common share available to common shareholders:
                
 
Income from continuing operations
  
$
.93
    
$
.16
  
 
Net income
    
.93
      
.16
  
             
Diluted earnings per common share available to common shareholders:
                
 
Income from continuing operations 
  
$
.92
    
$
.16
  
 
Net income
    
.92
      
.16
  
                 
(a)  
Includes straight-line rent and market rent adjustments of $699 and $683 for the three months ended March 31, 2009 and 2008, respectively.
(b)  
Includes accelerated deprecation and amortization of approximately $1.2 million for the three months ended March 31, 2009 as a result of the change in estimated useful life of the Hilton Head I, South Carolina center to three years based on our redevelopment plan for the center.  The accelerated depreciation and amortization reduced income from continuing operations and net income by approximately $.03 per share for the three months ended March 31, 2009.
(c)  
In accordance with FSP APB 14-1 “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)”, the results of operations for all prior periods presented for which such instruments were outstanding have been restated.
(d)  
Includes Wisconsin Dells, Wisconsin property for the 2009 and 2008 periods which is operated by us through 50% ownership joint venture.  Includes Myrtle Beach, South Carolina Hwy 17 property for the 2008 period during which period it was operated by us through a 50% ownership joint venture.  We acquired the remaining 50% interest in January 2009.  Includes Deer Park, New York property for the 2009 period which is operated by us through a 33.3% ownership joint venture.  Includes our share of losses incurred by the Deer Park property, which opened during October 2008, totaling $1.1 million due to depreciation charges and leverage on the project.  However, we expect results to improve during the stabilization of the property in its first year of operation.
(e)  
Represents FAS 141R “Business Combinations”, gain on fair value measurement of our previously held interest in the Myrtle Beach Hwy 17 joint venture upon acquisition on January 5, 2009.
(f)  
In accordance with EITF 03-06-1 “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities”, represents earnings allocated to unvested restricted share awards that contain non-forfeitable rights to dividends or dividend equivalents.


4
TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(Unaudited)
                       
   
March 31,
    
December 31,
  
   
2009
    
2008
  
 ASSETS:
                
 
Rental property
                
 
Land
  
$
135,710
    
$
135,689
  
 
Building, improvement and fixtures
    
1,348,211
      
1,260,243
  
 
Construction in progress
    
4,805
      
3,823
  
     
1,488,726
      
1,399,755
  
 
Accumulated depreciation
    
(374,541
)
    
(359,301
)
 
Rental property, net
    
1,114,185
      
1,040,454
  
 
Cash and cash equivalents
    
3,101
      
4,977
  
 
Investments in unconsolidated joint ventures
    
9,773
      
9,496
  
 
Deferred charges, net
    
48,294
      
37,750
  
 
Other assets
    
34,010
      
29,248
  
 
Total assets
  
$
1,209,363
    
$
1,121,925
  
             
 LIABILITIES AND EQUITY
 Liabilities
                
   
Debt
                
 
Senior, unsecured notes (net of discounts of $8,367 and $9,136, respectively)
$
391,133
    
$
390,363
  
 
Mortgage loan, net of discount of $1,166 and $0, respectively)
    
34,634
      
---
  
 
Unsecured term loan
    
235,000
      
235,000
  
 
Unsecured lines of credit
    
188,400
      
161,500
  
   
Total debt
    
849,167
      
786,863
  
 
Construction trade payables
    
9,070
      
11,968
  
 
Accounts payable and accrued expenses
    
27,777
      
26,277
  
 
Other liabilities
    
33,868
      
30,914
  
     
Total liabilities
    
919,882
      
856,022
  
             
Commitments
                
Equity
            
Shareholder’s equity
                
 
Preferred shares, 7.5% Class C, liquidation preference $25 per share,
                
   
8,000,000 shares authorized, 3,000,000 shares issued and
                
   
outstanding at March 31, 2009 and December 31, 2008
    
75,000
      
75,000
  
 
Common shares, $.01 par value, 150,000,000 shares authorized,
                
   
31,888,401 and 31,667,501 shares issued and outstanding at
                
   
March 31, 2009 and December 31, 2008, respectively
    
319
      
317
  
 
Paid in capital
    
372,762
      
371,190
  
 
Distributions in excess of net income (a)
    
(184,349
)
    
(201,679
)
 
Accumulated other comprehensive loss
    
(8,533
)
    
(9,617
)
     
Total shareholders’ equity
    
255,199
      
235,211
  
Non-controlling interest in operating partnership (b)
    
34,282
      
30,692
  
     
Total equity
    
289,481
      
265,903
  
       
Total liabilities and equity
  
$
1,209,363
    
$
1,121,925
  
             
(a)  
Distributions in excess of net income as of December 31, 2008 includes a reduction of earnings of $5,144 that represents the cumulative effect adjustment of the implementation of FSP APB 14-1, ”Accounting for Convertible Debt Instruments that May be Settled in Cash Upon Conversion (Including Partial Cash Settlement)”.
(b)  
Represents a reclassification of non-controlling interest from prior presentation upon adoption of FAS 160 “Non-controlling Interests in Consolidated Financial Statements, an amendment of ARB No. 51”.

 
5
 
TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
(in thousands, except per share, state and center information)
(Unaudited)

   
                    Three Months Ended
  
   
                    March 31,
  
   
2009
    
2008
  
FUNDS FROM OPERATIONS (a)
                
Net income
  
$
36,468
    
$
7,398
  
Adjusted for:
                
 
Depreciation and amortization uniquely significant to
                
   
real estate – wholly-owned
    
20,278
      
15,508
  
 
Depreciation and amortization uniquely significant to
                
   
real estate – unconsolidated joint ventures
    
1,166
      
652
  
 
Gain on fair value measurement of previously held interest in acquired
                
   
joint venture
    
(31,497
)
    
---
  
Funds from operations (FFO)
    
26,415
      
23,558
  
Preferred share dividends
    
(1,406
)
    
(1,406
)
Allocation to participating securities
    
(306
)
    
(246
)
Funds from operations available to common shareholders
    
24,703
      
21,906
  
Funds from operations available to common shareholders per share – diluted
  
$
.66
    
$
.59
  
                 
WEIGHTED AVERAGE SHARES
                
Basic weighted average common shares
    
31,269
      
30,979
  
Effect of exchangeable notes
    
---
      
92
  
Effect of outstanding options
    
81
      
169
  
Diluted weighted average common shares
                
 
(for earnings per share computations)
    
31,350
      
31,240
  
Convertible operating partnership units (b)
    
6,067
      
6,067
  
Diluted weighted average common share (for funds from operations per
            
 
share computations)
    
37,417
      
37,307
  
                 
OTHER INFORMATION
                
Gross leasable are open at end of period -
                
 
Wholly-owned
    
9,218
      
8,434
  
 
Partially-owned  -  unconsolidated
    
950
      
667
  
                 
Outlet centers in operations -
                
 
Wholly-owned
    
31
      
29
  
 
Partially-owned  -  unconsolidated
    
2
      
2
  
                 
States operated in at end of period (c)
    
21
      
21
  
Occupancy percentage at end of period (c) (d)
    
93.5%
      
95.2%
  


 
6
 


                                 
(a) FFO is a non-GAAP financial measure.  The most directly comparable GAAP measure is net income (loss), to which it is reconciled.  We believe that for a clear understanding of our operating results, FFO should be considered along with net income as presented elsewhere in this report.  FFO is presented because it is a widely accepted financial indicator used by certain investors and analysts to analyze and compare one equity REIT with another on the basis of operating performance.  FFO is generally defined as net income (loss), computed in accordance with generally accepted accounting principles, before extraordinary items and gains (losses) on sale or disposal of depreciable operating properties, plus depreciation and amortization uniquely significant to real estate and after adjustments for unconsolidated partnerships and joint ventures.  We caution that the calculation of FFO may vary from entity to entity and as such the presentation of FFO by us may not be comparable to other similarly titled measures of other reporting companies.  FFO does not represent net income or cash flow from operations as defined by accounting principles generally accepted in the United States of America and should not be considered an alternative to net income as an indication of operating performance or to cash flows from operations as a measure of liquidity.  FFO is not necessarily indicative of cash flows available to fund dividends to shareholders and other cash needs.
 
(b) The convertible operating partnership units (non-controlling interest in operating partnership) are not dilutive on earnings per share computed in accordance with generally accepted accounting principles.
 
(c) Excludes Wisconsin Dells, Wisconsin property for the 2009 and 2008 periods which is operated by us through 50% ownership joint venture.  Excludes Myrtle Beach, South Carolina Hwy 17 property for the 2008 period during which period it was operated by us through a 50% ownership joint venture.  We acquired the remaining 50% interest in January 2009.  Excludes Deer Park, New York property for the 2009 period which is operated by us through a 33.3% ownership joint venture.  The Deer Park property opened during October 2008.
 
(d) Excludes our wholly-owned, non-stabilized center in Washington, Pennsylvania for the 2009 period.
 



SIGNATURES

 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 

Dated:  April 23, 2009

TANGER FACTORY OUTLET CENTERS, INC.

By:           /s/ Steven B. Tanger
Steven B. Tanger
President and Chief Executive Officer
 
 
 
                                                                                 7