Tanger Reports First Quarter 2013 Results Funds From Operations Per Share Increases 16.7% Consolidated Portfolio 98.0% Occupied PR Newswire GREENSBORO, N.C., April 30, 2013 GREENSBORO, N.C., April30, 2013 /PRNewswire/ --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, increased 15.1% for the three months ended March31, 2013 to $41.0 million, compared to FFO of $35.6 million for the three months ended March31, 2012. On a per share basis, FFO for the three months ended March31, 2013 increased 16.7% to $0.42 per share, compared to $0.36 per share for the three months ended March31, 2012. "2013 is off to a healthy start, with FFO growth driven by the expansion of our footprint by 8.1% as a result of the addition of 4 new joint venture properties in the U.S. and Canada during the fourth quarter of last year and a 3.9% increase in same center net operating income throughout our consolidated portfolio. In addition, quarter-end occupancy increased 70 basis points year over year to 98.0%, compared to 97.3% last year," commented Steven B. Tanger, President and Chief Executive Officer. "Earlier this month, we announced a 7.1% increase in the annual dividend on our common shares, which marked our twentieth consecutive annual increase," he added. FFO for all periods shown was impacted by a number of charges as described in the summary below (in thousands, except per share amounts): Three months ended March 31, 2013 2012 FFO as reported $ 41,013 $ 35,640 As adjusted for: Acquisition costs 179 — AFFO adjustments from unconsolidated joint ventures ^(1) 211 686 Impact of above adjustments to the allocation of earnings (5) (6) to participating securities Adjusted FFO ("AFFO") $ 41,398 $ 36,320 Diluted weighted average common shares 98,798 98,690 AFFO per share $ 0.42 $ 0.37 (1) Includes our share of acquisition costs, abandoned development costs and gain on early extinguishment of debt from unconsolidated joint ventures. Net income available to common shareholders for the three months ended March31, 2013 increased 91.3% to $15.2 million or $0.16 per share, as compared to net income of $8.0 million, or $0.09 per share for the three months ended March31, 2012. Net income available to common shareholders for the above periods was also impacted by the charges described above. Net income, FFO and AFFO per share are on a diluted basis. FFO and AFFO are supplemental non-GAAP financial measures used in the real estate industry to measure and compare the operating performance of real estate companies. Complete reconciliations containing adjustments from GAAP net income to FFO and to AFFO are included in this release. First Quarter Highlights oSame center net operating income increased 3.9% during the quarter, marking the 33rd consecutive quarter of same center net operating income growth o21.2% blended increase in average base rental rates on renewed and released space throughout the consolidated portfolio (23.3% excluding approximately 61,000 square feet of space released to magnet tenants to upsize existing high performing stores) oPeriod-end consolidated portfolio occupancy rate of 98.0% at March31, 2013, up from 97.3% at March31, 2012 oComparable tenant sales for the consolidated portfolio increased 2.3% to $380 per square foot for the twelve months ended March31, 2013 (and increased 3.2% excluding 8 centers that experienced closings of a day or more related to Hurricane Sandy during the fourth quarter of 2012) oComparable tenant sales for the consolidated portfolio increased 4.9% for the three months ended March31, 2013 oDebt-to-total market capitalization ratio of 23.3% as of March31, 2013, compared to 26.1% last year oInterest coverage ratio of 3.95 times, compared to 3.90 times last year oTotal market capitalization increased 17.6% to $4.7 billion from $4.0 billion last year oRaised the quarterly common share cash dividend by 7.1% on April 4, 2013, from $0.21 to $0.225, $0.90 per share annualized, representing the 20th consecutive year of increased cash dividends oCompleted an approximately 40,000 sf expansion on Tanger Outlets Gonzales in Gonzales, Louisiana oAnnounced plans to form a partnership with The Peterson Companies for a proposed development of a new Tanger Outlet Center in Clarksburg, Maryland, located 27 miles northwest of Washington, D.C. and 36 miles west of Baltimore Cash Dividend Increased On April 4, 2013, Tanger announced that its Board of Directors approved a 7.1% increase in the annual cash dividend on its common shares from $0.84 per share to $0.90 per share. Simultaneously, the Board of Directors declared a quarterly dividend of $0.225 per share for the first quarter ended March 31, 2013, which will be payable on May 15, 2013 to holders of record on April 30, 2013. The company has paid cash dividends each quarter and has raised its dividend each year since becoming a public company in May 1993. Balance Sheet Summary As of March31, 2013, Tanger had a total market capitalization of approximately $4.7 billion including $1.1 billion of debt outstanding, equating to a 23.3% debt-to-total market capitalization ratio and the company had $174.9 million outstanding on its $520.0 million in available unsecured lines of credit. During the first quarter of 2013, Tanger maintained an interest coverage ratio of 3.95 times. North American Portfolio Drives Operating Results During the first quarter of 2013, Tanger executed 321 leases, totaling 1,429,000 square feet throughout its consolidated portfolio. Lease renewals accounted for 1,135,000 square feet, which generated an 18.0% increase in average base rental rates.The remaining 294,000 square feet was released at an increase in average base rental rates of 32.2%. Excluding approximately 61,000 square feet of space released to magnet tenants to upsize existing high performing stores, Tanger achieved an increase in average base rental rates of 46.5% on the remaining 233,000 square feet of released space. Consolidated portfolio same center net operating income increased 3.9% during the three months ended March31, 2013. Comparable tenant sales for the consolidated portfolio for the twelve months ended March31, 2013 increased 2.3% to $380 per square foot. For the three months ended March31, 2013, consolidated comparable tenant sales increased 4.9%. During the fourth quarter of 2012, approximately 25% of the company's consolidated portfolio was affected by closings related to Hurricane Sandy, including Atlantic City, New Jersey; Kittery, Maine; Nags Head, North Carolina; Ocean City, Maryland; Rehoboth Beach, Delaware; Riverhead, New York; Tilton, New Hampshire and Westbrook, Connecticut. Excluding these properties, reported tenant comparable sales for Tanger's consolidated portfolio increased 3.2% for the twelve months ended March31, 2013. Investment Activities Provide Potential Future Growth In early April 2013, Tanger Outlets Gonzales hosted grand opening festivities as this small expansion project neared completion and the first new tenants opened for business. The center was originally developed by Tanger in 1992, and this fully-leased expansion adds approximately 40,000 square feet and enhances the tenant mix of the property with the addition of great brands including American Eagle, Ann Taylor LOFT, Brooks Brothers, J.Crew, Talbots, Under Armour, and others. Currently under construction, Tanger Outlets National Harbor will be the next Tanger Outlet Center to be delivered to tenants and shoppers. Tanger and its 50/50 joint venture partner, The Peterson Companies, broke ground on the project on November29, 2012 and expect to open the property in time for the 2013 holiday shopping season. Located within the National Harbor waterfront resort in the Washington D.C. Metro area, the center will be accessible from I-95, I-295, I-495, and the Woodrow Wilson Bridge. The nation's capital welcomes approximately 33 million tourist visitors annually. When complete, the center will include approximately 340,000 square feet and feature approximately 80 brand name and designer outlet stores. Tanger has a robust pipeline of several other development sites for which current predevelopment activities are ongoing. These projects include planned new developments at Foxwoods Resort Casino in Mashantucket, Connecticut; in Charlotte, North Carolina; Columbus, Ohio; Scottsdale, Arizona; and Kanata, Ontario in the Ottawa market, as well as planned expansions of existing assets in Sevierville, Tennessee; Park City, Utah; Cookstown, Ontario in the northern Toronto market; and in Saint-Sauveur in the Montreal, Quebec market. Adding to the pipeline for future development, Tanger announced on April 16, 2013 plans to form a partnership with The Peterson Companies for a proposed development of a new Tanger Outlet Center in Clarksburg, Maryland, located 27 miles northwest of Washington, D.C. and 36 miles west of Baltimore. Tanger Expects Solid FFO Per Share In 2013 Based on Tanger's internal budgeting process, the company's view on current market conditions, and the strength and stability of its core portfolio, management currently believes its net income available to common shareholders for 2013 will be between $0.77 and $0.81 per share and its FFO available to common shareholders for 2013 will be between $1.77 and $1.81 per share. The company's earnings estimates reflect a projected increase in same-center net operating income of approximately 4%, and average general and administrative expense of approximately $9.5 million to $10.0million per quarter. The company's estimates do not include the impact of any rent termination fees, any potential refinancing transactions, the sale of any out parcels of land, or the sale or acquisition of any properties. The following table provides a reconciliation of estimated diluted net income per share to estimated diluted FFO per share: For the year ended December 31, 2013: Low Range High Range Estimated diluted net income per share $0.77 $0.81 Noncontrolling interest, gain/loss on acquisition of real estate, depreciation and amortization uniquely significant to real estate including noncontrolling interest share and our share of joint ventures $1.00 $1.00 Estimated diluted FFO per share $1.77 $1.81 First Quarter Conference Call Tanger will host a conference call to discuss its first quarter 2013 results for analysts, investors and other interested parties on Wednesday, May 1, 2013, at 10 a.m. eastern daylight time. To access the conference call, listeners should dial 1-877-277-5113 and request to be connected to the Tanger Factory Outlet Centers First Quarter 2013 Financial Results call. Alternatively, the call will be web cast by SNL IR Solutions and can be accessed at Tanger Factory Outlet Centers, Inc.'s web site by clicking the Investor Relations link at www.tangeroutlet.com. A telephone replay of the call will be available from May 1, 2013 at 1:00 p.m. through 11:59 p.m., May 8, 2013 by dialing 1-855-859-2056, conference ID # 31602091. An online archive of the broadcast will also be available through May 8, 2013. About Tanger Factory Outlet Centers Tanger Factory Outlet Centers, Inc. (NYSE:SKT), is a publicly-traded REIT headquartered in Greensboro, North Carolina that presently operates and owns, or has an ownership interest in, a portfolio of 43 upscale outlet shopping centers in 26 states coast to coast and in Canada, totaling approximately 12.9 million square feet leased to over 2,700 stores operated by more than 460 different brand name companies. More than 180 million shoppers visit Tanger Factory Outlet Centers, Inc. annually. Tanger is filing a Form 8-K with the Securities and Exchange Commission that includes a supplemental information package for the quarter ended March31, 2013. For more information on Tanger Outlet Centers, call 1-800-4TANGER or visit the company's web site at www.tangeroutlet.com. This news release contains forward-looking statements within the meaning of federal securities laws.These statements include, but are not limited to, estimates of future net income per share, FFO per share, same center net operating income and general and administrative expenses, as well as other statements regarding plans for new developments and expansions, the expected timing of the commencement of construction and the grand openings of the current developments, the renewal and re-tenanting of space, tenant sales and sales trends, interest rates, coverage of the current dividend and management's beliefs, plans, estimates, intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. 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 real estate conditions in the United States 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, whether projects in our pipeline convert into successful developments, 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, 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, 2012. CONTACT: Frank C. Marchisello, Jr. Executive Vice President and CFO (336) 834-6834 TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (Unaudited) Three months ended March 31, 2013 2012 REVENUES Base rentals (a) $ 59,244 $ 57,219 Percentage rentals 2,017 1,744 Expense reimbursements 25,306 23,673 Other income 2,122 1,607 Total revenues 88,689 84,243 EXPENSES Property operating 28,135 26,088 General and administrative 9,572 10,020 Acquisition costs (b) 179 — Depreciation and amortization 22,288 25,515 Total expenses 60,174 61,623 Operating income 28,515 22,620 Interest expense 12,876 12,334 Income before equity in earnings (losses) of 15,639 10,286 unconsolidated joint ventures Equity in earnings (losses) of unconsolidated joint 590 (1,452) ventures Net income 16,229 8,834 Noncontrolling interests in Operating Partnership (789) (713) Noncontrolling interests in other consolidated (1) 7 partnerships Net income attributable to Tanger Factory Outlet 15,439 8,128 Centers, Inc. Allocation of earnings to participating securities (194) (158) Net income available to common shareholders of $ 15,245 $ 7,970 Tanger Factory Outlet Centers, Inc. Basic earnings per common share: Net income $ 0.16 $ 0.09 Diluted earnings per common share: Net income $ 0.16 $ 0.09 a. Includes straight-line rent and market rent adjustments of $1,228 and $1,345 for the three months ended March31, 2013 and 2012, respectively. b. Represents potential acquisition related expenses incurred for the three months ended March31, 2013. TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share data) (Unaudited) March 31, December31, 2013 2012 ASSETS Rental property Land $ 148,002 $ 148,002 Buildings, improvements and fixtures 1,802,160 1,796,042 Construction in progress 6,336 3,308 1,956,498 1,947,352 Accumulated depreciation (600,713) (582,859) Total rental property, net 1,355,785 1,364,493 Cash and cash equivalents 2,691 10,335 Investments in unconsolidated joint ventures 133,982 126,632 Deferred lease costs and other intangibles, net 97,328 101,040 Deferred debt origination costs, net 8,534 9,083 Prepaids and other assets 63,353 60,842 Total assets $ 1,661,673 $ 1,672,425 LIABILITIES AND EQUITY Liabilities Debt Senior, unsecured notes (net of discount of $1,897 $ 548,103 $ 548,033 and $1,967, respectively) Unsecured term loans (net of discount of $509 and 259,491 259,453 $547, respectively) Mortgages payable (including premium of $6,085 and 105,346 107,745 $6,362, respectively) Unsecured lines of credit 174,917 178,306 Total debt 1,087,857 1,093,537 Construction trade payables 7,744 7,084 Accounts payable and accrued expenses 37,957 41,149 Other liabilities 16,676 16,780 Total liabilities 1,150,234 1,158,550 Commitments and contingencies Equity Tanger Factory Outlet Centers, Inc. Common shares, $.01 par value, 300,000,000 shares authorized, 94,415,137 and 94,061,384 shares 944 941 issued and outstanding at March 31, 2013 and December 31, 2012, respectively Paid in capital 768,702 766,056 Accumulated distributions in excess of net income (289,880) (285,588) Accumulated other comprehensive income 1,179 1,200 Equity attributable to Tanger Factory Outlet 480,945 482,609 Centers, Inc. Equity attributable to noncontrolling interests Noncontrolling interests in Operating Partnership 24,184 24,432 Noncontrolling interests in other consolidated 6,310 6,834 partnerships Total equity 511,439 513,875 Total liabilities and equity $ 1,661,673 $ 1,672,425 TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES SUPPLEMENTAL INFORMATION (in thousands, except per share, state and center information) (Unaudited) Three months ended March 31, 2013 2012 FUNDS FROM OPERATIONS (a) Net income $ 16,229 $ 8,834 Adjusted for: Depreciation and amortization uniquely significant to 22,043 25,301 real estate - consolidated Depreciation and amortization uniquely significant to 3,173 1,815 real estate - unconsolidated joint ventures Funds from operations (FFO) 41,445 35,950 FFO attributable to noncontrolling interests in other (7) (2) consolidated partnerships Allocation of earnings to participating securities (425) (308) Funds from operations available to common shareholders $ 41,013 $ 35,640 Funds from operations available to common shareholders $ 0.42 $ 0.36 per share - diluted WEIGHTED AVERAGE SHARES Basic weighted average common shares 93,132 89,671 Effect of notional units 805 1,096 Effect of outstanding options 106 65 Diluted weighted average common shares (for 94,043 90,832 earnings per share computations) Exchangeable operating partnership units (b) 4,755 7,858 Diluted weighted average common shares (for funds 98,798 98,690 from operations per share computations) OTHER INFORMATION Gross leasable area open at end of period - Consolidated 10,784 10,726 Partially owned - unconsolidated 2,127 1,193 Outlet centers in operation at end of period - Consolidated 36 36 Partially owned - unconsolidated 7 3 States operated in at end of period (c) 24 24 Occupancy at end of period (c) 98.0 % 97.3 % 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, impairment losses on depreciable real estate of consolidated real estate and after adjustments for unconsolidated partnerships and joint ventures, including depreciation and amortization, and impairment losses on investments in unconsolidated joint ventures driven by a measurable decrease in the fair value of depreciable real estate held by the unconsolidated 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 exchangeable operating partnership units (noncontrolling interest in operating partnership) are not dilutive on earnings per share computed in accordance with generally accepted accounting principles. c. Excludes the centers in which we have ownership interests in but are held in unconsolidated joint ventures. SOURCE Tanger Factory Outlet Centers, Inc. Website: http://www.tangeroutlet.com
Tanger Reports First Quarter 2013 Results
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