Form: 8-K

Current report filing

October 28, 2003

Documents

TFOC EXHIBIT 99.2

Published on October 28, 2003

NEWS RELEASE

FOR RELEASE: IMMEDIATE RELEASE
CONTACT: Frank C. Marchisello, Jr.
(336) 834-6834


TANGER REPORTS 50% INCREASE IN NET INCOME PER SHARE
FFO Per Share Increases by 3.6%
Tenant Sales Increase 6.3% During the Quarter


Greensboro, NC, October 28, 2003, Tanger Factory Outlet Centers, Inc. (NYSE:SKT)
today reported net income for the three months ended September 30, 2003 was $3.5
million, or $0.33 per share, compared to $2.3 million, or $0.22 per share for
the third quarter of 2002, representing a 52.5% increase in total net income and
a 50.0% per share increase. For the nine months ended September 30, 2003, net
income was $8.0 million, or $0.72 per share, compared to $5.8 million, or $0.55
per share for the first nine months of 2002, representing a 37.1% increase in
total net income and a 30.9% per share increase.

Funds from operations ("FFO"), a widely accepted performance measure of a Real
Estate Investment Trust ("REIT"), for the three months ended September 30, 2003,
was $11.9 million, or $0.87 per share, as compared to FFO of $10.3 million, or
$0.84 per share, for the three months ended September 30, 2002, representing a
15.3% increase in total FFO and a 3.6% per share increase. For the nine months
ended September 30, 2003, FFO was $33.1 million, or $2.47 per share, as compared
to FFO of $28.6 million, or $2.38 per share, for the nine months ended September
30, 2002, representing a 15.8% increase in total FFO and a 3.8% per share
increase.

Net income and FFO per share amounts are on a diluted basis. A reconciliation of
net income to FFO is presented on the supplemental information page of this
press release.

Third Quarter Highlights

o 95% period-end portfolio occupancy rate

o Same-space sales increased 6.3% for the three months ended September 30,
2003

o 32 leases signed, totaling 97,555 square feet

o As of September 30, 2003, 78% of the 1,070,000 square footage originally
scheduled to expire during 2003 has renewed

o Rental rates on new stores opening were 24% higher than rental rates on
stores closing during the quarter

o $303 per square foot in reported same-space tenant sales for the rolling
twelve months ended September 30, 2003

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o 35,000 square foot, 100% leased expansion space completed and opened in
Sevierville, Tennessee

o 39.7% debt-to-total market capitalization ratio as of September 30, 2003
compared to 49.2% as of September 30, 2002

o 2.9 times interest coverage ratio for the third quarter of 2003 compared to
2.6 times for the third quarter of 2002

o $0.615 per share in quarterly common dividends declared ($2.46 annualized)

Stanley K. Tanger, Chairman of the Board and Chief Executive Officer, commented,
"Our third quarter results came in as expected and our tenants continue to
perform well with same space sales increasing 6.3 % during the quarter and
averaging $303 per square foot for the twelve months ended September 30, 2003.
While the announced transaction to acquire the Charter Oak portfolio is
exciting, our team will also keep focused on our goals of increasing traffic,
sales and occupancies at all of our centers."

Portfolio Operating Results

During the third quarter of 2003, the average initial base rental rate for new
stores opened was $20.32, representing an increase of $3.93 or 24% over the rent
paid by stores that closed during the same quarter. In addition, for the first
nine months of 2003, Tanger has executed 265 leases, totaling approximately 1.1
million square feet, with a 1.2% increase in base rental revenue per square foot
on a cash basis as compared to the previous base rental revenue associated with
that space. Through the first nine months of 2003, the Company has renewed 78%
of the 1,070,000 square footage originally scheduled to expire during 2003 as
compared to 80% of the 935,000 square feet scheduled to expire at this time last
year.

Reported same-space sales per square foot for the three months ended September
30, 2003, increased by 6.3%, as compared to the three months ended September 30,
2002. For the rolling twelve months ended September 30, 2003 sales were $303 per
square foot, representing a 3.6% increase compared to $293 per square foot for
the rolling twelve months ended September 30, 2002. Same-space sales is defined
as the weighted average sales per square foot reported in space open for the
full duration of the comparative periods.

Investment Activities

During the third quarter of 2003, Tanger opened an additional 35,000 square
foot, 100% leased expansion at its outlet center in Sevierville, Tennessee. The
estimated cost of the expansion was $4.0 million, with an expected return in
excess of 13%. Including this latest expansion, the Sevierville center totals
approximately 419,000 square feet.

On October 3, 2003 Tanger entered into a definitive agreement for the
acquisition of the Charter Oak Partners' portfolio of nine factory outlet
centers totaling approximately 3.3 million square feet. Tanger and an affiliate
of Blackstone Real Estate Advisors have formed a limited liability company to
acquire the portfolio as a joint venture. Tanger will own one-third and
Blackstone will own two-thirds of the joint venture. Tanger will be paid a fee
to provide operating, management, leasing and marketing services for the
properties. The purchase price for this transaction is $491 million, including
the assumption of approximately $187 million of debt. Closing is expected to
take place during the fourth quarter of 2003.

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Additionally, Tanger is currently underway with a 79,000 square foot, third
expansion at its outlet center in Myrtle Beach, South Carolina. The estimated
cost of the expansion is $9.7 million, and the company currently expects to
complete the expansion with stores commencing operations during the summer of
2004. The center, which has been developed and is managed and leased by Tanger,
is owned through a joint venture of which the Company owns a 50% interest.
Accordingly, the capital investment by Tanger for the third phase will be
approximately $1.7 million with an expected return in excess of 20%. Upon
completion of the expansion, the Myrtle Beach center will total approximately
403,000 square feet.

Balance Sheet Summary

As of September 30, 2003, Tanger had a total market capitalization of
approximately $825 million, with $327 million of debt outstanding, equating to a
39.7% debt-to-total market capitalization ratio. This compares favorably to a
total market capitalization of approximately $705 million with $347 million of
debt outstanding on September 30, 2002. The Company had a 49.2% debt-to-total
market capitalization ratio as of September 30, 2002. During the third quarter
of 2003, Tanger reduced its debt outstanding by $5.3 million. As of September
30, 2003, the Company had $7.3 million outstanding with $77.7 million available
on its unsecured lines of credit. The Company continues to improve its interest
coverage ratio, which was 2.9 times for the third quarter of 2003, as compared
to 2.6 times interest coverage in the same period last year.

FFO Per Share Guidance

Based on current market conditions, the strength and stability of its core
portfolio and the Company's ongoing development, expansion and acquisition
pipeline, Tanger currently believes its FFO for the fourth quarter of 2003 will
range between $0.97 to $.99 per share and, based on the actual nine months FFO
of $2.47 per share, plus the anticipated fourth quarter, its FFO for the current
year will range between $3.44 and $3.46 per share. Tanger currently expects to
provide guidance for next year after the closing of the Charter Oak portfolio
acquisition.

Third Quarter Conference Call

Tanger will host a conference call to discuss its third quarter results for
analysts, investors and other interested parties on Tuesday, October 28, 2003,
at 3:00 P.M. eastern time. The conference call can be accessed by dialing
1-877-277-5113 and requesting to be connected to the Tanger Factory Outlet
Centers Third Quarter Financial Results Conference call. Alternatively, the call
will be webcast by CCBN and can be accessed at Tanger Factory Outlet Centers,
Inc.'s web site at www.tangeroutlet.com, (click on "Corporate News"). A
telephone replay of the call will be available from October 28, 2003 starting at
5:00 P.M eastern time through 11:59 P.M., October 31, 2003, by dialing
1-800-642-1687 (conference ID # 3366303). Additionally, an online archive of the
broadcast will also be available through October 31, 2003.

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About Tanger Factory Outlet Centers

Tanger Factory Outlet Centers, Inc. (NYSE: SKT), a fully integrated,
self-administered and self-managed publicly traded REIT, presently operates 33
centers in 20 states coast to coast, totaling approximately 6.3 million square
feet of gross leasable area. The Company is filing a Form 8-K with the
Securities and Exchange Commission that includes a supplemental information
package for the quarter ended September 30, 2003. For more information on Tanger
Outlet Centers, visit its web site at www.tangeroutlet.com.

This press release may contain forward-looking statements regarding our
re-merchandising strategy, the renewal and re-tenanting of space, tenant sales
and sales trends, interest rates, funds from operations and the acquisition or
development of new centers. 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, the
availability and cost of capital, our ability to lease our properties, our
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, 2002.


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TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)

Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
- -------------------------------------------------------------------------------------------------------------------------------

(unaudited) (unaudited)
REVENUES

Base rentals (a) $20,070 $ 18,673 $59,498 $55,058
Percentage rentals 793 778 1,743 1,956
Expense reimbursements 8,419 7,361 25,305 21,876
Other income 1,073 1,044 2,547 2,358
- -------------------------------------------------------------------------------------------------------------------------------
Total revenues 30,355 27,856 89,093 81,248
- -------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Property operating 10,073 8,582 30,135 25,729
General and administrative 2,492 2,623 7,375 6,989
Interest 6,427 7,171 19,707 21,418
Depreciation and amortization 7,084 7,133 21,463 21,365
- -------------------------------------------------------------------------------------------------------------------------------
Total expenses 26,076 25,509 78,680 75,501
- -------------------------------------------------------------------------------------------------------------------------------
Income before equity in earnings of unconsolidated joint ventures,
minority interest and discontinued operations 4,279 2,347 10,413 5,747
Equity in earnings of unconsolidated joint ventures 267 317 639 250
Minority interest (1,026) (596) (2,415) (1,270)
- -------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations 3,520 2,068 8,637 4,727
Discontinued operations, net of minority interest (b) --- 240 (619) 1,120
- -------------------------------------------------------------------------------------------------------------------------------
Net income 3,520 2,308 8,018 5,847
Less applicable preferred share dividends --- (443) (806) (1,329)
- -------------------------------------------------------------------------------------------------------------------------------
Net income available to common shareholders $3,520 $1,865 $7,212 $4,518
- -------------------------------------------------------------------------------------------------------------------------------

Basic earnings per common share (c):
Income from continuing operations $.34 $.20 $.80 $.42
Net income $.34 $.22 $.74 $.56
- -------------------------------------------------------------------------------------------------------------------------------

Diluted earnings per common share (c):
Income from continuing operations $.33 $.19 $.79 $.41
Net income $.33 $.22 $.72 $.55
- -------------------------------------------------------------------------------------------------------------------------------

Funds from operations (FFO) $11,854 $10,284 $33,121 $28,594
FFO per common share - diluted (c) $.87 $.84 $2.47 $2.38
- -------------------------------------------------------------------------------------------------------------------------------

(a) Includes straight-line rent adjustment of $(35) and $(91) for the three
months ended and $(147) and $(193) for the nine months ended September 30,
2003 and 2002, respectively.

(b) In accordance with SFAS No. 144 "Accounting for the Impairment or Disposal
of Long Lived Assets", the results of operations for property disposed of
during 2003 and 2002 have been reported above as Discontinued Operations
for both the current and prior periods presented. Includes a gain on the
sale of previously leased ouparcel of land of $243 for the three and nine
months ended September 30, 2002 and a (loss) and gain on the sales of real
estate of ($735) and $460 for the nine months ended September 30, 2003 and
2002 respectively.

(c) Relects the change in accounting policy with respect to stock options as
permitted by the modified prospective method of SFAS No. 148 "Accounting
for Stock-Based Compensation-Transition and Disclosure" whereby, effective
January 1, 2003, compensation expense is recognized based on the fair value
provisions of SFAS No. 123 "Accounting for Stock-Based Compensation" for
all options granted since 1995. Results for prior years have not been
restated.


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TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

September 30, December 31,
2003 2002
- ---------------------------------------------------------------------------------------------------------------------------
(unaudited)
ASSETS
Rental Property

Land $50,474 $51,274
Buildings, improvements and fixtures 583,269 571,125
- ---------------------------------------------------------------------------------------------------------------------------
633,743 622,399
Accumulated depreciation (191,628) (174,199)
- ---------------------------------------------------------------------------------------------------------------------------
Rental property, net 442,115 448,200
Cash and cash equivalents 209 1,072
Deferred charges, net 9,398 10,104
Other assets 13,666 18,299
- ---------------------------------------------------------------------------------------------------------------------------
Total assets $465,388 $477,675
- ---------------------------------------------------------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Long-term debt
Senior, unsecured notes $147,509 $150,109
Mortgages payable 172,552 174,421
Lines of credit 7,272 20,475
- ---------------------------------------------------------------------------------------------------------------------------
327,333 345,005
Construction trade payables 7,188 3,310
Accounts payable and accrued expenses 13,949 15,095
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities 348,470 363,410
- ---------------------------------------------------------------------------------------------------------------------------
Commitments
Minority interest 26,202 23,630
- ---------------------------------------------------------------------------------------------------------------------------
Shareholders' equity
Preferred shares, $.01 par value, 1,000,000 shares authorized,
0 and 80,190 shares issued and outstanding
at September 30, 2003 and December 31, 2002 --- 1
Common shares, $.01 par value, 50,000,000 shares authorized,
10,501,643 and 9,061,025 shares issued and outstanding
at September 30, 2003 and December 31, 2002 105 90
Paid in capital 171,747 161,192
Distributions in excess of net income (81,063) (70,485)
Accumulated other comprehensive loss (73) (163)
- ---------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 90,716 90,635
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $465,388 $477,675
- ---------------------------------------------------------------------------------------------------------------------------


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

Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
- ---------------------------------------------------------------------------------------------------------------------------
Funds from Operations:

Net income $3,520 $2,308 $8,018 $5,847
Adjusted for:
Minority interest 1,026 596 2,415 1,270
Minority interest, depreciation and amortization
attributable to discontinued operations --- 156 (107) 796
Depreciation and amortization uniquely significant to real estate
- wholly owned 7,021 7,056 21,252 20,973
Depreciation and amortization uniquely significant to real estate
- unconsolidated joint ventures 287 168 808 168
(Loss)/gain on sale of real estate --- --- 735 (460)
- ---------------------------------------------------------------------------------------------------------------------------
Funds from operations before minority interest $11,854 $10,284 $33,121 $28,594
- ---------------------------------------------------------------------------------------------------------------------------
Funds from operations per share - diluted $.87 $.84 $2.47 $2.38
- ---------------------------------------------------------------------------------------------------------------------------

WEIGHTED AVERAGE SHARES
Basic weighted average common shares 10,404 8,269 9,729 8,078
Effect of outstanding share and unit options 219 221 229 176
- ---------------------------------------------------------------------------------------------------------------------------
Diluted weighted average common shares (for
earnings per share computations) 10,623 8,490 9,958 8,254
Convertible preferred shares (a) --- 722 435 724
Convertible operating partnership units (a) 3,033 3,033 3,033 3,033
- ---------------------------------------------------------------------------------------------------------------------------
Diluted weighted average common shares (for
funds from operations per share computations) 13,656 12,245 13,426 12,011
- ---------------------------------------------------------------------------------------------------------------------------

OTHER INFORMATION
Gross leasable area open at end of period -
Wholly owned 5,483 5,493 5,483 5,493
Partially owned (b) 318 260 318 260
Managed 457 434 457 434
- ---------------------------------------------------------------------------------------------------------------------------
Total gross leasable area open at end of period 6,258 6,187 6,258 6,187

Outlet centers in operation -
Wholly owned 27 29 27 29
Partially owned (b) 1 1 1 1
Managed 5 4 5 4
- ---------------------------------------------------------------------------------------------------------------------------
Total outlet centers in operation 33 34 33 34

States operated in at end of period (b) 20 21 20 21
Occupancy percentage at end of period (b) 95% 96% 95% 96%
- ---------------------------------------------------------------------------------------------------------------------------
(a) The convertible preferred shares and operating partnership units (minority
interest) are not dilutive on earnings per share computed in accordance
with generally accepted accounting principles.

(b) Includes Myrtle Beach, South Carolina property which is operated by us
through a 50% ownership joint venture.

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.


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