TFOC EXHIBIT 99.2
Published on February 24, 2004
NEWS RELEASE
FOR RELEASE: IMMEDIATE RELEASE
CONTACT: Frank C. Marchisello, Jr.
(336) 834-6834
TANGER REPORTS 8.3% INCREASE IN NET INCOME PER SHARE FOR 2003
FFO Increases to $3.45 Per Share
Greensboro, NC, February 24, 2004, Tanger Factory Outlet Centers, Inc.
(NYSE:SKT) today reported net income available to common shareholders for the
year ended December 31, 2003 was $12.0 million, or $1.17 per share, as compared
to $9.2 million, or $1.08 per share, for 2002, representing an 8.3% per share
increase. Net income available to common shareholders for the fourth quarter of
2003 was $4.8 million, or $.43 per share, as compared to $4.7 million, or $0.51
per share, for the fourth quarter of 2002. Comparable net income results were
impacted by $1.7 million in gains on the sale of real estate during 2002,
representing $.20 per share of net income, compared to a $147,000 net loss on
the sale of real estate during 2003.
Funds from operations (FFO) for the year ended December 31, 2003 increased 12.8%
to $47.0 million, as compared to FFO of $41.7 million for 2002. On a per share
basis, FFO for 2003 was $3.45 per share, as compared to $3.40 per share for
2002, representing a 1.5% per share increase. FFO for the fourth quarter of 2003
was $13.9 million, or $0.98 per share, as compared to FFO of $13.1 million, or
$1.01 per share for the fourth quarter of 2002. Tanger's comparable FFO results
were impacted by a lack of any gains on the sale of land parcels during 2003,
compared to $728,000 of such gains, representing $.06 per share, during 2002.
Excluding these gains, FFO for the fourth quarter and year ended December 31,
2002 would have been $0.97 per share and $3.34 per share, respectively,
resulting in a 1.0% increase in FFO per share for the fourth quarter of 2003 and
a 3.3% increase in FFO per share for the year.
The company considers FFO a key measure of its operating performance that is not
specifically defined by accounting principles generally accepted in the United
States ("GAAP"). The Company believes that FFO is helpful to investors because
it is a widely recognized measure of the performance of real estate investment
trusts and provides a relevant basis for comparison among REITs. All FFO and net
income 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.
Tanger achieved the following results for the year ended December 31, 2003:
o Acquired a 1/3 interest in nine outlet centers totaling approximately 3.3
million square feet through a joint venture arrangement with an affiliate
of Blackstone Real Estate Advisors
o Issued 2,645,000 common shares, generating $101.2 million in net proceeds
used to fund the company's equity portion of the Charter Oak acquisition
o 97% year-end portfolio occupancy rate in the original Tanger portfolio
o Average tenant sales of $307 per square foot in the original Tanger
portfolio
o Average initial base rent for new stores opened during 2003 was $18.83,
which was 11.7% higher than the average base rent of $16.86 for stores
closed during 2003
o 277 re-tenant or renewal leases signed, totaling over 1.1 million square
feet, achieving an 80% renewal rate and a 1.3% increase in base rent, on a
cash basis, for re-tenanted and renewed space
o Occupancy cost per square foot remained at an industry-leading low 7.4%
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o Completed 128,000 square feet of expansion/acquisition space
o $8.7 million in net proceeds from non-core property dispositions
Stanley K. Tanger, Chairman of the Board and Chief Executive Officer, stated,
"We had a busy and productive 2003. Tenants' sales were strong throughout the
year and our operating results during 2003 continued the positive trends of the
last few years. Our excellent financial performance was due to the tremendous
focus of our entire management team on the day-to-day management, marketing and
leasing of our portfolio of outlet shopping centers. I am proud that we have
been able to maintain this focus while completing several transactions during
the year, including the acquisition of the Charter Oak portfolio. The continued
successful integration of these properties into our systems will be a top
priority this year."
National Platform Continues to Drive Solid Operating Results
and Higher Same-Space Sales
As of December 31, 2003, Tanger's portfolio of owned or partially owned
properties totaled 8.9 million square feet throughout 36 factory outlet shopping
centers diversified across 23 states. In addition as of December 31, 2003,
Tanger managed four outlet shopping centers totaling approximately 434,000
square feet for a fee. The company's broad geographic representation and
established brand name within the factory outlet industry continues to generate
solid operating results.
As expected, the Charter Oak portfolio of nine outlet centers, which were added
to the Tanger portfolio on December 19, 2003, had a year-end occupancy rate of
94%, compared to the remaining Tanger portfolio's year-end occupancy rate of
97%. In total, the company's portfolio of owned or partially owned properties
had a year-end occupancy rate of 96%, representing the 23rd consecutive year
since the company commenced operations in 1981 that it has achieved a year-end
portfolio occupancy rate at or above 95%.
During 2003, the company executed 277 re-tenant or renewal leases totaling over
1.1 million square feet. The company achieved a retention rate of approximately
80% with existing tenants for the year and achieved a 1.3% increase in base
rental revenue per square foot, on a cash basis, for re-tenanted and renewed
space. The average initial base rent for new stores that opened during 2003 was
$18.83, which was 11.7% higher than the average base rent of $16.86 for stores
that closed during 2003. As a result, the company's average base rental income
per leasable square foot increased to $15.02 per foot for the year ended
December 31, 2003 compared to $14.79 per foot for 2002. The company continues to
derive its rental income from a diverse group of retailers with no single tenant
representing more than 6.1% of its gross leasable area as of December 31, 2003.
In spite of severe winter weather in December that forced some of Tanger's
centers to close early or open late a few days during the peak holiday shopping
period, same-space sales increased by 2.3% for the year ended December 31, 2003
and 2.4% for the three months ended December 31, 2003 over the same-space sales
for the comparable periods in 2002. Reported 2003 same-space sales in the
Charter Oak portfolio equated to $290 per square foot, compared to the remaining
Tanger portfolio's average same-space sales during 2003 of $307 per square foot,
resulting in an overall average of $301 per square foot for the year. Average
tenant occupancy costs across Tanger's portfolio remained at an industry-leading
low level during 2003, averaging 7.4%, slightly above the company's 2002 rate of
7.2%.
2003 Investment Activities Increase Portfolio by Over 50%
& Provide Growth Opportunities
During 2003, Tanger increased its portfolio under management by approximately
3.1 million square feet, or approximately 51%, through expansion and acquisition
activities, net of dispositions.
In January 2003, Tanger acquired a 29,000 square foot, 100% leased expansion
located contiguous with its existing factory outlet center in Sevierville,
Tennessee. The purchase price was $4.7 million with an expected initial return
on our investment of 10%. Tanger also completed another 35,000 square foot
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expansion of the center in July 2003 at a cost of $4 million with an expected
return on our investment in excess of 13%. The Sevierville center now totals
approximately 419,000 square feet.
In May 2003, Tanger completed a 64,000 square foot second phase of its
successful center in Myrtle Beach, South Carolina. The center, developed,
managed and leased by the company, is owned through a joint venture in which the
company owns a 50% interest. Accordingly, the company's total investment for the
second phase is approximately $1.1 million with an expected return on our
investment in excess of 20%. Additionally, Tanger is currently underway with a
79,000 square foot, third expansion. 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 capital investment by
Tanger for the third phase is approximately $1.7 million with an expected return
on our investment in excess of 20%. Upon completion of the expansion, the Myrtle
Beach center will total approximately 403,000 square feet.
Also in May 2003, Tanger sold a 49,252 square foot non-core property located in
Martinsburg, West Virginia for a total cash sales price of $2.3 million,
resulting in a book loss of $735,000. In November 2003, Tanger sold a 184,768
square foot non-core property located in Casa Grande, Arizona for a total cash
sales price of $7.1 million, resulting in a book gain of $588,000. The book loss
and/or gain on the sale of these properties is included in the company's
reported net income for the year and is excluded from FFO in accordance with the
industry standard definition for FFO as set forth by the National Association of
Real Estate Investment Trusts.
In December 2003, Tanger closed on 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 acquired
the portfolio through a joint venture in the form of a limited liability
company. Tanger owns one-third and Blackstone owns two-thirds of the joint
venture. Tanger is providing operating, management, leasing and marketing
services to the properties for a fee. The purchase price of this transaction was
$491 million, including the assumption of approximately $186.4 million of debt.
2003 Financing Activities Improve Balance Sheet and Provide Additional Equity
During the second quarter of 2003, Tanger called for redemption all of its
801,897 Series A convertible preferred shares, to be effective on June 20, 2003.
Prior to redemption, each Series A preferred share could have been converted to
..901 common shares. In total, 787,008, or 98.1%, of the Series A preferred
shares were converted into 709,078 common shares and the company redeemed the
remaining 14,889 Series A preferred shares for $25 per share, plus accrued and
unpaid dividends. Tanger funded the redemption, totaling approximately $375,000
from cash flow from operations.
In December 2003, Tanger raised approximately $88.0 million in net equity
proceeds through the sale of 2.3 million newly issued common shares. The company
utilized the proceeds, together with other available funds, to fund its portion
of the equity required to acquire the Charter Oak Portfolio of outlet centers.
On January 6, 2004, an additional 345,000 shares where issued in conjunction
with the exercise of the underwriters' over-allotment option, resulting in
approximately $13.2 million in additional net proceeds which were used to pay
down amounts outstanding on Tanger's floating rate unsecured lines of credit.
Additionally, during 2003 Tanger increased its unsecured credit line capacity to
$100 million and extended the maturity on its credit lines to June 2005.
As a result of the company's successful equity transactions, Tanger's total
market capitalization increased 60.5% from $742.3 million at December 31, 2002
to $1.19 billion at December 31, 2003. As of December 31, 2003, on a
consolidated basis, the company had approximately $528.5 million of debt
outstanding (excluding a debt premium of $11.9 million), as compared to $345.0
million outstanding at year-end 2002. Of the $528.5 million outstanding as of
December 31, 2003, $452.3 million, or 85.6% of its total debt, was fixed rate,
long-term debt. At December 31, 2003, Tanger had $22.7 million outstanding on
its lines of credit, which as of February 24, 2003 has been reduced to $14.8
million outstanding.
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In 2004 Tanger Expects to Continue Growing FFO Per Share
Based on current market conditions, the strength and stability of its core
portfolio, the successful integration of the Charter Oak portfolio and the
company's development, acquisition and disposition strategy, Tanger currently
believes its net income available to common shareholders for 2004 will be
between $0.62 and $0.70 per share and its FFO for 2004 will be between $3.68 and
$3.76 per share, representing an increase in FFO over the prior year of
approximately 7% to 9%. The following table provides the reconciliation of
estimated diluted FFO per share to estimated diluted net income available to
common shareholders per share:
For the twelve months ended December 31, 2004
Low Range High Range
Estimated diluted FFO per share $ 3.68 $ 3.76
Minority interest, depreciation and amortization uniquely
significant to real estate including minority interest
share and our share of joint ventures (3.06) (3.06)
Estimated diluted net income available to
common shareholders per share $ 0.62 $ 0.70
Tanger currently believes it will earn 9% of its annual 2004 net income and 22%
of its FFO per share in the first quarter, 15% of its net income and 23% of its
FFO in the second quarter, 32% of its net income and 27% of its FFO in the third
quarter and 44% of its net income and 28% of its FFO in the fourth quarter.
Year-End Conference Call to be Held on February 24, 2003 at 3:00 P.M. (EST)
Tanger will host a conference call to discuss its 2003 results for analysts,
investors and other interested parties on February 24, 2004, at 3:00 P.M.
eastern time. To access the conference call, listeners should dial
1-877-277-5113 and request to be connected to the Tanger Factory Outlet Centers
Fourth Quarter and Year End Financial Results call. Alternatively, this call is
being web cast by CCBN and can be accessed at Tanger Factory Outlet Centers,
Inc.'s web site at www.tangeroutlet.com.
A telephone replay of the call will be available from February 24, 2004 at 5:00
P.M eastern time through February 27, 2004 at 11:59 A.M. by dialing
1-800-642-1687, conference ID # 5355432. An online archive of the broadcast will
also be available through February 27, 2004.
About Tanger Factory Outlet Centers
Tanger Factory Outlet Centers, Inc. (NYSE: SKT), a fully integrated,
self-administered and self-managed publicly traded REIT, presently has ownership
interests in or management responsibilities for 40 centers in 23 states coast to
coast, totaling approximately 9.3 million square feet of gross leasable area. We
are filing a Form 8-K with the Securities and Exchange Commission that includes
a supplemental information package for the quarter ended December 31, 2003. For
more information on Tanger Outlet Centers, visit our web site at
www.tangeroutlet.com.
Estimates of future net income per share and FFO per share are by definition,
and certain other matters discussed in this press release regarding our
re-merchandising strategy, the renewal and re-tenanting of space, tenant sales
and sales trends, interest rates, fund from operations, the development of new
centers, the opening of ongoing expansions, coverage of the current dividend and
the impact of sales of land parcels 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, 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 (and December 31, 2003, when available).NEWS RELEASE
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