Management Presentation February 22, 2011 Disclaimer This - - PowerPoint PPT Presentation

Management Presentation

February 22, 2011

Tanger Outlets – Mebane, NC

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Disclaimer

This presentation includes time-sensitive information that may be accurate only as of today’s date, February 22, 2011. Estimates of future net income per share and FFO per share are by definition, and certain other matters discussed in this presentation regarding the state of the industry, our growth prospects, our remerchandising and financial strategies, the renewal and re-tenanting of space, the development of new centers, redevelopment and acquisition of existing centers, tenant sales and sales trends, occupancy rates, interest rates, funds from operations and coverage of the current dividend 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 company’s ability to meet its obligations on existing indebtedness or refinance existing indebtedness on favorable terms, the availability and cost of capital, the company’s ability to lease its properties, 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, 2009 and December 31, 2010, when available.

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• Business Overview
• 2010 Highlights
• Summary Financial Results
• Summary Operating Results
• Development Update
• Financial Strategies
• History of Consistent Results & Investor Rewards
• Summary

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Business Overview

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State of the Industry

• Economies of scale benefit owners of large portfolios
• Tanger and Simon combined own approximately 60% of the total outlet gross

leasable area

• Each year new brand name manufacturers are opening outlet stores and existing

manufacturers are opening new outlet concepts

• Outlet center occupancy levels have not been impacted to the same extent as
• ther retail properties by bankruptcy and store closing announcements among

retailers

• During challenging retail environments, outlet

stores continue to be a viable and profitable channel of distribution for retailers and manufacturers

• Landlord revenues are protected by the relatively

long-term nature of tenant leases

Tanger – Riverhead, NY

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• Tanger continues to be successful in obtaining increases in rental rates on

renewals and releasing of space

• New development opportunities exist as there is increased tenant demand for
• utlet space
• Acquisition opportunities still exist but are limited
• Tanger has divested itself of many under-performing, smaller assets and

reinvested the proceeds in new developments and expansions or to reduce debt

Growth Prospects

Tanger – Deer Park, NY

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8.4% 6.4% 3.7% 3.6% 3.2% 3.1% 2.7% 2.6% 2.4% 61.6%

The Gap PVH Nike Adidas VF Carters Dress Barn Liz Polo Other Retailers

Note: In terms of GLA as of December 31, 2010 Includes all retail concepts of each tenant group. Liz branded stores totaled 2.2% while other Liz concepts totaled 0.4% .

Portfolio Diversification

2.3%

Hanesbrands

Geographic Diversification

Well positioned portfolio of 33 outlet centers in 22 states coast-to-coast, totaling approximately 10.1 million square feet.

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Corporate HQ Wholly-owned Unconsolidated JV Current development

Note: As of February 22, 2011

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2010 Highlights

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2010 Highlights

• 2.6% increase in same center net operating income
• 9.2% increase in average base rent on leases renewed
• 25.9% increase in average base rent on released space
• 98.4% occupancy rate for wholly-owned portfolio as of December 31, 2010
• Tenant comparable sales increased 6.6% to $354 per square foot for the rolling

12 months ended December 31, 2010

• Increase in common share cash dividend to $0.775 per share annualized from

$0.765 per share, on a split-adjusted basis

• Moody’s upgrade to Baa2 from Baa3 on May 20, 2010

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2010 Capital Transactions

• November 29, 2010 – Closed on $400 million in unsecured lines of credit that mature

November 29, 2013 and include options that can extend maturity for an additional year

• Replaced former lines of credit with total commitments of $325 million that were

terminated simultaneously with closing of new facilities

• Currently bear interest on outstanding balances at LIBOR + 190 plus facility fee of

40 bps on total commitment and include financial covenants that do not differ materially from those of our former facilities

• $385 million syndicated line with a total of nine lenders led by Bank of America

and Wells Fargo

• $15 million cash management line with Bank of America as lender
• December 9, 2010 – Completed the redemption of all 3 million outstanding 7.5% Class C

Preferred shares for $25.198 per share including accrued dividends with the total cost of $75.6 million funded under our lines of credit

• June 7, 2010 – Closed a $300 million 10 year bond offering (6.125% coupon, priced at 99.3%
• f par to yield 6.219%) with proceeds used to repay $235 million unsecured term loan,

terminate underlying interest rate swaps, and pay down outstanding balances under unsecured lines of credit

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Summary Financial Results

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2008 Adj. (1) 2009 Adj. (2) 2010 Adj. (3)

$97.38 $115.68 $122.78

FFO (in millions)

19%

Increase

6%

Increase 1) Excludes $8.9 million charge for settlement of T-locks and $406,000 debt prepayment premium. 2) Excludes $10.3 million charge for executive severance, $5.2 million impairment charge for Commerce I, $3.3 million gain on sale of Washington, PA outparcel, and a $10.5 million gain on early extinguishment of debt. 3) Excludes $6.7 million charge for write-off of unamortized loan costs and settlement of interest rate swaps associated with the prepayment

• f a $235 million term loan, $2.5 million reduction in net income related to the redemption of preferred shares and $1.2 million in other

charges related to impairment, demolition, and gain or sale of outparcels we believe are not indicative of our ongoing operations.

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2008 Adj. (1) 2009 Adj. (2) 2010 Adj. (3)

$1.32 $1.37 $1.33

FFO per share

84,157,000

Shares

74,858,000 Shares 92,523,000 Shares

1) Excludes $0.12 /share charge for settlement of T-locks & debt prepayment premium. 2) Excludes $0.125/share charge for executive severance, $0.06/share impairment charge for Commerce I, $0.04/share gain on sale of Washington, PA outparcel, and a $0.124/share gain on early extinguishment of debt. 3) Excludes $0.07/share charge for write-off of unamortized loan costs and settlement of interest rate swaps associated with the prepayment

• f a $235 million term loan, $0.025/share reduction in net income related to the redemption of preferred shares and $0.01/share in other

charges related to impairment, demolition, and gain or sale of outparcels we believe are not indicative of our ongoing operations.

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2004 2005 2006 2007 2008 2009 2010

$1.37 $1.78 $2.20 $2.20 $2.30 $2.50 $3.08

Total Enterprise Value (in billions)

14% Annual Compound Increase

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Total Enterprise Value

(as of December 31, 2010)

$2,365,484,000 $714,616,000

Common Equity Debt

23% 77%

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Summary Operating Results

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2006 2007 2008 2009 2010

3.10% 5.30% 4.10% 1.40% 2.60%

Growth in Same Center NOI

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2004 2005 2006 2007 2008 2009 2010

5.5% 6.3% 10.3% 17.5% 19.9% 9.8% 7.9%

Rental Rate Increases on Renewals and Releasing

(On a cash basis)

Straight-line releasing spreads = 25.9% 2010, 30.9% in 2009, 44.1% in 2008 Straight-line renewal spreads = 9.2% 2010, 9.7% in 2009, 17.5% in 2008

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1995 2000 2009 2010

$226 $281 $339 $354

Average Tenant Sales Per Square Foot

(3% compound annual increase)

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2006 2007 2008 2009 2010

7.40% 7.70% 8.20% 8.50% 8.30%

Tenant Average Occupancy Cost

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Development Update

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Mebane, NC

• 319,000 sf development
• $64.9 million investment
• Grand opening November 5, 2010
• Opened fully leased
• Tenants include Saks Off Fifth, Coach, Polo, J Crew, GAP, Banana Republic, Nike, Tommy

Hilfiger, & more

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Hilton Head I, SC Redevelopment

• Formerly 162,000 sf of GLA
• Shopper unfriendly design

Former

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Hilton Head I, SC Redevelopment

Redeveloped

• 176,000 sf GLA plus 4 outparcel pads when redeveloped
• Shopper-friendly redevelopment will be 1st LEED certified green shopping center in

Beaufort County

• $43 million incremental investment
• Grand Re-Opening scheduled for March 31, 2011
• Leases signed or out for signature for approximately 91.5% of GLA as of Feb. 22, 2011

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Internal Criteria for Development

• Predevelopment costs are limited to those associated with:
• Costs to control the land (option contract costs)
• Pre-leasing costs
• Due diligence costs
• Criteria required to purchase land and begin development
• Positive results of the due diligence process
• Pre-leasing of 50% or greater with an acceptable tenant mix and visibility of

leasing of the remaining leasable space to 75%

• Receipt of all non-appealable permits required to obtain a building permit
• Acceptable return on cost analysis

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Financial Strategies

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Summary of Financial Strategies

The following are strategic objectives of Tanger’s financial decision making process:

• Focus on improving investment grade rating
• Maintain quality coverage and leverage ratios
• Continue the use of unsecured financing
• Maintain significant unused capacity under our lines of credit
• Use off balance sheet joint ventures only when necessary
• Maintain manageable levels of debt maturities
• Recycle capital through the sale of non-core assets and land parcels
• Generate capital internally (cash flow in excess of dividends paid)

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Limited Exposure to Rising Interest Rates

As of December 31, 2010, only 22% of total debt at variable rates

$554,616,000 $160,000,000 Fixed Rate Variable Rate

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Financial Capacity

Current capacity of $400 million under new unsecured lines of credit that closed November 29, 2010 and mature November 29, 2013

• $385 million syndicated line with a total of 9 lenders led by Bank of

America and Wells Fargo

• $15 million cash management line with Bank of America

As of December 31, 2010, Tanger’s unused capacity was 60.0% of total available capacity

2010 2011 2012 - 2014 2015 2016 - 2019 2020

$7.2 $160.0 $250.0 $300.0 Exchangeable Notes (1) Lines of Credit 2015 Notes 2020 Notes

Maturities of Debt Outstanding as of 12/31/10

1) Represents convertible debt, which is puttable at holders’ option beginning 08/18/2011, or earlier under certain conditions.

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$56.4 Million Dividends

Reinvesting in the Company

Excess cash flow over the dividend is reinvested in existing centers, new expansions, new developments, acquisitions or to pay down debt – 2010 payout ratio of 64%

$56.4 Million Dividends (in millions) Common Dividends, $71.9 Preferred Dividends, $6.2 Excess Cash Flow, $42.9

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Financial Profile

Key Financial Ratios as of December 31, 2010: Calculation Limit Key Bond Covenants (based on GAAP consolidation):

• Total debt to adjusted total assets

42% < 60%

• Secured debt to adjusted total assets

0% < 40%

• Unencumbered assets to unsecured debt

238% > 135%

• Interest coverage

4.90 x > 1.50 x

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History of Consistent Results and Investor Rewards

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60 80 100 120 140 160 180 200 220 2005 2006 2007 2008 2009 2010

Total Return to Shareholders

Tanger NAREIT All Equity REIT Index SNL REIT Retail Shopping Ctr Index

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Summary

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Why ?

• Investment Diversification

Only public REIT with pure outlet portfolio

• Conservatively Structured Balance Sheet

23% debt to market cap at December 31, 2010 100% unencumbered portfolio

• Brand Recognition

Recognized & respected by tenants and shoppers alike

• Tenured Management Team

Executives average 17 years of Tanger service

• Disciplined Development Approach

Will not build on speculation

• Strong Portfolio of Operating Properties

Geographic diversification Stable annual lease rollover Tenant diversification Properties built to easily reconfigure High credit quality tenants No big boxes

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Appendix

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Reconciliation of Guidance: Net income to FFO

Low Range High Range Estimated diluted net income per common share $0.53 $0.59 Noncontrolling interest, gain/loss on the sale of real estate, depreciation and amortization uniquely significant to real estate including noncontrolling interest share, and our share

• f joint ventures

0.82 0.82 Estimated diluted FFO per share $1.35 $1.41

Tanger Factory Outlet Centers, Inc., (NYSE:SKT) is a publicly traded REIT headquartered in Greensboro, North Carolina that operates and owns or has ownership interests in, a portfolio of 33 outlet centers in 22 states coast-to-coast, totaling approximately 10.1 million square feet, leased to over 2,100 stores that are operated by over 350 different brand name companies. More than 160 million shoppers visit Tanger Outlet Centers

• annually. For more information on Tanger Outlet Centers, call 1-800-4-TANGER or visit

the company’s web site at www.tangeroutlet.com

CORPORATE HEADQUARTERS 3200 Northline Avenue, Suite 360 Greensboro, NC 27408 336.292.3010 www.tangeroutlet.com A New York Stock Exchange Listed Company: SKT