NEWS RELEASE
FOR RELEASE: IMMEDIATE RELEASE
CONTACT: Frank C. Marchisello, Jr.
(336) 834-6834
TANGER REPORTS FIRST QUARTER 2003 RESULTS
58.3% Increase in Net Income Per Share, 2.6% Increase in FFO Per Share
Greensboro, NC, May 6, 2003, Tanger Factory Outlet Centers, Inc. (NYSE:SKT)
today reported net income for the first quarter of 2003 was $2.2 million, or
$0.19 per share, as compared to net income of $1.4 million, or $0.12 per share
for the first quarter of 2002, representing a 58.3% per share increase. For the
three months ended March 31, 2003, funds from operations ("FFO"), a widely
accepted measure of REIT performance, was $10.3 million, or $0.78 per share, as
compared to FFO of $8.9 million, or $0.76 per share, for the three months ended
March 31, 2002, representing a 15.1% increase in total FFO and a 2.6% per share
increase. Net income and FFO per share amounts above are on a diluted basis. A
reconciliation of net income to FFO is presented on the supplemental information
page of this press release.
First Quarter Highlights
o 95% period-end portfolio occupancy rate
o 152 leases signed, totaling 677,000 square feet with respect to
re-tenanting and renewal activity, including 50.4% of the square footage
scheduled to expire during 2003
o $293 per square foot in reported same-space tenant sales for the rolling
twelve months ended March 31, 2003
o 7.2% occupancy cost per square foot for the rolling twelve months ended
March 31, 2003
o 99,000 square feet of development/expansion space underway and scheduled to
open in third quarter of 2003
o 45.8% debt-to-total market capitalization ratio, 2.62 times interest
coverage ratio
o $0.615 per share in common dividends declared, $2.46 per share annualized,
representing 10th consecutive year of increased dividends
Stanley K. Tanger, Chairman of the Board and Chief Executive Officer, commented,
"Our portfolio and tenants continued to perform well and post solid results,
despite being faced with numerous challenges in the first quarter, including
unusually harsh winter conditions and the shift in the Easter holiday to the
second quarter of 2003. Our portfolio occupancy held firm again at a strong 95%,
equaling our first-quarter occupancy rate for the past four consecutive years.
Importantly, we continued to operate our centers in a cost efficient manner, as
was evidenced by our low occupancy cost of 7.2%." Mr. Tanger continued, "During
the first three months we have already released or renewed approximately 50% of
the space scheduled to expire during the entire year. We are on track with our
development and expansion activities, which may have a positive impact on our
earnings in the second half of the year. Overall, we remain well-positioned to
achieve our stated growth objectives for the year."
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Portfolio Operating Results
During the first quarter of 2003, Tanger executed 152 leases, totaling
approximately 677,000 square feet, including approximately 539,000 square feet,
representing 50.4%, of the 1,070,000 square feet originally scheduled to expire
during 2003. Tanger achieved a 1.7% increase in base rental revenue per square
foot, on a cash basis, with respect to this re-tenanting and renewal activity.
Additionally, the average initial cash base rent for new stores opened during
the first quarter of 2003 was $19.01, representing an increase of $1.43 or 8.1%
above the average base rent for stores closed during the first quarter of 2003.
Reported same-space sales per square foot for the rolling twelve months ended
March 31, 2003 were $293 per square foot. This represents a 0.3% decrease
compared to $294 per square foot for the rolling twelve months ended March 31,
2002. For the first quarter of 2003, same-space sales decreased by 6.1%, as
compared to the record high first quarter sales for the same period in 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. The
sales results are due, in part, to the severe winter during the first quarter of
2003 and the shift in the Easter holiday to the second quarter of 2003.
Investment Activities
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 return of 10%.
Construction of an additional 35,000 square foot expansion of the center is
currently under way, with stores expected to open during the summer of 2003. The
cost of expansion is estimated to be $4.0 million with an expected return in
excess of 13%. Upon completion of the expansion, the Sevierville center will
total approximately 418,000 square feet.
Tanger is currently underway with constructing the second phase of our newly
opened, 100% leased center in Myrtle Beach, SC. The second phase totals 64,000
square feet and stores are expected to open during the summer of 2003. The
center, which was developed and is managed and leased by the Company, is owned
through a joint venture of which the Company owns a 50% interest. Accordingly,
the Company's capital investment for the second phase will be approximately $1.1
million with an expected return in excess of 20%.
Balance Sheet Summary
As of March 31, 2003, Tanger had a total market capitalization of approximately
$744 million, with $341 million of debt outstanding, equating to a 45.8%
debt-to-total market capitalization ratio. This compares favorably to a total
market capitalization of approximately $674 million with $360 million of debt
outstanding on March 31, 2002. The Company had a 53.3% debt-to-total market
capitalization ratio as of March 31, 2002. During the first quarter Tanger
reduced its debt outstanding by $3.9 million. As of March 31, 2003, the Company
had $19.3 million outstanding with $65.7 million available on its lines of
credit. The Company continues to improve its interest coverage ratio, which was
2.62 times for the first quarter of 2003, as compared to 2.35 times interest
coverage in the same period last year.
On May 2, 2003, Tanger announced it would call for redemption all of its
outstanding Depositary Shares representing Series A Cumulative Convertible
Redeemable Preferred Shares (NYSE: SKT-A) on June 20, 2003. The redemption price
will be $25.00 per Depositary Share, plus accrued and unpaid dividends, if any,
to, but not including, the redemption date. Prior to redemption, each Depositary
Share may be converted to .901 common shares at the option of the Depositary
Share holder until 5:00 p.m., Eastern Time, on June 17, 2003.
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2003 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 2003 will range between $3.44
and $3.50 per share. Tanger currently expects 2003 FFO to range between $0.81 to
$0.83 per share for the second quarter, $0.87 to $0.89 per share for the third
quarter and $0.98 to $1.00 per share for the fourth quarter.
First Quarter Conference Call
Tanger will host a conference call to discuss its first quarter results for
analysts, investors and other interested parties on Tuesday, May 6, 2003, 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
First Quarter Financial Results 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 May 6, 2003 starting at
5:00 P.M eastern time through May 13, 2003, by dialing 1-800-642-1687
(conference ID # 9544838). Additionally, an online archive of the broadcast will
also be available through May 13, 2003.
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 34
centers in 21 states coast to coast, totaling approximately 6.2 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, 2002. For more information on Tanger Outlet Centers,
visit our 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 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
March 31,
2003 2002
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(unaudited)
REVENUES
Base rentals (a) $19,661 $18,066
Percentage rentals 395 597
Expense reimbursements 8,450 7,260
Other income 671 564
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Total revenues 29,177 26,487
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EXPENSES
Property operating 10,017 8,611
General and administrative 2,430 2,275
Interest 6,724 7,129
Depreciation and amortization 7,329 7,066
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Total expenses 26,500 25,081
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Income before equity in earnings of unconsolidated joint ventures, 2,677 1,406
minority interest and discontinued operations
Equity in earnings of unconsolidated joint ventures 92 8
Minority interest (578) (252)
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Income from continuing operations 2,191 1,162
Discontinued operations (b) --- 283
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Net income 2,191 1,445
Less applicable preferred share dividends (443) (444)
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Net income available to common shareholders $1,748 $1,001
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Basic earnings per common share (c) :
Income from continuing operations $.19 $.09
Net income $.19 $.13
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Diluted earnings per common share (c) :
Income from continuing operations $.19 $.09
Net income $.19 $.12
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Funds from operations (FFO) $10,278 $8,927
FFO per common share - diluted (c) $.78 $.76
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(a) Includes straight-line rent adjustment of ($57) and ($41) for the three
months ended March 31, 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 2002 have been reported above as Discontinued Operations for both
the current and prior periods presented.
(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)
March 31, December 31,
2003 2002
- ------------------------------------------------------------------------------------------------------------------------------
(unaudited)
ASSETS
Rental Property
Land $51,274 $51,274
Buildings, improvements and fixtures 581,074 571,125
Developments under construction 692 ---
- ------------------------------------------------------------------------------------------------------------------------------
633,040 622,399
Accumulated depreciation (180,996) (174,199)
- ------------------------------------------------------------------------------------------------------------------------------
Rental property, net 452,044 448,200
Cash and cash equivalents 209 1,072
Deferred charges, net 9,648 10,104
Other assets 13,424 18,299
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Total assets $475,325 $477,675
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LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Long-term debt
Senior, unsecured notes $148,009 $150,109
Mortgages payable 173,811 174,421
Lines of credit 19,319 20,475
- ------------------------------------------------------------------------------------------------------------------------------
341,139 345,005
Construction trade payables 7,560 3,310
Accounts payable and accrued expenses 12,070 15,095
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Total liabilities 360,769 363,410
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Commitments and contingencies
Minority interest 23,245 23,630
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Shareholders' equity
Preferred shares, $.01 par value, 1,000,000 shares authorized,
80,190 shares issued and outstanding
at March 31, 2003 and December 31, 2002 1 1
Common shares, $.01 par value, 50,000,000 shares authorized,
9,299,665 and 9,061,025 shares issued and outstanding
at March 31, 2003 and December 31, 2002 93 90
Paid in capital 165,641 161,192
Distributions in excess of net income (74,324) (70,485)
Accumulated other comprehensive loss (100) (163)
- -------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 91,311 90,635
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Total liabilities and shareholders' equity $475,325 $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
March 31,
2003 2002
- --------------------------------------------------------------------------------------------------
Funds from Operations:
Net income $2,191 $1,445
Adjusted for:
Minority interest 578 252
Minority interest, depreciation and amortization
attributable to discontinued operations --- 237
Depreciation and amortization uniquely significant to real estate
- wholly owned 7,255 6,993
Depreciation and amortization uniquely significant to real estate
- unconsolidated joint ventures 254 ---
- --------------------------------------------------------------------------------------------------
Funds from operations before minority interest $10,278 $8,927
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Funds from operations per share - diluted $.78 $.76
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WEIGHTED AVERAGE SHARES
Basic weighted average common shares 9,181 7,948
Effect of outstanding share and unit options 227 80
- --------------------------------------------------------------------------------------------------
Diluted weighted average common shares (for
earnings per share computations) 9,408 8,028
Convertible preferred shares (a) 723 726
Convertible operating partnership units (a) 3,033 3,033
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Diluted weighted average common shares (for
funds from operations per share computations) 13,164 11,787
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OTHER INFORMATION
Gross leasable area open at end of period -
Wholly owned 5,497 5,332
Partially owned (b) 260 ---
Managed 457 105
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Total gross leasable area open at end of period 6,214 5,437
Outlet centers in operation -
Wholly owned 28 29
Partially owned (b) 1 ---
Managed 5 3
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Total outlet centers in operation 34 32
States operated in at end of period (b) 21 20
Occupancy percentage at end of period (b) 95% 95%
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(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 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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