MANAGEMENT PRESENTATION • FEBRUARY 12, 2013
DISCLAIMER 2 This presentation includes time-sensitive information that may be accurate only as of today’s date, February 12, 2013. Estimates of future net income per share and funds from operations per share are, and certain other matters discussed in this presentation regarding the state of the industry, our growth expectations and prospects, our development, remerchandising and financial strategies, the renewal and re-tenanting of space, tenant demand for outlet space in the US and Canada, our plans for new developments and expansions, including the commencement of construction, access to capital, our ability to acquire assets opportunistically, synergies expected to be achieved in acquiring centers in close proximity to existing Tanger centers, 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 in the US 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, 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, working with joint venture partners, 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 years ended December 31, 2011, and December 31, 2012, when available.
why TANGER? 3 • Well-positioned for growth • Financial stewardship • Recession resiliency • Outlet expertise & focus • Proven record of value creation
four-legged GROWTH 4 Opportunistic Existing Acquisitions Portfolio Canadian Growth Opportunities US Development Opportunities
organic GROWTH 5 Straight-line Blended Same Center NOI Rental Increases Growth 25.5% 2012 2012 6.0% 23.4% 2011 5.3% 2011 13.8% 2010 2.6% 2010 14.3% 2009 1.4% 2009 25.9% 2008 4.1% 2008 22.6% 2007 5.3% 2007 14.2% 2006 Tenant occupancy cost ratio has increased 100 basis points to 8.4% for 2012 from 7.4% for 2006 (see page 31 of appendix)
domestic RUNWAY 6 The outlet industry is small – we estimate about 50 million square feet, which is smaller than the retail space in the city of Chicago Recently Completed: Tanger Outlets Westgate in Glendale, Arizona – opened Attractive Supply Dynamic – • November 15, 2012 Tenant demand for outlet Tanger Outlets Texas City, near Houston/Galveston – • space continues and new opened October 19, 2012 supply is limited, with only a few disciplined public REIT Under Construction: developers that have access National Harbor, in Washington DC market • to capital and the expertise to Pre-development: deliver new outlet projects Charlotte, NC • Columbus, OH • Foxwoods Resort in Mashantucket, CT • Scottsdale, AZ • Shadow Pipeline: Site selection continues in other identified markets that are • not served or underserved by the outlet industry
canadian PLATFORM 7 The Next Frontier: US style outlet shopping is unrepresented in Canada. Relative to the US (24.5 retail sf/person), Canada is under-retailed (16 retail sf/person). Canadian consumers and retailers on both sides of the border are driving the demand for outlet expansion into Canada. 50/50 co-ownership agreement to establish an outlet platform in Canada • Properties will be branded as Tanger Outlet Centers • Potential openings of 10 outlet centers over the next 5 – 7 years • Tanger is responsible for leasing & marketing • RioCan is responsible for development & management • Current Portfolio/ Pipeline: Three operating outlet centers, all with potential for expansion • Development pipeline – Two new sites and two expansions announced and in predevelopment • phase Shadow pipeline – Other markets identified beyond the named pipeline sites •
opportunistic ACQUISTIONS 8 The outlet industry is largely consolidated. Tanger estimates that Tanger & Simon collectively own more than 75 – 80% of all quality outlet assets, and benefit from the scale of their portfolios. Acquisition opportunities are limited, but Tanger has sufficient access to capital to acquire quality assets opportunistically. 2012 Acquisitions: Les Factoreries St. Sauveur • Bromont Outlet Mall •
financial STEWARDSHIP 9 Funding Preference Generate Capital Investment Grade for Unsecured Internally Rated & Focused on Financing – Limited (Cash Flow in Excess Moving Up the Secured Financing of Dividends Paid) Ratings Scale Maintain Disciplined Maintain Significant Manageable Development Unused Capacity Schedule of Debt Approach – Will Not Under Lines of Credit Maturities Build on Spec Use Joint Ventures Limit Floating Rate Solid Coverage & Only When Exposure Leverage Ratios Necessary
quality Ratios 10 Key Bond Covenants As of 12/31/2012 Actual Limit Total debt to adjusted total assets 47% < 60% Secured debt to adjusted total assets 5% < 40% Unencumbered assets to unsecured debt 197% > 135% Interest coverage 4.5 x > 1.5 x S&P – BBB Moody’s – Baa2 Most recent ratings agency action: Moody’s revision of outlook to positive from stable on June 8, 2012
strong BALANCE SHEET 11 Limited Use of Secured Line of Credit Financing 1 Capacity 8% 34% 66% 92% GLA encumbered Outstanding ($178.3 million) GLA unencumbered Unused Capacity ($341.7 million) 1. Consolidated properties As of December 31, 2012
manageable MATURITIES 12 $300.0 $250.0 $250.0 $178.3 $21.0 $30.7 $18.5 $20.6 $10.6 $10.0 '12 '13 '14 Aug '15 Nov '15 Jan '16 June '16 Nov '16 '17-'18 Feb '19 June '20 Nov '21 '22-'23 Dec '24 '25 Dec '26 Lines of Credit Lines of Credit Commitment Mortgage Debt Term Loan (3) Bond Debt Other Unsecured Debt 1. In millions as of December 31, 2012 & assuming all extension options exercised; although some mortgage debt is amortizing, outstanding balance is shown in the month of final maturity 2. Excludes debt discount/premium 3. Excludes pro-rata share of debt maturities related to unconsolidated joint ventures
conservative STRATEGIES 13 Reinvesting in the Limited Floating Rate Exposure Company 2012 FFO Outstanding Debt $ 428.3 millio n $79.1 39% $81.8 61% $661.4 million Excess Cash Flow Variable Rate Fixed Rate Common Dividends As of December 31, 2012 In millions
disciplined DEVELOPMENT 14 Internal Guidelines for Buying Land: Predevelopment Costs are Limited to: Positive due diligence results Costs to control the land (option contract • • costs) 50% or greater preleasing with • acceptable tenant mix & visibility of Pre-leasing costs • reaching 75% Due diligence costs • Receipt of all non-appealable permits • required to obtain building permit Acceptable return on cost analysis •
recession RESILIENCY 15 “In good times people love a bargain, and in tough times, people need a bargain.” ~ Steven B. Tanger, CEO & President
sustained OCCUPANCY 1993 98% 1994 99% Have Ended Each Year Since IPO With Occupancy of 95% or Greater 1995 99% 1996 99% 1997 98% 1998 97% 1999 97% 2000 96% Represents period end occupancy 2001 96% 2002 98% 2003 96% 2004 97% 2005 97% 2006 98% 2007 98% 2008 97% 2009 96% 2010 98% 2011 99% 2012 99% 16
steady SALES GROWTH 17 For over 30+ years of economic cycles and the related peaks and valleys, tenant sales have trended positively 3% CAGR $354 $366 $376 $339 $281 $226 1995 2000 2009 2010 2011 2012 Represents tenant comparable sales for rolling 12 months
stable EXPIRATIONS 18 Percentage of Annual Percentage of Total GLA Base Rent 11% 2013 11% 2013 14% 2014 13% 2014 13% 2015 13% 2015 14% 2016 14% 2016 14% 2017 14% 2017 10% 2018 11% 2018 3% 2019 3% 2019 6% 2020 5% 2020 8% 8% 2021 2021 6% 5% 2022 2022 2% 2023+ 2% 2023+ 2012 expirations shown net of renewals executed through December 31, 2012
geographic DIVERSIFICATION 19 Well-positioned portfolio of 43 outlet centers in 26 states coast to coast & in Canada, totaling approximately 12.9 million square feet
strong TENANT MIX 20 Diversified tenant base, the majority of which are publicly-held, high credit quality retailers 60.5% 7.9% 6.3% 4.9% 3.5% 3.4% 3.0% 2.9% 2.7% 2.6% 2.3% Properties are easily reconfigured to minimize tenant turnover downtime Chart is in terms of GLA as of December 31, 2012 & includes all retail concepts of each tenant group
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