TangerOutlets 2005 ANNUAL REPORT TANGER FACTORY OUTLET CENTERS, INC.

Transcription

1 TangerOutlets 2005 ANNUAL REPORT TANGER FACTORY OUTLET CENTERS, INC.

2 company profile West Branch, MI Sparked by consumer s love of a bargain, Stanley K. Tanger founded Tanger Factory Outlet Centers, Inc. in Tanger pioneered the dynamic outlet industry and today is one of the largest developers of outlet shopping centers nationwide. The Tanger Brand currently operates 33 trademarked outlet centers located in 22 of the nation s most populated and tourist attractive states across America. The portfolio represents 8.7 million square feet of the nation s top branded and largely desired manufacturers in the country. Tanger is headquartered in Greensboro, North Carolina and is a self-administered, self-managed real estate investment trust focused on the acquisition, development, leasing and management of upscale outlet shopping centers. The Company became the first publicly held outlet center developer in May Tanger shares are proudly traded on the New York Stock Exchange under the ticker symbol SKT. Fort Myers, FL Tanger s trademarked outlet shopping destinations welcome more than 125 million shoppers nationwide each year. Eighty-five percent of our shoppers are women with the median age of 39 years. The centers house leading designer and brand name manufacturers who offer a diverse variety of fashions, footwear, home products and more directly to the consumer at substantial savings and a real value. Tanger customers can count on the brand to deliver the best quality, selection and value in the outlet center stores each and every day. vision success value tanger outlets annual report

3 financial highlights San Marcos, TX (In thousands, except per share and percent data) For the Year % Change Total revenues $ 202,799 $ 193, Operating income $ 76,215 $ 70, Funds from operations available to common shareholders (1) $ 60,046 $ 63,018 5 Dividends and distributions $ 44,087 $ 41, Average shares outstanding (2) 34,713 33, Average sales per square foot $ 320 $ Per Share Funds from operations available to common shareholders (1) $ 1.73 $ Dividends (3) $ 1.28 $ Dividend payout ratio (4) 74% 66% + 12 At Year-End Real estate assets, before depreciation $ 1,152,866 $ 1,077, Total assets $ 1,000,605 $ 936, Common shares outstanding 30,749 27, GLA open at year end Wholly-owned 8,261 5,066 Partially-owned (consolidated) 3,271 Partially-owned (unconsolidated) Managed Occupancy Rate (5) 97% 97% Westbrook, CT (1) Funds from Operations is defined as net income (loss) available to common shareholders 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. Funds from Operations for 2005 includes a $9.9 million non-recurring charge for the early extinguishment of certain mortgage debt. Excluding this charge funds from Operations for 2005 would have been $70 million or $2.01 per share. (2) Assumes all share and unit options and partnership units of the Operating Partnership are converted to common shares. (3) Represents per share amounts to common shareholders. (4) Annual dividends and distributions as a percent of funds from operations available to common shareholders for such year. (5) Represents occupancy at wholly owned centers. $99 $105 $ $37 $42 $47 $193 $203 $63 $ tanger outlets annual report 2005 TOTAL REVENUE (in millions of dollars) FUNDS FROM OPERATIONS (1) (in thousands of dollars) GROSS LEASABLE AREA Wholly Owned Centers (in millions of square feet)

4 classic brands provensuccess Myrtle Beach 17, SC Blowing Rock, NC strategic vision Riverhead, NY powerfulportfolio TangerOutlets Hilton Head, SC shareholdervalue tanger outlets annual report

5 reholder value exceeding expectations proven success strategic vision powerful portfolio classic bra brands shareholder value exceeding expectations proven success strategic vision powerful portfol tfolio classic brands shareholder value exceeding expectations proven success strategic vision p on powerful portfolio classic brands shareholder value exceeding expectations proven success st s strategic vision powerful portfolio classic brands shareholder value exceeding expectations pro s proven success strategic vision powerful portfolio classic brands shareholder value exceedin eeding expectations proven success strategic vision powerful portfolio classic brands shareholder v der value exceeding expectations to our proven fellow shareholders success strategic vision powerful portfolio classic brands brands shareholder value exceeding expectations proven success strategic vision powerful portfo l portfolio classic brands shareholder value exceeding expectations proven success strategic visio vision powerful portfolio classic brands shareholder value exceeding expectations proven succes cess strategic vision powerful We had portfolio a great year classic in brands This year our shareholders value were rewarded exceeding with an outstanding expectations ons proven success strategic total vision return on powerful their investment portfolio in excess classic of 14%. If brands you have been a shareholder value for a longer exceedi eeding expectations proven period success of time, strategic you would have vision received powerful a 30% annual portfolio compounded classic rate brands of return over shareholder the v der value exceeding expectations last five years. proven success strategic vision powerful portfolio classic brands brands shareholder value exceeding expectations proven success strategic vision powerful portfo As you read on, you will get a sense of how well our company performed from a financial l portfolio classic brands shareholder value exceeding expectations proven success strategic visio and operational standpoint. We will explain our strategic decisions during the later part of the vision powerful portfolio classic year relating brands to the shareholder buy-out of the remaining value two-thirds exceeding interest expectations in the Charter Oak portfolio, proven succes cess strategic vision powerful our decision portfolio to prepay classic certain brands mortgage shareholder loans resulting in value an increase exceeding our unsecured expectations debt ons proven success strategic rating vision to investment powerful grade, portfolio and the record classic amount brands of capital which shareholder we raised to accomplish value exceedi eeding expectations proven these success achievements. strategic The outlet vision industry powerful continues portfolio to be a profitable classic channel brands of distribution shareholder v der value exceeding expectations for our tenants. proven We are success excited to be strategic a major player vision in a growing powerful industry. portfolio classic brands brands shareholder value exceeding expectations proven success strategic vision powerful portfo l portfolio classic brands shareholder OUR FINANCIAL value RESULTS exceeding expectations proven success strategic visio vision powerful portfolio classic brands shareholder value exceeding expectations proven succes As of December 31, 2005, we had an equity market capitalization of over $1.1 billion and a cess strategic vision powerful portfolio classic brands shareholder value exceeding expectations total market capitalization of approximately $1.8 billion. This represents a 26% increase in ons proven success strategic our equity vision market powerful capitalization portfolio and a 30% classic increase brands in our total market shareholder capitalization value since exceedi eeding expectations proven December success 31, strategic vision powerful portfolio classic brands shareholder v der value exceeding expectations proven success strategic vision powerful portfolio classic brands brands shareholder value Our exceeding financial results expectations for 2005 were impacted proven by success a non-recurring strategic charge for vision the early powerful portfo l portfolio classic brands shareholder extinguishment value of certain exceeding mortgage loans. expectations Our decision to prepay proven these success mortgage loans strategic visio vision powerful portfolio classic was based brands on our knowledge shareholder that upon value doing exceeding so, we would receive expectations an investment proven grade succes cess strategic vision powerful senior portfolio unsecured classic debt rating. brands Obtaining shareholder an investment grade value rating exceeding has been an important expectations goal and part of our long range financial plan for many years. Having an investment grade ons proven success strategic vision powerful portfolio classic brands shareholder value exceedi rating was timely, as we raised the funds necessary to complete the acquisition of the eeding expectations proven success strategic vision powerful portfolio classic brands shareholder v remaining two-thirds interest in the Charter Oak portfolio. In addition, it will be beneficial in der value Stanley exceeding K. Tanger expectations proven success strategic vision powerful portfolio classic brands Founder obtaining better execution and lower long-term cost on any future public fixed income brands Chairman shareholder of the Board value securities exceeding we may expectations choose to issue. proven success strategic vision powerful portfo & Chief Executive Officer l portfolio classic brands shareholder value exceeding expectations proven success strategic visio vision powerful portfolio classic Excluding brands the non-recurring shareholder charge, our value total funds exceeding from operation, expectations often referred to proven as FFO, succes cess strategic vision powerful for 2005 portfolio reached classic an all time brands high of $70.0 shareholder million, representing value an 11% exceeding increase over expectations the ons proven success strategic prior vision year and powerful on a per share portfolio basis, an increase classic of brands 6% to $2.01 shareholder per share. These value positive exceedi eeding expectations proven results success where achieved strategic despite vision a nearly powerful 2% increase portfolio in short-term classic interest brands rates, which shareholder v der value exceeding expectations effectively reduced proven our success FFO for 2005 strategic by an estimated vision $0.04 powerful to $0.05 per portfolio share. classic brands brands shareholder value exceeding expectations proven success strategic vision powerful portfo Our FFO growth during 2005 was impressive, because the majority of this growth was l portfolio classic brands shareholder value exceeding expectations proven success strategic visio attributable to the exceptional performance of our existing portfolio of outlet centers. The vision powerful portfolio classic weighted brands average shareholder leaseable square value feet in our exceeding portfolio for 2005 expectations was virtually the proven same assuccess s s strategic vision powerful portfolio classic brands shareholder value exceeding expectations pro Steven B. Tanger that in 2004, while same center net operating income for our portfolio increased 3.8% during s proven President success & strategic vision powerful portfolio classic brands shareholder value exceedin Chief Operating Officer eeding expectations proven success strategic vision powerful portfolio classic brands shareholder v der value exceeding expectations proven success strategic vision powerful portfolio classic brands brands 4 shareholder tanger outlets annual value report exceeding 2005 expectations proven success strategic vision powerful portfo l portfolio classic brands shareholder value exceeding expectations proven success strategic visio

6 ands shareholder value exceeding expectations proven success strategic vision powerful portfolio c io classic brands shareholder value exceeding expectations proven success strategic vision powe powerful portfolio classic brands shareholder value exceeding expectations proven success strate trategic vision powerful portfolio classic brands shareholder value exceeding expectations proven s oven success strategic vision powerful portfolio classic brands shareholder value exceeding expe This compares to a 1.2% increase during the year ended December 31, 2004 compared to ng expectations proven success strategic vision powerful portfolio classic brands shareholder va The 3.8% increase in same center net operating income during 2005 is the largest percentage value exceeding expectations proven success strategic vision powerful portfolio classic brands sha increase we have seen in many years. This means much of our earnings growth during 2005 was s shareholder value exceeding expectations proven success strategic vision powerful portfolio c internally generated. olio classic brands shareholder value exceeding expectations proven success strategic vision p on powerful During portfolio 2005 classic we raised brands a record $381.3 shareholder million in debt value and equity exceeding capital. The expectations timeline for these events proven success str ss strategic and vision the use powerful of proceeds portfolio is as follows: classic brands shareholder value exceeding expectations pro proven success strategic vision powerful portfolio classic brands shareholder value exceeding exp ng expectations We completed proven the success sale of 3.0 million strategic common vision shares powerful in September portfolio 2005 at a net classic price of brands $27.09 per shareholder va value exceeding share, expectations proceeds of which proven we used to success temporarily strategic pay down amounts vision outstanding powerful on portfolio our unsecured classic brands sha s shareholder lines value of credit. exceeding expectations proven success strategic vision powerful portfolio c olio classic brands shareholder value exceeding expectations proven success strategic vision p In October 2005, we repaid certain mortgage loans outstanding totaling approximately $77.4 million, on powerful portfolio classic brands shareholder value exceeding expectations proven success str bearing interest rates ranging from 7.875% to 7.98% and an original maturity date of April 2009, ss strategic vision resulting powerful in an upgrade portfolio of our senior classic unsecured brands debt rating shareholder to investment value grade. exceeding expectations pro proven success strategic vision powerful portfolio classic brands shareholder value exceeding exp ng expectations We closed proven on $250 success million of 6.15% strategic Senior vision Unsecured powerful Notes with portfolio net proceeds classic of approximately brands shareholder va value exceeding $247.2 expectations million in November proven success strategic vision powerful portfolio classic brands sha s shareholder value exceeding expectations proven success strategic vision powerful portfolio c olio classic brands In November shareholder 2005, we closed value on the exceeding sale of 2.2 million, expectations 7.5% Class C Preferred proven Shares success with net strategic vision p on powerful portfolio proceeds classic of approximately brands $53.0 shareholder million and we completed value exceeding a follow-on offering expectations of 800,000 additional proven success str 7.5% Class C Preferred Shares with net proceeds of approximately $19.5 million in February ss strategic vision powerful portfolio classic brands shareholder value exceeding expectations pro proven success strategic vision powerful portfolio classic brands shareholder value exceeding exp With the funding in place, we closed on the $282.5 million acquisition of the remaining two-thirds ng expectations proven success strategic vision powerful portfolio classic brands shareholder va interest in the Charter Oak portfolio in November value exceeding expectations proven success strategic vision powerful portfolio classic brands sha s shareholder Completing value these exceeding financial transactions expectations in such a short proven period of success time was a strategic tremendous vision accomplishment powerful portfolio c olio classic brands a testament shareholder to our financial value team s hard exceeding work and dedication expectations to our company. proven We appreciate success their strategic vision p on powerful diligence portfolio and classic attention to brands detail and shareholder thank our entire team, value as well exceeding as our board expectations of directors and the proven other success str ss strategic professionals vision powerful involved in portfolio making these classic transactions brands happen. shareholder value exceeding expectations pro proven success strategic vision powerful portfolio classic brands shareholder value exceeding exp ng expectations OUR OPERATING proven success PERFORMANCE strategic vision powerful portfolio classic brands shareholder va value exceeding expectations proven success strategic vision powerful portfolio classic brands sha Our portfolio of outlet center properties ended the year with an average occupancy rate of 97%, marking s shareholder value exceeding expectations proven success strategic vision powerful portfolio c the 25th consecutive year we have achieved a year end occupancy rate at or above 95%. While olio classic maintaining brands high shareholder occupancy, we value were also exceeding able to drive rental expectations rates higher, obtaining proven a 7.1% success increase strategic in vision p on powerful base portfolio rental rates classic on space brands released shareholder during the year and value a 6.0% exceeding increase base expectations rental rates space proven success str ss strategic renewed vision during powerful the year. portfolio classic brands shareholder value exceeding expectations pro proven success strategic vision powerful portfolio classic brands shareholder value exceeding exp ng expectations Our tenant s proven average success sales have been strategic increasing vision throughout powerful the entire portfolio as well, classic resulting brands in a shareholder va value exceeding slight increase expectations in the portfolio proven average occupancy success cost strategic to our tenants vision from 7.3% powerful of tenants portfolio sales in 2004 classic brands sha s shareholder to 7.5% value of tenants exceeding sales expectations This low cost of occupancy proven success has been a driving strategic force in vision creating powerful a portfolio c profitable distribution channel for our tenants and turn, enhancing our ability to renew leases with olio classic brands shareholder value exceeding expectations proven success strategic vision p increases in rental rates. Increasing tenant sales should result in future increases in rental rates over time, n powerful portfolio classic brands shareholder value exceeding expectations proven success str as leases continue to come up for renewal. In 2005 tenant sales were very strong, averaging $320 per strategic vision foot for powerful the year, an portfolio increase of classic 3% from the brands previous shareholder year. As a result, value we renewed exceeding 84% of the expectations 1.8 proven s oven success million strategic square feet vision of leases powerful scheduled to portfolio come up for classic renewal during brands the year shareholder with an average value increaseexceeding expe ng expectations proven success strategic vision powerful portfolio classic brands shareholder va value exceeding expectations proven success strategic vision powerful portfolio classic brands sha s shareholder value exceeding expectations proven success strategic vision powerful portfolio c olio classic brands shareholder value exceeding expectations proven tanger outlets success annual report strategic 2005 vision 5 p on powerful portfolio classic brands shareholder value exceeding expectations proven success str

7 reholder value exceeding expectations proven success strategic vision powerful portfolio classic bra brands shareholder value exceeding expectations proven success strategic vision powerful portfol tfolio classic brands shareholder value exceeding expectations proven success strategic vision p on powerful portfolio classic brands shareholder value exceeding expectations proven success st s strategic vision powerful portfolio classic brands shareholder value exceeding expectations pro s proven success in base strategic rental rates vision the executed powerful renewals portfolio of 6.0%. This classic improved brands upon the shareholder positive momentum value in exceedin eeding expectations rental rates proven experienced success in the previous strategic year, when vision we executed powerful approximately portfolio 88% classic of the brands 1.8 million shareholder v square feet of leases expiring with an average increase in base rental rates on the executed renewals der value exceeding expectations proven success strategic vision powerful portfolio classic brands of 5.6%. brands shareholder value exceeding expectations proven success strategic vision powerful portfo l portfolio classic Over brands the past ten shareholder years, our tenants value sales exceeding have grown at expectations a compounded average proven rate higher success than strategic visio vision powerful inflation. portfolio This classic tells us that brands in spite of the shareholder ever increasing value options consumers exceeding have expectations for shopping, the proven succes cess strategic vision outlet concept powerful continues portfolio to attract more classic of the brands consumers shareholder retail dollars. The value outlet industry exceeding continues expectations ons proven success to be a very strategic profitable vision distribution powerful channel for portfolio our tenants and classic demand brands for space remains shareholder strong. value exceedi eeding expectations The financial proven strength success of our tenants strategic continues vision to be at its powerful very best. portfolio During 2005, classic we did not brands have shareholder v der value exceeding a single tenant expectations file for bankruptcy proven protection, success beating the strategic previous year vision when powerful only had portfolio two classic brands brands shareholder tenants file. value exceeding expectations proven success strategic vision powerful portfo l portfolio classic brands shareholder value exceeding expectations proven success strategic visio As an industry leader, we also take pride in our ability to introduce new manufacturers and brand vision powerful portfolio classic brands shareholder value exceeding expectations proven succes name retailers to the outlet concept, as well as work with existing tenants to extend their brand names cess strategic vision through new powerful concept stores. portfolio For example, classic we brands recently opened shareholder the first Polo value Ralph Lauren exceeding Children sexpectations ons proven success store in our strategic center in Lancaster, vision PA. powerful During 2005, portfolio we also classic added 27 brands new tenants, shareholder such as Gap Kids, value exceedi eeding expectations Alfred Dunner, proven Zumiez, success Sony, Epic strategic Jeans, Journey s vision Kids, powerful Gymboree portfolio and others. classic We are also brands proud shareholder v der value exceeding of our ability expectations to be the dominate proven outlet center success in our markets, strategic particularly vision where powerful there are multiple portfolio outletclassic brands brands shareholder centers owned value by exceeding multiple developers. expectations For example, our proven center in success Branson, MO strategic received the vision Best ofpowerful portfo l portfolio classic the brands Ozarks award shareholder for the second value year in a exceeding row as the favorite expectations outlet center in Southern proven Missouri. success strategic visio vision powerful portfolio classic brands shareholder value exceeding expectations proven succes These awards and impressive operating statistics do not happen by themselves. They are the direct cess strategic vision powerful portfolio classic brands shareholder value exceeding expectations result of the hard work, passion and dedication of our entire team, both in our corporate office and in ons proven success strategic vision powerful portfolio classic brands shareholder value exceedi the field. Operations, marketing, leasing, legal, construction, information technology, human eeding expectations proven success strategic vision powerful portfolio classic brands shareholder v resources, accounting and administration all work together to keep our centers profitable, clean and der value exceeding running efficiently; expectations our traffic and proven sales increasing; success our strategic tenant mix fresh vision and exciting; powerful and our portfolio customerclassic brands brands shareholder service second value to none. exceeding Everyone expectations in our company is attuned proven to providing success the best strategic customer vision service powerful portfo l portfolio classic which brands is important shareholder part of our value business. exceeding We appreciate expectations and thank our entire proven team for success their constantstrategic visio vision powerful and portfolio never-ending classic commitment brands to excellence. shareholder value exceeding expectations proven succes cess strategic vision powerful portfolio classic brands shareholder value exceeding expectations ons proven success OUTLOOK strategic FOR 2006 vision powerful portfolio classic brands shareholder value exceedi eeding expectations proven success strategic vision powerful portfolio classic brands shareholder v Our policy has always been to under promise and over perform. The successful execution of our der value exceeding expectations proven success strategic vision powerful portfolio classic brands strategic plan in 2005 should set the stage for more growth in 2006 and beyond. brands shareholder value exceeding expectations proven success strategic vision powerful portfo l portfolio classic The brands largest of those shareholder events was our value acquisition exceeding of the remaining expectations two thirds interest proven in the success Charter Oak strategic visio vision powerful portfolio owned classic by an affiliate brands of Blackstone shareholder Real Estate value Advisors exceeding for $282.5 million expectations November 23, proven succes cess strategic vision The powerful Charter Oak portfolio, comprised classic of brands nine factory shareholder outlet centers (approximately value exceeding 3.3 million expectations ons proven success square feet), strategic was acquired vision in December powerful 2003 portfolio by a joint venture classic company, brands owned shareholder one third by Tanger value exceedi eeding expectations and two thirds proven by Blackstone. success Since strategic then, we vision have provided powerful for a fee, portfolio operating, classic management, brands shareholder v der value exceeding leasing and expectations marketing services proven for the properties. success As a strategic result of our vision buy-out of powerful Blackstone, portfolio the total classic brands brands shareholder amount of value wholly-owned exceeding square footage expectations in our real estate proven portfolio success has increased strategic by 66%, from vision 5.0 topowerful portfo 8.3 million square feet. This acquisition, combined with the strategic, conservative mix of debt and l portfolio classic brands shareholder value exceeding expectations proven success strategic visio equity used to finance the purchase price, will add significantly to our FFO vision powerful portfolio classic brands shareholder value exceeding expectations proven success s s strategic vision We also powerful completed portfolio two expansions classic during brands the later part shareholder of Construction value of exceeding a 46,400 square expectations pro s proven success foot expansion strategic featuring vision Polo/Ralph powerful Lauren, portfolio Skechers, Children s classic Place brands others shareholder was completed value at exceedin eeding expectations proven success strategic vision powerful portfolio classic brands shareholder v der value exceeding expectations proven success strategic vision powerful portfolio classic brands brands 6 shareholder tanger outlets annual value report exceeding 2005 expectations proven success strategic vision powerful portfo l portfolio classic brands shareholder value exceeding expectations proven success strategic visio

8 ands shareholder value exceeding expectations proven success strategic vision powerful portfolio c io classic brands shareholder value exceeding expectations proven success strategic vision powe powerful portfolio classic brands shareholder value exceeding expectations proven success strate trategic vision powerful portfolio classic brands shareholder value exceeding expectations proven s oven success strategic vision powerful portfolio classic brands shareholder value exceeding expe ng expectations our center proven located in success Locust Grove, strategic GA. Our second vision expansion powerful was portfolio a 21,300 square classic foot addition brands at ourshareholder va center located in Foley, AL featuring Ann Taylor, Skechers, Tommy Hilfiger and others. The majority of value exceeding expectations proven success strategic vision powerful portfolio classic brands sha stores in these two expansions opened during the third and fourth quarters of 2005 and will provide s shareholder value exceeding expectations proven success strategic vision powerful portfolio c incremental growth in FFO during olio classic brands shareholder value exceeding expectations proven success strategic vision p on powerful Our portfolio pipeline is classic being filled brands with several shareholder new exciting properties. value exceeding We met our minimum expectations internal 50% proven signed success str ss strategic pre-leasing vision powerful requirement portfolio during 2005 classic for our Charleston, brands SC shareholder and Wisconsin Dells, value WI projects. exceeding They are expectations pro proven success both located strategic in high traffic vision tourist powerful destinations portfolio and we anticipate classic they brands will be very shareholder successful centers value for us. exceeding exp ng expectations These two proven new Tanger success Outlet Centers strategic are under vision construction powerful and are portfolio expected to open classic in the brands fourth shareholder va value exceeding quarter of expectations 2006, contributing proven to our growth success in FFO during strategic the later vision part of 2006, powerful and into portfolio classic brands sha s shareholder value exceeding expectations proven success strategic vision powerful portfolio c Our future development pipeline also includes two previously announced sites currently in the predevelopment and leasing phase located near Pittsburgh, PA and Deer Park, NY. We these olio classic brands shareholder value exceeding expectations proven success strategic vision p on powerful portfolio classic brands shareholder value exceeding expectations proven success str projects to be delivered in late 2007 or early 2008, providing for growth in New ground up ss strategic vision powerful portfolio classic brands shareholder value exceeding expectations pro development is a phenomenal value creation opportunity for our company. Over the past 25 years we proven success have developed strategic the skill vision set to powerful manage the portfolio risk associated classic with this brands type of development, shareholder including value our exceeding exp ng expectations philosophical proven discipline success to not build strategic on speculation. vision powerful portfolio classic brands shareholder va value exceeding expectations proven success strategic vision powerful portfolio classic brands sha s shareholder Our solid value balance exceeding sheet allows expectations us to fund this development proven pipeline success and grow strategic accretively vision while we powerful portfolio c olio classic continue brands to explore shareholder other potential value development, exceeding acquisition expectations and disposition opportunities. proven success We will focus strategic vision p on powerful on portfolio the details classic of our business, brands and our shareholder existing core portfolio value of exceeding outlet centers, expectations while searching for proven success str ss strategic innovative vision powerful ways to generate portfolio additional classic revenue brands sales. We shareholder have and will continue value to exceeding invest additional expectations pro capital into the renovation of existing centers to provide a new and fresh look for our tenants and our proven success strategic vision powerful portfolio classic brands shareholder value exceeding exp customers. And we will continue to sell our non-core properties and use the capital to pay off debt or to ng expectations proven success strategic vision powerful portfolio classic brands shareholder va reinvest in more profitable properties. For 25 years, we have provided consumers convenient, attractive value exceeding shopping expectations centers where they proven buy direct success from the manufacturers strategic of vision leading designer powerful apparel, portfolio brand-name classic brands sha s shareholder footwear, value home exceeding products, electronics expectations and more. proven success strategic vision powerful portfolio c olio classic brands shareholder value exceeding expectations proven success strategic vision p on powerful At portfolio Tanger Outlet classic Centers, brands consumers shareholder find quality, selection value and exceeding great values on expectations branded merchandise proven and success str ss strategic enjoy vision excellent powerful customer portfolio service. We classic work hard brands every day to shareholder make our customers value shopping exceeding experience expectations a pro proven success more exciting strategic and memorable vision powerful one, while at portfolio the same time, classic adding brands incremental shareholder value to each shopping value exceeding exp ng expectations center. In proven the long-term, success creating more strategic value in vision our centers powerful will translate portfolio into more value classic to the brands company shareholder va and ultimately more value to you, our shareholders. value exceeding expectations proven success strategic vision powerful portfolio classic brands sha s shareholder value exceeding expectations proven success strategic vision powerful portfolio c As the leaders of your management team and the largest shareholders of your company, we are proud to olio classic work brands with such shareholder a great group of value professionals. exceeding Our team expectations has been very successful proven in increasing success the value strategic vision p on powerful of portfolio our portfolio classic and in turn brands the value shareholder of your company value during our exceeding first 25 years expectations of existence, the last proven 13 success str ss strategic years vision as a powerful public company portfolio traded on classic the New brands York Stock Exchange. shareholder We are value grateful to exceeding our dedicatedexpectations pro proven success Board of strategic Directors for vision their leadership powerful and oversight. portfolio They classic have offered brands gracious shareholder encouragement value and keptexceeding exp ng expectations us focused proven on the long-term. success We strategic remain committed vision to creating powerful long term portfolio shareholder classic value, brands have theshareholder va value exceeding passion expectations and energy to make proven it happen. success strategic vision powerful portfolio classic brands sha s shareholder value exceeding expectations proven success strategic vision powerful portfolio c Sincerely, olio classic brands shareholder value exceeding expectations proven success strategic vision p n powerful portfolio classic brands shareholder value exceeding expectations proven success str strategic vision powerful portfolio classic brands shareholder value exceeding expectations proven s oven success strategic vision powerful portfolio classic brands shareholder value exceeding expe Stanley K. Tanger ng expectations Founder, Chairman proven of success the Board strategic vision Steven B. powerful Tanger portfolio classic brands shareholder va value exceeding and Chief expectations Executive Officer proven success President strategic and Chief vision Operating powerful Officer portfolio classic brands sha s shareholder value exceeding expectations proven success strategic vision powerful portfolio c olio classic brands shareholder value exceeding expectations proven tanger outlets success annual report strategic 2005 vision 7 p on powerful portfolio classic brands shareholder value exceeding expectations proven success str

9 Park City, UT Rehoboth Beach, DE Corporate Headquarters GREENSBORO, NC Center ALABAMA, BOAZ ALABAMA, FOLEY CALIFORNIA, BARSTOW CONNECTICUT, WESTBROOK DELAWARE, REHOBOTH BEACH FLORIDA, FORT MYERS (SANIBEL) GEORGIA, COMMERCE I GEORGIA, COMMERCE II GEORGIA, LOCUST GROVE ILLINOIS, TUSCOLA IOWA, WILLIAMSBURG LOUISIANA, GONZALES MAINE, KITTERY I MAINE, KITTERY II MICHIGAN, HOWELL MICHIGAN, WEST BRANCH MINNESOTA, NORTH BRANCH MISSOURI, BRANSON NEW HAMPSHIRE, TILTON NEW YORK, RIVERHEAD NORTH CAROLINA, BLOWING ROCK NORTH CAROLINA, BURLINGTON NORTH CAROLINA, NAGS HEAD OREGON, LINCOLN CITY PENNSYLVANIA, LANCASTER SOUTH CAROLINA, HILTON HEAD SOUTH CAROLINA, MYRTLE BEACH SOUTH CAROLINA, MYRTLE BEACH TENNESSEE, PIGEON FORGE TENNESSEE, SEVIERVILLE TEXAS, SAN MARCOS TEXAS, TERRELL UTAH, PARK CITY TangerOutlets locations across America Location I-59 I-10 I-15 I-95 RTE. 1 I-75 I-85 I-85 I-75 I-57 I-80 I-10 RTE. 1 RTE. 1 I-96 I-75 I-35 HWY 76 I-93 I-495 HWY 321 I-85 HWY 158 HWY 101 RTE. 30 HWY 278 HWY 17 HWY 501 HWY 441 HWY 441 I-35 I-20 I-80 Year Opened or Acquired GLA in Square Feet Year End , , , , , , , , , , , ,499 59,694 24, , , , , , , ,332 64,288 82, , , , , ,417 94, , , , ,602 vision success value 8 tanger outlets annual report 2005

10 United States SECURITIES AND EXCHANGE COMMISSION Washington, D.C FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2005 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number TANGER FACTORY OUTLET CENTERS, INC. (Exact name of Registrant as specified in its charter) North Carolina (State or other jurisdiction of (I.R.S. Employer Identification No.) Incorporation or organization) 3200 Northline Avenue, Suite 360 Greensboro, NC (336) (Address of principal executive offices) (Registrant s telephone number) Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of exchange on which registered Common Shares, $.01 par value New York Stock Exchange 7.5% Class C Cumulative Preferred Shares, New York Stock Exchange Liquidation Preference $25 per share Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer (as defined in Rule 12b-2 of the Securities and Exchange Act of 1934). Large accelerated filer Accelerated filer Non-accelerated filer Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Act).Yes No The aggregate market value of voting shares held by non-affiliates of the Registrant was approximately $799,184,000 based on the closing price on the New York Stock Exchange for such stock on February 1, The number of Common Shares of the Registrant outstanding as of February 1, 2006 was 30,756,716. Documents Incorporated By Reference Part III incorporates certain information by reference from the Registrant s definitive proxy statement to be filed with respect to the Annual Meeting of Shareholders to be held May 12, 2006.

11 PART I Item 1. Business The Company Tanger Factory Outlet Centers, Inc. and subsidiaries is one of the largest owners and operators of factory outlet centers in the United States. We are a fully-integrated, self-administered and self-managed real estate investment trust, or REIT, that focuses exclusively on developing, acquiring, owning, operating and managing factory outlet shopping centers. As of December 31, 2005, we owned 31 centers, with a total gross leasable area, or GLA, of approximately 8.3 million square feet. These factory outlet centers were 97% occupied and contained over 1,800 stores, representing approximately 370 store brands. Also, we owned a 50% interest in one center with a GLA of approximately 402,000 square feet and managed for a fee one center with a GLA of approximately 64,000 square feet. Our factory outlet centers and other assets are held by, and all of our operations are conducted by, Tanger Properties Limited Partnership and subsidiaries. Accordingly, the descriptions of our business, employees and properties are also descriptions of the business, employees and properties of the Operating Partnership. Unless the context indicates otherwise, the term Company refers to Tanger Factory Outlet Centers, Inc. and subsidiaries and the term Operating Partnership refers to Tanger Properties Limited Partnership and subsidiaries. The terms we, our and us refer to the Company or the Company and the Operating Partnership together, as the text requires. We own the majority of the units of partnership interest issued by the Operating Partnership through our two wholly-owned subsidiaries, the Tanger GP Trust and the Tanger LP Trust. The Tanger GP Trust controls the Operating Partnership as its sole general partner. The Tanger LP Trust holds a limited partnership interest. The Tanger family, through its ownership of the Tanger Family Limited Partnership, or TFLP, holds the remaining units as a limited partner. Stanley K. Tanger, our Chairman of the Board and Chief Executive Officer, is the sole general partner of TFLP. As of December 31, 2005, our wholly-owned subsidiaries owned 15,374,358 units and TFLP owned the remaining 3,033,305 units. Each of TFLP s units is exchangeable for two of our common shares, subject to certain limitations to preserve our status as a REIT. As of February 1, 2006, our management beneficially owned approximately 19% of all outstanding common shares (assuming TFLP s units and the units held by our wholly-owned subsidiaries are exchanged for common shares but without giving effect to the exercise of any outstanding share and partnership unit options). Ownership of our common shares is restricted to preserve our status as a REIT for federal income tax purposes. Subject to certain exceptions, a person may not actually or constructively own more than 4% of our common shares or 9.8% of our 7.5% Class C Cumulative Preferred Shares, which we refer to as our Class C Preferred Shares. We also operate in a manner intended to enable us to preserve our status as a REIT, including, among other things, making distributions with respect to our outstanding common shares equal to at least 90% of our taxable income each year. We are a North Carolina corporation that was formed in March Our executive offices are currently located at 3200 Northline Avenue, Suite 360, Greensboro, North Carolina, and our telephone number is (336) Our website can be accessed at A copy of our 10-K s, 10-Q s, and 8- K s can be obtained, free of charge, on our website. 2

12 Recent Developments Acquisition of Joint Venture Partner Interest in COROC Holdings, LLC In November 2005 we completed the acquisition of the final two-thirds interest of the Charter Oak Partners' portfolio of nine factory outlet centers totaling approximately 3.3 million square feet in which we originally purchased a one-third interest in December We and an affiliate of Blackstone Real Estate Advisors, or Blackstone, originally acquired the portfolio through a joint venture in the form of a limited liability company, COROC Holdings, LLC, which we refer to as COROC. From December 2003 to November 2005, COROC was consolidated for financial reporting purposes under the provisions of FASB Interpretation No. 46 (Revised 2003): Consolidation of Variable Interest Entities: An Interpretation of ARB No. 51, or FIN 46R. The purchase price for the final two-thirds interest of COROC was $286.0 million, including closing and acquisition costs of $3.5 million. During 2005, we raised approximately $381.3 million in debt and equity capital, the proceeds of which were used to prepay certain mortgage debt, and an associated prepayment premium, as well as to fund the acquisition of the remaining two-thirds interest in the Charter Oak portfolio, which we also refer to as the COROC acquisition. 3,000,000 Common Share Offering In September 2005, we completed the issuance of 3.0 million of our common shares at a price of $27.09 per share, receiving net proceeds of approximately $81.1 million. The proceeds were used to temporarily pay down amounts outstanding on our unsecured lines of credit. Mortgage Repayments In October 2005, we repaid in full our mortgage debt outstanding with John Hancock Mutual Life Insurance Company totaling approximately $77.4 million, with interest rates ranging from 7.875% to 7.98% and an original maturity date of April 1, As a result of the early repayment, we recognized a charge for the early extinguishment of the John Hancock mortgage debt of approximately $9.9 million. The charge, which is included in interest expense, was recorded in the fourth quarter of 2005 and consisted of a prepayment premium of approximately $9.4 million and the write-off of deferred loan fees totaling approximately $500,000. Debt Rating Upgrade In October 2005, following the early repayment of the John Hancock mortgage debt, Standard & Poor s Ratings Service announced an upgrade of our senior unsecured debt rating to an investment grade rating of BBB-, citing our progress in unencumbering a number of our properties resulting in over half of our fully consolidated net operating income being generated by unencumbered properties. Moody s Investors Services had previously announced in June 2005 their upgrade of our senior unsecured debt rating to an investment grade rating of Baa3. $250 Million Senior Unsecured Note Offering In November 2005, we closed on $250 million of 6.15% senior unsecured notes, receiving net proceeds of approximately $247.2 million. These ten year notes were issued by the Operating Partnership and were priced at % of par value. The proceeds were used to fund a portion of the COROC acquisition described above. 2,200,000 Preferred Share Offering Also in November 2005, we completed the issuance of 2,200,000 Class C Preferred Shares, receiving net proceeds of approximately $53.0 million. The proceeds were used to fund a portion of the COROC acquisition described above. 3

13 Locust Grove, Georgia Center Expansion During September 2005, we completed the construction of a 46,400 square foot expansion at our center located in Locust Grove, Georgia. Tenants within the expansion include Polo/Ralph Lauren, Sketchers, Children's Place and others. The Locust Grove center now totals approximately 294,000 square feet. Foley, Alabama Center Expansion During December 2005, we completed the construction of a 21,300 square foot expansion at our center located in Foley, Alabama. Tenants within the expansion include Ann Taylor, Skechers, Tommy Hilfiger and others. The Foley center now totals approximately 557,000 square feet. Development Projects: Charleston, South Carolina; Wisconsin Dells, Wisconsin; Pittsburgh, Pennsylvania and Deer Park (Long Island), New York In the fourth quarter of 2005, we met our internal minimum pre-leasing requirement of 50% and closed on the acquisition of the land for a center located near Charleston, South Carolina. Construction is currently taking place and we expect the center to be approximately 350,000 square feet upon total build out with a scheduled opening date in late In March 2005, we established Tanger Wisconsin Dells, LLC, which we refer to as Wisconsin Dells, a joint venture in which we have a 50% ownership interest, to construct and operate a Tanger Outlet center in Wisconsin Dells, Wisconsin. Construction of the outlet center, which is currently expected to be approximately 265,000 square feet upon total build out, began during the fourth quarter of 2005 upon meeting our internal minimum pre-leasing requirement of 50% with a scheduled opening in the fourth quarter of We continue our pre-development and leasing of two previously announced sites located in Pittsburgh, Pennsylvania and Deer Park, New York with expected deliveries in late The Factory Outlet Concept Factory outlets are manufacturer-operated retail stores that sell primarily first quality, branded products at significant discounts from regular retail prices charged by department stores and specialty stores. Factory outlet centers offer numerous advantages to both consumers and manufacturers. Manufacturers selling in factory outlet stores are often able to charge customers lower prices for brand name and designer products by eliminating the third party retailer. Factory outlet centers also typically have lower operating costs than other retailing formats, which enhance the manufacturer s profit potential. Factory outlet centers enable manufacturers to optimize the size of production runs while continuing to maintain control of their distribution channels. In addition, factory outlet centers benefit manufacturers by permitting them to sell out-of-season, overstocked or discontinued merchandise without alienating department stores or hampering the manufacturer s brand name, as is often the case when merchandise is distributed via discount chains. We believe that factory outlet centers continue to present attractive opportunities for capital investment, particularly with respect to strategic new developments, re-merchandising plans and expansions of existing centers. We believe that under present conditions such development or expansion costs, coupled with current market lease rates, permit attractive investment returns. We further believe, based upon our contacts with present and prospective tenants, that many companies, including prospective new entrants into the factory outlet business, desire to open a number of new factory outlet stores in the next several years, particularly in markets where there are successful factory outlet centers in which such companies do not have a significant presence or where there are few factory outlet centers. 4