United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 20172020
OR
o☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________


Commission file numbernumber: 1-11986 (Tanger Factory Outlet Centers, Inc.)
Commission file numbernumber: 333-3526-01 (Tanger Properties Limited Partnership)


TANGER FACTORY OUTLET CENTERS, INC.
TANGER PROPERTIES LIMITED PARTNERSHIP
(Exact name of Registrantregistrant as specified in its charter)
North Carolina (Tanger(Tanger Factory Outlet Centers, Inc.)56-1815473
North Carolina (Tanger(Tanger Properties Limited Partnership)56-1822494
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
3200 Northline Avenue, Suite 360, Greensboro, NC 27408
(Address of principal executive offices) (Zip Code)
(336) 292-3010
(Registrant’s telephone number, including area code)

N/A
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Tanger Factory Outlet Centers, Inc.:
3200 Northline Avenue, Suite 360, Greensboro, NC 27408Title of each classTrading Symbol(s)Name of each exchange on which registered
(Address of principal executive offices)
Common Shares,
$0.01 par value		SKT
(336) 292-3010
(Registrant's telephone number, including area code)New York Stock Exchange
Tanger Properties Limited Partnership:
None

Indicate by check mark whether the Registrantregistrant (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 Registrantregistrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Tanger Factory Outlet Centers, Inc.
Yesx
☒Noo☐
Tanger Properties Limited Partnership
Yesx
☒Noo☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Tanger Factory Outlet Centers, Inc.
Yesx
☒Noo☐
Tanger Properties Limited Partnership
Yesx
☒Noo☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”,filer,” “accelerated filer",filer,” “smaller reporting company” and "emerging“emerging growth company"company” in Rule 12b-2 of the Exchange Act.
Tanger Factory Outlet Centers, Inc.
Large Accelerated Filer☒Accelerated Filer☐
Non-accelerated Filer☐Smaller Reporting Company☐
Tanger Factory Outlet Centers, Inc.
Large accelerated filer x
Emerging Growth Company
Accelerated filer o
Non-accelerated filer o
Smaller reporting company o
(Do not check if a smaller reporting company)
Emerging growth company o
☐
Tanger Properties Limited Partnership
Large Accelerated Filer☐Accelerated Filer☐
Non-accelerated Filer☒Smaller Reporting Company☐
Tanger Properties Limited Partnership
Large accelerated filer o
Emerging Growth Company
Accelerated filer o
Non-accelerated filer x
Smaller reporting company o
(Do not check if a smaller reporting company)
Emerging growth company o
☐



If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Tanger Factory Outlet Centers, Inc.o☐
Tanger Properties Limited Partnershipo☐

Indicate by check mark whether the registrant is a shell company (as defined byin Rule 12b-2 of the Exchange Act).
Tanger Factory Outlet Centers, Inc.
Yeso
☐Nox☒
Tanger Properties Limited Partnership
Yeso
☐Nox☒



As of November 3, 2017,2, 2020, there were 94,528,18893,453,271 common shares of Tanger Factory Outlet Centers, Inc. outstanding, $.01 par value.




EXPLANATORY NOTE
This report combines the unaudited quarterly reports on Form 10-Q for the quarter ended September 30, 20172020 of Tanger Factory Outlet Centers, Inc. and Tanger Properties Limited Partnership. Unless the context indicates otherwise, the term "Company"“Company” refers to Tanger Factory Outlet Centers, Inc. and subsidiaries and the term "Operating Partnership"“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.


Tanger Factory Outlet Centers, Inc. and subsidiaries is one of the largest owners and operators of outlet centers in the United States and Canada. The Company is a fully-integrated, self-administered and self-managed real estate investment trust ("REIT"(“REIT”) which, through its controlling interest in the Operating Partnership, focuses exclusively on developing, acquiring, owning, operating and managing outlet shopping centers. The outlet centers and other assets are held by, and all of the operations are conducted by, the Operating Partnership and its subsidiaries. Accordingly, the descriptions of the business, employees and properties of the Company are also descriptions of the business, employees and properties of the Operating Partnership. As the Operating Partnership is the issuer of our registered debt securities, we are required to present a separate set of financial statements for this entity.


The Company owns the majority of the units of partnership interest issued by the Operating Partnership through its two wholly-owned subsidiaries, Tanger GP Trust and Tanger LP Trust. Tanger GP Trust iscontrols the Operating Partnership as its sole general partner of the Operating Partnership.partner. Tanger LP Trust holds a limited partnership interest. As of September 30, 2017,2020, the Company, through its ownership of Tanger GP Trust and Tanger LP Trust, owned 94,528,18893,453,271 units of the Operating Partnership and other limited partners (the "Non-Company LPs"“Non-Company LPs”) collectively owned 5,027,7814,911,173 Class A common limited partnership units. Each Class A common limited partnership unit held by the Non-Company LPs is exchangeable for one of the Company'sCompany’s common shares, subject to certain limitations to preserve the Company'sCompany’s status as a REIT. Class B common limited partnership units, which are held by Tanger LP Trust, are not exchangeable for common shares of the Company.


Management operates the Company and the Operating Partnership as one enterprise. The management of the Company consists of the same members as the management of the Operating Partnership. These individuals are officers of the Company and employees of the Operating Partnership. The individuals that comprise the Company'sCompany’s Board of Directors are also the same individuals that make up Tanger GP Trust'sTrust’s Board of Trustees.


We believe combining the quarterly reports on Form 10-Q of the Company and the Operating Partnership into this single report results in the following benefits:


•enhancing investors'investors’ understanding of the Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;


•eliminating duplicative disclosure and providing a more streamlined and readable presentation since a substantial portion of the disclosure applies to both the Company and the Operating Partnership; and


•creating time and cost efficiencies through the preparation of one combined report instead of two separate reports.


There are only a few differences between the Company and the Operating Partnership, which are reflected in the disclosure in this report. We believe it is important, however, to understand these differences between the Company and the Operating Partnership in the context of how the Company and the Operating Partnership operate as an interrelated consolidated company.


As stated above, the Company is a REIT, whose only material asset is its ownership of partnership interests of the Operating Partnership through its wholly-owned subsidiaries, the Tanger GP Trust and Tanger LP Trust. As a result, the Company does not conduct business itself, other than issuing public equity from time to time and incurring expenses required to operate as a public company. However, all operating expenses incurred by the Company are reimbursed by the Operating Partnership, thus the only material item on the Company'sCompany’s income statement is its equity in the earnings of the Operating Partnership. Therefore, the assets and liabilities and the revenues and expenses of the Company and the Operating Partnership are the same on their respective financial statements, except for immaterial differences related to cash, other assets and accrued liabilities that arise from public company expenses paid by the Company. The Company itself does not hold any indebtedness but does guarantee certain debt of the Operating Partnership, as disclosed in this report.

2




The Operating Partnership holds all of the outlet centers and other assets, including the ownership interests in consolidated and unconsolidated joint ventures. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity. Except for net proceeds from public equity issuances by the Company, which are contributed to the Operating Partnership in exchange for partnership units, the Operating Partnership generates the capital required through its operations, its incurrence of indebtedness or through the issuance of partnership units.


Noncontrolling interests, shareholder'sshareholders’ equity and partner'spartners’ capital are the main areas of difference between the consolidated financial statements of the Company and those of the Operating Partnership. The limited partnership interests in the Operating Partnership held by the Non-Company LPs are accounted for as partner'spartners’ capital in the Operating Partnership'sPartnership’s financial statements and as noncontrolling interests in the Company'sCompany’s financial statements.


To help investors understand the significant differences between the Company and the Operating Partnership, this report presents the following separate sections, as applicable, for each of the Company and the Operating Partnership:


•Consolidated financial statements;


•The following notes to the consolidated financial statements:


•Debt of the Company and the Operating Partnership;


Shareholders'•Shareholders’ Equity, if applicable, and Partners'Partners’ Equity;


•Earnings Per Share and Earnings Per Unit;


•Accumulated Other Comprehensive Income of the Company and the Operating Partnership;


•Liquidity and Capital Resources in the Management'sManagement’s Discussion and Analysis of Financial Condition and Results of Operations.


This report also includes separate Item 4. Controls and Procedures sections and separate Exhibit 31 and 32 certifications for each of the Company and the Operating Partnership in order to establish that the Chief Executive Officer and the Chief Financial Officer of each entity have made the requisite certifications and that the Company and Operating Partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934 and 18 U.S.C. §1350.


The separate sections in this report for the Company and the Operating Partnership specifically refer to the Company and the Operating Partnership. In the sections that combine disclosure of the Company and the Operating Partnership, this report refers to actions or holdings as being actions or holdings of the Company. Although the Operating Partnership is generally the entity that enters into contracts and joint ventures and holds assets and debt, reference to the Company is appropriate because the business is one enterprise and the Company operates the business through the Operating Partnership.


The Company currently consolidates the Operating Partnership because it has (1) the power to direct the activities of the Operating Partnership that most significantly impact the Operating Partnership’s economic performance and (2) the obligation to absorb losses and the right to receive the residual returns of the Operating Partnership that could be potentially significant. The separate discussions of the Company and the Operating Partnership in this report should be read in conjunction with each other to understand the results of the Company on a consolidated basis and how management operates the Company.

3


TANGER FACTORY OUTLET CENTERS, INC. AND TANGER PROPERTIES LIMITED PARTNERSHIP
Index
Page Number
Part I. Financial Information
Item 1.
FINANCIAL STATEMENTS OF TANGER FACTORY OUTLET CENTERS, INC. (Unaudited)
Consolidated Balance Sheets - as of September 30, 20172020 and December 31, 20162019
56
Consolidated Statements of Operations - for the three and nine months ended September 30, 20172020 and 20162019
67
Consolidated Statements of Comprehensive Income - for the three and nine months ended September 30, 20172020 and 20162019
78
Consolidated Statements of Shareholders'Shareholders’ Equity - for the three and nine months ended September 30, 20172020 and 20162019
89
Consolidated Statements of Cash Flows - for the nine months ended September 30, 20172020 and 20162019
1011
FINANCIAL STATEMENTS OF TANGER PROPERTIES LIMITED PARTNERSHIP (Unaudited)
Consolidated Balance Sheets - as of September 30, 20172020 and December 31, 20162019
1113
Consolidated Statements of Operations - for the three and nine months ended September 30, 20172020 and 20162019
1214
Consolidated Statements of Comprehensive Income - for the three and nine months ended September 30, 20172020 and 20162019
1315
Consolidated Statements of Equity - for the three and nine months ended September 30, 20172020 and 20162019
1416
Consolidated Statements of Cash Flows - for the nine months ended September 30, 20172020 and 20162019
1518
Condensed Notes to Consolidated Financial Statements of Tanger Factory Outlet Centers, Inc. and Tanger Properties Limited Partnership
1619
Item 2. Management'sManagement’s Discussion and Analysis of Financial Condition and Results of Operations
3744
Item 3. Quantitative and Qualitative Disclosures about Market Risk
6073
Item 4. Controls and Procedures (Tanger Factory Outlet Centers, Inc. and Tanger Properties Limited Partnership)
6174
Part II. Other Information
Item 1. Legal Proceedings
6275
Item 1A. Risk Factors
6275
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds6. Exhibits
6278
Item 4. Mine Safety DisclosureSignatures
6279
Item 6. Exhibits
63
Signatures
64

4


PART I. - FINANCIAL INFORMATION


Item 1 - Financial Statements of Tanger Factory Outlet Centers, Inc.


TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data, unaudited)
 September 30, 2017 December 31, 2016September 30, 2020December 31, 2019
Assets  
  
Assets  
Rental property:  
  
Rental property:  
Land $268,821
 $272,153
Land$266,014 $266,537 
Buildings, improvements and fixtures 2,694,549
 2,647,477
Buildings, improvements and fixtures2,545,111 2,630,357 
Construction in progress 87,762
 46,277
 3,051,132
 2,965,907
 2,811,125 2,896,894 
Accumulated depreciation (875,121) (814,583)Accumulated depreciation(1,034,670)(1,009,951)
Total rental property, net 2,176,011
 2,151,324
Total rental property, net1,776,455 1,886,943 
Cash and cash equivalents 8,773
 12,222
Cash and cash equivalents19,793 16,672 
Investments in unconsolidated joint ventures 125,819
 128,104
Investments in unconsolidated joint ventures92,537 94,691 
Deferred lease costs and other intangibles, net 135,768
 151,579
Deferred lease costs and other intangibles, net88,183 96,712 
Operating lease right-of-use assetsOperating lease right-of-use assets83,210 86,575 
Prepaids and other assets 95,075
 82,985
Prepaids and other assets125,297 103,618 
Total assets $2,541,446
 $2,526,214
Total assets$2,185,475 $2,285,211 
Liabilities and Equity    Liabilities and Equity  
Liabilities  
  
Liabilities  
Debt:  
  
Debt:  
Senior, unsecured notes, net $1,134,181
 $1,135,309
Senior, unsecured notes, net$1,140,080 $1,138,603 
Unsecured term loan, net 323,011
 322,410
Unsecured term loan, net347,213 347,367 
Mortgages payable, net 170,776
 172,145
Mortgages payable, net80,924 83,803 
Unsecured lines of credit, net 146,013
 58,002
Unsecured lines of credit, net0 0 
Total debt 1,773,981
 1,687,866
Total debt1,568,217 1,569,773 
Accounts payable and accrued expenses 84,091
 78,143
Accounts payable and accrued expenses85,712 79,562 
Operating lease liabilitiesOperating lease liabilities90,566 91,237 
Other liabilities 74,339
 54,764
Other liabilities91,495 88,530 
Total liabilities 1,932,411
 1,820,773
Total liabilities1,835,990 1,829,102 
Commitments and contingencies 

 

Commitments and contingencies
Equity  
  
Equity  
Tanger Factory Outlet Centers, Inc.:  
  
Tanger Factory Outlet Centers, Inc.:  
Common shares, $.01 par value, 300,000,000 shares authorized, 94,528,188 and 96,095,891 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively 945
 961
Common shares, $0.01 par value, 300,000,000 shares authorized, 93,453,271 and 92,892,260 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectivelyCommon shares, $0.01 par value, 300,000,000 shares authorized, 93,453,271 and 92,892,260 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively935 929 
Paid in capital 781,020
 820,251
Paid in capital783,815 775,035 
Accumulated distributions in excess of net income  (183,975) (122,701)Accumulated distributions in excess of net income (420,367)(317,263)
Accumulated other comprehensive loss (19,713) (28,295)Accumulated other comprehensive loss(32,347)(25,495)
Equity attributable to Tanger Factory Outlet Centers, Inc. 578,277
 670,216
Equity attributable to Tanger Factory Outlet Centers, Inc.332,036 433,206 
Equity attributable to noncontrolling interests:    Equity attributable to noncontrolling interests:
Noncontrolling interests in Operating Partnership 30,758
 35,066
Noncontrolling interests in Operating Partnership17,449 22,903 
Noncontrolling interests in other consolidated partnerships —
 159
Noncontrolling interests in other consolidated partnerships0 0 
Total equity 609,035
 705,441
Total equity349,485 456,109 
Total liabilities and equity $2,541,446
 $2,526,214
Total liabilities and equity$2,185,475 $2,285,211 


The accompanying notes are an integral part of these consolidated financial statements.

5


TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share data, unaudited)
 Three months ended September 30, Nine months ended September 30,Three months ended September 30,Nine months ended September 30,
 2017 2016 2017 2016 2020201920202019
Revenues:      
  Revenues:  
Base rentals $80,349
 $79,569
 $241,467
 $227,195
Percentage rentals 3,138
 2,995
 6,798
 7,471
Expense reimbursements 34,180
 33,125
 104,801
 97,121
Rental revenuesRental revenues$100,251 $115,050 $271,082 $347,389 
Management, leasing and other services 588
 806
 1,776
 3,259
Management, leasing and other services1,194 1,356 3,362 3,943 
Other income 2,510
 2,642
 6,905
 6,229
Other revenuesOther revenues1,768 2,588 4,392 6,524 
Total revenues 120,765
 119,137
 361,747
 341,275
Total revenues103,213 118,994 278,836 357,856 
Expenses:   

    
Expenses: 
Property operating 37,571
 37,442
 115,074
 110,328
Property operating35,206 39,149 101,991 118,252 
General and administrative 10,934
 12,128
 33,846
 35,368
General and administrative11,181 12,292 35,331 40,910 
Acquisition costs —
 487
 —
 487
Abandoned pre-development costs (99) —
 528
 —
Impairment chargeImpairment charge0 0 45,675 0 
Depreciation and amortization 30,976
 29,205
 95,175
 82,078
Depreciation and amortization29,903 30,103 87,966 93,009 
Total expenses 79,382
 79,262
 244,623
 228,261
Total expenses76,290 81,544 270,963 252,171 
Operating income 41,383
 39,875

117,124

113,014
Other income (expense):        Other income (expense):
Interest expense (16,489) (15,516) (49,496) (44,200)Interest expense(15,647)(15,197)(47,786)(46,638)
Loss on early extinguishment of debt (35,626) —
 (35,626) —
Gain on sale of assets —
 1,418
 6,943
 6,305
Gain on sale of assets2,324 0 2,324 43,422 
Gain on previously held interest in acquired joint venture —
 46,258
 —
 95,516
Other non-operating income (expense) 591
 24
 683
 378
Income (loss) before equity in earnings (losses) of unconsolidated joint ventures (10,141) 72,059
 39,628
 171,013
Other income (expense)Other income (expense)161 227 789 (2,966)
Total other income (expense)Total other income (expense)(13,162)(14,970)(44,673)(6,182)
Income (loss) before equity in earnings of unconsolidated joint venturesIncome (loss) before equity in earnings of unconsolidated joint ventures13,761 22,480 (36,800)99,503 
Equity in earnings (losses) of unconsolidated joint ventures (5,893) 715
 (1,201) 7,680
Equity in earnings (losses) of unconsolidated joint ventures(42)2,329 (1,490)5,604 
Net income (loss) (16,034) 72,774

38,427

178,693
Net income (loss)13,719 24,809 (38,290)105,107 
Noncontrolling interests in Operating Partnership 815
 (3,668) (1,920) (9,009)Noncontrolling interests in Operating Partnership(690)(1,263)1,939 (5,308)
Noncontrolling interests in other consolidated partnerships —
 (2) —
 (13)Noncontrolling interests in other consolidated partnerships0 0 (190)(195)
Net income (loss) attributable to Tanger Factory Outlet Centers, Inc. $(15,219) $69,104

$36,507

$169,671
Net income (loss) attributable to Tanger Factory Outlet Centers, Inc.$13,029 $23,546 $(36,541)$99,604 
        
Basic earnings per common share:        Basic earnings per common share:
Net income (loss) $(0.17) $0.72
 $0.38
 $1.77
Net income (loss)$0.14 $0.25 $(0.40)$1.06 
Diluted earnings per common share:        Diluted earnings per common share:
Net income (loss) $(0.17) $0.72
 $0.38
 $1.76
Net income (loss)$0.14 $0.25 $(0.40)$1.06 
        
Dividends declared per common share $0.3425
 $0.3250
 $1.01
 $0.9350
The accompanying notes are an integral part of these consolidated financial statements.

6


TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands, unaudited)
 Three months ended September 30, Nine months ended September 30,Three months ended September 30,Nine months ended September 30,
 2017 2016 2017 2016 2020201920202019
Net income (loss) $(16,034) $72,774
 $38,427
 $178,693
Net income (loss)$13,719 $24,809 $(38,290)$105,107 
Other comprehensive income:        
Other comprehensive income (loss):Other comprehensive income (loss):
Foreign currency translation adjustments 4,737
 (1,731) 8,821
 6,970
Foreign currency translation adjustments1,870 (1,051)(2,506)6,341 
Change in fair value of cash flow hedges 39
 2,228
 217
 (1,601)Change in fair value of cash flow hedges1,463 (1,011)(4,711)(6,576)
Other comprehensive income 4,776
 497
 9,038
 5,369
Other comprehensive income (loss)Other comprehensive income (loss)3,333 (2,062)(7,217)(235)
Comprehensive income (loss) (11,258) 73,271
 47,465
 184,062
Comprehensive income (loss)17,052 22,747 (45,507)104,872 
Comprehensive (income) loss attributable to noncontrolling interests 573
 (3,695) (2,376) (9,294)Comprehensive (income) loss attributable to noncontrolling interests(857)(1,158)2,114 (5,489)
Comprehensive income (loss) attributable to Tanger Factory Outlet Centers, Inc. $(10,685) $69,576
 $45,089
 $174,768
Comprehensive income (loss) attributable to Tanger Factory Outlet Centers, Inc.$16,195 $21,589 $(43,393)$99,383 
The accompanying notes are an integral part of these consolidated financial statements.




7

TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS'SHAREHOLDERS’ EQUITY
(In thousands, except share and per share data, unaudited)

Common sharesPaid in capitalAccumulated distributions in excess of earningsAccumulated other comprehensive lossEquity attributable to Tanger Factory Outlet Centers, Inc.Noncontrolling interests in Operating PartnershipNoncontrolling
interests in
other consolidated partnerships		Total
equity
Balance,
June 30, 2019		$935 $778,026 $(262,764)$(25,415)$490,782 $26,026 $0 $516,808 
Net income— — 23,546 — 23,546 1,263 — 24,809 
Other comprehensive loss— — — (1,957)(1,957)(105)— (2,062)
Compensation under Incentive Award Plan— 3,669 — — 3,669 — — 3,669 
Repurchase of 650,929 common shares, including transaction costs(6)(9,994)— — (10,000)— — (10,000)
Contributions from noncontrolling interests— — — — — — 11 11 
Adjustment for noncontrolling interests in Operating Partnership— 167 — — 167 (167)— — 
Common dividends
($0.355 per share)
— — (33,263)— (33,263)— — (33,263)
Distributions to noncontrolling interests— — — — — (1,761)(11)(1,772)
Balance, September 30, 2019$929 $771,868 $(272,481)$(27,372)$472,944 $25,256 $0 $498,200 
Common sharesPaid in capitalAccumulated distributions in excess of earningsAccumulated other comprehensive lossEquity attributable to Tanger Factory Outlet Centers, Inc.Noncontrolling interests in Operating PartnershipNoncontrolling
interests in
other consolidated partnerships		Total
equity
Balance,
December 31, 2018		$939 $778,845 $(272,454)$(27,151)$480,179 $25,356 $0 $505,535 
Net income— — 99,604 — 99,604 5,308 195 105,107 
Other comprehensive loss— — — (221)(221)(14)— (235)
Compensation under Incentive Award Plan— 14,657 — — 14,657 — — 14,657 
Grant of 242,167 restricted common share awards, net of forfeitures3 (3)— — — — — — 
Repurchase of 1,209,328 common shares, including transaction costs(12)(19,988)— — (20,000)— — (20,000)
Withholding of 81,284 common shares for employee income taxes(1)(1,780)— — (1,781)— — (1,781)
Contributions from noncontrolling interests— — — — — — 47 47 
Adjustment for noncontrolling interests in Operating Partnership— 137 — — 137 (137)— — 
Common dividends
($1.060 per share)
— — (99,631)— (99,631)— — (99,631)
Distributions to noncontrolling interests— — — — — (5,257)(242)(5,499)
Balance, September 30, 2019$929 $771,868 $(272,481)$(27,372)$472,944 $25,256 $0 $498,200 

  Common sharesPaid in capitalAccumulated distributions in excess of earningsAccumulated other comprehensive lossEquity attributable to Tanger Factory Outlet Centers, Inc.Noncontrolling interests in Operating Partnership
Noncontrolling
interests in
other consolidated partnerships
Total
 equity
Balance,
December 31, 2015
 $959
$806,379
$(195,486)$(36,715)$575,137
$30,309
$586
$606,032
Net income —
—
169,671
—
169,671
9,009
13
178,693
Other comprehensive income —
—
—
5,097
5,097
272
—
5,369
Compensation under Incentive Award Plan —
12,556
—
—
12,556
—
—
12,556
Issuance of 57,700 common shares upon exercise of options —
1,693
—
—
1,693
—
—
1,693
Grant of 173,124 restricted common share awards, net of forfeitures 2
(2)—
—
—
—
—
—
Issuance of 24,040 deferred shares —
—
—
—
—
—
—
—
Withholding of 66,427 common shares for employee income taxes —
(2,164)—
—
(2,164)—
—
(2,164)
Contributions from noncontrolling interests —
—
—
—
—
—
35
35
Adjustment for noncontrolling interests in Operating Partnership —
(385)—
—
(385)385
—
—
Adjustment for noncontrolling interests in other consolidated partnerships —
4
—
—
4
—
(4)—
Acquisition of noncontrolling interest in other consolidated partnership —
(1,617)—
—
(1,617)—
(325)(1,942)
Common dividends ($.935 per share) —
—
(89,750)—
(89,750)—
—
(89,750)
Distributions to noncontrolling interests —
—
—
—
—
(4,725)(145)(4,870)
Balance,
September 30, 2016
 $961
$816,464
$(115,565)$(31,618)$670,242
$35,250
$160
$705,652
          
The accompanying notes are an integral part of these consolidated financial statements.
          
  










  







          
          
          




TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands, except share and per share data, unaudited)
  Common sharesPaid in capitalAccumulated distributions in excess of earningsAccumulated other comprehensive lossEquity attributable to Tanger Factory Outlet Centers, Inc.Noncontrolling interests in Operating Partnership
Noncontrolling
interests in
other consolidated partnerships
Total
 equity
Balance, December 31, 2016 $961
$820,251
$(122,701)$(28,295)$670,216
$35,066
$159
$705,441
Net income —
—
36,507
—
36,507
1,920
—
38,427
Other comprehensive income —
—
—
8,582
8,582
456
—
9,038
Compensation under Incentive Award Plan —
10,891
—
—
10,891
—
—
10,891
Issuance of 1,800 common shares upon exercise of options —
54
—
—
54
—
—
54
Grant of 411,968 restricted common share awards, net of forfeitures 4
(4)—
—
—
—
—
—
Repurchase of 1,911,585 common shares, including transaction costs

 (19)(49,343)—
—
(49,362)—
—
(49,362)
Withholding of
69,886 common shares for employee income taxes		 (1)(2,435)—
—
(2,436)—
—
(2,436)
Adjustment for noncontrolling interests in Operating Partnership —
1,606
—
—
1,606
(1,606)—
—
Acquisition of noncontrolling interest in other consolidated partnership —
—
—
—
—
—
(159)(159)
Common dividends ($1.01 per share) —
—
(97,781)—
(97,781)—
—
(97,781)
Distributions to noncontrolling interests —
—
—
—
—
(5,078)—
(5,078)
Balance,
September 30, 2017
 $945
$781,020
$(183,975)$(19,713)$578,277
$30,758
$—
$609,035


The accompanying notes are an integral part of these consolidated financial statements.



8



TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In thousands, except share and per share data, unaudited)
Common sharesPaid in capitalAccumulated distributions in excess of earningsAccumulated other comprehensive lossEquity attributable to Tanger Factory Outlet Centers, Inc.Noncontrolling interests in Operating PartnershipNoncontrolling
interests in
other consolidated partnerships		Total
equity
Balance,
June 30, 2020		$935 $781,485 $(433,396)$(35,513)$313,511 $16,472 $0 $329,983 
Net income— — 13,029 — 13,029 690 — 13,719 
Other comprehensive income— — — 3,166 3,166 167 — 3,333 
Compensation under Incentive Award Plan— 2,450 — — 2,450 — — 2,450 
Forfeitures of 18,996 restricted common share awards— — — — — — — — 
Adjustment for noncontrolling interests in Operating Partnership— (120)— — (120)120 — — 
Balance,
September 30, 2020
$935 $783,815 $(420,367)$(32,347)$332,036 $17,449 $0 $349,485 
Common sharesPaid in capitalAccumulated distributions in excess of earningsAccumulated other comprehensive lossEquity attributable to Tanger Factory Outlet Centers, Inc.Noncontrolling interests in Operating PartnershipNoncontrolling
interests in
other consolidated partnerships		Total
equity
Balance,
December 31, 2019		$929 $775,035 $(317,263)$(25,495)$433,206 $22,903 $0 $456,109 
Net income (loss)— — (36,541)— (36,541)(1,939)190 (38,290)
Other comprehensive loss— — — (6,852)(6,852)(365)— (7,217)
Compensation under Incentive Award Plan— 9,871 — — 9,871 — — 9,871 
Grant of 611,350 restricted common share awards, net of forfeitures6 (6)— — — — — — 
Issuance of 6,258 deferred shares— — — — — — — — 
Withholding of 56,597 common shares for employee income taxes— (736)— — (736)— — (736)
Contributions from noncontrolling interests— — — — — — 72 72 
Adjustment for noncontrolling interests in Operating Partnership— (349)— — (349)349 — — 
Common dividends
($0.7125 per share)
— — (66,563)— (66,563)— — (66,563)
Distributions to noncontrolling interests— — — — — (3,499)(262)(3,761)
Balance,
September 30, 2020
$935 $783,815 $(420,367)$(32,347)$332,036 $17,449 $0 $349,485 


The accompanying notes are an integral part of these consolidated financial statements.
9

TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
 Nine months ended September 30,Nine months ended September 30,
 2017 2016 20202019
OPERATING ACTIVITIES    
OPERATING ACTIVITIES  
Net income $38,427
 $178,693
Net income (loss)Net income (loss)$(38,290)$105,107 
Adjustments to reconcile net income to net cash provided by operating activities:    Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 95,175
 82,078
Depreciation and amortization87,966 93,009 
Impairment chargeImpairment charge45,675 0 
Amortization of deferred financing costs 2,640
 2,350
Amortization of deferred financing costs2,586 2,246 
Gain on sale of assets (6,943) (6,305)Gain on sale of assets(2,324)(43,422)
Gain on previously held interest in acquired joint venture —
 (95,516)
Loss on early extinguishment of debt 35,626
 —
Equity in (earnings) losses of unconsolidated joint ventures 1,201
 (7,680)Equity in (earnings) losses of unconsolidated joint ventures1,490 (5,604)
Equity-based compensation expense 10,114
 11,815
Equity-based compensation expense9,566 14,371 
Amortization of debt (premiums) and discounts, net 363
 1,160
Amortization of debt (premiums) and discounts, net359 333 
Amortization (accretion) of market rent rate adjustments, net 2,107
 2,087
Amortization (accretion) of market rent rate adjustments, net2,560 1,067 
Straight-line rent adjustments (4,749) (5,092)
Straight-line rent adjustments including write offs due to tenant bankruptcies and uncollectible accountsStraight-line rent adjustments including write offs due to tenant bankruptcies and uncollectible accounts2,418 (6,938)
Distributions of cumulative earnings from unconsolidated joint ventures 8,128
 10,571
Distributions of cumulative earnings from unconsolidated joint ventures2,309 5,305 
Uncollectible rental revenue allowanceUncollectible rental revenue allowance26,573 965 
Other non-cashOther non-cash0 3,638 
Changes in other assets and liabilities:    Changes in other assets and liabilities:
Other assets (1,131) 1,093
Other assets(49,822)(1,303)
Accounts payable and accrued expenses 653
 2,512
Accounts payable and accrued expenses895 (9,805)
Net cash provided by operating activities 181,611
 177,766
Net cash provided by operating activities91,961 158,969 
INVESTING ACTIVITIES    INVESTING ACTIVITIES
Additions to rental property (132,612) (112,213)Additions to rental property(23,072)(35,208)
Acquisitions of interests in unconsolidated joint ventures, net of cash acquired —
 (45,219)
Additions to investments in unconsolidated joint ventures (4,033) (27,851)Additions to investments in unconsolidated joint ventures(5,601)(2,074)
Net proceeds from sale of assets 39,213
 28,706
Net proceeds from sale of assets7,626 128,505 
Change in restricted cash —
 118,370
Additions to non-real estate assets (8,384) (8,982)Additions to non-real estate assets(1,541)(819)
Distributions in excess of cumulative earnings from unconsolidated joint ventures 16,019
 14,193
Distributions in excess of cumulative earnings from unconsolidated joint ventures4,717 14,541 
Additions to deferred lease costs (4,218) (5,273)Additions to deferred lease costs(2,755)(5,207)
Other investing activities 4,963
 (1,221)Other investing activities8,339 8,205 
Net cash used in investing activities (89,052) (39,490)
Net cash provided by (used in) investing activitiesNet cash provided by (used in) investing activities(12,287)107,943 
FINANCING ACTIVITIES    FINANCING ACTIVITIES
Cash dividends paid (97,781) (109,879)Cash dividends paid(66,563)(99,631)
Distributions to noncontrolling interests in Operating Partnership (5,078) (5,786)Distributions to noncontrolling interests in Operating Partnership(3,499)(5,257)
Proceeds from revolving credit facility 543,866
 733,450
Proceeds from revolving credit facility641,630 275,400 
Repayments of revolving credit facility (456,666) (727,750)Repayments of revolving credit facility(641,630)(416,400)
Proceeds from notes, mortgages and loans 299,460
 338,270
Repayments of notes, mortgages and loans (302,240) (329,603)Repayments of notes, mortgages and loans(2,656)(2,509)
Payment of make-whole premium related to early extinguishment of debt (34,143) —
Repayment of deferred financing obligation —
 (28,388)
Repurchase of common shares, including transaction costs (49,362) —
Repurchase of common shares, including transaction costs0 (20,000)
Employee income taxes paid related to shares withheld upon vesting of equity awards (2,436) (2,164)Employee income taxes paid related to shares withheld upon vesting of equity awards(736)(1,781)
Additions to deferred financing costs (2,900) (4,243)Additions to deferred financing costs(1,841)(65)
Proceeds from exercise of options 54
 1,693
Proceeds from other financing activities 12,054
 35
Proceeds from other financing activities72 47 
Payment for other financing activities (782) (99)Payment for other financing activities(1,122)(1,103)
Net cash used in financing activities (95,954) (134,464)Net cash used in financing activities(76,345)(271,299)
Effect of foreign currency rate changes on cash and cash equivalents (54) 532
Effect of foreign currency rate changes on cash and cash equivalents(208)(32)
Net increase (decrease) in cash and cash equivalents (3,449) 4,344
Net increase (decrease) in cash and cash equivalents3,121 (4,419)
Cash and cash equivalents, beginning of period 12,222
 21,558
Cash and cash equivalents, beginning of period16,672 9,083 
Cash and cash equivalents, end of period $8,773
 $25,902
Cash and cash equivalents, end of period$19,793 $4,664 
The accompanying notes are an integral part of these consolidated financial statements.

10


Item 1 - Financial Statements of Tanger Properties Limited Partnership


11

TANGER PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except unit data, unaudited)
 September 30, 2017 December 31, 2016September 30, 2020December 31, 2019
Assets  
  
Assets  
Rental property:  
  
Rental property:  
Land $268,821
 $272,153
Land$266,014 $266,537 
Buildings, improvements and fixtures 2,694,549
 2,647,477
Buildings, improvements and fixtures2,545,111 2,630,357 
Construction in progress 87,762
 46,277
 3,051,132
 2,965,907
2,811,125 2,896,894 
Accumulated depreciation (875,121) (814,583)Accumulated depreciation(1,034,670)(1,009,951)
Total rental property, net 2,176,011
 2,151,324
Total rental property, net1,776,455 1,886,943 
Cash and cash equivalents 8,669
 12,199
Cash and cash equivalents19,712 16,519 
Investments in unconsolidated joint ventures 125,819
 128,104
Investments in unconsolidated joint ventures92,537 94,691 
Deferred lease costs and other intangibles, net 135,768
 151,579
Deferred lease costs and other intangibles, net88,183 96,712 
Operating lease right-of-use assetsOperating lease right-of-use assets83,210 86,575 
Prepaids and other assets 94,550
 82,481
Prepaids and other assets125,130 103,374 
Total assets $2,540,817
 $2,525,687
Total assets$2,185,227 $2,284,814 
Liabilities and Equity 
  Liabilities and Equity
Liabilities    Liabilities
Debt:    Debt:
Senior, unsecured notes, net $1,134,181
 $1,135,309
Senior, unsecured notes, net$1,140,080 $1,138,603 
Unsecured term loan, net 323,011
 322,410
Unsecured term loan, net347,213 347,367 
Mortgages payable, net 170,776
 172,145
Mortgages payable, net80,924 83,803 
Unsecured lines of credit, net 146,013
 58,002
Unsecured lines of credit, net0 0 
Total debt 1,773,981
 1,687,866
Total debt1,568,217 1,569,773 
Accounts payable and accrued expenses 83,462
 77,616
Accounts payable and accrued expenses85,464 79,165 
Operating lease liabilitiesOperating lease liabilities90,566 91,237 
Other liabilities 74,339
 54,764
Other liabilities91,495 88,530 
Total liabilities 1,931,782
 1,820,246
Total liabilities1,835,742 1,828,705 
Commitments and contingencies 

 

Commitments and contingencies
Equity    Equity
Partners' Equity:    
General partner, 1,000,000 units outstanding at September 30, 2017 and December 31, 2016 5,854
 6,485
Limited partners, 5,027,781 and 5,027,781 Class A common units, and 93,528,188 and 95,095,891 Class B common units outstanding at September 30, 2017 and December 31, 2016, respectively 623,977
 728,631
Partners’ Equity:Partners’ Equity:
General partner, 1,000,000 units outstanding at September 30, 2020 and December 31, 2019General partner, 1,000,000 units outstanding at September 30, 2020 and December 31, 20193,331 4,435 
Limited partners, 4,911,173 and 4,911,173 Class A common units, and 92,453,271 and 91,892,260 Class B common units outstanding at September 30, 2020 and December 31, 2019, respectivelyLimited partners, 4,911,173 and 4,911,173 Class A common units, and 92,453,271 and 91,892,260 Class B common units outstanding at September 30, 2020 and December 31, 2019, respectively380,259 478,562 
Accumulated other comprehensive loss (20,796) (29,834)Accumulated other comprehensive loss(34,105)(26,888)
Total partners' equity 609,035
 705,282
Total partners’ equityTotal partners’ equity349,485 456,109 
Noncontrolling interests in consolidated partnerships —
 159
Noncontrolling interests in consolidated partnerships0 0 
Total equity 609,035
 705,441
Total equity349,485 456,109 
Total liabilities and equity $2,540,817
 $2,525,687
Total liabilities and equity$2,185,227 $2,284,814 
The accompanying notes are an integral part of these consolidated financial statements.

12


TANGER PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per unit data, unaudited)
 Three months ended September 30, Nine months ended September 30,Three months ended September 30,Nine months ended September 30,
 2017 2016 2017 2016 2020201920202019
Revenues:      
  Revenues:  
Base rentals $80,349
 $79,569
 $241,467
 $227,195
Percentage rentals 3,138
 2,995
 6,798
 7,471
Expense reimbursements 34,180
 33,125
 104,801
 97,121
Rental revenuesRental revenues$100,251 $115,050 $271,082 $347,389 
Management, leasing and other services 588
 806
 1,776
 3,259
Management, leasing and other services1,194 1,356 3,362 3,943 
Other income 2,510
 2,642
 6,905
 6,229
Other revenuesOther revenues1,768 2,588 4,392 6,524 
Total revenues 120,765
 119,137

361,747

341,275
Total revenues103,213 118,994 278,836 357,856 
Expenses:        Expenses:
Property operating 37,571
 37,442
 115,074
 110,328
Property operating35,206 39,149 101,991 118,252 
General and administrative 10,934
 12,128
 33,846
 35,368
General and administrative11,181 12,292 35,331 40,910 
Acquisition costs —
 487
 —
 487
Abandoned pre-development costs (99) —
 528
 —
Impairment chargeImpairment charge0 0 45,675 0 
Depreciation and amortization 30,976
 29,205
 95,175
 82,078
Depreciation and amortization29,903 30,103 87,966 93,009 
Total expenses 79,382
 79,262

244,623

228,261
Total expenses76,290 81,544 270,963 252,171 
Operating income 41,383
 39,875

117,124

113,014
Other income (expense):        Other income (expense):
Interest expense (16,489) (15,516) (49,496) (44,200)Interest expense(15,647)(15,197)(47,786)(46,638)
Loss on early extinguishment of debt (35,626) —
 (35,626) —
Gain on sale of assets —
 1,418
 6,943
 6,305
Gain on sale of assets2,324 0 2,324 43,422 
Gain on previously held interest in acquired joint venture —
 46,258
 —
 95,516
Other non-operating income (expense) 591
 24
 683
 378
Income (loss) before equity in earnings (losses) of unconsolidated joint ventures (10,141) 72,059

39,628

171,013
Other income (expense)Other income (expense)161 227 789 (2,966)
Total other income (expense)Total other income (expense)(13,162)(14,970)(44,673)(6,182)
Income (loss) before equity in earnings of unconsolidated joint venturesIncome (loss) before equity in earnings of unconsolidated joint ventures13,761 22,480 (36,800)99,503 
Equity in earnings (losses) of unconsolidated joint ventures (5,893) 715
 (1,201) 7,680
Equity in earnings (losses) of unconsolidated joint ventures(42)2,329 (1,490)5,604 
Net income (loss) (16,034) 72,774

38,427

178,693
Net income (loss)13,719 24,809 (38,290)105,107 
Noncontrolling interests in consolidated partnerships —
 (2) —
 (13)Noncontrolling interests in consolidated partnerships0 0 (190)(195)
Net income (loss) available to partners (16,034) 72,772

38,427

178,680
Net income (loss) available to partners13,719 24,809 (38,480)104,912 
Net income (loss) available to limited partners (15,874) 72,052
 38,048
 176,912
Net income (loss) available to limited partners13,580 24,556 (38,089)103,850 
Net income (loss) available to general partner $(160) $720

$379

$1,768
Net income (loss) available to general partner$139 $253 $(391)$1,062 
        
Basic earnings per common unit:        
Basic earnings per common unit: 
Net income (loss) $(0.17) $0.72
 $0.38
 $1.77
Net income (loss)$0.14 $0.25 $(0.40)$1.06 
Diluted earnings per common unit:        Diluted earnings per common unit:
Net income (loss) $(0.17) $0.72
 $0.38
 $1.76
Net income (loss)$0.14 $0.25 $(0.40)$1.06 
        
Distribution declared per common unit $0.3425
 $0.3250
 $1.01
 $0.9350
The accompanying notes are an integral part of these consolidated financial statements.

13


TANGER PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands, unaudited)

 Three months ended September 30, Nine months ended September 30,Three months ended September 30,Nine months ended September 30,
 2017 2016 2017 2016 2020201920202019
Net income (loss) $(16,034) $72,774
 $38,427
 $178,693
Net income (loss)$13,719 $24,809 $(38,290)$105,107 
Other comprehensive income:        
Other comprehensive income (loss):Other comprehensive income (loss):
Foreign currency translation adjustments 4,737
 (1,731) 8,821
 6,970
Foreign currency translation adjustments1,870 (1,051)(2,506)6,341 
Changes in fair value of cash flow hedges 39
 2,228
 217
 (1,601)Changes in fair value of cash flow hedges1,463 (1,011)(4,711)(6,576)
Other comprehensive income 4,776
 497
 9,038
 5,369
Other comprehensive income (loss)Other comprehensive income (loss)3,333 (2,062)(7,217)(235)
Comprehensive income (loss) (11,258) 73,271
 47,465
 184,062
Comprehensive income (loss)17,052 22,747 (45,507)104,872 
Comprehensive income attributable to noncontrolling interests in consolidated partnerships —
 (2) —
 (13)
Comprehensive (income) loss attributable to noncontrolling interests in consolidated partnershipsComprehensive (income) loss attributable to noncontrolling interests in consolidated partnerships0 0 (190)(195)
Comprehensive income (loss) attributable to the Operating Partnership $(11,258) $73,269
 $47,465
 $184,049
Comprehensive income (loss) attributable to the Operating Partnership$17,052 $22,747 $(45,697)$104,677 
The accompanying notes are an integral part of these consolidated financial statements.




14

TANGER PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
(In thousands, except unit and per unit data, unaudited)
General partnerLimited partnersAccumulated other comprehensive lossTotal partners’ equityNoncontrolling interests in consolidated partnershipsTotal equity
Balance, June 30, 2019$5,018 $538,594 $(26,804)$516,808 $0 $516,808 
Net income253 24,556 — 24,809 — 24,809 
Other comprehensive loss— — (2,062)(2,062)— (2,062)
Compensation under Incentive Award Plan— 3,669 — 3,669 — 3,669 
Repurchase of 650,929 units, including transaction costs— (10,000)— (10,000)— (10,000)
Reclassification of general and limited partner interest0 0 — — — — 
Contributions from noncontrolling interests— — — — 11 11 
Common distributions ($0.355 per common unit)(355)(34,669)— (35,024)— (35,024)
Distributions to noncontrolling interests— — — — (11)(11)
Balance, September 30, 2019$4,916 $522,150 $(28,866)$498,200 $0 $498,200 
General partnerLimited partnersAccumulated other comprehensive lossTotal partners’ equityNoncontrolling interests in consolidated partnershipsTotal equity
Balance, December 31, 2018$4,914 $529,252 $(28,631)$505,535 $0 $505,535 
Net income1,062 103,850 — 104,912 195 105,107 
Other comprehensive loss— — (235)(235)— (235)
Compensation under Incentive Award Plan— 14,657 — 14,657 — 14,657 
Grant of 242,167 restricted common share awards by the Company— — — — — — 
Repurchase of 1,209,328 units, including transaction costs— (20,000)— (20,000)— (20,000)
Withholding of 81,284 common units for employee income taxes— (1,781)— (1,781)— (1,781)
Contributions from noncontrolling interests— — — — 47 47 
Common distributions ($1.060 per common unit)
(1,060)(103,828)— (104,888)— (104,888)
Distributions to noncontrolling interests— — — — (242)(242)
Balance, September 30, 2019$4,916 $522,150 $(28,866)$498,200 $0 $498,200 

15

  General partnerLimited partnersAccumulated other comprehensive lossTotal partners' equityNoncontrolling interests in consolidated partnershipsTotal equity
Balance, December 31, 2015 $5,726
$638,422
$(38,702)$605,446
$586
$606,032
Net income 1,768
176,912
—
178,680
13
178,693
Other comprehensive income —
—
5,369
5,369
—
5,369
Compensation under Incentive Award Plan —
12,556
—
12,556
—
12,556
Issuance of 57,700 common units upon exercise of options —
1,693
—
1,693
—
1,693
Grant of 173,124 restricted common share awards by the Company, net of forfeitures —
—
—
—
—
—
Issuance of 24,040 deferred units —
—
—
—
—
—
Withholding of 66,427 common units for employee income taxes —
(2,164)—
(2,164)—
(2,164)
Contributions from noncontrolling interests —
—
—
—
35
35
Adjustments for noncontrolling interests in consolidated partnerships —
4
—
4
(4)—
Acquisition of noncontrolling interest in other consolidated partnership —
(1,617)—
(1,617)(325)(1,942)
Common distributions ($.935 per common unit) (935)(93,540)—
(94,475)—
(94,475)
Distributions to noncontrolling interests —
—
—
—
(145)(145)
Balance, September 30, 2016 $6,559
$732,266
$(33,333)$705,492
$160
$705,652
        
  General partnerLimited partnersAccumulated other comprehensive lossTotal partners' equityNoncontrolling interests in consolidated partnershipsTotal equity
Balance, December 31, 2016 $6,485
$728,631
$(29,834)$705,282
$159
$705,441
Net income 379
38,048
—
38,427
—
38,427
Other comprehensive income —
—
9,038
9,038
—
9,038
Compensation under Incentive Award Plan —
10,891
—
10,891
—
10,891
Issuance of 1,800 common units upon exercise of options —
54
—
54
—
54
Grant of 411,968 restricted common share awards by the Company —
—
—
—
—
—
Repurchase of 1,911,585 units, including transaction costs —
(49,362)—
(49,362)—
(49,362)
Withholding of 69,886 common units for employee income taxes —
(2,436)—
(2,436)—
(2,436)
Acquisition of noncontrolling interest in other consolidated partnership —
—
—
—
(159)(159)
Common distributions ($1.01 per common unit) (1,010)(101,849)—
(102,859)—
(102,859)
Balance, September 30, 2017 $5,854
$623,977
$(20,796)$609,035
$—
$609,035
        
TANGER PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
(In thousands, except unit and per unit data, unaudited)

General partnerLimited partnersAccumulated other comprehensive lossTotal partners’ equityNoncontrolling interests in consolidated partnershipsTotal equity
Balance, June 30, 2020$3,192 $364,229 $(37,438)$329,983 $0 $329,983 
Net income139 13,580 — 13,719 — 13,719 
Other comprehensive income— — 3,333 3,333 — 3,333 
Compensation under Incentive Award Plan— 2,450 — 2,450 — 2,450 
Forfeitures of 18,996 restricted common share awards— — — — — — 
Common distributions— 0 — 0 — 0 
Balance, September 30, 2020$3,331 $380,259 $(34,105)$349,485 $0 $349,485 
General partnerLimited partnersAccumulated other comprehensive lossTotal partners’ equityNoncontrolling interests in consolidated partnershipsTotal equity
Balance, December 31, 2019$4,435 $478,562 $(26,888)$456,109 $0 $456,109 
Net income (loss)$(391)$(38,089)$— $(38,480)$190 $(38,290)
Other comprehensive loss$— $— $(7,217)$(7,217)$— $(7,217)
Compensation under Incentive Award Plan$— $9,871 $— $9,871 $— $9,871 
Grant of 611,350 restricted common share awards by the Company$— $— $— $— $— $— 
Issuance of 6,258 deferred units$— $— $— $— $— $— 
Withholding of 56,597 common units for employee income taxes$— $(736)$— $(736)$— $(736)
Contributions from noncontrolling interests$— $— $— $— $72 $72 
Common distributions ($0.7125
 per common unit)
$(713)$(69,349)$— $(70,062)$— $(70,062)
Distributions to noncontrolling interests$— $— $— $— $(262)$(262)
Balance, September 30, 2020$3,331 $380,259 $(34,105)$349,485 $0 $349,485 

The accompanying notes are an integral part of these consolidated financial statements.

16


TANGER PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
 Nine months ended September 30,Nine months ended September 30,
 2017 2016 20202019
OPERATING ACTIVITIES  
  
OPERATING ACTIVITIES  
Net income $38,427
 $178,693
Net income (loss)Net income (loss)$(38,290)$105,107 
Adjustments to reconcile net income to net cash provided by operating activities:    Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 95,175
 82,078
Depreciation and amortization87,966 93,009 
Impairment chargeImpairment charge45,675 0 
Amortization of deferred financing costs 2,640
 2,350
Amortization of deferred financing costs2,586 2,246 
Gain on sale of assets (6,943) (6,305)Gain on sale of assets(2,324)(43,422)
Gain on previously held interest in acquired joint venture —
 (95,516)
Loss on early extinguishment of debt 35,626
 —
Equity in (earnings) losses of unconsolidated joint ventures 1,201
 (7,680)Equity in (earnings) losses of unconsolidated joint ventures1,490 (5,604)
Equity-based compensation expense 10,114
 11,815
Equity-based compensation expense9,566 14,371 
Amortization of debt (premiums) and discounts, net 363
 1,160
Amortization of debt (premiums) and discounts, net359 333 
Amortization (accretion) of market rent rate adjustments, net 2,107
 2,087
Amortization (accretion) of market rent rate adjustments, net2,560 1,067 
Straight-line rent adjustments (4,749) (5,092)
Straight-line rent adjustments including write offs due to tenant bankruptcies and uncollectible accountsStraight-line rent adjustments including write offs due to tenant bankruptcies and uncollectible accounts2,418 (6,938)
Distributions of cumulative earnings from unconsolidated joint ventures 8,128
 10,571
Distributions of cumulative earnings from unconsolidated joint ventures2,309 5,305 
Uncollectible rental revenue allowanceUncollectible rental revenue allowance26,573 965 
Other non-cashOther non-cash0 3,638 
Changes in other assets and liabilities:    Changes in other assets and liabilities:
Other assets (1,110) 780
Other assets(49,899)(1,318)
Accounts payable and accrued expenses 551
 2,782
Accounts payable and accrued expenses1,044 (9,788)
Net cash provided by operating activities 181,530
 177,723
Net cash provided by operating activities92,033 158,971 
INVESTING ACTIVITIES    INVESTING ACTIVITIES
Additions to rental property (132,612) (112,213)Additions to rental property(23,072)(35,208)
Acquisitions of interests in unconsolidated joint ventures, net of cash acquired —
 (45,219)
Additions to investments in unconsolidated joint ventures (4,033) (27,851)Additions to investments in unconsolidated joint ventures(5,601)(2,074)
Net proceeds from sale of assets 39,213
 28,706
Net proceeds from sale of assets7,626 128,505 
Change in restricted cash —
 118,370
Additions to non-real estate assets (8,384) (8,982)Additions to non-real estate assets(1,541)(819)
Distributions in excess of cumulative earnings from unconsolidated joint ventures 16,019
 14,193
Distributions in excess of cumulative earnings from unconsolidated joint ventures4,717 14,541 
Additions to deferred lease costs (4,218) (5,273)Additions to deferred lease costs(2,755)(5,207)
Other investing activities 4,963
 (1,221)Other investing activities8,339 8,205 
Net cash used in investing activities (89,052) (39,490)
Net cash provided by (used in) investing activitiesNet cash provided by (used in) investing activities(12,287)107,943 
FINANCING ACTIVITIES    FINANCING ACTIVITIES
Cash distributions paid (102,859) (115,665)Cash distributions paid(70,062)(104,888)
Proceeds from revolving credit facility 543,866
 733,450
Proceeds from revolving credit facility641,630 275,400 
Repayments of revolving credit facility (456,666) (727,750)Repayments of revolving credit facility(641,630)(416,400)
Proceeds from notes, mortgages and loans 299,460
 338,270
Repayments of notes, mortgages and loans (302,240) (329,603)Repayments of notes, mortgages and loans(2,656)(2,509)
Payment of make-whole premium related to early extinguishment of debt (34,143) —
Repayment of deferred financing obligation —
 (28,388)
Repurchase of units, including transaction costs (49,362) —
Repurchase of units, including transaction costs0 (20,000)
Employee income taxes paid related to shares withheld upon vesting of equity awards (2,436) (2,164)Employee income taxes paid related to shares withheld upon vesting of equity awards(736)(1,781)
Additions to deferred financing costs (2,900) (4,243)Additions to deferred financing costs(1,841)(65)
Proceeds from exercise of options 54
 1,693
Proceeds from other financing activities 12,054
 35
Proceeds from other financing activities72 47 
Payment for other financing activities (782) (99)Payment for other financing activities(1,122)(1,103)
Net cash used in financing activities (95,954) (134,464)Net cash used in financing activities(76,345)(271,299)
Effect of foreign currency on cash and cash equivalents (54) 532
Effect of foreign currency on cash and cash equivalents(208)(32)
Net increase (decrease) in cash and cash equivalents (3,530) 4,301
Net increase (decrease) in cash and cash equivalents3,193 (4,417)
Cash and cash equivalents, beginning of period 12,199
 21,552
Cash and cash equivalents, beginning of period16,519 8,991 
Cash and cash equivalents, end of period $8,669
 $25,853
Cash and cash equivalents, end of period$19,712 $4,574 
The accompanying notes are an integral part of these consolidated financial statements.


17

TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
TANGER PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1. Business
Tanger Factory Outlet Centers, Inc. and subsidiaries is one of the largest owners and operators of outlet centers in the United States and Canada. We are a fully-integrated, self-administered and self-managed real estate investment trust ("REIT"(“REIT”) which, through our controlling interest in the Operating Partnership, focuses exclusively on developing, acquiring, owning, operating and managing outlet shopping centers. As of September 30, 2017,2020, we owned and operated 3531 consolidated outlet centers, with a total gross leasable area of approximately 12.611.9 million square feet. We also had partial ownership interests in 87 unconsolidated outlet centers totaling approximately 2.42.2 million square feet, including 43 outlet centers in Canada.


Our 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"“Company” refers to Tanger Factory Outlet Centers, Inc. and subsidiaries and the term, "Operating Partnership"“Operating Partnership”, refers to Tanger Properties Limited Partnership and subsidiaries. The terms "we"“we”, "our"“our” and "us"“us” refer to the Company or the Company and the Operating Partnership together, as the text requires.


The Company owns the majority of the units of partnership interest issued by the Operating Partnership through its two2 wholly-owned subsidiaries, Tanger GP Trust and Tanger LP Trust. Tanger GP Trust is the sole general partner of the Operating Partnership. Tanger LP Trust holds a limited partnership interest. As of September 30, 2017,2020, the Company, through its ownership of Tanger GP Trust and Tanger LP Trust, owned 94,528,18893,453,271 units of the Operating Partnership and other limited partners (the "Non-Company LPs"“Non-Company LPs”) collectively owned 5,027,7814,911,173 Class A common limited partnership units. Each Class A common limited partnership unit held by the Non-Company LPs is exchangeable for one1 of the Company'sCompany’s common shares, subject to certain limitations to preserve the Company'sCompany’s REIT status. Class B common limited partnership units, which are held by Tanger LP Trust, are not exchangeable for common shares of the Company.


2. Summary of Significant Accounting Policies
Basis of Presentation

The unaudited consolidated financial statements included herein have been prepared pursuant to accounting principles generally accepted in the United States of America and should be read in conjunction with the consolidated financial statements and notes thereto of the Company'sCompany’s and the Operating Partnership'sPartnership’s combined Annual Report on Form 10-K for the year ended December 31, 2016.2019. The December 31, 20162019 balance sheet data in this Form 10-Q was derived from audited financial statements. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the SEC'sSEC’s rules and regulations, although management believes that the disclosures are adequate to make the information presented not misleading. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the financial statements for the interim periods have been made. The results of interim periods are not necessarily indicative of the results for a full year.


The Company currently consolidates the Operating Partnership because it has (1) the power to direct the activities of the Operating Partnership that most significantly impact the Operating Partnership’s economic performance and (2) the obligation to absorb losses and the right to receive the residual returns of the Operating Partnership that could be potentially significant.



18


We consolidate properties that are wholly ownedwholly-owned and properties where we own less than 100% but we control.control such properties. Control is determined using an evaluation based on accounting standards related to the consolidation of voting interest entities and variable interest entities ("VIE"(“VIE”). For joint ventures that are determined to be a VIE, we consolidate the entity where we are deemed to be the primary beneficiary. Determination of the primary beneficiary is based on whether an entity has (1) the power to direct the activities of the VIE that most significantly impact the entity'sentity’s economic performance, and (2) the obligation to absorb losses of the entity that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be significant to the VIE. Our determination of the primary beneficiary considers all relationships between us and the VIE, including management agreements and other contractual arrangements.


Investments in real estate joint ventures that we do not control but may exercise significant influence on are accounted for using the equity method of accounting. These investments are recorded initially at cost and subsequently adjusted for our equity in the joint venture'sventure’s net income or loss, cash contributions, distributions and other adjustments required under the equity method of accounting.


For certain investments in real estate joint ventures, we record our equity in the venture'sventure’s net income or loss under the hypothetical liquidation at book value (“HLBV”) method of accounting due to the structures and the preferences we receive on the distributions from our joint ventures pursuant to the respective joint venture agreements for those joint ventures. Under this method, we recognize income and loss in each period based on the change in liquidation proceeds we would receive from a hypothetical liquidation of our investment based on depreciated book value. Therefore, income or loss may be allocated disproportionately as compared to the ownership percentages due to specified preferred return rate thresholds and may be more or less than actual cash distributions received and more or less than what we may receive in the event of an actual liquidation.


We separately report investments in joint ventures for which accumulated distributions have exceeded investments in, and our share of net income or loss of, the joint ventures within other liabilities in the consolidated balance sheets because we are committed to provide further financial support to these joint ventures. The carrying amount of our investments in the Charlotte, Columbus, Galveston/Houston, and Galveston/HoustonNational Harbor joint ventures are less than zero because of financing or operating distributions that were greater than net income, as net income includes non-cash charges for depreciation and amortization.


"“Noncontrolling interests in the Operating Partnership"Partnership” reflects the Non-Company LP'sLP’s percentage ownership of the Operating Partnership'sPartnership’s units. "Noncontrolling“Noncontrolling interests in other consolidated partnerships"partnerships” consist of outside equity interests in partnerships or joint ventures not wholly ownedwholly-owned by the Company or the Operating Partnership that are consolidated with the financial results of the Company and Operating Partnership because the Operating Partnership exercises control over the entities that own the properties. Noncontrolling interests are initially recorded in the consolidated balance sheets at fair value based upon purchase price allocations. Income is allocated to the noncontrolling interests based on the allocation provisions within the partnership or joint venture agreements.




Accounts Receivable

Historically, our accounts receivable from tenants has not been material; however, given the impacts from the coronavirus (“COVID-19”) pandemic discussed below, our net accounts receivable balance, which is recorded in other assets on the consolidated balance sheet, has increased from approximately $4.8 million at December 31, 2019 to approximately $32.3 million at September 30, 2020. Straight-line rent adjustments recorded as a receivable in other assets on the consolidated balance sheets were approximately $57.6 million and $61.6 million as of September 30, 2020 and December 31, 2019, respectively. Individual leases are assessed for collectability and upon the determination that the collection of rents is not probable, accrued rent and accounts receivable are reduced as an adjustment to rental revenue. Revenue from leases where collection is deemed to be less than probable is recorded on a cash basis until collectability is determined to be probable. Further we assess whether operating lease receivables, at a portfolio level, are appropriately valued based upon an analysis of balances outstanding, historical bad debt levels and current economic trends including discussions with tenants for potential lease amendments. Our estimate of the collectability of accrued rents and accounts receivable is based on the best information available to us at the time of preparing the financial statements.

The duration of the COVID 19 pandemic, recent tenant bankruptcies and other significant uncertainties with the economy required significant judgment to be used when estimating the collection of rents through September 30, 2020. See Note 3 for amounts we recorded as a reduction of revenues for uncollectible accounts.
19

Impairment of Long-Lived Assets

Rental property held and used by us is reviewed for impairment in the event that facts and circumstances indicate that the carrying amount of an asset may not be recoverable. In such an event, we compare the estimated future undiscounted cash flows associated with the asset to the asset's carrying amount, and if less, recognize an impairment loss in an amount by which the carrying amount exceeds its fair value.

During the first quarter of 2020, we determined that the estimated future undiscounted cash flows of our Foxwoods outlet center, Mashantucket, Connecticut did not exceed the property's carrying value due to a decline in forecasted operating results. Therefore, we recorded a $45.7 million non-cash impairment charge in our consolidated statement of operations which equaled the excess of the property's carrying value over its estimated fair value. See Note 5 for discussion of the impairment of the Saint-Sauveur, Quebec outlet center in our Canadian unconsolidated joint venture during the quarter ended June 30, 2020.

If the effects of the COVID-19 pandemic cause economic and market conditions to deteriorate beyond our current expectations or if our expected holding periods for assets change, subsequent tests for impairment could result in additional impairment charges in the future. For example, the Foxwoods property is part of a casino property and continues to face leasing challenges which could lead to further declines in occupancy, rental revenues and cash flows in the future. Such challenges could result in additional impairments. We can provide no assurance that material impairment charges with respect to our properties will not occur during the fourth quarter of 2020 or future periods.

3. COVID-19 Pandemic

The current novel COVID-19 pandemic has had, and will continue to have, repercussions across local, national and global economies and financial markets. COVID-19 has impacted all states where our tenants operate their businesses or where our properties are located and measures taken to prevent or remediate COVID-19, including “shelter-in place” or “stay-at-home” orders or other quarantine mandates issued by local, state or federal authorities, have had an adverse effect on our business and the businesses of our tenants. The full extent of the adverse impact on, among other things, our results of operations, liquidity (including our ability to access capital markets), the possibility of future impairments of long-lived assets or our investments in unconsolidated joint ventures, our compliance with debt covenants, our ability to collect rent under our existing leases, our ability to renew and re-lease our leased space, the outlook for the retail environment, bankruptcies and potential further bankruptcies or other store closings and our ability to develop, acquire, dispose or lease properties for our portfolio, is unknown and will depend on future developments, which are highly uncertain and cannot be predicted. Our results of operations, liquidity and cash flows have been and may continue to be in the future materially affected.

Although our outlet centers remained open, retailers began closing their stores in our outlet centers in mid-March and by April 6, 2020, substantially all of the stores in our portfolio were closed as a result of mandates by order of local and state authorities. By June 15, 2020, in store shopping for non-essential retail was allowed in every market in which our centers are located. Our outlet centers may experience additional short-term store closures as retailers implement additional safety protocols at specific locations impacted by increased exposure to COVID-19.

While our outlet centers have not closed throughout the pandemic, we have been operating under reduced hours since late April when the first stores began to reopen. Prior to the pandemic, our outlet centers operated an average of 12 hours per day. Upon reopening, our centers were open on an average of 8 hours per day.

A number of our tenants have requested rent deferrals, rent abatements or other types of rent relief during this pandemic. As a response, in late March 2020, we offered all tenants in our consolidated portfolio the option to defer 100% of April and May rents interest free, payable in equal installments due in January and February of 2021.

20

The following table sets forth information regarding the status of rents billed during the third and second quarters as of September 30, 2020 (In thousands):
As of September 30, 2020
Third QuarterSecond Quarter
Collection Status: (1)
Rents Billed% of RentsRents Billed % of Rents
Rents collected$82,006 86 %$40,995 42 %
Rents expected to be collected(2)
5,379 6 5,012 5 
Rents deferred (3)
618 1 25,327 26 
Under negotiation1,589 2 2,739 3 
One-time rent concessions in exchange for amendments to lease structure1,544 2 13,176 13 
Bankruptcy related, primarily pre-petition rents2,258 2 8,719 9 
At risk due to tenant financial weakness1,407 1 1,540 2 
Total rents billed$94,801 100 %$97,508 100 %
(1)Excludes variable revenue which is derived from tenant sales and lease termination fees.
(2)In October 2020, we collected and additional $2.3 million of the third quarter rents and $968,000 of the second quarter rents.
(3)Includes rents deferred with substantially all payments due in 2021, for which the majority is due in January/February of 2021.

During the three months ended September 30, 2020, we wrote off 5% of third quarter rents billed, related to tenant bankruptcies, other uncollectible accounts due to financial weakness and one-time concessions in exchange for landlord-favorable amendments to lease structure. During the nine months ended September 30, 2020, we wrote off approximately 15% of second and third quarter rents, related to bankruptcies, other uncollectible accounts due to financial weakness and one-time concessions in exchange for landlord-favorable amendments to lease structure. In addition, for the three and nine months ended September 30, 2020, we recorded a $2.2 million and $11.8 million reserve, respectively, for a portion of deferred and under negotiation billings that are expected to become uncollectible in future periods. Further, for the three and nine months ended September 30, 2020 we recognized a write-off of revenue of approximately $2.4 million and $6.1 million of straight-line rents, respectively, associated with the tenant bankruptcies and uncollectible accounts. We are closely monitoring changes in the collectability assessment of our tenant receivables as a result of certain tenants suffering adverse financial consequences due to COVID-19 and should our estimates change, there could be material modifications to our revenues in future periods.

Given the economic environment as a result of COVID-19, a select number of our tenants underwent liquidity hardships and filed for Chapter 11 bankruptcy protection in the second and third quarters of 2020. Although some of these tenants intend to exit the Chapter 11 bankruptcy process and resume operations, the outcomes of such proceedings are unknown and we are currently exploring leasing alternatives for stores we expect to close. Recent Chapter 11 bankruptcy filings include, but not limited to, J. Crew Group, Inc. (filed in May 2020) and Brooks Brothers, Lucky Brand Jeans, New York and Company and Ascena Retail Group, Inc. (all filed in July, 2020). Approximately 89% of the amounts included in the table above under the caption (“Bankruptcy related, primarily pre-petition rents”) that were written off during the second and third quarter as uncollectible rents as of September 30, 2020 were related to these tenants.

In March 2020, to increase liquidity, preserve financial flexibility and help meet our obligations for a sustained period of time, we drew down substantially all of the available capacity under our $600.0 million unsecured lines of credit. Beginning in June 2020 through August 2020, we repaid the entire $599.8 million outstanding balance bringing the outstanding balance to 0 as of September 30, 2020.

We also took steps to reduce cash outflows, including the reduction or deferral of certain operating costs, temporary base salary reductions for our named executive officers and other employees, and the reduction of certain other general and administrative expenses. During the second and third quarters, these reductions reduced cash outflows by approximately $15.4 million, including $1.9 million of general and administrative and $13.5 million of property operating expenses. In July 2020, we restored the above mentioned salary reductions.
21


We also deferred our Nashville pre-development-stage project and certain other planned capital expenditures. We paid the dividend that was declared in January 2020 as scheduled on May 15, 2020. Given the uncertainty related to the pandemic’s near and potential long-term impact, the Company’s Board of Directors temporarily suspended dividend distributions to conserve approximately $35.0 million in cash per quarter and preserve our balance sheet strength and flexibility. The Board continues to evaluate the potential for future dividend distributions on a quarterly basis. We expect to remain in compliance with REIT taxable income distribution requirements for the 2020 tax year.


4. Disposition of PropertyProperties


Disposition of Properties

During the three and nine months ended September 30, 2020, we closed on the sale of a non-core outlet center in Terrell, Texas for gross proceeds of $8.0 million. During the nine months ended September 30, 2019, we closed on the sale of 4 non-core outlet centers for total gross proceeds of $130.5 million.

The following table sets forth certain summarized information regarding the propertyproperties and land outparcels sold during the nine months ended September 30, 2017:2020 and September 30, 2019:
PropertyLocationDate SoldSquare Feet
(in 000’s)		Net Sales Proceeds
(in 000’s)		Gain on Sale (in 000’s)
2020 Dispositions:
TerrellTerrell, TexasAugust 2020178 $7,626 $2,324 
2019 Dispositions:
Nags Head, Ocean City, Park City, and WilliamsburgNags Head, NC, Ocean City, MD, Park City, UT, and Williamsburg, IAMarch 2019878 $128,248 $43,422 
Property Location Date Sold 
Square Feet
(in 000's)
 
Net Sales Proceeds
(in 000's)
 Gain on Sale(in 000's)
Westbrook Westbrook, CT May 2017 290
 $39,212
 $6,943


The rental propertyproperties sold did not meet the criteria for reportingto be reported as discontinued operations, thus its results of operations have remained in continuing operations.


4. Developments of Consolidated Outlet Centers

The table below sets forth our consolidated outlet centers under development as of September 30, 2017:
Project Approximate square feet
(in 000's)		 Costs Incurred to Date
(in millions)		 Projected Opening
New development:      
Fort Worth 352
 $74.7
 October 2017

Lancaster Expansion

In September 2017, we opened a 123,000 square foot expansion of our outlet center in Lancaster, Pennsylvania.

Fort Worth

In October 2017, we opened a 352,000 square foot wholly-owned outlet center center in the greater Fort Worth, Texas area. The outlet center is located within the 279-acre Champions Circle mixed-use development adjacent to Texas Motor Speedway.

Interest Costs Capitalized

Interest costs capitalized for development activities, including development in our unconsolidated joint ventures, was $798,000 and $2.0 million for the three and nine months ended September 30, 2017, respectively, and $574,000 and $1.7 million for the three and nine months ended September 30, 2016, respectively.



5. Investments in Unconsolidated Real Estate Joint Ventures
The equity method of accounting is used to account for each of the individual joint ventures. We have an ownership interest in the following unconsolidated real estate joint ventures:

As of September 30, 2020
Joint VentureOutlet Center LocationOwnership %Square Feet
(in 000’s)		Carrying Value of Investment (in millions)
Total Joint Venture Debt, Net
(in millions)(1)
Investments included in investments in unconsolidated joint ventures:
RioCan CanadaVarious50.0 %765 $92.5 $0 
$92.5 
Investments included in other liabilities:
Columbus(2)
Columbus, OH50.0 %355 $(3.6)$85.0 
Charlotte(2)
Charlotte, NC50.0 %399 (13.1)99.6 
National Harbor(2)
National Harbor, MD50.0 %341 (8.7)94.5 
Galveston/Houston (2)
Texas City, TX50.0 %353 (19.8)79.9 
$(45.2)

22

As of September 30, 2017
Joint Venture Outlet Center Location Ownership % 
Square Feet
(in 000's)
 Carrying Value of Investment (in millions) 
Total Joint Venture Debt, Net
(in millions)(1)
Columbus Columbus, OH 50.0% 355
 $6.8
 $84.4
National Harbor National Harbor, MD 50.0% 341
 2.4
 86.4
RioCan Canada Various 50.0% 924
 116.6
 11.4
Investments included in total assets     $125.8
 

           
Charlotte(3)
 Charlotte, NC 50.0% 398
 $(3.6) $89.8
Galveston/Houston (2)(3)
 Texas City, TX 50.0% 353
 (12.5) 79.4
Investments included in other liabilities

     $(16.1) 

As of December 31, 2019
Joint VentureOutlet Center LocationOwnership %Square Feet
(in 000’s)		Carrying Value of Investment (in millions)
Total Joint Venture Debt, Net
(in millions)(1)
Investments included in investments in unconsolidated joint ventures:
RioCan CanadaVarious50.0 %764 $94.7 $9.2 
$94.7 
Investments included in other liabilities:
Columbus(2)
Columbus, OH50.0 %355 $(3.5)$85.0 
Charlotte(2)
Charlotte, NC50.0 %399 (13.0)99.5 
National Harbor(2)
National Harbor, MD50.0 %341 (5.9)94.4 
Galveston/Houston (2)
Texas City, TX50.0 %353 (19.7)79.9 
$(42.1)


(1)Net of debt origination costs of $1.1 million as of September 30, 2020 and net of debt origination cost and including premiums of $1.1 million as of December 31, 2019.
As of December 31, 2016
Joint Venture Outlet Center Location Ownership % 
Square Feet
(in 000's)
 Carrying Value of Investment (in millions) 
Total Joint Venture Debt, Net
(in millions)(1)
Columbus Columbus, OH 50.0% 355
 $6.7
 $84.2
National Harbor National Harbor, MD 50.0% 341
 4.1
 86.1
RioCan Canada Various 50.0% 901
 117.3
 11.1
Investments included in total assets     $128.1
 

           
Charlotte(3)
 Charlotte, NC 50.0% 398
 $(2.5) $89.7
Galveston/Houston (2)(3)
 Texas City, TX 50.0% 353
 (3.8) 64.9
Investments included in other liabilities     $(6.3) 

(1)Net of debt origination costs and including premiums of $1.6 million and $1.6 million as of September 30, 2017 and December 31, 2016, respectively.
(2)In July 2017, the joint venture amended and restated the initial construction loan to increase the amount available to borrow from $70.0 million to $80.0 million and extended the maturity date until July 2020 with two one-year options. The amended and restated loan also changed the interest rate from LIBOR + 1.50% to an interest rate of LIBOR + 1.65%. At the closing of the amendment, the joint venture distributed approximately $14.5 million equally between the partners.
(3)The negative carrying value is due to the distributions of proceeds from mortgage loans and quarterly distributions of excess cash flow exceeding the original contributions from the partners.

(2)The negative carrying value is due to distributions exceeding contributions and increases or decreases from our equity in earnings of the joint venture.



Fees we received for various services provided to our unconsolidated joint ventures were recognized in management, leasing and other services as follows (in thousands):
Three months endedNine months ended
September 30,September 30,
 2020201920202019
Fee:  
Management and marketing$471 $567 $1,156 $1,696 
Leasing and other fees15 32 50 71 
Expense reimbursements from unconsolidated joint ventures708 757 2,156 2,176 
Total Fees$1,194 $1,356 $3,362 $3,943 
  Three months ended
Nine months ended
  September 30,
September 30,
  2017 2016
2017
2016
Fee:      
  
Management and marketing $564
 $656
 1,676
 2,199
Development and leasing 20
 65
 $87
 $611
Loan guarantee 4
 85
 13
 449
Total Fees $588
 $806
 $1,776
 $3,259


Our investments in real estate joint ventures are reduced by the percentage of the profits earned for leasing and development services associated with our ownership interest in each joint venture. Our carrying value of investments in unconsolidated joint ventures differs from our share of the assets reported in the "Summary“Summary Balance Sheets - Unconsolidated Joint Ventures"Ventures” shown below due to adjustments to the book basis, including intercompany profits on sales of services that are capitalized by the unconsolidated joint ventures. The differences in basis (totaling $3.7$3.6 million for both the period endedand $3.8 million as of September 30, 20172020 and the period ended December 31, 2016)2019, respectively) are amortized over the various useful lives of the related assets.


Galveston/Houston

In June 2020, in response to the COVID-19 impact on the property, the Galveston/Houston joint venture amended its mortgage loan. The loan modification amended the first one-year extension option to provide for 2 six-month options (the “First Extension” and “Second Extension”, respectively). Under the loan modification, the joint venture is prohibited from making partner distributions during the term of the First Extension.  If the joint venture exercises all available options, the loan would mature in July 2022.  The joint venture exercised its First Extension option to extend the mortgage loan for six months to January 2021.

RioCan Canada


Rental property heldIn May 2020, the joint venture’s mortgage loan for the outlet center in Saint-Sauveur matured and used by our RioCan joint venture is reviewed for impairment in the event that facts and circumstances indicate the carrying amount of an asset may not be recoverable. In such an event, the estimated future undiscounted cash flows associated with the asset is compared to the asset's carrying amount, and if less, we recognize an impairment loss in an amount by which the carrying amount exceeds its fair value.

During the third quarter 2017, the joint venture determined for its Bromont and Saint Sauveur, Quebec outlet centers thatrepaid the estimated future undiscounted cash flows of that property did not exceedapproximately $8.3 million owed in full.
23

During June 2020, the property's carrying value based on our expectations of the future performance of the centers. Therefore, theRio-Can joint venture recorded a $18.0 million non-cashrecognized an impairment charge related to its Saint-Sauveur property in its statementQuebec. The impairment charge was primarily driven by deterioration of operations, which equalednet operating income caused by market competition and the excessCOVID-19 pandemic.

The table below summarizes the impairment charge taken during the second quarter of the properties carrying value over its fair value. 2020 (in thousands):
Impairment Charge(1)
Outlet CenterTotalOur Share
2020Saint-Sauveur$6,181 $3,091 
(1)The fair value was determined using a marketan income approach considering the prevailing market income capitalization rates for similar assets. Our share of this impairment charge, $9.0 million, was recorded in equity in earnings of unconsolidated joint ventures in our consolidated statement of operations.






Condensed combined summary financial information of unconsolidated joint ventures accounted for using the equity method is as follows (in thousands):
Condensed Combined Balance Sheets - Unconsolidated Joint VenturesSeptember 30, 2020December 31, 2019
Assets  
Land$88,312 $90,859 
Buildings, improvements and fixtures461,593 477,061 
Construction in progress4,801 4,779 
554,706 572,699 
Accumulated depreciation(138,622)(132,860)
Total rental property, net416,084 439,839 
Cash and cash equivalents16,515 19,750 
Deferred lease costs and other intangibles, net5,134 6,772 
Prepaids and other assets24,355 17,789 
Total assets$462,088 $484,150 
Liabilities and Owners’ Equity  
Mortgages payable, net$358,940 $368,032 
Accounts payable and other liabilities15,911 17,173 
Total liabilities374,851 385,205 
Owners’ equity87,237 98,945 
Total liabilities and owners’ equity$462,088 $484,150 

24

Condensed Combined Balance Sheets - Unconsolidated Joint Ventures September 30, 2017 December 31, 2016
Assets  
  
Land $95,998
 $88,015
Buildings, improvements and fixtures 514,865
 503,548
Construction in progress, including land under development 2,849
 13,037
  613,712
 604,600
Accumulated depreciation (88,163) (67,431)
Total rental property, net 525,549
 537,169
Cash and cash equivalents 23,769
 27,271
Deferred lease costs and other intangibles, net 11,436
 13,612
Prepaids and other assets 16,262
 12,567
Total assets $577,016
 $590,619
Liabilities and Owners' Equity  
  
Mortgages payable, net $351,322
 $335,971
Accounts payable and other liabilities 13,463
 20,011
Total liabilities 364,785
 355,982
Owners' equity 212,231
 234,637
Total liabilities and owners' equity $577,016
 $590,619
 Three months endedNine months ended
Condensed Combined Statements of OperationsSeptember 30,September 30,
 - Unconsolidated Joint Ventures2020201920202019
Revenues$16,959 $23,050 $55,470 $70,088 
Expenses: 
Property operating8,035 8,380 24,023 27,780 
General and administrative82 19 344 171 
Asset impairment0 0 6,181 0 
Depreciation and amortization5,877 6,051 17,686 18,478 
Total expenses13,994 14,450 48,234 46,429 
Other income (expense):
Interest expense(3,024)(4,059)(9,991)(12,331)
Other income104 179 165 305 
Total other income (expense)(2,920)(3,880)$(9,826)$(12,026)
Net income (loss)$45 $4,720 $(2,590)$11,633 
The Company and Operating Partnership’s share of:  
Net income (loss)$(42)$2,329 $(1,490)$5,604 
Depreciation and amortization (real estate related)$3,003 $3,058 $9,038 $9,453 





  Three months ended Nine months ended
Condensed Combined Statements of Operations September 30, September 30,
 - Unconsolidated Joint Ventures 2017 2016 2017 2016
Revenues $25,241
 $25,654
 $72,588
 $82,693
Expenses:      
  
Property operating 8,987
 9,103
 27,242
 30,499
General and administrative 72
 95
 289
 390
Asset impairment 18,042
 5,838
 18,042
 5,838
Depreciation and amortization 6,998
 8,001
 21,453
 26,208
Total expenses 34,099
 23,037
 67,026
 62,935
Operating income (loss) (8,858) 2,617
 5,562
 19,758
Interest expense (2,776) (1,925) (7,497) (7,161)
Other non-operating income 20
 2
 23
 5
Net income (loss) $(11,614) $694
 $(1,912) $12,602
         
The Company and Operating Partnership's share of:  
  
Net income (loss) $(5,893) $715
 $(1,201) $7,680
Depreciation and amortization expense (real estate related) $3,583
 $4,325
 $10,971
 $15,472





6. Debt Guaranteed by the Company


All of the Company'sCompany’s debt is held by the Operating Partnership and its consolidated subsidiaries.


The Company guarantees the Operating Partnership'sPartnership’s obligations with respect to its unsecured lines of credit which have a total borrowing capacity of $520.0$600.0 million. The Company also guarantees the Operating Partnership'sPartnership’s unsecured term loan.


The Operating Partnership had the following principal amounts outstanding on the debt guaranteed by the Company (in thousands):
As of
September 30, 2020December 31, 2019
Unsecured lines of credit$0 $0 
Unsecured term loan$350,000 $350,000 

25
  September 30, 2017 December 31, 2016
Unsecured lines of credit $148,200
 $61,000
Unsecured term loan $325,000
 $325,000



7. Debt of the Operating Partnership


The debt of the Operating Partnership consisted of the following (in thousands):
As ofAs of
September 30, 2020December 31, 2019
Stated Interest Rate(s)Maturity DatePrincipal
Book Value(1)
Principal
Book Value(1)
Senior, unsecured notes: 
Senior notes3.875 %December 2023$250,000 $247,801 $250,000 $247,308 
Senior notes3.750 %December 2024250,000 248,401 250,000 248,127 
Senior notes3.125 %September 2026350,000 346,630 350,000 346,215 
Senior notes3.875 %July 2027300,000 297,248 300,000 296,953 
Mortgages payable:
Atlantic City (2)(3)
5.14 %-7.65%November 2021- December 202628,253 29,578 30,909 32,531 
     SouthavenLIBOR+1.80%April 202151,400 51,346 51,400 51,272 
Unsecured term loan
LIBOR(4)
+1.00%April 2024350,000 347,213 350,000 347,367 
Unsecured lines of credit
LIBOR(4)
+1.00%
October 2021 (5)
0 0 0 0 
 $1,579,653 $1,568,217 $1,582,309 $1,569,773 
      As of As of
      September 30, 2017 December 31, 2016
  Stated Interest Rate(s) Maturity Date Principal 
Book Value(1)
 Principal 
Book Value(1)
Senior, unsecured notes:    
      
Senior notes 6.125% June 2020 $—
 $—
 $300,000
 $298,226
Senior notes 3.875% December 2023 250,000
 245,882
 250,000
 245,425
Senior notes 3.750% December 2024 250,000
 247,321
 250,000
 247,058
Senior notes 3.125% September 2026 350,000
 344,993
 350,000
 344,600
Senior notes 3.875% July 2027 300,000
 295,985
 —
 —
             
Mortgages payable:            
Atlantic City (2)
 5.14%-7.65%
 November 2021- December 2026 38,230
 40,747
 40,471
 43,286
     Foxwoods LIBOR + 1.55%
 December 2017 70,250
 70,174
 70,250
 69,902
     Southaven LIBOR + 1.75%
 April 2018 60,000
 59,855
 59,277
 58,957
Unsecured term loan LIBOR + 0.95%
 April 2021 325,000
 323,011
 325,000
 322,410
Unsecured lines of credit LIBOR + 0.90%
 October 2019 148,200
 146,013
 61,000
 58,002
      $1,791,680
 $1,773,981
 $1,705,998
 $1,687,866
(1)Including premiums and net of debt discount and debt origination costs.
(1)Including premiums and net of debt discount and debt origination costs.
(2)The effective interest rate assigned during the purchase price allocation to the Atlantic City mortgages assumed during the acquisition in 2011 was 5.05%.

(2)The effective interest rate assigned during the purchase price allocation to the Atlantic City mortgages assumed during the acquisition in 2011 was 5.05%.
(3)Principal and interest due monthly with remaining principal due at maturity.
(4)Beginning in June 2020, if LIBOR is less than 0.25% per annum, the rate will be deemed to be 0.25% for the portions of the lines of credit and bank term loan that are not fixed with an interest rate swap.
(5)Unsecured lines of credit have a one-year extension option to extend maturity to October 2022.

Certain of our properties, which had a net book value of approximately $314.5$165.5 million at September 30, 2017,2020, serve as collateral for mortgages payable. We maintain unsecured lines of credit that provide for borrowings of up to $520.0$600.0 million. The unsecured lines of credit include a $20.0 million liquidity line and a $500.0$580.0 million syndicated line. The syndicated line may be increased up to $1.0$1.2 billion through an accordion feature in certain circumstances. As of September 30, 2017, letters of credit totaling approximately $5.5 million were issued under the lines of credit.




We provide guarantees to lenders for our joint ventures which include standard non-recourse carve out indemnifications for losses arising from items such as but not limited to fraud, physical waste, payment of taxes, environmental indemnities, misapplication of insurance proceeds or security deposits and failure to maintain required insurance. For construction and term loans, we may include a guaranty of completion as well as a principal guaranty ranging from 5% to 100% of principal.  The principal guarantees include terms for release or reduction based upon satisfactory completion of construction and performance targets including occupancy thresholds and minimum debt service coverage tests. As of September 30, 2017,2020, the maximum amount of unconsolidated joint venture debt guaranteed by the Company was $32.8$16.4 million.


The unsecured lines of credit and senior unsecured notes include covenants that require the maintenance of certain ratios, including debt service coverage and leverage, and limit the payment of dividends such that dividends and distributions will not exceed funds from operations, as defined in the agreements, for the prior fiscal year on an annual basis or 95% of funds from operations on a cumulative basis. As of September 30, 2017,2020, we believe we were in compliance with all of our debt covenants.


$300.0 Million Unsecured Senior Notes due 2027

Lines of credit and Term Loan Covenant Modifications
In June 2020, we amended the debt agreements for our lines of credit and bank term loan, primarily to improve future covenant flexibility. The amendments, among other things, allow us to access the existing surge leverage provision, which provides for an increase to the maximum thresholds to 65% from 60% for total leverage and unsecured leverage, for twelve months starting July 2017, we completed an underwritten public offering1, 2020, during which time share repurchases are prohibited. Additionally, the leverage covenants are determined based on the calculation period which is modified to be based on the immediately preceding three calendar month period annualized for the calculation date occurring on
26

December 31, 2020; the immediately preceding six calendar month period annualized for the calculation date occurring on March 31, 2021; the immediately preceding nine calendar month period annualized for the calculation date occurring on June 30, 2021; and for all other calculation dates occurring during the term on the agreement, the immediately preceding twelve calendar month period. Some definitional modifications related to the calculation of $300.0certain covenants are permanent, including the netting of cash balances in excess of $30.0 million (or debt maturing in the next 24 months, if less) as well as using adjusted EBITDA, which adds back general and administrative expenses not attributable to the subsidiaries or properties and deducts a management fee of 3.875% senior notes due 2027 (the "2027 Notes").3% of rental revenues in liability and asset calculations for certain covenants. The 2027 Notes priced at 99.579%amendments revised the interest rate to provide a LIBOR floor of 0.25% for the portions of the principal amountlines of credit and bank term loan that are not fixed with an interest rate swap. Although the amended covenants provide additional flexibility and we expect to yield 3.926%remain in compliance with such covenants, the potential impacts from COVID-19 are highly uncertain and therefore could impact covenant compliance in the future.

Unsecured Lines of Credit
In March 2020, in response to maturity. The 2027 Notes pay interest semi-annually at a rate of 3.875% per annum and mature on July 15, 2027. The estimated net proceeds from the offering, after deducting the underwriting discount and offering expenses, wereCOVID-19 pandemic, we drew down approximately $295.9 million. In August 2017, we used the net proceeds from the sale of the 2027 Notes, together with borrowings$599.8 million under our unsecured lines of credit to redeem allincrease liquidity and preserve financial flexibility to help ensure that we are able to meet our obligations for a sustained period. Beginning in June 2020 through August 2020, we repaid the entire $599.8 million outstanding balance bringing the outstanding balance to 0 as of September 30, 2020.

Interest Rate Spread over LIBOR
In February 2020, due to a change in our 6.125% senior notes due 2020 (the "2020 Notes") (approximately $300.0credit rating, our interest rate spread over LIBOR on our $600.0 million in aggregate principal amount outstanding). The 2020 Notes were redeemed at par plus a “make-whole” premiumunsecured line of approximately $34.1 million.credit facility increased from 0.875% to 1.0% and our annual facility fee increased from 0.15% to 0.20%. In addition, we wrote off approximately $1.5our interest rate spread over LIBOR on our $350.0 million of unamortized debt discount and debt origination costs relatedunsecured term loan increased from 0.90% to the 2020 Notes.1.0%.


Debt Maturities


Maturities of the existing long-term debt as of September 30, 20172020 for the next five years and thereafter are as follows (in thousands):
Calendar YearAmount
For the remainder of 2020$910 
202157,193 
20224,436 
2023254,768 
2024605,140 
Thereafter657,206 
Subtotal1,579,653 
Net discount and debt origination costs(11,436)
Total$1,568,217 
Calendar Year Amount
2017 $71,017
2018 63,183
2019 151,569
2020 3,566
2021 330,793
Thereafter 1,171,552
Subtotal 1,791,680
Net discount and debt origination costs (17,699)
Total $1,773,981
Given the financial implications of COVID-19, we have considered our short-term (one year or less from the date of filing these financial statements) liquidity needs and the adequacy of our estimated cash flows from operating activities and other financing sources to meet these needs. These other sources include but are not limited to: existing cash, ongoing relationships with certain financial institutions, our ability to sell debt or issue equity subject to market conditions and proceeds from the potential sale of non-core assets. We believe that we have access to the necessary financing to fund our short-term liquidity needs.
 

27



8. Derivative Financial Instruments


The following table summarizes the terms and fair values of our derivative financial instruments, as well as their classifications within the consolidated balance sheets (notional amounts and fair values in thousands):

Fair Value
Effective DateMaturity DateNotional AmountBank Pay RateCompany Fixed Pay RateSeptember 30, 2020December 31, 2019
Assets (Liabilities)(1):
Interest rate swaps:
April 13, 2016January 1, 2021175,000 1 month LIBOR1.03 %$(411)$1,018 
March 1, 2018January 31, 202140,000 1 month LIBOR2.47 %(311)(376)
August 14, 2018January 1, 2021150,000 1 month LIBOR2.20 %(817)(896)
July 1, 2019February 1, 202425,000 1 month LIBOR1.75 %(1,314)(170)
January 1, 2021February 1, 2024150,000 1 month LIBOR0.60 %(2,043)0 
January 1, 2021February 1, 2024$100,000 1 month LIBOR0.22 %$(238)0 
Total$640,000 $(5,134)$(424)
(1)Asset balances are recorded in prepaids and other assets on the consolidated balance sheets and liabilities are recorded in other liabilities on the consolidated balance sheets. 
          Fair Value
Effective Date Maturity Date Notional Amount Bank Pay Rate Company Fixed Pay Rate September 30, 2017 December 31, 2016
Assets (Liabilities):            
November 14, 2013 August 14, 2018 $50,000
 1 month LIBOR 1.3075% $52
 $(119)
November 14, 2013 August 14, 2018 50,000
 1 month LIBOR 1.2970% 56
 (110)
November 14, 2013 August 14, 2018 50,000
 1 month LIBOR 1.3025% 54
 (115)
April 13, 2016 January 1, 2021 50,000
 1 month LIBOR 1.0390% 1,147
 1,227
April 13, 2016 January 1, 2021 50,000
 1 month LIBOR 1.0395% 1,146
 1,226
April 13, 2016 January 1, 2021 50,000
 1 month LIBOR 1.0400% 1,145
 1,222
April 13, 2016 January 1, 2021 25,000
 1 month LIBOR 0.9915% 611
 662
Total   $325,000
     $4,211
 $3,993


The derivative financial instruments are comprised of interest rate swaps, which are designated and qualify as cash flow hedges, each with a separate counterparty. We do not use derivatives for trading or speculative purposes and currently do not have any derivatives that are not designated as hedges.


The effective portion of changesChanges in the fair value of derivatives designated and qualifying as cash flow hedges is recorded in accumulated other comprehensive loss and subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivative, if significant, is recognized directly in earnings. For the three and nine months ended September 30, 2017 and 2016, the ineffective portion was not significant.


The following table represents the effect of the derivative financial instruments on the accompanying consolidated financial statements (in thousands):
Three months ended September 30,Nine months ended September 30,
2020201920202019
Interest Rate Swaps:
Amount of loss recognized in other comprehensive income (loss) on derivative$1,463 $(1,011)$(4,711)$(6,576)

28
  Three months ended September 30, Nine months ended September 30,
  2017 2016 2017 2016
Interest Rate Swaps (Effective Portion): 
 
    
Amount of gain (loss) recognized in OCI on derivative $39
 $2,228
 $217
 $(1,601)


9. Fair Value Measurements


Fair value guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers are defined as follows:
TierDescription
Level 1Observable inputs such as quoted prices in active markets
Level 2Inputs other than quoted prices in active markets that are either directly or indirectly observable
Level 3Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions



Fair Value Measurements on a Recurring Basis


The following table sets forth our assets and liabilities that are measured at fair value within the fair value hierarchy (in thousands):
Level 1Level 2Level 3
Quoted Prices in Active Markets for Identical Assets or LiabilitiesSignificant Observable InputsSignificant Unobservable Inputs
Total
Fair value as of September 30, 2020:
Assets:
Short-term government securities (cash and cash equivalents)
$20,626 $20,626 $0 $0 
Total assets$20,626 $20,626 $0 $0 
Liabilities:
Interest rate swaps (other liabilities)$5,134 $0 $5,134 $0 
Total liabilities$5,134 $0 $5,134 $0 
Level 1Level 2Level 3
Quoted Prices in Active Markets for Identical Assets or LiabilitiesSignificant Observable InputsSignificant Unobservable Inputs
Total
Fair value as of December 31, 2019:
Asset:
Interest rate swaps (prepaids and other assets)$1,018 $0 $1,018 $0 
Total assets$1,018 $0 $1,018 $0 
Liabilities:
Interest rate swaps (other liabilities)$1,442 $0 $1,442 $0 
Total liabilities$1,442 $0 $1,442 $0 

Short-term government securities

Short-term government securities are highly liquid investments, which are classified as Level 1 in the fair value hierarchy because they are valued using quoted market prices in an active market.


29

    Level 1 Level 2 Level 3
    Quoted Prices in Active Markets for Identical Assets or Liabilities Significant Observable Inputs Significant Unobservable Inputs
  Total   
Fair value as of September 30, 2017:        
Asset:        
Interest rate swaps (prepaids and other assets) $4,211
 $—
 $4,211
 $—
Total assets $4,211
 $—
 $4,211
 $—
Interest rate swaps

    Level 1 Level 2 Level 3
    Quoted Prices in Active Markets for Identical Assets or Liabilities Significant Observable Inputs Significant Unobservable Inputs
  Total   
Fair value as of December 31, 2016:        
Asset:        
Interest rate swaps (prepaids and other assets) $3,993
 $—
 $3,993
 $—
Total assets $3,993
 $—
 $3,993
 $—


Fair values of interest rate swaps are approximatedestimated using Level 2 inputs based on current market data received from financial sources that trade such instruments and are based on prevailing market data and derived from third party proprietary models based on well recognized financial principles including counterparty risks, credit spreads and interest rate projections, as well as reasonable estimates about relevant future market conditions.


Fair Value Measurements on a Nonrecurring Basis

The following table sets forth our assets that are measured at fair value on a nonrecurring basis within the fair value hierarchy (in thousands):
Level 1Level 2Level 3
Quoted Prices in Active Markets for Identical Assets or LiabilitiesSignificant Observable InputsSignificant Unobservable Inputs
Total
Fair value as of March 31,2020:
Asset:
Long-lived assets$60,000 $0 $0 $60,000 

During the first quarter 2020, we recorded a $45.7 million impairment charge in our consolidated statement of operations which equaled the excess of the carrying value of our Foxwoods outlet center over its estimated fair value. The estimated fair value was based on the income approach. The income approach involves discounting the estimated income stream and reversion (presumed sale) value of a property over an estimated holding period to a present value at a risk-adjusted rate. Discount rates and terminal capitalization rates utilized in this approach were derived from property-specific information, market transactions and other financial and industry data. The terminal capitalization rate and discount rate are significant unobservable inputs in determining the fair value. The terminal capitalization rate used in the calculation was 7.8% and the discount rate used was 8.5%. These inputs are classified under Level 3 in the fair value hierarchy above. Should the significant assumptions utilized above to determine fair value continue to deteriorate, additional impairments in the future could be possible. 

Other Fair Value Disclosures

The estimated fair value within the fair value hierarchy and recorded value of our debt consisting of senior unsecured notes, unsecured term loans, secured mortgages and unsecured lines of credit were as follows (in thousands):

September 30, 2020December 31, 2019
Level 1 Quoted Prices in Active Markets for Identical Assets or Liabilities$0 $0 
Level 2 Significant Observable Inputs1,133,864 1,169,481 
Level 3 Significant Unobservable Inputs431,285 434,333 
Total fair value of debt$1,565,149 $1,603,814 
Recorded value of debt$1,568,217 $1,569,773 
  September 30, 2017 December 31, 2016
Level 1 Quoted Prices in Active Markets for Identical Assets or Liabilities $—
 $—
Level 2 Significant Observable Inputs 1,153,778
 1,137,976
Level 3 Significant Unobservable Inputs 647,877
 566,668
Total fair value of debt $1,801,655
 $1,704,644
     
Recorded value of debt $1,773,981
 $1,687,866


Our senior unsecured notes are publicly-traded which provides quoted market rates. However, due to the limited trading volume of these notes, we have classified these instruments as Level 2 in the hierarchy. Our other debt is classified as Level 3 given the unobservable inputs utilized in the valuation. Our unsecured term loan, unsecured lines of credit and variable interest rate mortgages are all LIBOR based instruments. When selecting the discount rates for purposes of estimating the fair value of these instruments, we evaluated the original credit spreads and do not believe that the use of them differs materially from current credit spreads for similar instruments and therefore the recorded values of these debt instruments is considered their fair value.

30


The carrying values of cash and cash equivalents, receivables, accounts payable, accrued expenses and other assets and liabilities are reasonable estimates of their fair values because of the short maturities of these instruments.



10. Shareholders’ Equity of the Company

Dividend Declaration

In January 2020, the Company's Board of Directors declared a $0.355 cash dividend per common which was paid during the first quarter of 2020 to each shareholder of record on January 31, 2020, and the Trustees of Tanger GP Trust declared a $0.355 cash distribution per Operating Partnership unit to the Operating Partnership's unitholders.

Also in January 2020, the Company's Board of Directors declared a $0.3575 cash dividend per common share payable on May 15, 2020 to each shareholder of record on April 30, 2020, and the Trustees of Tanger GP Trust declared a $0.3575 cash distribution per Operating Partnership unit to the Operating Partnership's unitholders.

In January 2019, the Company's Board of Directors declared a $0.35 cash dividend per common which was paid during the first quarter of 2019, to each shareholder of record on January 31, 2019, and the Trustees of Tanger GP Trust declared a $0.35 cash distribution per Operating Partnership unit to the Operating Partnership's unitholders.

In February 2019, the Company's Board of Directors declared a $0.355 cash dividend per common share payable on May 15, 2019 to each shareholder of record on April 30, 2019, and the Trustees of Tanger GP Trust declared a $0.355 cash distribution per Operating Partnership unit to the Operating Partnership's unitholders. A liability in the amount of approximately $35.2 million was recorded in accounts payable and accrued expenses in the consolidated balance sheet as of March 31, 2019.

Share Repurchase Program


In May 2017, we announced that ourFebruary 2019, the Company’s Board of Directors authorized the repurchase of up to $125.0an additional $44.3 million of our outstanding common shares as market conditions warrant over a period commencing onfor an aggregate authorization of $169.3 million until May 19, 2017 and expiring on May 18, 2019.2021. Repurchases may be made from time to time through open market, privately-negotiated, structured or derivative transactions (including accelerated share repurchase transactions), or other methods of acquiring shares. The Company intends to structure open market purchases to occur within pricing and volume requirements of Rule 10b-18.  The Company may, from time to time, enter into Rule 10b5-1 plans to facilitate the repurchase of its shares under this authorization. Between May 19, 2017 and August 25, 2017 we repurchased approximately 1.9 million commonThe Company did not repurchase any shares onfor the open market at an average price of $25.80, totaling approximately $49.3 million, exclusive of commissions and related fees.periods ended September 30, 2020. The remaining amount authorized to be repurchased under the program as of September 30, 20172020 was approximately $75.7$80.0 million. The Company has temporarily suspended share repurchases for at least the twelve months starting July 1, 2020 as the June 2020 amendments to our debt agreements for our lines of credit and bank term loan prohibit share repurchases during such time and in order to preserve our liquidity position.


Shares repurchased were follows:
Three months ended September 30,Nine months ended September 30,
2020201920202019
Total number of shares purchased0 650,929 0 1,209,328 
Average price paid per share$0 $15.34 $0 $16.52 
Total price paid exclusive of commissions and related fees (in thousands)$0 $9,987 $0 $19,976 

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11. Partners'Partners’ Equity of the Operating Partnership


All units of partnership interest issued by the Operating Partnership have equal rights with respect to earnings, dividends and net assets. When the Company issues common shares upon the exercise of options, the grant of restricted common share awards, or the exchange of Class A common limited partnership units, the Operating Partnership issues a corresponding Class B common limited partnership unit to Tanger LP trust,Trust, a wholly-owned subsidiary of the Company. Likewise, when the Company repurchases its outstanding common shares, the Operating Partnership repurchases an equivalent number ofa corresponding Class B common limited partnership unitsunit held by Tanger LP Trust.


The following table sets forth the changes in outstanding partnership units for the three and nine months ended September 30, 20172020 and September 30, 2016:2019:
Limited Partnership Units
General Partnership UnitsClass AClass BTotal
Balance June 30, 20191,000,000 4,960,684 92,544,267 97,504,951 
Repurchase of units0 0 (650,929)(650,929)
Balance September 30, 20191,000,000 4,960,684 91,893,338 96,854,022 
Balance December 31, 20181,000,000 4,960,684 92,941,783 97,902,467 
Grant of restricted common share awards by the Company, net of forfeitures0 0 242,167 242,167 
Repurchase of units0 0 (1,209,328)(1,209,328)
Units withheld for employee income taxes0 0 (81,284)(81,284)
Balance September 30, 20191,000,000 4,960,684 91,893,338 96,854,022 
Balance June 30, 20201,000,000 4,911,173 92,472,267 97,383,440 
Forfeitures of restricted common share awards0 0 (18,996)(18,996)
Balance September 30, 20201,000,000 4,911,173 92,453,271 97,364,444 
Balance December 31, 20191,000,000 4,911,173 91,892,260 96,803,433 
Grant of restricted common share awards by the Company, net of forfeitures0 0 611,350 611,350 
Issuance of deferred units0 0 6,258 6,258 
Units withheld for employee income taxes0 0 (56,597)(56,597)
Balance September 30, 20201,000,000 4,911,173 92,453,271 97,364,444 


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    Limited Partnership Units
  General Partnership Units Class A Class B Total
Balance December 31, 2015 1,000,000
 5,052,743
 94,880,825
 99,933,568
Grant of restricted common share awards by the Company, net of forfeitures —
 —
 173,124
 173,124
Issuance of deferred units —
 —
 24,040
 24,040
Units issued upon exercise of options —
 —
 57,700
 57,700
Units withheld for employee income taxes —
 —
 (66,427) (66,427)
Balance September 30, 2016 1,000,000
 5,052,743
 95,069,262
 100,122,005
         
Balance December 31, 2016 1,000,000
 5,027,781
 95,095,891
 100,123,672
Grant of restricted common share awards by the Company, net of forfeitures —
 —
 411,968
 411,968
Repurchase of units —
 —
 (1,911,585) (1,911,585)
Units issued upon exercise of options —
 —
 1,800
 1,800
Units withheld for employee income taxes —
 —
 (69,886) (69,886)
Balance September 30, 2017 1,000,000
 5,027,781
 93,528,188
 98,555,969




12. Earnings Per Share of the Company


The following table sets forth a reconciliation of the numerators and denominators in computing the Company'sCompany’s earnings per share (in thousands, except per share amounts):
Three months ended September 30,Nine months ended September 30,
 2020201920202019
Numerator:
Net income (loss) attributable to Tanger Factory Outlet Centers, Inc.$13,029 $23,546 $(36,541)$99,604 
Less allocation of earnings to participating securities(146)(305)(692)(1,030)
Net income (loss) available to common shareholders of Tanger Factory Outlet Centers, Inc.$12,883 $23,241 $(37,233)$98,574 
Denominator:
Basic weighted average common shares92,649 92,514 92,596 92,999 
Diluted weighted average common shares92,649 92,514 92,596 92,999 
Basic earnings per common share:
Net income (loss)$0.14 $0.25 $(0.40)$1.06 
Diluted earnings per common share:
Net income (loss)$0.14 $0.25 $(0.40)$1.06 
  Three months ended September 30, Nine months ended September 30,
  2017 2016 2017 2016
Numerator:        
Net income (loss) attributable to Tanger Factory Outlet Centers, Inc. $(15,219) $69,104
 $36,507
 $169,671
Less allocation of earnings to participating securities (306) (627) (907) (1,649)
Net income (loss) available to common shareholders of Tanger Factory Outlet Centers, Inc. $(15,525) $68,477
 $35,600
 $168,022
Denominator:        
Basic weighted average common shares 93,923
 95,156
 94,781
 95,075
Effect of notional units —
 426
 —
 393
Effect of outstanding options and certain restricted common shares —
 90
 23
 69
Diluted weighted average common shares 93,923
 95,672
 94,804
 95,537
Basic earnings per common share:        
Net income (loss) $(0.17) $0.72
 $0.38
 $1.77
Diluted earnings per common share:        
Net income (loss) $(0.17) $0.72
 $0.38
 $1.76


We determine diluted earnings per share based on the weighted average number of common shares outstanding combined with the incremental weighted average shares that would have been outstanding assuming all potentially dilutive securities were converted into common shares at the earliest date possible.


The notionalNotional units granted under our equity compensation plan are considered contingently issuable common shares and are included in earnings per share if the effect is dilutive using the treasury stock method and the common shares would be issuable if the end of the reporting period were the end of the contingency period. For the both the three and nine months ended September 30, 2017, 858,1162020, 1.7 million notional units were excluded from the computation respectively, and for both the three and nine months ended September 30, 2016, 531,746 and 564,8492019, approximately 1.1 million notional units were excluded from the computation respectively, because these notional units either would not have been issuable if the end of the reporting period were the end of the contingency period or as they were anti-dilutive.


TheWith respect to outstanding options, the effect of dilutive common shares is determined using the treasury stock method, whereby outstanding options are assumed exercised at the beginning of the reporting period and the exercise proceeds from such options and the average measured but unrecognized compensation cost during the period are assumed to be used to repurchase our common shares at the average market price during the period. For both the three and nine months ended September 30, 2017,235,7002020, 1.8 million options were excluded from the computation, as they were anti-dilutive. For both the three and for the nine months ended September 30, 2017, 173,500 options were excluded from the computation. For the three months ended September 30, 2016, there were no options excluded from the computation. For the nine months ended September 30, 2016, 145,3002019 approximately 524,000 options were excluded from the computation, respectively, as they were anti-dilutive.

The assumed exchange of the partnership units held by the Non-Company LPs as of the beginning of the year, which would result in the elimination of earnings allocated to the noncontrolling interest in the Operating Partnership, would have no impact on earnings per share since the allocation of earnings to a common limited partnership unit, as if exchanged, is equivalent to earnings allocated to a common share.


Certain of the Company'sCompany’s unvested restricted common share awards contain non-forfeitable rights to dividends or dividend equivalents. The impact of these unvested restricted common share awards on earnings per share has been calculated using the two-class method whereby earnings are allocated to the unvested restricted common share awards based on dividends declared and the unvested restricted common shares'shares’ participation rights in undistributed earnings. Unvested restricted common shares that do not contain non-forfeitable rights to dividends or dividend equivalents are included in the diluted earnings per share computation if the effect is dilutive, using the treasury stock method.



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13. Earnings Per Unit of the Operating Partnership


The following table sets forth a reconciliation of the numerators and denominators in computing earnings per unit (in thousands, except per unit amounts):
Three months ended September 30,Nine months ended September 30,
 2020201920202019
Numerator:   
Net income (loss) attributable to partners of the Operating Partnership$13,719 $24,809 $(38,480)$104,912 
Less allocation of earnings to participating securities(147)(305)(692)(1,030)
Net income (loss) available to common unitholders of the Operating Partnership$13,572 $24,504 $(39,172)$103,882 
Denominator:
Basic weighted average common units97,560 97,474 97,507 97,959 
Diluted weighted average common units97,560 97,474 97,507 97,959 
Basic earnings per common unit:
Net income (loss)$0.14 $0.25 $(0.40)$1.06 
Diluted earnings per common unit:
Net income (loss)$0.14 $0.25 $(0.40)$1.06 
  Three months ended September 30, Nine months ended September 30,
  2017 2016 2017 2016
Numerator:  
    
  
Net income (loss) attributable to partners of the Operating Partnership $(16,034) $72,772
 $38,427
 $178,680
Less allocation of earnings to participating securities (306) (629) (907) (1,651)
Net income (loss) available to common unitholders of the Operating Partnership $(16,340) $72,143
 $37,520
 $177,029
Denominator:        
Basic weighted average common units 98,951
 100,209
 99,809
 100,127
Effect of notional units —
 426
 —
 393
Effect of outstanding options and certain restricted common units —
 90
 23
 69
Diluted weighted average common units 98,951
 100,725
 99,832
 100,589
Basic earnings per common unit:        
Net income (loss) $(0.17) $0.72
 $0.38
 $1.77
Diluted earnings per common unit:        
Net income (loss) $(0.17) $0.72
 $0.38
 $1.76


We determine diluted earnings per unit based on the weighted average number of common units outstanding combined with the incremental weighted average units that would have been outstanding assuming all potentially dilutive securities were converted into common units at the earliest date possible. There were no securities which had a dilutive effect on earnings per common unit for the three and nine months ended September 30, 2020 and 2019.

The notionalNotional units granted under our equity compensation plan are considered contingently issuable common units and are included in earnings per unit if the effect is dilutive using the treasury stock method and the common sharesunits would be issuable if the end of the reporting period were the end of the contingency period. For both the three and nine months ended September 30, 2017, 858,1162020 1.7 million notional units were excludedfrom the computation and for both the three and nine months endedSeptember 30, 2016, 531,746 and 546,8492019 approximately 1.1 million notional units were excludedfrom the computation respectively, because these notional units either would not have been issuable if the end of the reporting period were the end of the contingency period or as they were anti-dilutive.


TheWith respect to outstanding options, the effect of dilutive common units is determined using the treasury stock method, whereby outstanding options are assumed exercised at the beginning of the reporting period and the exercise proceeds from such options and the average measured but unrecognized compensation cost during the period are assumed to be used to repurchase our common units at the average market price during the period. The market price of a common unit is considered to be equivalent to the market price of a Company common share. For both the three months ended September 30, 2017, 235,700 options were excluded from the computation and for the nine months ended September 30, 2017, 173,5002020, 1.8 million options were excluded from the computation. For both the three months ended September 30, 2016, there were no options excluded from the computation. For theand nine months endedSeptember 30, 2016, 145,3002019, approximately 524,000 options were excluded from the computation as they were anti-dilutive.


Certain of the Company'sCompany’s unvested restricted common share awards contain non-forfeitable rights to distributions or distribution equivalents. The impact of the corresponding unvested restricted unit awards on earnings per unit has been calculated using the two-class method whereby earnings are allocated to the unvested restricted unit awards based on distributions declared and the unvested restricted units'units’ participation rights in undistributed earnings. Unvested restricted common units that do not contain non-forfeitable rights to dividends or dividend equivalents are included in the diluted earnings per unit computation if the effect is dilutive, using the treasury stock method.



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14. Equity-Based Compensation of the Company


We have a shareholder approved equity-based compensation plan, the Incentive Award Plan of Tanger Factory Outlet Centers, Inc. and Tanger Properties Limited Partnership (Amended(as amended and Restated as ofrestated on April 4, 2014), as amended (the "Plan"“Plan”), which covers our independentnon-employee directors, officers, employees and consultants. For eachPer the Operating Partnership agreement, when a common share is issued by the Company, the Operating Partnership issues one corresponding unit of partnership interest to the Company's wholly ownedCompany’s wholly-owned subsidiaries. Therefore, when the Company grants an equity-based award, the Operating Partnership treats each award as having been granted by the Operating Partnership. In the discussion below, the term "we"“we” refers to the Company and the Operating Partnership together and the term "shares"“shares” is meant to also include corresponding units of the Operating Partnership.


We recorded equity-based compensation expense in general and administrative expenses in our consolidated statements of operations as follows (in thousands):
Three months endedNine months ended
September 30,September 30,
 2020201920202019
Restricted common shares (1)
$1,610 $2,084 $5,731 $9,224 
Notional unit performance awards (1)
624 1,446 3,606 5,021 
Options113 45 229 126 
Total equity-based compensation$2,347 $3,575 $9,566 $14,371 
  Three months ended Nine months ended
  September 30, September 30,
  2017 2016 2017 2016
Restricted common shares $2,302
 $3,020
 $7,039
 $8,527
Notional unit performance awards 939
 1,057
 2,870
 2,967
Options 77
 83
 205
 321
Total equity-based compensation $3,318
 $4,160
 $10,114
 $11,815


(1) The nine months ended September 30, 2019 includes the accelerated recognition of compensation cost related to the planned retirement of an executive officer.

Equity-based compensation expense capitalized as a part of rental property and deferred lease costs were as follows (in thousands):
Three months endedNine months ended
September 30,September 30,
 2020201920202019
Equity-based compensation expense capitalized$103 $94 $305 $286 

Option Awards

In September 2020, the Company granted 334,500 options to non-executive employees of the Company. The exercise price of the options granted during the third quarter was $5.73 per share which equaled the closing market price of the Company's common shares on the day prior to the grant date. The options expire 10 years years from the date of grant and 20% of the options become exercisable in each of the first 5 years years commencing one year year from the date of grant. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model, which resulted in a weighted average grant date fair value per share of $1.03 and included the following weighted-average assumptions: expected dividend yield 4.93%; expected life of 6.5 years; expected volatility of  34.39%; a risk-free rate of 0.48%; and forfeiture rate of 7.2% dependent upon the employee's position within the Company.

In April 2020, Stephen Yalof became the President and Chief Operating Officer of the Company. As part of his employment, Mr. Yalof was granted 1.0 million options that have an exercise price of $7.15 per share, which equaled the closing market price of a common share of the Company on the day prior to the grant date. The options expire 10 years from the date of grant and 25% of the options become exercisable on December 31, 2020 with the remaining options vesting ratably on each December 31st through 2023, in each case, contingent upon continued employment with the Company through the applicable vesting date (subject to acceleration upon certain terminations of employment). The fair value of each option grant was estimated on the date of grant using the Black-Scholes option pricing model, which resulted in a weighted average grant date fair value per share of $0.42 and included the following weighted-average assumptions: expected dividend yield 9.86%; expected life of 7.9 years; expected volatility of 30%; a risk-free rate of 0.60%; and forfeiture rate 0.0%.


35

  Three months ended Nine months ended
  September 30, September 30,
  2017 2016 2017 2016
Equity-based compensation expense capitalized $267
 $244
 $777
 $741


Restricted Common Share and Restricted Share Unit Awards


During February 2017,2020, the Company granted 253,431approximately 399,000 restricted common shares and restricted share units to the Company's independentCompany’s non-employee directors and the Company'sCompany’s senior executive officers. The grant date fair value of the awards ranged from $30.16$12.03 to $34.47$13.75 per share. The independent directors' restricted common shares vest ratably over a three year period on January 4th of each year for non-employee directors and theon February 15th of each year for senior executive officers' restricted shares vest ratably over a three or five year period.officers. For the restricted shares units issued to our chief executive officer,Chief Executive Officer, the restricted share agreement requiresaward agreements require him to hold the shares or units issued to him for a minimum of three years following each vesting date.or the share issuance date, as applicable. Compensation expense related to the amortization of the deferred compensation is being recognized in accordance with the vesting schedule of the restricted shares.


Also in April 2020, Mr. Yalof was granted 389,308 restricted common shares with a grant date fair value of $7.15 per share. The restricted common shares vest ratably over a three year period, with one-third of the restricted common shares vesting on each anniversary of the grant date, beginning on April 10, 2021, contingent upon continued employment with the Company through the applicable vesting date (subject to acceleration upon certain terminations of employment).

For certain shares that vest during the period, we withhold shares with value equivalent up to the employees' minimumemployees’ maximum statutory obligation for the applicable income and other employment taxes, and remit cash to the appropriate taxing authorities. The total number of shares withheld upon vesting was 69,886were approximately 57,000 and 81,000 for the nine months ended September 30, 2017. No shares were withheld for the three months ended September 30, 2017. The total number of shares withheld upon vesting was 6,045 2020and 66,427 for the three and nine months ended September 30, 2016,2019, respectively. The total number of shares withheld was based on the value of the restricted common shares on the vesting date as determined by our closing share price on the day prior to the vesting date. Total amounts paid for the employees'employees’ tax obligation to taxing authorities was $2.4were $736,000 and $1.8 million for the nine months ended September 30, 20172020 and was $244,000 and $2.2 million for the three and nine months ended September 30, 2016,2019, respectively. These amounts are reflected as financing activities within the consolidated statements of cash flows.




20172020 Outperformance Plan


InDuring February 2017,2020, the Compensation Committee of Tanger Factory Outlet Centers, Inc.the Company approved the general terms of the Tanger Factory Outlet Centers, Inc. 20172020 Outperformance Plan (the “2017 OPP"“2020 OPP”), covering the Company's senior executive officers whereby a maximum of approximately 697,000 restricted common shares may be earned if certain share price appreciation goals are achieved over a three year measurement period. The 2020 OPP is a long-term incentive compensation plan. Recipients receive notionalmay earn units which may convert subject to the achievement of the goals described below, into restricted common shares of the Company based on the Company’s absolute share price appreciation (or absolute total shareholder return) and its share price appreciation relative to its peer group (or relative total shareholder return) over a three-year measurement period. Any shares earned at the end of the three-year measurement period are subject to a time-based vesting schedule, with 50% of the shares vesting immediately following issuance,the measurement period, and the remaining 50% vesting one year thereafter, contingent upon continued employment with the Company through the vesting datesdate (unless terminated prior thereto (a) by the Company without cause, (b) by participant for good reason or, with respect to our Chief Executive Officer, retirement or (c) due to death or disability).


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The following table sets forth 20172020 OPP performance targets and other relevant information about the 20172020 OPP:
Performance targets (1)
Absolute portion of award:
Percent of total award33.3%
Absolute total shareholder return range36.8 %-52.1%
Percentage of units to be earned20 %-100%
Relative portion of award:
Percent of total award66.7%
Percentile rank of peer group range(2)
30 th-80th
Percentage of units to be earned20 %-100%
Maximum number of restricted common shares that may be earned (3)
902,167 
February grant date fair value per share$7.30 
April grant date fair value per share (3)
$3.11 
Performance targets (1)
  
Absolute portion of award:  
Percent of total award 50%
Absolute share price appreciation range 18% - 35%
Percentage of units to be earned 20%-100%
   
Relative portion of award:  
Percent of total award 50%
Percentile rank of peer group range(2)
 40th - 70th
Percentage of units to be earned 20%-100%
   
Maximum number of restricted common shares that may be earned 296,400
Grant date fair value per share $16.60
(1)The number of restricted common shares received under the 2020 OPP will be determined on a pro-rata basis by linear interpolation between total shareholder return thresholds, both for absolute total shareholder return and for relative total shareholder return amongst the Company’s peer group.
(1)The number of restricted common shares received under the 2017 OPP will be determined on a pro-rata basis by linear interpolation between share price appreciation thresholds, both for absolute share price appreciation and for relative share price appreciation amongst the Company's peer group. The share price for the purposes of calculation of share price appreciation will be adjusted on a penny-for-penny basis with respect to any dividend payments made during the measurement period.
(2)The peer group is based on companies included in the SNL Equity REIT index.

(2)The peer group is based on companies included in the FTSE NAREIT Retail Index.
(3)In April 2020, Mr. Yalof was awarded 205,480 notional units under the 2020 OPP. These awards have the same terms as the awards our executive officers received in February 2020.




The fair values of the 20172020 OPP awards granted during the nine months ended September 30, 20172020 were determined at the grant dates using a Monte Carlo simulation pricing model and the following assumptions:
Risk free interest rate (1)
1.521.4 %
Expected dividend yield (2)
3.48.4 %
Expected volatility (3)
1929 %
(1)Represents the interest rate as of the grant date on US treasury bonds having the same life as the estimated life of the restricted unit grants.
(2)The dividend yield is calculated utilizing the dividends paid for the previous five-year period.
(3)
(1)Represents the interest rate as of the grant date on US treasury bonds having the same life as the estimated life of the restricted unit grants.
(2)The dividend yield is calculated utilizing the dividends paid for the previous five-year period.
(3)Based on a mix of historical and implied volatility for our common shares and the common shares of our peer index companies over the measurement period.

2014 Outperformance Plan

On December 31, 2016, the measurement period for the 2014 Outperformance Plan ('the 2014 OPP") expired. Based on the Company’s absolute share price appreciation (or total shareholder return) over the three year measurement period, we issued 184,455 restricted common shares in January 2017, with 94,663 vesting immediately and the remaining to vest in January one year thereafter, contingent upon continued employment with the Company through the vesting date. Our relative total shareholder return for the 2014 OPP did not meet the minimum share price appreciation and no shares were earned under this component of the 2014 OPP.period.



37

15. Accumulated Other Comprehensive Income (Loss) of the Company


The following table presents changes in the balances of each component of accumulated comprehensive loss for the three and nine months ended September 30, 2020 (in thousands):
Tanger Factory Outlet Centers, Inc. Accumulated Other Comprehensive Income (Loss)Noncontrolling Interest in Operating Partnership Accumulated Other Comprehensive Income (Loss)
Foreign CurrencyCash flow hedgesTotalForeign CurrencyCash flow hedgesTotal
Balance June 30, 2020$(29,249)$(6,264)$(35,513)$(1,590)$(335)$(1,925)
Other comprehensive income (loss) before reclassifications1,776 (42)1,734 94 (3)91 
Reclassification out of accumulated other comprehensive income/loss into interest expense0 1,432 1,432 0 76 76 
Balance September 30, 2020$(27,473)$(4,874)$(32,347)$(1,496)$(262)$(1,758)
Tanger Factory Outlet Centers, Inc. Accumulated Other Comprehensive Income (Loss)Noncontrolling Interest in Operating Partnership Accumulated Other Comprehensive Income (Loss)
Foreign CurrencyCash flow hedgesTotalForeign CurrencyCash flow hedgesTotal
Balance December 31, 2019$(25,094)$(401)$(25,495)$(1,369)$(24)$(1,393)
Other comprehensive loss before reclassifications(2,379)(6,995)(9,374)(127)(372)(499)
Reclassification out of accumulated other comprehensive income/loss into interest expense0 2,522 2,522 0 134 134 
Balance September 30, 2020$(27,473)$(4,874)$(32,347)$(1,496)$(262)$(1,758)

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The following table presents changes in the balances of each component of accumulated comprehensive income (loss) for the three and nine months ended September 30, 20172019 (in thousands):
Tanger Factory Outlet Centers, Inc. Accumulated Other Comprehensive Income (Loss)Noncontrolling Interest in Operating Partnership Accumulated Other Comprehensive Income (Loss)
Foreign CurrencyCash flow hedgesTotalForeign CurrencyCash flow hedgesTotal
Balance June 30, 2019$(25,591)$176 $(25,415)$(1,397)$8 $(1,389)
Other comprehensive loss before reclassifications(998)(447)(1,445)(53)(25)(78)
Reclassification out of accumulated other comprehensive income/loss into other income (expense) for interest expense for cash flow hedges0 (512)(512)0 (27)(27)
Balance September 30, 2019$(26,589)$(783)$(27,372)$(1,450)$(44)$(1,494)
Tanger Factory Outlet Centers, Inc. Accumulated Other Comprehensive Income (Loss)Noncontrolling Interest in Operating Partnership Accumulated Other Comprehensive Income (Loss)
Foreign CurrencyCash flow hedgesTotalForeign CurrencyCash flow hedgesTotal
Balance December 31, 2018$(32,610)$5,459 $(27,151)$(1,770)$290 $(1,480)
Other comprehensive income (loss) before reclassifications2,567 (4,296)(1,729)136 (230)(94)
Reclassification out of accumulated other comprehensive income/loss for foreign currency and interest expense for cash flow hedges3,454 (1,946)1,508 184 (104)80 
Balance September 30, 2019$(26,589)$(783)$(27,372)$(1,450)$(44)$(1,494)

We expect within the next twelve months to reclassify into earnings as an increase to interest expense approximately $2.3 million of the amounts recorded within accumulated other comprehensive loss related to the interest rate swap agreements in effect as of September 30, 2020.

39
  
  Tanger Factory Outlet Centers, Inc. Accumulated Other Comprehensive Income (Loss) Noncontrolling Interest in Operating Partnership Accumulated Other Comprehensive Income (Loss)
  Foreign Currency Cash flow hedges Total Foreign Currency Cash flow hedges Total
Balance June 30, 2017 $(28,209) $3,962
 $(24,247) $(1,534) $209
 $(1,325)
Other comprehensive income before reclassifications 4,497
 89
 4,586
 240
 5
 245
Reclassification out of accumulated other comprehensive income into interest expense —
 (52) (52) —
 (3) (3)
Balance September 30, 2017 $(23,712) $3,999
 $(19,713) $(1,294) $211
 $(1,083)
             
   
  Tanger Factory Outlet Centers, Inc. Accumulated Other Comprehensive Income (Loss) Noncontrolling Interest in Operating Partnership Accumulated Other Comprehensive Income (Loss)
  Foreign Currency Cash flow hedges Total Foreign Currency Cash flow hedges Total
Balance December 31, 2016 $(32,087) $3,792
 $(28,295) $(1,740) $201
 $(1,539)
Other comprehensive income (loss) before reclassifications 8,375
 (154) 8,221
 446
 (9) 437
Reclassification out of accumulated other comprehensive income into interest expense —
 361
 361
 —
 19
 19
Balance September 30, 2017 $(23,712) $3,999
 $(19,713) $(1,294) $211
 $(1,083)


16. Accumulated Other Comprehensive Income (Loss) of the Operating Partnership



The following table presents changes in the balances of each component of accumulated comprehensive loss for the three and nine months ended September 30, 20162020 (in thousands):
Foreign CurrencyCash flow hedgesAccumulated Other Comprehensive Income (Loss)
Balance June 30, 2020$(30,839)$(6,599)$(37,438)
Other comprehensive income (loss) before reclassifications1,870 (45)1,825 
Reclassification out of accumulated other comprehensive income (loss) into interest expense for cash flow hedges— 1,508 1,508 
Balance September 30, 2020$(28,969)$(5,136)$(34,105)
Foreign CurrencyCash flow hedgesAccumulated Other Comprehensive Income (Loss)
Balance December 31, 2019$(26,463)$(425)$(26,888)
Other comprehensive loss before reclassifications(2,506)(7,367)(9,873)
Reclassification out of accumulated other comprehensive income (loss) into interest expense— 2,656 2,656 
Balance September 30, 2020$(28,969)$(5,136)$(34,105)
  
  Tanger Factory Outlet Centers, Inc. Accumulated Other Comprehensive Income (Loss) Noncontrolling Interest in Operating Partnership Accumulated Other Comprehensive Income (Loss)
  Foreign Currency Cash flow hedges Total Foreign Currency Cash flow hedges Total
Balance June 30, 2016 $(27,869) $(4,221) $(32,090) $(1,516) $(224) $(1,740)
Other comprehensive income (loss) before reclassifications (1,644) 1,596
 (48) (87) 84
 (3)
Reclassification out of accumulated other comprehensive income into interest expense —
 520
 520
 —
 28
 28
Balance September 30, 2016 $(29,513) $(2,105) $(31,618) $(1,603) $(112) $(1,715)
             
   
  Tanger Factory Outlet Centers, Inc. Accumulated Other Comprehensive Income (Loss) Noncontrolling Interest in Operating Partnership Accumulated Other Comprehensive Income (Loss)
  Foreign Currency Cash flow hedges Total Foreign Currency Cash flow hedges Total
Balance December 31, 2015 $(36,130) $(585) $(36,715) $(1,956) $(31) $(1,987)
Other comprehensive income (loss) before reclassifications 6,617
 (2,885) 3,732
 353
 (154) 199
Reclassification out of accumulated other comprehensive income into interest expense —
 1,365
 1,365
 —
 73
 73
Balance September 30, 2016 $(29,513) $(2,105) $(31,618) $(1,603) $(112) $(1,715)

We expect within the next twelve months to reclassify into earnings as a decrease to interest expense approximately $444,000 of the amounts recorded within accumulated other comprehensive income related to the interest rate swap agreements in effect and as of September 30, 2017.



16. Accumulated Other Comprehensive Income (Loss) of the Operating Partnership


The following table presents changes in the balances of each component of accumulated comprehensive income (loss) for the three and nine months ended September 30, 20172019 (in thousands):
Foreign CurrencyCash flow hedgesAccumulated Other Comprehensive Income (Loss)
Balance June 30, 2019$(26,988)$184 $(26,804)
Other comprehensive loss before reclassifications(1,051)(472)(1,523)
Reclassification out of accumulated other comprehensive income (loss) into other income (expense) for interest expense for cash flow hedges— (539)(539)
Balance September 30, 2019$(28,039)$(827)$(28,866)
Foreign CurrencyCash flow hedgesAccumulated Other Comprehensive Income (Loss)
Balance December 31, 2018$(34,380)$5,749 $(28,631)
Other comprehensive income (loss) before reclassifications2,703 (4,526)(1,823)
Reclassification out of accumulated other comprehensive income (loss) into other income (expense) for foreign currency and interest expense for cash flow hedges3,638 (2,050)1,588 
Balance September 30, 2019$(28,039)$(827)$(28,866)
  Foreign Currency Cash flow hedges Accumulated Other Comprehensive Income (Loss)
Balance June 30, 2017 $(29,743) $4,171
 $(25,572)
Other comprehensive income before reclassifications 4,737
 94
 4,831
Reclassification out of accumulated other comprehensive income into interest expense —
 (55) (55)
Balance September 30, 2017 $(25,006) $4,210
 $(20,796)
       
  Foreign Currency Cash flow hedges Accumulated Other Comprehensive Income (Loss)
Balance December 31, 2016 $(33,827) $3,993
 $(29,834)
Other comprehensive income (loss) before reclassifications 8,821
 (163) 8,658
Reclassification out of accumulated other comprehensive income into interest expense —
 380
 380
Balance September 30, 2017 $(25,006) $4,210
 $(20,796)

The following table presents changes in the balances of each component of accumulated comprehensive loss for the three and nine months ended September 30, 2016 (in thousands):
  Foreign Currency Cash flow hedges Accumulated Other Comprehensive Income (Loss)
Balance June 30, 2016 $(29,385) $(4,445) $(33,830)
Other comprehensive income (loss) before reclassifications (1,731) 1,680
 (51)
Reclassification out of accumulated other comprehensive income into interest expense —
 548
 548
Balance September 30, 2016 $(31,116) $(2,217) $(33,333)
       
  Foreign Currency Cash flow hedges Accumulated Other Comprehensive Income (Loss)
Balance December 31, 2015 $(38,086) $(616) $(38,702)
Other comprehensive income (loss) before reclassifications 6,970
 (3,039) 3,931
Reclassification out of accumulated other comprehensive income into interest expense —
 1,438
 1,438
Balance September 30, 2016 $(31,116) $(2,217) $(33,333)


We expect within the next twelve months to reclassify into earnings as a decreasean increase to interest expense approximately $444,000$2.3 million of the amounts recorded within accumulated other comprehensive incomeloss related to the interest rate swap agreements in effect and as of September 30, 2017.2020.

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17.    Non-Cash ActivitiesLease Agreements


As of September 30, 2020, we were the lessor to over 2,200 stores in our 31 consolidated outlet centers, under operating leases with initial terms that expire from 2020 to 2035, with certain agreements containing extension options. We also have certain agreements that require tenants to pay their portion of reimbursable expenses such as common area expenses, utilities, insurance and real estate taxes.

The components of rental revenues are as follows (in thousands):
Three months endedNine months ended
September 30,September 30,
2020201920202019
Rental revenues - fixed$78,312 $89,055 $213,760 $272,482 
Rental revenues - variable (1)
21,939 25,995 57,322 74,907 
Rental revenues$100,251 $115,050 $271,082 $347,389 
(1)Primarily includes rents based on a percentage of tenant sales volume and reimbursable expenses such as common area expenses, utilities, insurance and real estate taxes.

18. Supplemental Cash Flow Information

We purchase capital equipment and incur costs relating to construction of facilities, including tenant finishing allowances. Expenditures included in accounts payable and accrued expenses were as follows (in thousands):
As ofAs of
 September 30, 2020September 30, 2019
Costs relating to construction included in accounts payable and accrued expenses$21,416 $18,417 

Interest paid, net of interest capitalized was as follows (in thousands):
Nine months ended September 30,
20202019
Interest paid$44,990 $44,231 


  September 30, 2017 September 30, 2016
Costs relating to construction included in accounts payable and accrued expenses $27,090
 $20,340


18.19. New Accounting Pronouncements


Recently issued accounting standards

On March 12, 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference LIBOR or other reference rates expected to be discontinued because of reference rate reform. This ASU is effective as of March 12, 2020 through December 31, 2022. We have not adopted any of the optional expedients or exceptions through September 30, 2020, but will continue to evaluate the possible adoption of any such expedients or exceptions during the effective period as circumstances evolve.

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Recently adopted accounting standards


In April 2020, the Financial Accounting Standards Board (“FASB”) staff issued a question and answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance to lease concessions provided as a result of the COVID-19 pandemic. Under existing accounting lease guidance under ASC 842, the Company would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant (treated within the lease modification accounting framework) or if a lease concession was under the enforceable rights and obligations within the existing lease agreement (precluded from applying the lease modification accounting framework). The Lease Modification Q&A allows the Company, if certain criteria have been met, to bypass the lease by lease analysis, and instead make an accounting policy election to account for COVID-19 related lease concessions as either a lease modification or a negative variable adjustment to rental revenue. The Lease Modification Q&A allows the Company to determine accounting policy elections at a disaggregated level, and the elections should be applied consistently by either the type of concession or another reasonable disaggregated level. We have evaluated and elected to apply the Lease Modification Q&A to eligible lease concessions. We applied modification accounting to individual leases that are in bankruptcy and those that did not qualify for the concession. As a result, for leases not treated as a lease modification we have made the following policy elections by the type of concession agreed to with the respective tenant.

Rent Deferrals

We will account for rental deferrals using the receivables model as described within the Lease Modification Q&A. Under the receivables model, we will continue to recognize lease revenue in a manner that is unchanged from the original lease agreement and continue to recognize lease receivables and rental revenue during the deferral period.

Rent Abatements

We will account for rental abatements as negative variable adjustments to rental revenue as described within the Lease Modification Q&A. We will recognize negative variable rent for the current period reduction of rental revenue associated with any lease concessions we provide.

See Notes 2 and 3, for additional details on the impact of the Lease Modification Q&A on the Company’s consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 is intended to improve the effectiveness of disclosures required by entities regarding recurring and nonrecurring fair value measurements. ASU 2018-13 is effective for reporting periods beginning after December 15, 2019, with early adoption permitted. The adoption of ASU 2018-13 did not have a material impact on our consolidated financial statements.

In June 2016, the FASB issued ASU 2016-15,No. 2016-13 to amend the Statementaccounting for credit losses for certain financial instruments. Under the new guidance, an entity recognizes its estimate of Cash Flows (Topic 230): Classificationexpected credit losses as an allowance, which the FASB believes will result in more timely recognition of Certain Cash Receipts and Cash Payments (a consensus ofsuch losses. In November 2018, the Emerging Issues Task Force), which finalizes ProposedFASB released ASU No. EITF-15F2018-19 “Codification Improvements to Topic 326, Financial Instruments - Credit Losses.” This ASU clarifies that receivables arising from operating leases are not within the scope of the same name, and addresses stakeholders’ concerns regarding diversity in practice in how certain cash receipts and cash payments are presented and classified in the statementSubtopic 326-20 “Financial Instruments - Credit Losses.” Instead, impairment of cash flowsreceivables arising from operating leases should be accounted for under Topic 230, Statement of Cash Flows, and other Topics.Subtopic 842-30 “Leases - Lessor.” ASU 2016-15 clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows to reduce diversity in practice with respect to (i) debt prepayment or debt extinguishment costs, (ii) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, (iii) contingent consideration payments made after a business combination, (iv) proceeds from the settlement of insurance claims, (v) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies, (vi) distributions received from equity method investees, (vii) beneficial interests in securitization transactions, and (viii) separately identifiable cash flows and application of the predominance principle.  This ASU2016-13 is effective for fiscal years beginning after December 15, 2017 and for2019, including interim periods within those fiscal years, with earlyyears. The adoption permitted. The ASU should be adopted using a retrospective transition approach. We early adopted ASU 2016-15 during the third quarter of 2017, with retrospective application to our consolidated statements of cash flows. For distributions received from equity method investees, we have chosen the cumulative-earnings approach, which is also our current policy for these distributions. ASU 2016-15 requires debt prepayment or debt extinguishment costs to be classified as cash outflows for financing activities. As such, the make-whole premium related to the 2020 notes has been classified as a financing activity. The retrospective application of ASU 2016-15 had no impact on any of the prior periods presented.

Recently issued accounting standards to be adopted

In August 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2017-12, Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities. Thethis new guidance will make more financial and nonfinancial hedging strategies eligible for hedge accounting. It also amends the presentation and disclosure requirements and changes how companies assess effectiveness. It is intended to more closely align hedge accounting with companies’ risk management strategies, simplify the application of hedge accounting, and increase transparency as to the scope and results of hedging programs. The amendments can be adopted immediately in any interim or annual period (including the current period). The mandatory effective date for calendar year-end public companies is January 1, 2019. We are currently evaluating the impact of adopting the new guidance, but we dodid not expect the adoption to have a material impact on our consolidated financial statements.


In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting. ASU 2017-09 amends the scope of modification accounting for share-based payment arrangements, and provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting under ASC 718. ASU 2017-07 is effective for annual reporting periods, including interim periods within those annual reporting periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period. We are currently evaluating the impact of adopting the new guidance, but we do not expect the adoption to have a material impact on our consolidated financial statements.
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In February 2017, the FASB issued ASU 2017-05, "Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets." ASU 2017-05 clarifies the definition of an in-substance nonfinancial asset and changes the accounting for partial sales of nonfinancial assets to be more consistent with the accounting for a sale of a business pursuant to ASU 2017-01. This update is effective for interim and annual periods beginning after December 15, 2017 using a full retrospective or modified retrospective method and is required to be adopted in conjunction with ASU 2014-09, "Revenue from Contracts with Customers" discussed below. We will adopt ASU 2017-05 effective January 1, 2018, along with our adoption of ASU 2014-09, using the modified retrospective approach. We do not actively sell operating properties as part of our core business strategy and, accordingly, the sale of properties does not generally constitute a significant part of our revenue and cash flows. Subsequent to adoption, we believe most of our future contributions of nonfinancial assets to our joint ventures where we cease to have a controlling financial interest, if any, will result in the recognition of a full gain or loss as if we sold 100% of the nonfinancial asset and we will also measure our retained interest at fair value.

In January 2017, the FASB issued ASU 2017-01, Clarifying the Definition of a Business (Topic 805). ASU 2017-01 clarifies the definition of a business and provides further guidance for evaluating whether a transaction will be accounted for as an acquisition of an asset or a business. ASU 2017-01 is effective for interim and annual periods beginning after December 15, 2017, and early adoption is permitted. The update should be applied prospectively. We early adopted this standard on January 1, 2017. We believe most of our future acquisitions of operating properties will qualify as asset acquisitions and certain transaction costs associated with these acquisitions will be capitalized.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. This ASU requires that a statement of cash flows explain the change during the period in cash, cash equivalents, and amounts generally described as restricted cash. Amounts generally described as restricted cash should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The update should be applied retrospectively to each period presented.  The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. We plan to adopt this pronouncement for our fiscal year beginning January 1, 2018, and the pronouncement will result in changes to our consolidated statements of cash flows such that restricted cash amounts will be included in the beginning-of-period and end-of-period cash and cash equivalents totals.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires measurement and recognition of expected versus incurred credit losses for financial assets held. This ASU will be applied on a prospective basis for fiscal years and interim periods beginning after December 15, 2019, with early adoption permitted for fiscal years beginning and interim periods beginning after December 15, 2018. We are currently evaluating the impact of adopting the new guidance, but we do not expect the adoption to have a material impact on our consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases. ASU 2016-02, codified in ASC 842, amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU 2016-02 will be effective beginning in the first quarter of 2019. Early adoption of ASU 2016-02 as of its issuance is permitted. We will adopt ASU 2016-02 effective January 1, 2019. The new leases standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. Based on a preliminary assessment, we expect our significant operating lease commitments, primarily ground leases, will be required to be recognized as operating lease liabilities and right-of-use assets upon adoption, resulting in an increase in the assets and liabilities on our consolidated balance sheets. Upon adoption, we anticipate separating lease components from nonlease components, which will be evaluated under ASU 2014-09, as described below. We are continuing our evaluation, which may identify additional impacts this standard will have on our consolidated financial statements and related disclosures.



In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. This ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 applies to all contracts with customers, except those that are within the scope of other topics in the FASB's Accounting Standards Codification, including real estate lease contracts, which the majority of our revenue is derived.  The guidance also provides a model for the measurement and recognition of gains and losses on the sale of certain nonfinancial assets, such as property, including real estate. We are required to adopt the new pronouncement in the first quarter of fiscal 2018 using one of two retrospective application methods. In March 2016, April 2016, and May 2016, the FASB issued the following amendments to clarify the implementation guidance: ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, and ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606)—Narrow-Scope Improvements and Practical Expedients.

We will adopt ASU 2014-09 effective January 1, 2018 using the modified retrospective approach. Our revenues that will be impacted by this standard primarily include revenue from management, marketing, development, and leasing fees for services performed related to various joint ventures that we manage and other ancillary income earned at our properties. While the total revenue recognized over time would not differ under the new guidance, the recognition pattern may be different under the new guidance. Through the nine months ended September 30, 2017 and for the year ended December 31, 2016, these revenues were approximately 3% of consolidated revenue, for both periods. As a result, we currently do not expect the adoption of ASU 2014-09 or related amendments and modifications by the FASB to have a material impact on the amount of revenue we recognize in our consolidated financial statements but we do expect to have additional disclosure and reclassification of amounts with in our revenue section of the consolidated income statement as required by the adoption of ASU 2014-09. In addition, we currently expect our cumulative catch-up upon the adoption of this standard, if any, will not be material.


19. Subsequent Events

In October 2017, the Company's Board of Directors declared a $0.3425 cash dividend per common share payable on November 15, 2017 to each shareholder of record on October 31, 2017, and the Trustees of Tanger GP Trust declared a $0.3425 cash distribution per Operating Partnership unit to the Operating Partnership's unitholders.

Subsequent to quarter end, we successfully settled litigation with the estate of our former partner in the Foxwoods, Connecticut joint venture.  In return for mutual releases and no cash consideration, the estate tendered its partnership interest to the Company. Prior to this settlement, we had a 100% economic interest in the consolidated joint venture as a result of our preferred equity interest and the capital and distribution provisions in the joint venture agreement.  On November 3, 2017, Tanger repaid the $70.3 million floating rate mortgage loan secured by the property with borrowings under its unsecured floating rate lines of credit.





Item 2. Management'sManagement’s Discussion and Analysis of Financial Condition and Results of Operations


The discussion of our results of operations reported in the unaudited, consolidated statements of operations compares the three and nine months ended September 30, 20172020 with the three and nine months endedSeptember 30, 2016.2019. The results of operations discussion is combined for Tanger Factory Outlet Centers, Inc. and Tanger Properties Limited Partnership because the results are virtually the same for both entities. The following discussion should be read in conjunction with the unaudited consolidated financial statements appearing elsewhere in this report. Historical results and percentage relationships set forth in the unaudited, consolidated statements of operations, including trends which might appear, are not necessarily indicative of future operations. Unless the context indicates otherwise, the term "Company"“Company” refers to Tanger Factory Outlet Centers, Inc. and subsidiaries and the term "Operating Partnership"“Operating Partnership” refers to Tanger Properties Limited Partnership and subsidiaries. The terms "we"“we”, "our"“our” and "us"“us” refer to the Company or the Company and the Operating Partnership together, as the text requires.


Cautionary Statements


Certain statements made in this Management's Discussion and Analysis of Financial Condition and Results of Operations below are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.amended, or the Exchange Act. We intend for such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Reform Act of 1995 and have included this statement for purposes of complying with these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies, beliefs and expectations, are generally identifiable by use of the words "believe", "expect", "intend", "anticipate", "estimate", "project", or similar expressions. Such forward-looking statements include, but are not limited to, statements regarding our:regarding: the expected impact of the novel coronavirus (“COVID-19”) pandemic on our business, financial results and financial condition; our ability to raise additional capital, including via future issuances of equity and debt, and the expected use of proceeds from such issuances; our results of operations and financial condition; capital expenditure and working capital needs and the funding thereof; the repurchase of the Company's common shares, including the potential salesuse of a 10b5-1 plan to facilitate repurchases; future dividend payments; the possibility of future asset impairments; potential developments, expansions, renovations, acquisitions or purchasesdispositions of outlet centers; anticipated results of operations, liquidity and working capital; new outlet center developments, market and industry trends and consumer behavior;compliance with debt covenants; renewal and re-lease of leased space; expansionsthe outlook for the retail environment, potential bankruptcies, and renovations;other store closings; the outcome of legal proceedings arising in the normal course of business; and real estate joint ventures. You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other important factors which are, in some cases, beyond our control and which could materially affect our actual results, performance or achievements. Important

Currently, one of the most significant factors, however, is the adverse effect of the COVID-19 pandemic on the financial condition, results of operations, cash flows, compliance with debt covenants and performance of the Company and its tenants, the real estate market and the global economy and financial markets. The extent to which COVID-19 impacts us and our tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, the timing or effectiveness of any vaccines or treatments, and the direct and indirect economic effects of the pandemic and containment measures, among others. Moreover, you should interpret many of the risks identified in this report, as well as the risks set forth below, as being heightened as a result of the ongoing and numerous adverse impacts of COVID-19.

43

Other important factors which may cause actual results to differ materially from current expectations include, but are not limited to: our inability to develop new outlet centers or expand existing outlet centers successfully; risks related to the economic performance and market value of our outlet centers; the relative illiquidity of real property investments; impairment charges affecting our properties; our dispositions of assets may not achieve anticipated results; competition for the acquisition and development of outlet centers, and our inability to complete outlet centers we have identified; environmental regulations affecting our business; risk associated with a possible terrorist activity or other acts or threats of violence, public health crises and threats to public safety; our dependence on rental income from real property; our dependence on the results of operations of our retailers; the fact certain of our lease agreements include co-tenancy and/or sales-based provisions that may allow a tenant to pay reduced rent and/or terminate a lease prior to its natural expiration; the fact that certain of our properties are subject to ownership interests held by third parties, whose interests may conflict with ours; risks related to uninsured losses; the risk thatrisks related to changes in consumer travel, shopping and spending habits may change;habits; risks associated with our Canadian investments; risks associated with attracting and retaining key personnel; risks associated with debt financing; risk associated with our guarantees of debt for, or other support we may provide to, joint venture properties; the effectiveness of our interest rate hedging arrangements; uncertainty relating to the potential phasing out of LIBOR; risk associated with our interest rate hedging arrangements; risk associated to uncertainty related to determination of LIBOR; our potential failure to qualify as a REIT; our legal obligation to make distributions to our shareholders; legislative or regulatory actions that could adversely affect our shareholders; our dependence on distributions from the Operating Partnership to meet our financial obligations, including dividends; the risk of a cyber-attack or an act of cyber-terrorism and other important factors which may cause actual results to differ materially from current expectations include, but are not limited to, those set forth under Item 1A - "Risk Factors"“Risk Factors” in the Company'sCompany’s and the Operating Partnership'sPartnership’s Annual Report on Form 10-K for the year ended December 31, 2016.2019, as updated in Part II, Item 1A- “Risk Factors” in this Quarterly Report on Form 10-Q.




General Overview


As of September 30, 2017,2020, we had 3531 consolidated outlet centers in 2219 states totaling 12.611.9 million square feet. We also had 87 unconsolidated outlet centers in 6 states or provinces totaling 2.42.2 million square feet.

The table below details our new developments, expansions and dispositions of consolidated and unconsolidated outlet centers that significantly impacted our results of operations and liquidity from January 1, 20162019 to September 30, 20172020 (square feet in thousands):
Consolidated Outlet CentersUnconsolidated Joint Venture Outlet Centers
Outlet CenterQuarter Opened/DisposedSquare FeetNumber of Outlet CentersSquare FeetNumber of Outlet Centers
As of January 1, 201912,923 36 2,371 8 
Dispositions:
Nags HeadFirst Quarter(82)(1)— — 
Ocean CityFirst Quarter(200)(1)— — 
Park CityFirst Quarter(320)(1)— — 
WilliamsburgFirst Quarter(276)(1)— — 
BromontSecond Quarter— — (161)(1)
Other3 — 2 — 
As of December 31, 201912,048 32 2,212 7 
Dispositions:
TerrellThird Quarter(178)(1)— — 
Other3 — — — 
As of September 30, 202011,873 31 2,212 7 

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    Consolidated Outlet Centers Unconsolidated Joint Venture Outlet Centers
Outlet Center Quarter Acquired/Opened/Disposed Square Feet Outlet Centers Square Feet 

Outlet Centers
As of January 1, 2016   11,746
 34
 2,747
 9
New Developments:          
Columbus Second Quarter —
 —
 355
 1
Daytona Beach Fourth Quarter 349
 1
 —
 —
Acquisitions:          
Westgate Second Quarter 408
 1
 (408) (1)
Savannah Third Quarter 419
 1
 (419) (1)
Expansions:          
    Ottawa First Quarter —
 —
 32
 —
  Savannah Second Quarter —
 —
 42
 —
Dispositions:          
Fort Myers First Quarter (199) (1) —
 —
Demolition:          
Lancaster Various (25) —
 —
 —
Other   12
 —
 (1) —
As of December 31, 2016   12,710
 36
 2,348
 8
Expansion:          
Ottawa Second Quarter —
 —
 39
 —
Lancaster Third Quarter 148
 —
 —
 —
Dispositions:          
Westbrook Second Quarter (290) (1) —
 —
Other   7
 —
 (16) —
As of September 30, 2017   12,575
 35
 2,371
 8


Our Westgate and Savannah outlet centers were previously held in unconsolidated joint ventures prior to acquiring our partners' interest in each venture in June 2016 and August 2016, respectively.


The following table summarizes certain information for our existing outlet centers in which we have an ownership interest as of September 30, 2017.2020. Except as noted, all properties are fee owned.
Consolidated Outlet CentersLegalSquare%
LocationOwnership %FeetOccupied
Deer Park, New York100 739,110 93 
Riverhead, New York (1)
100 729,278 92 
Rehoboth Beach, Delaware (1)
100 557,353 93 
Foley, Alabama100 554,587 89 
Atlantic City, New Jersey (1) (3)
100 489,718 79 
San Marcos, Texas100 471,816 93 
Sevierville, Tennessee (1)
100 447,810 99 
Savannah, Georgia100 429,089 99 
Myrtle Beach Hwy 501, South Carolina100 426,523 98 
Jeffersonville, Ohio100 411,896 80 
Glendale, Arizona (Westgate)100 410,751 92 
Myrtle Beach Hwy 17, South Carolina (1)
100 403,425 99 
Charleston, South Carolina100 386,328 93 
Lancaster, Pennsylvania100 375,857 97 
Pittsburgh, Pennsylvania100 373,863 92 
Commerce, Georgia100 371,408 94 
Grand Rapids, Michigan100 357,119 89 
Fort Worth, Texas100 351,741 99 
Daytona Beach, Florida100 351,721 97 
Branson, Missouri100 329,861 100 
Southaven, Mississippi (2) (3)
50 324,717 97 
Locust Grove, Georgia100 321,082 98 
Gonzales, Louisiana100 321,066 97 
Mebane, North Carolina100 318,886 97 
Howell, Michigan100 314,438 80 
Mashantucket, Connecticut (Foxwoods) (1)
100 311,487 88 
Tilton, New Hampshire100 250,107 87 
Hershey, Pennsylvania100 249,696 100 
Hilton Head II, South Carolina100 206,564 89 
Hilton Head I, South Carolina100 181,67093 
Blowing Rock, North Carolina100 104,009 89 
Totals11,872,976 93 
(1)These properties or a portion thereof are subject to a ground lease.
(2)Based on capital contribution and distribution provisions in the joint venture agreement, we expect our economic interest in the venture’s cash flow to be greater than our legal ownership percentage. We currently receive substantially all the economic interest of the property.
(3)Property encumbered by mortgage. See Notes 6 and 7 to the consolidated financial statements for further details of our debt obligations.
45

Consolidated Outlet Centers Legal Square %
Location Ownership % Feet Occupied
Deer Park, New York 100 749,074
 95 
Riverhead, New York (1)
 100 729,706
 98 
Rehoboth Beach, Delaware (1)
 100 557,404
 99 
Foley, Alabama 100 556,677
 99 
Atlantic City, New Jersey (1) (4)
 99 489,706
 87 
San Marcos, Texas 100 471,816
 97 
Sevierville, Tennessee (1)
 100 448,355
 100 
Savannah, Georgia 100 429,089
 97 
Myrtle Beach Hwy 501, South Carolina 100 425,334
 94 
Jeffersonville, Ohio 100 411,849
 95 
Glendale, Arizona (Westgate) 100 407,673
 97 
Myrtle Beach Hwy 17, South Carolina (1)
 100 403,339
 100 
Charleston, South Carolina 100 382,117
 97 
Lancaster, Pennsylvania 100 377,299
 93 
Pittsburgh, Pennsylvania 100 372,958
 100 
Commerce, Georgia 100 371,408
 97 
Grand Rapids, Michigan 100 357,080
 97 
Daytona Beach, Florida 100 351,704
 97 
Branson, Missouri 100 329,861
 100 
Locust Grove, Georgia 100 321,070
 97 
Gonzales, Louisiana 100 321,066
 99 
Southaven, Mississippi (2) (4)
 50 320,341
 97 
Park City, Utah 100 319,661
 97 
Mebane, North Carolina 100 318,910
 100 
Howell, Michigan 100 314,459
 98 
Mashantucket, Connecticut (Foxwoods) (1) (2) (4)
 67 311,614
 94 
Williamsburg, Iowa 100 276,331
 97 
Tilton, New Hampshire 100 250,107
 93 
Hershey, Pennsylvania 100 247,500
 100 
Hilton Head II, South Carolina 100 206,564
 96 
Ocean City, Maryland (1)
 100 198,800
 98 
Hilton Head I, South Carolina 100 181,670
 99 
Terrell, Texas 100 177,800
 96 
Blowing Rock, North Carolina 100 104,009
 98 
Nags Head, North Carolina 100 82,161
 100 
Totals   12,574,512
 97
(3) 
(1)These properties or a portion thereof are subject to a ground lease.
(2)Based on capital contribution and distribution provisions in the joint venture agreement, we expect our economic interest in the venture's cash flow to be greater than our legal ownership percentage. We currently receive substantially all the economic interest of the property.
(3)Excludes the occupancy rate at our Daytona Beach outlet center which opened during the fourth quarter of 2016 and has not yet stabilized.
(4)Property encumbered by mortgage. See notes 6 and 7 to the consolidated financial statements for further details of our debt obligations.

Unconsolidated joint venture propertiesLegalSquare%
LocationOwnership %FeetOccupied
Charlotte, North Carolina (1)
50 398,676 98 
Ottawa, Ontario50 357,218 96 
Columbus, Ohio (1)
50 355,245 97 
Texas City, Texas (Galveston/Houston) (1)
50 352,705 91 
National Harbor, Maryland (1)
50 341,156 99 
Cookstown, Ontario50 307,895 92 
Saint-Sauveur, Quebec (1)
50 99,405 87 
Total2,212,300 95 

(1)Property encumbered by mortgage. See Note 5 to the consolidated financial statements for further details of the joint venture debt obligations.

Unconsolidated joint venture properties Legal Square % 
Location Ownership % Feet Occupied 
Charlotte, North Carolina (1)
 50 397,844
 99 
Ottawa, Ontario 50 355,497
 93 
Columbus, Ohio (1)
 50 355,220
 96 
Texas City, Texas (Galveston/Houston) (1)
 50 352,705
 99 
National Harbor, Maryland (1)
 50 341,156
 98 
Cookstown, Ontario 50 307,779
 98 
Bromont, Quebec 50 161,307
 72 
Saint-Sauveur, Quebec (1)
 50 99,405
 96 
Total   2,370,913
 95
(2) 
(1)Property encumbered by mortgage. See note 5 to the consolidated financial statements for further details of our debt obligations.
(2)Excludes the occupancy rate at our Columbus outlet center which opened during the second quarter of 2016 and has not yet stabilized.


Leasing Activity


The tables below show changes in rent (base rent and common area maintenance (“CAM”)) for leases for new stores that opened or renewals that started during the respective trailing twelve month periods ended September 30, 2020 and 2019:
Trailing twelve months ended September 30, 2020(1),(2), (3)
# of LeasesSquare Feet
(in 000’s)		Average
Annual
Straight-line Rent (psf)		Average
Tenant
Allowance (psf)		Average Initial Term
(in years)
Net Average
Annual
Straight-line Rent (psf) (4)
Re-tenant83 387 $32.85 $63.66 7.17 $23.97 
Renewal177 889 $27.32 $0.90 3.85 $27.09 
Trailing twelve months ended September 30, 2019(1),(2)
# of LeasesSquare Feet
(in 000’s)		Average
Annual
Straight-line Rent (psf)		Average
Tenant
Allowance (psf)		Average Initial Term
(in years)
Net Average
Annual
Straight-line Rent (psf) (4)
Re-tenant106 520 $34.02 $42.35 8.41 $28.98 
Renewal239 1,147 $34.02 $0.55 3.81 $33.88 
(1)Excludes license agreements, seasonal tenants, and month-to-month leases.
(2)Excludes outlet centers sold in March 2019 (Nags Head, Ocean City, Park City, and Williamsburg Outlets Centers).
(3)Excludes the Terrell outlet center sold in August 2020.
(4)Net average annual straight-line base rent is calculated by dividing the average tenant allowance costs per square foot by the average initial term and subtracting this calculated number from the average straight-line base rent per year amount. The average annual straight-line base rent disclosed in the table above includes all concessions, abatements and reimbursements of rent to tenants. The average tenant allowance disclosed in the table above includes other landlord costs.

46

COVID-19 Pandemic

The current COVID-19 pandemic has had, and will continue to have, repercussions across local, national and global economies and financial markets. COVID-19 has impacted all states where our tenants operate their businesses or where our properties are located and measures taken to prevent or remediate COVID-19, including “shelter-in-place” or “stay-at-home” orders or other quarantine mandates issued by local, state or federal authorities, have had an adverse effect on our business and the businesses of our tenants. The full extent of the adverse impact on our results of operations, liquidity (including our ability to access capital markets), the possibility of future impairments of long-lived assets or our investments in unconsolidated joint ventures, our compliance with debt covenants, our ability to collect rent under our existing leases, our ability to renew and re-lease our leased space, the outlook for the retail environment, bankruptcies and potential further bankruptcies or other store closings and our ability to develop, acquire, dispose or lease properties for our portfolio, is unknown and will depend on future developments, which are highly uncertain and cannot be predicted. Our results of operations, liquidity and cash flows have been and may continue to be in the future materially affected.

Many of our tenants operate in industries that depend on in-person interactions with their customers to be profitable and to fund their obligations under lease agreements with us. Measures taken to prevent or remediate COVID-19, including “shelter-in-place” or “stay-at-home” orders or other quarantine mandates, with respect to virtually all of our tenants, has (i) prevented our tenants from being able to open their stores and conduct business or limited the hours in which they may conduct business, (ii) decreased or prevented our tenants’ customers’ willingness or ability to frequent their businesses, and/or (iii) impacted supply chains from local, national and international suppliers or otherwise delayed the delivery of inventory or other materials necessary for our tenants’ operations, all of which have adversely affected, and are likely to continue to adversely affect, their ability to maintain profitability and make rental payments to us under their leases. Tenants have also, as a result of such public health crisis, orders or mandates and the resulting economic downturn, requested rent deferrals, rent abatement or early termination of their leases and may be forced to temporarily or permanently close or declare bankruptcy which could reduce our cash flows and negatively affect our ability to pay dividends. Specifically, as a result of COVID-19 and various governmental orders currently in place, a number of our tenants either closed their business or operated with limited operations and/or have submitted requests for rent relief or failed to pay rent. Certain other of our tenants have declared bankruptcy as discussed below. In addition, state, local or industry-initiated efforts, such as tenant rent freezes or suspension of a landlord’s ability to enforce evictions, may also affect our ability to collect rent or enforce remedies for the failure to pay rent. We believe our tenants do not have a clear contractual right to cease paying rent due to government mandated closures. We have instituted legal proceedings against a limited number of tenants related to collection of delinquent rental payments, and we intend to continue to enforce our rights under our lease agreements.However, COVID-19 and the related governmental orders present fairly novel situations for which the ultimate legal outcome cannot be assured and it is possible future governmental action could impact our rights under the lease agreements. The extent of future tenant requests and actions and the impact on our results of operations and cash flows is uncertain and cannot be predicted at this time. Some states are experiencing a resurgence of the COVID-19 pandemic, which has resulted in mandatory closures in certain markets. None of our outlet centers are in these markets. However, if store closures were to occur again in our markets this could have a material adverse impact on our financial position and results.

Although our outlet centers remained open, retailers began closing their stores in our outlet centers in mid-March and by April 6, 2020, substantially all of the stores in our portfolio were closed as a result of mandates by order of local and state authorities. Reopened stores as a percentage of total leased stores improved over time as mandates were lifted, from 1% on April 6, 2020 to 56% on June 3, 2020 to 72% on June 14, 2020. By June 15, 2020, in-store shopping for non-essential retail was allowed in every market in which our centers are located. As of September 30, 2020, 99% of total occupied stores in our consolidated portfolio had reopened, representing 98% of leased square footage and 98% of annualized base rent. Our outlet centers may experience additional short-term store closures as retailers implement additional safety protocols at specific locations impacted by increased exposure to COVID-19.

While our outlet centers have not closed throughout the pandemic, we have been operating under reduced hours since late April when the first stores began to reopen. Prior to the pandemic, our outlet centers operated an average of 12 hours per day. Upon reopening, our centers were open an average of 8 hours per day. Effective November 6, 2020, center hours will expand to an average of 10 hours per day to accommodate the holiday shopping season.

47

A number of our tenants have requested rent deferrals, rent abatements or other types of rent relief during this pandemic. As a response, in late March 2020, we offered all tenants in our consolidated portfolio the option to defer 100% of April and May rents interest free, payable in equal installments due in January and February of 2021.

The following table providessets forth information regarding the status of rents billed during the third and second quarters (in thousands):
As of October 31, 2020
Third QuarterSecond Quarter
Collection Status: (1)
Rents Billed% of RentsRents Billed % of Rents
Rents collected$84,329 89 %$41,963 43 %
Rents expected to be collected3,056 3 4,044 4 %
Rents deferred (2)
618 1 25,327 26 %
Under negotiation1,589 2 2,739 3 %
One-time rent concessions in exchange for amendments to lease structure1,544 2 13,176 13 %
Bankruptcy related, primarily pre-petition rents2,258 2 8,719 9 %
At risk due to tenant financial weakness1,407 1 1,540 2 %
Total rents billed$94,801 100 %$97,508 100 %
(1)Excludes variable revenue which is derived from tenant sales and lease termination fees.
(2)Includes rents deferred with substantially all payments due in 2021, for which the majority is due in January/February of 2021

Our rent collection rates improved significantly in the third quarter to 89% of rents billed as compared to 43% during the second quarter of 2020. In addition, during the three months ended September 30, 2020, we wrote off 5% of third quarter rents related to tenant bankruptcies, other uncollectible accounts due to financial weakness and one-time concessions in exchange for landlord-favorable amendments to lease structure, as compared to 25% of second quarter rents billed for these same categories.

During the nine months ended September 30, 2020, we wrote off approximately 15% of second and third quarter rents related to bankruptcies, other uncollectible accounts due to financial weakness and one-time concessions in exchange for landlord-favorable amendments to lease structure. In addition, for the three and nine months ended September 30, 2020, we recorded a $2.2 million and $11.8 million reserve, respectively, for a portion of deferred and under negotiation billings that we expect to become uncollectible in future periods. Further, for the three and nine months ended September 30, 2020, we recognized a write-off of revenue of approximately $2.4 million and $6.1 million of straight-line rents, respectively, associated with the tenant bankruptcies and uncollectible accounts. We are closely monitoring changes in the collectability assessment of our tenant receivables as a result of certain tenants suffering adverse financial consequences due to COVID-19 and should our estimates change, there could be material modifications to our revenues in future periods.

Given the economic environment as a result of COVID-19, a select number of our tenants underwent liquidity hardships and filed for Chapter 11 bankruptcy protection in the second and third quarters of 2020. Although some of these tenants intend to exit the Chapter 11 bankruptcy process and resume operations, the outcomes of such proceedings are unknown and we are currently exploring leasing alternatives for stores we expect to close. Recent Chapter 11 bankruptcy filings include, but not limited to, J. Crew Group, Inc. (filed in May 2020) and Brooks Brothers, Lucky Brand Jeans, New York and Company and Ascena Retail Group, Inc. (all filed in July 2020). .Approximately 89% of the amounts included in the table above under the caption (“Bankruptcy related, primarily pre-petition rents”) that were written off during the second and third quarter as uncollectible rents as of September 30, 2020 were related to these tenants.





48

Due to the potential impact of COVID-19 and related bankruptcies and brand-wide restructurings, our revenues may be significantly lower in the fourth quarter of 2020 than the comparable period in 2019. The extent of the impact to our results of operations and cash flows is uncertain and cannot be predicted at this time. While our preference is to work with our tenant partners to reach a financial resolution that maintains occupancy and positions both parties for long-term growth, certain tenants may close a number of their stores or seek significant rent reductions. We reserve all rights under our lease agreements and have pursued, and will continue to pursue, legal remedies to collect rent as appropriate. However, the impact of the COVID–19 pandemic on our tenants' ability to pay rent has had and could have a significant impact in future periods.

In March 2020, to increase liquidity, preserve financial flexibility and help meet our obligations for a sustained period of time, we drew down substantially all of the available capacity under our $600.0 million unsecured lines of credit. Beginning in June 2020 through August 2020, we repaid the entire $599.8 million outstanding balance bringing the outstanding balance to zero as of September 30, 2020.

We also took steps to reduce cash outflows, including the reduction or deferral of certain operating and general and administrative expenses, which included temporary base salary reductions for our consolidated outlet centersnamed executive officers and other employees. During the second and third quarters, these reductions reduced cash outflows by approximately $15.4 million, including $1.9 million of general and administrative and $13.5 million of property operating expenses In July 2020, we restored the above mentioned salary reductions.

We also deferred our Nashville pre-development-stage project and certain other planned capital expenditures. We paid the dividend that was declared in January 2020 as scheduled on May 15, 2020. Given the uncertainty related to the pandemic’s near and potential long-term impact, the Company’s Board of Directors temporarily suspended dividend distributions to conserve approximately $35.0 million in cash per quarter and preserve our balance sheet strength and flexibility. The Board continues to evaluate the potential for future dividend distributions on a quarterly basis. We expect to remain in compliance with REIT taxable income distribution requirements for the 2020 tax year.

The extent to which the COVID-19 pandemic continues to impact our future financial condition, results of operations and cash flows will depend on future developments which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, the timing or effectiveness of any vaccines or treatments, and the direct and indirect economic effects of the pandemic and containment measures, among others. Accordingly, the impact of the COVID-19 pandemic on our rental revenue for the fourth quarter of 2020 and thereafter cannot be determined at present. The situation surrounding the COVID-19 pandemic remains fluid, and we are continuing to manage our response in collaboration with tenants, government officials and business partners and assess potential impacts to our financial position and operating results, as well as potential adverse developments in our business. For further information regarding space re-leased or renewed:the impact of COVID-19 on us, see Part II, Item 1A titled “Risk Factors.”
49
 
Trailing twelve months ended September 30, 2017(1)
 # of Leases
Square Feet
(in 000's)
Average
Annual
Straight-line Rent (psf)(2)
Average
Tenant
Allowance (psf)
Average Initial Term
 (in years)
Net Average
Annual
Straight-line Rent (psf) (3)
Re-tenant87
380
$34.76
$55.47
8.94
$28.56
Renewal253
1,126
$32.56
$0.24
4.50
$32.51
       
 
Trailing twelve months ended September 30, 2016(1)
 # of Leases
Square Feet
(in 000's)
Average
Annual
Straight-line Rent (psf)(2)
Average
Tenant
Allowance (psf)
Average Initial Term
 (in years)
Net Average
Annual
Straight-line Rent (psf) (3)
Re-tenant103
401
$41.47
$57.04
8.54
$34.79
Renewal290
1,337
$32.22
$0.41
4.71
$32.13
(1)Includes information for consolidated portfolio outlet centers owned as of period end date.
(2)Includes both minimum base rent and common area maintenance rents.
(3)Net average straight-line rent is calculated by dividing the average tenant allowance costs per square foot by the average initial term and subtracting this calculated number from the average straight-line rent per year amount. The average annual straight-line rent disclosed in the table above includes all concessions, abatements and reimbursements of rent to tenants. The average tenant allowance disclosed in the table above includes landlord costs.








RESULTS OF OPERATIONS
Comparison of the three months ended September 30, 20172020 to the three months ended September 30, 20162019


NET INCOME (LOSS)
Net income (loss) decreased $88.8 million in the 20172020 period decreased $11.1 million to a loss of $16.0$13.7 million as compared to income of $72.8$24.8 million for the 20162019 period. The majority of this decrease wasin net income is due to the following:
•significant revenue reductions caused by the COVID-19 pandemic discussed above, and
•a loss ondecrease in equity in earnings (losses) of unconsolidated joint ventures from the early extinguishmentimpact of debt of $35.6 millionCOVID-19.
The decrease in the 2017 period and a $46.3 million gain on the acquisition of our partners' equity interests in the Savannah joint venture in the 2016 period. This decreasenet income was partially offset by improvedthe following:
•the $2.3 million gain recorded on the sale of our Terrell outlet center, and
•decreased operating income.costs in the 2020 period due to lower operating and advertising costs as a result of COVID-19.


In the tables below, information set forth for new development represents our Daytona Beachproperty disposed includes the Terrell outlet center which opened in November 2016. Acquisitions include our Westgate and Savannah outlet centers, which were previously held in unconsolidated joint ventures prior to acquiring our partners' interest in each venture in June 2016 and August 2016, respectively. Properties disposed include our Westbrook and Fort Myers outlet centers sold in May 2017 and January 2016, respectively.August 2020.


BASE RENTALSRENTAL REVENUES
Base rentals increased $780,000, or 1%,Rental revenues decreased $14.8 million in the 20172020 period compared to the 20162019 period. The following table sets forth the changes in various components of base rentalsrental revenues (in thousands):
 20202019Increase/(Decrease)
Rental revenues from existing properties$97,613 $112,147 $(14,534)
Rental revenues from property disposed113 945 (832)
Straight-line rent adjustments(1,741)2,052 (3,793)
Lease termination fees6,323 127 6,196 
Amortization of above and below market rent adjustments, net(2,057)(221)(1,836)
 $100,251 $115,050 $(14,799)
  2017 2016 Increase/(Decrease)
Base rentals from existing properties $73,217
 $73,523
 $(306)
Base rentals from new development 1,978
 —
 1,978
Base rentals from acquisitions 5,294
��4,131
 1,163
Base rentals from property disposed —
 1,134
 (1,134)
Termination fees 162
 1,450
 (1,288)
Amortization of above and below market rent adjustments, net (302) (669) 367
  $80,349
 $79,569
 $780


Base rentals from existing propertiesRental revenues decreased due primarily to a slight decreasethe impact of the $6.6 million COVID-19 pandemic-related revenue reduction discussed above as well as the decline in averageoverall portfolio occupancy.

PERCENTAGE RENTALS
Percentage rentals increased $143,000, or 5%, inoccupancy rate to 92.9% as of the 2017end of the current period compared to 95.9% as of the 2016end of the prior year period. Percentage rentals represents revenues based on a percentageThe decline in occupancy was impacted by space recaptured totaling approximately 586,000 square feet within our consolidated portfolio during the nine months ended September 30, 2020 from the early termination of tenants' sales volume above predetermined levels (contractual breakpoints") (in thousands):
  2017 2016 Increase/(Decrease)
Percentage rentals from existing properties $2,738
 $2,698
 $40
Percentage rentals from new development 99
 —
 99
Percentage rentals from acquisitions 301
 285
 16
Percentage rentals from property disposed —
 12
 (12)
  $3,138
 $2,995
 $143





EXPENSE REIMBURSEMENTS
Expense reimbursements increased $1.1 million, or 3%, in the 2017 periodleases related to bankruptcies and brand-wide restructurings by retailers, compared to the 2016 period. The following table sets forth the changes in various components of expense reimbursements (in thousands):
  2017 2016 Increase/(Decrease)
Expense reimbursements from existing properties $30,504
 $30,538
 $(34)
Expense reimbursements from new development 825
 49
 776
Expense reimbursements from acquisitions 2,851
 1,952
 899
Expense reimbursements from property disposed —
 586
 (586)
  $34,180
 $33,125
 $1,055

Expense reimbursements represent the contractual recovery from tenants of certain common area maintenance ("CAM"), insurance, property tax, promotional, advertising and management expenses. Certain expense reimbursements are based on the tenant's proportionate share of the allocable operating expenses195,000 square feet for the property. and thus generally fluctuate consistentlynine months ended September 30, 2019.

Further, we recognized a revenue write-off of approximately $2.4 million of straight-line rents associated with the related expenses. Other expense reimbursements, such as promotional, advertisingtenant bankruptcies and certain CAM payments, represent contractual fixed rents and may escalate each year. See "Property Operating Expenses" below for a discussion of the decrease in operating expenses from our existing properties.uncollectible accounts.


MANAGEMENT, LEASING AND OTHER SERVICES
Management, leasing and other services decreased $218,000, or 27%,$162,000 in the 20172020 period compared to the 20162019 period. The following table sets forth the changes in various components of management, leasing and other services (in thousands):
 20202019Increase/(Decrease)
Management and marketing$471 $567 $(96)
Leasing and other fees15 32 (17)
Expense reimbursements from unconsolidated joint ventures708 757 (49)
$1,194 $1,356 $(162)
  2017 2016 Increase/(Decrease)
Management and marketing $564
 $656
 $(92)
Development and leasing 20
 65
 (45)
Loan guarantee 4
 85
 (81)
  $588
 $806
 $(218)


The decrease in management,Management, leasing and other services is primarilyservice revenue decreased in the 2020 period due to having one fewer outlet center in ourreduced management fee income from unconsolidated joint ventures which are earned on a cash basis. The COVID-19 pandemic resulted in lower tenant payments during the 2020 period which resulted in lower management fees.


50



OTHER REVENUES
Other revenues decreased $820,000 in the 2017 period compared to the 2016 period. During August 2016, we acquired our venture partners' equity interests in the Savannah outlet center and received no fees subsequent to the acquisition date.

OTHER INCOME
Other income decreased $132,000, or 5% in the 20172020 period as compared to the 20162019 period. The following table sets forth the changes in various components of other revenues (in thousands):
 20202019Increase/(Decrease)
Other revenues from existing properties$1,760 $2,572 $(812)
Other revenues from properties disposed8 16 (8)
 $1,768 $2,588 $(820)

Other revenues from existing properties decreased primarily from reductions in variable vending and other revenue sources as a direct result of the COVID-19 pandemic impacting traffic to our centers and partially due to the centers operating under reduced hours.

PROPERTY OPERATING EXPENSES
Property operating expenses decreased $3.9 million in the 2020 period compared to the 2019 period. The following table sets forth the changes in various components of property operating expenses (in thousands):

 20202019Increase/(Decrease)
Property operating expenses from existing properties$33,393 $37,609 $(4,216)
Properties operating expenses from property disposed183 467 (284)
Expenses related to unconsolidated joint ventures708 757 (49)
Other property operating expenses922 316 606 
 $35,206 $39,149 $(3,943)
  2017 2016 Change
Other income from existing properties $2,283
 $2,434
 $(151)
Other income from new developments 34
 62
 (28)
Other income from acquisitions 193
 146
 47
  $2,510
 $2,642
 $(132)




PROPERTY OPERATING EXPENSES
The following table sets forth the changes in various components of property operating expenses (in thousands):
  2017 2016 Increase/(Decrease)
Property operating expenses from existing properties $34,315
 $34,932
 $(617)
Property operating expenses from new development 846
 55
 791
Property operating expenses from acquisitions 2,410
 1,673
 737
Property operating expenses from property disposed —
 782
 (782)
  $37,571
 $37,442
 $129


The decrease in property operating expenses fromat existing properties was dueprimarily reflects the lower costs needed to lower spendingoperate the centers an average of 8 hours a day compared to an average of 12 hours a day that they were in operation in 2019. We expect these expenses to increase during the 2017 period for certain CAM and marketing expenses.three months ended December 31, 2020 as compared to the three months ended September 30, 2020 as we intend to extend the hours of centers to an average of 10 hours a day.


GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses decreased $1.2$1.1 million or 10% in the 20172020 period compared to the 20162019 period, due primarily dueas a result lower travel related expenses as a result of COVID-19 and lower compensation costs. These reductions were partially offset by higher expenses related to the 2016 period including executive severance.legal and professional fees.


DEPRECIATION AND AMORTIZATION

Depreciation and amortization costs increased $1.8 million, or 6%,decreased $200,000 in the 20172020 period compared to the 20162019 period. The following table sets forth the changes in various components of depreciation and amortization costs from the 20172019 period to the 20162020 period (in thousands):
 20202019Increase/(Decrease)
Depreciation and amortization from existing properties$29,845 $29,951 $(106)
Depreciation and amortization from property disposed58 152 (94)
 $29,903 $30,103 $(200)
  2017 2016 Increase/(Decrease)
Depreciation and amortization from existing properties $25,912
 $26,514
 $(602)
Depreciation and amortization from new development 1,236
 —
 1,236
Depreciation and amortization from acquisitions 3,828
 2,340
 1,488
Depreciation and amortization from properties disposed —
 351
 (351)
  $30,976
 $29,205
 $1,771


INTEREST EXPENSE AND LOSS
Interest expense increased $450,000 in the 2020 period compared to the 2019 period as a result higher loan cost amortization from the cost of amending our debt covenants during the second quarter of 2020 and an increase in our debt facility fee expenses effective in February 2020.

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GAIN ON EARLY EXTINGUISHMENTSALE OF DEBTASSETS
In July 2017,August 2020, we completed an underwritten public offeringsold a non-core outlet center in Terrell, Texas for net proceeds $7.6 million, which resulted in a gain on sale of $300.0 millionassets of 3.875% senior notes due 2027 (the "2027 Notes"). In August 2017, we used the net$2.3 million. The proceeds from the sale of the 2027 Notes, together with borrowings under our unsecured lines of credit, to redeem all of our 6.125% senior notes due 2020 (the "2020 Notes") (approximately $300.0 million in aggregate principal amount outstanding). The 2020 Notes were redeemed at par plus a make-whole premium of approximately $34.1 million. The loss on early extinguishment of debt includes the make-whole premium and approximately $1.5 million of costs written off related to a debt discount and the remaining net book value of deferred 2020 Notes origination costs.

Interest expense increased $1.0 million, or 6%, in the 2017 period compared to the 2016 period, due primarily to the completed public offerings in August 2016 and October 2016, of an aggregate $350.0 million of 3.125% notes, the net proceeds of whichthis unencumbered asset were used to repay amountspay down balances outstanding under our unsecured lines of credit that had an approximate interest rate of 1.20%. Interest expense also increased due to the 30-day LIBOR interest rate, which impacts the interest rate associated with our floating rate debt, increasing in the 2017 period compared with the 2016 period and due to incremental interest paid during the redemption notice period when both the 2020 Notes and the 2027 Notes were outstanding. The overall increase was partially offset by a decrease in interest expense related to the July 2017 bond refinancing, which effectively lowered the interest rate from 6.125% to 3.875% on $300.0 million of senior notes.credit.






GAIN ON PREVIOUSLY HELD INTEREST IN ACQUIRED JOINT VENTURE
In August 2016, the Savannah joint venture, which owned the outlet center in Pooler, Georgia distributed all outparcels along with $15.0 million in cash consideration to the other partner in exchange for the partner's ownership interest. We contributed the $15.0 million in cash consideration to the joint venture, which we funded with borrowings under our unsecured lines of credit. The joint venture is now wholly-owned by us and has been consolidated in our financial results since the acquisition date. As a result of acquiring the remaining interest in the Savannah joint venture, we recorded a gain of $46.3 million, which represented the difference between the carrying book value and the fair value of our previously held equity method investment in the Savannah joint venture, as a result of the significant appreciation in the property's value since the completion of its original development and opening in April 2015.


EQUITY IN EARNINGS (LOSSES) OF UNCONSOLIDATED JOINT VENTURES
Equity in earnings (losses) of unconsolidated joint ventures decreased approximately $6.6$2.4 million or 924% in the 20172020 period compared to the 20162019 period. The decrease was due to the impact of COVID-19 on revenues.

Comparison of the nine months ended September 30, 2020 to the nine months ended September 30, 2019

NET INCOME (LOSS)
Net income decreased $143.4 million in the 2020 period to a net loss of $38.3 million as compared to net income of $105.1 million for the 2019 period. The decrease in income is primarily due to:
•significant revenue reductions caused by the COVID-19 pandemic discussed above,
•the $43.4 million gain recorded on the sale of four outlet centers in March 2019,
•the loss of revenues from the four outlet centers sold in March 2019,
•the $45.7 million impairment charge recognized in March 2020 on the outlet center in Mashantucket, Connecticut, and
•a decrease in equity in earnings (losses), which includes our share of an impairment charge totaling $3.1 million in the 2020 period related to the Saint-Sauveur, Quebec outlet center in our Canadian joint venture.
The decrease in net income was partially offset by the following:
•the $2.3 million gain recorded on the sale of our Terrell outlet center.
•decreased operating costs in the 2020 period due to lower operating and advertising costs as a result of COVID-19 government mandated store closures,
•a $4.4 million charge in the 2019 period related to the accelerated recognition of compensation cost as a result of a transition agreement with the Company’s former President and Chief Operating Officer in connection with his retirement (the “COO Transition Agreement”), and
•a $3.6 million foreign currency loss recorded in the 2019 period upon the sale of the Bromont property by the RioCan Canada joint venture.

In the tables below, information set forth for properties disposed includes the four outlet centers sold in March 2019 and the Terrell outlet center sold in August 2020.

RENTAL REVENUES
Rental revenues decreased $76.3 million in the 2020 period compared to the 2019 period. The following table sets forth the changes in various components of equity in earnings (losses) of unconsolidated joint venturesrental revenues (in thousands):
 20202019Increase/(Decrease)
Rental revenues from existing properties$266,391 $330,437 $(64,046)
Rental revenues from properties disposed1,390 9,259 (7,869)
Straight-line rent adjustments(2,417)6,938 (9,355)
Lease termination fees8,000 1,526 6,474 
Amortization of above and below market rent adjustments, net(2,282)(771)(1,511)
 $271,082 $347,389 $(76,307)
  2017 2016 Increase/(Decrease)
Equity in earnings (losses) from existing properties $(5,893) $(3) $(5,890)
Equity in earnings from properties previously held in unconsolidated joint ventures —
 718
 (718)
  $(5,893) $715
 $(6,608)


Equity in earnings (losses)Rental revenues from existing properties includes our share of impairment charges totaling $9.0 million in the 2017 period relateddecreased largely due to the Bromont and Saint-Sauveur outlet centers in Canada, and totaling $2.9 million in the 2016 period related to the Bromont outlet center. The decrease in equity in earnings from properties previously held in unconsolidated joint ventures in 2016 is related to the Savannah joint venture. We acquired our venture partner's interest in the joint venture in August 2016 and have consolidated the results of operationsimpact of the center since the acquisition date.

Comparison of$40.5 million COVID-19 pandemic-related revenue reduction in the nine months ended September 30, 20172020 as discussed above as well as the decline in overall portfolio occupancy rate to 92.9% as of the end of the current period compared to 95.9% as of the end of the prior year period. The decline in occupancy was impacted by space recaptured totaling approximately 586,000 square feet within our consolidated portfolio during the nine months ended September 30, 2016

NET INCOME
Net income decreased $140.3 million in2020 from the 2017 periodearly termination of leases related to $38.4 million asbankruptcies and brand-wide restructurings by retailers, compared to $178.7 million195,000 square feet for the 2016 period. The majority of this decrease was due to a loss on the early extinguishment of debt of $35.6 million in the 2017 period, a $95.5 million gain on the acquisition of our partners' equity interests in the Westgate and Savannah joint ventures in the 2016 period.

In the tables below, information set forth for new development represents our Daytona Beach outlet center, which opened in November 2016. Acquisitions include our Westgate and Savannah outlet centers, which were previously held in unconsolidated joint ventures prior to acquiring our partners' interest in each venture in June 2016 and August 2016, respectively. Properties disposed include our Westbrook outlet center and Fort Myers outlet center sold in May 2017 and January 2016, respectively.
BASE RENTALS
Base rentals increased $14.3 million, or 6%, in the 2017 period compared to the 2016 period. The following table sets forth the changes in various components of base rentals (in thousands):
  2017 2016 Change
Base rentals from existing properties $216,954
 $217,861
 $(907)
Base rentals from new development 5,836
 —
 5,836
Base rentals from acquisitions 16,042
 4,131
 11,911
Base rentals from properties disposed 1,605
 3,457
 (1,852)
Termination fees 2,796
 3,492
 (696)
Amortization of above and below market rent adjustments, net (1,766) (1,746) (20)
  $241,467
 $227,195
 $14,272



Base rentals from existing properties decreased primarily due to a slight decrease in average portfolio occupancy.

PERCENTAGE RENTALS
Percentage rentals decreased $673,000, or 9%, in the 2017 period compared to the 2016 period. Percentage rentals represents revenues based on a percentage of tenants' sales volume above predetermined levels ("contractual breakpoints") (in thousands):
  2017 2016 Increase/(Decrease)
Percentage rentals from existing properties $5,998
 $7,129
 $(1,131)
Percentage rentals from new development 106
 —
 106
Percentage rentals from acquisitions 629
 285
 344
Percentage rentals from properties disposed 65
 57
 8
  $6,798
 $7,471
 $(673)

Decrease in percentage rentals is primarily due to a decrease in average sales per square foot for certain tenants for the rolling twelvenine months ended September 30, 2017, compared2019.



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Further, we recognized a write-off to revenue of approximately $6.1 million of straight-line rents associated with the rolling twelve months ended September 30, 2016tenant bankruptcies and due to annual increases in contractual breakpoints in certain leases.

EXPENSE REIMBURSEMENTS
Expense reimbursements increased $7.7 million, or 8%, inuncollectible accounts. In addition, variable revenue which is derived from tenant sales was negatively impacted by mandatory closures of several centers for the 2017 period compared to the 2016 period. The following table sets forth the changes in various componentsfirst half of expense reimbursements (in thousands):
  2017 2016 Change
Expense reimbursements from existing properties $93,141
 $93,296
 $(155)
Expense reimbursements from new development 2,856
 156
 2,700
Expense reimbursements from acquisitions 8,052
 1,952
 6,100
Expense reimbursements from properties disposed 752
 1,717
 (965)
  $104,801
 $97,121
 $7,680

Expense reimbursements represent the contractual recovery from tenants of certain common area maintenance, insurance, property tax, promotional, advertising and management expenses. Certain expense reimbursements are based on the tenant's proportionate share2020 as a result of the allocable operating expenses for the property, and thus generally fluctuate consistently with the related expenses. Other expense reimbursements, such as promotional, advertising and certain CAM payments, represent contractual fixed rents and may escalate each year. See "Property Operating Expenses" below for a discussion of the decrease in operating expenses from our existing properties.COVID-19 pandemic.


MANAGEMENT, LEASING AND OTHER SERVICES
Management, leasing and other services decreased $1.5 million, or 46%,$581,000 in the 20172020 period compared to the 20162019 period. The following table sets forth the changes in various components of management, leasing and other services (in thousands):
 20202019Increase/(Decrease)
Management and marketing$1,156 $1,696 $(540)
Leasing and other fees50 71 (21)
Expense reimbursements from unconsolidated joint ventures2,156 2,176 (20)
Total Fees$3,362 $3,943 $(581)
  2017 2016 Change
Management and marketing $1,676
 $2,199
 $(523)
Development and leasing 87
 611
 (524)
Loan guarantee 13
 449
 (436)
  $1,776
 $3,259
 $(1,483)


The decrease in management,Management, leasing and other services is primarilyservice revenue decreased in the 2020 period due to having two fewer outlet centers in ourreduced management fee income from unconsolidated joint ventures which are earned on a cash basis. The COVID-19 pandemic resulted in materially lower tenant payments during the 2020 period which resulted in lower management fees.

OTHER REVENUES
Other revenues decreased $2.1 million in the 2017 period compared to the 2016 period. During 2016, we acquired our venture partners' equity interests in the Westgate and Savannah outlet centers and received no fees subsequent to the acquisition dates. Offsetting the impact of the acquisitions was the addition of one new center in an unconsolidated joint venture, the Columbus outlet center, which opened in June 2016.



OTHER INCOME
Other income increased 676,000, or 11% in the 20172020 period as compared to the 20162019 period. The following table sets forth the changes in various components of other incomerevenues (in thousands):
 20202019Increase/(Decrease)
Other revenues from existing properties$4,370 $6,424 $(2,054)
Other revenues from property disposed22 100 (78)
 $4,392 $6,524 $(2,132)
  2017 2016 Change
Other income from existing properties $6,043
 $6,004
 $39
Other income from new development 148
 —
 148
Other income from acquisitions 613
 162
 451
Other income from properties disposed 101
 63
 38
  $6,905
 $6,229
 $676


Other revenues from existing properties decreased primarily due to reductions in variable vending and other revenue sources due to the mandatory closure of a vast majority of stores in our outlet centers by local and state authorities for a portion of the 2020 period, as well as the COVID-19 pandemic impacting traffic to our centers and also partially due to the centers operating under reduced hours.

PROPERTY OPERATING EXPENSES
Property operating expenses increased $4.7decreased $16.3 million or 4% in the 20172020 period as compared to the 20162019 period. The following table sets forth the changes in various components of property operating expenses (in thousands):
 20202019Increase/(Decrease)
Property operating expenses from existing properties$97,066 $110,558 $(13,492)
Property operating expenses from property disposed1,012 3,969 (2,957)
Expenses related to unconsolidated joint ventures2,156 2,176 (20)
Other property operating expense1,757 1,549 208 
 $101,991 $118,252 $(16,261)
  2017 2016 Change
Property operating expenses from existing properties $104,135
 $106,147
 $(2,012)
Property operating expenses from new development 3,139
 163
 2,976
Property operating expenses from acquisitions 6,801
 1,689
 5,112
Property operating expenses from properties disposed 999
 2,329
 (1,330)
  $115,074
 $110,328
 $4,746


The decrease in property operating expenses fromat existing properties was dueprimarily reflects the lower costs needed to lower spendingoperate and advertise the centers while stores were closed under government mandates in response to the 2017 period for certain CAMCOVID-19 pandemic and marketing expenses.as a result of our stores operating under reduced operating hours subsequent to such stores reopening.





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GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses decreased $1.5$5.6 million or 4%, in the 20172020 period compared to the 20162019 period due primarily dueas a result of a $4.4 million charge in the 2019 period related to the 2016COO Transition Agreement. In addition as a result of COVID-19, the compensation costs of our executive officers and other employees were temporarily reduced during the 2020 period including executive severance.through salary and wage reductions and government assistance programs and virtually all travel and entertainment expenses were eliminated. These reductions were partially offset by higher expenses related to legal and professional fees.


ABANDONED PRE-DEVELOPMENT COSTSIMPAIRMENT CHARGE
During the 2017 period,first quarter of 2020, we decideddetermined that the estimated future undiscounted cash flows of our Foxwoods outlet center in Mashantucket, Connecticut did not exceed the property's carrying value due to terminate a purchase option for a pre-development stage project near Detroit, Michigan and as a result,decline in operating results. Therefore, we recorded a $528,000$45.7 million non-cash impairment charge representingin our consolidated statement of operations for the cumulative related pre-development costs.2020 period which equaled the excess of the property's carrying value over its estimated fair value.


DEPRECIATION AND AMORTIZATION
Depreciation and amortization costs increased $13.1decreased $5.0 million or 16%, in the 20172020 period compared to the 20162019 period. The following table sets forth the changes in various components of depreciation and amortization costs from the 20172019 period to the 20162020 period (in thousands):
 20202019Increase/(Decrease)
Depreciation and amortization expenses from existing properties$87,605 $91,295 $(3,690)
Depreciation and amortization from property disposed361 1,714 (1,353)
 $87,966 $93,009 $(5,043)
  2017 2016 Change
Depreciation and amortization expenses from existing properties $79,537
 $78,690
 $847
Depreciation and amortization expenses from new development 3,524
 —
 3,524
Depreciation and amortization expenses from acquisitions 11,437
 2,340
 9,097
Depreciation and amortization from properties disposed 677
 1,048
 (371)
  $95,175
 $82,078
 $13,097


Depreciation and amortization increaseddecreased at our existing properties primarily due to the accelerated amortization of lease related intangibles upon store closures and demolition activities at onelower basis of our centers.Foxwoods and Jeffersonville properties as a result of impairments recorded at March 31, 2020 and December 31, 2019, respectively.




INTEREST EXPENSE AND LOSS ON EARLY EXTINGUISHMENT OF DEBT
In July 2017, we completed an underwritten public offering of $300.0 million of 3.875% senior notes due 2027 (the "2027 Notes"). In August 2017, we used the net proceeds from the sale of the 2027 Notes, together with borrowings under our unsecured lines of credit, to redeem all of our 6.125% senior notes due 2020 (the "2020 Notes") (approximately $300.0 million in aggregate principal amount outstanding). The 2020 Notes were redeemed at par plus a make-whole premium of approximately $34.1 million. The loss on early extinguishment of debt includes the make-whole premium and approximately $1.5 million of costs written off related to a debt discount and the remaining net book value of deferred 2020 Notes origination costs.

Interest expense increased $5.3$1.1 million, or 12%, in the 20172020 period compared to the 20162019 period primarily dueas a result of our borrowing approximately $599.8 million under our lines of credit at the onset of the COVID-19 pandemic in March 2020 to (1)increase liquidity and preserve financial flexibility. Beginning in June 2020 through August 2020, we repaid the impactentire $599.8 million outstanding balance bringing the outstanding balance to zero as of converting throughout 2016 $525.0 million of debt with floating interest rates to higher fixed interest rates, (2) the 30-day LIBOR, which impacts the interest rate associated with our floating rate debt, increasing relative to its level in the 2016 period, (3) and the additional debt incurred related to the 2016 acquisitions of Westgate and Savannah.September 30, 2020.


GAIN ON SALE OF ASSETS
In May 2017,August 2020, we sold our Westbrooka non-core outlet center in Terrell, Texas for approximately $40.0net proceeds of $7.6 million, which resulted in a gain on sale of $6.9 million.

GAIN ON PREVIOUSLY HELD INTEREST IN ACQUIRED JOINT VENTURE
On June 30, 2016, we completed the purchaseassets of our venture partner's interest in the Westgate joint venture, which owned the outlet center in Glendale, Arizona, for a total cash price of approximately $40.9$2.3 million. The purchase was funded with borrowingsproceeds from the sale of this unencumbered asset were used to pay down balances outstanding under our unsecured lines of credit. Prior to the transaction,

In March 2019, we owned a 58% interestsold four outlet centers for net proceeds of approximately $128.2 million, which resulted in the Westgate joint venture since its formation in 2012 and accounted for it under the equity method of accounting. The joint venture is now wholly-owned and is consolidated in our financial results as of June 30, 2016. As a result of acquiring the remaining interest in the Westgate joint venture, we recorded a gain on sale of $49.3 million, which representedassets of $43.4 million. The proceeds from the difference between the carrying book value and the fair valuesale of our previously held equity method investment in the joint venture, as a result of the significant appreciation in the property's value since the completion of its original development and opening.

In August 2016, the Savannah joint venture, which owned the outlet center in Pooler, Georgia distributed all outparcels along with $15.0 million in cash considerationthese unencumbered assets were used to the other partner in exchange for the partner's ownership interest. We contributed the $15.0 million in cash consideration to the joint venture, which we funded with borrowingspay down balances outstanding under our unsecured lines of credit. The

OTHER INCOME (EXPENSE)
In May 2019, the RioCan joint venture is now wholly-owned by us and has been consolidatedclosed on the sale of its outlet center in our financial results sinceBromont for net proceeds of approximately $6.4 million. Our share of the acquisition date.proceeds was approximately $3.2 million. As a result of acquiring the remaining interest in the Savannah joint venture,this transaction, we recorded a gainforeign currency loss of $46.3approximately $3.6 million in other income (expense), which represented the difference between the carrying book value and the fair value of ourhad been previously held equity method investmentrecorded in the Savannah joint venture, as a result of the significant appreciation in the property's value since the completion of its original development and opening in April 2015.other comprehensive income.


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EQUITY IN EARNINGS (LOSSES) OF UNCONSOLIDATED JOINT VENTURES
Equity in earnings (losses) of unconsolidated joint ventures decreased approximately $8.9$7.1 million or 116% in the 20172020 period compared to the 20162019 period. The followingIn the table setsbelow, information set forth for properties disposed includes the changesBromont outlet center in various components of equityour Canadian joint venture, which was sold in earnings (losses) of unconsolidated joint ventures (in thousands):May 2019.
 20202019Increase/(Decrease)
Equity in earnings (losses) from existing properties$(1,490)$5,596 $(7,086)
Equity in earnings from property disposed— 8 (8)
 $(1,490)$5,604 $(7,094)
  2017 2016 Change
Equity in earnings (losses) from existing properties $(2,293) $3,671
 $(5,964)
Equity in earnings from new development 1,092
 366
 726
Equity in earnings from properties previously held in unconsolidated joint ventures —
 3,643
 (3,643)
  $(1,201) $7,680
 $(8,881)


Equity in earnings (losses) from existing properties includes our share of an impairment chargescharge totaling $9.0$3.1 million in the 20172020 period related to the BromontSaint-Sauveur, Quebec outlet center in our Canadian joint venture. The impairment charge was primarily driven by deterioration of net operating income caused by market competition and Saint-Sauveur outlet centersthe COVID-19 pandemic. Equity in Canada, and totaling $2.9 million in the 2016 period related to the Bromont outlet center. . The increase in equity in earnings (losses) of unconsolidated joint ventures from new development isexisting properties also decreased due to the incremental earnings from the Columbus outlet center, which opened in June 2016. The decrease in equity in earnings (losses) from properties previously held in unconsolidated joint ventures in 2016 is related to the Westgate and Savannah joint ventures. We acquired our venture partners' interest in eachimpact of these joint ventures in June 2016 and August 2016, respectively, and have consolidated the results of operations of these centers since the respective acquisition date.COVID-19 on revenues.





LIQUIDITY AND CAPITAL RESOURCES OF THE COMPANY


In this "Liquidity“Liquidity and Capital Resources of the Company"Company” section, the term "the Company"“the Company” refers only to Tanger Factory Outlet Centers, Inc. on an unconsolidated basis, excluding the Operating Partnership.


The Company'sCompany’s business is operated primarily through the Operating Partnership. The Company issues public equity from time to time, but does not otherwise generate any capital itself or conduct any business itself, other than incurring certain expenses in operating as a public company, which are fully reimbursed by the Operating Partnership. The Company does not hold any indebtedness, and its only material asset is its ownership of partnership interests of the Operating Partnership. The Company'sCompany’s principal funding requirement is the payment of dividends on its common shares. The Company'sCompany’s principal source of funding for its dividend payments is distributions it receives from the Operating Partnership.


Through its ownership of the sole general partner of the Operating Partnership, the Company has the full, exclusive and complete responsibility for the Operating Partnership'sPartnership’s day-to-day management and control. The Company causes the Operating Partnership to distribute all, or such portion as the Company may in its discretion determine, of its available cash in the manner provided in the Operating Partnership'sPartnership’s partnership agreement. The Company receives proceeds from equity issuances from time to time, but is required by the Operating Partnership'sPartnership’s partnership agreement to contribute the proceeds from its equity issuances to the Operating Partnership in exchange for partnership units of the Operating Partnership.


The Company isWe are a well-known seasoned issuer with a shelf registration that expires in June 2018March 2021 that allows the Company to register unspecified various classes of equity securities and the Operating Partnership to register unspecified, various classes of debt securities. As circumstances warrant, the Company may issue equity from time to time on an opportunistic basis, dependent upon market conditions and available pricing. The Operating Partnership may use the proceeds to repay debt, including borrowings under its lines of credit, to develop new or existing properties, to make acquisitions of properties or portfolios of properties, to invest in existing or newly created joint ventures or for general corporate purposes.


The liquidity of the Company is dependent on the Operating Partnership'sPartnership’s ability to make sufficient distributions to the Company. The Operating Partnership is a party to loan agreements with various bank lenders that require the Operating Partnership to comply with various financial and other covenants before it may make distributions to the Company. The Company also guarantees some of the Operating Partnership'sPartnership’s debt. If the Operating Partnership fails to fulfill its debt requirements, which trigger the Company'sCompany’s guarantee obligations, then the Company may be required to fulfill its cash payment commitments under such guarantees. However, the Company'sCompany’s only material asset is its investment in the Operating Partnership.





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The Company believes the Operating Partnership'sPartnership’s sources of working capital, specifically its cash flow from operations and borrowings available under its unsecured lines of credit,cash on hand, are adequate for it to make its distribution payments to the Company and, in turn, for the Company to make itsany minimum dividend payments to its shareholders.shareholders and to finance its continued operations, growth strategy and additional expenses we expect to incur for at least the next twelve months. However, there can be no assurance that the Operating Partnership'sPartnership’s sources of capital will continue to be available at all or in amounts sufficient to meet its needs, including its ability to make distribution payments to the Company. The unavailability of capital could adversely affect the Operating Partnership'sPartnership’s ability to pay its distributions to the Company which will, in turn, adversely affect the Company'sCompany’s ability to pay cash dividends to its shareholders. Our ability to access capital on favorable terms as well as to use cash from operations to continue to meet our liquidity needs, all of which are highly uncertain and cannot be predicted, could be affected by various risks and uncertainties, including, but not limited to, the effects of the COVID-19 pandemic and other risks detailed in Part II, Item 1A titled “Risk Factors.”


For the Company to maintain its qualification as a REIT, it must pay dividends to its shareholders aggregating annually at least 90% of its taxable income (excluding capital gains). While historically the Company has satisfied this distribution requirement by making cash distributions to its shareholders, it may choose to satisfy this requirement by making distributions of cash or other property, including, in limited circumstances, the Company'sCompany’s own shares.


As a result of this distribution requirement, the Operating Partnership cannot rely on retained earnings to fund its on-going operations to the same extent that other companies whose parent companies are not real estate investment trusts can. The Company may need to continue to raise capital in the equity markets to fund the Operating Partnership'sPartnership’s working capital needs, as well as potential new developments, expansions and renovations of existing properties, acquisitions, or investments in existing or newly created joint ventures.




The Company currently consolidates the Operating Partnership because it has (1) the power to direct the activities of the Operating Partnership that most significantly impact the Operating Partnership’s economic performance and (2) the obligation to absorb losses and the right to receive the residual returns of the Operating Partnership that could be potentially significant. The Company does not have significant assets other than its investment in the Operating Partnership. Therefore, the assets and liabilities and the revenues and expenses of the Company and the Operating Partnership are the same on their respective financial statements, except for immaterial differences related to cash, other assets and accrued liabilities that arise from public company expenses paid by the Company. However, all debt is held directly or indirectly at the Operating Partnership level, and the Company has guaranteed some of the Operating Partnership'sPartnership’s unsecured debt as discussed below. Because the Company consolidates the Operating Partnership, the section entitled "Liquidity“Liquidity and Capital Resources of the Operating Partnership"Partnership” should be read in conjunction with this section to understand the liquidity and capital resources of the Company on a consolidated basis and how the Company is operated as a whole.


In May 2017, we announced that ourFebruary 2019, the Company’s Board of Directors authorized the repurchase of up to $125.0an additional $44.3 million of our outstanding common shares as market conditions warrant over a period commencing onfor an aggregate authorization of $169.3 million until May 19, 2017 and expiring on May 18, 2019.2021. Repurchases may be made from time to time through open market, privately-negotiated, structured or derivative transactions (including accelerated share repurchase transactions), or other methods of acquiring shares. The Company intends to structure any open market purchases to occur within pricing and volume requirements of Rule 10b-18.  The Company may, from time to time, enter into Rule 10b5-1 plans to facilitate the repurchase of its shares under this authorization. Between May 19, 2017However, the Company has temporarily suspended share repurchases for at least the twelve months starting July 1, 2020 as the June 2020 amendments to our debt agreements for our lines of credit and August 25, 2017 webank term loan prohibit share repurchases during such time and in order to preserve our liquidity position.

Shares repurchased approximately 1.9 million common shares on the open market at an average price of $25.80, totaling approximately $49.3 million exclusive of commissions and related fees. were as follows:
Three months ended September 30,Nine months ended September 30,
2020201920202019
Total number of shares purchased— 650,929 — 1,209,328 
Average price paid per share$— $15.34 $— $16.52 
Total price paid exclusive of commissions and related fees (in thousands)$— $9,987 $— $19,976 

56

The remaining amount authorized to be repurchased under the program as of September 30, 20172020 was approximately $75.7$80.0 million.


In October 2017,January 2020, the Company's Board of Directors declared a $0.3425$0.355 cash dividend per common share payable on November 15, 2017February 14, 2020 to each shareholder of record on OctoberJanuary 31, 2017,2020, and the Trustees of Tanger GP Trust declared a $0.3425$0.355 cash distribution per Operating Partnership unit to the Operating Partnership's unitholders.


Additionally in January 2020, the Company's Board of Directors declared a quarterly cash dividend of $0.3575 per common share payable on May 15, 2020 to holders of record on April 30, 2020, and the Trustees of Tanger GP Trust declared a cash distribution of $0.3575 per Operating Partnership unit to the Operating Partnership's unitholders.


In June 2020, we amended our debt agreements for our lines of credit and bank term loan. These amendments prohibit repurchases of our common shares during the twelve months starting July 1, 2020.

Given the uncertainty related to the pandemic’s near and potential long-term impact, the Company’s Board of Directors temporarily suspended dividend distributions to conserve approximately $35.0 million in cash per quarter and preserve our balance sheet strength and flexibility. The Board continues to evaluate the potential for future dividend distributions on a quarterly basis. We expect to remain in compliance with REIT taxable income distribution requirements for the 2020 tax year.

LIQUIDITY AND CAPITAL RESOURCES OF THE OPERATING PARTNERSHIP


General Overview


In this "Liquidity“Liquidity and Capital Resources of the Operating Partnership"Partnership” section, the terms "we"“we”, "our"“our” and "us"“us” refer to the Operating Partnership or the Operating Partnership and the Company together, as the text requires.


Property rental income represents our primary source to pay property operating expenses, debt service, distributions and capital expenditures needed to maintain our properties.and distributions, excluding non-recurring capital expenditures and acquisitions. To the extent that our cash flow from operating activities is insufficient to cover oursuch non-recurring capital needs, including new developments, expansions of existing outlet centers,expenditures and acquisitions, and investments in unconsolidated joint ventures, we finance such activities from borrowings under our unsecured lines of credit, to the extent available, or from the proceeds from the Operating Partnership'sPartnership’s debt offerings and the Company'sCompany’s equity offerings.


We believe we achieve a strong and flexible financial position by attempting to: (1) maintain a conservative leverage position relative to our portfolio when pursuing new development, expansion and acquisition opportunities, (2) extend and sequence debt maturities, (3) manage our interest rate risk through a proper mix of fixed and variable rate debt, (4) maintain access to liquidity by using our unsecured lines of credit in a conservative manner and (5) preserve internally generated sources of capital by strategically divesting of underperforming assets and maintaining a conservative distribution payout ratio. We manage our capital structure to reflect a long term investment approach and utilize multiple sources of capital to meet our requirements.



Our ability to access capital on favorable terms as well as to use cash from operations to continue to meet our liquidity needs, all of which are highly uncertain and cannot be predicted, could be affected by various risks and uncertainties, including, but not limited to, the effects of the COVID-19 pandemic and other risks detailed in Part II, Item 1A titled “Risk Factors.”


In March 2020, we offered all tenants in our consolidated portfolio the option to defer 100% of April and May rents interest free, payable in equal installments due in January and February of 2021. For details of our expected collection of rents billed in the second and third quarters and in October, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations-COVID-19 Pandemic”.

57

Cash Flows

The following table sets forth our changes in cash flows (in thousands):
Nine months ended September 30,
 20202019Change
Net cash provided by operating activities$92,033 $158,971 $(66,938)
Net cash provided by (used in) investing activities(12,287)107,943 (120,230)
Net cash used in financing activities(76,345)(271,299)194,954 
Effect of foreign currency rate changes on cash and equivalents(208)(32)(176)
Net increase (decrease) in cash and cash equivalents$3,193 $(4,417)$7,610 
  Nine months ended September 30,  
  2017 2016 Change
Net cash provided by operating activities $181,530
 $177,723
 $3,807
Net cash used in investing activities (89,052) (39,490) (49,562)
Net cash used in financing activities (95,954) (134,464) 38,510
Effect of foreign currency rate changes on cash and equivalents (54) 532
 (586)
Net increase (decrease) in cash and cash equivalents $(3,530) $4,301
 $(7,831)


Operating Activities


The increasedecrease in net cash provided by operating activities in the 2017 period compared to the 2016 period was primarily due to incremental operating incomereduced revenues, as well as uncollected and deferred contractual rents as a result of COVID-19. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations-COVID-19 Pandemic”. In addition, the acquisitiondecrease was also due to the sale of our venture partners' interest in our Westgate and Savannahthe four outlet centers previously held in unconsolidated joint ventures, in June 2016the 2019 period, lower average portfolio occupancy during 2020 compared to 2019 and August 2016, respectively, and the opening of our newest wholly owned outlet center in Daytona Beach, FL, which opened in November 2016.rent modifications for certain tenants.


Investing Activities


The primary cause for the increasedecrease in net cash used inprovided by investing activities was due to the changenet proceeds of approximately $128.2 million from the sale of the four outlet centers in restricted cashthe 2019 period, partially offset by the net proceeds from the sale of $118.4 million.our Terrell, Texas outlet center. In addition, during the 20162020 period we used restricted cash, which represented a portionhad lower distributions in excess of the proceeds receivedcumulative earnings from certain assets sales in 2015, to pay a portion of our $150.0 million floating rate mortgage loan, which had an original maturity date in August 2018, and our $28.4 million deferred financing obligation, both of which related to our Deer Park outlet center. Partially offsetting the increase in cash used in the 2017 period comparedunconsolidated joint ventures due to the 2016 period was the cash used to acquire our venture partners' interest in our Westgate joint venture and Savannah joint venture in the 2016 period.COVID-19 pandemic.


Financing Activities


The primary cause for the decrease in net cash used in financing activities iswas due to the incremental borrowings required to fund the Company's development needs, netpaying down our unsecured lines of asset sales proceeds,credit in the 2017 periodprior year using proceeds from the sale of our Nags Head, Ocean City, Park City and Williamsburg outlet centers. The prior year also included repurchases of common shares of $20.0 million as compared to no repurchases for the 2016 period. A significant portion of the 2016 development needs was funded with the $118.4 million held in restricted cash during that2020 period. In addition, cash used wasthe prior year had higher individend payments. Given the 2016 period compareduncertainty related to the 2017 period due to a specialpandemic’s near and potential long-term impact, the Company’s Board of Directors temporarily suspended dividend of approximately $21.0 million that was paid during 2016.distributions after paying the initial first and second quarter dividends.



58


Capital Expenditures


The following table details our capital expenditures (in thousands):
Nine months ended September 30,
 20202019Change
Capital expenditures analysis:
New outlet center developments and expansions$1,967 $6,913 $(4,946)
Major outlet center renovations5,217 919 4,298 
Second generation tenant allowances8,549 15,171 (6,622)
Other capital expenditures7,437 15,135 (7,698)
23,170 38,138 (14,968)
Conversion from accrual to cash basis(98)(2,930)2,832 
Additions to rental property-cash basis$23,072 $35,208 $(12,136)
  Nine months ended September 30,  
  2017 2016 Change
Capital expenditures analysis:      
New center developments $87,376
 $74,441
 $12,935
Major center renovations 13,813
 13,908
 (95)
Second generation tenant allowances 15,815
 6,963
 8,852
Other capital expenditures 19,791
 8,576
 11,215
  136,795
 103,888
 32,907
Conversion from accrual to cash basis (4,183) 8,325
 (12,508)
Additions to rental property-cash basis $132,612
 $112,213
 $20,399
•New developments and expansions decreased due to a suspension of major development projects because of the uncertainty caused by the COVID-19 pandemic. The 2019 period included expenditures related to finalizing the expansion in our Lancaster, PA outlet center development expenditures, which includeand other first generation tenant allowances relate to construction expenditures for our Fort Worth, Daytona Beach, Lancaster and Tiltonthroughout the portfolio.

•Major outlet centers in the 2017 period. The 2016 period included new center development expenditures for our Daytona Beach, Fort Worth, Southaven, and San Marcos outlet centers.
Major center renovations in both the 2017 and 2016 periods included construction activities at2020 period includes costs related to bringing two magnate tenants to our Riverhead and our Rehoboth Beach outlet centers. The 2016 period also included renovations at our Howell outlet center while the 2017 period also included renovations at our Myrtle Beach 17Lancaster outlet center. We expect to spend approximately $7.7 million for the remainder of 2017 to complete our current renovation projects.
The increase in other
•Other capital expenditures decreased in the 20172020 period is primarilyas we decided to defer all capital projects except essential and life-safety projects due to the installation of solar panels at several of our outlet centers and tenant interior build outs.expected impact on cash flows caused by the COVID-19 pandemic.
Current Developments

We intend to continue to grow our portfolio by developing, expanding or acquiring additional outlet centers. In the section below, we describe the new developments that are either currently planned, underway or recently completed. However, you should note that any developments or expansions that we, or a joint venture that we have an ownership interest in, have planned or anticipated may not be started or completed as scheduled, or may not result in accretive net income or funds from operations ("FFO"). See the section "Non-GAAP Supplemental Earnings Measures" - "Funds From Operations" below for further discussion of FFO.

In addition, we regularly evaluate acquisition or disposition proposals and engage from time to time in negotiations for acquisitions or dispositions of properties. We may also enter into letters of intent for the purchase or sale of properties. Any prospective acquisition or disposition that is being evaluated or which is subject to a letter of intent may not be consummated, or if consummated, may not result in an increase in earnings or liquidity.

New Development of Consolidated Outlet Centers

The following table summarizes our projects under development as of September 30, 2017:

Project 
Approximate square feet
(in 000's)
 Projected Total Net Cost per Square Foot
(in dollars)		 Projected Total Net Cost
(in millions)		 Costs Incurred to Date
(in millions)		 Projected Opening
New development:          
Fort Worth 352
 $256
 $90.2
 $74.7
 October 2017




Lancaster Expansion

In September 2017, we opened a 123,000 square foot expansion of our outlet center in Lancaster, Pennsylvania.

Fort Worth

In October 2017, we opened a 352,000 square foot wholly-owned outlet center center in the greater Fort Worth, Texas area. The outlet center is located within the 279-acre Champions Circle mixed-use development adjacent to Texas Motor Speedway.

Other Potential Future Developments, Acquisitions and Dispositions


As of the date of this filing, weWe are in the initial study period for potential new developments.developments, including a potential site in Nashville, Tennessee. We may also use joint venture arrangements to develop other potential sites. ThereGiven the uncertainties of the COVID-19 Pandemic, we have temporarily deferred the Nashville project. Accordingly, there can be no assurance however, that these potential future projects will ultimately be developed.


In the case of projects to be wholly-owned by us, we would expect to fund these projects from amounts available under our unsecured lines of credit, but may also fund them with capital from additional public debt and equity offerings. For projects to be developed through joint venture arrangements, we may use collateralized construction loans to fund a portion of the project, with our share of the equity requirements funded from sources described above. See “Off-Balance Sheet Arrangements” for a discussion of unconsolidated joint venture development activities.


We intend to continue to grow our portfolio by developing, expanding or acquiring additional outlet centers. However, you should note that any developments or expansions that we, or a joint venture that we have an ownership interest in, have planned or anticipated may not be started or completed as scheduled, or may not result in accretive net income or funds from operations (“FFO”). See the section “Non-GAAP Supplemental Earnings Measures - Funds From Operations” below for further discussion of FFO. In addition, we regularly evaluate acquisition or disposition proposals and engage from time to time in negotiations for acquisitions or dispositions of properties. We may also enter into letters of intent for the purchase or sale of properties. Any prospective acquisition or disposition that is being evaluated or which is subject to a letter of intent may not be consummated, or if consummated, may not result in an increase in earnings or liquidity.

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Financing Arrangements


In March 2020, in response to the COVID-19 pandemic, we drew down approximately $599.8 million under our unsecured lines of credit to increase liquidity and preserve financial flexibility to help ensure that we were able to meet our obligations for a sustained period. Beginning in June 2020 through August 2020, we repaid the entire $599.8 million outstanding balance bringing the outstanding balance to zero as of September 30, 2020.
As of September 30, 2017,2020, unsecured borrowings represented 91%95% of our outstanding debt and 89%92% of the gross book value of our real estate portfolio was unencumbered. We maintain unsecured lines of credit that provide for borrowings of up to $520.0 million. The unsecured lines of credit include a $20.0 million liquidity line and a $500.0 million syndicated line. Our unsecured lines of credit bear interest at a rate of LIBOR + 0.90% and the syndicated line may be increased up to $1.0 billion through an accordion feature in certain circumstances. The unsecured lines of credit have an expiration date of October 24, 2019 with an option for a one year extension. The Company guarantees the Operating Partnership'sPartnership’s obligations under these lines. As of September 30, 2017, we had $366.3 million available under our unsecured lines of credit after taking into account outstanding letters of credit of $5.5 million.

In July 2017, we completed an underwritten public offering of $300.0 million of our 3.875% senior notes due 2027 (the "2027 Notes"). The 2027 Notes priced at 99.579% of the principal amount to yield 3.926% to maturity. The 2027 Notes pay interest semi-annually at a rate of 3.875% per annum and mature on July 15, 2027. The estimated net proceeds from the offering, after deducting the underwriting discount and offering expenses, were approximately $295.9 million. In August 2017, we used the net proceeds from the sale of the 2027 Notes, together with borrowings under our unsecured lines of credit, to redeem all of our 6.125% senior notes due 2020 (the "2020 Notes") (approximately $300.0 million in aggregate principal amount outstanding). The 2020 Notes were redeemed at par plus a “make-whole” premium of approximately $34.1 million.

Subsequent to quarter end, we successfully settled litigation with the estate of our former partner in the Foxwoods, Connecticut joint venture.  In return for mutual releases and no cash consideration, the estate tendered its partnership interest to the Company. Prior to this settlement, we had a 100% economic interest in the consolidated joint venture as a result of our preferred equity interest and the capital and distribution provisions in the joint venture agreement.  On November 3, 2017, Tanger repaid the $70.3 million floating rate mortgage loan secured by the property with borrowings under its unsecured floating rate lines of credit.


We intend to retain the ability to raise additional capital, including public debt or equity, to pursue attractive investment opportunities that may arise and to otherwise act in a manner that we believe to be in the best interests of our shareholders and unitholders. The Company is aand Operating Partnership are well-known seasoned issuerissuers with a joint shelf registration with the Operating Partnership,statement on Form S-3, expiring in June 2018,March 2021, that allows us to register unspecified amounts of different classes of securities on Form S-3.securities. To generate capital to reinvest into other attractive investment opportunities, we may also consider the use of additional operational and developmental joint ventures, the sale or lease of outparcels on our existing properties and the sale of certain properties that do not meet our long-term investment criteria. Based on cash provided by operations, existing lines of credit, ongoing relationships with certain financial institutions and our ability to sell debt or issue equity subject to market conditions, we believe that we have access to the necessary financing to fund the planned capital expenditures throughfor at least the end of 2018.next twelve months.




We anticipate that adequate cash will be available to fund our operating and administrative expenses, regular debt service obligations, and the payment of dividends in accordance with REIT requirements in both the short and long-term. Although we receive most of our rental payments on a monthly basis, distributions to shareholders and unitholders are typically made quarterly and interest payments on the senior, unsecured notes are made semi-annually. Amounts accumulated for such payments will be used in the interim to reduce the outstanding borrowings under our existing unsecured lines of credit or invested in short-term money market or other suitable instruments.


The extent to which the COVID-19 pandemic continues to impact our financial condition, results of operations and cash flows will depend on future developments which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, the timing or effectiveness of any vaccines or treatments, and the direct and indirect economic effects of the pandemic and containment measures, among others. As of October 31, 2020, our total liquidity was approximately $640 million, including cash and cash equivalents on our balance sheet and unused capacity under our lines of credit. Based on estimated monthly cash expenditures of approximately $22.5 million (excluding dividends and debt maturities) for the remainder of 2020, we expect to have sufficient liquidity to meet our obligations for at least the next 12 months. For further discussion of COVID-19, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations-COVID-19 Pandemic”.

We believe our current balance sheet position is financially sound; however, due to the economic uncertainty caused by the COVID-19 pandemic and the inherent uncertainty and unpredictability of the capital and credit markets, we can give no assurance that affordable access to capital will exist between now and when our next significant debt matures, which is our unsecured lines of credit to the extent there are amounts outstanding. The unsecured lines of credit expire in October 2021, with a one-year extension option whereby we may extend the maturity whichto October 2022.
The interest rate spreads associated with our unsecured lines of credit and our unsecured term loan are based on the higher of our two investment grade credit ratings.  Changes to our credit ratings could cause our interest rate spread to adjust accordingly. In February 2020, due to a change in our credit rating, our interest rate spread over LIBOR on our $600.0 million unsecured line of credit facilities, occurs in 2020 assuming the extension option is exercised.facility increased from 0.875% to 1.0% and our annual facility fee increased from 0.15% to 0.20%. In addition, our interest rate spread over LIBOR on our $350.0 million unsecured term loan increased from 0.90% to 1.0%.

The Operating Partnership'sPartnership’s debt agreements require the maintenance of certain ratios, including debt service coverage and leverage, and limit the payment of dividends such that dividends and distributions will not exceed
60

funds from operations, as defined in the agreements, for the prior fiscal year on an annual basis or 95% on a cumulative basis.

In June 2020, we amended the debt agreements for our lines of credit and bank term loan, primarily to improve future covenant flexibility. The amendments, among other things, allow us to access the existing surge leverage provision, which provides for an increase to the maximum thresholds to 65% from 60% for total leverage and unsecured leverage, for twelve months starting July 1, 2020, during which time share repurchases are prohibited. Additionally, the leverage covenants are determined based on the calculation period which is modified to be based on the immediately preceding three calendar month period annualized for the calculation date occurring on December 31, 2020; the immediately preceding six calendar month period annualized for the calculation date occurring on March 31, 2021; the immediately preceding nine calendar month period annualized for the calculation date occurring on June 30, 2021; and for all other calculation dates occurring during the term on the agreement, the immediately preceding twelve calendar month period. Some definitional modifications related to the calculation of certain covenants are permanent, including the netting of cash balances in excess of $30.0 million (or debt maturing in the next 24 months, if less) as well as using adjusted EBITDA, which adds back general and administrative expenses not attributable to the subsidiaries or properties and deducts a management fee of 3% of rental revenues in liability and asset calculations for certain covenants. The amendments revised the interest rate to provide a LIBOR floor of 0.25% for the portions of the lines of credit and bank term loan that are not fixed with an interest rate swap. Although the amended covenants provide additional flexibility and we expect to remain in compliance with such covenants, the potential impacts from COVID-19 are highly uncertain and therefore could impact covenant compliance in the future.

We have historically been and currently are in compliance with all of our debt covenants. We expect to remain inWhile the amendments discussed above will provide additional covenant flexibility, the financial impact of the COVID-19 pandemic could potentially negatively impact our future compliance with allfinancial covenants of our existingcredit facilities, term loan and other debt covenants; however, should circumstances arise thatagreements and result in a default and potentially an acceleration of indebtedness. Our continued compliance with these covenants depends on many factors and could be impacted by current or future economic conditions associated with the COVID-19 pandemic. Failure to comply with these covenants would cause usresult in a default which, if we were unable to becure or obtain a waiver from the lenders, could accelerate the repayment obligations. Further, in the event of default, the various lenders wouldCompany may be restricted from paying dividends to its shareholders in excess of dividends required to maintain its REIT qualification. Accordingly, an event of default could have a material and adverse impact on us. As a result, we have considered our short-term (one year or less from the date of filing these financial statements) liquidity needs and the adequacy of our estimated cash flows from operating activities and other financing sources to meet these needs. These other sources include but are not limited to: existing cash, ongoing relationships with certain financial institutions, our ability to acceleratesell debt or issue equity subject to market conditions and proceeds from the maturity onpotential sale of non-core assets. We believe that we have access to the necessary financing to fund our outstanding debt.short-term liquidity needs.


WeAs of September 30, 2020, we believe our most restrictive covenants are contained in our senior, unsecured notes. Key financial covenants and their covenant levels, which are calculated based on contractual terms, include the following:
Senior unsecured notes financial covenantsRequiredActual
Total consolidated debt to adjusted total assets<60%5247 %
Total secured debt to adjusted total assets<40%53 %
Total unencumbered assets to unsecured debt>150%184203 %


In addition key financial covenants for our line of credit and term loan, include the following:

RequiredActual
Total Liabilities to Total Adjusted Asset Value
<65% (1)
45 %
Secured Indebtedness to Adjusted Unencumbered Asset Value<35%6 %
EBITDA to Fixed Charges>1.53.4 
Total Unsecured Indebtedness to Adjusted Unencumbered Asset Value
<65% (1)
41 %
Unencumbered Interest Coverage Ratio>1.53.9 
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(1)In June 2020, we amended the debt agreements for our lines of credit and bank term loan which, among other things, allow us to access the existing surge leverage provision, which provides for an increase to the maximum thresholds to 65% from 60% for total leverage and unsecured leverage, for twelve months starting July 1, 2020.

Depending on the future economic impact of COVID-19, other convents related to credit facilities, term loans, and other debt obligations could become one of our most restrictive covenants.

CONTRACTUAL OBLIGATIONS

There were no material changes in our commitments during the nine months ended September 30, 2020 under contractual obligations from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019, other than the following updates to our contractual obligations for debt and interest payments over the next five years and thereafter as of September 30, 2020 (in thousands):
Contractual ObligationsRemainder of 20202021202220232024ThereafterTotal
Debt (1)
$910 $57,193 $4,436 $254,768 $605,140 $657,206 $1,579,653 
Interest payments (2)
$16,444 $50,297 $48,237 $47,098 $33,576 $48,517 $244,169 

(1)These amounts represent total future cash payments related to debt obligations outstanding as of September 30, 2020.
(2)These amounts represent future interest payments related to our debt obligations based on the fixed and variable interest rates specified in the associated debt agreements, including the effects of our interest rate swaps. All of our variable rate debt agreements are based on the one month LIBOR rate or a LIBOR floor of 0.25%, thus for purposes of calculating future interest amounts on variable interest rate debt, the one month LIBOR rate as of September 30, 2020 was used.


OFF-BALANCE SHEET ARRANGEMENTS


The following tableWe have partial ownership interests in seven unconsolidated outlet centers totaling approximately 2.2 million square feet, including three outlet centers in Canada. See Note 5 to the consolidated financial statements for details certain information as of September 30, 2017 about various unconsolidated real estateour individual joint ventures, including, but not limited to, carrying values of our investments, fees we receive for services provided to the joint ventures, recent development and financing transactions and condensed combined summary financial information.

We may elect to fund cash needs of a joint venture through equity contributions (generally on a basis proportionate to our ownership interests), advances or partner loans, although such funding is not typically required contractually or otherwise. We separately report investments in joint ventures for which accumulated distributions have exceeded investments in, and our share of net income or loss of, the joint ventures within other liabilities in the consolidated balance sheets because we have an ownership interest:are committed and intend to provide further financial support to these joint ventures. We believe our joint ventures will be able to fund their operating and capital needs for the next twelve months based on their sources of working capital, specifically cash flow from operations, access to contributions from partners, and ability to refinance debt obligations, including the ability to exercise upcoming extensions of near term maturities.
Joint Venture Outlet Center Location Ownership % 
Square Feet
(in 000's)
 Carrying Value of Investment (in millions)
Columbus Columbus, OH 50.0% 355
 $6.8
National Harbor National Harbor, MD 50.0% 341
 2.4
RioCan Canada Various 50.0% 924
 116.6
Investments included in total assets     $125.8
         
Charlotte(1)
 Charlotte, NC 50.0% 398
 $(3.6)
Galveston/Houston(1)
 Texas City, TX 50.0% 353
 (12.5)
Investments included in other liabilities     $(16.1)
(1)The negative carrying value is due to the distributions of proceeds from mortgage loans and quarterly distributions of excess cash flow exceeding the original contributions from the partners.


Our joint ventures are generally subject to buy-sell provisions which are customary fortypically encumbered by a mortgage on the joint venture agreements in the real estate industry. Either partner may initiate these provisions (subject to any applicable lock up period), which could result in either the sale of our interest or the use of available cash or additional borrowings to acquire the other party's interest. Under these provisions, one partner sets a price for the property, then the other partner has the option to either (1) purchase their partner's interest based on that price or (2) sell its interest to the other partner based on that price. Since the partner other than the partner who triggers the provision has the option to be the buyer or seller, we don't consider this arrangement to be a mandatory redeemable obligation.



property. We provide guarantees to lenders for our joint ventures which include standard non-recourse carve out indemnifications for losses arising from items such as but not limited to fraud, physical waste, payment of taxes, environmental indemnities, misapplication of insurance proceeds or security deposits and failure to maintain required insurance. A default by a joint venture under its debt obligations may expose us to liability under the guaranty. For construction and termmortgage loans, we may include a guaranty of completion as well as a principal guaranty ranging from 5% to 100% of principal.  The principal guarantees include terms for release based upon satisfactory completion of construction and performance targets including occupancy thresholds and minimum debt service coverage tests. Our joint ventures may contain make whole provisions in the event that demands are made on any existing guarantees.

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Debt of unconsolidated joint ventures


The following table details information regarding the outstanding debt of the unconsolidated joint ventures and principal guarantees of such debt provided by us as of September 30, 20172020 (dollars in millions):
Joint VentureTotal Joint
Venture Debt		Maturity DateInterest RatePercent Guaranteed by the Operating PartnershipMaximum Guaranteed Amount by the Company
Charlotte$100.0 July 20284.27%— %$— 
Columbus(1)
85.0 November 2020LIBOR + 1.65%7.5 %6.4 
Galveston/Houston (2)
80.0 January 2021LIBOR + 1.65%12.5 %10.0 
National Harbor95.0 January 20304.63 %— %— 
Debt origination costs(1.1)
$358.9 $16.4 
Joint Venture Total Joint
Venture Debt		 Maturity Date Interest Rate Percent Guaranteed by the Operating Partnership Maximum Guaranteed Amount by the Company
Charlotte $90.0
 November 2018 LIBOR + 1.45% 5.0% $4.5
Columbus 85.0
 November 2019 LIBOR + 1.65% 7.5% 6.4
Galveston/Houston(1)
 80.0
 July 2020 LIBOR + 1.65% 12.5% 10.0
National Harbor(2)
 87.0
 November 2019 LIBOR + 1.65% 10.0% 8.7
RioCan Canada(3)
 11.4
 May 2020 5.75% 28.1% 3.2
Debt origination costs (2.0)        
  $351.4
       $32.8
(1)In July, the joint venture amended and restated the initial construction loan to increase the amount available to borrow from $70.0 million to $80.0 million and extended the maturity date until July 2020 with two one-year options. The amended and restated loan also changed the interest rate from LIBOR + 1.50% to an interest rate of LIBOR + 1.65%. At the closing of the amendment, the joint venture distributed approximately $14.5 million equally between the partners.
(2)100% completion guaranty; 10% principal guaranty.
(3)The joint venture debt amount includes premium of approximately $405,000.

(1)We intend to extend the loan using our one-year extension option to November 2021, which may require reductions in principal or additional guarantees to comply with extension requirements.
Fees(2)In June 2020, in response to the COVID 19 impact on the property, the Galveston/Houston joint venture amended its mortgage loan. The loan modification amended the first one-year extension option to provide for two six-month options (the “First Extension” and “Second Extension”, respectively). Under the loan modification, the joint venture is prohibited from unconsolidatedmaking partner distributions during the term of the First Extension.  If the joint venturesventure exercises all available options, the loan would mature in July 2022.  The joint venture exercised its First Extension option to extend the mortgage loan for six months to January 2021. The Second Extension may require reductions in principal or additional guarantees to comply with the extension requirements.


Fees we received for various services provided to our unconsolidated joint ventures were recognized in other income as follows (in thousands):
  Three months ended Nine months ended
  September 30, September 30,
  2017 2016 2017 2016
Fee:      
  
Management and marketing $564
 $656
 1,676
 2,199
Development and leasing 20
 65
 $87
 $611
Loan Guarantee 4
 85
 13
 449
Total Fees $588
 $806
 $1,776
 $3,259

CRITICAL ACCOUNTING POLICIES AND ESTIMATES


Refer to our 20162019 Annual Report on Form 10-K of the Company and the Operating Partnership for a discussion of our critical accounting policies which include principles of consolidation, acquisition of real estate, cost capitalization, impairment of long-lived assets and revenue recognition. ThereOther than noted below, there have been no material changes to these policies in 2017.2020.


If the effects of the COVID-19 pandemic cause economic and market conditions to continue to deteriorate or if our expected holding period for assets change, subsequent tests for impairment could result in additional impairment charges in the future. We can provide no assurance that material impairment charges with respect to our investment properties will not occur during the remaining quarters in 2020 or future periods.



Historically, our accounts receivable from tenants has not been material; however, given the impacts from COVID-19 discussed below, our net accounts receivable balance, which is recorded in other assets on the consolidated balance sheet, has increased from approximately $4.8 million at December 31, 2019 to approximately $32.3 million at September 30, 2020. Straight-line rent adjustments recorded as a receivable in other assets on the consolidated balance sheets were approximately $57.6 million and $61.6 million as of September 30, 2020 and December 31, 2019, respectively. Individual leases are assessed for collectability and upon the determination that the collection of rents is not probable, accrued rent and accounts receivable are reduced as an adjustment to rental revenue. Revenue from leases where collection is deemed to be less than probable is recorded on a cash basis until collectability is determined to be probable. Further we assess whether operating lease receivables, at a portfolio level, are appropriately valued based upon an analysis of balances outstanding, historical bad debt levels and current economic trends including discussions with tenants for potential lease amendments. Our estimate of the collectability of accrued rents and accounts receivable is based on the best information available to us at the time of preparing the financial statements.







63

The duration of the COVID 19 pandemic, recent tenant bankruptcies and other significant uncertainties with the economy required significant judgment to be used when estimating the collection of rents through September 30, 2020. During the three months ended September 30, 2020, we wrote off 5% of third quarter rents billed, related to tenant bankruptcies, other uncollectible accounts due to financial weakness and one-time concessions in exchange for landlord-favorable amendments to lease structure. During the nine months ended September 30, 2020, we wrote off approximately 15% of second and third quarter rents, related to bankruptcies, other uncollectible accounts due to financial weakness and one-time concessions in exchange for landlord-favorable amendments to lease structure. In addition, for the three and nine months ended September 30, 2020, we recorded a $2.2 million and $11.8 million reserve, respectively, for a portion of deferred and under negotiation billings that are expected to become uncollectible in future periods. Further, for the three and nine months ended September 30, 2020 we recognized a write-off of revenue of approximately $2.4 million and $6.1 million of straight-line rents, respectively, associated with the tenant bankruptcies and uncollectible accounts.

After considering current write-offs and reserves for rents we do not expect to collect, the accounts receivables associated with deferred rental payments and unresolved leases of $18.5 million represent the greatest uncertainty with regards to our estimation of collectability. As a result of this uncertainty, there is a risk that a significant reduction in revenues could be recorded in the future if our assessment of collectability changes in subsequent periods.

In April 2020, the Financial Accounting Standards Board (“FASB”) staff issued a question and answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance to lease concessions provided as a result of the COVID-19 pandemic. Under existing lease guidance, we would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant (treated within the lease modification accounting framework) or if a lease concession was under the enforceable rights and obligations within the existing lease agreement (precluded from applying the lease modification accounting framework). The Lease Modification Q&A allows the Company, if certain criteria have been met, to bypass the lease by lease analysis, and instead elect to either apply the lease modification accounting framework or not, with such election applied consistently to leases with similar characteristics and similar circumstances. The Lease Modification Q&A allows the Company to determine accounting policy elections at a disaggregated level, and the elections should be applied consistently by either the type of concession, underlying asset class or another reasonable disaggregated level. We have evaluated and elected to apply the Lease Modification Q&A. As a result, we have made the following policy elections based on the type of concession agreed to with the respective tenant.

Rent Deferrals

We account for rental deferrals using the receivables model as described within the Lease Modification Q&A. Under the receivables model, we will continue to recognize lease revenue in a manner that is unchanged from the original lease agreement and continue to recognize lease receivables and rental revenue during the deferral period.

Rent Abatements

We account for rental abatements using the negative variable income model as described within the Lease Modification Q&A. Under the negative variable income model, we will recognize negative variable rent for the current period reduction of rental revenue associated with any lease concessions we provide.



64

NON-GAAP SUPPLEMENTAL MEASURES


Beginning with the three months ended March 31, 2020, we have elected to supplement our disclosure with three additional non-GAAP measures, Adjusted EBITDA, EBITDAre and Adjusted EBITDAre (each as defined below), that are commonly provided in the REIT industry. See “Adjusted EBITDA, EBITDAre and Adjusted EBITDAre” below for more information. We also now refer to Adjusted Funds from Operations (“AFFO”) as Core Funds From Operations (“Core FFO”), but there has been no change to the definition of this measure.

Funds From Operations


Funds From Operations ("FFO"(“FFO”) is a widely used measure of the operating performance for real estate companies that supplements net income (loss) determined in accordance with GAAP.generally accepted accounting principles in the United States (“GAAP”). We determine FFO based on the definition set forth by the National Association of Real Estate Investment Trusts ("NAREIT"(“NAREIT”), of which we are a member. In December 2018, NAREIT issued “NAREIT Funds From Operations White Paper - 2018 Restatement” which clarifies, where necessary, existing guidance and consolidates alerts and policy bulletins into a single document for ease of use. NAREIT defines FFO representsas net income (loss) (computedavailable to the Company’s common shareholders computed in accordance with GAAP) before extraordinary items and gains (losses) on sale or disposal of depreciable operating properties, plusGAAP, excluding (i) depreciation and amortization related to real estate, (ii) gains or losses from sales of certain real estate assets, (iii) gains and losses from change in control, (iv) impairment losses onwrite-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate of consolidated real estateheld by the entity and (v) after adjustments for unconsolidated partnerships and joint ventures including depreciation and amortization, and impairment lossescalculated to reflect FFO on investments in unconsolidated joint ventures driven by a measurable decrease in the fair value of depreciable real estate held by the unconsolidated joint ventures.same basis.


FFO is intended to exclude historical cost depreciation of real estate as required by GAAP which assumes that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO excludes depreciation and amortization of real estate assets, gains and losses from property dispositions and extraordinary items, it provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities and interest costs, providing perspective not immediately apparent from net income.income (loss).


We present FFO because we consider it an important supplemental measure of our operating performance. In addition, a portion of cash bonus compensation to certain members of management is based on our FFO or Adjusted Funds From Operations ("AFFO"),Core FFO, which is described in the section below. We believe it is useful for investors to have enhanced transparency into how we evaluate our performance and that of our management. In addition, FFO is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO when reporting their results. FFO is also widely used by us and others in our industry to evaluate and price potential acquisition candidates. We believe that FFO payout ratio, which represents regular distributions to common shareholders and unit holders of the Operating Partnership expressed as a percentage of FFO, is useful to investors because it facilitates the comparison of dividend coverage between REITs. NAREIT has encouraged its member companies to report their FFO as a supplemental, industry-wide standard measure of REIT operating performance.


FFO has significant limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:


•FFO does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;


•FFO does not reflect changes in, or cash requirements for, our working capital needs;


•Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and FFO does not reflect any cash requirements for such replacements; and


FFO, which includes discontinued operations, may not be indicative of our ongoing operations; and

•Other companies in our industry may calculate FFO differently than we do, limiting its usefulness as a comparative measure.


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Because of these limitations, FFO should not be considered as a measure of discretionary cash available to us to invest in the growth of our business or our dividend paying capacity. We compensate for these limitations by relying primarily on our GAAP results and using FFO only as a supplemental measure.




AdjustedCore Funds From Operations


We present AFFOCore FFO (formerly referred to as AFFO) as a supplemental measure of our performance. We define AFFOCore FFO as FFO further adjusted to eliminate the impact of certain items that we do not consider indicative of our ongoing operating performance. These further adjustments are itemized in the table below.below, if applicable. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating AFFOCore FFO you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of AFFOCore FFO should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.


We present AFFOCore FFO because we believe it assists investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. In addition, we believe it is useful for investors to have enhanced transparency into how we evaluate management’s performance and the effectiveness of our business strategies. We use AFFOCore FFO when certain material, unplanned transactions occur as a factor in evaluating management'smanagement’s performance and to evaluate the effectiveness of our business strategies, and may use AFFOCore FFO when determining incentive compensation.


AFFOCore FFO has limitations as an analytical tool. Some of these limitations are:


AFFO•Core FFO does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;


AFFO•Core FFO does not reflect changes in, or cash requirements for, our working capital needs;


•Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and AFFOCore FFO does not reflect any cash requirements for such replacements;


AFFO•Core FFO does not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations; and


•Other companies in our industry may calculate AFFOCore FFO differently than we do, limiting its usefulness as a comparative measure.


Because of these limitations, AFFOCore FFO should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using AFFOCore FFO only as a supplemental measure.






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Below is a reconciliation of net income to FFO available to common shareholders and AFFOCore FFO available to common shareholders (in thousands, except per share amounts):
 Three months endedNine months ended
 September 30,September 30,
 2020201920202019
Net income (loss)$13,719 $24,809 $(38,290)$105,107 
Adjusted for:
Depreciation and amortization of real estate assets - consolidated28,676 29,451 85,534 91,149 
Depreciation and amortization of real estate assets - unconsolidated joint ventures3,003 3,058 9,038 9,453 
Impairment charge - consolidated— — 45,675 — 
Foreign currency loss from sale of joint venture property— — — 3,641 
Impairment charge - unconsolidated joint ventures— — 3,091 — 
Gain on sale of assets(2,324)— (2,324)(43,422)
FFO43,074 57,318 102,724 165,928 
FFO attributable to noncontrolling interests in other consolidated partnerships— — (190)(195)
Allocation of earnings to participating securities(461)(481)(1,153)(1,502)
FFO available to common shareholders (1)
$42,613 $56,837 $101,381 $164,231 
As further adjusted for:
Compensation related to executive officer retirement (2)
— — — 4,371 
Impact of above adjustment to the allocation of earnings to participating securities— — — (35)
Core FFO available to common shareholders (1)
$42,613 $56,837 $101,381 $168,567 
FFO available to common shareholders per share - diluted (1)
$0.44 $0.58 $1.04 $1.68 
Core FFO available to common shareholders per share - diluted (1)
$0.44 $0.58 $1.04 $1.72 
 
Weighted Average Shares:
Basic weighted average common shares92,649 92,514 92,596 92,999 
Diluted weighted average common shares (for earnings per share computations)92,649 92,514 92,596 92,999 
Exchangeable operating partnership units4,911 4,960 4,911 4,960 
Diluted weighted average common shares (for FFO per share computations) (1)
97,560 97,474 97,507 97,959 
  Three months ended Nine months ended
  September 30, September 30,
  2017 2016 2017 2016
Net income (loss) $(16,034) $72,774
 $38,427
 $178,693
Adjusted for:        
Depreciation and amortization of real estate assets - consolidated 30,396
 28,850
 93,634
 80,992
Depreciation and amortization of real estate assets - unconsolidated joint ventures 3,583
 4,325
 10,971
 15,472
Impairment charges - unconsolidated joint ventures 9,021
 2,919
 9,021
 2,919
Gain on sale of assets —
 —
 (6,943) (4,887)
Gain on previously held interests in acquired joint ventures —
 (46,258) —
 (95,516)
FFO 26,966
 62,610
 145,110
 177,673
FFO attributable to noncontrolling interests in other consolidated partnerships —
 (3) —
 (62)
Allocation of earnings to participating securities (306) (539) (1,346) (1,675)
FFO available to common shareholders  (1)
 $26,660
 $62,068
 $143,764
 $175,936
As further adjusted for:        
Compensation related to director and executive officer terminations(2)
 —
 887
 —
 1,180
Acquisition costs —
 487
 —
 487
Demolition costs —
 259
 —
 441
Gain on sale of outparcel —
 (1,418) —
 (1,418)
Abandoned pre-development costs (99) —
 528
 —
Make-whole premium due to early extinguishment of debt (3)
 34,143
 —
 34,143
 —
Write-off of debt discount and debt origination costs due to early extinguishment of debt (3)
 1,483
 —
 1,483
 882
Impact of above adjustments to the allocation of earnings to participating securities (249) (2) (254) (15)
AFFO available to common shareholders (1)
 $61,938
 $62,281
 $179,664
 $177,493
FFO available to common shareholders per share - diluted (1)
 $0.27
 $0.62
 $1.44
 $1.75
AFFO available to common shareholders per share - diluted (1)
 $0.63
 $0.62
 $1.80
 $1.76
         
Weighted Average Shares:        
Basic weighted average common shares 93,923
 95,156
 94,781
 95,075
Effect of notional units —
 426
 —
 393
Effect of outstanding options and restricted common shares —
 90
 23
 68
Diluted weighted average common shares (for earnings per share computations) 93,923
 95,672
 94,804
 95,536
Exchangeable operating partnership units 5,028
 5,053
 5,028
 5,053
Diluted weighted average common shares (for FFO and AFFO per share computations) (1)
 98,951
 100,725
 99,832
 100,589
(1)Assumes the Class A common limited partnership units of the Operating Partnership held by the noncontrolling interests are exchanged for common shares of the Company. Each Class A common limited partnership unit is exchangeable for one of the Company's common shares, subject to certain limitations to preserve the Company's REIT status.
(2)Represents cash severance and accelerated vesting of restricted shares associated with the departure of an officer in August 2016 and the accelerated vesting of restricted shares due to the death of a director in February 2016.
(3)Due to charges related to the redemption of our $300.0 million 6.125% senior notes due 2020 and the January 28, 2016 early repayment of the $150.0 million mortgage secured by the Deer Park property, which was scheduled to mature August 30, 2018.

(1)Assumes the Class A common limited partnership units of the Operating Partnership held by the noncontrolling interests are exchanged for common shares of the Company. Each Class A common limited partnership unit is exchangeable for one of the Company’s common shares, subject to certain limitations to preserve the Company’s REIT status.

(2)Represents the accelerated recognition of compensation cost entitled to be received by the Company’s former President and Chief Operating Officer per the terms of a transition agreement executed in connection with his retirement.




Portfolio Net Operating Income and Same Center NOI


We present portfolio net operating income ("(“Portfolio NOI"NOI”) and same center net operating income ("(“Same Center NOI"NOI”) as supplemental measures of our operating performance. Portfolio NOI represents our property level net operating income which is defined as total operating revenues less property operating expenses and excludes termination fees and non-cash adjustments including straight-line rent, net above and below market rent amortization, impairment charges and gains or losses on the sale of outparcelsassets recognized during the periods presented. We define Same Center NOI as Portfolio NOI for the properties that were operational for the entire portion of both comparable reporting periods and which were not acquired, or subject to a material expansion or non-recurring event, such as a natural disaster, during the comparable reporting periods.


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We believe Portfolio NOI and Same Center NOI are non-GAAP metrics used by industry analysts, investors and management to measure the operating performance of our properties because they provide performance measures directly related to the revenues and expenses involved in owning and operating real estate assets and provide a perspective not immediately apparent from net income (loss), FFO or AFFO.Core FFO. Because Same Center NOI excludes properties developed, redeveloped, acquired and sold; as well as non-cash adjustments, gains or losses on the sale of outparcels and termination rents; it highlights operating trends such as occupancy levels, rental rates and operating costs on properties that were operational for both comparable periods. Other REITs may use different methodologies for calculating Portfolio NOI and Same Center NOI, and accordingly, our Portfolio NOI and Same Center NOI may not be comparable to other REITs.


Portfolio NOI and Same Center NOI should not be considered alternatives to net income (loss) or as an indicator of our financial performance since they do not reflect the entire operations of our portfolio, nor do they reflect the impact of general and administrative expenses, acquisition-related expenses, interest expense, depreciation and amortization costs, other non-property income and losses, the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties, or trends in development and construction activities which are significant economic costs and activities that could materially impact our results from operations. Because of these limitations, Portfolio NOI and Same Center NOI should not be viewed in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using Portfolio NOI and Same Center NOI only as supplemental measures.





Below is a reconciliation of net income to Portfolio NOI and Same Center NOI for the consolidated portfolio (in thousands):
Three months endedNine months ended
September 30,September 30,
2020201920202019
Net income (loss)$13,719 $24,809 $(38,290)$105,107 
Adjusted to exclude:
Equity in (earnings) losses of unconsolidated joint ventures42 (2,329)1,490 (5,604)
Interest expense15,647 15,197 47,786 46,638 
Gain on sale of assets(2,324)— (2,324)(43,422)
Other (income) expense(161)(227)(789)2,966 
Impairment charge— — 45,675 — 
Depreciation and amortization29,903 30,103 87,966 93,009 
Other non-property expense704 160 1,162 491 
Corporate general and administrative expenses11,463 12,265 35,759 41,032 
Non-cash adjustments(1)
3,913 (1,729)5,032 (5,829)
Lease termination fees(6,323)(127)(8,000)(1,526)
Portfolio NOI66,583 78,122 175,467 232,862 
Non-same center NOI(2)
65 (576)(398)(5,610)
Same Center NOI$66,648 $77,546 $175,069 $227,252 
  Three months ended Nine months ended
  September 30, September 30,
  2017 2016 2017 2016
Net income (loss) $(16,034) $72,774
 $38,427
 $178,693
Adjusted to exclude:        
Equity in (earnings) losses of unconsolidated joint ventures 5,893
 (715) 1,201
 (7,680)
Interest expense 16,489
 15,516
 49,496
 44,200
Gain on sale of assets —
 (1,418) (6,943) (6,305)
Gain on previously held interests in acquired joint ventures —
 (46,258) —
 (95,516)
Loss on early extinguishment of debt 35,626
 —
 35,626
 —
Other non-operating (income) expense (591) (24) (683) (378)
Depreciation and amortization 30,976
 29,205
 95,175
 82,078
Other non-property (income) expenses 372
 (47) 993
 (437)
Abandoned pre-development costs (99) —
 528
 —
Acquisition costs —
 487
 —
 487
Demolition Costs —
 259
 —
 441
Corporate general and administrative expenses 11,020
 12,076
 33,499
 34,989
Non-cash adjustments(1)
 (1,020) (967) (2,580) (2,938)
Termination rents (162) (1,450) (2,796) (3,491)
Portfolio NOI 82,470
 79,438
 241,943
 224,143
Non-same center NOI(2)
 (9,813) (7,320) (29,643) (13,514)
Same Center NOI $72,657
 $72,118
 $212,300
 $210,629
(1)Non-cash items include straight-line rent, above and below market rent amortization, straight-line rent expense on land leases and gains or losses on outparcel sales, as applicable.
(1)Non-cash items include straight-line rent, net above and below market rent amortization and gains or losses on outparcel sales, as applicable.
(2)Excluded from Same Center NOI:
(2)Excluded from Same Center NOI:
Outlet centers opened:Outlet centers sold:Outlet centers acquired:Outlet center expansions:
Daytona BeachNags Head, Ocean City, Park City, and WilliamsburgNovember 2016March 2019Fort MyersJanuary 2016Glendale (Westgate)June 2016LancasterSeptember 2017
TerrellAugust 2020WestbrookMay 2017SavannahAugust 2016



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Adjusted EBITDA, EBITDAre and Adjusted EBITDAre



We present Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) as adjusted for items described below (“Adjusted EBITDA”), EBITDA for Real Estate (“EBITDAre”) and Adjusted EBITDAre, all non-GAAP measures, as supplemental measures of our operating performance. Each of these measures is defined as follows:

We define Adjusted EBITDA as net income (loss) available to the Company’s common shareholders computed in accordance with GAAP before interest expense, income taxes, depreciation and amortization, gains and losses on sale of operating properties, joint venture properties and other assets, gains and losses on change of control, impairment write-downs of depreciated property and of investment in unconsolidated joint ventures caused by a decrease in value of depreciated property in the affiliate, compensation related to executive officer retirement, gains and losses on extinguishment of debt, net and other items that we do not consider indicative of the Company's ongoing operating performance.


We determine EBITDAre based on the definition set forth by NAREIT, which is defined as net income (loss) available to the Company’s common shareholders computed in accordance with GAAP before interest expense, income taxes, depreciation and amortization, gains and losses on sale of operating properties, gains and losses on change of control and impairment write-downs of depreciated property and of investment in unconsolidated joint ventures caused by a decrease in value of depreciated property in the affiliate and after adjustments to reflect our share of the EBITDAre of unconsolidated joint ventures.

Adjusted EBITDAre is defined as EBITDAre excluding gains and losses on extinguishment of debt, net, compensation related to executive officer retirement and other items that that we do not consider indicative of the Company's ongoing operating performance.
We present Adjusted EBITDA, EBITDAre and Adjusted EBITDAre as we believe they are useful for investors, creditors and rating agencies as they provide additional performance measures that are independent of a Company’s existing capital structure to facilitate the evaluation and comparison of the Company’s operating performance to other REITs and provide a more consistent metric for comparing the operating performance of the Company’s real estate between periods.
Adjusted EBITDA, EBITDAre and Adjusted EBITDAre have significant limitations as analytical tools, including:
•They do not reflect our interest expense;

•They do not reflect gains or losses on sales of operating properties or impairment write-downs of depreciated property and of investment in unconsolidated joint ventures caused by a decrease in value of depreciated property in the affiliate;

•Adjusted EBITDA and Adjusted EBITDAre do not reflect gains and losses on extinguishment of debt and other items that may affect operations; and

•Other companies in our industry may calculate these measures differently than we do, limiting its usefulness as a comparative measure.

Because of these limitations, Adjusted EBITDA, EBITDAre and Adjusted EBITDAre should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA, EBITDAre and Adjusted EBITDAre only as supplemental measures.
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Below is a reconciliation of Net Income to Adjusted EBITDA (in thousands):
Three months endedNine months ended
September 30,September 30,
2020201920202019
Net income (loss)$13,719 $24,809 $(38,290)$105,107 
Adjusted to exclude:
Interest expense15,647 15,197 47,786 46,638 
Depreciation and amortization29,903 30,103 87,966 93,009 
Impairment charge - consolidated— — 45,675 — 
Impairment charge - unconsolidated joint ventures— — 3,091 — 
Loss on sale of joint venture property, including foreign currency effect— — — 3,641 
Gain on sale of assets(2,324)— (2,324)(43,422)
Compensation related to executive officer retirement— — — 4,371 
Adjusted EBITDA$56,945 $70,109 $143,904 $209,344 

Below is a reconciliation of Net Income to EBITDAre and Adjusted EBITDAre (in thousands):
Three months endedNine months ended
September 30,September 30,
2020201920202019
Net income (loss)$13,719 $24,809 $(38,290)$105,107 
Adjusted to exclude:
Interest expense15,647 15,197 47,786 46,638 
Depreciation and amortization29,903 30,103 87,966 93,009 
Impairment charge - consolidated— — 45,675 — 
Impairment charge - unconsolidated joint ventures— — 3,091 — 
Loss on sale of joint venture property, including foreign currency effect— — — 3,641 
Gain on sale of assets(2,324)— (2,324)(43,422)
Pro-rata share of interest expense - unconsolidated joint ventures1,512 2,029 4,995 6,165 
Pro-rata share of depreciation and amortization - unconsolidated joint ventures3,003 3,057 9,038 9,400 
EBITDAre$61,460 $75,195 $157,937 $220,538 
Compensation related to executive officer retirement— — — 4,371 
Adjusted EBITDAre$61,460 $75,195 $157,937 $224,909 




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ECONOMIC CONDITIONS AND OUTLOOK


We are closely monitoring the impact of the COVID-19 pandemic on all aspects of our business and geographies, including how it will impact our tenants and business partners. For a complete discussion of the impact the pandemic is having on our current operations, the steps we have taken to increase liquidity and preserve financial flexibility and the uncertainties around our future operations and financial condition, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations-COVID-19 Pandemic”.
The majority of our leases contain provisions designed to mitigate the impact of inflation. Such provisions include clauses for the escalation of base rent and clauses enabling us to receive percentage rentals based on tenants'tenants’ gross sales (above predetermined levels) which generally increase as prices rise. A component of most leases includes a pro-rata share or escalating fixed contributions by the tenant for property operating expenses, including common area maintenance, real estate taxes, insurance and advertising and promotion, thereby reducing exposure to increases in costs and operating expenses resulting from inflation.

The current challenging retail environment could impact our business in the short-term as our operations are subject to the results of operations of our retail tenants. A portion of our rental revenues are derived from percentage rents that directly depend on the sales volume of certain tenants. Accordingly, declines in these tenants' results of operationstenants’ sales would reduce the income produced by our properties. If the sales or profitability of our retail tenants decline sufficiently, whether due to a change in consumer preferences, health concerns, legislative changes that increase the cost of their operations or otherwise, such tenants maybemay be unable to pay their existing rents as such rents would represent a higher percentage of their sales. WhileAs a result of the COVID-19 pandemic, we believe outlet stores will continue to be a profitable and fundamental distribution channel for many brand name manufacturers, some retail formats are more successful than others. As typicalhave seen reductions in the retail industry, certain tenants have closed, or will close, certain stores by terminating their lease prior to its natural expiration orrental revenues as a result of filing for protection under bankruptcy laws, or may request modifications to their existing lease terms.

Due to the relatively short-term nature of our tenants' leases, a significant portion of the leases in our portfolio come up for renewal each year. As of January 1, 2017, excluding the Westbrook outlet center, which was solddeclines in the second quartersales volumes of 2017, we had approximately 1.5 million square feet, or 12% of our consolidated portfolio at that time, coming up for renewal during 2017. As of September 30, 2017, we had renewed approximately 78% of this space. In addition, for the rolling twelve months ended September 30, 2017, we completed renewals and re-tenanted space totaling 1.5 million square feet at a blended 11.8% increase in average base rental rates compared to the expiring rates. While we continue to attract and retain additional tenants, there can be no assurance that we can achieve similar base rental rates. In addition, if we were unable to successfully renew or re-lease a significant amount of this space on favorable economic terms, the loss in rent could have a material adverse effect on our results of operations.

certain tenants.
Our outlet centers typically include well-known, national, brand name companies. By maintaining a broad base of well-known tenants and a geographically diverse portfolio of properties located across the United States, we believe we reduce our operating and leasing risks. No one tenant (including affiliates) accounts for more than 8% of our square feet or 7% of our combinedrental revenues.
Due to the relatively short-term nature of our tenants’ leases, a significant portion of the leases in our portfolio come up for renewal each year. As of January 1, 2020, we had approximately 1.6 million square feet, or 14% of our consolidated portfolio at that time coming up for renewal during 2020. As of September 30, 2020, we had renewed approximately 60% of this space. In addition, for the rolling twelve months ended September 30, 2020, we completed renewals and re-tenanted space totaling 1.3 million square feet at a blended 6.3% decrease in average base rental rates compared to the expiring rates.

The current challenging retail environment has impacted our business as our operations are subject to the operating results and percentage rental revenues. Accordingly, although we can give no assurance, we do not expect any material adverse impact onoperating decisions of our results of operations and financial conditionretail tenants. As is typical in the retail industry, certain tenants have closed, or will close, certain stores by terminating their lease prior to its contractual expiration or as a result of filing for protection under bankruptcy laws, or may request modifications to their existing lease terms. We have recaptured approximately 586,000 square feet within our consolidated portfolio during the nine months ended September 30, 2020 related to bankruptcies and brand-wide restructurings by retailers, compared to 195,000 square feet for the nine months ended September 30, 2019. We expect other store closings or rent modifications to impact our operating results in the fourth quarter of 2020.

In addition, the current environment has negatively impacted certain retailers, in particular some who were already pressured prior to the pandemic. Year to date, 14 retailers on our tenant roster have declared bankruptcy or announced a brand-wide restructuring. Recent Chapter 11 bankruptcy filings include, but not limited to, J. Crew Group, Inc. (filed in May 2020) and Brooks Brothers, Lucky Brand Jeans, New York and Company and Ascena Retail Group, Inc. (all filed in July, 2020). Also, earlier this year, G-III Apparel announced a brand-wide restructuring, including its intention to close all of its Wilsons and Bass stores. While a number of tenant bankruptcies and brand-wide restructurings remain fluid, at this time, we expect approximately 80 stores comprising 400,000 square feet to close between the fourth quarter of 2020 and the second quarter of 2021. We also expect there will be an impact on rental rates as some of these tenant leases are renewed at reduced spreads, or in select cases mid-lease modifications are implemented. As many of these are still in process, we don’t yet know what the ultimate impact of store closures, timing, lease adjustments or potential early termination fees will be.


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Due to store closures, tenant bankruptcies and rent adjustments that may result from the impact of the COVID-19 pandemic, our Same Center NOI for 2020 compared to 2019 has been and may continue to be renewed oradversely impacted.
We believe outlet stores will continue to be re-leased.a profitable and fundamental distribution channel for many brand name manufacturers. While we continue to attract and retain additional tenants, if we were unable to successfully renew or re-lease a significant amount of this space on favorable economic terms or in a timely manner, the loss in rent and our Same Center NOI could be further negatively impacted in 2020 and 2021. Occupancy at our consolidated centers was 97%92.9% and 95.9% as of September 30, 20172020 and 2016.2019, respectively. As a result of COVID-19, occupancy could be negatively impacted in the remainder of 2020 and 2021.


Item 3. Quantitative and Qualitative Disclosures about Market Risk
Market Risk


We are exposed to various market risks, including changes in interest rates. Market risk is the potential loss arising from adverse changes in market rates and prices, such as interest rates. We may periodically enter into certain interest rate protection and interest rate swap agreements to effectively convert existing floating rate debt to a fixed rate basis. We do not enter into derivatives or other financial instruments for trading or speculative purposes.

Interest Rate Risk

We may periodically enter into certain interest rate protection and interest rate swap agreements to effectively convert existing floating rate debt to a fixed rate basis. We do not enter into derivatives or other financial instruments for trading or speculative purposes. We currently have interest rate swap agreements to fix the interest rates on outstanding debt with notional amounts totaling $390.0 million. In addition, we have forward starting interest rate swaps totaling $250.0 million that begin in January 2021. See Note 8 to the consolidated financial statements for additional details related to our outstanding derivatives.

As of September 30, 2020, 1% of our outstanding consolidated debt, excluding the amount of variable rate debt with interest rate protection agreements in place, had variable interest rates and therefore was subject to market fluctuations. A change in the LIBOR index of 100 basis points would result in an increase or decrease of approximately $114,000 in interest expense on an annual basis. The information presented herein is merely an estimate and has limited predictive value.  As a result, the ultimate effect upon our operating results of interest rate fluctuations will depend on the interest rate exposures that arise during the period, our hedging strategies at that time and future changes in the level of interest rates.

The estimated fair value and recorded value of our debt consisting of senior unsecured notes, unsecured term loans, secured mortgages and unsecured lines of credit were as follows (in thousands):
September 30, 2020December 31, 2019
Fair value of debt$1,565,149 $1,603,814 
Recorded value of debt$1,568,217 $1,569,773 

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A 100 basis point increase from prevailing interest rates at September 30, 2020 and December 31, 2019 would result in a decrease in fair value of total consolidated debt of approximately $53.7 million and $62.9 million, respectively. Refer to Note 9 to the consolidated financial statements for a description of our methodology in calculating the estimated fair value of debt. Considerable judgment is necessary to develop estimated fair values of financial instruments. Accordingly, the estimates presented herein are not necessarily indicative of the amounts we could realize on the disposition of the financial instruments. In addition, the COVID-19 pandemic may impact markets, rates, behavior and other estimates used in the above scenarios.

Foreign Currency Risk

We are also exposed to foreign currency risk on investments in outlet centers that are located in Canada. Our currency exposure is concentrated in the Canadian Dollar. To mitigate some of the risk related to changes in foreign currency, cash flows received from our Canadian joint ventures are either reinvested to fund ongoing Canadian development activities, if applicable, or converted to US dollars and utilized to repay amounts outstanding under our unsecured lines of credit. We generally do not hedge currency translation exposures.




In April 2016, we entered into four separate interest rate swap agreements, effective April 13, 2016 that fix the base LIBOR rate at an average of 1.03% on notional amounts totaling $175.0 million through January 1, 2021. In addition, in October 2013, we entered into interest rate swap agreements with notional amounts totaling $150.0 million to reduce our floating rate debt exposure. The interest rate swap agreements fix the base LIBOR rate at an average of 1.30% and mature in August 2018. The fair value of the interest rate swap agreements represents the estimated receipts or payments that would be made to terminate the agreement. As of September 30, 2017, the fair value of these contracts is an asset of $4.2 million. The fair value is based on dealer quotes, considering current interest rates, remaining term to maturity and our credit standing.

As of September 30, 2017, 16% of our outstanding debt, excluding variable rate debt with interest rate protection agreements in place, had variable interest rates and therefore were subject to market fluctuations. An increase in the LIBOR index of 100 basis points would result in an increase of approximately $2.8 million in interest expense on an annual basis. The information presented herein is merely an estimate and has limited predictive value.  As a result, the ultimate effect upon our operating results of interest rate fluctuations will depend on the interest rate exposures that arise during the period, our hedging strategies at that time and future changes in the level of interest rates.

The estimated fair value and recorded value of our debt consisting of senior unsecured notes, unsecured term loans, secured mortgages and unsecured lines of credit were as follows (in thousands):
  September 30, 2017
 December 31, 2016
Fair value of debt $1,801,655
 $1,704,644
Recorded value of debt $1,773,981
 $1,687,866

A 100 basis point increase from prevailing interest rates at September 30, 2017 and December 31, 2016 would result in a decrease in fair value of total debt of approximately $80.9 million and $69.1 million, respectively. Refer to Note 9 to the consolidated financial statements for a description of our methodology in calculating the estimated fair value of debt. Considerable judgment is necessary to develop estimated fair values of financial instruments. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize on the disposition of the financial instruments.

Item 4. Controls and Procedures


Tanger Factory Outlet Centers, Inc. Controls and Procedures


The Company'sCompany’s management carried out an evaluation, with the participation of the Company'sCompany’s Chief Executive Officer and Chief Financial Officer of the effectiveness of the Company'sCompany’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of September 30, 2017.2020. Based on this evaluation, the Company'sCompany’s Chief Executive Officer and Chief Financial Officer have concluded that the Company'sCompany’s disclosure controls and procedures were effective as of September 30, 2017.2020. There were no changes to the Company'sCompany’s internal controlscontrol over financial reporting during the quarter ended September 30, 2017,2020, that materially affected, or are reasonably likely to materially affect, the Company'sCompany’s internal control over financial reporting.


Tanger Properties Limited Partnership Controls and Procedures


The management of the Operating Partnership'sPartnership’s general partner carried out an evaluation, with the participation of the Chief Executive Officer and the Vice-President and Treasurer (Principal Financial and Accounting Officer) of the Operating Partnership'sPartnership’s general partner, of the effectiveness of the Operating Partnership'sPartnership’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of September 30, 2017.2020. Based on this evaluation, the Chief Executive Officer of the Operating Partnership'sPartnership’s general partner, and the Vice-President and Treasurer of the Operating Partnership'sPartnership’s general partner, have concluded that the Operating Partnership'sPartnership’s disclosure controls and procedures were effective as of September 30, 2017.2020. There were no changes to the Operating Partnership'sPartnership’s internal controlscontrol over financial reporting during the quarter ended September 30, 2017,2020, that materially affected, or are reasonably likely to materially affect, the Operating Partnership'sPartnership’s internal control over financial reporting.




73

PART II. OTHER INFORMATION


Item 1. Legal Proceedings


The Company and the Operating Partnership are, from time to time, engaged in a variety of legal proceedings arising in the normal course of business. Although the results of these legal proceedings cannot be predicted with certainty, management believes that the final outcome of such proceedings will not have a material adverse effect on our results of operations or financial condition.


Item 1A. Risk Factors


There have been no material changes fromThe following information updates the risk factors disclosed in the "Risk Factors"“Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2016.2019. Except for the additional risk factors provided below, there have been no material changes in the Company's risk factors from those disclosed in the 2019 Form 10-K.

Item 2. Unregistered Sales
The current COVID-19 pandemic has negatively affected and will likely continue to negatively affect our business, financial condition, liquidity and results of Equity Securitiesoperations and Use of Proceeds

(c) Issuer Purchases of Equity Securities

On May 19, 2017, we announced that our Board of Directors authorized the repurchase of up to $125 millionthose of our outstanding common shares as market conditions warrant over a period commencing on May 19, 2017tenants.

The current COVID-19 pandemic has had, and expiring on May 18, 2019.  Repurchases may be made through open market, privately-negotiated, structuredlikely will continue to have, repercussions across local, national and global economies and financial markets. COVID-19 has impacted all states where our tenants operate their businesses or derivative transactions (including accelerated stock repurchase transactions),where our properties are located and measures taken to prevent or remediate COVID-19, including “shelter-in place” or “stay-at-home” orders or other methodsquarantine mandates issued by local, state or federal authorities, have had an adverse effect on our business and the businesses of acquiring shares.our tenants. The full extent of the adverse impact on our results of operations, liquidity (including our ability to access capital markets), and our ability to develop, acquire, dispose or lease properties for our portfolio, is unknown and will depend on future developments, which are highly uncertain and cannot be predicted. Our results of operations, liquidity and cash flows may continue to be materially affected.

Many of our tenants operate in industries that depend on in-person interactions with their customers to be profitable and to fund their obligations under lease agreements with us. Measures taken to prevent or remediate COVID-19, including “shelter-in-place” or “stay-at-home” orders or other quarantine mandates, with respect to some portion of our tenants, (i) prevented our tenants from being able to open their stores and conduct business or limited the hours in which they may conduct business, and/or (ii) decreased or prevented our tenants’ customers’ willingness or ability to frequent their businesses, and/or (iii) impacted supply chains from local, national and international suppliers or otherwise delayed the delivery of inventory or other materials necessary for our tenants’ operations, all of which have adversely affected, and are likely to continue to adversely affect, their ability to maintain profitability and make rental payments to us under their leases. Tenants have also, as a result of such public health crisis, orders or mandates and any resulting economic downturn, requested rent deferrals, rent abatement or early termination of their leases and may continue to do so. In addition, tenants have and may continue to be forced to temporarily or permanently close or declare bankruptcy which could reduce our cash flows and negatively affect our ability to pay dividends. Specifically, as a result of COVID-19 and various governmental orders currently in place, a significant number of our tenants either closed their business or operated with limited operations and/or have submitted requests for rent relief or failed to pay rent. In addition, state, local or industry-initiated efforts, such as tenant rent freezes or suspension of a landlord’s ability to enforce evictions, may also affect our ability to collect rent or enforce remedies for the failure to pay rent. In late March 2020, we offered all tenants in our consolidated portfolio the option to defer 100% of April and May 2020 rents interest free, payable in equal installments due in January and February of 2021.

We are closely monitoring changes in the collectability assessment of our tenant receivables as a result of certain tenants suffering adverse financial consequences due to COVID-19 and should our estimates change, there could be material modifications to our revenues in future periods. We believe our tenants do not have a clear contractual right to cease paying rent due to government mandated closures and we intend to enforce our rights under the lease agreements. However, COVID-19 and the related governmental orders present fairly novel situations for which the ultimate legal outcome cannot be assured and it is possible future governmental action could impact our rights under the lease agreements. The extent of tenant requests and actions and the impact to the Company’s results of operations and cash flows is uncertain and cannot be predicted.

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The extent to which the COVID-19 pandemic continues to impact our financial condition, results of operations and cash flows will depend on future developments which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, the timing or effectiveness of any vaccines or treatments, and the direct and indirect economic effects of the pandemic and containment measures, among others. The impact of the COVID-19 pandemic on our rental revenue for the fourth quarter of 2020 and thereafter cannot be determined at present. The situation surrounding the COVID-19 pandemic remains fluid, and we are continuing to manage our response in collaboration with tenants, government officials and business partners and assessing potential impacts to our financial position and operating results, as well as potential adverse developments in our business.

The COVID-19 pandemic, or a future pandemic, could also have material and adverse effects on our ability to successfully operate and on our financial condition, results of operations and cash flows due to, among other factors:

•the reduced economic activity that could result in a prolonged recession and may consequently negatively impact consumer discretionary spending;
•difficulty accessing debt and equity capital on attractive terms, or at all, deteriorations in our credit ratings, a severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions may affect our access to capital necessary to fund business operations or address maturing liabilities on a timely basis and our tenants' ability to fund their business operations and meet their obligations to us;
•the financial impact of the COVID-19 pandemic could negatively impact our future compliance with financial covenants of our credit facility and other debt agreements and result in a default and potentially an acceleration of indebtedness, which non-compliance could negatively impact our liquidity;
•any impairment in value of our tangible or intangible assets which could be recorded as a result of a weaker economic conditions;
•a general decline in business activity and demand for real estate transactions could adversely affect our ability or desire to grow our portfolio of properties;
•a deterioration in our or our tenants' ability to operate in affected areas or delays in the supply of products or services to us or our tenants from vendors that are needed for our or our tenants' efficient operations could adversely affect our operations and those of our tenants;
•a significant increase in the number of tenants that file for Chapter 11 bankruptcy;
•adverse impacts from requiring most employees to work remotely, such as reductions in productivity and heightened cybersecurity risks; and
•the potential negative impact on the health of our personnel, particularly if a significant number of them are impacted, could result in a deterioration in our ability to ensure business continuity during this disruption.

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Cyber-attacks or acts of cyber-terrorism could disrupt our business operations and information technology systems or result in the loss or exposure of confidential or sensitive customer, employee or Company intendsinformation.
Our information technology systems have been and may in the future be attacked or breached by individuals or organizations intending to structure open market purchasesobtain sensitive data regarding our business, customers, employees, tenants or other third parties with whom we do business or disrupt our business operations and information technology systems. A security compromise of our information technology systems or business operations could occur through cyber attacks or cyber-intrusions over the Internet, malware, ransomware, computer viruses, attachments to e-mails, persons inside our organization, or persons with access to systems inside our organization. Like many companies, we have experienced intrusions and threats to data and information technology systems, and the risk of a future security breach or disruption, particularly through cyber attacks or cyber-intrusion, including by computer hackers, foreign governments, and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. We use information technology systems to manage our outlet centers and other business processes. Disruption of those systems could adversely impact our ability to operate our business to provide timely service to our customers and maintain our relationships with our tenants. Accordingly, if such an attack or act of terrorism were to occur, within pricingour operations and volume requirementsfinancial results could be adversely affected. In addition, we use our information technology systems to protect confidential or sensitive customer, employee and Company information developed and maintained in the normal course of Rule 10b-18.  The Companyour business. Certain of these systems have been attacked, and any attack on such systems that results in the unauthorized release or loss of customer, employee or other confidential or sensitive data could have a material adverse effect on our business reputation, increase our costs and expose us to material legal claims and liability. If the unauthorized release or loss of customer, employee or other confidential or sensitive data were to occur, our operations and financial results and our share price could be adversely affected.
While we maintain some of our own critical information technology systems, we also depend on third parties to provide important information technology services relating to several key business functions, such as payroll, electronic communications and certain accounting and finance functions. Our measures to prevent, detect and mitigate these threats, including password protection, firewalls, backup servers, threat monitoring and periodic penetration testing, may from timenot be successful in preventing a data breach or limiting the effects of a breach. Furthermore, the security measures employed by third-party service providers may prove to time, enter into Rule 10b5-1 plans to facilitate the repurchasebe ineffective at preventing breaches of its shares under this authorization.their systems.

The following table summarizes our common share repurchases for the fiscal quarter ended September 30, 2017:


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Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs 
Approximate dollar value of shares that may yet be purchased under the plans or programs
(in millions)
July 1, 2017 to July 31, 2017 —
 $—
 —
 $85.7
August 1, 2017 to August 31, 2017 413,604
 24.18
 413,604
 75.7
September 1, 2017 to September 30, 2017 —
 —
 —
 75.7
Total 413,604
 $24.18
 413,604
 $75.7



Item 4.Mine Safety Disclosures

Not applicable




Item 6. Exhibits
Exhibit NumberExhibit Descriptions
4.131.1*
12.1*
Company's Ratio of Earnings to Fixed Charges.
12.2*
Operating Partnership's Ratio of Earnings to Fixed Charges.
31.1*
Principal Executive Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes - Oxley Act of 2002 for Tanger Factory Outlet Centers, Inc.
31.2*
31.2*
31.3*
31.3*
31.4*
32.1**
32.2**
32.2**
32.3**
32.3**
32.4**
32.4**
101.INS*Inline XBRL Instance Document - the Instance Document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.
101*101.SCH*
The following financial statements from Tanger Factory Outlet Centers, Inc. and Tanger Properties Limited Partnership's dual Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, formatted in XBRL: (i) Consolidated Balance Sheets (unaudited), (ii) Consolidated Statements of Operations (unaudited), (iii) Consolidated Statements of Other Comprehensive Income (unaudited), (iv) Consolidated Statements of Equity (unaudited), (v) Consolidated Statements of Cash Flows (unaudited), and (vi) Notes to Consolidated Financial Statements (unaudited).Inline XBRL Taxonomy Extension Schema Document
101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF*Inline XBRL Taxonomy Extension Definition Linkbase Document
104*Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
* Filed herewith.
** Furnished herewith.




77

SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrantregistrant has duly caused this Reportreport to be signed on its behalf by the undersigned thereunto duly authorized.
DATE: November 8, 2017
9, 2020
TANGER FACTORY OUTLET CENTERS, INC.
By:/s/ James F. Williams
James F. Williams
SeniorExecutive Vice President and Chief Financial Officer
TANGER PROPERTIES LIMITED PARTNERSHIP
By: TANGER GP TRUST, its sole general partner
By:/s/ James F. Williams
James F. Williams
Vice President and Treasurer (Principal Financial and Accounting Officer)







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