SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
SEPTEMBER 30, 1997
Date of Report (Date of earliest event reported)
TANGER PROPERTIES LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
NORTH CAROLINA
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
33-99736-01 56-1822494
(COMMISSION FILE NO.) (I.R.S. EMPLOYER IDENTIFICATION NO.)
1400 WEST NORTHWOOD STREET, GREENSBORO, NC 27408
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
(910) 274-1666
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NOT APPLICABLE
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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TANGER PROPERTIES LIMITED PARTNERSHIP
CURRENT REPORT
ON
FORM 8-K
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On February 28, 1997, Tanger Properties Limited Partnership, a
North Carolina Limited Partnership (the "Operating Partnership"),
completed the acquisition of Five Oaks Factory Stores, a factory
outlet center in Sevierville, Tennessee, containing approximately
123,000 square feet, for an aggregate purchase price of $18
million. Five Oaks Factory Stores is located along Highway 441 in
the city of Sevierville, approximately 30 miles southeast of
Knoxville, Tennessee.
On September 30, 1997, the Operating Partnership acquired Shoppes
on the Parkway, a factory outlet center located on US 321 in
Blowing Rock, North Carolina, containing approximately 98,000
square feet, and Soundings Factory Stores, a factory outlet center
located on US 264 in Nags Head, North Carolina, containing
approximately 82,000 square feet (the "North Carolina Acquired
Properties") for an aggregate purchase price of $19.5 million.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
The financial statements, unaudited pro forma financial
information and exhibits filed herewith are as set forth below
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(a) Financial Statements Page
(1) Five Oaks Factory Stores
Report of Independent Accountants 4
Combined Statement of Revenues and Certain Operating Expenses
for the Year Ended December 31, 1996 5
Notes to Combined Statement of Revenues and
Certain Operating Expenses 6
(2) North Carolina Acquired Properties
Report of Independent Accountants 8
Combined Statement of Revenues and Certain Operating Expenses
for the Year Ended December 31, 1996 9
Notes to Combined Statement of Revenues and
Certain Operating Expenses 10
2
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(b) Pro Forma Financial Information
(1) Unaudited Pro Forma Balance Sheet
as of June 30, 1997. 13
(2) Unaudited Pro Forma Statements of Operations
for the six months ended June 30, 1997 14
for the year ended December 31, 1996 15
(3) Adjustments to Unaudited Pro Forma
Statements of Operations 16
</TABLE>
(c) Exhibits
23.1 Consent of Coopers & Lybrand, L.L.P.*
23.2 Consent of Joseph Decosimo and Company, LLP*
* Filed herewith
3
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of
Tanger Properties Limited Partnership:
We have audited the combined statement of revenues and certain
operating expenses of Five Oaks Factory Stores (the "Property") as described in
Note 1, for the year ended December 31, 1996. This combined financial statement
is the responsibility of the Property's management. Our responsibility is to
express an opinion on this combined financial statement based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the statement of revenues and
certain operating expenses is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statement. An audit also includes assessing the accounting
principles used and the significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
The accompanying combined statement of revenues and certain
operating expenses was prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission for inclusion in the
current report on Form 8-K of Tanger Properties Limited Partnership as described
in Note 1 and is not intended to be a complete presentation of the Property's
revenues and expenses.
In our opinion, the combined financial statement referred to above
presents fairly, in all material respects, the revenues and certain operating
expenses of the Property for the year ended December 31, 1996 in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND, L.L.P.
Greensboro, North Carolina
September 23, 1997
4
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FIVE OAKS FACTORY STORES
COMBINED STATEMENT OF REVENUES AND CERTAIN OPERATING EXPENSES
For The Year Ended December 31, 1996
(In thousands)
Revenues
Base rental $1,613
Percentage rentals 95
Expense reimbursements 528
Other income 18
---------
$2,254
Certain operating expenses
Advertising and promotion 161
Common area maintenance 276
Real estate taxes 75
Land rent 205
Other operating expenses 35
---------
752
Excess of revenues over certain operating expenses $1,502
======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
5
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NOTES TO COMBINED STATEMENT OF REVENUES AND
CERTAIN OPERATING EXPENSES
1. BASIS OF PRESENTATION
The Combined Statement of Revenues and Certain Operating Expenses
relates to the combined operations of Five Oaks Outlet Centers, Inc.
and Five Oaks Outlets II, LLC ("Five Oaks Factory Stores"), a factory
outlet center in Sevierville, Tennessee (the "Property") acquired by
Tanger Properties Limited Partnership (the "Operating Partnership").
The accompanying Combined Statement of Revenues and Certain Operating
Expenses was prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission. This statement
is not representative of the actual operations for the period
presented, as certain expenses, which may not be comparable to the
expenses expected to be incurred by the Operating Partnership in the
future operation of the Property, have been excluded as discussed
below.
Certain Operating Expenses include advertising and promotional
expenses, common area maintenance, real estate taxes, and certain other
operating expenses relating to the operations of the Property. In
accordance with the regulations of the Securities and Exchange
Commission, mortgage interest, depreciation and amortization and
certain other costs have been excluded from certain operating expenses,
as they are dependent upon a particular owner, purchase price or other
financial arrangement. Certain other costs excluded include:
Management fees $119,000
Legal and professional fees 20,000
State income and franchise taxes 34,000
Leasing commissions 5,000
-----------
$178,000
As a partnership, the allocated share of income or loss for the year is
included in the income tax returns of the partners; accordingly, no
provision has been made for Federal income taxes in the accompanying
financial statements.
2. ACQUISITION CONSIDERATIONS (UNAUDITED)
In assessing the Property, the Operating Partnership's management
considered the existing tenant base, which is the primary revenue
source, occupancy rate, the competitive nature of the market and
comparative rental rates. Furthermore, current and anticipated
maintenance and repair costs, real estate taxes and capital improvement
requirements were evaluated. Management is not aware of any material
factors that would cause the reported financial information in the
accompanying Combined Statement of Revenues and Certain Operating
Expenses to be misleading or not necessarily indicative of future
operating results.
6
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3. SIGNIFICANT ACCOUNTING POLICIES AND OPERATING LEASES
Base and percentage rental revenues are reported as income over the
lease term as earned.
The preparation of the Combined Statement of Revenues and Certain
Operating Expenses in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that
affect the reported amounts of revenues and expenses during the period
reported. Actual results may differ from those estimates.
The Property is leased to tenants under operating leases with
expiration dates extending to the year 2003. Future minimum rentals
(assuming lease renewal options, where applicable, are not exercised)
under noncancellable operating leases, exclusive of additional rents
from reimbursement of operating expenses are approximately as follows:
1997 $1,833
1998 1,628
1999 1,628
2000 1,465
2001 1,296
Thereafter 766
--------
$8,616
4. LAND RENT
The land on which the Property is located is subject to a long-term
ground lease expiring in 2046. Minimum lease payments through 2002 are
$390,000 each year and then adjusted by the Consumer Price Index on
each succeeding fifth year.
7
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of
Tanger Properties Limited Partnership:
We have audited the combined statement of revenues and certain
operating expenses of the North Carolina Acquired Properties as described in
Note 1, for the year ended December 31, 1996. This combined financial statement
is the responsibility of the North Carolina Acquired Properties' management. Our
responsibility is to express an opinion on this combined financial statement
based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statement of revenues and certain
operating expenses is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statement. An audit also includes assessing the accounting
principles used and the significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
The accompanying combined statement of revenues and certain operating
expenses was prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission for inclusion in the
current report on Form 8-K of Tanger Properties Limited Partnership as described
in Note 1 and is not intended to be a complete presentation of the North
Carolina Acquired Properties' revenues and expenses.
In our opinion, the combined financial statement referred to above
presents fairly, in all material respects, the revenues and certain operating
expenses of the North Carolina Acquired Properties for the year ended December
31, 1996 in conformity with generally accepted accounting principles.
JOSEPH DECOSIMO AND COMPANY, LLP
Chattanooga, Tennessee
January 14, 1997
8
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NORTH CAROLINA ACQUIRED PROPERTIES
COMBINED STATEMENT OF REVENUES AND CERTAIN OPERATING EXPENSES
For The Year Ended December 31, 1996
(In thousands)
Revenues
Base rental $2,214
Percentage rentals 120
Expense reimbursements 904
Other income 14
--------
3,252
Certain operating expenses
Advertising and promotion 380
Common area maintenance 453
Real estate taxes 81
Other operating expenses 42
---------
956
Excess of revenues over certain operating expenses $2,296
======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
9
<PAGE>
NOTES TO COMBINED STATEMENT OF REVENUES AND
CERTAIN OPERATING EXPENSES
1. BASIS OF PRESENTATION
The Combined Statement of Revenues and Certain Operating Expenses
relates to the combined operations of the following factory outlet
centers (the "North Carolina Acquired Properties") acquired by Tanger
Properties Limited Partnership (the "Operating Partnership"):
Property Name Location Square Footage
Shoppes on the Parkway Blowing Rock, NC 97,808 sq. ft.
Soundings Factory Stores Nags Head, NC 82,462 sq. ft.
The accompanying Combined Statement of Revenues and Certain Operating
Expenses was prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission. This statement
is not representative of the actual operations for the period
presented, as certain expenses, which may not be comparable to the
expenses expected to be incurred by the Operating Partnership in the
future operation of the North Carolina Acquired Properties, have been
excluded as discussed below.
Certain Operating Expenses include advertising and promotional
expenses, common area maintenance, real estate taxes, and certain other
operating expenses relating to the operations of the North Carolina
Acquired Properties. In accordance with the regulations of the
Securities and Exchange Commission, mortgage interest, depreciation and
amortization and certain other costs have been excluded from certain
operating expenses, as they are dependent upon a particular owner,
purchase price or other financial arrangement. Certain other costs
excluded include:
Management fees $118,000
Legal and professional fees 30,000
State income tax 56,000
Other 2,000
Leasing commissions 36,000
----------
$242,000
As a partnership, the allocated share of income or loss for the year is
included in the income tax returns of the partners; accordingly, no
provision has been made for Federal income taxes in the accompanying
financial statements.
2. ACQUISITION CONSIDERATIONS (UNAUDITED)
In assessing the North Carolina Acquired Properties, the Operating
Partnership's management considered the existing tenant base, which is
the primary revenue source, occupancy rate, the competitive nature of
the market and comparative rental rates. Furthermore, current and
anticipated maintenance and repair costs, real estate taxes and capital
improvement requirements were evaluated. Management is not aware of any
material factors that would cause the reported financial information in
the accompanying Combined Statement of Revenues and Certain Operating
Expenses to be misleading or not necessarily indicative of future
operating results.
10
<PAGE>
3. SIGNIFICANT ACCOUNTING POLICIES AND OPERATING LEASES
Base and percentage rental revenues are reported as income over the
lease term as earned.
The preparation of the Combined Statement of Revenues and Certain
Operating Expenses in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that
affect the reported amounts of revenues and expenses during the period
reported. Actual results may differ from those estimates.
The North Carolina Acquired Properties are leased to tenants under
operating leases with expiration dates extending to the year 2003.
Future minimum rentals (assuming lease renewal options, where
applicable, are not exercised) under noncancellable operating leases,
exclusive of additional rents from reimbursement of operating expenses
as of December 31, 1996 are approximately as follows:
1997 $2,091,000
1998 1,964,000
1999 1,459,000
2000 831,000
2001 342,000
Thereafter 365,000
------------
$7,052,000
11
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TANGER PROPERTIES LIMITED PARTNERSHIP
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
The accompanying Pro Forma Financial Statements are based on the
historical statements of the Operating Partnership after giving effect to the
acquisition of Five Oaks Factory Stores and the North Carolina Acquired
Properties (the "Acquisitions"). The unaudited Pro Forma Statements of
Operations for the six months ended June 30, 1997 and the year ended December
31, 1996 assume the Acquisitions had occurred as of the beginning of each
respective period.
The Pro Forma Financial Statements have been prepared by the Operating
Partnership's management. These pro forma statements may not be indicative of
the results that would have actually occurred if the Acquisitions had been in
effect on the date indicated, nor does it purport to represent the results of
operations for future periods. The Unaudited Pro Forma Financial Statements
should be read in conjunction with the audited statement of revenues and certain
operating expenses of the Acquisitions (contained herein) for the year ended
December 31, 1996, the Operating Partnership's unaudited financial statements
and notes thereto as of June 30, 1997 and for the six months then ended (which
are contained in the Operating Partnership's Form 10-Q for the period ended June
30, 1997), and the audited financial statements and notes thereto as of December
31, 1996 and for the year then ended (which are contained in the Operating
Partnership's Annual Report on Form 10-K for the year ended December 31, 1996).
12
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TANGER PROPERTIES LIMITED PARTNERSHIP
PRO FORMA BALANCE SHEETS
As of June 30, 1997
(Unaudited)
(In thousands)
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Tanger Adjustments Pro forma
------------------------------------------------
ASSETS
Rental property, net $348,548 $19,500 (a) $368,048
Cash and cash equivalents 2,603 2,603
Deferred charges, net 7,560 7,560
Other assets 11,540 11,540
------------------------------------------------
TOTAL ASSETS $370,251 $19,500 $389,751
================================================
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES
Long-term debt $214,890 $19,500 (a) $234,390
Construction trade payables 13,226 13,226
Accounts payable and accrued expenses 9,224 9,224
------------------------------------------------
TOTAL LIABILITIES 237,340 19,500 256,840
------------------------------------------------
Commitments
PARTNERS' EQUITY
General partner 108,355 108,355
Limited partner 24,556 24,556
------------------------------------------------
TOTAL PARTNERS' EQUITY 132,911 132,911
------------------------------------------------
TOTAL LIABILITIES AND PARTNERS' EQUITY $370,251 $19,500 $389,751
================================================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED PRO FORMA
FINANCIAL STATEMENTS.
13
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TANGER PROPERTIES LIMITED PARTNERSHIP
PRO FORMA STATEMENT OF OPERATIONS
For The Six Months Ended June 30, 1997
(unaudited)
(In thousands, except unit data)
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<CAPTION>
<S> <C> <C> <C> <C>
Tanger Acquisitions (b) Adjustments Pro forma
--------------- --------------------- --------------- -------------------
REVENUES
Base rentals $26,958 $1,394 $28,352
Percentage rentals 703 122 825
Expense reimbursements 11,599 513 12,112
Other income 421 14 435
-------------------------------------------------------------------------
Total revenues 39,681 2,043 41,724
-------------------------------------------------------------------------
EXPENSES
Property operating 12,148 552 12,700
General and administrative 3,028 3,028
Interest 7,779 912 (c) 8,691
Depreciation and amortization 8,904 378 (d) 9,282
-------------------------------------------------------------------------
Total expenses 31,859 552 1,290 33,701
-------------------------------------------------------------------------
NET INCOME $7,822 $1,491 ($1,290) $8,023
NET INCOME PER COMMON UNIT $.71 (e) $.72
==========================================================================
WEIGHTED AVERAGE NUMBER OF UNITS 9,757,833 9,757,833
==========================================================================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED PRO FORMA
FINANCIAL STATEMENTS.
14
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TANGER PROPERTIES LIMITED PARTNERSHIP
PRO FORMA STATEMENT OF OPERATIONS
For The Year Ended December 31, 1996
(unaudited)
(In thousands, except unit data)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Tanger Acquisitions (f) Adjustments Pro forma
-----------------------------------------------------------------------------
REVENUES
Base rentals $50,596 $3,827 $54,423
Percentage rentals 2,017 215 2,232
Expense reimbursements 21,991 1,432 23,423
Other income 896 32 928
-----------------------------------------------------------------------------
Total revenues 75,500 5,506 81,006
-----------------------------------------------------------------------------
EXPENSES
Property operating 23,559 1,708 25,267
General and administrative 5,467 5,467
Interest 13,998 2,681 (c) 16,679
Depreciation and amortization 16,458 1,154 (d) 17,612
-----------------------------------------------------------------------------
Total expenses 59,482 1,708 3,835 65,025
-----------------------------------------------------------------------------
INCOME BEFORE GAIN ON SALE OF LAND AND
EXTRAORDINARY ITEM 16,018 3,798 (3,835) 15,981
Gain on sale of land 159 159
-----------------------------------------------------------------------------
INCOME BEFORE EXTRAORDINARY ITEM
16,177 3,798 (3,835) 16,140
Extraordinary item---Loss on early
extinguishment of debt (831) (831)
-----------------------------------------------------------------------------
NET INCOME $15,346 $3,798 $(3,835) $15,309
=============================================================================
PER COMMON UNIT OUTSTANDING
Income before extraordinary item $1.46 (e) $1.46
Net income 1.37 (e) 1.37
=============================================================================
WEIGHTED AVERAGE NUMBER OF UNITS 9,434,810 9,434,810
=============================================================================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED PRO FORMA
FINANCIAL STATEMENTS.
15
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TANGER PROPERTIES LIMITED PARTNERSHIP
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(a) Represents the cost of the acquisition of the North Carolina Acquired
Properties which is assumed to be financed with additional borrowings
under available lines of credit. The cost of the acquisition of Five
Oaks Factory Stores has already been included in the Operating
Partnership's historical Consolidated Balance Sheet as of June 30,
1997.
(b) Represents the historical combined statement of revenues and certain
operating expenses of Five Oaks Factory Stores for the period from
January 1, 1997 through February 28, 1997 and the historical combined
statement of revenues and certain operating expenses of the North
Carolina Acquired Properties for the six months ended June 30, 1997.
(c) Represents interest from additional borrowings under available lines of
credit to finance the Acquisitions at an interest rate of LIBOR plus
150 basis points (assumed to be 7.15%).
(d) Reflects increase in depreciation and amortization resulting from the
Acquisitions depreciated over lives ranging from 15 to 33 years.
(e) On September 24, 1997, the Operating Partnership received net proceeds
of approximately $27.0 million from the issuance of Common Shares
issued by its general partner, Tanger Factory Outlet Centers, Inc. and
used such proceeds to pay down certain debt. If such retirement had
taken place as of the beginning of the fiscal year presented, income
per unit before extraordinary item would have been $.72 and $1.44 for
the periods ended June 30, 1997 and December 31, 1996, respectively,
and net income per unit would have been $.72 and $1.36 for the periods
ended June 30, 1997 and December 31, 1996, respectively.
(f) Represents the historical combined statements of revenues and certain
operating expenses of the Acquisitions for the year ended December 31,
1996.
16
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
TANGER PROPERTIES LIMITED PARTNERSHIP
BY: TANGER FACTORY OUTLET CENTERS, INC,
ITS GENERAL PARTNER
By: /s/ FRANK C. MARCHISELLO, JR.
Frank C. Marchisello, Jr.
Vice President, Chief Financial Officer
DATE: October 9, 1997
17
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EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements of
Tanger Factory Outlet Centers, Inc. and Tanger Properties Limited Partnership on
Form S-3 (File Nos. 33-99736/33-99763-01) and Form S-3 (File Nos.
333-3526/333-3526-01) of our report dated September 23, 1997, on our audit of
the Combined Statement of Revenues and Certain Operating Expenses of Five Oaks
Factory Stores for the year ended December 31, 1996, which report is included in
this Current Report on Form 8-K.
COOPERS & LYBRAND, L.L.P.
Greensboro, North Carolina
October 9, 1997
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements of
Tanger Factory Outlet Centers, Inc. and Tanger Properties Limited Partnership on
Form S-3 (File Nos. 33-99736/33-99763-01) and Form S-3 (File Nos.
333-3526/333-3526-01) of our report dated January 14, 1997, on our audit of the
Combined Statement of Revenues and Certain Operating Expenses of North Carolina
Acquired Properties for the year ended December 31, 1996, which report is
included in this Current Report on Form 8-K.
JOSEPH DECOSIMO AND COMPANY, LLP
Chattanooga, Tennessee
October 9, 1997
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