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
JULY 31, 1998
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
333-3526-01
333-39365-01 56-1822494
(COMMISSION FILE NOS.) (I.R.S. EMPLOYER IDENTIFICATION NO.)
1400 WEST NORTHWOOD STREET, GREENSBORO, NC 27408
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
(336) 274-1666
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NOT APPLICABLE
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
<PAGE>
TANGER PROPERTIES LIMITED PARTNERSHIP
CURRENT REPORT
ON
FORM 8-K
--------------------
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On July 31, 1998, Tanger Properties Limited Partnership, a North
Carolina limited partnership (the "Operating Partnership"), completed
the acquisition of Sanibel Factory Stores, a factory outlet center
containing approximately 186,000 square feet, for an aggregate purchase
price of $27.65 million. Sanibel Factory Stores is located on the Gulf
coast of Florida between Fort Myers and Sanibel Island.
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
(a) Financial Statements Page
(1) Sanibel Factory Stores
Report of Independent Accountants 3
Statement of Revenues and Certain Operating Expenses
for the Year Ended December 31, 1997 4
Notes to Statement of Revenues and
Certain Operating Expenses 5
(b) Pro Forma Financial Information
(1) Unaudited Pro Forma Balance Sheet
as of March 31, 1998 8
(2) Unaudited Pro Forma Statements of Operations
for the three months ended March 31, 1998 9
for the year ended December 31, 1997 10
(3) Adjustments to Unaudited Pro Forma
Statements of Operations 11
(c) Exhibits
23.1 Consent of PricewaterhouseCoopers LLP*
* Filed herewith
2
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of
Tanger Properties Limited Partnership:
We have audited the statement of revenues and certain operating
expenses of Sanibel Factory Stores (the "Property") as described in Note 1, for
the year ended December 31, 1997. This financial statement is the responsibility
of the Property's management. Our responsibility is to express an opinion on
this 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 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 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, 1997 in conformity with generally
accepted accounting principles.
PricewaterhouseCoopers LLP
Greensboro, North Carolina
June 30, 1998
3
<PAGE>
SANIBEL FACTORY STORES
STATEMENT OF REVENUES AND CERTAIN OPERATING EXPENSES
For The Year Ended December 31, 1997
(In thousands)
Revenues
Base rentals $2,815
Percentage rentals 148
Expense reimbursements 1,071
Other income 10
--------
4,044
--------
Certain operating expenses
Advertising and promotion 374
Common area maintenance 363
Real estate taxes 296
Insurance 49
General and administrative 60
--------
1,142
--------
Excess of revenues over certain operating
expenses $2,902
========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
4
<PAGE>
NOTES TO STATEMENT OF REVENUES AND
CERTAIN OPERATING EXPENSES
(IN THOUSANDS)
1. BASIS OF PRESENTATION
The Statement of Revenues and Certain Operating Expenses relates to the
operations of Sanibel Factory Stores, a factory outlet center located in
Florida between Ft. Myers and Sanibel Island (the "Property"). The
Property was acquired by Tanger Properties Limited Partnership (the
"Operating Partnership").
The accompanying 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, net of
tenant reimbursements $38
Leasing commissions 21
----
$59
====
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 Statement of
Revenues and Certain Operating Expenses to be misleading or not
necessarily indicative of future operating results.
5
<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 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 2005. 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:
1998 $2,656
1999 2,280
2000 1,828
2001 1,602
2002 1,426
Thereafter 1,222
========
$11,014
========
6
<PAGE>
TANGER PROPERTIES LIMITED PARTNERSHIP
PRO FORMA 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 Sanibel Factory Stores, which was acquired on July 31, 1998, and
Dalton Factory Stores, which was acquired on March 31, 1998 (collectively, the
"Acquisitions"). The unaudited Pro Forma Statements of Operations for the three
months ended March 31, 1998 and the year ended December 31, 1997 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 Sanibel Factory Stores (contained herein) for the year
ended December 31, 1997, the Operating Partnership's unaudited financial
statements and notes thereto as of March 31, 1998 and for the three months then
ended (which are contained in the Operating Partnership's Form 10-Q for the
period ended March 31, 1998), and the audited financial statements and notes
thereto as of December 31, 1997 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, 1997).
7
<PAGE>
TANGER PROPERTIES LIMITED PARTNERSHIP
PRO FORMA BALANCE SHEETS
As of March 31, 1998
(Unaudited)
(In thousands, except share data)
Tanger Adjustments Pro forma
----------------------------------
ASSETS
Rental property, net $406,673 $27,650 (a) $434,323
Cash and cash equivalents 5,181 5,181
Deferred charges, net 8,288 8,288
Other assets 12,026 12,026
----------------------------------
TOTAL ASSETS $432,168 $27,650 $459,818
==================================
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES
Long-term debt $253,411 $27,650 (a) $281,061
Construction trade payables 8,375 8,375
Accounts payable and accrued expenses 11,099 11,099
----------------------------------
TOTAL LIABILITIES 272,885 27,650 300,535
----------------------------------
Commitments
PARTNERS' EQUITY
General partner 135,772 135,772
Limited partner 23,511 23,511
----------------------------------
TOTAL PARTNERS' EQUITY 159,283 159,283
----------------------------------
TOTAL LIABILITIES AND
PARTNERS' EQUITY $432,168 $27,650 $459,818
==================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED PRO FORMA
FINANCIAL STATEMENTS.
8
<PAGE>
TANGER PROPERTIES LIMITED PARTNERSHIP
PRO FORMA STATEMENT OF OPERATIONS
For The Three Months Ended March 31, 1998
(Unaudited)
(In thousands, except per share data)
Tanger Sanibel Dalton Adjustments Pro forma
---------------------------------------------------
REVENUES
Base rentals $15,655 $725 $488 $16,868
Percentage rentals 494 20 20 534
Expense reimbursements 6,360 299 140 6,799
Other income 297 6 24 327
---------------------------------------------------
Total revenues 22,806 1,050 672 24,528
---------------------------------------------------
EXPENSES
Property operating 6,652 283 140 7,075
General and
administrative 1,699 32 4 1,735
Interest 4,792 809 (b) 5,601
Depreciation and
amortization 5,134 320 (c) 5,454
---------------------------------------------------
Total expenses 18,277 315 144 1,129 19,865
---------------------------------------------------
INCOME BEFORE GAIN ON SALE
OF REAL ESTATE AND
EXTRAORDINARY ITEM 4,529 735 528 (1,129) 4,663
Gain on sale of real estate 994 994
---------------------------------------------------
INCOME BEFORE
EXTRAORDINARY ITEM 5,523 735 528 (1,129) 5,657
Extraordinary item (460) (460)
---------------------------------------------------
NET INCOME 5,063 735 528 (1,129) 5,197
Income allocated to the
limited partner (1,280) (37) (d) (1,317)
---------------------------------------------------
INCOME ALLOCATED TO THE
GENERAL PARTNER $3,783 $735 $528 ($1,166) $3,880
===================================================
BASIC EARNINGS PER UNIT
Income before
extraordinary item $.46 $.48
Net income .42 .43
===================================================
DILUTED EARNINGS PER UNIT
Income before
extraordinary item $.46 $.47
Net income .42 .43
===================================================
WEIGHTED AVERAGE NUMBER OF
UNITS
Basic 10,891 10,891
Diluted 11,067 11,067
===================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED PRO FORMA
FINANCIAL STATEMENTS.
9
<PAGE>
TANGER PROPERTIES LIMITED PARTNERSHIP
PRO FORMA STATEMENT OF OPERATIONS
For The Year Ended December 31, 1997
(Unaudited)
(In thousands, except per share data)
Pro
Tanger Sanibel Dalton Adjustments forma
-------------------------------------------------
REVENUES
Base rentals $56,807 $2,815 $1,858 $61,480
Percentage rentals 2,637 148 23 2,808
Expense reimbursements 24,665 1,071 720 26,456
Other income 1,162 10 29 1,201
-------------------------------------------------
Total revenues 85,271 4,044 2,630 91,945
-------------------------------------------------
EXPENSES
Property operating 26,269 1,082 932 28,283
General and administrative 6,145 60 8 6,213
Interest 16,835 3,237 (b) 20,072
Depreciation and
amortization 18,439 1,280 (c) 19,719
-------------------------------------------------
Total expenses 67,688 1,142 940 4,517 74,287
-------------------------------------------------
NET INCOME 17,583 2,902 1,690 (4,517) 17,658
Income allocated to the
limited partner (4,756) (23)(d) (4,779)
-------------------------------------------------
INCOME ALLOCATED TO THE
GENERAL PARTNER $12,827 $2,902 $1,690 ($4,540) $12,879
=================================================
EARNINGS PER UNIT
Basic $1.57 $1.58
Diluted 1.55 1.56
=================================================
WEIGHTED AVERAGE NUMBER OF
UNITS
Basic 10,061 10,061
Diluted 10,171 10,171
=================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED PRO FORMA
FINANCIAL STATEMENTS.
10
<PAGE>
TANGER PROPERTIES LIMITED PARTNERSHIP
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(a) Represents the cost of the acquisition of the Sanibel Factory Stores which
is assumed to be financed with additional borrowings under available lines
of credit. The cost of the acquisition of Dalton Factory Stores has
already been included in the Operating Partnership's historical Balance
Sheet as of March 31, 1998.
(b) Represents interest from additional borrowings under available lines of
credit to finance the Acquisitions at an interest rate of LIBOR plus 160
basis points (assumed to be 7.25 %).
(c) Reflects increase in depreciation and amortization resulting from the
Acquisitions depreciated over lives ranging from 15 to 33 years.
(d) Reflects the adjustment to income available to the limited partner, after
preferred dividends of $468,000 and $1,808,000 for the periods ended March
31, 1998 and December 31, 1997, respectively, allocable to the
Acquisitions and the pro forma adjustments for mortgage interest and
depreciation and amortization.
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: July 31, 1998
11
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements of
Tanger Properties Limited Partnership on Forms S-3 (File Nos. 33-99736-01,
333-3526-01 and 333-39365-01) of our report dated June 30, 1998, on our audit of
the Statement of Revenues and Certain Operating Expenses of Sanibel Factory
Stores for the year ended December 31, 1997, which report is included in this
Current Report on Form 8-K.
PricewaterhouseCoopers LLP
Greensboro, North Carolina
July 31, 1998
