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Tanger Factory Outlet Centers, Inc. (NYSE:SKT)

Q3 2009 Earnings Call

October 28, 2009 10:000 am ET

Executives

Steven Tanger - President, and CEO

Frank Marchisello, Jr. - EVP and CFO

Analysts

Quentin Velleley - Citi

Christy McElroy - UBS

Craig Schmidt - Bank of America - Merrill Lynch

Michael Mueller - JP Morgan

Carol Kemple - Hilliard Lyons

David Leibowitz - Horizon Asset Management

Dave Fick - Stifel, Nicolaus

Jim Sullivan - Green Street Advisors

Rich Moore - RBC Capital Markets

Operator

Good morning and welcome to the Tanger Factory Outlet Centers’ third quarter 2009 conference call. Please note that during this conference call some of management's comments will be forward-looking statements regarding the company's property operations, leasing, tenant sales trends, development, acquisition, expansion and disposition activities, as well as their comments regarding the company's funds from operations, funds available for distribution and dividends.

These forward-looking statements are subject to numerous risks and uncertainties and actual results could differ materially from these projected due to factors including, but not limited to, changes in economic and real estate conditions, the availability and cost of capital. The company's ongoing ability to lease, develop and acquire properties, as well as potential tenant bankruptcies and competition.

We direct you to the company's filings with the Securities and Exchange Commission for a detailed discussion of the risks and the uncertainties. This call is being record for rebroadcast for a period of time in the future, as such, it is important to note that management's comments include time-sensitive information that maybe accurate only as of today's date, October 28, 2009.

At this time, all participants are in a listen-only mode. Following management's prepared comments, the call will be opened up from your questions. On the call today will be Steven Tanger, President and Chief Executive Officer; and Frank Marchisello, Executive Vice President and Chief Financial Officer.

I will now turn the call over to Mr. Tanger.

Steven Tanger

Frank will take you through our financial results and I will follow with a summary of our operating performance and future developments. Then we will have time for any questions.

I'll now turn the call over to Frank.

Frank Marchisello

Our current year and prior year comparative results have been adjusted to include the impact of a number of new accounting pronouncements, most material of which is FSP APB 14-1 accounting for convertible debt instruments that may be settled in cash upon conversion, including partial cash settlement.

Net income available to common shareholders for the third quarter of 2009 was $0.06 per share compared to $0.26 per share in the prior year. Adjusted funds from operations for the third quarter of 2009 increased approximately 4.5% to $0.70 per share compared to $0.67 per share for the third quarter of 2008. While adjusted funds from operating for the nine months ended September 30, 2009 increased approximately 8.5% to $2.04 per share compared to $1.88 per share for the first nine months of 2008.

The increase in adjusted FFO was driven in part by same center NOI growth during the quarter, incremental FFO from our new wholly-owned center in Washington, Pennsylvania, and our joint venture property located in Deer Park Long Island, New York, both of which opened during the third quarter of 2008. As well as the acquisition of our property located on Highway 17 in Myrtle Beach, South Carolina in January of this year.

Termination fee income for the third quarter of 2009 amounted to only $93,000 compared to $646,000 during the third quarter of last year. Our FFO payout ratio for the first nine months of 2009 was approximately 58% and our FAD payout ratio was about 64%. At these levels, our dividend is well covered. We will generate incremental cash flow over our dividend which we plan on using to help fund our new development in Mebane, North Carolina or to reduce our outstanding lines of credit.

Our balance sheet strategy has always been conservative. With that in mind, we have completed two successful equity issuances so far this year. On May 11th, we completed an exchange offer on our 3.75% exchangeable notes. In the aggregate, the exchange offer resulted in the retirement of approximately $142.3 million principle amount of the notes and the issuance of approximately 4.9 million common shares to the company.

Subsequently, on August 14th, we completed a public offering of 3,450,000 common shares at a price $35.50 per share, including 450,000 common shares issued and sold upon the exercise of the underwriters' overallotment option. The net proceeds for the company from the offering after deducting underwriter commissions, discounts and offering expenses were approximately $116.8 million.

As a result of these two equity transactions, our balance sheet has never been stronger. On a consolidated basis our total market capitalization at September 30, 2009 was approximately $2.4 billion and our debt to total market capitalization was approximately 24.3%. We also maintained a strong interest coverage ratio of 4.63 times for the quarter.

As at September 30th, approximately 90.6% of our debt was at fixed rates. Our floating rate debt totaled to only $54.8 million of which $54 million was outstanding on our $325 million in unsecured lines of credit. Our wholly-owned portfolio of properties was 95% unencumbered and we had no outstanding debt maturities until June of 2011, including extension options.

I’ll now turn the call back over to Steve.

Steven Tanger

I'm pleased to report that our low cost of occupancy or put in other way, the highly profitable stores for our tenants has proven to be an excellent shock absorber in this difficult market. While tenants look at the base rent amount, they are focused on their total cost of occupancy.

Our team continues to work hard to reduce the non-rent component of the occupancy cost by reducing CAM, appealing real estate taxes, renegotiating insurance rates, and efficiently and effectively spending marketing funds to drive traffic. We are making great progress in completing the two -- of the remaining 2009 renewals throughout our wholly-owned portfolio.

As of the end of September, we have obtained executed renewals and renewals in process for approximately 77% of the space coming up for renewal during 2009 with an average increase and average based rental rates on the executed renewals of 10.1%. This compares to 79% this time last year with an increase in average base rental rates on the executed renewals of 17%.

In addition, during the first nine months of 2009, we retenanted approximately 319,000 square feet with an increase in average base rental rates of 37.4% compared to last year at this time when we had released approximately 481,000 square feet with an increase in average base rents of 43.8%. We have made significant leasing progress and continue to creatively retenant our portfolio. In a tough market, we are getting leases signed.

Same centre NOI growth during the first nine months was 1.8%. Our overall occupancy rate for our wholly-owned stabilized properties was 95.6% as of September 30, 2009 up almost 1% compared to the end of the previous quarter.

Outlets stores remain a very profitable channel of distribution for our tenants. Tanger Outlet Centers represents an attractive defensive property type and growth opportunity during an economic slowdown. Our operating portfolio continues to perform at a very high level. Reported tenant comparable sales within our wholly-owned portfolio decreased 2% for the rolling 12 months ended September 30, 2009 to $335 per square foot. Importantly, comp sales increased 5.1% for the three months ended September 30, 2009 compared to the same period last year.

Historically, percentage rents, which are paid by tenants once their total sales exceed certain levels, represent less than 3% of our total revenue. No single tenant accounts for more than 8.4% of our gross leasable area or 5.4% of our base and percentage rents.

We are also very pleased to announce that we have closed on the [land four] and have begun construction of our center to be located in Mebane, North Carolina. We currently have over 66% of the space either leased or it leases out for signature including [Sax Outfit], Banana Republic, Coach, GAP, J.Crew, Michael Kors, BCBG, Nike, Tommy Hilfiger and many more factory outlet stores. We have decided to begin construction now, because we feel the economy is improving.

Being in a position to tell tenants that they can open in time for the 2010 holiday season has created additional excitement among our retail partners to perceive now to sign leases and an interest continues to be strong and additional leasing momentum is building for this fabulous site located on the heavily traveled Interstate 8540 corridor in North Carolina.

With respect to earnings guidance for 2009, based on our view of the current market conditions, we believe our estimated diluted net income per share for 2009 will be between $1.39 and $1.45 per share and our FFO for 2009 will be between $2.62 and $2.68 per share. This represents an increase of approximately 7% from our previous FFO guidance.

Our operating assumptions used in our guidance are consistent with those used at the end of the second quarter. We are assuming that same center NOI grows by approximately 1% to 2%. In our guidance, we’ve also taken a conservative view and assume our tenants will be challenged to maintain sales as increased discounting and priced deflation will most likely continue during the remainder of the year. We are projecting percentage rental revenues to decrease, which is a direct result of lower sales.

The midpoint of our new guidance range equates to an annual increase in FFO over the prior year of approximately 8%. This is an impressive number, particularly considering the fact that during 2009 we executed two dilutive common equity transactions which raised over $255 million, an increase to our common share outstanding by over 8 million shares or approximately 23%. As we have done in the past, we will be providing 2010 guidance at the time of our year end 2009 conference call.

We plan to continue to thoughtfully use our resources and to maintain a conservative financial position. These were unprecedented times, but our company is positioned to get through the headwinds successfully. Our solid balance sheet with no upcoming debt maturities in the next two years puts us in a very strong position for the rest of this year and into 2010.

With that we'd be happy to answer any questions that you may have.

Question-and-Answer Session

Operator

(Operator Instructions). We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Quentin Velleley with Citi. Your line is now open.

Quentin Velleley - Citi

Steve, just a question -- given where your balance sheet is, how are your leverages? I know you’ve spoken about this before. But, could you maybe speak about some of the acquisition opportunities or maybe the other development projects that sort of [maybe] you are looking at?

Steven Tanger

We are in a position with our strong balance sheet and liquidity to be opportunistic and competitive when acquisition become avail. With regard to our development properties, we are very happy to have started construction on our site in Mebane, North Carolina, with an accretive expected return between 10.5% and 11%.

At this time, we're in the process of our development real estate group going around the country, we're identifying markets with our major tenants that could support a new Tanger Outlets Center. We're in the process of tying up appropriate land and hopefully before the ICSC convention in May, we’ll be announcing new additional new sites.

Quentin Velleley - Citi

Just in terms of utilizing spread, I noticed that for the third quarter, they were much weaker than what you've had for the earlier part of the year and also last year. Is this something which could be a trend running into 2010 slightly weaker leasing spreads?

Steven Tanger

I think it's too early to establish any sort of trend. As you can see from our supplement, we retenanted only 16 leases and we renewed only 18 leases at a 230 year-to-date. In managing the business, we focus on the year-to-date number as opposed to just one quarter's number.

Quentin Velleley - Citi

Perfect and just a last question with the (inaudible) occupancies sequentially flat at 80%, are you close to do any leasing running into the holiday period and maybe whether you're looking at putting temporary tenants into that asset as well?

Steven Tanger

We are in discussions putting temporary seasonal tenants into Deer Park and we are also in discussions with several tenants about opening permanent stores.

Operator

You next question comes from the line of Jay Habermann with Goldman Sachs. Your line is now open.

Unidentified Analyst

Good morning. It’s [Johan] here with [Jaswal]. Just going back for a second to Mebane, on the decision to close on the land, could you speak maybe a little bit more broadly to land costs today, how much costs have changed and maybe the impact that pricing had on your decision to actually move ahead here?

Steven Tanger

This land was not in a distressed situation. It’s a prime property located on an interchange on a very highly traveled road system in North Carolina. So, we were pleased with the price. We thought it was fair and we are pleased with the return on our properties, on the proposed development and that’s how we decided to move forward.

Unidentified Analyst

Then I guess staying on development for a moment, you’ve mentioned your goal of one to two projects a year and the past. Do you see yourself as moving back to that model or was Mebane more for one-off opportunity that made sense as given the attractive returns that you are anticipating?

Steven Tanger

Mebane made sense because not only the attractive returns, but the outstanding tenants that have executed leases in this property. We are working with our tenant community, as I mentioned before, to identify high volume locations together that will support new outlet centers. As I mentioned, it’s our intention to announce additional sites hopefully before the May ICSC convention.

Unidentified Analyst

Just the last one. Sorry if I missed this, but did you quantify what occupancy costs were in the quarter?

Steven Tanger

Frank, do you have that exact number?

Frank Marchisello, Jr.

No. We typically only calculate and report occupancy cost after the end of the year, because from quarter-to-quarter it could be skewed just because of the seasonality in sales.

Operator

Your next question comes from the line of Christy McElroy with UBS. Your line is now open.

Christy McElroy - UBS

Can you sort of walk us through the different components of the increase in guidance? I know $0.07 of it was the gain on sale. But, can you breakout what's driving the remaining $0.10, especially since you kept same store NOI guidance unchanged?

Frank Marchisello, Jr.

Hey, Christy it's Frank. To be honest with you, we pretty much just beat our number on every line item. I think everything came in better than we had anticipated ion Q3 base rent, percentage rent. Our especially leasing income was very strong. Our other income was strong. Our JV income was higher because of lower interest rates and better performance. So, really if you just go down the income statement you could add a penny or two to each line, expense imbursement was better than anticipated partially because of higher occupancy. So the $0.07 pickup, if you will include Q3, was it all across the board on lines and then we did up fourth quarter by about $0.03. Although, we are not ready to jump it up any further than that just because of the uncertainty of the holiday season.

Christy McElroy - UBS

So, that's why you kept the same store NOI guidance unchanged? I mean should we assume that it would probably be at the higher end of that 1% to 2% range?

Frank Marchisello, Jr.

We're just not in a position to say until we really get a good handle on how the holiday turns out. Fourth quarter has been highest percentage rent quarter over quarter.

Christy McElroy - UBS

Right.

Frank Marchisello, Jr.

So, it has the most uncertainty included in.

Christy McElroy - UBS

Okay and then just sort of a follow-up on the releasing spread question. Your retenanted spreads are obviously have been running higher than your renewal spreads that's kind of reversal of what we have seen from other retail landlords which have had a much tougher time releasing vacant space. Is that a function of sort of older releases that your 20, 30 years tenants that you’re sort of -- they're vacating that space and you are putting new tenants in there? Or is it the type of new tenants that are now occupying that space?

Steven Tanger

Christy, I think you are correct. It is a function of leases that are 10 and 15 years old coming to the end of their term and we're able now to mark-to-market these assets appropriately.

Christy McElroy - UBS

Okay and then on the renewals, I mean, I know that a very low leasing volume in the quarter and we probably shouldn’t read anything into those negative numbers, but are you finding that you need to give rent breaks in order to keep tenants in the spaces. I know in the past you've always managed for occupancy, so I'm must trying to get a little bit more color on what's going there?

Steven Tanger

I think in the view of the absolute perfect storm and the tsunami of economic downturn, our folks have done a magnificent job in working with our tenants in getting fair rents so that the tenants can maintain profitability and so can we.

Christy McElroy - UBS

Okay and then just regarding the occupancy increase quarter-over-quarter, that looks like some of the retenanted leasing that you did earlier this year actually taking occupancy, actually taking the space?

Steven Tanger

It includes everything.

Frank Marchisello, Jr.

Yeah. It was that in addition to new leases in the third quarter.

Operator

Your next question comes from the line of Craig Schmidt with Bank of America - Merrill Lynch. Your line is now open.

Craig Schmidt - Bank of America, Merrill Lynch

Given probably the feasibility study that you did on Mebane, three years out, that suggested that the center would be above your $335 per square feet average or at the average? I'm just wondering is -- where do you expect this center to fall on your portfolio once it gets stabilized?

Steven Tanger

Craig, we wouldn't have started construction if we felt it was not going to be at least average or above.

Craig Schmidt - Bank of America, Merrill Lynch

Okay and is there anything about the demographics that skew in a certain way that might impact releasing the further leasing in this center?

Steven Tanger

The Raleigh, Durham, Chapel Hill market and Greensboro, High Point and Winston-Salem market represent a very large percentage of the population in the state of North Carolina. Stable government jobs, university jobs, high tech jobs, we felt that the demographics was appropriate as did our tenants was a good match for our tenants, long-term. Also, the two nearest outlet centers of significance are 90 miles in different directions. So, this filled what we perceived as a whole in the outlet distribution channel in North Carolina.

Operator

Your next question comes from the line of Michael Mueller with JP Morgan. Your line is now open.

Michael Mueller - JP Morgan

Hi, good morning. I was wondering if you could just comment a little bit about expectations for net square footage openings or net store openings for the retailers and what you’re hearing from them as you think about 2010 compared to what we saw in, what we’re seeing this year in ’09?

Steven Tanger

Our meetings with CEOs of our major tenant partners, they continue to tell me that the outlet distribution channel is either their most profitable or one of their most profitable business units. When they go into planning for 2010 and 2011, their expectation or tenant’s expectation is that the outlets will provide the highest and fastest return on their invested capital. They tell us if that trend continues that their plan is to open more outlet stores.

Michael Mueller - JP Morgan

Okay. So, basically the expectation for ’10 is greater openings compare to ‘09?

Steven Tanger

Assuming the market continues to recover, we don't expect to rapid recovery, but if it continues to move forward at this pace, we’re optimistic, cautiously optimistic going into 2010.

Michael Mueller - JP Morgan

Okay and, what are your thoughts on sales heading into the fourth quarter considering that pretty sizable pickup in Q3?

Steven Tanger

The consumers continue to be very cautious and deliberate in spending their disposable income. I think you’ve heard me saying it numerous times. But in good times people like a bargain and in tough times like these they need a bargain. The outlets are the distribution channel where they receive bargains day-in and day-out brand name products. So, we are, as I said, cautiously optimistic going into the holiday season. The comps in the fourth quarter of last year was a very difficult and not a good quarter for most of our retailers. So, this year's comps are relatively low. We are hoping for very positive results in the fourth quarter of this year.

Michael Mueller - JP Morgan

Okay and the last question, your guidance. I think, Frank, you mentioned the expectation as percentage rents are down, so implicitly in your guidance you kind of have flat-to maybe slightly down sales. Is that a fair statement?

Frank Marchisello, Jr.

No. We have estimated flat sales throughout the year, and that’s part of the reason why Q3 was better than expected.

Operator

Your next question comes from the line of Carol Kemple with Hilliard Lyons. Your line is now open.

Carol Kemple - Hilliard Lyons

On the acquisition market, are you all aware of any outlet centers that are for sale or any of that will be coming to the market soon?

Steven Tanger

To our knowledge there's nothing publicly on the market.

Operator

Your next question comes from the line of David Leibowitz with Horizon Asset Management. Your line is now open.

David Leibowitz – Horizon Asset Management

A couple of questions, after the new construction is complete, how much cash will still be on the balance sheet and how much of that might be considered excess to your operating needs?

Frank Marchisello, Jr.

We typically do not hold any cash on our balance sheet. What we do would be to pay down our lines of credit as cash comes in and then use our lines to fund the construction. Net-net we have enough internally generated cash in a rolling 12 month period to pay for a good portion of the Mebane location. But we will have some incremental borrowings on our lines to complete them.

David Leibowitz – Horizon Asset Management

And in terms of your strategy going forward, is there much room to expand existing centers at this time?

Steven Tanger

We have very little excess land at this point in time, David. We have 25 acres attached to our successful property in Myrtle Beach, South Carolina. There are some small expansion opportunities in several of our newer properties, but nothing of any significance in it.

David Leibowitz – Horizon Asset Management

And do you have any options on other property at this time?

Steven Tanger

No. I'm sorry, let me retract that. We have an ongoing option on a site in Irving, Texas where we intend to build a new center at some point in the future.

David Leibowitz – Horizon Asset Management

And how larger property might that be?

Steven Tanger

We’ve announced it could be as much as half a million square feet, but that’s not imminent and it may be two or three years down the road.

David Leibowitz – Horizon Asset Management

And lastly, given your drivers, would you prefer to buy existing distressed property or would you prefer to go out and do something from scratch on your own?

Steven Tanger

We would prefer to buy existing successful properties. We are not in the business really of turning around distressed properties. We are also one of the developers and have for close to 30 years, successfully develop property, with the site in Mebane, we hope is an indication from our tenant community that they will support new centers and as we’ve mentioned, we are in the process of going out and finalizing options on various parcels of land around the country and hope to announce new sites in the future.

David Leibowitz – Horizon Asset Management

And lastly, is there any size in terms of dollars that are either too small or too large for you to look at?

Steven Tanger

As far as the acquisition or develop?

David Leibowitz – Horizon Asset Management

Yes. To acquire a distressed, but successful property or buy a successful property from a distressed owner, how does that sounds?

Steven Tanger

We would look at buying successful properties from owners regardless of whether they are distressed or not and due to the strength of our balance sheet we have investment grade ratings from both agencies. We have received upgrades from both agencies in the past year. Our debt-to-market cap is less than 25%. So, we have a lot of capacity to fund internally acquisitions of almost any size.

Operator

Your next question comes from the line of Nathan Isbee with Stifel Nicolaus. Your line is now open.

Dave Fick- Stifel Nicolaus

Hi, it's Dave Fick with Nate. Steve, I know you are sometimes hesitant to do this. I am wondering if you can talk a little bit about the tenant commitment lineup in North Carolina.

Steven Tanger

I did mention in my opening remarks the tenants that have already signed leases. They include [Sax Outfit], Banana Republic Factory Store, Coach Factory Store, GAP Outlet, J.Crew Factory Store, and Michael Kors, BCBG, Nike, Tommy Hilfiger and we’ve many, many more.

Dave Fick- Stifel Nicolaus

I apologize for missing that.

Steven Tanger

No problem.

Dave Fick- Stifel Nicolaus

Did you at this point bid out any of the construction costs? And what are you anticipating in terms of the cost per foot on this project?

Steven Tanger

The construction costs have come in lower than they were a year ago. We are anticipating about $200 per square foot or 315,000 square feet at $61 million in cost and an estimated return of 10.5% to 11%.

Dave Fick- Stifel Nicolaus

And the physical characteristics of this is, is going to be another platinum plated project like the Dells?

Steven Tanger

Well. Thank you for your compliment on our site in Dells. We feel that all of our new developments are platinum plated. This will be an upscale environment in an architecture that's suitable for the North Carolina [Petemont].

Dave Fick- Stifel Nicolaus

Great. You have mentioned additional permanent tenants at Deer Park, are those going into the luxury wing is taking a little bit longer to lease than you'd hope?

Steven Tanger

They're going various parts of this [Saturday].

Dave Fick- Stifel Nicolaus

Okay and you said that you're not aware of any significant portfolios in the market. Do you anticipate or are you sensing that there is a buzz that there maybe significant transactions in the offering over the next, say, 12 to 24 months?

Steven Tanger

It's never been our policy to comment on speculation or rumors?

Dave Fick- Stifel Nicolaus

Okay. Then lastly, you've talked about the yield in Mebane. Can you tell us where your targeted anticipated stabilized yields are on the most recent three projects that you opened at Dells, Pittsburg and Long Island?

Steven Tanger

Do not think we previously announced, this should come in stabilized between 10% and 10.5% -- 10% to 11%. I think Deer Park will take longer and the anticipated returns, probably Frank, what do we estimate 9% to 9.5%?

Frank Marchisello, Jr.

On Deer Park, yes.

Dave Fick- Stifel Nicolaus

So you see you haven't hurt value there but maybe not created a whole lot at this point. I don't want to be repetitive in terms of asking the question, but I just want to see if anything has changed from what you said previously.

Operator

You next question comes from the line of Jim Sullivan with Green Street Advisors. Your line is now open.

John Arabia – Green Street Advisors

This is Andrew. Steve, you mentioned earlier, you see the outlook for the economy improving and that help you get comfortable with breaking ground on that and maybe a bit earlier than you previously planned. You maybe saying that comment and specifically what you're seeing in the economy that tells you things are improving?

Steven Tanger

We're looking at an economy a year from today, not next weekend. Our reading of the economic indicators, I'm sure is the same as you. You’ve just let us to that conclusion that it’s not just one indicator; it’s a whole range of indicators. We just sensed that our retailers have cut a tremendous amount of G&A out of their overhead, have cut their inventories down to appropriate levels. So that if they gain traction with sales, they should be very profitable and should generate a lot of cash flow as such and if that is what happens, they will be looking to invest that excess cash in the outlet stores. We are lead to believe are the fastest and highest return on invested equity.

As far as the overall macro environment, everybody draws different conclusions from the same set of numbers. We drew the conclusion that a year from today we feel consumers, although, they are cautious and deliberate today, maybe more apt to buy or there maybe more consumers to buy or more disposable incomes to spent in the outlet distribution channels.

Operator

(Operator Instructions). Your next question comes from the line of Rich Moore with RBC Capital Markets. Your line is now open.

Rich Moore - RBC Capital Markets

On the accounts payable line, that kind of balanced up for this quarter, any thoughts on that, Frank?

Frank Marchisello

Rich, give me half a second, I’m now --

Rich Moore - RBC Capital Markets

Yes, that’s all right. If I cut you off guard, I mean, I noticed it and I was curious if it is going to continue if there is any -- especially you guys are holding out?

Frank Marchisello, Jr.

I'm sorry, yeah. Part of that is due to the only thing, our severance.

Rich Moore - RBC Capital Markets

Okay.

Frank Marchisello, Jr.

Which is not -- it was not all payable and his retirement. So, we had to accrue it and it’s in that line item.

Rich Moore - RBC Capital Markets

On tenant allowances, I noticed those were down for the quarter, kind of unusually down. Is that reflective of the amount of leasing or again is there anything special going on with what you guys are doing as far as offering tenant allowances?

Frank Marchisello, Jr.

I think it's a timing issue. We are still looking to spend about $8 million for the year in tenant allowances, this second generation.

Rich Moore - RBC Capital Markets

On the mortgages, you obviously have many mortgages to begin with, but on the two that are getting closer, do those just go on the line of credit. Is that what you're thinking currently?

Frank Marchisello, Jr.

The one mortgage that we have wholly-owned is the Myrtle Beach 17 mortgage. That actually has an extension option that we can pull the trigger on and we most likely will do that all things being considered if we get to April of '010 and have not done anything else. The answer is, yes. We could put on the lines, but given that it’s at a fairly decent rate, we may just spend it. The other mortgage that we have is in a joint venture in Wisconsin Dells. We have gotten a commitment for a three year extension on that. It's actually a three plus, one plus one. So, that will be rolling into that new mortgage.

Rich Moore - RBC Capital Markets

Last thing, where was that land sale gained that partial?

Frank Marchisello, Jr.

Washington County, south of Pittsburgh.

Rich Moore - RBC Capital Markets

Okay and where was that, I mean what happens with that? Is there a plans or something to be put in there? Do you know?

Steven Tanger

We sold it to a developer who is going to put in a Marriott Hotel at the entrance to the center.

Rich Moore - RBC Capital Markets

Got you. I've seen the centers, it's a nice center. Great, thank you guys.

Operator

There are no further questions at this time.

Steven Tanger

I want to thank everybody for joining us and as usual, Frank and I are available to answer any questions you may have. So please call us. Again, happy holiday season, I guess we won't be talking to you before then. Good bye now.

Operator

This now concludes today's conference call. You may now disconnect.

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Source: Tanger Factory Outlet Centers, Inc. Q3 2009 Earnings Call Transcript
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