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Tanger Factory Outlet Centers Inc. (NYSE:SKT)

Q3 2010 Earnings Conference Call

October 27, 2010 10:00 AM ET

Executives

Mona Walsh – Assistant VP, Corporate Communications

Steven Tanger – President and CEO

Frank Marchisello – CFO, EVP and Secretary

Analysts

Christie McElroy – UBS

Quinton Falelli – Citi

Craig Schmidt – Bank of America/Merrill Lynch

Todd Thomas – Keybanc Capital Markets

Michael Mueller – J.P. Morgan

Carol Kemple – Hilliard Lyons

David Leibowitz – Horizon Asset Management

Ben Yang – Keefe Bruyette & Woods

Cedric Lachance – Greenstreet Advisors

Rich Moore – RBC Capital Markets

Nathan Isbee – Stifel Nicolaus

Operator

Good morning. My name is Andrea and I will be your conference operator today. At this time I would like to welcome everyone to the Tanger Factory Outlet Centers third quarter 2010 earnings conference call. All lines have been placed on mute to prevent noise. After the speakers’ remarks, there will be a question-and-answer session.

(Operator Instructions)

Thank you. I would now like to turn the call over to our presenters, Steven Tanger, President and Chief Executive Officer, Frank Marchisello, Executive Vice President and Chief Financial Officer and Mona Walsh, Assistant Vice President, Corporate Communications. Miss Walsh, you may begin your conference.

Mona Walsh

Thank you. Good morning. This is the Tanger Factory Outlet Centers third quarter 2010 conference call. Please note that during the 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. Actual results could differ materially from those 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 details discussion of the risks and uncertainties. This call is being recorded 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 may be accurate only as of today’s date, October 27, 2010.

At this time, all participants are in a listen only mode. Following management’s prepared comments, the call will be opened up for your questions. I’ll now turn the call over to Steven Tanger. Please go ahead Steve.

Steven Tanger

Thank you Mona and good morning everyone. Before we get started today, I would like to acknowledge the passing of our Founder, my father Stanley Tanger. Dad died last Saturday peacefully surrounded by our family including my mother, his wife of over 62 years, his three children and six grandchildren.

Stanley Tanger was a dedicated family man and an entrepreneur who will be remembered for his lifetime commitment to philanthropy. He was a visionary, but more than anything, he was my mentor and my friend. His legacy will be carried forward by everyone at Tanger Outlet Centers, of whom he was very proud.

As you can imagine, it is with mixed emotions that we conduct this call today. Stanley Tanger never sat still, and always moved forward, so it is in this spirit that we share our thoughts on our performance during the third quarter.

Our operating results were strong and above plan with same center NOI increasing by 3.6 % in the third quarter and 2.4 % in the first nine months of 2010. Our tenant comparable sales for the rolling 12 months ended September 30, 2010 increased 6.3 % to $349.00 per square foot. Comparable sales for the third quarter increased 4.9 % compared to the third quarter of 2009.

During the quarter, we expanded our senior management team with the appointment of Thomas E. McDonough to the newly created position of Executive Vice President of Operations. Tom brings to Tanger nearly 30 years of REIT management, leasing acquisition and development experience. He has served in senior management positions at several REIT’s. Tom joined the Tanger management team in August and we are very pleased to have him on board.

We also expanded and strengthened our Board of Directors with the addition of Thomas J. Reddin, a 30 year consumer marketing and e-commerce veteran. Appointed a Director in July, Tom has already brought value and perspective to our Board.

Each year, millions of shoppers across America look to Tanger Outlet Centers to receive value on all the brand name fashions and accessories they purchase for their family. Kicking off on September 15, Tanger added even more value to our consumer’s visits by giving them a chance to also fight breast cancer in their community.

For the 17th year, the annual Tanger style of Pink Campaign is providing consumers in our 32 outlet centers across the country, the opportunity to purchase Tanger Pink cards for a dollar donation and receive a 25 % discount at participating stores.

The money raised is locally donated to nearly 20 different organizations across the country through the Stanley K. Tanger Breast Cancer Fund. Tanger’s 2010 Pink campaign, concluded on October 25, and raised approximately $1.2 million. Since 1994, Tanger Outlet Centers has contributed more than $8.7 million to this important cause, giving back and supporting the communities where we live and work.

I will now turn the call over to Frank who will take you through our financial results for the quarter, and then I will follow with a summary of our operating performance and our current expectations for the balance of 2010.

Frank Marchisello

Thank you Steve and good morning everyone. Total adjusted funds from operations, or FFO for the nine months ended September 30, 2010 increased approximately 9.1 % for the period. As expected, adjusted FFO per share decreased approximately 3.9 % to $1.96 per share compared to $2.04 per share for the nine months ended September 30, 2009.

The decrease in FFO per share was due to the issuance of 8.3 million additional common shares associated with the two successful equity transactions completed during 2009. More information on these transactions may be found in our Form 10-K for the year ended December 31, 2009.

On a consolidated basis, our total market capitalization at September 30, 2010 was approximately $2.9 billion including $609 million of debt outstanding, equating to a debt to total market capitalization of approximately 21.2 %.

We also maintained a strong interest coverage ratio of 4.62 times for the quarter compared to 4.63 times last year. As of September 30, 2010 approximately 91 % of our debt was at fixed rates. Our only floating rate debt is the $54.8 million outstanding on our $325 million in unsecured lines of credit, which mature between June and August of 2011.

Following our recent senior notes offering, we have no significant debt maturities until November 2015, and June of 2020. As of September 30, our whole owned portfolio properties had no mortgages and was 100 % unencumbered.

Tanger’s Board of Directors declared a dividend of $0.3875 per common share for the third quarter ended September 30, payable on November 15 to shareholders of record on October 29. Tanger has paid cash dividends each quarter since becoming a publicly traded entity in May of 1993.

Our dividend is well covered. We will generate incremental cash flow over our dividend, which we plan on using to help fund our new developments and to reduce amounts outstanding on our lines of credit. In addition, no single tenant accounts for more than 8.5 % of our gross leasable area or 6.8 % of our base in %age rents. Most of our tenants have very strong balance sheets.

Tanger has a conservative approach to all aspects of our business, and this approach continues to build value for our stakeholders. I’ll now turn the call back over to Steve. Go ahead Steve.

Steven Tanger

Thank you Frank. I’m very pleased to report that through the end of the quarter, we continued to see positive rent spreads on the renewal and leasing of space within our portfolio. As of the end of September, we executed 358 leases totaling 1,441,000 square feet throughout our wholly owned portfolio.

New tenants to Tanger in 2010 included outstanding brands such as PS by Aeropostale, Ed Hardy, New Balance, Jos. A. Bank, Coach Men’s Stores, Hurley, Soma and New York & Co.

Lease renewals during the first nine months accounted for 1,014,000 square feet, or about 69% of the square footage coming up for renewal during 2010 and generated an increase in average base rental rates on the executed renewals of 10.1%.

In addition, during the first nine months, we re-tenanted approximately 427,000 square feet with an increase in average base rental rates of 25%. Tanger’s low cost of occupancy and our tenant’s increasing sales allow us the opportunity to continue to drive up rents while maintaining a very profitable distribution channel for our tenant partners.

As I mentioned earlier, same center NOI growth increased 2.4% for the first nine months of 2010 and 23.6% during the third quarter of 2010. Our overall occupancy rate for our wholly owned stabilized properties was 98.1% at the end of the third quarter, up from 96.9% at June 30, 2010 and 96% at year-end 2009.

Reported tenant comparable sales within our wholly owned portfolio increased 6.3% for the rolling 12 months ended September 2010 to $349.00 per square foot. Sales for the third quarter increased 4.9% compared to the third quarter of 2009.

The grand opening of our Mebane, North Carolina outlet center is just a week away. Scheduled for Friday, November 5, our $65 million, 317,000 square foot center will open its doors just in time for the 2010 holiday season. I’m pleased to announce that the center is now 100% leased or with leases out for signature.

To name just a few of the close to 80 stores that will open at this outlet center are, Banana Republic Factory Store, BCBG, Carter’s, Coach, J Crew, GAP Outlet, IZOD, Levi, Nike Factory Stores, Nine West, Oshkosh, Polo Factory Stores, QVC, Sachs Fifth Avenue on Fifth, Route 21 and Tommy Hilfiger.

The Mebane Outlet Center home page has now been launched on our consumer website, where a complete list of stores and the center map can now be found. The entire Tanger team is looking forward to next week’s ribbon cutting ceremony, which will officially open this newest addition to our portfolio of properties.

Our Hilton Head One Center currently in the midst of redevelopment in Buford County, South Carolina is moving rapidly towards an expected re-opening by the second half of 2011.

Hilton Head Two just down the road on Highway 278 continues to service our customer base in this upscale tourist location, as residents, tourists and the tenant community, eagerly await the Hilton Head One return.

Upon completion, Hilton Head One will be approximately 176,000 square feet plus four restaurant land parcels facing Highway 278. Banana Bread, Olive Garden and Longhorn Steak House will occupy three of these parcels.

Leasing activity has been very strong with74.3% of Hilton Head One leases signed or out for signature, up from 53.6% at the time of our last earnings call. A quick lineup of stores our shoppers in Hilton Head area are anxiously waiting to open are Brooks Brothers, Children’s Place, Jake Rue, Jackie, Levi, Sachs Fifth Avenue off Fifth, and many more.

Our expected $50 million investment will create the first lead certified green shopping center in Buford County.

We are continuing the process of building our shadow pipeline of potential new developments in roughly 17 markets across the country. These markets are currently either under-served or not served at all by the outlet industry.

We are currently leasing and developing new sites in West Phoenix, Scottsdale and the Houston markets, where tenant support is keen and market potential is great. We remain very excited about the growth prospects of our company and our industry as the tenant community continues to indicate the desire to expand into new markets in the United States.

As we work through the negotiation with Liz Claiborne, we will have a better understanding of how they plan to exit this business. At this juncture, it would be premature for us to make any further announcement about sales levels, rental rates, termination fees and the like until an agreement is reached.

We are delighted that Liz Claiborne has decided to continue to own and operate outlet centers for their couture, Lucky Brand Jeans, Kinsey and Kate Spade Brands.

With respect to earnings guidance for 2010, based on the positive trends in the third quarter, and our current view of market conditions, we believe our estimated diluted net income per share for 2010 will be between $0.65 and $0.71 per share and our FFO for 2010 will be between $2.42 and $2.48 per share.

As a result of the two successful equity common equity transactions during 2009, our earnings estimate for 2010 is based upon 46.2 million diluted weighted average common shares outstanding. Our 2010 guidance includes the full year impact of the dilution caused by the issuance of 8.3 million common shares in 2009 as well as the issuance of $300 million of unsecured bonds in 2010.

Our 2010 earnings estimate do not include any additional rent termination fees, the impact of any potential future refinancing transactions, the sale of any additional out parcels of land or the sale or acquisition of any properties.

We plan to continue to thoughtfully use our resources and to maintain a conservative financial position. Our solid balance sheet with no upcoming debt maturities until November 2015, and no mortgages encumbering our assets, puts us in a very strong position for the balance of 2010 and the start of next year.

Our tenants appear to have an appropriate, well priced inventory levels in their stores. They have significant positive momentum heading into the important holiday season.

I’d like now to open the call for any questions. Operator?

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from Christie McElroy with UBS. Your line is open.

Christie McElroy – UBS

Hi, good morning. Regarding the leasing that you’ve done this year, at what lease durations are you signing new leases on average and what kind of rent step ups are typical with the leases that you’re signing today both for the re-tenanted and renewed space. It seems like the spread between the cash and GAAP is much wider on re-tenanted space versus the renewed space.

Frank Marchisello

Well, we still are signing primarily five year leases. Occasionally with a good credit, high volume tenant we will enter into a ten year lease, and we’ve had that business model for many, many years.

We are in the fashion business and we want to be able with the shorter term leases, to continually upgrade the portfolio with the current most popular brand names, and with five year leases, gives us the opportunity to continue to operate.

Christie McElroy – UBS

And are step ups typically 1%, 1.5% per year on average?

Frank Marchisello

Well there really is no typical. Most of the leases have interim step ups during the period of time of the initial term and the renewal terms.

Steven Tanger

Right, and to your point on renewals, a lot of the renewals that we are doing still have renewals second and third renewal periods that we cannot adjust, so that’s why the spread between cash and straight line is less on the renewals than on the re-leasing.

Christie McElroy – UBS

And then without commenting on the Liz Claiborne Outlet Stores, can you give us a sense for the retailer’s commitment to expand and open new stores in their other brands?

Steven Tanger

We’re seeing that across the board. There’s tremendous brand leverage. As I mentioned, Coach Leatherwear has now opened one of the first Coach Men’s store in our center at Riverhead in New York. Aeropostale was expanded into PS, and just on and on.

The outlet distribution channel is now an important part of the business strategy when our tenants continue to expand their brands.

Christie McElroy – UBS

OK. What I guess I’m trying to get a sense for is whether or not the retailer plans to maybe replace some of their leases on the stores that have plans to close with some of the other brands.

Steven Tanger

I don’t really know what you’re referring to.

Christie McElroy – UBS

OK. Well if they plan to close a Liz Claiborne outlet store, would they open it with a Juicy, something like that?

Steven Tanger

Oh, well that’s, if you’re specifically talking about Liz Claiborne, there are a number of different opportunities that Liz is presenting to us. Liz Claiborne is the guarantor and signator on all of our leases and we’re very comfortable with the financial position of Liz Claiborne as the guarantor.

They have presented some potential tenants in order to assign the lease to them, and we’re analyzing that position right now. In some cases, they are converting parts of the Liz Claiborne store to their other brands. As I mentioned, we’ve got a broad portfolio with Liz in all different sizes and shapes, so there is no one cookie cutter solution.

Christie McElroy – UBS

Thank you.

Operator

Your next question comes from the line of Quinton Falelli with Citi. Your line is open.

Quinton Falelli – Citi

Good morning. I’m just curious whether or not you looked at investing into the outlet shops at Oklahoma City and whether or not that’s a market that you’ve had interest in.

Steven Tanger

We are subject to a confidentiality agreement, so I hope you understand that I’m not at liberty to comment.

Quinton Falelli – Citi

That’s okay. And then just whether or not you can give us an update on the leasing at Deer Park.

Steven Tanger

We have had great success in Deer Park since the beginning of the year. I think as you can see, we’re up now close to 86% leased. We have executed new leases and licenses with approximately 50,000 square feet of new tenants including such prestige brands as Brooks Brothers, Jay Crew, Oshkosh by Gosh, New York & Co., etc.

So we are starting to see some positive momentum in Deer Park. The traffic continues to build nicely. We expect in our second full year of operation to welcome more than nine million shoppers to Deer Park, which is an extraordinary amount and I think over time, sales usually follows traffic, so we are cautiously optimistic on the continued success of Deer Park.

Quinton Falelli – Citi

OK. Thanks Steve.

Operator

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

Craig Schmidt – Bank of America/Merrill Lynch

Thank you. First I just wanted to express condolences to your Steve, and the entire Tanger family with the passing of Stanley Tanger. I would say that over the years we’ve enjoyed Stanley’s insight into the outlet industry, but as well, his overall good humor.

Steven Tanger

Well that’s very nice, and I will pass your lovely comments on to my sisters and the rest of my family, and we really appreciate that Craig.

Craig Schmidt – Bank of America/Merrill Lynch

OK. And then moving forward, of the 17 markets that you’re looking at for potential ground up development, do any of those look like they could be built in 2011 or are we looking more towards 2012?

Steven Tanger

I think you’re looking more towards ‘12, ‘13 and ‘14. We are going to now focus on the three that we’ve announced which is high market volume we anticipate on Interstate 45 south of Houston on the way to Galveston, and our site in Scottsdale and our site in west Phoenix.

Craig Schmidt – Bank of America/Merrill Lynch

OK. Thank you.

Operator

Your next question comes from the line of Todd Thomas with Keybanc Capital Markets. Your line is open.

Todd Thomas – Keybanc Capital Markets

Hi good morning. I’m on with Jordan Sadler as well. I was just wondering with the hire of Thomas McDonough, it seems like a pretty senior level addition. I was just wondering if you could shed a little light on the reason for bringing him on board.

Steven Tanger

First of all, Tom is a highly skilled senior executive and we’re delighted to have him as part of our management team. As you may recall we had a senior executive named Al Chaffin who was with us for 17 years and he retired four or five years ago and was not replaced.

Also, Joseph Neiman, who was our senior VP of Operations retired a year ago, and was not replaced immediately. So Tom is essentially taking those two job functions and it’s just a replacement for those two.

Todd Thomas – Keybanc Capital Markets

OK. And then just quickly on the comparable store sales, I was just wondering if you could – how did they trend throughout the quarter? Was there any discernable trend really throughout the quarter in the months?

Steven Tanger

Well we are delighted that the tenant community is experiencing such great success in Tanger Centers. We do not announce interim quarter results and I hope you can understand that I don’t want to start that trend.

Todd Thomas – Keybanc Capital Markets

OK. All right, thank you.

Operator

Your next question comes from the line of Michael Mueller with J.P. Morgan. Your line is open.

Michael Mueller – J.P. Morgan

Hi. Steve, first of all, we’d like to echo Craig’s sentiments. Our thoughts are with you and your family. Dad was a great guy.

Steven Tanger

Thanks Mike.

Michael Mueller – J.P. Morgan

And two questions. One with respect to Deer Park, I know you talked about the progress so far. We’re half way through the fourth quarter. Can you give us any insights as to should we expect to see that occupancy continue to pick up in Q4? And then the second question is just thinking about the development pipeline, I mean there’s obviously been a lot of discussion about new entrants coming in to this business. Are you seeing any impact whatsoever at this point on development deals or expected deals.

Steven Tanger

Well Deer Park, I don’t want to speculate as to which tenants may or may not sign leases or move forward with us. Going into the fourth quarter, most of it is set, but I think you’ll find continued leasing success as we go forward, certainly in the next 12 months.

I think we announced a year or two ago during the economic conditions, and remember we opened in the eye of the perfect storm in October of 2008, that it would probably take us a year or two longer to stabilize that center at 90 to 95% occupancy, and I believe by next year if things continue on the positive trend, we’ll be at probably 90% to 95% occupied.

What was your second question again?

Michael Mueller – J.P. Morgan

About new entrants into the business. Any impact on yields?

Steven Tanger

Well our development site in Mebane, North Carolina is 100% occupied and a lot of those leases were executed during the past 12 months. Our development site in Hilton Head continues to lease up and yes, we are thoughtfully working with our tenant partners to establish rents where this remains a highly profitable distribution channel for them, and our stakeholders get an appropriate return.

The new sites in the new markets, we have just started to lease, so it would be premature for us to say that. I will tell you though as you can see from our positive rent spreads is they’ve continued as we’ve driven our occupancy up over 98%, that these new entrants have allowed us to do that, and also have been very profitable for the new tenants coming into our industry.

Michael Mueller – J.P. Morgan

OK. Thank you.

Operator

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

Carol Kemple – Hilliard Lyons

Good morning. On your two outlet centers in Arizona and Houston that you’re interested in, do you think those will be 2011 or 2012 delivery?

Steven Tanger

I think it’s realistic to expect that they’ll be 2012.

Carol Kemple – Hilliard Lyons

And what do you have percent or what stage of leasing you all are on with those centers?

Steven Tanger

We have just started the early pre-development and pre-leasing, so it would really not be appropriate. It’s not a significant amount. Tenant interest is very high and we’re in the process of getting leases out and executed, but it’s very early.

Carol Kemple – Hilliard Lyons

OK. Thank you.

Operator

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

David Leibowitz – Horizon Asset Management

Good morning, and let me add my condolences as well. Very briefly, the new projects that you’re speaking about for ‘12, ‘13, ‘14, what is the capital expenditures going to be, and is that going to be funded internally and how much would you look to borrow?

Frank Marchisello

Well, we’re still working on budgets as you might imagine, so it would be premature for us to say that. Keep in mind that we generate an FAD or funds available for distribution of the between $55 and $60 million a year. Probably half of that can be put forward to new development opportunities.

We only have about $55 million outstanding on our $325 million line of credit, so we have lots of capacity to fund the development. The developments will be funded over the next two to three years. It’s not one big check tomorrow that’s being written.

David Leibowitz – Horizon Asset Management

And the second related issue, nothing was said about the possibility of acquiring existing properties. Is that no longer on the table?

Steven Tanger

We, thank heavens, with the strength of our balance sheet right now, we are in a position to be opportunistic should acquisition targets become available. The best outlet centers in the country, should they become available, would be very desirable and we would certainly aggressively pursue them.

David Leibowitz – Horizon Asset Management

What about converting a strip mall or whatever into an outlet center?

Steven Tanger

We have looked at that on and off for the past 30 years, and each of those opportunities has different reasons why they’re not appropriate or the tenants have determined they’re not appropriate for outlet centers.

A failed regional mall or a failed strip center usually has been outflanked by new properties or the demographics of the trade area have changed, and our tenants don’t want to go into it. The location of strip centers and location of most malls makes them very sensitive for our brand name high quality tenants.

So although it would be an easy way to grow the portfolio, our tenants have not had any desire so far to go into that type of property.

David Leibowitz – Horizon Asset Management

Thank you very much.

Operator

Your next question comes from the line of Ben Yang with Keefe Bruyette & Woods. Your line is open.

Ben Yang – Keefe Bruyette & Woods

Hi, good morning. Just two quick questions. Did you guys revise your same store guidance for this year?

Steven Tanger

We’ve raised our NOI guidance, same store NOI guidance to roughly 2%, 2.5% based on the Q3 results up from a half to one and a half. And that’s partially the reason why our guidance was increased.

Ben Yang – Keefe Bruyette & Woods

OK. And then second, I think you said that at Mebane, it’s 100% leased and out for signature. Curious what that physical occupancy will be for that center when it opens next week.

Steven Tanger

We anticipate it will be close to 100%.

Ben Yang – Keefe Bruyette & Woods

OK. Great. That’s it for me. Thanks.

Operator

Your next question comes from the line of Cedric Lachance with Greenstreet Advisors. Your line is open.

Cedric Lachance – Greenstreet Advisors

Thank you. Just looking at the tenant allowances for this quarter, the number has jumped significantly from previous quarters yet the square footage that’s been leased this quarter is lower. Can you explain to me a little bit what’s the philosophy right now on tenant allowances and what if anything created the larger amount this quarter?

Frank Marchisello

Well the tenant allowance and the FAD calculation are when they’re paid, not when the lease is signed, so that’s not going to match up. That said, we obviously have signed additional leases above expectations and our second generation tenant allowance budget has been revised upwards some from about $15 million to about $18 million for the year.

Cedric Lachance – Greenstreet Advisors

So when you think about it on a per square foot per year per lease, what’s the typical TA package right now?

Steven Tanger

There is no typical package. Our goal is to put the right tenants in the right spaces in our centers to produce the highest sales per square foot. There are magna tenants which draw significant traffic and we are delighted to have them join our portfolio. But there is no typical allowance.

Cedric Lachance – Greenstreet Advisors

OK. Thank you.

Operator

Your next question comes from the line of Rich Moore of RBC Capital Markets. Your line is open.

Rich Moore – RBC Capital Markets

Hello Steve. I want to extend our condolences as well on Stanley’s passing. The only question I have left is on G&A. I appeared a slight bit higher. Is there anything special going on in G&A?

Steven Tanger

Nothing really, just some average legal and other professional fees. I think the run rate for G&A will come back down a little bit in Q4 closer maybe to $6.2 million or so.

Rich Moore – RBC Capital Markets

OK, great. Thank you guys.

Operator

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

Nathan Isbee – Stifel Nicolaus

Hi good morning. Steve, I just want to express my condolences as well to you and your family. As you look to capitalize on external growth opportunities, you’re looking at 17 different sites, can you just talk about how you look at your existing portfolio and opportunities to prune, sell off some of the lower productivity, lower quality assets?

Steven Tanger

We have always done that and as you know over the past seven, eight years, we’re probably sold 15 to 20 properties. We just sold within the last year our property in Commerce, Georgia, which was one of the first ones we built I think in 1987, 1988.

We examine every one of our properties every quarter to see if we can continue to add value to them, and lease them up, or if it’s appropriate to sell them. Not having a mortgage encumbering any of these assets gives us the flexibility to sell. Right now we have no assets on the market to sell, and we’re very comfortable with the portfolio we have.

Nathan Isbee – Stifel Nicolaus

OK. And when you just look at the 17 sites you’re looking at, is it fair to say there’s more of a bias towards major metro areas versus some of the existing assets which are in less populated areas?

Steven Tanger

We go to two types of areas. One, large populated centers such as Phoenix and Houston, but also we’ve had tremendous success with American go-to type resorts like Myrtle Beach, Foley, Alabama etc. So we’re looking to resort areas and we’re looking at major population centers.

Nathan Isbee – Stifel Nicolaus

OK, thanks.

Operator

There are no further questions at this time. I’ll turn the call back over to Mr. Tanger for closing remarks.

Steven Tanger

Thank you all for participating today and for your interest in the company and your condolences on the passing of my father.

Tanger is the only public REIT with a pure outlet portfolio. We have a conservatively structured balance sheet, high brand recognition and tenured management team. Tanger has always had and will continue to maintain a disciplined development approach.

We currently have a strong portfolio of operating properties across the U.S. providing significant returns for our stakeholders. We’re always available to answer any of your questions, and look forward to receiving them. Thank you and have a great day. Goodbye.

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Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

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