Cyndi Holt - VP, Finance and Investor Relations Steven B. Tanger - President and CEO Frank C. Marchisello, Jr. - EVP and CFO.

Todd Thomas - KeyBanc Michael Bilerman - Citigroup Caitlin Burrows - Goldman Sachs Omotayo Okusanya - Jefferies Michael Mueller - J. P. Morgan DJ Busch - Green Street Advisors.

Good morning. This is Cyndi Holt, Vice President, Finance and Investor Relations and I would like to welcome you to the Tanger Factory Outlet Centers Third Quarter 2014 Conference Call. Yesterday, we issued our earnings release as well as our supplemental information and investor presentation.

This information is available on our Investor Relations Web-page, investors.tangeroutlet.com.

Please note that during this conference call, some of management's comments will be forward-looking statements, including statements regarding the Company's property operations, leasing, tenant sales trends, development, acquisition and expansion activities, as well as their comments regarding the Company's funds from operations, adjusted 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 those projected 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 and obtain public financing, the expected timing and yields related to development projects 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 uncertainties. During the call, we will also discuss non-GAAP financial measures as defined by SEC Regulation G.

Reconciliations of these non-GAAP measures to the comparable GAAP financial measures are included in our earnings release and in our supplemental information. 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 only be accurate as of today's date, October 29, 2014. At this time, all participants are in listen-only mode. Following management's prepared comments, the call will be opened for your questions.

We ask you to limit your questions to two so that all callers will have the opportunity to ask 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 Steven Tanger. Please go ahead, Steve..

Thank you, Cyndi, and good morning everyone. The third quarter 2014 was another solid quarter for Tanger. Adjusted funds from operations per share increased 6.1% compared to the third quarter of 2013.

Same-center total tenant sales increased 2% for the trailing 12 months ended September 30, 2014, and earlier this month we expanded our footprint in Canada when we opened a new 316,000 square foot outlet center in Ottawa, Ontario. Many of you were interested in an update on our development projects.

First, let me turn the call over to Frank who will take you through our financial results. Then I will follow up with a discussion of our operating performance, our development pipeline and our expectations for the balance of 2014..

Thank you, Steve, and good morning everyone. As Steve mentioned, our reported AFFO per share increased 6.1% for the third quarter of 2014 to $0.52 per share from $0.49 per share for the third quarter of 2013. For the nine months of 2014, AFFO per share increased 6.7% to $1.44 per share compared to $1.35 per share for the same period of 2013.

On a consolidated basis, our total market capitalization at September 30, 2014 was $4.8 billion, up 4% compared to September 30, 2013. And our debt to total market cap of 30.5% was best in class for the mall REIT group. We also maintained a strong interest coverage ratio of 4.4x for the third quarter.

Our balance sheet strategy continues to be conservative targeting minimal use of secured financing and a manageable schedule of debt maturities. As of September 30, 2014, there was $380.2 million of available capacity under our unsecured lines of credit or 73% of the total $520 million commitment.

As of quarter end, approximately 86% of our consolidated square footage was unencumbered by mortgages. We have no significant maturities on our balance sheet until November 2015, when a $250 million bond matures with a coupon of 6.15%.

Recent comparable transactions in the REIT bond market indicate that if we could refinance this maturity today, the all-in rate would be below 4%. We have paid cash dividends each quarter and have raised our dividend each of the 21 years since becoming a public company on May of 1993.

Our dividend is well covered with an expected FAD payout ratio for 2014 of around 60%. At these levels, we expect to generate close to $100 million in excess cash flow over our dividend, which we plan to use to reinvest in our business to help fund the development of new properties and the expansion of successful properties.

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

Thank you, Frank. As I mentioned earlier, our same-center total tenant sales volume reported to us by all tenants throughout the consolidated portfolio regardless of their store size increased 2% to $4.1 billion through for the 12 months ended September 30, 2014 compared to $4 billion for the 12 months ended September 30, 2013.

Comparable tenant sales for the 12 months ended September 30 increased approximately 1% to $387 per square foot. I'm pleased to report that we continued to generate very healthy base rental rate spreads during the third quarter of 2014. For the first nine months of 2014, blended rental rates increased 23.3%.

This ability to drive rents higher is a function of both retailer demand for outlet space and the fact that on average our leases are currently at below market rents. With the lowest average tenant occupancy cost ratio in our mall peer group at just 8.6% for our consolidated portfolio in 2013, our average occupancy cost ratio is well below market.

Under these conditions, we have been successful in raising rents while maintaining a very profitable distribution channel for our tenant partners. Lease renewals in the first nine months of 2014 accounted for 1,130,000 square feet or about 68% of the space coming up for renewal during 2014 and generated a 17.1% average increase in base rental rates.

Excluded the expiring space in which the tenant has no renewal option and we are opting not to renew the lease to further upgrade our tenant mix, 80% of the expiring space was executed at quarter end and 84% is either executed or in process.

Re-tenanting activity accounted for an additional 470,000 square feet of leases executed during the first nine months of 2014. This space was re-leased at an average increase in base rental rates of 35.4%, as we continue to capture the embedded value within our portfolio.

Occupancy for the consolidated portfolio was 97.7% on September 30, 2014 and the highest of the reporting mall REITs. Occupancy is down slightly compared to occupancy of 98% on June 30, 2014.

This decrease is primarily the result of temporary downtime related to both remerchandising activity at a number of our centers and the bankruptcy of Coldwater Creek. Continually improving tenant mix is a crucial ingredient as we strive to provide a unique and upscale shopping experience to the customer.

Atlantic City is one of the centers on which we are currently focusing our remerchandising efforts. The major change in occupancy during the quarter was related to our ability to recapture a 16,000 square foot space from a tenant performing in the $100 per square foot range.

In early October, a temporary tenant moved into the space adding some seasonal flavor to the center and providing a rental stream while we worked to lease the space to one or more high-volume outlet brands.

Contrary to media reports, there is a great deal of excitement in Atlantic City as the community has embraced its beach town routes and rebranded itself to market the family-friendly non-gaming audiences. In addition, traffic onto the island via the Atlantic City Expressway has not been negatively impacted by the casino closures.

Coldwater Creek's average sales within our portfolio were less than $200 a square foot. At a few smaller centers, like Kittery and Tuscola, the entire change in occupancy from June to September was a result of the Coldwater Creek suite going vacant.

Our objective in leasing the 11 spaces totaling approximately 57,000 square feet they vacated in late June or early August is to put higher volume tenants in the space and to mark the rents to market. In the past, this strategy has proven successful in such situations and has resulted in improvement to our tenant mix and increased rents.

Same-center net operating income increased 1.4% for the third quarter, extending our streak to 39 consecutive quarters of internal growth, dating back to the first quarter of 2005 when we first began tracking this metric. On a year-to-date basis, same-center net operating income increased 2.6%.

We are pleased to post this healthy growth in the face of tough comps of 4.1% and 5% for the nine months of 2013 and 2012 respectively. We currently believe our 2014 same-center net operating income will meet or exceed our original guidance of 3%.

Tenant demand for outlet space coupled with our reputation within the industry of having a quality portfolio of outlet centers and a refined skill set for developing, leasing, operating and marketing them has afforded us a robust external growth pipeline throughout the United States and Canada.

As I mentioned, the newest property was added to our portfolio less than two weeks ago when we and our 50-50 co-owner opened our first ground up development in Canada. Located in suburban Kanata, Ontario, the 316,000 square foot Tanger Outlet Center Ottawa features about 80 brand and designer stores.

Ottawa is the capital and fourth largest city in the country of Canada with 1.2 million residents and 7.5 million annual visitors. Since the center opened on October 17, shopper traffic has been strong and retailer feedback has been very positive.

Before the end of 2014, we plan to open four additional development projects, just in time for the holiday shopping season. First up is completion of a major expansion and renovation of Tanger Outlets Cookstown located on the northern end of the Greater Toronto Area.

Scheduled to open next Friday, November 7, the expansion will nearly double the size of the existing 155,000 square foot center and will add about 35 brand name and designer outlet stores. The renovation will create an updated exterior for the existing space, consistent with the newly developed expansion space.

The remaining three projects with planned Holiday 2014 openings are smaller expansions of successful outlet centers, including 78,000 square foot at Tanger Outlets Westgate in Glendale, Arizona; 25,000 square foot at Tanger Outlets Branson, Missouri; and 21,000 square feet at Tanger Outlets Park City, Utah.

The total project cost for the new developments and expansions that we have opened or planned to open in 2014 is about $316.6 million. Out of this amount, our remaining equity contribution necessary to complete these projects net of construction loan proceeds was only about $42 million as of September 30, 2014.

In 2015, we currently expect to open three additional new developments, all of which are already under construction. During the quarter, we broke ground on a 358,000 foot wholly-owned outlet center in the Grand Rapids, Michigan market and Byron Township, Michigan for which we are currently targeting a third quarter 2015 opening.

Construction is ongoing at Tanger Outlets at Foxwoods in Mashantucket, Connecticut at the Foxwoods Resort Casino, and at Tanger Outlets Savannah, Georgia. We are projecting second quarter 2015 for both of these developments. Total project cost for the development projects that we expect to open in 2015 is about $304.9 million.

Of this amount, our remaining equity contribution necessary to complete these projects, net of construction loan proceeds, was about $65.7 million as of September 30, 2014.

During the quarter, we and our 50-50 joint venture partner delayed commencement of construction of Tanger Outlets Columbus, Ohio in order to secure public financing for the necessary off-site improvements. The partners are currently targeting a mid-2016 opening.

Our most recently announced project is in Hartford, Connecticut market in Cheshire, Connecticut. Additionally, we have identified a deep shadow pipeline of other markets that are either underserved or not served by the outlet industry. All of the projects that we intend to open in 2014 and 2015 are either under construction or have already opened.

At the midpoint of the yield ranges disclosed in our supplemental information, the weighted average stabilized return on cost for these projects is currently projected to be 9.2%.

These developments extend our proven track record of developing high quality outlet assets that yield well above our cost of capital, which should create significant shareholder value.

With respect to earnings guidance for 2014, based on our internal budgeting process, our current view of market conditions, and the strength and stability of our core portfolio, we are increasing the low end of the previously announced guidance.

We expect our estimated diluted net income will be between $0.80 and $0.83 per share and our FFO will be between $1.93 and $1.96 per share. Our estimates do not include the impact of any rent termination fees, any potential refinancing transactions, the sale of any out-parcels of land or the sale or acquisition of any properties.

Our 2014 guidance assumes a projected increase in same-center net operating income of approximately 3%, and that tenant sales will remain stable or increase modestly. We remain optimistic about the growth prospects for our Company and our industry as shoppers continue to see brand name products direct from the manufacturer.

The tenant community continues to indicate its desire to expand into new markets in the United States and Canada with Tanger as a preferred partner. The resiliency of the outlet channel has been proven over the past 33 years through many economic cycles.

We have over 3,000 long-term leases with good credit brand name tenants that have historically provided a continuous and predictable cash flow in good times and in challenging times. Those single tenant accounts for more than 4.8% of our base and percentage rental revenues or 7.9% of our gross leasable area.

In addition, approximately 90% of our total revenues are expected to be derived from contractual base rents and tenant expense reimbursements. Now I'd be happy to turn the call over to any questions..

(Operator Instructions) Our first question comes from the line of Todd Thomas from KeyBanc. Your line is open..

First question on the 11 Coldwater Creek spaces, I was just wondering if you had any thoughts on what the potential mark to market might look like on the new leases for those spaces?.

We're not going to speculate on what leases might – what the rental rates might be on deals that would be commenced in the future, but we're satisfied that Coldwater sales were well below probably about half of our average sales and that we'll be able to replace those stores with much higher volume tenants at significantly higher rents..

Okay. And then the drag on occupancy, I guess it's partially related to Coldwater, but it sounds like you're also not renewing leases and getting some space back.

I was wondering, are retailers, are they kind of walking away a little more frequently than they have in the past? It seems like there are some retailers that are sort of struggling to figure out their optimal retailing strategies, and so any thoughts whether this creates an opportunity for Tanger to get space back more frequently than you have in the past on a more recurring basis?.

We're very happy with the consistency of our tenant base. We're not finding tenants in the outlet area walking away from leases, certainly not in our portfolio. They may be doing that in other retail venues but not in the outlet venue. We have a tremendous amount of new tenant interest from new tenants in space.

We for the better part of 30 years have always strived to continue to upgrade our portfolio with the hottest and best tenants for retail and they usually do well in the outlet space. So this is a consistent strategy we've had for 30 years and it seems to have worked..

Your next question comes from the line of Michael Bilerman from Citi. Your line is open..

It's funny they were complaining about 98% occupancy versus 99%, but anyways we'll move off of that topic.

Steve, can you share a little bit about sort of the CapEx that you're spending? If you were to look in your disclosure on Page 13 in your AFFO, your FAD disclosure, you're upwards about $29 million year-to-date, and I know a lot of these changes that you're making are coming with capital as you go through the shuffle within your portfolio, but the number is elevated especially relative to last few years where you were sort of in the $7 million to $10 million, last year you were at $15 million for the full-year, can you sort of break down a little bit the $30 million that's spent year-to-date, how much more capital is coming in the fourth quarter and sort of what the level is for next year?.

The CapEx of $29 million is basically being spent to upgrade two of our highest volume most popular centers, one in Riverhead, New York and the other in Rehoboth Beach, Delaware. We're doing complete renovations of both of those properties and the $29 million was spent on those renovations and is essentially complete..

Just to be clear, not the full $29 million but the incremental over what we typically would spend in a year went toward Riverhead and Rehoboth..

And that should – so as we look forward to the fourth quarter and to next year, that should trend back down to that call it $10 million to $15 million range?.

Yes, unless we decide to do something similar at another center, which we don't currently have in the plans. Most of the work has been completed. So I think you'll see the fourth quarter come back down to more of a stabilized amount..

And in the occupancy numbers, those are economic occupancy rather than leased rates, correct, in your supp?.

Yes..

And so where would – I think, Steve, you talked about Atlantic City and some of the leasing that's been going on there, and it seems that the leased rate would be a lot higher than the current occupancy.

I don't know if you can sort of bridge – again at 98% I know there's not a lot of room to lease, but maybe you can just talk a little bit about sort of where you stand overall on leased percentage?.

As of September 30, Michael, Atlantic City the space we spoke about was vacant, we got a temporary tenant in there during October. So that would not have been included as of September.

And as Steve mentioned, we have the temporary tenant there until we find the appropriate mix of tenants to take that space whether it would be one large tenant or multiple tenants that we can break that space up and get higher rents..

But I want to make clear, we're just not in a rush to put any tenant in vacant space, we want to set this center up for the next 5 to 10 years and continue to upgrade the co-tenancy with the outstanding mix we currently have there..

But outside of that one large space, is there other leases that you've done where the lease rate that haven't begun taking occupancy yet, where the lease percentage is actually much higher than the 90%?.

Marking on leases, obviously for the Coldwater Creek spaces, to speak to that directly, the timing of when they will be turned over and opened is to be determined.

In the meantime, certainly our temporary tenant group will focus on filling some of that space to the extent it's not going to be turned over to a permanent tenant during the fourth quarter. So long story short, I think we will see occupancy trend back up by year-end..

Your next question comes from the line of Andrew Rosivach from Goldman Sachs. Your line is open..

This is Caitlin Burrows. We've heard some weak outlet results from a couple of your tenants this week, Coach and Ralph Lauren as examples, and Ralph Lauren specifically mentioned some cannibalization impact from e-commerce.

I was just wondering if you could talk about the extent to which you believe this is impacting sales and traffic at your centers..

I think you'd have to query Ralph Lauren and the other tenants directly. As far as we're concerned, traffic is doing well, sales are up. We've been competing with e-commerce for the past 15, 20 years and tenant sales ebb and flow. For every Coach there is a Michael Kors, for every Ralph Lauren there's other people that outlet sales are doing well.

You might want to refer to some of the athletic providers like Nike or Under Armour who are explosive. We're basically in the fashion business and fashion goes in and out amongst different apparel categories, and I think that's probably the best answer..

Okay.

And then also is there anything you're doing on the topic of e-commerce, online or social media to help drive the traffic to your centers and have those purchases occur in the centers themselves?.

We have a very robust social media program encompassing all of the popular social media venues. We have a team that works to provide special offerings through those sites.

We have been able to work consistently through the Tanger app on your mobile phone, happy to have you download it, and you can measure in the center, you can bring the phone in and show the app and get discounts from some of our best merchants.

So we have embraced the Internet and I think you'll find that e-tailing is essentially a new catalog, and catalog sales historically have been about 6% of retail sales and there were no catalogs – there was no Internet 10, 15 years ago of any substance, so I think combined catalog sales are way off and Internet sales are up, but our sales are doing great..

Your next question comes from the line of Omotayo Okusanya from Jefferies. Your line is open..

Just two quick questions from my end. Just again, results for the quarter, the other income line looked a little bit elevated versus past quarters.

Could you just tell us what was going into that line item this quarter that may be unusual?.

Yes, this is Frank. Other income was about $3.6 million and prior year's third quarter was $3.1 million, so it's up slightly.

The item there that was, I'll call it unusual not nonrecurring, was with the opening of Charlotte we earned our development fee, it was a little over $0.5 million of net development fee, our share of that fee, and that was reported in Q3.

Other than that, everything was recurring in nature, and to a certain extent development fees do recur as we continue to develop centers within joint ventures..

Okay, that's helpful. And then this quarter, again the lease yields or development yields on quite a few of the development projects moved around a little bit again this quarter. I was just wondering if you could talk about it a little bit..

What we did with the development pipeline this quarter was, after reviewing quite a few of our peers it was determined that a projected stabilized yield was more relevant than an initial yield. So we have calculated all of our yields to be a more peer oriented comparable yield..

Okay, that's actually very helpful. Thanks so much..

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

Just a quick question.

When you talk about the re-tenanting, I mean how different is that from just the normal course leasing? Is it for something that falls into that bucket you got a tenant who wants to stay in the space, but you're proactively saying, no, you can't stay there and taking the space back, is that what the delineation is?.

No. Tenancy in the space have a valid lease, and if at the end of the term they have a renewal option, then they can either stay at a predetermined rent or leave. If they leave at the end of the term at their option, then it's called re-tenant the space when we put a new tenant in.

If the end of the term comes and they have no option, then we negotiate with the existing tenant to market to market for a new term or we make a merchandising decision to put a new tenant in. In either instance that's re-tenanted space..

Maybe I should have said remerchandising then, I got it on re-tenanting in that, but it sounds like you're proactively going in and replacing some low productivity tenants with tenants that you think are going to be more highly productive, in terms of what you were talking about in the release.

My question was a little bit more geared towards that, like just in terms of most of the occupancy differential you're talking about here aside from the bankruptcy, is it that the tenant wants to stay in there but you're going to them and you know the sales are low and you're saying, okay, you don't have an option but we're not going to renew your lease, is that what you were talking about?.

Let's put it in perspective. Between the end of the second quarter and the end of the third quarter, our occupancy went from 98% to 97.6% or whatever, 97.7%. So it's down 30 basis points but it's still the highest among our peers.

Our strategy has been consistent over the past 30 years to continue to upgrade our tenant mix and we will continue to do that, and if it means holding space off the market for a short period of time, we'll continue to do that. But we want to set the properties up with the very best tenant mix to attract the most customers over the long period..

Okay.

So you're not necessarily doing anything different here at this point than you normally do in normal course of action?.

[Inaudible] This has been our consistent strategy over the past 30 years..

Got it.

And then switching for a second to the development pipeline, when you think about the shadow, I know you talked about a couple of projects in the shadow pipeline, but even stuff that's not announced, I mean how do you feel at this point about the depth of what you see as the shadow pipeline and just how the potential economics are holding up?.

The economics in our existing developments are holding up very, very well. Certainly as well if not better than other retail property types.

The shadow pipeline is tough to talk about yields and returns because we haven't announced them yet, but these are in markets that we feel we can deliver high quality, high-volume Tanger centers, and the tenants when we discuss them with them seem to be receptive to these markets..

Got it, okay. Thank you..

(Operator Instructions) Our next phone comes from the line of Michael Bilerman from Citi. Your line is open..

I just had a couple, and Frank, thanks for the added disclosure on the development pipeline, but if I can just ask a clarification question, the stabilized yield, what is now that referring to, that's going to be the stabilized yield at what point for these projects?.

On average, Michael, it's kind of looking at a year two yield if you will, whereas before we were looking at a year one yield..

And then, Steve, can you just give an update on Ottawa in terms of the current lease rate, the large big box tenant that you were working to secure last quarter and where things stand?.

We still continue to talk to them. The way we backed up traffic on the interstate coming out to the site for our grand opening, we can for miles. The large tenant we're talking to has announced publicly that they'll plan to open stores in the Canadian market in 2016 and we're excited about that. We did open by the way at about 90% occupied in Ottawa..

What was the percentage, sorry?.

90%..

90%. And then earlier this year you had talked a little bit about selling assets and then sort of pulled back a little bit from those plans.

I'm just curious given the intensity in the asset sale market, would you re-evaluate that today to sort of sell assets if your equity stays depressed and eventually you want to fund additional developments and redevelopments?.

We're always looking at our assets on an individual basis to decide if we hold them, sell them or continue to reinvest in them. So this is a continual process for us but we have nothing to report right now with regard to the asset sales..

So there's no market, there's no active marketing currently, there's nothing actually officially on the market, it's more just a…?.

There's not a process going on to market any of our centers..

And last one just on Charlotte, Simon had talked about high double-digit return, I think in the last supp you still had 10.5 to 11.5 returns, where did that open from a yield perspective for you?.

Who are we to argue with our partners?.

We'll say better than expected.

How's that?.

Great. Thank you..

Our next question comes from the line of DJ Busch from Green Street Advisors. Your line is open..

Just a quick follow-up on some of the retail comments.

Steve, as Primark looks to expand here in the U.S., have they showed any interest in the outlet channel or have you had any discussions with that retailer of taking space in some of your centers?.

Fortunately we do not have any J. C. Penneys or any Sears in Tanger centers. No, we are not talking with Primark. And again, at 98% occupied, we don't have any space to put them even if they wanted to come into our centers..

That's fair.

And then as you look at some of the other fast fashion lower price points, and it's whether H&M or Forever 21, are they still actively looking for space in your centers and how did tenants like that do I guess alongside the more traditional of your outlet tenants?.

The first answer is, yes, we are very happily leasing space to H&M and Forever 21. By the way, Forever 21 took a couple of the Coldwater Creek spaces out of bankruptcy. H&M is not the first fast fashion group to come in. I think a couple of years ago Old Navy was considered fast fashion and Old Navy did very well in the outlet channel.

And I think if you speak to H&M, I'll let them speak for themselves, but we're very pleased with the sales volume coming out of their stores..

There are no further questions at this time. I'll turn the call back over to the presenters..

I want to thank all of you for participating on our call today and for your interest in Tanger Outlets. Frank and I are available to answer any additional questions you may have. Hope to see you next week in Atlanta at the NAREIT Conference. Have a great day. Thank you..

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