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Item 7. Management’s Discussion and Analysis

2022-02-22 compared with 2021-02-23 · 364 added, 361 removed, 405 unchanged (64% of the section changed)

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the outlook for the retail environment, potential bankruptcies, and other store closings;

consumer shopping trends and preferences;

the outcome of legal proceedings arising in the normal course of business;

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You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other important factors which are, in some cases, beyond our control and which could materially affect our actual results, performance or achievements.

Currently, one of the most significant factors, however, is the adverse effect of the COVID-19 pandemic on the financial condition, results of operations, cash flows, compliance with debt covenants and performance of the Company and its tenants, the real estate market and the global economy and financial markets.

The extent to which COVID-19 impacts us and our tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, the availability or effectiveness of vaccines or treatments, future mutations or variations of the virus, and the direct and indirect economic effects of the pandemic and containment measures, among others.

Moreover, you should interpret many of the risks identified in this report, as well as the risks set forth below, as being heightened as a result of the ongoing and numerous adverse impacts of COVID-19.

Other important factors which may cause actual results to differ materially from current expectations include, but are not limited to:

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risks related to changes in consumer spending habits;

investor and regulatory focus on environmental, sustainability and social initiatives;

risks associated with our Canadian investments;

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Historical results and percentage relationships set forth in the consolidated statements of operations, including trends which might appear, are not necessarily indicative of future operations.

This Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to provide a reader of our financial statements with a narrative from the perspective of our management regarding our financial condition and results of operations, liquidity and certain other factors that may affect our future results.

Our MD&A is presented in the following sections:

• General Overview

• Leasing Activity

• COVID-19 Pandemic

• Results of Operations

• Liquidity and Capital Resources of the Company

• Liquidity and Capital Resources of the Operating Partnership

• Critical Accounting Estimates

• Recent Accounting Pronouncements

• Non-GAAP Supplemental Measures

• Economic Conditions and Outlook

General Overview

As of December 31, 2021, we had 30 consolidated outlet centers in 18 states totaling 11.5 million square feet.

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Outlet Centers

As of January 1, 2018 12,930 36 2,370 8

Other (7) — 1 —

As of December 31, 2018 12,923 36 2,371 8

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As of December 31, 2020 11,873 31 2,212 7

Dispositions:

Jeffersonville First Quarter (412) (1) — —

Saint Sauveur First Quarter (99) (1)

Other (8) — — —

As of December 31, 2021

11,453 30 2,113 6

Leasing Activity

The following table provides information for our consolidated outlet centers related to leases for new stores that opened or renewals that commenced during the years ended December 31, 2020 and 2019, respectively:

# of Leases Square Feet (in 000's) Average

Straight-line Rent (psf) Average

Allowance (psf) Average Initial Term (in years) Net Average

Straight-line Rent (psf) (4)

Re-tenant 70 350 $ 30.44 $ 66.43 6.96 $ 20.90

Renewal 209 1,132 25.33 1.23 3.79 25.01

# of Leases Square Feet (in 000's) Average

Straight-line Rent (psf) Average

Allowance (psf) Average Initial Term (in years) Net Average

Straight-line Rent (psf) (4)

Re-tenant 113 460 $ 38.93 $ 43.48 7.89 $ 33.42

Renewal 224 1,064 31.91 0.59 3.54 31.74

(1) Rent includes both minimum base rents and common area maintenance ("CAM") rents.

Excludes license agreements, temporary tenants, and month-to-month leases.

(2) Excludes the Terrell outlet center sold in August 2020.

(3) Excludes outlet centers sold in March 2019 (Nags Head, Ocean City, Park City, and Williamsburg Outlet Centers).

(4) Net average annual straight-line base rent is calculated by dividing the average tenant allowance costs per square foot by the average initial term and subtracting this calculated number from the average straight-line rent per year amount.

The average annual straight-line rent disclosed in the table above includes all concessions, abatements and reimbursements of rent to tenants.

The average tenant allowance disclosed in the table above includes other landlord costs.

In 2021, we revised our rent spread presentation from a commenced basis to executed basis and we are presenting it for comparable and non- comparable space.

Comparable space excludes leases for space that was vacant for more than 12 months (non-comparable space).

We believe that this presentation provides additional information and improves comparability to other retail REITs.

Prior period results have been revised to conform with the current period presentation.

The following table provides information for our consolidated outlet centers related to leases for new stores that opened or renewals that were executed during the years ended December 31, 2021 and 2020, respectively:

Comparable Space for Executed Leases (1) (2) (3)

Leasing Transactions Square Feet (in 000s) New

Tenant Allowance (psf) (6)

Average Initial Term

2021 266 1,170 $ 30.78 (0.6) % $ 7.75 3.43

2020 213 1,168 $ 23.46 (7.5) % $ 1.02 2.75

Comparable and Non-Comparable Space for Executed Leases (1) (2) (3)

Leasing Transactions Square Feet (in 000s) New

Tenant Allowance (psf) (6)

Average Initial Term

2021 317 1,363 $ 30.46 $ 21.91 3.85

2020 235 1,220 $ 23.80 $ 1.46 2.85

(1) For consolidated properties owned as of the period-end date.

Represents leases for new stores or renewals that were executed during the respective calendar years and excludes license agreements, seasonal tenants and month-to-month leases.

(2) Comparable space excludes leases for space that was vacant for more than 12 months (non-comparable space).

(3) Leasing activity for commenced leases, or leases for new stores that opened or renewals that began during the respective trailing twelve months ended December 31, were as follows:

Leasing activity for commenced leases

Leasing Transactions Square Feet

(in 000s) New

Tenant Allowance

Comparable Space (2)

2021 280 1,378 $ 26.76 (2.4) % $ 4.22 3.35

2020 254 1,404 $ 25.01 (12.2) % $ 16.56 4.41

Comparable and Non-comparable Space (2)

2021 328 1,541 $ 26.84 $ 6.02 3.63

2020 279 1,483 $ 25.51 $ 16.64 4.54

(4) Represents average initial cash rent (base rent and common area maintenance (“CAM”)).

(5) Represents change in average initial and expiring cash rent (base rent and CAM).

(6) Tenant allowance includes other landlord costs.

COVID-19 Pandemic

The current COVID-19 pandemic has had, and will continue to have, repercussions across local, national and global economies and financial markets.

COVID-19 has impacted all states where our tenants operate their businesses or where our properties are located and measures taken to prevent or remediate COVID-19, including “shelter-in-place” or “stay-at-home” orders or other quarantine mandates issued by local, state or federal authorities, have had an adverse effect on our business and the businesses of our tenants.

The full extent of the adverse impact on our results of operations, liquidity (including our ability to access capital markets), the possibility of future impairments of long-lived assets or our investments in unconsolidated joint ventures, our compliance with debt covenants, our ability to collect rent under our existing leases, our ability to renew and re - lease our leased space, the outlook for the retail environment, bankruptcies and potential further bankruptcies or other store closings and our ability to develop, acquire, dispose or lease properties for our portfolio, is unknown and will depend on future developments, which are highly uncertain and cannot be predicted.

Our results of operations, liquidity and cash flows have been and may continue to be in the future materially affected.

Many of our tenants operate in industries that depend on in-person interactions with their customers to be profitable and to fund their obligations under lease agreements with us.

Measures taken to prevent or remediate COVID-19, including “shelter-in-place” or “stay-at-home” orders or other quarantine mandates, with respect to virtually all of our tenants, has (i) prevented our tenants from being able to open their stores and conduct business or limited the hours in which they may conduct business, (ii) decreased or prevented our tenants’ customers’ willingness or ability to frequent their businesses, and/or (iii) impacted supply chains from local, national and international suppliers or otherwise delayed the delivery of inventory or other materials necessary for our tenants’ operations, all of which have adversely affected, and are likely to continue to adversely affect, their ability to maintain profitability and make rental payments to us under their leases.

Tenants have also, as a result of such public health crisis, orders or mandates and the resulting economic downturn, requested rent deferrals, rent abatement or early termination of their leases and may be forced to temporarily or permanently close or declare bankruptcy which could reduce our cash flows and negatively affect our ability to pay dividends.

Specifically, as a result of COVID-19 and various governmental orders currently in place, a number of our tenants either closed their business or operated with limited operations and/or have submitted requests for rent relief or failed to pay rent.

Certain other of our tenants have declared bankruptcy as discussed below.

In addition, state, local or industry-initiated efforts, such as tenant rent freezes or suspension of a landlord’s ability to enforce evictions, may also affect our ability to collect rent or enforce remedies for the failure to pay rent.

We believe o ur tenants do not have a clear contractual right to cease paying rent due to government mandated closures.

W e have instituted legal proceedings against a limited number of tenants related to collection of delinquent rental payments, and we intend to continue to enforce our rights under our lease agreements.

However, COVID-19 and the related governmental orders present fairly novel situations for which the ultimate legal outcome cannot be assured and it is possible future governmental action could impact our rights under the lease agreements.

Th e extent of future tenant requests and actions and the impact on our results of operations and cash flows is uncertain and cannot be predicted at this time.

Some states are experiencing a resurgence of the COVID-19 pandemic, which has resulted in mandatory closures in certain markets.

While none of our domestic outlet centers are in these markets, our centers in Canada were required to shut down the last week of the year, two of which reopened in mid-February 2021 and the other is expected to open soon thereafter.

If store closures were to occur again in our domestic markets, this could have a material adverse impact on our financial position and results.

Although our outlet centers remained open, retailers began closing their stores in our outlet centers in mid-March and by April 6, 2020, substantially all of the stores in our portfolio were closed as a result of mandates by order of local and state authorities.

Reopened stores as a percentage of total leased stores improved over time as mandates were lifted, from 1% on April 6, 2020 to 56% on June 3, 2020 to 72% on June 14, 2020.

By June 15, 2020, in-store shopping for non-essential retail was allowed in every market in which our centers are located.

As of December 31, 2020, 99.9% of total occupied stores in our consolidated portfolio had reopened, representing 99.9% of leased square footage and 99.9% of annualized base rent.

In addition, traffic during the fourth quarter represented approximately 90% of prior year levels and increased to approximately 96% in January.

Governmental mandates effective between late December and early-to-mid-February impacted traffic at the Tanger Outlet Centers in Canada.

Excluding those centers, domestic traffic was over 99% in January.

Our outlet centers may experience additional short-term store closures as retailers implement additional safety protocols at specific locations impacted by increased exposure to COVID-19.

While our outlet centers have not closed throughout the pandemic, we operated under reduced hours since late April when the first stores began to reopen.

Prior to the pandemic, our outlet centers operated an average of 12 hours per day.

Upon reopening, our centers were open an average of 8 hours per day.

Effective November 6, 2020, center hours expanded to an average of 10 hours per day to accommodate the holiday shopping season.

A number of our tenants have requested rent deferrals, rent abatements or other types of rent relief during this pandemic.

Due to the COVID-19 pandemic, a number of our tenants requested rent deferrals, rent abatements or other types of rent relief during this pandemic.

As a response, in late March 2020, we offered all tenants in our consolidated portfolio the option to defer 100% of April and May rents interest free, payable in equal installments due in January and February of 2021.

The following table sets forth information regarding the status of rents billed during the fourth, third and second quarters (in thousands):

As of January 31, 2021

Fourth Quarter Third Quarter Second Quarter

Collection Status:

Rents Billed % of Rents Rents Billed % of Rents Rents Billed % of Rents

Rents collected $ 83,281 95 % $ 86,682 91 % $ 61,139 63 %

Rents expected to be collected 278 — 113 — 404 — %

Rents deferred (2)

507 1 473 1 9,361 9 %

Under negotiation 702 1 755 1 1,760 2 %

One-time rent concessions in exchange for amendments to lease structure 1,205 1 2,829 3 13,687 14 %

Bankruptcy related, primarily pre-petition rents 821 1 3,015 3 9,290 10 %

At risk due to tenant financial weakness 1,116 1 934 1 1,867 2 %

Total rents billed $ 87,910 100 % $ 94,801 100 % $ 97,508 100 %

(1) Excludes v ariable revenue which is derived from tenant sales and lease termination fees.

(2) Includes rents deferred with substantially all payments due in 2021, for which the majority is due in January/February of 2021

As a direct result of the pandemic, bankruptcies and restructurings, the Company's earnings were negatively impacted by approximately $47.3 million due to (1) write-offs related to bankruptcies and other uncollectible accounts due to financial weakness, (2) one-time concessions in exchange for landlord-favorable amendments to lease structure, (3) reserves for a portion of deferred and under negotiation billings that we expect to become uncollectible in future periods, (4) and write-offs of straight-line rents associated with the bankruptcies and uncollectible accounts.

Included in the negative impact discussed above, for the year ended December 31, 2020, we recorded a $5.3 million reserve for a portion of deferred and under negotiation billings that are expected to become uncollectible in future periods and recognized a write-off of revenue of approximately $7.2 million of straight-line rents associated with the tenant bankruptcies and uncollectible accounts.

We are closely monitoring changes in the collectability assessment of our tenant receivables as a result of certain tenants suffering adverse financial consequences due to COVID-19 and should our estimates change, there could be material modifications to our revenues in future periods.

Given the economic environment as a result of COVID-19, a select number of our tenants underwent liquidity hardships and filed for Chapter 11 bankruptcy protection during the year.

Although some of these tenants intend to exit the Chapter 11 bankruptcy process and resume operations, the outcomes of such proceedings are unknown and we are currently exploring leasing alternatives for stores we expect to close.

Recent Chapter 11 bankruptcy filings include, but not limited to, J.

Crew Group, Inc.

(filed in May 2020) and Brooks Brothers, Lucky Brand Jeans, New York and Company and Ascena Retail Group, Inc.

(all filed in July 2020), Francesca's (filed in December 2020) and Christopher and Banks (filed in January 2021).

Also, in 2020, G-III Apparel announced a brand-wide restructuring, including its intention to close all of its Wilsons and Bass stores.

Approximately 93% of the amounts included in the table above under the caption (“Bankruptcy related, primarily pre-petition rents”) that were written off as uncollectible rents during the year ended December 31, 2020 were related to these tenants.

Due to the potential impact of COVID-19 and related bankruptcies and brand-wide restructurings, our revenues may continue to be significantly impacted in 2021.

The extent of the impact to our results of operations and cash flows is uncertain and cannot be predicted at this time.

While our preference is to work with our tenant partners to reach a financial resolution that maintains occupancy and positions both parties for long-term growth, certain tenants may close a number of their stores or seek significant rent reductions.

We reserve all rights under our lease agreements and have pursued, and will continue to pursue, legal remedies to collect rent as appropriate.

However, the impact of the COVID–19 pandemic on our tenants' ability to pay rent has had and could have a significant impact in future periods.

In March 2020, to increase liquidity, preserve financial flexibility and help meet our obligations for a sustained period of time, we drew down substantially all of the available capacity under our $600.0 million unsecured lines of credit.

Beginning in June 2020 through August 2020, we repaid the entire $599.8 million outstanding balance.

No amount was outstanding under the lines of credit as of December 31, 2020.

We also took steps to reduce cash outflows, including the reduction or deferral of certain operating and general and administrative expenses, which included temporary base salary reductions for our named executive officers and other employees.

During the last nine months of 2020, these reductions reduced cash outflows by approximately $17.9 million, including $1.3 million of general and administrative and $16.6 million of property operating expenses.

In July 2020, we restored the above mentioned salary reductions.

We also deferred our Nashville pre-development-stage project and certain other planned capital expenditures.

While we paid the dividends that were declared for the first and second quarters, given the uncertainty related to the pandemic’s near and potential long-term impact, in May 2020 the Company’s Board of Directors temporarily suspended dividend distributions for the rest of the year to conserve approximately $35.0 million in cash per quarter and preserve our balance sheet strength and flexibility.

The dividend was reinstated in January 2021 and the Board declared a dividend of $0.1775 per share paid in February 2021.

The Board continues to evaluate the potential for future dividend distributions on a quarterly basis.

We were in compliance with REIT taxable income distribution requirements for the 2020 tax year.

The extent to which the COVID-19 pandemic continues to impact our future financial condition, results of operations and cash flows will depend on future developments which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, the availability or effectiveness of vaccines or treatments, future mutations or variants of the virus, and the direct and indirect economic effects of the pandemic and containment measures, among others.

Accordingly, the impact of the COVID-19 pandemic on our rental revenue for 2021 and thereafter cannot be determined at present.

The situation surrounding the COVID-19 pandemic remains fluid, and we are continuing to manage our response in collaboration with tenants, government officials and business partners and assess potential impacts to our financial position and operating results, as well as potential adverse developments in our business.

For further information regarding the impact of COVID-19 on us, see "Item 1-Business" and “Item 1A-Risk Factors” in Part I of this Annual Report on Form 10-K.

As of December 31, 2021, contractual fixed rents billed during 2020 that were deferred as a direct result of the COVID-19 pandemic and remain outstanding totaled $82,000.

Through December 31, 2021, the Company had collected 99% of the 2020 deferred rents due to be repaid during the year ended December 31, 2021.

The extent of future tenant requests for rent relief and the impact on our results of operations and cash flows is uncertain and cannot be predicted at this time.

If store closures were to occur again in our domestic markets, this could have a material adverse impact on our financial position and results of operations.

Results of Operations

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Net income (loss)

Net income decreased $130.7 million in the 2020 period to a net loss of $38.0 million as compared to net income of $92.7 million for the 2019 period.

The decrease in income is primarily due to:

• significant revenue reductions in the 2020 period caused by the COVID-19 pandemic discussed above,

• the $43.4 million gain recorded on the sale of four outlet centers in March 2019,

• the loss of revenues from the four outlet centers sold in March 2019,

• the $64.8 million in impairment charges recognized in 2020 on the outlet center in Mashantucket, Connecticut,

• the $2.4 million impairment charge recognized in 2020 on the outlet center in Jeffersonville, Ohio, and

• a decrease in equity in earnings (losses), which includes our share of an impairment charge totaling $3.1 million in the 2020 period related to the Saint-Sauveur, Quebec outlet center in our Canadian joint venture.

The decrease in net income was partially offset by the following:

• the $37.6 million in impairment charges recognized in 2019 on the outlet center in Jeffersonville, Ohio,

• the $10.5 million increase in lease termination fees over the prior year,

• the $2.3 million gain recorded on the sale of our Terrell outlet center,

• decreased operating costs in the 2020 period due to lower operating and advertising costs as a result of COVID-19 government mandated store closures,

• a $4.4 million charge in the 2019 period related to the accelerated recognition of compensation cost as a result of a transition agreement with the Company’s former President and Chief Operating Officer in connection with his retirement (the “COO Transition Agreement”), and

• a $3.6 million foreign currency loss recorded in the 2019 period upon the sale of the Bromont property by the RioCan Canada joint venture.

In the tables below, information set forth for properties disposed includes the four outlet centers sold in March 2019 and the Terrell outlet center sold in August 2020.

Net income increased $47.6 million in the 2021 period to a net income of $9.6 million as compared to a net loss of $38.0 million for the 2020 period.

The increase in net income is primarily due to the following:

• 2020 was impacted by the COVID-19 pandemic and had significant revenue reductions

• variable revenue derived from tenant sales was significantly higher in 2021 as the COVID-19 pandemic impacted traffic to our centers in the 2020 period and our centers operated under reduced hours.

• the 2020 period included $64.8 million in impairment charges recognized on the outlet center in Mashantucket, Connecticut and a $2.4 million impairment charge recognized on the outlet center in Jeffersonville, Ohio, and

• the 2020 period included our share of an impairment charge totaling $3.1 million in equity in earnings that related to the Saint-Sauveur, Quebec outlet center in our Canadian joint venture.

The increase in net income was partially offset by the following:

• 2021 included $7.0 million in impairment charges recognized on the outlet center in Mashantucket, Connecticut,

• the 2021 period included a loss on the early extinguishment of debt of $47.9 million related to the redemption of all of our bonds due in 2023 and 2024,

• in the current period we recorded a foreign currency loss of approximately $3.6 million in other income (expense), which had been previously recorded in other comprehensive income associated with the sale the outlet center in Saint-Sauveur held in our RioCan joint venture

• the $9.9 million decrease in lease termination fees compared to the prior year,

• the loss in revenues from the sale of our two centers in 2020 and 2021 described below, and

• the 2020 period included a $2.3 million gain recorded on the sale of our Terrell outlet center.

In the tables below, information set forth for properties disposed includes the Terrell outlet center sold in August 2020 and the Jeffersonville outlet center sold in January 2021.

Rental Revenues

Rental revenues decreased $86.0 million in the 2020 period compared to the 2019 period.

Rental revenues increased $29.8 million in the 2021 period compared to the 2020 period.

The following table sets forth the changes in various components of rental revenues (in thousands):

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$ 407,766 $ 377,932 $ 29,834

Rental revenues from existing properties decreased largely due to the impact of the $40.1 million COVID-19 pandemic-related revenue reduction in the year ended December 31, 2020 as discussed above.

Also as a result of the pandemic, variable revenue which is derived from tenant sales was negatively impacted by mandatory closures of a vast majority of stores in our outlet centers by local and state authorities during the second quarter of 2020 and a reduction in overall traffic to the centers during the year as well due to our centers operating under reduced hours since the pandemic began.

Further, we recognized a write-off to revenue of approximately $7.2 million of straight-line rents associated with the tenant bankruptcies and uncollectible accounts.

Rental revenues also decreased in 2020 due to decline in the overall portfolio occupancy rate to 91.9% as of the end of 2020 compared to 97.0% as of the end of 2019.

The decline in occupancy was impacted by space recaptured totaling approximately 903,000 square feet within our consolidated portfolio during the year ended December 31, 2020 from the early termination of leases related to bankruptcies and brand-wide restructurings by retailers, compared to 198,000 square feet for the year ended December 31, 2019.

However, we received a significant increase in termination fees from certain of the early lease terminations, helping to offset some of these lost revenues.

Rental revenues from existing properties in the prior year period included the impact of a $40.1 million COVID-19 pandemic-related revenue reduction.

In addition, variable revenues, which are derived from tenant sales, were higher in the 2021 period as a result of the impact of the COVID-19 pandemic on the 2020 period, which included mandated store closures by local and state authorities during the second quarter, continued lower traffic levels to our centers in the third quarter and to the centers operating under reduced hours.

The 2020 period includes a higher amount of lease termination fees from certain early lease terminations as a result of a significant amount of space recaptured due to bankruptcies and brand-wide restructuring in the 2020 period.

In addition, in the prior year, we recognized a write-off of revenue of approximately $7.2 million of straight-line rents associated with the tenant bankruptcies and uncollectible accounts.

Management, Leasing and Other Services

Management, leasing and other services decreased $483,000 in the 2020 period compared to the 2019 period.

Management, leasing and other services increased $1.5 million in the 2021 period compared to the 2020 period.

The following table sets forth the changes in various components of management, leasing and other services (in thousands):

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Total Fees $ 6,411 $ 4,936 $ 1,475

Management, leasing and other service revenue decreased in the 2020 period due to reduced management fee income from unconsolidated joint ventures which are earned based on cash basis revenues recognized by the joint venture properties.

The COVID-19 pandemic resulted in materially lower tenant payments during the 2020 period which resulted in lower management fees.

Management, leasing and other service revenue increased in the 2021 period due to the prior year impact of the COVID-19 pandemic.

The COVID-19 pandemic resulted in materially lower rental revenues received during the 2020 period which resulted in lower management fees.

In addition, expense reimbursements from unconsolidated joint ventures were higher in the 2021 period as our centers operated under reduced hours during 2020 as a result of the COVID-19 pandemic.

Other Revenues

The following table sets forth the changes in various components of other income (in thousands):

Other revenues increased $5.2 million in the 2021 period as compared to the 2020 period.

The following table sets forth the changes in other revenues (in thousands):

2021 2020 Increase/(Decrease)

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$ 12,348 $ 7,123 $ 5,225

Other revenues from existing properties decreased primarily due to reductions in variable vending and other revenue sources due to mandatory closures of a vast majority of stores in our outlet centers by local and state authorities during the second quarter of 2020, a reduction in overall traffic to the centers during the year as well due to our centers operating under reduced hours since the pandemic began.

Other revenues from existing properties increased in the 2021 period due to the prior year impact of the COVID-19 pandemic and our focus on increasing other revenue streams in 2021 The 2020 period included large reductions in the variable vending and other revenue sources due to the mandatory store closures by local and state authorities for a portion of the 2020 period discussed above, as well as the COVID-19 pandemic impacting traffic to our centers and the centers operating under reduced hours.

Property Operating Expenses

Property operating expenses decreased $20.6 million in the 2020 period compared to the 2019 period.

Property operating expenses increased $3.6 million in the 2021 period compared to the 2020 period.

The following table sets forth the changes in various components of property operating expenses (in thousands):

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$ 140,736 $ 137,135 $ 3,601

The decrease in property operating expenses at existing properties primarily reflects the lower costs needed to operate and advertise the centers while stores were closed under government mandates in response to the COVID-19 pandemic and as a result of our stores operating under reduced operating hours subsequent to such stores reopening.

Property operating expenses at existing properties increased in the 2021 period compared to the 2020 period primarily due to the lower costs needed to operate and advertise the centers while stores were closed under government mandates in response to the COVID-19 pandemic in 2020, as well as operating the centers under reduced hours when the stores reopened during the 2020 period.

Property operating expenses from properties disposed for the 2021 period includes $1.7 million in net proceeds received from the successful appeal of property taxes for tax years prior to disposition.

General and Administrative Expenses

General and administrative expenses in the 2020 period decreased $6.1 million compared to the 2019 period, primarily as a result of a $4.4 million charge in the 2019 period related to the COO Transition Agreement.

In addition, as a result of COVID-19, the compensation costs of our executive officers and other employees were temporarily reduced during the 2020 period through salary and wage reductions and government assistance programs and virtually all travel and entertainment expenses were eliminated.

These reductions were partially offset by approximately $573,000 in compensation cost related to a voluntary retirement plan offer which required eligible participants to give notice of acceptance by December 1, 2020 for an effective retirement date of March 31, 2021 and higher expenses related to legal and professional fees.

General and administrative expenses increased $18.1 million in the 2021 period compared to the 2020 period.

The 2021 period includes higher compensation costs due to the addition of certain executives and other key employees added to drive operational and growth initiatives and increases in other professional and legal fees, some of which are related to collection of rents from periods during the COVID-19 mandated shut downs.

The 2020 period included temporary reductions in compensation costs of our executive officers and other employees and virtually all travel and entertainment expenses were eliminated following the onset of the pandemic.

In addition, 2021 includes compensation cost related to employees that accepted a voluntary retirement plan with an effective retirement date of March 31, 2021, as well as other executive severance costs incurred during 2021, totaling $3.6 million.

Impairment Charges

We recorded $67.2 million and $37.6 million in impairment charges in the 2020 and 2019 periods, respectively, related to our Mashantucket (Foxwoods), CT outlet center and Jeffersonville, OH properties in 2020 and our Jeffersonville, OH property in 2019.

During the first quarter and fourth quarter of 2020 and the fourth quarter of 2021, we determined that the estimated future undiscounted cash flows of our Foxwoods outlet center in Mashantucket, Connecticut did not exceed the property's carrying value due to a continuing decline in operating results.

Therefore, we recorded $64.8 million and $7.0 million of non-cash impairment charges in our consolidated statement of operations for both 2020 and 2021, respectively, which equaled the excess of the property's carrying value over its estimated fair value.

In addition, in 2020, we recorded a $2.4 million impairment charge on the outlet center in Jeffersonville, Ohio.

Depreciation and Amortization

Depreciation and amortization expense decreased $7.1 million in the 2021 period compared to the 2020 period.

The following table sets forth the changes in various components of depreciation and amortization (in thousands):

The following table sets forth the changes in various components of depreciation and amortization costs from the 2020 period to the 2021 period (in thousands):

2021 2020 Increase/(Decrease)

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$ 110,008 $ 117,143 $ (7,135)

Depreciation and amortization decreased at our existing properties primarily due to the lower basis of our Foxwoods and Jeffersonville properties as a result of impairment charges recognized in 2020 and 2019, respectively.

Depreciation and amortization decreased at our existing properties due to the lower basis in our Foxwoods property due to impairments recorded in the first and fourth quarters of 2020, and due to tenant improvements and lease related intangibles, which are amortized over shorter lives, in other parts of the portfolio becoming fully depreciated during the reporting periods.

Interest Expense

Interest expense increased $1.5 million in the 2020 period compared to the 2019 period as a result higher debt outstanding during the 2020 period due to of our borrowing approximately $599.8 million under our lines of credit at the onset of the COVID-19 pandemic in March 2020 to increase liquidity and preserve financial flexibility.

Beginning in June 2020 through August 2020, we repaid the entire $599.8 million outstanding balance bringing the outstanding balance to zero as of December 31, 2020.

Interest expense decreased $10.3 million in the 2021 period compared to the 2020 period for the following reasons:

• In August 2021, we completed a public offering of $400.0 million in senior notes due 2031 in an underwritten public offering.

The notes were priced at 98.552% of the principal amount to yield 2.917% to maturity.

The notes pay interest semi-annually at a rate of 2.750% per annum and mature on September 1, 2031.

• During 2021, we completed the early redemption of $250.0 million of our 3.875% senior notes due December 2023 and $250.0 million of our 3.75% senior notes due 2024.

• During 2021, we paid down $50.0 million of borrowings under our unsecured term loan.

• Interest rate swap agreements in place during the 2021 period had lower average interest rates compared to the 2020 period.

• The 2020 period included interest expense related to borrowing in March 2020 approximately $599.8 million under our unsecured lines of credit to increase liquidity and preserve financial flexibility as a result of the COVID-19 pandemic.

In June 2020, we repaid $200.0 million of these borrowings, and by August 2020, we had repaid the entire $599.8 million outstanding balance bringing the outstanding balance to zero as of December 31, 2020.

During the 2021 period, we had no borrowings under our unsecured lines of credit.

Loss on Early Extinguishment of Debt

For the year ended December 31, 2021, we recorded make-whole premiums of $44.9 million and the write-off of approximately $3.0 million of debt discount and debt origination costs due to the early redemption of our notes originally due 2023 and 2024.

Gain on Sale of Assets

In August 2020, we sold a non-core outlet center in Terrell, Texas for net proceeds of $7.6 million, which resulted in a gain on sale of assets of $2.3 million.

The proceeds from the sale of this unencumbered asset were used to pay down balances, which were outstanding under our unsecured lines of credit at that time.

In March 2019, we sold four outlet centers for net proceeds of approximately $128.2 million, which resulted in a gain on sale of assets of $43.4 million.

The proceeds from the sale of these unencumbered assets were used to pay down balances outstanding under our unsecured lines of credit.

Equity in Earnings of Unconsolidated Joint Ventures

Equity in earnings of unconsolidated joint ventures decreased approximately $6.7 million in the 2020 period compared to the 2019 period.

The following table sets forth the changes in various components of equity in earnings of unconsolidated joint ventures (in thousands):

The proceeds from the sale of this unencumbered asset were used to pay down balances outstanding under our unsecured lines of credit.

Other Income (Expense)

Other income (expense) decreased approximately $2.5 million in the 2021 period compared to the 2020 period.

In March 2021, the RioCan joint venture closed on the sale of its outlet center in Saint-Sauveur, for net proceeds of approximately $9.4 million.

Our share of the proceeds was approximately $4.7 million.

As a result of this transaction, we recorded a foreign currency loss of approximately $3.6 million in other income (expense), which had been previously recorded in other comprehensive income.

Equity in Earnings (Losses) of Unconsolidated Joint Ventures

Equity in earnings (losses) of unconsolidated joint ventures increased approximately $7.8 million in the 2021 period compared to the 2020 period.

In the table below, information set forth for property disposed includes the Saint-Sauveur, Quebec outlet center in our Canadian joint venture, which was sold in March 2021.

2021 2020 Increase/(Decrease)

Equity in earnings from existing properties $ 8,714 $ 4,051 $ 4,663

Equity in earnings from property disposed — 8 (8)

Equity in earnings (losses) from property disposed 190 (2,925) 3,115

$ 8,904 $ 1,126 $ 7,778

Equity in earnings from existing properties includes our share of an impairment charge totaling $3.1 million in 2020 related to the Saint-Sauveur, Quebec outlet center in our Canadian joint venture.

Equity in earnings (losses) of unconsolidated joint ventures from existing properties increased due to the impact of COVID-19 on revenues in the previous year.

Equity in earnings (losses) from properties disposed includes our share of an impairment charge totaling $3.1 million in the 2020 period related to the Saint-Sauveur, Quebec outlet center in our Canadian joint venture.

The impairment charge was primarily driven by deterioration of net operating income caused by market competition and the COVID-19 pandemic.

Equity in earnings of unconsolidated joint ventures from existing properties also decreased due to the impact of COVID-19 on the properties.

Information set forth above for properties disposed includes the RioCan joint venture’s Bromont outlet center, which was sold in May 2019.

2020 Compared to 2019

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The Company receives proceeds from equity issuances from time to time, but is required by the Operating Partnership's partnership agreement to contribute the proceeds from its equity issuances to the Operating Partnership in exchange for partnership units of the Operating Partnership.

We are a well-known seasoned issuer with a shelf registration which expires in March 2021 that allows the Company to register various unspecified classes of equity securities and the Operating Partnership to register various unspecified classes of debt securities.

We are a well-known seasoned issuer with a shelf registration which expires in February 2024 that allows the Company to register various unspecified classes of equity securities and the Operating Partnership to register various unspecified classes of debt securities.

We expect to file a new joint shelf registration statement on Form S-3 prior to the expiration of the current registration statement.

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While historically the Company has satisfied this distribution requirement by making cash distributions to its shareholders, it may choose to satisfy this requirement by making distributions of cash or other property, including, in limited circumstances, the Company's own shares.

Based on our 2020 estimated taxable income, we were required to distribute approximately $54.6 million to our shareholders in order to maintain our REIT status as described above.

Based on our 2021 estimated taxable loss, we were not required make a distribution to our shareholders in order to maintain our REIT status as described above.

For tax reporting purposes, we distributed approximately $71.4 million during 2021.

Given the uncertainty related to the pandemic’s near and potential long-term impact, in May 2020 the Company’s Board of Directors temporarily suspended dividend distributions to conserve approximately $35.0 million in cash per quarter and preserve our balance sheet strength and flexibility.

On January 14, 2021, the Board reinstated dividend distributions and declared a dividend of $0.1775 per share paid in February 2021.

Beginning in January 2021, the Board reinstated dividend distributions and declared and paid dividends on a quarterly basis for the year ended December 31, 2021.

On January 13, 2022, the Board declared a dividend of $0.1825 per share paid in February 2022.

The Board continues to evaluate the potential for future dividend distributions on a quarterly basis.

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Because the Company consolidates the Operating Partnership, the section entitled "Liquidity and Capital Resources of the Operating Partnership" should be read in conjunction with this section to understand the liquidity and capital resources of the Company on a consolidated basis and how the Company is operated as a whole.

In May 2017, we announced that our Board of Directors authorized the repurchase of up to $125 million of our outstanding common shares as market conditions warrant over a period commencing on May 19, 2017 and expiring on May 18, 2019.

In February 2019, the Company’s Board of Directors authorized the repurchase of an additional $44.3 million of our outstanding common shares for an aggregate authorization of $169.3 million until May 2021.

Under our ATM Offering program, which commenced in February 2021, we may offer and sell our common shares, $0.01 par value per share (“Common Shares”), having an aggregate gross sales price of up to $250.0 million (the “Shares”).

We may sell the Shares in amounts and at times to be determined by us but we have no obligation to sell any of the Shares.

Actual sales, if any, will depend on a variety of factors to be determined by us from time to time, including, among other things, market conditions, the trading price of the Common Shares, capital needs and determinations by us of the appropriate sources of its funding.

We currently intend to use the net proceeds from the sale of shares pursuant to the ATM Offering for working capital and general corporate purposes.

As of December 31, 2021, we had approximately $60.1 million remaining available for sale under our ATM Offering program.

The following table sets forth information regarding settlements under our ATM offering program:

2021 2020 2019

Number of common shares settled during the period 10,009,263 — —

Average price per share $ 18.97 $ — $ —

Aggregate gross proceeds (in thousands) $ 189,868 $ — $ —

Aggregate net proceeds after commissions and fees (in thousands) $ 186,969 $ — $ —

In May 2021, the Company’s Board of Directors authorized the repurchase of up to $80.0 million of the Company’s outstanding shares through May 31, 2023.

This authorization replaced a previous repurchase authorization for approximately $80.0 million that expired in May 2021.

In June 2020, we amended our debt agreements primarily to improve future covenant flexibility and such amendments included a prohibition on share repurchases for twelve months starting July 1, 2020 (the “Repurchase Covenant”).

The Company temporarily suspended share repurchases for at least the twelve months starting July 1, 2020 and ending on June 30, 2021 in light of the Repurchase Covenant.

On July 1, 2021, the Repurchase Covenant expired.

Repurchases may be made from time to time through open market, privately-negotiated, structured or derivative transactions (including accelerated share repurchase transactions), or other methods of acquiring shares.

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The Company may, from time to time, enter into Rule 10b5-1 plans to facilitate the repurchase of its shares under this authorization.

The Company has temporarily suspended share repurchases for at least the twelve months starting July 1, 2020 as the June 2020 amendments to our debt agreements for our lines of credit and bank term loan prohibit share repurchases during such time and in order to preserve our liquidity position.

The Company did not repurchase any shares for the year ended December 31, 2021 and 2020.

The remaining amount authorized to be repurchased under the program as of December 31, 2021 was approximately $80.0 million.

Shares repurchased during the years ended December 31, 2021, 2020 and 2019 were as follows:

Year Ended December 31,

2021 2020 2019

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Total price paid exclusive of commissions and related fees (in thousands) $ — $ — $ 19,976

The remaining amount authorized to be repurchased under the program as of December 31, 2020 was approximately $80.0 million.

In January 2021, the Company's Board of Directors declared a $0.1775 cash dividend per common share payable on February 12, 2021 to each shareholder of record on January 29, 2021, and the Trustees of Tanger GP Trust declared a $0.1775 cash distribution per Operating Partnership unit to the Operating Partnership's unitholders.

In January 2022, the Company's Board of Directors declared a $0.1825 cash dividend per common share payable on February 15, 2022 to each shareholder of record on January 31, 2022, and a $0.1825 cash distribution per Operating Partnership unit to the Operating Partnership's unitholders.

Liquidity and Capital Resources of the Operating Partnership

General Overview

In this “Liquidity and Capital Resources of the Operating Partnership” section, the terms “we”, “our” and “us” refer to the Operating Partnership or the Operating Partnership and the Company together, as the text requires.

Summary of Our Major Sources and Uses of Cash and Cash Equivalents

General Overview

Property rental income represents our primary source to pay property operating expenses, debt service, capital expenditures and distributions, excluding non-recurring capital expenditures and acquisitions.

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(1) maintain a conservative leverage position relative to our portfolio when pursuing new development, expansion and acquisition opportunities, (2) extend and sequence debt maturities, (3) manage our interest rate risk through a proper mix of fixed and variable rate debt, (4) maintain access to liquidity by using our lines of credit in a conservative manner and (5) preserve internally generated sources of capital by strategically divesting of our non-core assets and maintaining a conservative distribution payout ratio.

We manage our capital structure to reflect a long-term investment approach and utilize multiple sources of capital to meet our requirements.

Statements of Cash Flows

The following table sets forth our changes in cash flows from 2020 and 2019 (in thousands):

We manage our capital structure to reflect a long-term investment approach and utilize multiple sources of capital to meet our requirements, including without limitation issuances of equity under our ATM program.

Capital Expenditures

The following table details our capital expenditures for consolidated outlet centers for the years ended December 31, 2021 and 2020, respectively (in thousands):

2021 2020 Change

Net cash provided by operating activities $ 164,818 $ 220,391 $ (55,573)

Net cash provided by (used in) investing activities (18,771) 99,289 (118,060)

Net cash used in financing activities (77,593) (312,133) 234,540

Effect of foreign currency rate changes on cash and equivalents (223) (19) (204)

Net increase in cash and cash equivalents $ 68,231 $ 7,528 $ 60,703

Operating Activities

The decrease in net cash provided by operating activities was primarily due to reduced revenues, as well as uncollected and deferred contractual rents as a result of COVID-19.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations-COVID-19 Pandemic”.

In addition, the decrease was also due to the sale of the four outlet centers in the 2019 period, lower average portfolio occupancy during 2020 compared to 2019 and rent modifications for certain tenants.

Investing Activities

The primary cause for the decrease in net cash provided by investing activities was due to the net proceeds of approximately $128.2 million from the sale of the four outlet centers in the 2019 period, partially offset by the net proceeds from the sale of our Terrell, Texas outlet center in 2020.

In addition, during the 2020 period, we had lower distributions in excess of cumulative earnings from unconsolidated joint ventures due to the COVID-19 pandemic.

Financing Activities

The primary cause for the decrease in net cash used in financing activities was due to paying down our unsecured lines of credit in 2019 using proceeds from the sale of the four outlet centers.

In 2019, we also repurchased of common shares totaling $20.0 million as compared to no repurchases for the 2020 period.

In addition, the 2019 had higher dividend payments than 2020.

Given the uncertainty related to the pandemic’s near and potential long-term impact, in May 2020 the Company’s Board of Directors temporarily suspended dividend distributions after paying the initial first and second quarter dividends.

Development Activities

Development in Unconsolidated Real Estate Joint Ventures

From time to time, we form joint venture arrangements to develop outlet centers.

See "Off-Balance Sheet Arrangements" for a discussion of unconsolidated joint venture development activities.

Capital expenditures analysis:

New outlet center developments and expansions (1)

$ 2,441 $ 2,432 $ 9

Renovations (2)

761 5,505 (4,744)

Second generation tenant allowances (3)

3,020 12,273 (9,253)

Other capital expenditures (4)

30,917 10,279 20,638

37,139 30,489 6,650

Conversion from accrual to cash basis 8,047 (1,923) 9,970

Additions to rental property-cash basis $ 45,186 $ 28,566 $ 16,620

(1) New outlet center developments and expansions in the 2021 period included a land acquisition at our Westgate outlet center.

(2) Major outlet center renovations in the 2020 period included costs related to bringing two magnet tenants to our Lancaster outlet center.

(3) In the 2021 period, second generation tenant allowances are presented net of $3.3 million tenant allowance reversals, which were the result of a lease modification.

(4) The increase in other capital expenditures in 2021 was primarily due to our decision in 2020 to defer all capital projects except essential and life-safety projects, due to the impact on cash flows caused by the COVID-19 pandemic.

We expect total capital expenditures for 2022 to be approximately $125.0 million as compared to capital expenditures of $45.2 million in 2021.

Based on our liquidity we expect to fund these capital expenditures in 2022.

Potential Future Developments, Acquisitions and Dispositions

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We may also use joint venture arrangements to develop other potential sites.

Given the uncertainties of the COVID-19 Pandemic, we have temporarily deferred the Nashville project.

Accordingly, there can be no assurance that these potential future projects will ultimately be developed.

In the case of projects to be wholly-owned by us, we expect to fund these projects with borrowings under our unsecured lines of credit and cash flow from operations, but may also fund them with capital from additional public debt and equity offerings.

However, there can be no assurance that these potential future projects will ultimately be developed.

In the case of projects to be wholly-owned by us, we expect to fund these projects with borrowings under our unsecured lines of credit and cash flows from operations, but may also fund them with capital from additional public debt and equity offerings.

For projects to be developed through joint venture arrangements, we may use collateralized construction loans to fund a portion of the project, with our share of the equity requirements funded from sources described above.

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Any prospective acquisition or disposition that is being evaluated or which is subject to a letter of intent may not be consummated, or if consummated, may not result in an increase in earnings or liquidity.

Unconsolidated Real Estate Joint Ventures

From time to time, we form joint venture arrangements to develop outlet centers.

As of December 31, 2021, we have partial ownership interests in six unconsolidated outlet centers totaling approximately 2.1 million square feet, including two outlet centers in Canada.

See Note 5 to the Consolidated Financial Statements for details of our individual joint ventures, including, but not limited to, carrying values of our investments, fees we receive for services provided to the joint ventures, recent development and financing transactions and condensed combined summary financial information.

We may elect to fund cash needs of a joint venture through equity contributions (generally on a basis proportionate to our ownership interests), advances or partner loans, although such funding is not typically required contractually or otherwise.

We separately report investments in joint ventures for which accumulated distributions have exceeded investments in, and our share of net income or loss of, the joint ventures within other liabilities in the consolidated balance sheets because we are committed and intend to provide further financial support to these joint ventures.

We believe our joint ventures will be able to fund their operating and capital needs during 2022 based on their sources of working capital, specifically cash flow from operations, access to contributions from partners, and ability to refinance all or portion of its debt obligations, including the ability to exercise upcoming extensions of near term maturities.

Our joint ventures are typically encumbered by a mortgage on the joint venture property.

We provide guarantees to lenders for our joint ventures which include standard non-recourse carve out indemnifications for losses arising from items such as but not limited to fraud, physical waste, payment of taxes, environmental indemnities, misapplication of insurance proceeds or security deposits and failure to maintain required insurance.

A default by a joint venture under its debt obligations may expose us to liability under the guaranty.

For construction and mortgage loans, we may include a guaranty of completion as well as a principal guaranty ranging from 5% to 100% of principal.

The principal guarantees include terms for release based upon satisfactory completion of construction and performance targets including occupancy thresholds and minimum debt service coverage tests.

Our joint ventures may contain make whole provisions in the event that demands are made on any existing guarantees.

Our joint ventures are generally subject to buy-sell provisions which are customary for joint venture agreements in the real estate industry.

Either partner may initiate these provisions (subject to any applicable lock up period), which could result in either the sale of our interest or the use of available cash or additional borrowings to acquire the other party's interest.

Under these provisions, one partner sets a price for the property, then the other partner has the option to either (1) purchase their partner's interest based on that price or (2) sell its interest to the other partner based on that price.

Since the partner other than the partner who triggers the provision has the option to be the buyer or seller, we do not consider this arrangement to be a mandatory redeemable obligation.

Future Debt Obligations

As described further in Note 8 of the notes to the consolidated financial statements, as of December 31, 2021, scheduled maturities of our existing long-term debt for 2022, 2023, 2024, 2025 and 2026 are $4.4 million, $44.9 million, $305.1 million, $1.5 million and $355.7 million, respectively.

As of December 31, 2021, scheduled maturities after 2026 aggregate to $700.0 million.

Future Interest Payments

We are obligated to make periodic interest payments at fixed and variable rates, depending on the terms of the applicable debt agreements.

Based on applicable interest rates and scheduled debt maturities as of December 31, 2021, these interest obligations total approximately $239.1 million and range from approximately $30.2 million to $41.1 million on an annual basis over the next five years.

Operating Lease Obligations

As described further in Note 20 of the notes to the consolidated financial statements, as of December 31, 2021, we had a total of $244.0 million of minimum operating lease obligations.

These minimum lease payments range from approximately $5.7 million to $5.9 million on an annual basis over the next five years.

Other Contractual Obligations

Other contractual obligations totaled $22.9 million as of December 31, 2021.

These obligations range from approximately $1.2 million to $15.8 million on an annual basis over the next five years.

The majority of these contractual obligations relate to our solar initiative and installation of electric vehicle charging stations in 2022.

The following table sets forth our changes in cash flows from 2021 and 2020 (in thousands):

2021 2020 Change

Net cash provided by operating activities $ 217,697 $ 164,818 $ 52,879

Net cash used in investing activities (22,739) (18,771) (3,968)

Net cash used in financing activities (118,379) (77,593) (40,786)

Effect of foreign currency rate changes on cash and equivalents (177) (223) 46

Net increase in cash and cash equivalents $ 76,402 $ 68,231 $ 8,171

Operating Activities

The increase in net cash provided by operating activities was primarily due to the collection of rent deferred from April and May of 2020 during the beginning of the COVID-19 pandemic.

These rents were payable during 2021, the majority of which was due in the first quarter of 2021.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations-COVID-19 Pandemic.” In addition, our cash collections normalized during 2021, whereas the second and third quarters of 2020 had uncollected and deferred contractual rents as a result of COVID-19.

Investing Activities

The primary cause for the increase in net cash used in investing activities was due to additions in rental property, additions to non-real estate assets, and additions to deferred lease costs, which was offset by increased distributions in excess of cumulative earnings from unconsolidated joint ventures.

Financing Activities

The primary cause for the increase in net cash used in financing activities was due to early redemption of $250.0 million of our 3.875% senior notes due December 2023 and $250.0 million of our 3.75% senior notes due 2024, including make whole premiums of $44.9 million.

In addition, in March 2021 and June 2021, we paid down a total of $50.0 million of borrowings under our unsecured term loan with cash on hand.

We also had higher dividend payments in 2021 compared to 2020.

The increase in net cash used in financing activities was partially offset by proceeds received during 2021 from our August 2021 public offering of $400.0 million in senior notes due 2031 and sales of commons shares under our ATM Offering program generating net proceeds of approximately $187.0 million.

Financing Arrangements

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As of December 31, 2021, 3% of our outstanding debt, excluding variable rate debt with interest rate protection agreements in place, had variable interest rates and therefore was subject to market fluctuations.

We maintain unsecured lines of credit that, as of December 31, 2020, provided for borrowings of up to $600.0 million, including a separate $20.0 million liquidity line and a $580.0 million syndicated line.

The syndicated line may be increased up to $1.2 billion through an accordion feature in certain circumstances.

As of December 31, 2020, we had no borrowings outstanding under the lines of credit.

We intend to retain the ability to raise additional capital, including public debt or equity, to pursue attractive investment opportunities that may arise and to otherwise act in a manner that we believe to be in the best interests of our shareholders and unitholders.

The Company and Operating Partnership are well-known seasoned issuers with a joint shelf registration statement on Form S-3, expiring in March 2021, that allows us to register unspecified amounts of different classes of securities.

We expect to file a new joint shelf registration statement on Form S-3 prior to the expiration of the current registration statement.

The Company and Operating Partnership are well-known seasoned issuers with a joint shelf registration statement on Form S-3, expiring in February 2024, that allows us to register unspecified amounts of different classes of securities.

To generate capital to reinvest into other attractive investment opportunities, we may also consider the use of additional operational and developmental joint ventures, the sale or lease of outparcels on our existing properties and the sale of certain properties that do not meet our long-term investment criteria.

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The extent to which the COVID-19 pandemic continues to impact our financial condition, results of operations and cash flows will depend on future developments which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, the availability or effectiveness of vaccines or treatments, future mutations or variants of the virus, and the direct and indirect economic effects of the pandemic and containment measures, among others.

As of December 31, 2020, our total liquidity was approximately $684.8 million, including cash and cash equivalents on our balance sheet and unused capacity under our lines of credit.

As of December 31, 2021, our total liquidity was approximately $681.3 million, including cash and cash equivalents on our balance sheet and the full undrawn capacity under our $520 million unsecured lines of credit.

Based on estimated monthly cash expenditures of approximately $28.6 million (excluding dividends and debt maturities) for 2022, we expect to have sufficient liquidity to meet our obligations for at least the next 12 months.

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We believe our current balance sheet position is financially sound;

however, due to the economic uncertainty caused by the COVID-19 pandemic and the inherent uncertainty and unpredictability of the capital and credit markets, we can give no assurance that affordable access to capital will exist between now and when our next significant debt matures, which is our unsecured lines of credit to the extent there are amounts outstanding.

The unsecured lines of credit expire in October 2021, with a one-year extension option whereby we may extend the maturity to October 2022.

The company intends to extend it's lines of credit beyond October 2022.

However, their can be no assurance that we will be able to extend the lines with similar terms or amounts.

The interest rate spreads associated with our unsecured lines of credit and our unsecured term loan are based on the higher of our two investment grade credit ratings.

Changes to our credit ratings could cause our interest rate spread to adjust accordingly.

In February 2020, due to a change in our credit rating, our interest rate spread over LIBOR on our $600.0 million unsecured line of credit facility increased from 0.875% to 1.0% and our annual facility fee increased from 0.15% to 0.20%.

In addition, our interest rate spread over LIBOR on our $350.0 million unsecured term loan increased from 0.90% to 1.0%.

The Operating Partnership’s debt agreements require the maintenance of certain ratios, including debt service coverage and leverage, and limit the payment of dividends such that dividends and distributions will not exceed funds from operations, as defined in the agreements, for the prior fiscal year on an annual basis or 95% on a cumulative basis.

Equity Offerings under the ATM Offering Program

In February 2021, the Company implemented the ATM Offering program whereby it may offer and sell the Company's common shares having an aggregate gross sales price of up to $250.0 million.

During 2021, under this program, the Company sold 10.0 million shares at a weighted average price of $18.97 per share, generating net proceeds of $187.1 million and leaving a remaining authorization of $60.1 million.

The proceeds were contributed to the Operating Partnership and then used primarily to reduce indebtedness as described in the sections immediately below.

Redemption of the 2023 and 2024 Senior Notes and public offering of aggregate $400.0 Million Unsecured Senior Notes due 2031

In April 2021, we completed a partial redemption of $150.0 million aggregate principal amount of our $250.0 million 3.875% senior notes due December 2023, for $163.0 million in cash, which includes a make-whole premium of $13.0 million and the write-off of approximately $1.0 million of debt discount and debt origination costs.

The make-whole premium and the write-off of debt discount and debt origination costs was recorded as a loss on early extinguishment of debt within the consolidated statements of operations.

Subsequent to this redemption, $100.0 million aggregate principal amount of the notes remained outstanding, until the redemption in August 2021, described below.

In August 2021, we completed a public offering of $400.0 million in senior notes due 2031.

The notes were priced at 98.552% of the principal amount to yield 2.917% to maturity.

The notes pay interest semi-annually at a rate of 2.750% per annum and mature on September 1, 2031.

The aggregate net proceeds from the offering, after deducting the underwriting discount and offering expenses, were approximately $390.7 million.

We used the net proceeds from the sale of the notes to redeem all remaining 3.875% senior notes due 2023, $100.0 million in aggregate principal amount outstanding, and all 3.750% senior notes due 2024, $250.0 million in aggregate principal outstanding.

The redemptions occurred in September 2021 and included a make-whole premium of $31.9 million and the write-off of approximately $1.9 million of debt discount and debt origination costs.

The make-whole premium and the write-off of debt discount and debt origination costs was recorded as a loss on early extinguishment of debt within the consolidated statements of operations.

The remaining proceeds were used for general corporate purposes.

Unsecured term loan

In March 2021 and June 2021, we paid down a total of $50.0 million of borrowings under our $350.0 million unsecured term loan with cash on hand, reducing the balance outstanding to $300.0 million as of December 31, 2021.

Unsecured Lines of Credit Amendments and Extension

In June 2020, we amended the debt agreements for our lines of credit and bank term loan, primarily to improve future covenant flexibility.

The amendments, among other things, allow us to access the existing surge leverage provision, which provides for an increase to the maximum thresholds to 65% from 60% for total leverage and unsecured leverage, for twelve months starting July 1, 2020, during which time share repurchases are prohibited.

The amendments, among other things, allowed us to access the existing surge leverage provision, which provides for an increase to the maximum thresholds to 65% from 60% for total leverage and unsecured leverage, for twelve months from July 1, 2020 to June 30, 2021, during which time share repurchases were prohibited.

Additionally, the leverage covenants are determined based on the calculation period which is modified to be based on the immediately preceding three calendar month period annualized for the calculation date occurring on December 31, 2020;

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Although the amended covenants provide additional flexibility and we expect to remain in compliance with such covenants, the potential impacts from COVID-19 are highly uncertain and therefore could impact covenant compliance in the future.

We have historically been and currently are in compliance with all of our debt covenants.

While the amendments discussed above will provide additional covenant flexibility, the financial impact of the COVID-19 pandemic could potentially negatively impact our future compliance with financial covenants of our credit facilities, term loan and other debt agreements and result in a default and potentially an acceleration of indebtedness.

Our continued compliance with these covenants depends on many factors and could be impacted by current or future economic conditions associated with the COVID-19 pandemic.

In July 2021, we amended our unsecured lines of credit and extended the maturity date from October 2021 to July 2025, which may be extended by an additional year by exercising two six-month extension options.

The amendment eliminated the LIBOR floor, which was previously 0.25%, and entitles us to a one basis point annual reduction in the interest rate if we meet certain sustainability thresholds.

Other pricing terms remained the same.

The lines provide for borrowings of up to $520.0 million, including a $20.0 million liquidity line and a $500.0 million syndicated line.

A 0.25% facility fee is due annually on the entire committed amount of each facility.

In certain circumstances, total line capacity may be increased to $1.2 billion through an accordion feature in the syndicated line.

Other Financing Activity

In April 2021, Moody’s lowered the Company’s credit rating to Baa3, stable.

As the Company no longer had a split rating between the rating agencies, the pricing over LIBOR for the lines of credit, term loan and facility fee increased to 1.20%, 1.25% and 0.25%, respectively, effective May 1, 2021.

In October 2021, the joint venture that owns the Southaven, MS outlet center exercised its option to extend the maturity of the Southaven, MS mortgage to April 2023 and paid down the principal balance by $11.3 million to $40.1 million.

The interest rate remains LIBOR + 1.80%.

The outlet center is consolidated for financial reporting purposes and we funded the entire $11.3 million.

During 2021, we completed the principal payments of certain mortgage notes secured by the Atlantic City property with stated interest rates that ranged from 5.14% to 6.27% and which were scheduled to mature in 2021.

The effective interest rate for the remaining notes remains 5.05% as established upon acquisition.

The stated rates for the remaining secured notes ranged from 6.44% to 7.65% with maturity dates between December 2024 and December 2026.

Debt Covenants

We have historically been, and at December 31, 2021 are, in compliance with all of our debt covenants.

The ongoing financial impact of the COVID-19 pandemic could potentially negatively impact our future compliance with financial covenants of our credit facilities, term loan and other debt agreements and result in a default and potentially an acceleration of indebtedness.

Failure to comply with these covenants would result in a default which, if we were unable to cure or obtain a waiver from the lenders, could accelerate the repayment obligations.

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Accordingly, an event of default could have a material and adverse impact on us.

As a result, we have considered our short-term (one year or less from the date of filing these financial statements) and long-term liquidity needs and the adequacy of our estimated cash flows from operating activities and other financing sources to meet these needs.

As a result, we have considered our short-term (one year or less from the date of filing these financial statements) liquidity needs and the adequacy of our estimated cash flows from operating activities and other financing sources to meet these needs.

These other sources include but are not limited to:

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Total unencumbered assets to unsecured debt >150% 232 %

In addition key financial covenants for our line of credit and term loan, include the following:

Consolidated Income Available for Debt Service to Annual Debt Service Charge > 1.5 x 5.1 x

In addition, key financial covenants for our lines of credit and term loan, include the following as of December 31, 2021:

Required Actual

1 unchanged sentence

Secured Indebtedness to Adjusted Unencumbered Asset Value < 35% 5 %

EBITDA to Fixed Charges >1.5 3.4

EBITDA to Fixed Charges > 1.5 x 4.1

Total Unsecured Indebtedness to Adjusted Unencumbered Asset Value <60% 35 %

Unencumbered Interest Coverage Ratio >1.5 3.8

(1) Leverage ratios are based on a trailing three month period annualized at December 31, 2020.

(2) In June 2020, we amended the debt agreements for our lines of credit and bank term loan which, among other things, allow us to access the existing surge leverage provision, which provides for an increase to the maximum thresholds to 65% from 60% for total leverage and unsecured leverage, for twelve months starting July 1, 2020.

Capital Expenditures

The following table details our capital expenditures for the years ended December 31, 2020 and 2019, respectively (in thousands):

2020 2019 Change

Capital expenditures analysis:

New outlet center developments and expansions $ 2,432 $ 8,865 $ (6,433)

Renovations 5,505 2,930 2,575

Second generation tenant allowances 12,273 18,189 (5,916)

Other capital expenditures 10,279 20,133 (9,854)

30,489 50,117 (19,628)

Conversion from accrual to cash basis (1,923) (2,233) 310

Additions to rental property-cash basis $ 28,566 $ 47,884 $ (19,318)

Contractual Obligations and Commercial Commitments

The following table details our contractual obligations over the next five years and thereafter as of December 31, 2020 (in thousands):

Contractual Obligations 2021 2022 2023 2024 2025 Thereafter Total

$ 57,193 $ 4,436 $ 254,768 $ 605,140 $ 1,501 $ 655,705 $ 1,578,743

Interest payments (2)

50,254 48,227 47,088 33,573 22,983 25,534 227,659

Operating leases 5,613 5,669 5,709 5,765 5,816 221,059 249,631

Other contractual obligations 1,434 1,316 1,161 1,148 1,310 3,216 9,585

$ 114,494 $ 59,648 $ 308,726 $ 645,626 $ 31,610 $ 905,514 $ 2,065,618

(1) These amounts represent total future cash payments related to debt obligations outstanding as of December 31, 2020.

(2) These amounts represent future interest payments related to our debt obligations based on the fixed and variable interest rates specified in the associated debt agreements, including the effects of our interest rate swaps.

All of our variable rate debt agreements are based on the one month LIBOR rate or a LIBOR floor of 0.25%, thus for purposes of calculating future interest amounts on variable interest rate debt, the one month LIBOR rate as of December 31, 2020 or the 0.25% floor was used where applicable.

Off-Balance Sheet Arrangements

We have partial ownership interests in seven unconsolidated outlet centers totaling approximately 2.2 million square feet, including 3 outlet centers in Canada.

See Note 6 to the Consolidated Financial Statements for details of our individual joint ventures, including, but not limited to, carrying values of our investments, fees we receive for services provided to the joint ventures, recent development and financing transactions and condensed combined summary financial information.

We believe our joint ventures will be able to fund their operating and capital needs during 2021 based on their sources of working capital, specifically cash flow from operations, access to contributions from partners, and ability to refinance all or portion of its debt obligations, including the ability to exercise upcoming extensions of near term maturities.

Our joint ventures are typically encumbered by a mortgage on the joint venture property.

A default by a joint venture under its debt obligations may expose us to liability under the guaranty.

For construction and mortgage loans, we may include a guaranty of completion as well as a principal guaranty ranging from 5% to 100% of principal.

The principal guarantees include terms for release based upon satisfactory completion of construction and performance targets including occupancy thresholds and minimum debt service coverage tests.

Our joint ventures may contain make whole provisions in the event that demands are made on any existing guarantees.

Unencumbered Interest Coverage Ratio > 1.5 x 4.9

Depending on the future economic impact of COVID-19, other covenants related to credit facilities, term loans, and other debt obligations could become one of our most restrictive covenants.

Debt of unconsolidated joint ventures

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Charlotte $ 100.0 July 2028 4.27 % — % $ —

71.0 November 2022 LIBOR + 1.85% 16.8 % 11.9

Galveston/Houston (2)

80.0 February 2021 LIBOR + 1.65% 12.5 % 10.0

Columbus 71.0 November 2022 LIBOR + 1.85% 16.8 % 11.9

Galveston/Houston 64.5 July 2023 LIBOR + 1.85% 15.5 % 10.0

National Harbor 95.0 January 2030 4.63 % — % —

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$ 329.5 $ 21.9

(1) In December 2020, the Columbus joint venture amended the mortgage loan to extend the maturity to November 2022, which required a reduction in principal balance from $85.0 million to $71.0 million.

The amendment also changed the interest rate from LIBOR + 1.65% to LIBOR + 1.85%.

In addition, the mortgage loan guarantee by us was increased from $6.4 million to $11.9 million.

We are providing property management, marketing and leasing services to the joint venture.

(2) In June 2020, in response to the COVID-19 impact on the property, the Galveston/Houston joint venture amended its mortgage loan.

The loan modification amended the first one-year extension option to provide for two six-month options (the “First Extension” and “Second Extension”, respectively).

Under the loan modification, the joint venture is prohibited from making partner distributions during the term of the First Extension.

If the joint venture exercises all available options, the loan would mature in July 2022.

The joint venture exercised its First Extension option to extend the mortgage loan for six months to January 2021.

In December 2020, the partnership further extended this maturity to February 15, 2021 while it works with the existing lenders on a modification of this loan.

In February 2021, the Galveston/Houston joint venture amended the mortgage loan to extend the maturity to July 2023, which required a reduction in principal balance from $80.0 million to $64.5 million The amendment also changed the interest rate from LIBOR + 1.65% to LIBOR + 1.85%.

Our joint ventures are generally subject to buy-sell provisions which are customary for joint venture agreements in the real estate industry.

Since the partner other than the partner who triggers the provision has the option to be the buyer or seller, we do not consider this arrangement to be a mandatory redeemable obligation.

Rental property held and used by our joint ventures are reviewed for impairment in the event that facts and circumstances indicate the carrying amount of an asset may not be recoverable.

In such an event, the estimated future undiscounted cash flows associated with the asset is compared to the asset's carrying amount, and if less than such carrying amount, the joint venture recognizes an impairment loss in an amount by which the carrying amount exceeds its fair value.

During 2020 and 2018, the Rio-Can joint venture recognized impairment charges related to its Bromont and Saint Sauveur properties.

The impairment charges were primarily driven by, among other things, new competition in the market and changes in market capitalization rates and the COVID-19 pandemic in 2020.

The table below summarizes the impairment charges taken during 2020 and 2018 (in thousands):

Impairment Charge (1)

Outlet Center Total Our Share

2020 Saint-Sauveur $ 6,181 $ 3,091

2018 Bromont and Saint Sauveur $ 14,359 $ 7,180

(1) The fair value was determined using an income approach considering the prevailing market income capitalization rates for similar assets.

Critical Accounting Policies and Estimates

Critical Accounting Estimates

The preparation of financial statements and related disclosures in conformity with U.S.

generally accepted accounting principles (“GAAP”) and the Company’s discussion and analysis of its financial condition and operating results require the Company’s management to make judgments, assumptions and estimates that affect the amounts reported.

Note 2, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K describes the significant accounting policies and methods used in the preparation of the Company’s consolidated financial statements.

Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

Actual results may differ from these estimates, and such differences may be material.

Management believes the Company’s critical accounting policies and estimates are those related to principles of consolidation, rental property, impairment of long-lived assets, impairment of investments, revenue recognition and collectibility of operating lease receivables.

Management considers these policies critical because they are both important to the portrayal of the Company’s financial condition and operating results, and they require management to make judgments and estimates about inherently uncertain matters.

The Company’s senior management has reviewed these critical accounting policies and related disclosures with the Audit Committee of the Company’s Board of Directors.

If the effects of the COVID-19 pandemic cause economic and market conditions to deteriorate beyond our current expectations or if our expected holding periods for assets change, subsequent tests for impairment could result in additional impairment charges in the future.

For example, the Foxwoods outlet center, which is part of a casino property, and our Atlantic city outlet center both continue to face leasing challenges that could lead to further declines in occupancy, rental revenues and cash flows in the future.

Such challenges could result in additional impairments.

We can provide no assurance that material impairment charges with respect to our properties will not occur in future periods.

New Accounting Pronouncements

See Note 2 and Note 20 to the consolidated financial statements for information on recently adopted accounting standards and new accounting pronouncements issued.

Historically, our accounts receivable from tenants has not been material;

however, given the impacts from COVID-19 discussed below, our net accounts receivable balance, which is recorded in other assets on the consolidated balance sheet, has increased from approximately $4.8 million at December 31, 2019 to approximately $18.8 million at December 31, 2020.

Straight-line rent adjustments recorded as a receivable in other assets on the consolidated balance sheets were approximately $65.8 million and $61.6 million as of December 31, 2020 and December 31, 2019, respectively.

Individual leases are assessed for collectability and upon the determination that the collection of rents is not probable, accrued rent and accounts receivable are reduced as an adjustment to rental revenue.

Revenue from leases where collection is deemed to be less than probable is recorded on a cash basis until collectability is determined to be probable.

Further we assess whether operating lease receivables, at a portfolio level, are appropriately valued based upon an analysis of balances outstanding, historical bad debt levels and current economic trends including discussions with tenants for potential lease amendments.

Our estimate of the collectability of accrued rents and accounts receivable is based on the best information available to us at the time of preparing the financial statements.

The duration of the COVID 19 pandemic, recent tenant bankruptcies and other significant uncertainties with the economy required significant judgment to be used when estimating the collection of rents through December 31, 2020.

After considering current write-offs and reserves for rents we do not expect to collect, the accounts receivables associated with deferred rental payments and unresolved leases of $8.3 million represent the greatest uncertainty with regards to our estimation of collectability.

As a result of this uncertainty, there is a risk that a significant reduction in revenues could be recorded in the future if our assessment of collectability changes in subsequent periods.

In April 2020, the Financial Accounting Standards Board (“FASB”) staff issued a question and answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance to lease concessions provided as a result of the COVID-19 pandemic.

Under existing accounting lease guidance under ASC 842, the Company would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant (treated within the lease modification accounting framework) or if a lease concession was under the enforceable rights and obligations within the existing lease agreement (precluded from applying the lease modification accounting framework).

The Lease Modification Q&A allows the Company, if certain criteria have been met, to bypass the lease by lease analysis, and instead make an accounting policy election to account for COVID-19 related lease concessions as either a lease modification or a negative variable adjustment to rental revenue.

The Lease Modification Q&A allows the Company to determine accounting policy elections at a disaggregated level, and the elections should be applied consistently by either the type of concession or another reasonable disaggregated level.

We have evaluated and elected to apply the Lease Modification Q&A to eligible lease concessions.

We applied modification accounting to individual leases that are in bankruptcy and those that did not qualify for the concession.

As a result, for lease concessions not treated as a lease modification we have made the following policy elections by the type of concession agreed to with the respective tenant.

Rent Deferrals

We account for rental deferrals using the receivables model as described within the Lease Modification Q&A.

Under the receivables model, we will continue to recognize lease revenue in a manner that is unchanged from the original lease agreement and continue to recognize lease receivables and rental revenue until such deferral is paid.

Rent Abatements

We account for rental abatements as negative variable adjustments to rental revenue as described within the Lease Modification Q&A.

New Auditing Standard

On June 1, 2017, the Public Company Accounting Oversight Board issued Auditing Standard 3101, The Auditor's Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion (“AS 3101”).

As a result of AS 3101, the most significant change to the auditor’s report on the financial statements is a new requirement to describe critical audit matters arising from the audit of the current period’s financial statements in the auditor’s report.

The requirements related to critical audit matters in AS 3101 were effective for audits of fiscal years ending on or after June 30, 2019, for large accelerated filers;

and for fiscal years ending on or after December 15, 2020, for all other companies to which the requirements apply.

Therefore, critical audit matters are included in the Report of Independent Registered Public Accounting Firm for Tanger Factory Outlet Centers, Inc.'s consolidated financial statements as of and for the year ended December 31, 2019, and are included in the Report of Independent Registered Public Accounting Firm for Tanger Properties Limited Partnership's consolidated financial statements as of and for the year ended December 31, 2020.

Management believes the Company’s critical accounting estimates are those related to impairment of long-lived assets, impairment of investments, revenue recognition and collectibility of operating lease receivables.

Management considers these estimates critical because they are both important to the portrayal of the Company’s financial condition and operating results, and they require management to make judgments and estimates about inherently uncertain matters.

The Company’s senior management has reviewed these critical accounting estimates and related disclosures with the Audit Committee of the Company’s Board of Directors.

Evaluation of Impairment of long-lived assets

Rental property held and used by us is reviewed for impairment in the event that facts and circumstances indicate the carrying amount of an asset may not be recoverable.

In such an event, we compare the estimated future undiscounted cash flows associated with the asset to the asset's carrying amount, and if less than such carrying amount, recognize an impairment loss in an amount by which the carrying amount exceeds its fair value.

The cash flow estimates used both for determining recoverability and estimating fair value are inherently judgmental and reflect current and projected trends in rental, occupancy, capitalization and discount rates, and estimated holding periods for the applicable assets.

Impairment analyses are based on our current plans, intended holding periods and available market information at the time the analyses are prepared.

If our estimates of the projected future cash flows change based on uncertain market conditions or holding periods, our evaluation of impairment losses may be different and such differences could be material to our consolidated financial statements.

The Foxwoods outlet center, which is part of a casino property, continues to face leasing challenges that led to declines in occupancy and estimated operating cash flows.

As a result, during December 2021, due to a decrease in the estimated hold period and declining operating results, we determined the carrying value of the Foxwoods outlet center was not recoverable.

Discount rates and terminal capitalization rates utilized in the approach above were derived from property-specific information, market transactions and other financial and industry data.

The terminal capitalization rate and discount rate are significant unobservable inputs in determining the fair value.

In estimating the fair value for our Foxwoods outlet center, the terminal capitalization rate changed from 7.8% in 2020 to 8.3% in 2021.

The discount rate changed from 8.5% in 2020 to 9.3% in 2021.

We recorded an impairment charge of $7.0 million in our consolidated statement of operations, which equaled the excess of the carrying value of our Foxwoods outlet center over its estimated fair value.

Evaluation of Impairment of investments

Our estimates of value for each joint venture investment are based on a number of assumptions that are subject to economic and market uncertainties including, among others, estimated hold period, terminal capitalization rates, demand for space, competition for tenants, changes in market rental rates and operating costs of the property.

These above factors are considered in the estimation process and are subject to significant management judgment, difficult to predict and contingent on future events that may alter our assumptions and the values estimated by us in our impairment analysis may not be realized.

Revenue recognition and collectibility of operating lease receivables

We, as a lessor, retain substantially all of the risks and benefits of ownership of our outlet centers and account for our leases as operating leases.

We accrue fixed lease income on a straight-line basis over the terms of the leases, when we believe substantially all lease income, including the related straight-line rent receivable, is probable of collection.

Our assessment of collectability requires the exercise of considerable judgment and incorporates available operational performance measures such as sales and the aging of billed amounts as well as other publicly available information with respect to our tenant’s financial condition, liquidity and capital resources, including declines in such conditions due to, or amplified by, the COVID-19 pandemic.

When a tenant seeks to reorganize its operations through bankruptcy proceedings, we assess the collectability of receivable balances including, among other things, the timing of a tenant’s bankruptcy filing and our expectations of the assumption by the tenant in bankruptcy proceeding of leases at the Company’s properties on substantially similar terms.

In the event that we determine accrued receivables are not probable of collection, lease income will be recorded on a cash basis, with the corresponding tenant receivable and straight-line rent receivable charged as a direct write-off against lease income in the period of the change in our collectability determination.

Our financial results for 2020 were materially adversely impacted by COVID-19.

During the year ended December 31, 2020, as a direct result of the pandemic, bankruptcies and restructurings, the Company's earnings were negatively impacted by approximately $47.3 million due to (1) write-offs related to bankruptcies and other uncollectible accounts due to financial weakness, (2) one-time concessions in exchange for landlord-favorable amendments to lease structure, (3) reserves for a portion of deferred and under negotiation billings that we expect to become uncollectible in future periods and (4) and write-offs of straight-line rents associated with the bankruptcies and uncollectible accounts.

As of December 31, 2021, contractual fixed rents billed during 2020 that were deferred as a direct result of the COVID-19 pandemic and remain outstanding totaled $82,000.

Through December 31, 2021, the Company had collected 99% of the 2020 deferred rents due to be repaid during the year ended December 31, 2021.

During 2021, our business and financial results improved, and metrics such as average occupancy rates, traffic to our centers, sales reported by our tenants, and collections of rental revenues returned to near, at, or in some cases above, pre-pandemic levels.

The extent of future tenant requests for rent relief and the impact on our results of operations and cash flows is uncertain and cannot be predicted at this time.

If store closures were to occur again in our domestic markets, this could have a material adverse impact on our financial position and results of operations.

Recent Accounting Pronouncements

See Note 2 to the consolidated financial statements for information on recently adopted accounting standards and new accounting pronouncements issued.

Non-GAAP Supplemental Measures

Beginning with the three months ended March 31, 2020, we elected to supplement our disclosure with three additional non-GAAP measures, Adjusted EBITDA, EBITDAre and Adjusted EBITDAre (each as defined below), that are commonly provided in the REIT industry.

See “Adjusted EBITDA, EBITDAre and Adjusted EBITDAre” below for more information.

We also now refer to Adjusted Funds from Operations (“AFFO”) as Core Funds From Operations (“Core FFO”), but there has been no change to the definition of this measure.

Funds From Operations

48 unchanged sentences

6,989 67,226 37,610

Impairment charge - unconsolidated joint ventures 3,091 — 7,180

Foreign currency loss from sale of joint venture property — 3,641

Impairment charges - unconsolidated joint ventures — 3,091 —

Loss on sale of joint venture property, including foreign currency effect (2)

3,704 — 3,641

Gain on sale of assets — (2,324) (43,422)

5 unchanged sentences

As further adjusted for:

Compensation related to voluntary retirement plan and executive officer retirement (3)

Compensation related to voluntary retirement plan and other executive officer severance and retirement (4)

3,579 573 4,371

Casualty gain (969) — —

Gain on sale of outparcel — (992) —

Loss on early extinguishment of debt (5)

Impact of above adjustments to the allocation of earnings to participating securities (224) 5 (35)

7 unchanged sentences

Basic weighted average common shares 100,418 92,618 92,808

Effect of notional units 809 — —

Effect of outstanding options and restricted common shares 752 — —

4 unchanged sentences

106,769 97,615 97,766

(1) The 2020 amount includes $4.0 million of impairment loss attributable to the right-of-use asset associated with the ground lease at the Mashantucket (Foxwoods), Connecticut outlet center.

The 2021 amount includes $563,000 of impairment loss attributable to the right-of-use asset associated with the ground lease at the Mashantucket (Foxwoods), Connecticut outlet center.

(2) Includes a $3.6 million charge related to the foreign currency effect of the sale of the Saint-Sauveur, Quebec property by the RioCan joint venture in March 2021.

(3) Assumes the Class A common limited partnership units of the Operating Partnership held by the noncontrolling interests are exchanged for common shares of the Company.

Each Class A common limited partnership unit is exchangeable for one of the Company's common shares, subject to certain limitations to preserve the Company's REIT status.

(2) The 2020 amount includes $4.0 million of impairment loss attributable to the right-of-use asset associated with the ground lease at the Mashantucket (Foxwoods), Connecticut outlet center.

(4) The 2019 amount represents the accelerated recognition of compensation cost entitled to be received by the Company’s former President and Chief Operating Officer per the terms of a transition agreement executed in connection with his retirement.

The 2020 amount represents compensation cost related to a voluntary retirement plan offer which required eligible participants to give notice of acceptance by December 1, 2020 for an effective retirement date of March 31, 2021.

The 2020 and 2021 amounts include compensation cost related to a voluntary retirement plan offer which required eligible participants to give notice of acceptance by December 1, 2020 for an effective retirement date of March 31, 2021.

The 2021 amount also includes other executive officer severance costs incurred during 2021.

(5) In April 2021, the Company completed a partial redemption of $150.0 million aggregate principal amount of its $250.0 million 3.875% senior notes due December 2023 for $163.0 million in cash.

In September 2021, the Company completed a redemption of the remaining senior notes due 2023, $100.0 million in aggregate principal amount outstanding, and all of its 3.750% senior notes due 2024, $250.0 million in aggregate principal outstanding, for $381.9 million in cash.

The loss on extinguishment of debt includes make-whole premiums of $44.9 million for both of these redemptions.

Portfolio Net Operating Income and Same Center NOI

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Gain on sale of assets — (2,324)

Loss on early extinguishment of debt (1)

Other (income) expense 1,595 (925)

1 unchanged sentence

Depreciation and amortization 110,008 117,143

Other non-property expenses 1,359 1,049

Other non-property (income) expenses 165 1,359

Corporate general and administrative expenses 66,023 48,172

Non-cash adjustments (2)

6,170 (6,237)

Lease termination fees (2,225) (12,125)

Portfolio NOI 248,699 313,902

Non-same center NOI (2)

Portfolio NOI - Consolidated 286,251 248,699

Non-same center NOI - Consolidated (1,483) (2,454)

Same Center NOI - Consolidated (3)

$ 284,768 $ 246,245

Same Center NOI $ 247,971 $ 307,909

(1) In April 2021, the Company completed a partial redemption of $150.0 million aggregate principal amount of its $250.0 million 3.875% senior notes due December 2023 for $163.0 million in cash.

The loss on extinguishment of debt includes make-whole premiums of $44.9 million for both of these redemptions.

(2) Non-cash items include straight-line rent, above and below market rent amortization, straight-line rent expense on land leases and gains or losses on outparcel sales, as applicable.

(2) Excluded from Same Center NOI:

(3) Sold outlet centers excluded from Same Center NOI Cash Basis:

Outlet centers sold:

Nags Head, Ocean City, Park City, and Williamsburg

Terrell August 2020

Jeffersonville January 2021

Adjusted EBITDA, EBITDAre and Adjusted EBITDAre

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Each of these measures is defined as follows:

We define Adjusted EBITDA as net income (loss) available to the Company’s common shareholders computed in accordance with GAAP before interest expense, income taxes (if applicable), depreciation and amortization, gains and losses on sale of operating properties, joint venture properties, outparcels and other assets, gains and losses on change of control, impairment write-downs of depreciated property and of investment in unconsolidated joint ventures caused by a decrease in value of depreciated property in the affiliate, compensation related to voluntary retirement plan and executive officer retirement, gains and losses on extinguishment of debt, net and other items that we do not consider indicative of the Company's ongoing operating performance.

We define Adjusted EBITDA as net income (loss) available to the Company’s common shareholders computed in accordance with GAAP before interest expense, income taxes (if applicable), depreciation and amortization, gains and losses on sale of operating properties, joint venture properties, outparcels and other assets, impairment write-downs of depreciated property and of investment in unconsolidated joint ventures caused by a decrease in value of depreciated property in the affiliate, compensation related to voluntary retirement plan and other executive officer severance, casualty gains and losses, gains and losses on early extinguishment of debt, net and other items that we do not consider indicative of the Company's ongoing operating performance.

We determine EBITDAre based on the definition set forth by NAREIT, which is defined as net income (loss) available to the Company’s common shareholders computed in accordance with GAAP before interest expense, income taxes (if applicable), depreciation and amortization, gains and losses on sale of operating properties, gains and losses on change of control and impairment write-downs of depreciated property and of investment in unconsolidated joint ventures caused by a decrease in value of depreciated property in the affiliate and after adjustments to reflect our share of the EBITDAre of unconsolidated joint ventures.

Adjusted EBITDAre is defined as EBITDAre excluding gains and losses on extinguishment of debt, net, compensation related to voluntary retirement plan and executive officer retirement, gains and losses on sale of outparcels, and other items that that we do not consider indicative of the Company's ongoing operating performance.

Adjusted EBITDAre is defined as EBITDAre excluding gains and losses on early extinguishment of debt, net, casualty gains and losses, compensation related to voluntary retirement plan and other executive officer severance, casualty gains and losses, gains and losses on sale of outparcels, and other items that that we do not consider indicative of the Company's ongoing operating performance.

We present Adjusted EBITDA, EBITDAre and Adjusted EBITDAre as we believe they are useful for investors, creditors and rating agencies as they provide additional performance measures that are independent of a Company’s existing capital structure to facilitate the evaluation and comparison of the Company’s operating performance to other REITs and provide a more consistent metric for comparing the operating performance of the Company’s real estate between periods.

16 unchanged sentences

Loss on sale of joint venture property, including foreign currency effect (2)

3,704 — 3,641

Gain on sale of assets — (2,324) (43,422)

Compensation related to voluntary retirement plan and executive officer retirement (2)

Compensation related to voluntary retirement plan and other executive severance (3)

3,579 573 4,371

Casualty gain (969) — —

Gain on sale of outparcel - unconsolidated joint ventures — (992) —

Loss on early extinguishment of debt (4)

Adjusted EBITDA $ 233,595 $ 209,846 $ 279,914

9 unchanged sentences

Loss on sale of joint venture property, including foreign currency effect (2)

3,704 — 3,641

Gain on sale of assets — (2,324) (43,422)

2 unchanged sentences

EBITDAre $ 200,601 $ 228,834 $ 296,118

Compensation related to voluntary retirement plan and executive officer retirement (2)

Compensation related to voluntary retirement plan and other executive officer severance (3)

3,579 573 4,371

Casualty gain (969) — —

Gain on sale of outparcel - unconsolidated joint ventures — (992) —

Loss on early extinguishment of debt (4)

Adjusted EBITDAre $ 251,071 $ 228,415 $ 300,489

(1) The 2020 amount includes $4.0 million of impairment loss attributable to the right-of-use asset associated with the ground lease at the Mashantucket (Foxwoods), Connecticut outlet center.

The 2021 amount includes $563,000 of impairment loss attributable to the right-of-use asset associated with the ground lease at the Mashantucket (Foxwoods), Connecticut outlet center.

(2) Includes a $3.6 million charge related to the foreign currency effect of the sale of the Saint-Sauveur, Quebec property by the RioCan joint venture in March 2021.

(3) The 2019 amount represents the accelerated recognition of compensation cost entitled to be received by the Company’s former President and Chief Operating Officer per the terms of a transition agreement executed in connection with his retirement.

The 2020 and 2021 amounts include compensation costs related to a voluntary retirement plan offer which required eligible participants to give notice of acceptance by December 1, 2020 for an effective retirement date of March 31, 2021.

The 2021 amount also includes other executive officer severance costs incurred during 2021.

(4) In April 2021, the Company completed a partial redemption of $150.0 million aggregate principal amount of its $250.0 million 3.875% senior notes due December 2023 for $163.0 million in cash.

The loss on extinguishment of debt includes make-whole premiums of $44.9 million for both of these redemptions.

Economic Conditions and Outlook

We are closely monitoring the impact of the COVID-19 pandemic on all aspects of our business and geographies, including how it will impact our tenants and business partners.

For a complete discussion of the impact the pandemic is having on our current operations, the steps we have taken to increase liquidity and preserve financial flexibility and the uncertainties around our future operations and financial condition, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations-COVID-19 Pandemic”.

For further discussion of COVID-19, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - COVID-19 Pandemic.”

The majority of our leases contain provisions designed to mitigate the impact of inflation.

1 unchanged sentence

A component of most leases includes a pro-rata share or escalating fixed contributions by the tenant for property operating expenses, including common area maintenance, real estate taxes, insurance and advertising and promotion, thereby reducing exposure to increases in costs and operating expenses resulting from inflation.

A portion of our rental revenues are derived from percentage rents that directly depend on the sales volume of certain tenants.

A portion of our rental revenues are derived from rents that directly depend on the sales volume of certain tenants.

Accordingly, declines in these tenants’ sales would reduce the income produced by our properties.

If the sales or profitability of our retail tenants decline sufficiently, whether due to a change in consumer preferences, legislative changes that increase the cost of their operations or otherwise, such tenants may be unable to pay their existing rents as such rents would represent a higher percentage of their sales.

If the sales or profitability of our retail tenants decline sufficiently, whether due to a change in consumer preferences, health concerns, legislative changes that increase the cost of their operations or otherwise, such tenants may be unable to pay their existing rents as such rents would represent a higher percentage of their sales.

As a result of the COVID-19 pandemic, we saw reductions in rental revenues during 2020 as a result of declines in the sales volumes of certain tenants.

However, during 2021, our tenants' average sales per square foot for the consolidated portfolio was the highest in our company's history, resulting in significant increases in rental revenues compared to the prior year.

In addition, certain of our lease agreements include co-tenancy and/or sales-based provisions that may allow a tenant to pay reduced rent and/or terminate a lease prior to its natural expiration if we fail to maintain certain occupancy levels or retain specified named tenants, or if the tenant does not achieve certain specified sales targets.

Our occupancy at our consolidated centers has declined from 97% at the end of 2019 to 92% at then end of 2020.

If our occupancy continues to decline, certain outlet centers may fall below the minimum co-tenancy thresholds and could trigger many tenants ability to pay reduced rents, which in turn may negatively impact our results of operations.

If our occupancy declines, certain outlet centers may fall below the minimum co-tenancy thresholds and could trigger many tenants' contractual ability to pay reduced rents, which in turn may negatively impact our results of operations.

Our occupancy at our consolidated centers improved from 92% at the end of 2020 to 95% at the end of 2021.

Our outlet centers typically include well-known, national, brand name companies.

2 unchanged sentences

Due to the relatively short-term nature of our tenants’ leases, a significant portion of the leases in our portfolio come up for renewal each year.

As of January 1, 2020, we had approximately 1.5 million square feet, or 13% of our consolidated portfolio at that time coming up for renewal during 2020.

As of December 31, 2020, we had renewed approximately 70%of this space.

In addition, for the twelve months ended December 31, 2020, we completed renewals and re-tenanted space totaling 1.5 million square feet at a blended 6.7% decrease in average base rental rates compared to the expiring rates.

During 2021, approximately 1.7 million square feet, or 15%, of our current consolidated portfolio will come up for renewal.

Our operations are subject to the operating results and operating decisions of our retail tenants.

As is typical in the retail industry, certain tenants have closed, or will close, certain stores by terminating their lease prior to its natural expiration or as a result of filing for protection under bankruptcy laws, or may request modifications to their existing lease terms.

The current environment has negatively impacted certain retailers, in particular some who were already pressured prior to the pandemic.

During 2020 and 2021, 16 retailers on our tenant roster declared bankruptcy or announced a brand-wide restructuring.

Recent Chapter 11 bankruptcy filings include, but not limited to, J.

Crew Group, Inc.

(filed in May 2020) and Brooks Brothers, Lucky Brand Jeans, New York and Company and Ascena Retail Group, Inc.

(all filed in July, 2020), Francesca's (filed in December 2020) and Christopher and Banks (filed in January 2021).

Also, in 2020, G-III Apparel announced a brand-wide restructuring, including its intention to close all of its Wilsons and Bass stores.

During the year ended December 31, 2020, we recaptured approximately 903,000 square feet within the consolidated portfolio related to bankruptcies and brand-wide restructurings by retailers, compared to 198,000 square feet during the year ended December 31, 2019.

While a number of tenant bankruptcies and brand-wide restructurings remain fluid, at this time, we expect approximately 50 stores comprising approximately 200,000 square feet to close mostly during the first half of 2021.

We also expect there will be an impact on rental rates as some of these tenant leases are renewed at reduced spreads, or in select cases mid-lease modifications are implemented.

As many of these are still in process, we don’t yet know what the ultimate impact of store closures, timing, lease adjustments or potential early termination fees will be.

Due to store closures, tenant bankruptcies and rent adjustments that may result from the impact of the COVID-19 pandemic, our Same Center NOI for 2020 compared to 2019 was adversely impacted and may continue to be adversely impacted in 2021.

During 2022, approximately 2.1 million square feet, or 17% to the total portfolio including our share of unconsolidated joint ventures, will come up for renewal.

For the total portfolio, including the Company’s pro rata share of unconsolidated joint ventures, as of January 31, 2022, we had lease renewals executed or in process for 29.8% of the space scheduled to expire during 2022 compared to 42.9% of the space scheduled to expire during 2021 that was executed or in process as of January 31, 2021.

As of January 31, 2022, we had lease renewals executed or in process for approximately 77.7% of the space that came up for renewal in 2021.

The current challenging retail environment has impacted our business as our operations are subject to the operating results and operating decisions of our retail tenants.

We are encouraged by the recent improvement in traffic and sales trends, which in many cases are exceeding 2019 levels, and the fact that collections of monthly rents have normalized.

However, many retailers across the country are currently facing, or expect to face, potential logistics and staffing issues.

While we believe many of these retailers are proactively navigating this situation, the ultimate impact of labor and supply chain issues is unknown.

We may continue to experience pressure from current vacancies, potential additional store closures and potential rent modifications.

As is typical in the retail industry, certain tenants have closed, or will close, certain stores by terminating their lease prior to its contractual expiration or as a result of filing for protection under bankruptcy laws, or may request modifications to their existing lease terms.

We recaptured approximately 136,000 square feet within our consolidated portfolio during the year ended December 31, 2021 related to bankruptcies and brand-wide restructurings by retailers, compared to 903,000 square feet for the year ended December 31, 2020.

We believe outlet stores will continue to be a profitable and fundamental distribution channel for many brand name manufacturers.

While we continue to attract and retain additional tenants, if we were unable to successfully renew or re-lease a significant amount of this space on favorable economic terms or in a timely manner, the loss in rent and our Same Center NOI could be further negatively impacted in 2022.

As a result of COVID-19, occupancy could be negatively impacted in 2022.

Occupancy at our consolidated centers was 95.2% and 91.9% as of December 31, 2021 and 2020, respectively.

As a result of COVID-19, occupancy could be further negatively impacted in 2021.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis