Annual report pursuant to Section 13 and 15(d)

Investments in Unconsolidated Real Estate Joint Ventures

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Investments in Unconsolidated Real Estate Joint Ventures
 12 Months Ended
Dec. 31, 2020
Equity Method Investments and Joint Ventures [Abstract]  
Investments in Unconsolidated Real Estate Joint Ventures Investments in Unconsolidated Real Estate Joint Ventures
The equity method of accounting is used to account for each of the individual joint ventures. We have an ownership interest in the following unconsolidated real estate joint ventures:
As of December 31, 2020
Joint Venture Outlet Center Location Ownership % Square Feet
(in 000's)		 Carrying Value of Investment (in millions)
Total Joint Venture Debt, Net
(in millions) (1)
Investments included in investments in unconsolidated joint ventures:
Columbus Columbus, OH 50.0  % 355  $ 2.0  $ 70.8 
RioCan Canada Various 50.0  % 765  $ 92.6  $ — 
$ 94.6 
Investments included in other liabilities:
Charlotte (2)
Charlotte, NC 50.0  % 399  (12.8) 99.6 
National Harbor (2)
National Harbor, MD 50.0  % 341  (8.4) 94.5 
Galveston/Houston (2)
Texas City, TX 50.0  % 353  (19.5) 80.0 
$ (40.7)
As of December 31, 2019
Joint Venture Outlet Center Location Ownership % Square Feet
(in 000's)		 Carrying Value of Investment (in millions)
Total Joint Venture Debt, Net
(in millions) (1)
Investments included in investments in unconsolidated joint ventures:
RioCan Canada Various 50.0  % 764  $ 94.7  $ 9.2 
$ 94.7 
Investments included in other liabilities:
Columbus (2)
Columbus, OH 50.0  % 355  $ (3.5) $ 85.0 
Charlotte (2)
Charlotte, NC 50.0  % 399  (13.0) 99.5 
National Harbor (2)
National Harbor, MD 50.0  % 341  (5.9) 94.4 
Galveston/Houston (2)
Texas City, TX 50.0  % 353  (19.7) 79.9 
$ (42.1)
(1)Net of debt origination costs and including premiums of $1.1 million and $1.1 million as of December 31, 2020 and 2019, respectively.
(2)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. The negative carrying value is due to the distributions of proceeds from mortgage loans and quarterly distributions of excess cash flow exceeding the original contributions from the partners and equity in earnings of the joint ventures.

Fees we received for various services provided to our unconsolidated joint ventures were recognized in management, leasing and other services as follows (in thousands):
Year Ended December 31,
2020 2019 2018
Fees:
Management and marketing $ 1,859  $ 2,308  $ 2,334 
Leasing and other fees 60  126  162 
Expense reimbursements from unconsolidated joint ventures 3,017  2,985  2,499 
Total Fees $ 4,936  $ 5,419  $ 4,995 
Expense reimbursements from unconsolidated joint ventures were previously included in expense reimbursements in our Form 10-K for the year ended December 31, 2018. As these revenues are not related to leases, the 2018 amounts have been reclassified to management, leasing and other services on the consolidated statements of operations to conform to the current year presentation. See Note 21 for discussion of adoption of ASC 842.

Our investments in real estate joint ventures are reduced by the percentage of the profits earned for leasing and development services associated with our ownership interest in each joint venture. Our carrying value of investments in unconsolidated joint ventures differs from our share of the assets reported in the “Condensed Combined Balance Sheets - Unconsolidated Joint Ventures” shown below due to adjustments to the book basis, including intercompany profits on sales of services that are capitalized by the unconsolidated joint ventures. The differences in basis (totaling $3.6 million and $3.8 million as of December 31, 2020 and 2019, respectively) are amortized over the various useful lives of the related assets.

Charlotte

In July 2014, we opened an approximately 398,000 square foot outlet center in Charlotte, North Carolina that was developed through, and is owned by, a joint venture formed in May 2013. In June 2018, the Charlotte joint venture closed on a $100.0 million mortgage loan with a fixed interest rate of approximately 4.3% and a maturity date of July 2028. The proceeds from the loan were used to pay off the existing $90.0 million mortgage loan with an interest rate of LIBOR + 1.45%, which had an original maturity date of November 2018. The joint venture distributed the incremental net loan proceeds of $9.3 million equally to the partners. Our partner is providing property management, marketing and leasing services to the joint venture.

Columbus

In June 2016, we opened an approximately 355,000 square foot outlet center in Columbus, Ohio. The development was initially fully funded with equity contributed to the joint venture by Tanger and its partner. In November 2016, the joint venture closed on an interest-only mortgage loan of $85.0 million at an interest rate of LIBOR + 1.65%. The loan initially matured in November 2019, with two one-year extension options. The joint venture received net loan proceeds of $84.2 million and distributed them equally to the partners. In October 2019, the joint venture exercised its first option to extend the mortgage loan for one year to November 2020 under the same terms. 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.

Galveston/Houston

In October 2012, we opened an approximately 353,000 square foot outlet center in Texas City, Texas that was developed through, and is owned by, a joint venture formed in June 2011. In July 2017, the joint venture amended and restated the initial construction loan, which had an outstanding balance of $65.0 million, to increase the amount available to borrow from $70.0 million to $80.0 million and extended the maturity date until July 2020 with two one-year options. The amended and restated loan also changed the interest rate from LIBOR + 1.50% to LIBOR + 1.65%. At the closing of the amendment, the joint venture distributed the net proceeds of approximately $14.5 million equally between the partners. 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%. We are providing property management, marketing and leasing services to the outlet center.
National Harbor

In November 2013, we opened an approximately 341,000 square foot outlet center at National Harbor in the Washington, D.C. Metro area that was developed through, and is owned by, a joint venture formed in May 2011. In December 2018, the National Harbor joint venture closed on a $95.0 million mortgage loan with a fixed interest rate of approximately 4.6% and a maturity date of January 2030. The proceeds from the loan were used to pay off the $87.0 million construction loan with an interest rate of LIBOR + 1.65%, which had an original maturity date of November 2019. The joint venture distributed the incremental net loan proceeds of $7.4 million equally to the partners.

RioCan Canada

We have a 50/50 co-ownership agreement with RioCan Real Estate Investment Trust to operate and manage outlet centers in Canada. We provide leasing and marketing services for the outlet centers and RioCan provides development and property management services.

In October 2014, the co-owners opened Tanger Outlets Ottawa, the first ground up development of a Tanger Outlet Center in Canada. In 2016, the co-owners commenced construction on a 39,000 square foot expansion, which opened during the second quarter of 2017 to bring the total square feet of the outlet center to approximately 357,000. In November 2020, the Rio Can joint venture closed on the sale of an outparcel located at Tanger Outlets Ottawa for net proceeds of approximately $5.5 million and a gain of approximately $2.0 million. Our share of the net proceeds was $2.8 million, and our share of the gain was approximately $1.0 million.

Other properties owned by the RioCan Canada co-owners include Cookstown Outlet Mall and Les Factoreries Saint-Sauveur. Cookstown Outlet Mall is approximately 308,000 square feet and Les Factoreries Saint-Sauveur is approximately 116,000 square feet. In May 2020, the joint venture’s mortgage loan for the outlet center in Saint-Sauveur matured and the joint venture repaid the approximately $8.3 million owed in full.

In May 2019, the RioCan joint venture closed on the sale of its 161,000 square foot outlet center in Bromont, for net proceeds of approximately $6.4 million. Our share of the proceeds was approximately $3.2 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.

During 2020 and 2018, the RioCan 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.
Condensed combined summary financial information of joint ventures accounted for using the equity method as of December 31, 2020 and 2019 and for the years ended December 31, 2020, 2019 and 2018 is as follows (in thousands):
Condensed Combined Balance Sheets - Unconsolidated Joint Ventures 2020 2019
Assets
Land $ 86,861  $ 90,859 
Buildings, improvements and fixtures 471,798  477,061 
Construction in progress 2,976  4,779 
561,635  572,699 
Accumulated depreciation (145,810) (132,860)
Total rental property, net 415,825  439,839 
Cash and cash equivalents 21,471  19,750 
Deferred lease costs, net 4,849  6,772 
Prepaids and other assets 20,478  17,789 
Total assets $ 462,623  $ 484,150 
Liabilities and Owners' Equity
Mortgages payable, net $ 344,856  $ 368,032 
Accounts payable and other liabilities 17,427  17,173 
Total liabilities 362,283  385,205 
Owners' equity 100,340  98,945 
Total liabilities and owners' equity $ 462,623  $ 484,150 
Condensed Combined Statements of Operations- Unconsolidated Joint Ventures: Year Ended December 31,
2020 2019 2018
Revenues $ 76,866  $ 93,508  $ 94,509 
Expenses:
Property operating 33,053  36,812  37,121 
General and administrative 395  271  266 
Impairment charges 6,181  —  14,359 
Depreciation and amortization 23,544  24,454  26,262 
Total expenses 63,173  61,537  78,008 
Other income (expense):
Interest expense (13,091) (16,234) (14,518)
Other non-operating income 2,153  507  234 
Total other income (expense) $ (10,938) $ (15,727) $ (14,284)
Net income $ 2,755  $ 16,244  $ 2,217 
The Company and Operating Partnership's share of:
Net income $ 1,126  $ 7,839  $ 924 
Depreciation, amortization and asset impairments (real estate related) $ 15,115  $ 12,512  $ 20,494