UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2010

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                               to

Commission File No. 1-11986 (Tanger Factory Outlet Centers, Inc.)

Commission File No. 333-3526-01 (Tanger Properties Limited Partnership)

  

TANGER FACTORY OUTLET CENTERS, INC.
TANGER PROPERTIES LIMITED PARTNERSHIP

(Exact name of Registrant as specified in its Charter)

  

	NORTH CAROLINA (Tanger Factory Outlet Centers, Inc.)			56-1815473
	NORTH CAROLINA (Tanger Properties Limited Partnership)			56-1822494
	(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

	3200 Northline Avenue, Suite 360, Greensboro, North Carolina 27408
	(Address of principal executive offices) (Zip code)
	(336) 292-3010
	(Registrant's telephone number, including area code)

  

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Tanger Factory Outlet Centers, Inc. Yes x No o

Tanger Properties Limited Partnership Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Tanger Factory Outlet Centers, Inc. Yes x No o

Tanger Properties Limited Partnership Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

    

Tanger Factory Outlet Centers, Inc.:

	Large accelerated filer x			Accelerated filer o			Non-accelerated filer o			Smaller reporting company o
							(Do not check if a smaller reporting company)

Tanger Properties Limited Partnership:

	Large accelerated filer o			Accelerated filer o			Non-accelerated filer x			Smaller reporting company o
							(Do not check if a smaller reporting company)

Indicated by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Tanger Factory Outlet Centers, Inc.

Yes o No x

Tanger Properties Limited Partnership

Yes o No x

	As of August 2, 2010, there were 40,475,662 shares of Tanger Factory Outlet Centers, Inc. common stock, $.01 par value, outstanding.

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the quarter ended June 30, 2010 of Tanger Factory Outlet Centers, Inc. and Tanger Properties Limited Partnership. Unless the context indicates otherwise, the term, Company, refers to Tanger Factory Outlet Centers, Inc. and subsidiaries and the term, Operating Partnership, refers to Tanger Properties Limited Partnership and subsidiaries. The terms "we", "our" and "us" refer to the Company or the Company and the Operating Partnership together, as the text requires.

Tanger Factory Outlet Centers, Inc. and subsidiaries is one of the largest owners and operators of outlet centers in the United States. The Company is a fully-integrated, self-administered and self-managed real estate investment trust, or REIT, which, through its controlling interest in the Operating Partnership, focuses exclusively on developing, acquiring, owning, operating and managing outlet shopping centers. The outlet centers and other assets are held by, and all of the operations are conducted by, the Operating Partnership and its subsidiaries. Accordingly, the descriptions of the business, employees and properties of the Company are also descriptions of the business, employees and properties of the Operating Partnership.

The Company owns the majority of the units of partnership interest issued by the Operating Partnership through its two wholly-owned subsidiaries, the Tanger GP Trust and the Tanger LP Trust. The Tanger GP Trust controls the Operating Partnership as its sole general partner. The Tanger LP Trust holds a limited partnership interest in the Operating Partnership. The Tanger family, through its ownership of the Tanger Family Limited Partnership, holds the remaining units of partnership interest in the Operating Partnership as a limited partner. Stanley K. Tanger, a member of the Company's Board of Directors, is the sole general partner of the Tanger Family Limited Partnership.

As of June 30, 2010, the Company, through its ownership of the GP Trust and LP Trust, owned 20,235,431 units of the Operating Partnership and the Tanger Family Limited Partnership owned 3,033,305 units. Each Tanger Family Limited Partnership unit is exchangeable for two of the Company's common shares, subject to certain limitations to preserve the Company's REIT status. Prior to the Company's two for one share split on December 28, 2004, the exchange ratio was one for one.

Management operates the Company and the Operating Partnership as one enterprise. The management of the Company consists of the same members as the management of the Operating Partnership. These individuals are officers of the Company and employees of the Operating Partnership. The individuals that comprise the Company's Board of Directors are also the same individuals that make up the Tanger GP Trust's Board of Trustees.

We believe combining the quarterly reports on Form 10-Q of the Company and the Operating Partnership into this single report results in the following benefits:

• enhancing investors' understanding of the Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;

• eliminating duplicative disclosure and providing a more streamlined and readable presentation because a substantial portion of the disclosure applies to both the Company and the Operating Partnership; and

• creating time and cost efficiencies through the preparation of one combined report instead of two separate reports.

There are few differences between the Company and the Operating Partnership, which are reflected in the disclosure in this report. We believe it is important to understand the differences between the Company and the Operating Partnership in the context of how the Company and the Operating Partnership operate as an interrelated consolidated company. As stated above, the Company is a REIT, whose only material asset is its ownership of partnership interests of the Operating Partnership through its wholly-owned subsidiaries, the Tanger GP Trust and Tanger LP Trust. As a result, the Company does not conduct business itself, other than issuing public equity from time to time and incurring expenses required to operate as a public company. However, all operating expenses incurred by the Company are reimbursed by the Operating Partnership, thus the only material item on the Company's income statement is its equity in the earnings of the Operating Partnership. Therefore, the assets and liabilities and the revenues and expenses of the Company and the Operating Partnership are the same on their respective financial statements, except for immaterial differences related to cash, other assets and accrued liabilities that arise from public company expenses paid by the REIT. The Company itself does not hold any indebtedness but does guarantee certain debt of the Operating Partnership, as disclosed in this report. The Operating Partnership holds substantially all the assets of the Company and holds the ownership interests in the Company's unconsolidated joint ventures. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity. Except for net proceeds from public equity issuances by the Company, which are contributed to the Operating Partnership in exchange for partnership units, the Operating

Partnership generates the capital required by the Company's business through the Operating Partnership's operations, by the Operating Partnership's incurrence of indebtedness or through the issuance of partnership units of the Operating Partnership or its subsidiaries.

Noncontrolling interests, shareholder's equity and partners' capital are the main areas of difference between the consolidated financial statements of the Company and those of the Operating Partnership. The limited partnership interests in the Operating Partnership held by the Tanger Family Limited Partnership are accounted for as partners' capital in the Operating Partnership's financial statements and as noncontrolling interests in the Company's financial statements.

To help investors understand the significant differences between the Company and the Operating Partnership, this report presents the following separate sections for each of the Company and the Operating Partnership:

	consolidated financial statements; the following notes to the consolidated financial statements:
				Debt; Shareholders' Equity of the Company and Partners' Equity of the Operating Partnership; Other Comprehensive Income of the Company and Other Comprehensive Income of the Operating Partnership; Earnings Per Share and Earnings Per Unit and
	Liquidity and Capital Resources in the Management's Discussion and Analysis of Financial condition and Results of Operations.

This report also includes separate Item 4. Controls and Procedures sections and separate Exhibit 31 and 32 certifications for each of the Company and the Operating Partnership in order to establish that the Chief Executive Officer and the Chief Financial Officer of each entity have made the requisite certifications and that the Company and Operating Partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934 and 18 U.S.C. §1350.

In order to highlight the differences between the Company and the Operating Partnership, the separate sections in this report for the Company and the Operating Partnership specifically refer to the Company, not including its consolidated subsidiaries, and the Operating Partnership. In the sections that combine disclosure of the Company and the Operating Partnership, this report refers to actions or holdings as being actions or holdings of the Company. Although the Operating Partnership is generally the entity that enters into contracts and joint ventures and holds assets and debt, reference to the Company is appropriate because the business is one enterprise and the Company operates the business through the Operating Partnership.

As the 100% owner of Tanger GP Trust, the general partner with control of the Operating Partnership, the Company consolidates the Operating Partnership for financial reporting purposes. The separate discussions of the Company and the Operating Partnership in this report should be read in conjunction with each other to understand the results of the Company on a consolidated basis and how management operates the Company.

TANGER FACTORY OUTLET CENTERS, INC. AND TANGER PROPERTIES LIMITED PARTNERSHIP

Index

							Page Number
				Part I. Financial Information
	Item 1.
				FINANCIAL STATEMENTS OF TANGER FACTORY OUTLET CENTERS, INC (Unaudited)
				Consolidated Balance Sheets - as of June 30, 2010 and December 31, 2009			6
				Consolidated Statements of Operations - for the three and six months ended June 30, 2010 and 2009			7
				Consolidated Statements of Cash Flows - for the six months ended June 30, 2010 and 2009			8
				FINANCIAL STATEMENTS OF TANGER PROPERTIES LIMITED PARTNERSHIP (Unaudited)
				Consolidated Balance Sheets - as of June 30, 2010 and December 31, 2009			9
				Consolidated Statements of Operations - for the three and six months ended June 30, 2010 and 2009			10
				Consolidated Statements of Cash Flows - for the six months ended June 30, 2010 and 2009			11
				Notes to Consolidated Financial Statements of Tanger Factory Outlet Centers, Inc and Tanger Properties Limited Partnership			12
	Item 2.			Management's Discussion and Analysis of Financial Condition and Results of Operations			26
	Item 3.			Quantitative and Qualitative Disclosures about Market Risk			40
	Item 4.			Controls and Procedures (Tanger Factory Outlet Centers, Inc. and Tanger Properties Limited Partnership)			41
				Part II. Other Information
	Item 1.			Legal Proceedings			41
	Item 1A.			Risk Factors			41
	Item 6.			Exhibits			41
	Signatures						42

PART I. - FINANCIAL INFORMATION
Item 1 - Financial Statements of Tanger Factory Outlet Centers, Inc.
TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(Unaudited)

				June 30,			December 31,
				2010			2009
	ASSETS:
	Rental property
	Land		$	141,575		$	143,933
	Buildings, improvements and fixtures			1,343,155			1,352,568
	Construction in progress			39,883			11,369
				1,524,613			1,507,870
	Accumulated depreciation			(425,168	)		(412,530	)
	Rental property, net			1,099,445			1,095,340
	Cash and cash equivalents			3,453			3,267
	Rental property held for sale			1,921			---
	Investments in unconsolidated joint ventures			7,570			9,054
	Deferred charges, net			35,124			38,867
	Other assets			31,627			32,333
	Total assets		$	1,179,140		$	1,178,861
	LIABILITIES AND EQUITY
	Liabilities
	Debt
	Senior, unsecured notes (net of discount of $2,795 and $858 respectively)		$	554,415		$	256,352
	Mortgage payable (including a debt discount of $0 and $241, respectively)			---			35,559
	Unsecured term loan			---			235,000
	Unsecured lines of credit			50,800			57,700
				605,215			584,611
	Construction trade payables			30,829			14,194
	Accounts payable and accrued expenses			22,747			31,916
	Other liabilities			17,286			27,077
	Total liabilities			676,077			657,798
	Commitments and contingencies
	Equity
	Tanger Factory Outlet Centers, Inc.
	Preferred shares, 7.5% Class C, liquidation preference $25 per share, 8,000,000 shares authorized, 3,000,000 shares issued and outstanding at June 30, 2010 and December 31, 2009			75,000			75,000
	Common shares, $.01 par value, 150,000,000 shares authorized, 40,470,862 and 40,277,124 shares issued and outstanding at June 30, 2010 and December 31, 2009, respectively			405			403
	Paid in capital			599,270			596,074
	Distributions in excess of net income			(229,298	)		(202,997	)
	Accumulated other comprehensive income (loss)			1,884			(5,809	)
	Equity attributable to Tanger Factory Outlet Centers, Inc.			447,261			462,671
	Equity attributable to noncontrolling interest in Operating Partnership			55,802			58,392
	Total equity			503,063			521,063
	Total liabilities and equity		$	1,179,140		$	1,178,861

The accompanying notes are an integral part of these consolidated financial statements.

TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)

				Three months ended June 30,						Six months ended June 30,
				2010			2009			2010			2009
	Revenues
	Base rentals		$	43,968		$	43,218		$	87,465		$	85,894
	Percentage rentals			1,048			940			2,353			2,248
	Expense reimbursements			18,429			18,321			37,948			37,491
	Other income			1,850			1,921			3,571			3,618
	Total revenues			65,295			64,400			131,337			129,251
	Expenses
	Property operating			22,123			20,660			44,472			42,270
	General and administrative			5,963			5,817			11,429			11,752
	Impairment charge			---			---			735			---
	Depreciation and amortization			17,109			19,422			43,583			39,588
	Total expenses			45,195			45,899			100,219			93,610
	Operating income			20,100			18,501			31,118			35,641
	Interest expense			(7,951	)		(9,564	)		(15,899	)		(20,774	)
	Gain (loss) on early extinguishment of debt			(563	)		10,467			(563	)		10,467
	Gain on fair value measurement of previously held interest in acquired joint venture			---			---			---			31,497
	Loss on termination of interest rate swaps			(6,142	)		---			(6,142	)		---
	Income before equity in losses of unconsolidated joint ventures and discontinued operations			5,444			19,404			8,514			56,831
	Equity in losses of unconsolidated joint ventures			(51	)		(517	)		(119	)		(1,414	)
	Income from continuing operations			5,393			18,887			8,395			55,417
	Discontinued operations			(1	)		(5,300	)		---			(5,362	)
	Net income			5,392			13,587			8,395			50,055
	Noncontrolling interest			(524	)		(1,833	)		(734	)		(7,531	)
	Net income attributable to Tanger Factory Outlet Centers, Inc.		$	4,868		$	11,754		$	7,661		$	42,524
	Basic earnings per common share:
	Income from continuing operations		$	.08		$	.43		$	.11		$	1.33
	Net income		$	.08		$	.30		$	.11		$	1.19
	Diluted earnings per common share:
	Income from continuing operations		$	.08		$	.43		$	.11		$	1.33
	Net income		$	.08		$	.30		$	.11		$	1.19
	Dividends paid per common share		$	.3875		$	.3825		$	.7700		$	.7625

The accompanying notes are an integral part of these consolidated financial statements.

TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

				Six Months Ended June 30,
				2010			2009
	OPERATING ACTIVITIES
	Net income		$	8,395		$	50,055
	Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation and amortization (including discontinued operations)			43,670			40,049
	Impairment charge			735			5,200
	Loss on termination of interest rate swap agreements			6,142			---
	Gain on sale of outparcels of land			(161	)		---
	Amortization of deferred financing costs			657			822
	(Gain) loss on early extinguishment of debt			563			(10,467	)
	Gain on fair value measurement of previous interest held in acquired joint venture			---			(31,497	)
	Equity in losses of unconsolidated joint ventures			119			1,414
	Compensation expense related share-based compensation			2,682			2,889
	Amortization of debt (premiums) and discount, net			(219	)		994
	Distributions of cumulative earnings from unconsolidated joint ventures			414			360
	Net accretion of market rent rate adjustment			(381	)		(43	)
	Straight-line base rent adjustment			(1,402	)		(1,534	)
	Increase (decrease) due to changes in:
	Other assets			2,250			1,348
	Accounts payable and accrued expenses			(9,423	)		(1,795	)
	Net cash provided by operating activities			54,041			57,795
	INVESTING ACTIVITIES
	Additions to rental property			(26,692	)		(20,962	)
	Acquisition of remaining interests in unconsolidated joint venture, net of cash acquired			---			(31,086	)
	Termination payments related to interest rate swap agreements			(6,142	)		---
	Distributions in excess of cumulative earnings from unconsolidated joint ventures			536			---
	Net proceeds from the sale of real estate			602			---
	Additions to deferred lease costs			(1,969	)		(2,369	)
	Net cash used in investing activities			(33,665	)		(54,417	)
	FINANCING ACTIVITIES
	Cash dividends paid			(33,962	)		(27,047	)
	Distributions to noncontrolling interest in Operating Partnership			(4,671	)		(4,623	)
	Proceeds from debt issuances			485,230			109,200
	Repayments of debt			(465,000	)		(82,450	)
	Proceeds from tax incremental financing			---			944
	Additions to deferred financing costs			(2,486	)		---
	Proceeds from exercise of options			699			771
	Net cash used in financing activities			(20,190	)		(3,205	)
	Net increase in cash and cash equivalents			186			173
	Cash and cash equivalents, beginning of period			3,267			4,977
	Cash and cash equivalents, end of period		$	3,453		$	5,150

The accompanying notes are an integral part of these consolidated financial statements.

Item 1 - Financial Statements of Tanger Properties Limited Partnership

TANGER PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)

							June 30, 2010						December 31, 2009
	ASSETS:
	Rental property
	Land					$	141,575					$	143,933
	Buildings, improvements and fixtures						1,343,155						1,352,568
	Construction in progress						39,883						11,369
							1,524,613						1,507,870
	Accumulated depreciation						(425,168	)					(412,530	)
	Rental property, net						1,099,445						1,095,340
	Cash and cash equivalents						3,447						3,214
	Rental property held for sale						1,921						---
	Investments in unconsolidated joint ventures						7,570						9,054
	Deferred charges, net						35,124						38,867
	Other assets						31,250						32,025
	Total assets					$	1,178,757					$	1,178,500
	LIABILITIES AND PARTNERS' EQUITY
	Liabilities
	Debt
	Senior, unsecured notes (net of discount of $2,795 and $858, respectively)					$	554,415					$	256,352
	Mortgage payable (including a debt discount of $0 and $241, respectively)						---						35,559
	Unsecured term loan						---						235,000
	Unsecured lines of credit						50,800						57,700
							605,215						584,611
	Construction trade payables						30,829						14,194
	Accounts payable and accrued expenses						22,364						31,555
	Other liabilities						17,286						27,077
	Total liabilities						675,694						657,437
	Commitments and contingencies
	Partners' Equity
	General partner						5,328						5,633
	Limited partners						495,873						522,425
	Accumulated other comprehensive income (loss)						1,862						(6,995	)
	Total partners' equity						503,063						521,063
	Total liabilities and partners' equity					$	1,178,757					$	1,178,500

The accompanying notes are an integral part of these consolidated financial statements.

TANGER PROPERITES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per unit data)
(Unaudited)

				Three months ended																		Six months ended
				June 30,																		June 30,
				2010								2009									2010												2009
	Revenues
	Base rentals		$	43,968											$	43,218								$	87,465											$	85,894
	Percentage rentals			1,048												940									2,353												2,248
	Expense reimbursements			18,429												18,321									37,948												37,491
	Other income			1,850												1,921									3,571												3,618
				65,295												64,400									131,337												129,251
	Expenses
	Property operating			22,123												20,660									44,472												42,270
	General and administrative			5,963												5,817									11,429												11,752
	Impairment charge			---												---									735												---
	Depreciation and amortization			17,109												19,422									43,583												39,588
	Total expenses			45,195												45,899									100,219												93,610
	Operating income			20,100												18,501									31,118												35,641
	Interest expense			(7,951	)											(9,564	)								(15,899	)											(20,774	)
	Gain (loss) on early extinguishment of debt			(563	)											10,467									(563	)											10,467
	Gain on fair value measurement of previously held interest in acquired joint venture
				---												---									---												31,497
	Loss on termination of interest rate swaps			(6,142	)											---									(6,142	)											---
	Income before equity in losses of unconsolidated joint ventures and discontinued operations
				5,444												19,404									8,514												56,831
	Equity in losses of unconsolidated joint ventures			(51	)											(517	)								(119	)											(1,414	)
	Income from continuing operations			5,393												18,887									8,395												55,417
	Discontinued operations			(1	)											(5,300	)								---												(5,362	)
	Net income			5,392												13,587									8,395												50,055
	Net income available to limited partners			5,351												13,496									8,338												49,682
	Net income available to general partner		$	41											$	91								$	57											$	373
	Basic earnings per common unit:
	Income from continuing operations		$	.17											$	.85								$	.23											$	2.67
	Net income		$	.17											$	.59								$	.23											$	2.40
	Diluted earnings per common unit:
	Income from continuing operations		$	.17											$	.85								$	.23											$	2.67
	Net income		$	.17											$	.59								$	.23											$	2.40
	Distribution paid per common unit		$	.775											$	.765								$	1.540											$	1.525

The accompanying notes are an integral part of these consolidated financial statements.

TANGER PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

				Six Months Ended June 30,
				2010						2009
	OPERATING ACTIVITIES
	Net income		$	8,395					$	50,055
	Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation and amortization (including discontinued operations)			43,670						40,049
	Impairment charge			735						5,200
	Loss on termination of interest rate swap agreements			6,142						---
	Gain on sale of outparcels of land			(161	)					---
	Amortization of deferred financing costs			657						822
	(Gain) loss on early extinguishment of debt			563						(10,467	)
	Gain on fair value measurement of previous interest held in acquired joint venture			---						(31,497	)
	Equity in losses of unconsolidated joint ventures			119						1,414
	Equity-based compensation expense			2,682						2,889
	Amortization of debt premiums and discount, net			(219	)					994
	Distributions of cumulative earnings from unconsolidated joint ventures			414						360
	Net accretion of market rent rate adjustment			(381	)					(43	)
	Straight-line base rent adjustment			(1,402	)					(1,534	)
	Increase (decrease) due to changes in:
	Other assets			2,319						1,913
	Accounts payable and accrued expenses			(9,445	)					(2,373	)
	Net cash provided by operating activities			54,088						57,782
	INVESTING ACTIVITIES
	Additions to rental property			(26,692	)					(20,962	)
	Acquisition of remaining interests in unconsolidated joint venture, net of cash acquired			---						(31,086	)
	Termination payments related to interest rate swap agreements			(6,142	)					---
	Distributions in excess of cumulative earnings from unconsolidated joint ventures			536						---
	Net proceeds from the sale of real estate			602						---
	Additions to deferred lease costs			(1,969	)					(2,369	)
	Net cash used in investing activities			(33,665	)					(54,417	)
	FINANCING ACTIVITIES
	Cash distributions paid			(38,633	)					(31,670	)
	Proceeds from debt issuances			485,230						109,200
	Repayments of debt			(465,000	)					(82,450	)
	Proceeds from tax incremental financing			---						944
	Additions to deferred financing costs			(2,486	)					---
	Proceeds from exercise of options			699						771
	Net cash used in financing activities			(20,190	)					(3,205	)
	Net increase in cash and cash equivalents			233						160
	Cash and cash equivalents, beginning of period			3,214						4,952
	Cash and cash equivalents, end of period		$	3,447					$	5,112

The accompanying notes are an integral part of these consolidated financial statements.

TANGER FACTORY OUTLET CENTERS INC. AND SUBSIDIARIES
TANGER PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIAIRES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Business

Tanger Factory Outlet Centers, Inc. and subsidiaries is one of the largest owners and operators of outlet centers in the United States. We are a fully-integrated, self-administered and self-managed real estate investment trust, or REIT, which, through our controlling interest in the Operating Partnership, focuses exclusively on developing, acquiring, owning, operating and managing outlet shopping centers. As of June 30, 2010, we owned and operated 31 outlet centers, with a total gross leasable area of approximately 9.1 million square feet. We also operated and had partial ownership interests in two outlet centers totaling approximately 948,000 square feet.

Our outlet centers and other assets are held by, and all of our operations are conducted by, Tanger Properties Limited Partnership and subsidiaries. Accordingly, the descriptions of our business, employees and properties are also descriptions of the business, employees and properties of the Operating Partnership. Unless the context indicates otherwise, the term, Company, refers to Tanger Factory Outlet Centers, Inc. and subsidiaries and the term, Operating Partnership, refers to Tanger Properties Limited Partnership and subsidiaries. The terms "we", "our" and "us" refer to the Company or the Company and the Operating Partnership together, as the text requires.

The Company owns the majority of the units of partnership interest issued by the Operating Partnership through its two wholly-owned subsidiaries, the Tanger GP Trust and the Tanger LP Trust. The Tanger GP Trust controls the Operating Partnership as its sole general partner. The Tanger LP Trust holds a limited partnership interest in the Operating Partnership. The Tanger family, through its ownership of the Tanger Family Limited Partnership holds the remaining units of partnership interest in the Operating Partnership as a limited partner. Stanley K. Tanger, a member of the Company's Board of Directors, is the sole general partner of the Tanger Family Limited Partnership.

2. Basis of Presentation

The unaudited consolidated financial statements included herein have been prepared pursuant to accounting principles generally accepted in the United States of America and should be read in conjunction with the consolidated financial statements and notes thereto of the Company's and the Operating Partnership's Annual Reports on Form 10-K for the year ended December 31, 2009. The December 31, 2009 balance sheet data in this Form 10-Q was derived from audited financial statements. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the Securities and Exchange Commission's, or the SEC, rules and regulations, although management believes that the disclosures are adequate to make the information presented not misleading.

Investments in real estate joint ventures that we do not control are accounted for using the equity method of accounting. These investments are recorded initially at cost and subsequently adjusted for our equity in the venture's net income (loss), cash contributions, distributions and other adjustments required under the equity method of accounting. These investments are evaluated for impairment when necessary.

Control is determined using an evaluation based on accounting standards related to the consolidation of joint ventures and variable interest entities. For joint ventures that are defined as variable interest entities, the primary beneficiary consolidates the entity.

3. Development of Rental Properties

New Development

During the second quarter of 2010, construction continued on our development site in Mebane, North Carolina. Currently, we have signed leases or leases out for signature for approximately 91% of the total square feet. We currently expect the center to open on November 5th, in time for the 2010 holiday season.

Redevelopment at Existing Outlet Centers

During the second quarter of 2010, we completed the demolition of our Hilton Head I center in Bluffton, South Carolina. The redevelopment of the outlet center is currently underway and we have leases signed or out for signature on 54% of the leasable square feet. When completed, the new 176,000 square foot center, with an additional four outparcel pads, will be the first LEED certified green shopping center in Beaufort County. Our $50.0 million redevelopment is projected to open during the second half of 2011. As a result of the demolition and redevelopment plan, a total of $9.2 million in depreciation and amortization was recognized in the first quarter of 2010 to completely depreciate the existing center. The demolition was completed during the second quarter of 2010, at which time the fully depreciated assets were written-off.

Commitments to complete construction of our new developments, redevelopments and other capital expenditure requirements amounted to approximately $30.0 million at June 30, 2010. Commitments for construction represent only those costs contractually required to be paid by us.

Interest costs capitalized during the three months ended June 30, 2010 and 2009 amounted to $313,000 and $48,000, respectively, and for the six months ended June 30, 2010 and 2009 amounted to $513,000 and $84,000, respectively.

Impairment Charges

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, recognize an impairment loss in an amount by which the carrying amount exceeds its fair value.

Seymour, Indiana 2010

In 2005 we sold our outlet center located in Seymour, Indiana, but retained various outparcels of land at the development site, some of which we sold in recent years. In February 2010, our Board of Directors approved the sale of the remaining parcels of land. As a result of this Board approval and an approved plan to actively market the land, we accounted for the land as "held for sale" and recorded a non-cash impairment charge of approximately $735,000 in our consolidated statement of operations which equaled the excess of the carrying amount of the land over its fair value. We determined the fair value using a market approach considering offers that we have obtained for all the various parcels less estimated closing costs. See Note 17, Fair Value Measurements, for further discussion.

Commerce I, Georgia 2009

During the second quarter 2009, we determined for our Commerce I, Georgia outlet center that the estimated future undiscounted cash flows of that property did not exceed the property's carrying value based on deteriorating amounts of net operating income and the expectation that the occupancy rate of the property would significantly decrease in future periods. Therefore, we recorded a $5.2 million non-cash impairment charge in our consolidated statement of operations within discontinued operations (Note 5) which equaled the excess of the property's carrying value over its fair value. We determined the fair value using a market approach whereby we considered the prevailing market income capitalization rates and sales data for transactions involving similar assets.

Land Outparcel Sales

Gains on sale of outparcels are included in other income in the consolidated statements of operations. Cost is allocated to the outparcels based on the relative market value method.

In March 2010, we closed on the sale of an outparcel of land at our property in Lincoln City, Oregon. The net proceeds from the sale were approximately $403,000 and a gain on sale of outparcel of approximately $161,000 was recognized. We also sold two of the remaining outparcels in Seymour Indiana for net proceeds of approximately $199,000. As these parcels were recorded at their fair value earlier in the quarter, no gain or loss on sale was recorded. The only remaining land as of June 30, 2010 is currently recorded at its estimated fair value which is approximately $200,000.

4. Investments in Unconsolidated Real Estate Joint Ventures

Our investments in unconsolidated joint ventures as of June 30, 2010 and December 31, 2009 aggregated $7.6 million and $9.1 million, respectively. We have evaluated the accounting treatment for each of the joint ventures and have concluded based on the current facts and circumstances that the equity method of accounting should be used to account for the individual joint ventures. At June 30, 2010, we were members of the following unconsolidated real estate joint ventures:

	Joint Venture			Center Location			Opening Date			Ownership %			Square Feet			Carrying Value of Investment (in millions)			Total Joint Venture Debt (in millions)
	Deer Park			Deer Park, Long Island, New York			2008			33.3%			683,033			$2.5			$269.3
	Wisconsin Dells			Wisconsin Dells, Wisconsin			2006			50%			265,061			$5.1			$24.8

These investments are recorded initially at cost and subsequently adjusted for our equity in the venture's net income (loss), cash contributions, distributions and other adjustments required by the equity method of accounting as discussed below.

The following management, leasing and marketing fees were recognized from services provided to Wisconsin Dells and Deer Park (in thousands):

							Three Months Ended June 30,						Six Months Ended June 30,
							2010			2009			2010			2009
	Fee:
	Management and leasing					$	471		$	494		$	935		$	965
	Marketing						39			40			80			79
	Total Fees					$	510		$	534		$	1,015		$	1,044

Our investments in real estate joint ventures are reduced by 50% of the profits earned for leasing services provided to Wisconsin Dells and by 33.3% of the profits earned for leasing services provided to Deer Park. Our carrying value of investments in unconsolidated joint ventures differs from our share of the assets reported in the "Summary 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 are amortized over the various useful lives of the related assets.

On a periodic basis, we assess whether there are any indicators that the value of our investments in unconsolidated joint ventures may be impaired. An investment is impaired only if management's estimate of the value of the investment is less than the carrying value of the investments, and such decline in value is deemed to be other than temporary. To the extent impairment has occurred, the loss shall be measured as the excess of the carrying amount of the investment over the fair value of the investment. Our estimates of fair value for each joint venture investment are based on a number of assumptions that are subject to economic and market uncertainties including, among others, demand for space, competition for tenants, changes in market rental rates and operating costs of the property. As these factors are difficult to predict and are subject to future events that may alter our assumptions, the values estimated by us in our impairment analysis may not be realized. As of June 30, 2010, we do not believe that any of our equity investments were impaired.

In accordance with amended guidance related to the consolidation of variable interest entities which became effective January 1, 2010, we performed an analysis of all of our real estate joint ventures to determine whether they would qualify as variable interest entities, or VIE, and whether the joint venture should be consolidated or accounted for as an equity method investment in an unconsolidated joint venture. As a result of our qualitative assessment, we concluded that Deer Park is a VIE and Wisconsin Dells is not a VIE. Deer Park is considered a VIE because it does not meet the criteria of the members having a sufficient equity investment at risk.

After making the determination that Deer Park was a VIE, we performed an assessment to determine if we would be considered the primary beneficiary and thus be required to consolidate Deer Park's balance sheets and results of operations. This assessment was based upon whether we had the following:

a. The power to direct the activities of the variable interest entity that most significantly impact the entity's economic performance

b. The obligation to absorb losses of the entity that could potentially be significant to the variable interest entity or the right to receive benefits from the entity that could potentially be significant to the variable interest entity

Based on the provisions of the operating and management agreements of Deer Park, we determined that no one member alone has the power to direct the significant activities that affect the economic performance of Deer Park. While we are the Deer Park property manager, we must operate the property within the approved budget or risk being removed by the other two members as the property manager.

We have determined that all three partners share power in the decisions that most significantly impact Deer Park, as well as the financial rights and obligations, and therefore we are not required to consolidate Deer Park. Our equity method investment in Deer Park as of June 30, 2010 was approximately $2.5 million. We are unable to estimate our maximum exposure to loss at this time. Upon completion of the final phase of the project, the debt is expected to be approximately $284.0 million, of which our proportionate share would be approximately $94.7 million. A calculation of the maximum loss would involve variables such as the loan balance amount and any proceeds from the sale of the property.

Condensed combined summary financial information of joint ventures accounted for using the equity method is as follows (in thousands):

	Summary Balance Sheets - Unconsolidated Joint Ventures			As of June 30, 2010			As of December 31, 2009
	Assets
	Investment properties at cost, net		$	289,587		$	294,857
	Cash and cash equivalents			9,020			8,070
	Deferred charges, net			4,799			5,450
	Other assets			6,697			5,610
	Total assets		$	310,103		$	313,987
	Liabilities and Owners' Equity
	Mortgages payable		$	294,034		$	292,468
	Construction trade payables			878			3,647
	Accounts payable and other liabilities			3,991			3,826
	Total liabilities			298,903			299,941
	Owners' equity			11,200			14,046
	Total liabilities and owners' equity		$	310,103		$	313,987

	Summary Statements of Operations—			Three Months Ended June 30,						Six Months Ended June 30,
	Unconsolidated Joint Ventures			2010			2009			2010			2009
	Revenues		$	9,261		$	8,431		$	18,535		$	16,955
	Expenses
	Property operating			4,200			3,611			8,410			7,858
	General and administrative			72			117			359			306
	Depreciation and amortization			3,546			3,358			7,043			6,532
	Total expenses			7,818			7,086			15,812			14,696
	Operating income			1,443			1,345			2,723			2,259
	Interest expense			1,717			3,079			3,391			6,810
	Net loss		$	(274	)	$	(1,734	)	$	(668	)	$	(4,551	)
	Tanger's share of:
	Net loss		$	(51	)	$	(517	)	$	(119	)	$	(1,414	)
	Depreciation (real estate related)			1,280			1,223			2,545			2,389

5. Rental Property Held for Sale

In May 2010, our Board of Directors approved the sale of our Commerce I, Georgia center. As of June 30, 2010, this property qualified as a rental property held for sale under applicable accounting guidance. In June 2009, we recorded an impairment charge for this property of $5.2 million which equaled the excess of the property's carrying value over its estimated fair value at that time.

Summary of results of operations for the property whose results of operations are considered discontinued operations for the three and six months ended June 30, 2010 and 2009, respectively (in thousands):

				Three Months Ended June 30,						Six Months Ended June 30,
				2010			2009			2010			2009
	Revenues:
	Base rentals		$	138		$	206		$	289		$	458
	Expense reimbursements			27			53			45			102
	Other income			10			7			18			14
	Total revenues			175			266			352			574
	Expenses:
	Property operating			138			133			261			272
	General and administrative			4			3			4			3
	Depreciation and amortization			34			230			87			461
	Impairment charge			---			5,200			---			5,200
	Total expenses			176			5,566			352			5,936
	Discontinued operations		$	(1	)	$	(5,300	)	$	---		$	(5,362	)

6. Debt of the Company

In this Note 6, the “Company” refers only to Tanger Factory Outlet Centers, Inc. and not to any of its subsidiaries.

The Company itself does not hold any indebtedness. All debt is held directly by the Operating Partnership.

The Company guarantees the Operating Partnership's obligations with respect to its five unsecured lines of credit which have a total borrowing capacity of $325.0 million. As of June 30, 2010, the Operating Partnership had approximately $50.8 million outstanding in total on these lines. The Company also guarantees the Operating Partnership's obligations with respect to its $7.2 million of outstanding senior exchangeable notes due in 2026. However, August 18, 2011 is the first date that the noteholders can require us to repurchase the notes without the occurrence of specified events.

7. Debt of the Operating Partnership

As of June 30, 2010 and December 31, 2009, the debt of the Operating Partnership consisted of the following (in thousands):

				June 30, 2010			December 31, 2009
	Senior, unsecured notes:
	6.15% Senior notes, maturing November 2015, net of discount of $555 and $598, respectively		$	249,445		$	249,402
	3.75% Senior exchangeable notes, maturing August 2026, net of discount of $183 and $260, respectively			7,027			6,950
	6.125% Senior notes, maturing in May 2020, net of discount of $2,057 and $0, respectively			297,943			---
	Unsecured term loan facility:
	LIBOR + 1.60% unsecured term loan facility (1)			---			235,000
	Unsecured lines of credit with a weighted average interest rates of 1.01% and 0.98%, respectively (2)			50,800			57,700
	Mortgage note:
	LIBOR + 1.40 maturing April 2010, including net premium of $0 and $241, respectively (3)			---			35,559
			$	605,215		$	584,611

(1) The effective rate on this facility due to interest rate swap agreements was 5.25%.

(2) For our lines of credit being utilized at June 30, 2010 and depending on our investment grade rating, the interest rates can vary from either prime or from LIBOR +.45% to LIBOR + 1.55% and expire in June 2011 or later. At June 30, 2010, our interest rates on outstanding balances were LIBOR + .60%.

(3) Because this mortgage debt was assumed as part of an acquisition, the debt was recorded at its fair value and carried an effective interest rate of 5.34%.

Transactions in 2010

In June 2010, we closed on $300.0 million of senior unsecured notes. The ten year notes were issued by the Operating Partnership and were priced at 99.31% of par value to yield 6.219% to maturity. The notes will pay interest semi-annually at a rate of 6.125% per annum and mature on June 1, 2020.

The net proceeds from the offering, after deducting the underwriting discount and offering expenses, were approximately $295.5 million. We used the net proceeds from the sale of the notes to (i) repay our $235.0 million unsecured term loan due in June 2011, (ii) pay approximately $6.1 million to terminate two interest rate swap agreements associated with the term loan and (iii) repay borrowings under our unsecured lines of credit and for general working capital purposes.

No prepayment or early termination penalty was paid as a result of the repayment of the term loan; however, unamortized loan origination costs of approximately $563,000 were written-off during the second quarter of 2010.

Debt Maturities

Maturities of the existing long-term debt as of June 30, 2010 are as follows (in thousands):

	Year			Amount
	2010		$	---
	2011 (1)			58,010
	2012			---
	2013			---
	2014			---
	Thereafter			550,000
	Subtotal			608,010
	Discount			(2,795	)
	Total		$	605,215

(1) Includes expiration of $7.2 million of senior exchangeable notes shown in 2011 because that is the first date that the noteholders can require us to repurchase the notes without the occurrence of specified events.

8. Shareholders' Equity of the Company

In May 2009, the senior exchangeable notes of the Operating Partnership in the principal amount of $142.3 million were exchanged for Company common shares, representing approximately 95.2% of the total senior exchangeable notes outstanding prior to the exchange offer.  In the aggregate, the exchange offer resulted in the issuance of approximately 4.9 million Company common shares and the payment of approximately $1.2 million in cash for accrued and unpaid interest and in lieu of fractional shares.  Following settlement of the exchange offer, senior exchangeable notes in the principal amount of approximately $7.2 million remained outstanding.  In connection with the exchange offering, we recognized in income from continuing operations and net income a gain on early extinguishment of debt in the amount of $10.5 million.  A portion of the debt discount recorded upon adoption of new accounting guidance for convertible debt amounting to approximately $7.0 million was written-off as part of the transaction.

9. Partners' Equity of the Operating Partnership

When the Company issues common shares pursuant to a public offering or upon exercise of options or issuance of restricted share awards, the Operating Partnership issues a corresponding unit to the Company on a two shares for one unit basis. At June 30, 2010 and December 31, 2009, the ownership interests of the Operating Partnership consisted of the following:

				June 30, 2010			December 31, 2009
	Preferred units:
	Limited partner			3,000,000			3,000,000
	Common units:
	General partner			237,000			237,000
	Limited partners			23,031,736			22,934,867
	Total common units			23,268,736			23,171,867

10. Other Comprehensive Income of the Company

Total comprehensive income for the three and six months ended June 30, 2010 and 2009 is as follows (in thousands):

				Three Months Ended June 30,						Six Months Ended June 30,
				2010			2009			2010			2009
	Net income		$	5,392		$	13,587		$	8,395		$	50,055
	Other comprehensive income:
	Reclassification adjustment for amortization of gain on 2005 settlement of US treasury rate lock included in net income			(78	)		(73	)		(154	)		(145	)
	Reclassification adjustment for settlement of interest rate swap agreements			6,142			---			6,142			---
	Change in fair value of cash flow hedges			2,053			1,331			2,905			1,261
	Change in fair value of our portion of our unconsolidated joint ventures' cash flow hedges			3			696			(36	)		2,136
	Other comprehensive income			8,120			1,954			8,857			3,252
	Total comprehensive income			13,512			15,541			17,252			53,307
	Comprehensive income attributable to the noncontrolling interest			(1,591	)		(2,136	)		(1,898	)		(8,045	)
	Total comprehensive income attributable to the Company		$	11,921		$	13,405		$	15,354		$	45,262

11. Other Comprehensive Income of the Operating Partnership

Total comprehensive income for the three and six months ended June 30, 2010 and 2009 is as follows (in thousands):

				Three Months Ended June 30,						Six Months Ended June 30,
				2010			2009			2010			2009
	Net income		$	5,392		$	13,587		$	8,395		$	50,055
	Other comprehensive income:
	Reclassification adjustment for amortization of gain on 2005 settlement of US treasury rate lock included in net income			(78	)		(73	)		(154	)		(145	)
	Reclassification adjustment for settlement of interest rate swap agreements			6,142			---			6,142			---
	Change in fair value of cash flow hedges			2,053			1,331			2,905			1,261
	Change in fair value of our portion of our unconsolidated joint ventures' cash flow hedges			3			696			(36	)		2,136
	Other comprehensive income			8,120			1,954			8,857			3,252
	Total comprehensive income		$	13,512		$	15,541		$	17,252		$	53,307

12. Noncontrolling Interest in the Operating Partnership

Noncontrolling interest in the Operating Partnership in the consolidated financial statements relates to the ownership of units by the Tanger Family Limited Partnership. Net income attributable to noncontrolling interests in the Operating Partnership is computed by applying the weighted average percentage of units owned by the Tanger Family Limited Partnership during the period, as a percentage of the total number of outstanding units, to the Operating Partnership's net income for the period after deducting distributions for preferred units.

The following table sets forth noncontrolling interests in the Operating Partnership (in thousands):

				Six months ended June 30,
				2010			2009
	Beginning noncontrolling interest in the Operating Partnership		$	58,392		$	30,692
	Net income attributable to noncontrolling interest in the Operating Partnership			734			7,531
	Distributions to noncontrolling interest in the Operating Partnership			(4,671	)		(4,623	)
	Other comprehensive income attributable to noncontrolling interest in the Operating Partnership			1,164			514
	Reallocation of noncontrolling interest in the Operating Partnership due to changes in ownership			183			13,687
	Total noncontrolling interest in the Operating Partnership		$	55,802		$	47,801

13. Equity-Based Compensation

During the first quarter of 2010, the Company's Board of Directors approved the grant of 150,288 restricted common shares to the Company's independent directors and the Company's senior executive officers. The Company receives one common unit from the Operating Partnership for every two restricted shares issued by the Company. The independent directors' restricted common shares vest ratably over a three year period and the senior executive officers' restricted shares vest ratably over a five year period. The grant date fair value of the awards was $39.24 per share, which was determined based upon the closing market price of our common shares on the day prior to the grant date in accordance with the terms of the Company's Incentive Award Plan, or Plan. Compensation expense related to the amortization of the deferred compensation amount is being recognized in accordance with the vesting schedule of the restricted shares.

Also during the first quarter of 2010, the Company's Compensation Committee approved the general terms of the Tanger Factory Outlet Centers, Inc. 2010 Multi-Year Performance Plan, or the 2010 Multi-Year Performance Plan. The 2010 Multi-Year Performance Plan is a long-term incentive compensation plan pursuant to which award recipients, as a group, may earn up to approximately 615,000 restricted common shares of the Company based on our share price appreciation over four years beginning on January 1, 2010. The maximum number of shares will be earned under this plan if we achieve 60% or higher share price appreciation over the four-year performance period. We expect that the value of the awards, if we achieve 60% share price appreciation, will equal between approximately $35 million and $39 million. After the awards are earned, they will remain subject to a one-year vesting period. For notional amounts granted in 2010, any shares earned on December 31, 2013 will vest on December 31, 2014 contingent on continued employment through the vesting date.

Under the 2010 Multi-Year Performance Plan, we will grant 205,000 notional units to award recipients as a group. If our aggregate share price appreciation during this period equals or exceeds the minimum threshold of 40%, then the notional units will convert into the Company's common shares on a one-for-one basis. The notional units will convert into common shares on a one-for-two basis if the share price appreciation exceeds the target threshold of 50% and on a one-for-three basis if the share price appreciation exceeds the maximum threshold of 60%. The notional amounts will convert on a pro rata basis between share price appreciation thresholds. The share price targets will be reduced on a dollar-for-dollar basis with respect to any dividend payments made during the measurement period, subject to a minimum level price target.

The notional units, prior to the date they are converted into restricted common shares, will not entitle award recipients to receive any dividends or other distributions. If the notional units are earned, and thereby converted into restricted common shares, then award recipients will be entitled to receive a payment of all dividends and other distributions that would have been paid had the number of earned common shares been issued at the beginning of the performance period. Thereafter, dividends and other distributions will be paid currently with respect to all restricted common shares that were earned.

At the end of the four-year performance period, if the minimum share price threshold is not achieved but the Company's share performance exceeds the 50th percentile of the share performance of its peer group, the notional units will convert into restricted common shares on a one-for-one basis. All determinations, interpretations and assumptions relating to the vesting and calculation of the performance awards will be made by our Compensation Committee.

We recorded equity-based compensation expense in our statements of operations as follows (in thousands):

				Three Months Ended June 30,						Six Months Ended June 30,
				2010			2009			2010			2009
	Restricted shares		$	1,006		$	1,567		$	1,965		$	2,811
	Notional unit performance awards			450			---			717			---
	Options			---			25			---			78
	Total equity-based compensation		$	1,456		$	1,592		$	2,682		$	2,889

As of June 30, 2010, there was $20.9 million of total unrecognized compensation cost related to unvested equity-based compensation arrangements granted under the Plan.

14. Earnings Per Share of the Company

The following table sets forth a reconciliation of the numerators and denominators in computing the Company's earnings per share (in thousands, except per share amounts):

				Three Months Ended June 30,						Six Months Ended June 30,
				2010			2009			2010			2009
	Numerator
	Income from continuing operations attributable to the Company		$	4,869		$	16,256		$	7,661		$	47,078
	Less applicable preferred share dividends			(1,407	)		(1,407	)		(2,813	)		(2,813	)
	Less allocation of earnings to participating securities			(143	)		(250	)		(312	)		(687	)
	Income from continuing operations available to common shareholders of the Company			3,319			14,599			4,536			43,578
	Discontinued operations attributable to participating securities			---			71			---			71
	Discontinued operations attributable to the Company			(1	)		(4,502	)		---			(4,554	)
	Net income available to common shareholders of the Company		$	3,318		$	10,168		$	4,536		$	39,095
	Denominator
	Basic weighted average common shares			40,103			34,249			40,067			32,767
	Effect of senior exchangeable notes			25			---			25			---
	Effect of outstanding options			43			78			49			80
	Diluted weighted average common shares			40,171			34,327			40,141			32,847
	Basic earnings per common share:
	Income from continuing operations		$	.08		$	.43		$	.11		$	1.33
	Discontinued operations			---			(.13	)		---			(.14	)
	Net income		$	.08		$	.30		$	.11		$	1.19
	Diluted earnings per common share:
	Income from continuing operations		$	.08		$	.43		$	.11		$	1.33
	Discontinued operations			---			(.13	)		---			(.14	)
	Net income		$	.08		$	.30		$	.11		$	1.19

The senior exchangeable notes are included in the diluted earnings per share computation, if the effect is dilutive, using the treasury stock method.  In applying the treasury stock method, the effect will be dilutive if the average market price of our common shares for at least 20 trading days in the 30 consecutive trading days at the end of each quarter is higher than the exchange rate of $35.83 per share.

The computation of diluted earnings per share excludes options to purchase common shares when the exercise price is greater than the average market price of the common shares for the period.  No options were excluded from the computations for the three months ended June 30, 2010 and 2009, respectively.  The assumed conversion of the partnership units held by the noncontrolling interest limited partner as of the beginning of the year, which would result in the elimination of earnings allocated to the noncontrolling interest in the Operating Partnership, would have no impact on earnings per share since the allocation of earnings to a partnership unit, as if converted, is equivalent to earnings allocated to a common share.

The Company's unvested restricted share awards contain non-forfeitable rights to dividends or dividend equivalents. The impact of the unvested restricted share awards on earnings per share has been calculated using the two-class method whereby earnings are allocated to the unvested restricted share awards based on dividends declared and the unvested restricted shares' participation rights in undistributed earnings.

The notional units are considered contingently issuable common shares and are included in earnings per share if the effect is dilutive using the treasury stock method. The notional units were issued in January 2010 and all have been excluded from the computation of diluted earnings per share for the three and six months ended June 30, 2010 as none of the contingent conditions were satisfied as of the end of the reporting period.

15. Earnings Per Unit of the Operating Partnership

The following table sets forth a reconciliation of the numerators and denominators in computing the Operating Partnership's earnings per unit (in thousands, except per unit amounts):

				Three Months Ended June 30,						Six Months Ended June 30,
				2010			2009			2010			2009
	Numerator
	Income from continuing operations		$	5,393		$	18,887		$	8,395		$	55,417
	Less applicable preferred unit distributions			(1,407	)		(1,407	)		(2,813	)		(2,813	)
	Less allocation of earnings to participating securities			(143	)		(247	)		(312	)		(689	)
	Income from continuing operations available to common unitholders of the Operating Partnership			3,843			17,233			5,270			51,915
	Discontinued operations			(1	)		(5,300	)		---			(5,362	)
	Net income available to common unitholders of the Operating Partnership		$	3,842		$	11,933		$	5,270		$	46,553
	Denominator
	Basic weighted average common units			23,085			20,158			23,067			19,417
	Effect of senior exchangeable notes			13			---			13			---
	Effect of outstanding options			21			39			24			40
	Diluted weighted average common units			23,119			20,197			23,104			19,457
	Basic earnings per common unit:
	Income from continuing operations		$	.17		$	.85		$	.23		$	2.67
	Discontinued operations			---			(.26	)		---			(.27	)
	Net income		$	.17		$	.59		$	.23		$	2.40
	Diluted earnings per common unit:
	Income from continuing operations		$	.17		$	.85		$	.23		$	2.67
	Discontinued operations			---			(.26	)		---			(.27	)
	Net income		$	.17		$	.59		$	.23		$	2.40

When the Company issues common shares pursuant to a public offering or upon exercise of options or issuance of restricted share awards, the Operating Partnership issues a corresponding unit to the Company on a two shares for one unit basis. The senior exchangeable notes are included in the diluted earnings per unit computation, if the effect is dilutive, using the treasury stock method.  In applying the treasury stock method, the effect will be dilutive if the average market price of the Company's common shares for at least 20 trading days in the 30 consecutive trading days at the end of each quarter is higher than the exchange rate of $35.83 per Company common share.