**United
                States****SECURITIES
                AND EXCHANGE COMMISSION**Washington,
                D.C. 20549**FORM
                10-K**





[X]ANNUAL
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES
                EXCHANGE ACT OF 1934**For
                the fiscal year ended December 31, 2006**OR[
                ]TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES
                EXCHANGE ACT OF 1934For
                the transition period from _________ to _________Commission
                file numbers:33-99736-01333-3525-01333-39365-01333-61394-01333-128160**TANGER
                PROPERTIES LIMITED PARTNERSHIP**(Exact
                name of Registrant as specified in its charter)**North
                Carolina**
            **56-1822494**(State
                or other jurisdiction of incorporation or organization)
            (I.R.S.
                Employer Identification No.)**3200
                Northline Avenue, Suite 360**
            **(336)
                292-3010****Greensboro,
                NC 27408**
            (Registrant’s
                telephone number)(Address
                of principal executive offices)Securities
                registered pursuant to Section 12(b) of the Act: None


Securities
      registered pursuant to Section 12(g) of the Act: None





Indicate
      by check mark if the registrant is well-known seasoned issuer, as defined in
      Rule 405 of the Securities Act.


Yes o No ý





Indicate
      by check mark if the registrant is not required to file reports pursuant to
      Section 13 or Section 15(d) of the Act.


Yes o No ý





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. Yes ý No o





Indicate
      by check mark if disclosure of delinquent filers pursuant to Item 405 of
      Regulation S-K is not contained herein, and will not be contained, to the best
      of Registrant’s knowledge, in definitive proxy or information statements
      incorporated by reference in Part III of this Form 10-K or any amendment to
      this
      Form 10-K. o





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer or a non-accelerated filer (as defined in Rule 12b-2 of the
      Securities and Exchange Act of 1934). o Large
      accelerated filer o Accelerated filer ý Non-accelerated filer





Indicate
      by check mark whether the registrant is a shell company (as defined by Rule
      12b-2 of the Act). Yes o No ý





**Documents
      Incorporated By Reference**


Part
      III
      incorporates certain information by reference from the definitive proxy
      statement of Tanger Factory Outlet Centers, Inc. to be filed with respect to
      the
      Annual Meeting of Shareholders to be held May 18, 2007.








**PART
      I**





**Item
      1. Business**





***The
      Operating Partnership***





Tanger
      Properties Limited Partnership and subsidiaries, a North Carolina limited
      partnership, focuses exclusively on developing, acquiring, owning, operating
      and
      managing factory outlet shopping centers. We are one of the largest owners
      and
      operators of factory outlet centers in the United States. As of December 31,
      2006, we owned 30 outlet centers, with a total gross leasable area, or GLA,
      of
      approximately 8.4 million square feet. These factory outlet centers were 98%
      occupied and contained over 1,800 stores, representing approximately 380 store
      brands. Also, we owned a 50% interest in two outlet centers with a GLA of
      approximately 667,000 square feet and managed for a fee three outlet centers
      with a GLA of approximately 293,000 square feet.





We
      are
      controlled by Tanger Factory Outlet Centers, Inc. and subsidiaries, a
      fully-integrated, self-administered and self-managed real estate investment
      trust, or REIT. The Company owns the majority of the units of partnership
      interest issued by the Operating Partnership, which we refer to as units,
      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.
      The
      remaining units are held by the Tanger family through its ownership of the
      Tanger Family Limited Partnership, or TFLP. Stanley K. Tanger, the Company’s
      Chairman of the Board and Chief Executive Officer, is the sole general partner
      of TFLP. Unless the context indicates otherwise, the term “Operating
      Partnership” refers to Tanger Properties Limited Partnership and subsidiaries
      and the term “Company” refers to Tanger Factory Outlet Centers, Inc. and
      subsidiaries. The terms “we”, “our” and “us” refer to the Operating Partnership
      or the Operating Partnership and the Company together, as the text
      requires.





As
      of
      December 31, 2006, Tanger GP Trust owned 150,000 common units, Tanger LP Trust
      owned 15,370,668 common units and TFLP owned the remaining 3,033,305 common
      units. Each of TFLP’s common units is exchangeable for two of the Company’s
      common shares, subject to certain limitations to preserve the Company’s status
      as a REIT. In addition, Tanger LP Trust owned 3,000,000 preferred units which
      were issued by the Operating Partnership in exchange for the proceeds from
      the
      Company’s issuance of 3.0 million 7.5% Class C Cumulative Preferred Shares, or
      Class C Preferred Shares. If the Company redeems any Preferred Shares, the
      Operating Partnership will redeem an equivalent number of preferred units for
      the liquidation preference value of the Company’s Class C Preferred
      Shares.





As
      of
      February 1, 2007, the Company’s management beneficially owned approximately 19%
      of all outstanding Company common shares (assuming TFLP’s common units are
      exchanged for Company common shares but without giving effect to the exercise
      of
      any outstanding share and partnership unit options or the conversion of the
      exchangeable notes. See “Recent Developments” for discussion on exchangeable
      notes).





Ownership
      of the Company’s common shares is restricted to preserve the Company’s status as
      a REIT for federal income tax purposes. Subject to certain exceptions, a person
      may not actually or constructively own more than 4% of the Company’s common
      shares or 9.8% of the Company’s Class C Preferred Shares. The Company also
      operates in a manner intended to enable it to preserve its status as a REIT,
      including, among other things, making distributions with respect to its
      outstanding common shares equal to at least 90% of its taxable income each
      year.





We
      are a
      North Carolina limited partnership that was formed in May 1993. Our executive
      offices are currently located at 3200 Northline Avenue, Suite 360, Greensboro,
      North Carolina, 27408 and our telephone number is (336) 292-3010. Our website
      can be accessed at www.tangeroutlet.com .
      A copy
      of our 10-K’s, 10-Q’s, and 8-K’s can be obtained, free of charge, on our
      website.








***Recent
      Developments***





*800,000
      Class C Preferred Share Offering*





In
      February 2006, the Company completed the issuance of an additional 800,000
      Class
      C Preferred Shares, receiving net proceeds of approximately $19.4 million.
      The
      proceeds, which were contributed to us in exchange for preferred units, were
      used to pay down amounts outstanding on our unsecured lines of credit. The
      Company pays annual dividends equal to $1.875 per share with distributions
      from
      us. After the offering the total amount of Company Class C Preferred Shares
      (and
      Operating Partnership preferred units) outstanding was 3,000,000. All proceeds
      from common and preferred share issuances by the Company are contributed to
      the
      Operating Partnership in exchange for common and preferred units.





*$149.5
      million 3.75% Exchangeable Senior Unsecured Note Offering*





In
      August
      2006, the Operating Partnership issued $149.5 million of exchangeable senior
      unsecured notes that mature on August 15, 2026. The notes bear interest at
      a
      fixed coupon rate of 3.75%. The notes are exchangeable into the Company’s common
      shares, at the option of the holder, at an initial exchange ratio, subject
      to
      adjustment, of 27.6856 shares per $1,000 principal amount of notes (or an
      initial exchange price of $36.1198 per common share). The notes are senior
      unsecured obligations of the Operating Partnership and are guaranteed by the
      Company on a senior unsecured basis. On and after August 18, 2011, holders
      may
      exchange their notes for cash in an amount equal to the lesser of the exchange
      value and the aggregate principal amount of the notes to be exchanged, and,
      at
      our option, Company common shares, cash or a combination thereof for any excess.
      Note holders may exchange their notes prior to August 18, 2011 only upon the
      occurrence of specified events. In addition, on August 18, 2011, August 15,
      2016
      or August 15, 2021, note holders may require us to repurchase the notes for
      an
      amount equal to the principal amount of the notes plus any accrued and unpaid
      interest up to, but excluding, the repurchase date. In no event will the total
      number of common shares issuable upon exchange exceed 4.9 million, subject
      to
      adjustments for dividend rate changes. Accordingly, the Company has reserved
      those shares.





We
      used
      the net proceeds from the issuance to repay in full our mortgage debt
      outstanding with Woodman of the World Life Insurance Society totaling
      approximately $15.3 million, with an interest rate of 8.86% and an original
      maturity of September 2010. We also repaid all amounts outstanding under our
      unsecured lines of credit and a $53.5 million variable rate unsecured term
      loan
      with Wells Fargo with a weighted average interest rate of approximately 6.3%.
      As
      a result of the early repayment, we recognized a charge for the early
      extinguishment of the mortgages and term loan of approximately $917,000. The
      charge, which is included in interest expense, consisted of a prepayment premium
      of approximately $609,000 and the write-off of deferred loan fees totaling
      approximately $308,000.





*Grand
      Opening of Development Projects: Charleston, South Carolina and Wisconsin Dells,
      Wisconsin*





During
      the third quarter of 2006, we opened two new centers located in Wisconsin Dells,
      Wisconsin and Charleston, South Carolina. The 264,900 square foot center in
      Wisconsin Dells, Wisconsin is owned through a joint venture, Tanger Wisconsin
      Dells, LLC, or Tanger Wisconsin Dells, of which we own a 50% interest. We
      provide development, leasing and management services to the center for a fee.
      Tenants in the center include Polo Ralph Lauren, Abercrombie & Fitch,
      Hollister, Gap, Banana Republic, Old Navy, Liz Claiborne, Nike, Adidas, Tommy
      Hilfiger and many others.





Our
      352,300 square foot center in Charleston, South Carolina is wholly owned by
      us.
      Tenants in the center include Gap, Banana Republic, Liz Claiborne, Nike, Adidas,
      Tommy Hilfiger, Guess, Reebok and many others.








*On
      Going Development Projects: Pittsburgh, Pennsylvania and Deer Park (Long
      Island), New York*





We
      continue the pre-development and leasing of two previously announced sites
      located near Pittsburgh, Pennsylvania and in Deer Park (Long Island), New York.
      During the fourth quarter of 2006, we closed on the acquisition of the
      Pittsburgh land for $4.8 million and have completed the relocation of the power
      lines located on our property. Tax incentive financing bonds have been issued,
      with net proceeds of approximately $16.8 million expected to be received by
      us
      as qualifying expenditures during construction of the center are incurred.
      We
      currently expect to deliver the first phase of the center, approximately 309,000
      square feet, during the first quarter of 2008. The Pittsburgh center is wholly
      owned by us.





The
      Deer
      Park project is owned through a joint venture, Deer Park Enterprise, LLC, or
      Deer Park, of which we own a 33.3% interest. Demolition of the buildings located
      at the Deer Park site began during the third quarter of 2006 and we currently
      expect this center will contain over 800,000 square feet and will be delivered
      in the first quarter of 2008.





*2007
      Expansion Projects*





During
      2007 we plan to expand four centers by a combined 140,000 square feet. These
      centers are located in Barstow, California; Branson, Missouri; Gonzales,
      Louisiana and Tilton, New Hampshire. These expansions are projected to be
      completed during the fourth quarter of 2007.





*Abandonment
      of Acquisition Due Diligence Costs*





During
      2006, we incurred a $1.5 million charge for the abandonment of acquisition
      due
      diligence costs, as we have decided we are no longer in a position to pursue
      a
      potential acquisition opportunity. The abandoned acquisition due diligence
      costs
      were incurred in connection with structuring, diligencing and submitting a
      proposal to acquire a significant portfolio from a public REIT that was
      exploring its strategic alternatives. The bid was requested, but ultimately
      not
      accepted, by the public REIT.





***The
      Factory Outlet Concept***





Factory
      outlets are manufacturer-operated retail stores that sell primarily first
      quality, branded products at significant discounts from regular retail prices
      charged by department stores and specialty stores. Factory outlet centers offer
      numerous advantages to both consumers and manufacturers. Manufacturers selling
      in factory outlet stores are often able to charge customers lower prices for
      brand name and designer products by eliminating the third party retailer.
      Factory outlet centers also typically have lower operating costs than other
      retailing formats, which enhance the manufacturer’s profit potential. Factory
      outlet centers enable manufacturers to optimize the size of production runs
      while continuing to maintain control of their distribution channels. In
      addition, factory outlet centers benefit manufacturers by permitting them to
      sell out-of-season, overstocked or discontinued merchandise without alienating
      department stores or hampering the manufacturer’s brand name, as is often the
      case when merchandise is distributed via discount chains.





We
      believe that factory outlet centers continue to present attractive opportunities
      for capital investment, particularly with respect to strategic new developments,
      re-merchandising plans and expansions of existing centers. We believe that
      under
      present conditions such development or expansion costs, coupled with current
      market lease rates, permit attractive investment returns. We further believe,
      based upon our contacts with present and prospective tenants, that many
      companies, including prospective new entrants into the factory outlet business,
      desire to open a number of new factory outlet stores in the next several years,
      particularly in markets where there are successful factory outlet centers in
      which such companies do not have a significant presence or where there are
      few
      factory outlet centers.





***Our
      Factory Outlet Centers***





Each
      of
      our factory outlet centers carries the Tanger brand name. We believe that
      national manufacturers and consumers recognize the Tanger brand as one that
      provides factory outlet shopping centers where consumers can trust the brand,
      quality and price of the merchandise they purchase directly from the
      manufacturers.








As
      one of
      the original participants in this industry, we have developed long-standing
      relationships with many national and regional manufacturers. Because of our
      established relationships with many manufacturers, we believe we are well
      positioned to capitalize on industry growth.





Our
      factory outlet centers range in size from 24,619 to 729,315 square feet of
      GLA
      and are typically located at least 10 miles from major department stores and
      manufacturer-owned, full-price retail stores. Manufacturers prefer these
      locations so that they do not compete directly with their major customers and
      their own stores. Many of our factory outlet centers are located near tourist
      destinations to attract tourists who consider shopping to be a recreational
      activity. Our centers are typically situated in close proximity to interstate
      highways that provide accessibility and visibility to potential
      customers.





As
      of
      February 1, 2007, we had a diverse tenant base comprised of approximately 380
      different well-known, upscale, national designer or brand name concepts, such
      as
      Liz Claiborne, GAP, Banana Republic, Old Navy, Polo Ralph Lauren, Reebok, Tommy
      Hilfiger, Nautica, Abercrombie & Fitch, Hollister, Eddie Bauer, Coach
      Leatherware, Brooks Brothers, Nike and others. Most of the factory outlet stores
      are directly operated by the respective manufacturer.





No
      single
      tenant (including affiliates) accounted for 10% or more of combined base and
      percentage rental revenues during 2006, 2005 and 2004. As of February 1, 2007,
      our largest tenant, including all of its store concepts, accounted for
      approximately 7.1% of our GLA. Because our typical tenant is a large, national
      manufacturer, we have not experienced any significant problems with respect
      to
      rent collections or lease defaults.





Revenues
      from fixed rents and operating expense reimbursements accounted for
      approximately 89% of our total revenues in 2006. Revenues from contingent
      sources, such as percentage rents, vending income and miscellaneous income,
      accounted for approximately 11% of 2006 revenues. As a result, only small
      portions of our revenues are dependent on contingent revenue
      sources.





***Business
      History***





Stanley
      K. Tanger, the Company’s founder, Chairman and Chief Executive Officer, entered
      the factory outlet center business in 1981. Prior to founding our company,
      Stanley K. Tanger and his son, Steven B. Tanger, our President and Chief
      Operating Officer, built and managed a successful family owned apparel
      manufacturing business, Tanger/Creighton Inc., or Tanger/Creighton, which
      business included the operation of five factory outlet stores. Based on their
      knowledge of the apparel and retail industries, as well as their experience
      operating Tanger/Creighton’s factory outlet stores, they recognized that there
      would be a demand for factory outlet centers where a number of manufacturers
      could operate in a single location and attract a large number of
      shoppers.





In
      1981,
      Stanley K. Tanger began developing successful factory outlet centers. Steven
      B.
      Tanger joined the Company in 1986 and by June 1993, the Tangers had developed
      17
      centers with a total GLA of approximately 1.5 million square feet. In June
      1993,
      we completed our initial public offering, making Tanger Factory Outlet Centers,
      Inc. the first publicly traded outlet center company. Since our initial public
      offering, we have grown our portfolio through the strategic development,
      expansion and acquisition of outlet centers and are now one of the largest
      owner
      operators of factory outlet centers in the country.





***Business,
      Growth and Operating Strategy***





BUSINESS
      STRATEGY





We
      maintain strong tenant relationships with high volume manufacturers and
      retailers that have a selective presence in the outlet industry. These
      relationships help solidify our position in the manufacturer outlet
      business.





We
      are a
      very experienced company within the outlet industry with over 26 years of
      experience in the sector and over 13 years as a public company. We have a
      seasoned team of real estate professionals with many years of experience in
      the
      outlet industry. We believe our competitive advantage in the manufacturers'
      outlet business is a result of our experience in the business, long-standing
      relationships with tenants and expertise in the development and operation of
      manufacturers' outlet centers.








As
      of
      December 31, 2006, our wholly owned, stabilized properties were 98% occupied
      with average tenant sales of $338 per square foot. Our properties have had
      an
      occupancy rate on December 31 st of 95%
      or greater for the last 26 years. The ability to achieve such a level is a
      testament to our tenant relationships and the quality of our centers.





GROWTH
      STRATEGY





We
      seek
      growth through increasing rents in our existing centers, developing new centers,
      expanding existing centers and acquiring centers.





*Increasing
      Rents at Existing Centers*





Our
      leasing strategy includes aggressively marketing available space and maintaining
      a high level of occupancy; providing for inflation-based contractual rent
      increases or periodic fixed contractual rent increases in substantially all
      leases; renewing leases at higher base rents per square-foot; re-tenanting
      space
      occupied by under performing tenants and continuing to sign leases that provide
      for percentage rents.





*Developing
      New Centers and Expanding Existing Centers*





We
      believe that there continues to be significant opportunities to develop factory
      outlet centers across the United States of America. We intend to undertake
      such
      development selectively, and believe that we will have a competitive advantage
      in doing so as a result of our development expertise, tenant relationships
      and
      access to capital. We expect that the development of new centers and the
      expansion of existing centers will continue to be a substantial part of our
      growth strategy. We believe that our development experience and strong tenant
      relationships enable us to determine site viability on a timely and
      cost-effective basis. However, there can be no assurance that any development
      or
      expansion projects will be commenced or completed as scheduled.





We
      typically seek opportunities to develop or acquire new centers in locations
      that
      have at least 1 million people residing within an hours drive, an average
      household income within a 30-mile radius of at least $60,000 per year and access
      to frontage on a major or interstate highway with a traffic count of at least
      45,000 cars per day. We also consider tourist markets that receive at least
      5
      million visitors annually. Our current goal is to target sites that are large
      enough to support centers with approximately 75 stores totaling at least 300,000
      square feet of GLA. We will vary our minimum conditions based on the particular
      characteristics of a site.





We
      generally pre-lease at least 50% of the space in each center prior to acquiring
      the site and beginning construction. Construction of a new factory outlet center
      has normally taken us nine to twelve months from groundbreaking to the opening
      of the first tenant store. Construction of expansions to existing properties
      typically takes less time, usually between six to nine months.





*Acquiring
      Centers*





We
      may
      selectively acquire individual properties or portfolios of properties that
      meet
      our strategic investment criteria as suitable opportunities arise. We believe
      that our extensive experience in the outlet center business, access to capital
      markets, familiarity with real estate markets and management experience will
      allow us to evaluate and execute our acquisition strategy successfully.
      Furthermore, we believe that we will be able to enhance the operation of
      acquired properties as a result of our tenant relationships and experience
      in
      the outlet industry.





OPERATING
      STRATEGY





Our
      primary business objective is to enhance the value of our properties and
      operations by increasing cash flow. We plan to achieve this objective through
      continuing efforts to improve tenant sales and profitability, and to enhance
      the
      opportunity for higher base and percentage rents.








*Leasing*





We
      pursue
      an active leasing strategy through long-standing relationships with a broad
      range of tenants including manufacturers of men's, women's and children's
      ready-to-wear, lifestyle apparel, footwear, accessories, tableware, housewares,
      linens and domestic goods. Key tenants are placed in strategic locations to
      draw
      customers into each center and to encourage shopping at more than one store.
      We
      continually monitor tenant mix, store size, store location and sales
      performance, and work with tenants to improve each center through re-sizing,
      re-location and joint promotion.





*Marketing*




We
      develop branded property-specific marketing plans annually to deliver the
      message of superior outlet brand name assortment, selection and savings. We
      closely examine our plans each year to ensure we are reaching the right markets
      and shoppers with the right message to drive traffic to our centers nationwide.
      Our plans include strategic advertising, enticing promotions, incentives and
      events to targeted audiences for meaningful and measurable results. Customer
      satisfaction and retention are always a high priority. The majority of
      consumer-marketing expenses incurred by the Company are reimbursable by our
      tenants.





***Capital
      Strategy***





We
      achieve a strong and flexible financial position by: (1) managing our leverage
      position relative to our portfolio when pursuing new development and expansion
      opportunities, (2) extending and sequencing debt maturities, (3) managing our
      interest rate risk through a proper mix of fixed and variable rate debt, (4)
      managing our liquidity by maintaining and using our lines of credit in a
      conservative manner and (5) preserving internally generated sources of capital
      by strategically divesting our underperforming assets and maintaining a
      conservative distribution payout ratio.





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 our unitholders' best
      interests. During the third quarter of 2006, we, together with the Company,
      updated our shelf registration as a well known seasoned issuer where we will
      be
      able to register unspecified amounts of different classes of securities on
      Form
      S-3. 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.





We
      maintain unsecured lines of credit that provided for unsecured borrowings up
      to
      $200 million at December 31, 2006, an increase of $50 million in capacity from
      December 31, 2005. These lines of credit expire June 30, 2009 or later. Based
      on
      cash provided by operations, existing credit facilities, ongoing negotiations
      with certain financial institutions and our ability to sell debt or equity
      subject to market conditions, we believe that we have access to the necessary
      financing to fund the planned capital expenditures during 2007.





***Competition***





We
      carefully consider the degree of existing and planned competition in a proposed
      area before deciding to develop, acquire or expand a new center. Our centers
      compete for customers primarily with factory outlet centers built and operated
      by different developers, traditional shopping malls and full- and off-price
      retailers. However, we believe that the majority of our customers visit factory
      outlet centers because they are intent on buying name-brand products at
      discounted prices. Traditional full- and off-price retailers are often unable
      to
      provide such a variety of name-brand products at attractive prices.





Tenants
      of factory outlet centers typically avoid direct competition with major
      retailers and their own specialty stores, and, therefore, generally insist
      that
      the outlet centers be located not less than 10 miles from the nearest major
      department store or the tenants’ own specialty stores. For this reason, our
      centers compete only to a very limited extent with traditional malls in or
      near
      metropolitan areas.





We
      compete favorably with two large national owners of factory outlet centers
      and
      numerous small owners. During the last several years, the factory outlet
      industry has been consolidating with smaller, less capitalized operators
      struggling to compete with, or being acquired by, larger, national factory
      outlet operators. Since 2000 the number of factory outlet centers in the United
      States has decreased while the average size factory outlet center has increased.
      During this period of consolidation, the high barriers to entry in the factory
      outlet industry, including the need for extensive relationships with premier
      brand name manufacturers, have minimized the number of new factory outlet
      centers. This consolidation trend and the high barriers to entry, along with
      our
      national presence, access to capital and extensive tenant relationships, have
      allowed us to grow our business and improve our market position.





***Corporate
      and Regional Headquarters***





We
      rent
      space in an office building in Greensboro, North Carolina in which our corporate
      headquarters are located. In addition, we rent a regional office in New York
      City, New York under a lease agreement and sublease agreement, respectively,
      to
      better service our principal fashion-related tenants, many of whom are based
      in
      and around that area.





We
      maintain offices and employ on-site managers at 32 centers. The managers closely
      monitor the operation, marketing and local relationships at each of their
      centers.





***Insurance***





We
      believe that as a whole our properties are covered by adequate comprehensive
      liability, fire, flood, earthquake and extended loss insurance provided by
      reputable companies with commercially reasonable and customary deductibles
      and
      limits. Northline Indemnity, LLC, or Northline, our wholly owned captive
      insurance subsidiary, is responsible for losses up to certain levels for
      property damage (including wind damage from hurricanes) prior to third-party
      insurance coverage. Specified types and amounts of insurance are required to
      be
      carried by each tenant under their lease agreement with us. There are however,
      types of losses, like those resulting from wars or nuclear radiation, which
      may
      either be uninsurable or not economically insurable in some or all of our
      locations. An uninsured loss could result in a loss to us of both our capital
      investment and anticipated profits from the affected property.





***Employees***





As
      of
      February 1, 2007, we had 200 full-time employees, located at our corporate
      headquarters in North Carolina, our regional office in New York and our 32
      business offices. At that date, we also employed 221 part-time employees at
      various locations.








**Item
      1A.**  **Risk
      Factors**





**Risks
      Related to our Business**





**We
      face competition for the acquisition of factory outlet centers, and we may
      not
      be able to complete acquisitions that we have identified.**





One
      component of our business strategy is expansion through acquisitions, and we
      may
      not be successful in completing acquisitions that are consistent with our
      strategy. We compete with institutional pension funds, private equity investors,
      other REITs, small owners of factory outlet centers, specialty stores and others
      who are engaged in the acquisition, development or ownership of factory outlet
      centers and stores. These competitors may affect the supply/demand dynamics
      and,
      accordingly, increase the price we must pay for factory outlet centers we seek
      to acquire, and these competitors may succeed in acquiring those factory outlet
      centers themselves. Also, our potential acquisition targets may find our
      competitors to be more attractive acquirers because they may have greater
      marketing and financial resources, may be willing to pay more, or may have
      a
      more compatible operating philosophy. In addition, the number of entities
      competing for factory outlet centers may increase in the future,  which
      would increase demand for these factory outlet centers and the prices we must
      pay to acquire them. If we pay higher prices for factory outlet centers, our
      profitability may be reduced. Also, once we have identified potential
      acquisitions, such acquisitions are subject to the successful completion of
      due
      diligence, the negotiation of definitive agreements and the satisfaction of
      customary closing conditions, and we cannot assure you that we will be able
      to
      reach acceptable terms with the sellers or that these conditions will be
      satisfied.





**The
      economic performance and the market value of our factory outlet centers are
      dependent on risks associated with real property
      investments.**





Real
      property investments are subject to varying degrees of risk. The economic
      performance and values of real estate may be affected by many factors, including
      changes in the national, regional and local economic climate, inflation,
      unemployment rates, consumer confidence, local conditions such as an oversupply
      of space or a reduction in demand for real estate in the area, the
      attractiveness of the properties to tenants, competition from other available
      space, our ability to provide adequate maintenance and insurance and increased
      operating costs.





**Our
      earnings and therefore our profitability is entirely dependent on rental income
      from real property.**





Substantially
      all of our income is derived from rental income from real property. Our income
      and funds for distribution would be adversely affected if a significant number
      of our tenants were unable to meet their obligations to us or if we were unable
      to lease a significant amount of space in our centers on economically favorable
      lease terms. In addition, the terms of factory outlet store tenant leases
      traditionally have been significantly shorter than in other retail segments.
      There can be no assurance that any tenant whose lease expires in the future
      will
      renew such lease or that we will be able to re-lease space on economically
      favorable terms.





**We
      are substantially dependent on the results of operations of our
      retailers.**





Our
      operations are necessarily subject to the results of operations of our retail
      tenants. A portion of our rental revenues are derived from percentage rents
      that
      directly depend on the sales volume of certain tenants. Accordingly, declines
      in
      these tenants' results of operations would reduce the income produced by our
      properties. If the sales of our retail tenants decline sufficiently, such
      tenants may be unable to pay their existing rents as such rents would represent
      a higher percentage of their sales. Any resulting leasing delays, failures
      to
      make payments or tenant bankruptcies could result in the termination of such
      tenants' leases.





A
      number
      of companies in the retail industry, including some of our tenants, have
      declared bankruptcy or have voluntarily closed certain of their stores in recent
      years. The bankruptcy of a major tenant or number of tenants may result in
      the
      closing of certain affected stores, and we may not be able to re-lease the
      resulting vacant space for some time or for equal or greater rent. Such
      bankruptcy could have a material adverse effect on our results of operations
      and
      could result in a lower level of funds for distribution.





**We
      may be subject to environmental regulation.**





Under
      various federal, state and local laws, ordinances and regulations, we may be
      considered an owner or operator of real property and may be responsible for
      paying for the disposal or treatment of hazardous or toxic substances released
      on or in our property or disposed of by us, as well as certain other potential
      costs which could relate to hazardous or toxic substances (including
      governmental fines and injuries to persons and property). This liability may
      be
      imposed whether or not we knew about, or were responsible for, the presence
      of
      hazardous or toxic substances.





**The
      Company is required by law to make distributions to its shareholders and
      therefore we must make distributions to the Company.**





To
      obtain
      the favorable tax treatment associated with our qualification as a REIT,
      generally, the Company is required to distribute to its common and preferred
      shareholders at least 90.0% of its net taxable income (excluding capital gains)
      each year. The Company depends upon distributions or other payments from us
      to
      make distributions to its common and preferred shareholders.





**We
      are subject to the risks associated with debt financing.**





We
      are
      subject to the risks associated with debt financing, including the risk that
      the
      cash provided by our operating activities will be insufficient to meet required
      payments of principal and interest and the risk that we will not be able to
      repay or refinance existing indebtedness or that the terms of any refinancing
      will not be as favorable as the terms of existing indebtedness. If we are unable
      to refinance our indebtedness on acceptable terms, we might be forced to dispose
      of properties on disadvantageous terms, which might result in
      losses.





**We
      may be unable to develop new factory outlet centers or expand existing factory
      outlet centers successfully.**





We
      continue to develop new factory outlet centers and expand factory outlet centers
      as opportunities arise. However, there are significant risks associated with
      our
      development activities in addition to those generally associated with the
      ownership and operation of established retail properties. While we have policies
      in place designed to limit the risks associated with development, these policies
      do not mitigate all development risks associated with a project. These risks
      include the following:





•  significant
      expenditure of money and time on projects that may be delayed or never be
      completed;





•higher
      than projected construction costs;





•  shortage
      of construction materials and supplies;





•
            failure
                to obtain zoning, occupancy or other governmental approvals or to
                the
                extent required, tenant approvals;
                and





•
            late
                completion because of construction delays, delays in the receipt
                of
                zoning, occupancy and other approvals or other factors outside of
                our
                control.





Any
      or
      all of these factors may impede our development strategy and adversely affect
      our overall business.





**An
      uninsured loss or a loss that exceeds the insurance policies on our factory
      outlet centers could subject us to lost capital or revenue on those
      centers.**





Some
      of
      the risks to which our factory outlet centers are subject, including risks
      of
      war and earthquakes, hurricanes and other natural disasters, are not insurable
      or may not be insurable in the future. Should a loss occur that is uninsured
      or
      in an amount exceeding the combined aggregate limits for the insurance policies
      noted above or in the event of a loss that is subject to a substantial
      deductible under an insurance policy, we could lose all or part of our capital
      invested in and anticipated revenue from one or more of our factory outlet
      centers, which could adversely affect our results of operations and financial
      condition, as well as our ability to make distributions to our
      unitholders.








Under
      the
      terms and conditions of our leases, tenants generally are required to indemnify
      and hold us harmless from liabilities resulting from injury to persons and
      contamination of air, water, land or property, on or off the premises, due
      to
      activities conducted in the leased space, except for claims arising from
      negligence or intentional misconduct by us or our agents. Additionally, tenants
      generally are required, at the tenant's expense, to obtain and keep in full
      force during the term of the lease, liability and property damage insurance
      policies issued by companies acceptable to us. These policies include liability
      coverage for bodily injury and property damage arising out of the ownership,
      use, occupancy or maintenance of the leased space. All of these policies may
      involve substantial deductibles and certain exclusions.





**Historically
      high fuel prices may impact consumer travel and spending
      habits.**





Our
      markets are currently experiencing historically high fuel prices. Most shoppers
      use private automobile transportation to travel to our factory outlet centers
      and many of our centers are not easily accessible by public transportation.
      Increasing fuel costs may reduce the number of trips to our centers thus
      reducing the amount spent at our centers. Many of our factory outlet center
      locations near tourist destinations may experience an even more acute reduction
      of shoppers if there were a reduction of people opting to drive to vacation
      destinations. Such reductions in traffic could adversely impact our percentage
      rents and ability to renew and release space at current rental
      rates.





Increasing
      fuel costs may also reduce disposable income and decrease demand for retail
      products. Such a decrease could adversely affect the results of operations
      of
      our retail tenants and adversely impact our percentage rents and ability to
      renew and release space at current rental rates.





**Item
      1B.**  **Unresolved
      Staff Comments**





There
      are
      no unresolved staff comments from a Securities Exchange Commission comment
      letter.





**Item
      2.**  **Properties**





As
      of
      February 1, 2007, our wholly owned portfolio consisted of 30 outlet centers
      totaling 8.4 million square feet of GLA located in 21 states. We own a 50%
      interest in each of two outlet centers totaling 667,000 square feet through
      unconsolidated joint ventures. Also, we have two outlet centers that we manage
      for a fee with a total GLA of approximately 229,000 square feet. Our centers
      range in size from 24,619 to 729,315 square feet of GLA. The centers are
      generally located near tourist destinations or along major interstate highways
      to provide visibility and accessibility to potential customers.





We
      believe that the centers are well diversified geographically and by tenant
      and
      that we are not dependent upon any single property or tenant. Our Riverhead,
      New
      York center is the only property that represented more than 10% of our 2006
      annual consolidated gross revenues. Our Rehoboth Beach, Delaware center is
      the
      only property that represented more than 10% of our consolidated total assets
      as
      of December 31, 2006. See “Business and Properties - Significant
      Properties”.





We
      have
      an ongoing strategy of acquiring centers, developing new centers and expanding
      existing centers. See “Management’s Discussion and Analysis of Financial
      Condition and Results of Operations--Liquidity and Capital Resources” for a
      discussion of the cost of such programs and the sources of financing
      thereof.





Certain
      of our centers serve as collateral for mortgage notes payable. Of the 30 outlet
      centers in our wholly owned portfolio, we own the land underlying 27 and have
      ground leases on three. The land on which the Sevierville center is located
      is
      subject to long-term ground leases expiring in 2046. The land parcel on which
      the original Riverhead center is located, approximately 47 acres, is also
      subject to a ground lease with an initial term that was automatically renewed
      for an additional five years in 2004, with renewal at our option for up to
      six
      more additional terms of five years each. Terms on the Riverhead center ground
      lease are renewed automatically unless we give notice otherwise. The land parcel
      on which the Riverhead center expansion is located, containing approximately
      43
      acres, is owned by us. The 2.7 acre land parcel on which part of the Rehoboth
      Beach center is located, is also subject to a ground lease with an initial
      term
      expiring in 2044, with renewal at our option for additional terms of twenty
      years each.





The
      term
      of our typical tenant lease averages approximately five years. Generally, leases
      provide for the payment of fixed monthly rent in advance. There are often
      contractual base rent increases during the initial term of the lease. In
      addition, the rental payments are customarily subject to upward adjustments
      based upon tenant sales volume. Most leases provide for payment by the tenant
      of
      real estate taxes, insurance, common area maintenance, advertising and promotion
      expenses incurred by the applicable center. As a result, the majority of our
      operating expenses for the centers are borne by the tenants.








The
      table
      set forth below summarizes certain information with respect to our wholly owned
      centers as of February 1, 2007 .





State
            Number
                of
              Centers
            GLA
              (sq.
                ft.)
            %
              of
                GLASouth
                Carolina
            3
            1,171,771
            14Georgia
            3
            825,826
            10New
                York
            1
            729,315
            9Alabama
            2
            636,668
            8Texas
            2
            620,000
            7Delaware
            1
            568,926
            7Michigan
            2
            436,751
            5Tennessee
            1
            419,038
            5Utah
            1
            300,602
            4Connecticut
            1
            291,051
            4Missouri
            1
            277,883
            3Iowa
            1
            277,230
            3Oregon
            1
            270,280
            3Illinois
            1
            256,514
            3Pennsylvania
            1
            255,152
            3Louisiana
            1
            243,499
            3New
                Hampshire
            1
            227,977
            3Florida
            1
            198,924
            2North
                Carolina
            2
            186,458
            2California
            1
            109,600
            1Maine
            2
            84,313
            1Total
            30
            8,387,778
            100











The
      table
      set forth below summarizes certain information with respect to our existing
      centers in which we have an ownership interest or manage as of February 1,
      2007.
      Except as noted, all properties are fee owned. Note that during January 2007,
      the outlet center that we managed as of December 31, 2006 in Burlington, North
      Carolina was sold and we were not retained to provide management services to
      the
      64,000 square foot center.


Location
            GLA
              (sq.
                ft.)
            
            %
              Occupied**Wholly
                Owned Properties**Riverhead,
                New York(1)
            729,315
            
            99Rehoboth,
                Delaware(1)
            568,926
            
            98Foley,
                Alabama
            557,093
            
            95San
                Marcos, Texas
            442,510
            
            97Myrtle
                Beach Hwy 501, South Carolina
            426,417
            
            94Sevierville,
                Tennessee(1)
            419,038
            
            97Hilton
                Head, South Carolina
            393,094
            
            87Charleston,
                South Carolina
            352,260
            
            87Commerce
                II, Georgia
            346,208
            
            95Howell,
                Michigan
            324,631
            
            100Park
                City, Utah
            300,602
            
            99Locust
                Grove, Georgia
            293,868
            
            93Westbrook,
                Connecticut
            291,051
            
            97Branson,
                Missouri
            277,883
            
            98Williamsburg,
                Iowa
            277,230
            
            97Lincoln
                City, Oregon
            270,280
            
            96Tuscola,
                Illinois
            256,514
            
            72Lancaster,
                Pennsylvania
            255,152
            
            100Gonzales,
                Louisiana
            243,499
            
            96Tilton,
                New Hampshire
            227,977
            
            99Fort
                Meyers, Florida
            198,924
            
            99Commerce
                I, Georgia
            185,750
            
            87Terrell,
                Texas
            177,490
            
            99West
                Branch, Michigan
            112,120
            
            89Barstow,
                California
            109,600
            
            100Blowing
                Rock, North Carolina
            104,280
            
            97Nags
                Head, North Carolina
            82,178
            
            100Boaz,
                Alabama
            79,575
            
            92Kittery
                I, Maine
            59,694
            
            100Kittery
                II, Maine
            24,619
            
            948,387,778
            
            (2)96**Unconsolidated
                Joint Ventures**Myrtle
                Beach Hwy17, South Carolina(1)(50% owned)
            401,992
            
            96Wisconsin
                Dells, Wisconsin (50% owned)
            264,929
            
            99





**Managed
                Properties**Pigeon
                Forge, Tennessee
            94,694North
                Branch, Minnesota
            134,480





*(1)*
            *These
                properties or a portion thereof are subject to a ground
                lease.*


*(2)*
            *Excludes
                the occupancy rate at our Charleston, South Carolina center which
                opened
                during the third quarter of 2006 and has not yet
                stabilized.*








The
      table
      set forth below summarizes certain information related to GLA as of February
      1,
      2007 and debt as of December 31, 2006 with respect to our wholly owned centers
      which serve as collateral for an existing mortgage loan.





Lender/Location
            GLA
              (sq.
                ft.)
            Mortgage
              Debt
                (000’s)
              as
                of
              December
              31,
                2006
            Interest
              Rate
            Maturity
              Date**GMAC**Rehoboth
                Beach, DE
            568,926Foley,
                AL
            557,093Myrtle
                Beach Hwy 501, SC
            426,417Hilton
                Head, SC
            393,094Park
                City, UT
            300,602Westbrook,
                CT
            291,051Lincoln
                City, OR
            270,280Tuscola,
                IL
            256,514Tilton,
                NH
            227,977$176,470
            6.590%
            7/10/2008Debt
                premium
            3,441**Totals**
            3,291,954
            $179,911


***Lease
      Expirations***





The
      following table sets forth, as of February 1, 2007, scheduled lease expirations,
      assuming none of the tenants exercise renewal options, for our wholly owned
      centers. Most leases are renewable for five year terms at the tenant’s
      option.


Year
            No.
                of
              Leases
                Expiring
            Approx.
              GLA
                (sq.
              ft(1))
            
            Average
              Annualized
              Base
                Rent
              per
                sq. ft
            
            Annualized
              Base
                Rent(2)
            %
                of Gross
              Annualized
              Base
                Rent
              Represented
              by
                Expiring
              Leases2007
            222
            901,000
            
            $14.29
            
            $
                12,874,000
            102008
            290
            1,288,000
            
            15.91
            
            20,497,000
            162009
            312
            1,405,000
            
            15.36
            
            21,584,000
            172010
            292
            1,254,000
            
            20.86
            
            26,157,000
            202011
            308
            1,436,000
            
            16.78
            
            24,093,000
            192012
            129
            592,000
            
            16.15
            
            9,561,000
            72013
            30
            142,000
            
            19.15
            
            2,719,000
            22014
            18
            113,000
            
            16.69
            
            1,886,000
            22015
            30
            123,000
            
            20.16
            
            2,480,000
            22016
            36
            154,000
            
            20.50
            
            3,157,000
            32017
                & thereafter
            31
            139,000
            
            19.32
            
            2,685,000
            21,698
            7,547,000
            
            $16.92
            
            $127,693,000
            100





*(1)*
            *Excludes
                leases that have been entered into but which tenant has not yet taken
                possession, vacant suites, space under construction, temporary leases
                and
                month-to-month leases totaling in the aggregate approximately 841,000
                square feet.**(2)*
            *Annualized
                base rent is defined as the minimum monthly payments due as of February
                1,
                2007 annualized, excluding periodic contractual fixed increases and
                rents
                calculated based on a percentage of tenants’
                sales.*








***Rental
      and Occupancy Rates***





The
      following table sets forth information regarding the expiring leases during
      each
      of the last five calendar years for our wholly owned centers.





Total
                Expiring
            
            Renewed
                by Existing
              Tenants
            
            Re-leased
                to
              New
                TenantsYear
            
            GLA
              (sq.
                ft.)
            
            %
                of
              Total
                Center GLA
            
            GLA
              (sq.
                ft.)
            
            %
                of
              Expiring
                GLA
            
            GLA
              (sq.
                ft.)
            
            %
                of
              Expiring
              GLA2006
            
            1,760,000
            
            21
            
            1,466,000
            
            83
            
            129,000
            
            72005
            
            1,812,000
            
            22
            
            1,525,000
            
            84
            
            112,000
            
            62004
            
            1,790,000
            
            20
            
            1,571,000
            
            88
            
            94,000
            
            52003
            
            1,070,000
            
            12
            
            854,000
            
            80
            
            49,000
            
            52002
            
            935,000
            
            16
            
            819,000
            
            88
            
            56,000
            
            6





The
      following table sets forth the weighted average base rental rate increases
      per
      square foot, excluding periodic contractual fixed increases, upon re-leasing
      stores that were turned over or renewed during each of the last five calendar
      years for our wholly owned centers.




Renewals
                of Existing Leases
            
            Stores
                Re-leased to New Tenants(1)Average
                Annualized Base Rents
            
            
            
            Average
                Annualized Base Rents($
                per sq. ft.)
            
            
            
            ($
                per sq. ft.)Year
            GLA
              (sq.
                ft.)
            Expiring
            New
            %
              Increase
            
            GLA
              (sq.
                ft.)
            
            Expiring
            
            New
            %
                Increase2006
            1,466,000
            $15.91
            $17.22
            8
            465,000
            
            $16.43
            $19.16
            172005
            1,525,000
            15.44
            16.37
            6
            419,000
            
            16.56
            17.74
            72004
            1,571,000
            13.63
            14.40
            6
            427,000
            
            16.43
            17.27
            52003
            854,000
            13.29
            13.32
            --
            272,000
            
            16.47
            17.13
            42002
            819,000
            14.86
            15.02
            1
            229,000
            
            15.14
            15.74
            4




*(1)*
            *The
                square footage released to new tenants for 2006, 2005, 2004, 2003
                and 2002
                contains 129,000, 112,000, 94,000, 49,000 and 56,000 square feet,
                respectively, that was released to new tenants upon expiration of
                an
                existing lease during the current
                year.*





***Occupancy
      Costs***





We
      believe that our ratio of average tenant occupancy cost (which includes base
      rent, common area maintenance, real estate taxes, insurance, advertising and
      promotions) to average sales per square foot is low relative to other forms
      of
      retail distribution. The following table sets forth for tenants that report
      sales, for each of the last five years, tenant occupancy costs per square foot
      as a percentage of reported tenant sales per square foot for our wholly owned
      centers.








Year
            Occupancy
                Costs as a
              %
                of Tenant Sales2006
            7.42005
            7.52004
            7.32003
            7.42002
            7.2








***Tenants***


The
      following table sets forth certain information with respect to our ten largest
      tenants and their store concepts as of February 1, 2007 for our wholly owned
      centers.


Tenant
            Number
              of
                Stores
            GLA
              (sq.
                ft.)
            %
                of Total
              GLA**The
                Gap, Inc.:**Old
                Navy
            16
            239,591
            2.9GAP
            24
            211,866
            2.5Banana
                Republic
            15
            120,405
            1.4Gap
                Kids
            4
            19,440
            0.2Baby
                Gap
            1
            3,885
            0.160
            595,187
            7.1**Phillips-Van
                Heusen Corporation:**Bass
                Shoe
            28
            185,318
            2.2Van
                Heusen
            27
            117,047
            1.4Geoffrey
                Beene Co. Store
            13
            49,640
            0.6Calvin
                Klein, Inc.
            10
            54,994
            0.6Izod
            15
            39,998
            0.593
            446,997
            5.3**Liz
                Claiborne:**Liz
                Claiborne
            25
            262,525
            3.1Liz
                Claiborne Women
            6
            19,584
            0.2Ellen
                Tracy
            3
            12,474
            0.1Dana
                Buchman
            3
            6,975
            0.1DKNY
                Jeans
            2
            5,820
            0.1Claiborne
                Mens
            1
            3,100
            0.140
            310,478
            3.7**Adidas:**Reebok
            23
            211,656
            2.5Adidas
            6
            47,669
            0.6Rockport
            4
            12,046
            0.1Greg
                Norman
            1
            3,000
            0.134
            274,371
            3.3**VF
                Factory Outlet:**VF
                Factory Outlet, Inc
            7
            172,541
            2.0Nautica
                Factory Stores
            19
            86,227
            1.0Nautica
                Kids
            2
            5,841
            0.1Vans
            2
            5,000
            0.130
            269,609
            3.2**Dress
                Barn, Inc.:**Dress
                Barn
            24
            190,155
            2.3Maurice’s
            6
            23,803
            0.3Dress
                Barn Petite
            2
            9,570
            0.1Dress
                Barn Woman
            2
            7,470
            0.134
            230,998
            2.8**Carter’s:**OshKosh
                B”Gosh
            24
            123,488
            1.5Carter’s
            19
            89,703
            1.043
            213,191
            2.5**Nike:**Nike
            13
            190,977
            2.3Cole-Haan
            2
            6,223
            0.115
            197,200
            2.4**Jones
                Retail Corporation:**Jones
                Retail Corporation
            16
            53,741
            0.6Nine
                West
            20
            51,977
            0.6Easy
                Spirit
            14
            39,336
            0.5Kasper
            11
            28,269
            0.4Anne
                Klein
            5
            12,155
            0.1Treza
            2
            5,000
            0.168
            190,478
            2.3**Polo
                Ralph Lauren:**Polo
                Ralph Lauren
            20
            177,128
            2.1Polo
                Jeans Outlet
            2
            8,500
            0.1Polo
                Ralph Lauren Children
            1
            3,000
            -23
            188,628
            2.2Total
                of all tenants listed in table
            440
            2,917,137
            34.8




***Significant
      Property***





The
      Riverhead, New York and Rehoboth Beach, Delaware centers, or the Significant
      Properties, are the only properties that comprise more than 10% of our
      consolidated gross revenues or consolidated total assets. The center in
      Riverhead, New York is our only center that comprised more than 10% of our
      consolidated gross revenues for the year ended December 31, 2006. The Riverhead
      center, which was originally constructed in 1994 and now totals 729,315 square
      feet, represented 13% of our consolidated gross revenue for the year ended
      December 31, 2006. The Rehoboth Beach center, acquired in December 2003,
      represented 11% of our consolidated total assets as of December 31, 2006. The
      Rehoboth Beach center is 568,926 square feet.





Tenants
      at the Significant Properties principally conduct retail sales operations.
      The
      following table shows occupancy and certain base rental information related
      to
      these properties as of December 31, 2006, 2005 and 2004:





**Center
                Occupancy**
            2006
            2005
            2004Riverhead,
                NY
            100%
            99%
            99%Rehoboth
                Beach, DE
            99%
            99%
            99%**Average
                base rental rates per weighted average GLA**
            2006
            2005
            2004Riverhead,
                NY
            $23.09
            $22.73
            $21.39Rehoboth
                Beach, DE
            $22.02
            $20.04
            $19.56





Depreciation
      on the Significant Properties is computed on the straight-line basis over the
      estimated useful lives of the assets. We generally use estimated lives ranging
      from 25 to 33 years for buildings, 15 years for land improvements and seven
      years for equipment. Expenditures for ordinary maintenance and repairs are
      charged to operations as incurred while significant renovations and
      improvements, including tenant finishing allowances that improve and/or extend
      the useful life of the asset are capitalized and depreciated over their
      estimated useful life. At December 31, 2006, the net federal tax basis of these
      centers was approximately $187.9 million.





The
      following table sets forth, as of February 1, 2007, scheduled lease expirations
      at the Significant Properties assuming that none of the tenants exercise renewal
      options:


Year
            No.
                of
              Leases
              Expiring(1)
            GLA
              (sq.
                ft.)(1)
            Annualized
              Base
                Rent
              per
                sq. ft.
            Annualized
              Base
                Rent(2)
            %
                of Gross
              Annualized
              Base
                Rent
              Represented
              by
                Expiring
              Leases2007
            30
            95,000
            $
                22.69
            $
                2,149,000
            82008
            47
            227,000
            19.68
            4,465,000
            172009
            40
            158,000
            22.86
            3,614,000
            142010
            63
            298,000
            21.11
            6,300,000
            242011
            33
            140,000
            22.85
            3,206,000
            122012
            28
            127,000
            21.48
            2,730,000
            102013
            7
            49,000
            21.40
            1,052,000
            42014
            7
            65,000
            14.74
            953,000
            42015
            9
            43,000
            22.05
            941,000
            32016
            5
            15,000
            29.64
            453,000
            22017
                and thereafter
            3
            16,000
            37.42
            602,000
            2Total
            272
            1,233,000
            $
                21.46
            $
                26,465,000
            100


*(1)
      Excludes leases that have been entered into but which tenant has not taken
      possession, vacant suites, temporary leases and month-to-month leases totaling
      in the aggregate approximately 65,000 square feet.*


*(2)
      Annualized base rent is defined as the minimum monthly payments due as of
      February 1, 2007, excluding periodic contractual fixed increases and rents
      calculated based on a percentage of tenants’ sales.*











**Item
                3.**
            **Legal
                Proceedings**





We
      are
      subject to legal proceedings and claims that have arisen in the ordinary course
      of our business and have not been finally adjudicated. In our opinion, the
      ultimate resolution of these matters will have no material effect on our results
      of operations or financial condition.





**Item
                4.**
            **Submission
                of Matters to a Vote of Security
                Holders**





There
      were no matters submitted to a vote of security holders, through solicitation
      of
      proxies or otherwise, during the fourth quarter of the fiscal year ended
      December 31, 2006.










**EXECUTIVE
      OFFICERS OF THE COMPANY**





The
      Operating Partnership does not have any officers. The following table sets
      forth
      certain information concerning the executive officers of the Company which
      controls the Operating Partnership through its ownership of the general partner,
      Tanger GP Trust:




NAME
            AGE
            POSITIONStanley
                K. Tanger
            83
            Founder,
                Chairman of the Board of Directors and Chief Executive
                OfficerSteven
                B Tanger
            58
            Director,
                President and Chief Operating OfficerFrank
                C. Marchisello, Jr.
            48
            Executive
                Vice President - Chief Financial Officer and SecretaryJoseph
                N. Nehmen
            58
            Senior
                Vice President - OperationsCarrie
                A. Warren
            44
            Senior
                Vice President - MarketingKevin
                M. Dillon
            48
            Senior
                Vice President - Construction and DevelopmentLisa
                J. Morrison
            47
            Senior
                Vice President - LeasingJames
                F. Williams
            42
            Senior
                Vice President - ControllerVirginia
                R. Summerell
            48
            Vice
                President - Treasurer and Assistant
                Secretary





The
      following is a biographical summary of the experience of the executive officers
      of the Company:





***Stanley
      K. Tanger*** **.** Mr.
      Tanger is the founder, Chief Executive Officer and Chairman of the Board of
      Directors of the Company. He also served as President from inception of the
      Company to December 1994. Mr. Tanger opened one of the country’s first outlet
      shopping centers in Burlington, North Carolina in 1981. Before entering the
      factory outlet center business, Mr. Tanger was President and Chief Executive
      Officer of his family’s apparel manufacturing business, Tanger/Creighton, Inc.,
      for 30 years.





***Steven
      B. Tanger*** **.** Mr.
      Tanger is a director of the Company and was named President and Chief Operating
      Officer effective January 1, 1995. Previously, Mr. Tanger served as Executive
      Vice President since joining the Company in 1986. He has been with
      Tanger-related companies for most of his professional career, having served
      as
      Executive Vice President of Tanger/Creighton for 10 years. He is responsible
      for
      all phases of project development, including site selection, land acquisition
      and development, leasing, marketing and overall management of existing outlet
      centers. Mr. Tanger is a graduate of the University of North Carolina at Chapel
      Hill and the Stanford University School of Business Executive Program. Mr.
      Tanger is the son of Stanley K. Tanger.





***Frank
      C. Marchisello, Jr.*** Mr.
      Marchisello was named Executive Vice President and Chief Financial Officer
      in
      April 2003 and was named Secretary in May 2005. Previously he was named Senior
      Vice President and Chief Financial Officer in January 1999 after being named
      Vice President and Chief Financial Officer in November 1994. Previously, he
      served as Chief Accounting Officer since joining the Company in January 1993
      and
      Assistant Treasurer since February 1994. He was employed by Gilliam, Coble
&
Moser, certified public accountants, from 1981 to 1992, the last six years
      of
      which he was a partner of the firm in charge of various real estate clients.
      Mr.
      Marchisello is a graduate of the University of North Carolina at Chapel Hill
      and
      is a certified public accountant.




***Joseph
      H. Nehmen*** **.** Mr.
      Nehmen was named Senior Vice President - Operations in January 1999. He joined
      the Company in September 1995 and was named Vice President of Operations in
      October 1995. Mr. Nehmen has over 20 years experience in private business.
      Prior
      to joining Tanger, Mr. Nehmen was owner of Merchants Wholesaler, a privately
      held distribution company in St. Louis, Missouri. He is a graduate of Washington
      University. Mr. Nehmen is the son-in-law of Stanley K. Tanger and brother-in-law
      of Steven B. Tanger.





***Carrie
      A. Warren.*** Ms.
      Warren was named Senior Vice President - Marketing in May 2000. Previously,
      she
      held the position of Vice President - Marketing since September 1996 and
      Assistant Vice President - Marketing since joining the Company in December
      1995.
      Prior to joining Tanger, Ms. Warren was with Prime Retail, L.P. for 4 years
      where she served as Regional Marketing Director responsible for coordinating
      and
      directing marketing for five outlet centers in the southeast region. Prior
      to
      joining Prime Retail, L.P., Ms. Warren was Marketing Manager for North Hills,
      Inc. for five years and also served in the same role for the Edward J. DeBartolo
      Corp. for two years. Ms. Warren is a graduate of East Carolina
      University.








**** ***Kevin
      M. Dillon.*** Mr.
      Dillon was named Senior Vice President - Construction and Development in August
      2004. Previously, he held the positions of Vice President - Construction and
      Development from May 2002 to August 2004, Vice President - Construction from
      October 1997 to May 2002, Director of Construction from September 1996 to
      October 1997 and Construction Manager from November 1993, the month he joined
      the Company, to September 1996. Prior to joining the Company, Mr. Dillon was
      employed by New Market Development Company for six years where he served as
      Senior Project Manager. Prior to joining New Market, Mr. Dillon was the
      Development Director of Western Development Company where he spent 6
      years.





***Lisa
      J. Morrison.*** Ms.
      Morrison was named Senior Vice President - Leasing in August 2004. Previously,
      she held the positions of Vice President - Leasing from May 2001 to August
      2004,
      Assistant Vice President of Leasing from August 2000 to May 2001 and Director
      of
      Leasing from April 1999 until August 2000. Prior to joining the Company, Ms.
      Morrison was employed by the Taubman Company and Trizec Properties, Inc. where
      she served as a leasing agent. Her major responsibilities include managing
      the
      leasing strategies for our operating properties, as well as expansions and
      new
      development. She also oversees the leasing personnel and the merchandising
      and
      occupancy for Tanger properties.




***James
      F. Williams*** **.** Mr.
      Williams was named Senior Vice President and Controller in February 2006. Mr.
      Williams joined the Company in September 1993, was promoted to Controller in
      January 1995 and was named Assistant Vice President in January 1997 and Vice
      President in April 2004. Prior to joining the Company Mr. Williams was the
      Financial Reporting Manager of Guilford Mills, Inc. from April 1991 to September
      1993 and was employed by Arthur Andersen for 5 years from 1987 to 1991. Mr.
      Williams graduated from the University of North Carolina at Chapel Hill in
      December 1986 and is a certified public accountant.




***Virginia
      R. Summerell*** **.** Ms.
      Summerell was named Vice President, Treasurer and Assistant Secretary of the
      Company in May 2005. Since joining the Company in August 1992, she has held
      various positions including Treasurer, Assistant Secretary and Director of
      Finance. Her major responsibilities include developing and maintaining banking
      relationships, oversight of all project and corporate finance transactions
      and
      management of treasury systems. Previously she served as a Vice President and
      in
      other capacities at Bank of America and its predecessors in Real Estate and
      Corporate Lending for nine years. Ms. Summerell is a graduate of Davidson
      College and holds an MBA from the Babcock School at Wake Forest University.








**PART
      II**





**Item
                5.**
            **Market
                For Registrant’s Common Equity, Related Shareholder Matters and Issuer
                Purchases of Equity
                Securities**





**Market
      Information**


There
      is
      no established public trading market for our common units. As of December 31,
      2006, the Company’s wholly-owned subsidiaries owned 15,520,668 common units and
      TFLP owned 3,033,305 common units as a limited partner. We made distributions
      per partnership common unit during 2006 and 2005 as follows:





2006
            2004First
                Quarter
            $
                .645
            $
                .625Second
                Quarter
            .680
            .645Third
                Quarter
            .680
            .645Fourth
                Quarter
            .680
            .645$
                2.685
            $
                2.560





**Distributions**


The
      Company operates in a manner intended to enable it to qualify as a REIT under
      the Internal Revenue Code, or the Code. A REIT is required to distribute at
      least 90% of its taxable income to its shareholders each year. The Company
      depends upon distributions or payments from us to make distributions to its
      common and preferred shareholders. The Company intends to continue to qualify
      as
      a REIT and to distribute substantially all of its taxable income to its
      shareholders through the payment of regular quarterly dividends. Certain of
      our
      debt agreements limit the payment of distributions such that distributions
      shall
      not exceed funds from operations, or FFO, as defined in the agreements, for
      the
      prior fiscal year on an annual basis or 95% of FFO on a cumulative basis.





**Securities
      Authorized for Issuance under Equity Compensation Plans**





The
      information required by this Item is set forth in Part III Item 12 of this
      document.





**Purchases
      of Equity Securities by the Issuer and Affiliated
      Purchasers**





During
      1998, the Company's Board of Directors authorized the repurchase of up to $6
      million of the Company's common shares. The timing and amount of the repurchases
      is at the discretion of management. We have not made any repurchases since
      1999
      and the amount authorized for future repurchases remaining at December 31,
      2005
      totaled $4.8 million. Any amounts required to repurchase the Company's common
      shares will be funded by us by redeeming one unit for every two common shares
      repurchased.





**Item
      6. Selected Financial Data**





2006
            
            
            2005
            
            
            2004
            
            
            2003
            
            
            2002(In
                thousands, except per unit and center data)**OPERATING
                DATA**Total
                revenues
            
            $
            211,711
            
            $
            198,761
            
            $
            190,483
            
            $
            113,727
            
            $
            101,999Operating
                income
            
            
            69,099
            
            
            74,011
            
            
            69,201
            
            
            39,920
            
            
            34,994Income
                from continuing operations
            
            
            29,592
            
            
            7,920
            
            
            7,982
            
            
            13,312
            
            
            6,926Net
                income
            
            
            43,633
            
            
            6,077
            
            
            8,626
            
            
            16,399
            
            
            14,280**UNIT****DATA**Basic:Income
                from continuing operations
            
            $
            1.32
            
            $
            .16
            
            $
            .48
            
            $
            .96
            
            $
            .45Net
                income available to commonunitholders
            
            $
            2.08
            
            $
            .32
            
            $
            .52
            
            $
            1.19
            
            $
            1.11Weighted
                average common units
            
            
            18,333
            
            
            17,223
            
            
            16,555
            
            
            13,085
            
            
            11,356Diluted:Income
                from continuing operations
            
            $
            1.30
            
            $
            .16
            
            $
            .48
            
            $
            .94
            
            $
            .45Net
                income available to commonunitholders
            
            $
            2.06
            
            $
            .32
            
            $
            .52
            
            $
            1.17
            
            $
            1.08Weighted
                average common units
            
            
            18,574
            
            
            17,341
            
            
            16,650
            
            
            13,300
            
            
            11,539Common
                distributions paid
            
            $
            2.69
            
            $
            2.56
            
            $
            2.49
            
            $
            2.46
            
            $
            2.45**BALANCE
                SHEET DATA**Real
                estate assets, before depreciation
            
            $
            1,216,847
            
            $
            1,152,866
            
            $
            1,077,393
            
            $
            1,078,553
            
            $
            622,399Total
                assets
            
            
            1,040,635
            
            
            1,000,363
            
            
            936,105
            
            
            986,815
            
            
            477,380Debt
            
            
            678,579
            
            
            663,607
            
            
            488,007
            
            
            540,319
            
            
            345,005Partners’
                equity
            
            
            313,700
            
            
            299,581
            
            
            196,754
            
            
            206,600
            
            
            114,265**OTHER
                DATA**Cash
                flows provided by (used in):Operating
                activities
            
            $
            88,354
            
            $
            83,912
            
            $
            84,774
            
            $
            46,593
            
            $
            39,695Investing
                activities
            
            $
            (62,831
            )
            $
            (336,563
            )
            $
            2,607
            
            $
            (327,068
            )
            $
            (26,883
            )Financing
                activities
            
            $
            (20,036
            )
            $
            251,488
            
            $
            (93,156
            )
            $
            289,271
            
            $
            (12,247
            )Gross
                Leasable Area Open:Wholly-owned
            
            
            8,388
            
            
            8,261
            
            
            5,066
            
            
            5,299
            
            
            5,469Partially-owned
                (consolidated)
            
            
            ---
            
            
            ---
            
            
            3,271
            
            
            3,273
            
            
            ---Partially-owned
                (unconsolidated)
            
            
            667
            
            
            402
            
            
            402
            
            
            324
            
            
            260Managed
            
            
            293
            
            
            64
            
            
            105
            
            
            434
            
            
            457Number
                of outlet centers:Wholly-owned
            
            
            30
            
            
            31
            
            
            23
            
            
            26
            
            
            28Partially-owned
                (consolidated)
            
            
            ---
            
            
            ---
            
            
            9
            
            
            9
            
            
            ---Partially-owned
                (unconsolidated)
            
            
            2
            
            
            1
            
            
            1
            
            
            1
            
            
            1Managed
            
            
            3
            
            
            1
            
            
            3
            
            
            4
            
            
            5


In December 2003, COROC Holdings, LLC, a joint venture in which we initially
      had
      a one-third ownership interest and consolidated for financial reporting purposes
      under the provisions of FIN 46R, purchased the 3.3 million square foot Charter
      Oak portfolio of outlet center properties for $491.0 million, including the
      assumption of $186.4 million of cross-collateralized debt which has a stated,
      fixed interest rate of 6.59% and matures in July 2008. We recorded the debt
      at
      its fair value of $198.3 million, with an effective interest rate of 4.97%.
      We
      funded the majority of our share of the equity required for the transaction
      through the issuance of 4.6 million of the Company’s common shares on December
      10, 2003, generating approximately $88.0 million in net proceeds. The results
      of
      the Charter Oak portfolio have been included in the consolidated financial
      statements since December 2003.





In
      November 2005, we purchased for $286.0 million (including acquisition costs)
      the
      remaining two-thirds interest in this joint venture. The transaction was funded
      with a combination of Company common and preferred shares and senior unsecured
      notes.








**Item
      7.**  **Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations**





***Cautionary
      Statements***





Certain
      statements made below are forward-looking statements within the meaning of
      Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
      Securities Exchange Act of 1934, as amended. We intend such forward-looking
      statements to be covered by the safe harbor provisions for forward-looking
      statements contained in the Private Securities Reform Act of 1995 and included
      this statement for purposes of complying with these safe harbor provisions.
      Forward-looking statements, which are based on certain assumptions and describe
      our future plans, strategies and expectations, are generally identifiable by
      use
      of the words ‘believe’, ‘expect’, ‘intend’, ‘anticipate’, ‘estimate’, ‘project’,
      or similar expressions. You should not rely on forward-looking statements since
      they involve known and unknown risks, uncertainties and other factors which
      are,
      in some cases, beyond our control and which could materially affect our actual
      results, performance or achievements. Factors which may cause actual results
      to
      differ materially from current expectations include, but are not limited to,
      those set forth under Item 1A - Risk Factors.





The
      following discussion should be read in conjunction with the consolidated
      financial statements appearing elsewhere in this report. 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.





General
      Overview





In
      November 2005 we completed the acquisition of the final two-thirds interest
      in
      the COROC joint venture which owned nine factory outlet centers totaling
      approximately 3.3 million square feet. We originally purchased a one-third
      interest in December 2003. From December 2003 to November 2005, COROC was
      consolidated for financial reporting purposes under the provisions of FASB
      Interpretation No. 46 (Revised 2003): “Consolidation of Variable Interest
      Entities: An Interpretation of ARB No. 51”, or FIN 46R. The purchase price for
      the final two-thirds interest of COROC was $286.0 million (including closing
      and
      acquisition costs of $3.5 million) which we and the Company funded with a
      combination of unsecured debt and equity raised through the capital markets
      in
      the fourth quarter of 2005.





At
      December 31, 2006, we had 30 wholly-owned centers in 21 states totaling 8.4
      million square feet of GLA compared to 31 centers in 22 states totaling 8.3
      million square feet of GLA as of December 31, 2005. The changes in the number
      of
      centers and GLA are due to the following events:





No.
                of
              Centers
            
            
            GLA
              (000’s
            )
            
            StatesAs
                of December 31, 2005
            
            
            31
            
            
            8,261
            
            
            22New
                development:Charleston,
                South Carolina
            
            
            1
            
            
            352
            
            
            ---Dispositions:Pigeon
                Forge, Tennessee
            
            
            (1
            )
            
            (95
            )North
                Branch, Minnesota
            
            
            (1
            )
            
            (134
            )
            
            (1
            )Other
            
            
            ---
            
            
            4
            
            
            ---As
                of December 31, 2006
            
            
            30
            
            
            8,388
            
            
            21








Results
      of Operations





2006
      Compared to 2005





Base
      rentals increased $7.5 million, or 6%, in the 2006 period compared to the 2005
      period. Our overall occupancy rates for our stabilized outlet centers were
      comparable from year to year at 97.5% and 97.0%. Our base rental income
      increased $4.9 million due to increases in rental rates on lease renewals and
      incremental rents from re-tenanting vacant space. During 2006, we executed
      479
      leases totaling 1.9 million square feet at an average increase of 10%. This
      compares to our execution of 460 leases totaling 1.9 million square feet at
      an
      average increase of 6% during 2005. Base rentals also increased approximately
      $2.1 million due to the August 2006 opening of our new center in Charleston,
      South Carolina. Additionally, increases were recognized in the net amortization
      of above or below market leases totaling $723,000.





The
      values of the above and below market leases are amortized and recorded as either
      an increase (in the case of below market leases) or a decrease (in the case
      of
      above market leases) to rental income over the remaining term of the associated
      lease. For the 2006 period, we recorded $1.5 million to rental income for the
      net amortization of market lease values compared with $741,000 for the 2005
      period. If a tenant vacates its space prior to the contractual termination
      of
      the lease and no rental payments are being made on the lease, any unamortized
      balance of the related above or below market lease value will be written off
      and
      could materially impact our net income positively or negatively. At December
      31,
      2006, the net liability representing the amount of unrecognized below market
      lease values totaled $2.1 million.





Percentage
      rentals, which represent revenues based on a percentage of tenants' sales volume
      above predetermined levels (the "breakpoint"), increased $842,000 or 13%.
      Reported same-space sales per square foot for the twelve months ended December
      31, 2005 were $338 per square foot, a 4.8% increase over the prior year ended
      December 31, 2005. Same-space sales is defined as the weighted average sales
      per
      square foot reported in space open for the full duration of each comparison
      period. Our ability to attract high volume tenants to many of our outlet centers
      continues to improve the average sales per square foot throughout our portfolio.





Expense
      reimbursements, which represent the contractual recovery from tenants of certain
      common area maintenance, insurance, property tax, promotional, advertising
      and
      management expenses generally fluctuate consistently with the related
      reimbursable property operating expenses to which they relate. Expense
      reimbursements increased $3.1 million, or 6%, in the 2006 period versus the
      2005
      period. Expense reimbursements, expressed as a percentage of property operating
      expenses, were 87% and 88% respectively, in the 2006 and 2005 periods. The
      slight decrease is due to increases in miscellaneous non-reimbursable expenses
      such as state franchise and excise taxes.





Other
      income increased $1.5 million, or 27%, in 2006 compared to 2005 primarily due
      to
      the recognition of leasing, marketing and development fee income from our Tanger
      Wisconsin Dells joint venture, fees from third party management services, gains
      on sales of outparcels of land and increases in miscellaneous vending
      income.





Property
      operating expenses increased by $6.0 million, or 9%, in the 2006 period as
      compared to the 2005 period. Of this increase, $1.8 million relates
      incrementally to our Charleston, South Carolina outlet center which opened
      in
      August 2006. In addition, during 2006 we incurred a $1.5 million charge for
      the
      abandonment of acquisition due diligence costs, as we have decided we are no
      longer in a position to pursue a potential acquisition opportunity. The
      abandoned acquisition due diligence costs were incurred in connection with
      structuring, diligencing and submitting a proposal to acquire a significant
      portfolio from a public REIT that was exploring its strategic alternatives.
      The
      bid was requested, but ultimately not accepted, by the public REIT. Excluding
      these costs associated with the Charleston, South Carolina outlet center and
      the
      abandoned due diligence costs, operating expenses increased 4.3 %. This increase
      was due to higher property insurance costs upon renewal of our annual policies
      during the year and non-reimbursable expenses such as state franchise and excise
      taxes.





General
      and administrative expenses increased $2.9 million, or 21%, in the 2006 period
      as compared to the 2005 period. The increase is primarily due to compensation
      expense related to restricted shares issued during the 2006 period as well
      as an
      increase in bonus compensation for senior executives in the 2006 period. As
      a
      percentage of total revenues, general and administrative expenses increased
      from
      7% in the 2005 period to 8% in the 2006 period.











Depreciation
      and amortization increased from $48.2 million in the 2005 period to $57.2
      million in the 2006 period. This was due a full year of depreciation of the
      assets acquired in December 2005 in the final COROC joint venture acquisition
      and the accelerated depreciation and amortization of certain assets in the
      initial acquisition of the COROC properties in December 2003 accounted for
      under
      FAS 141 for tenants that terminated their leases during the 2006
      period.





As
      shown
      in the table below, total interest expense decreased $2.2 million, or 5%, during
      the 2006 period as compared to the 2005 period. However, the 2005 period
      included a large prepayment premium and the write off of deferred loan costs
      totaling $9.9 million incurred related to the early extinguishment of the $77.4
      million John Hancock Life Insurance Company mortgages. Actual interest expense
      from borrowings increased during 2006 due to higher overall debt levels related
      to the $250 million senior unsecured note issuance in November 2005 and the
      $149.5 million exchangeable senior unsecured note issuance in August 2006.





Summary
                of interest expense
            
            2006
            
            2005Interest
                expense from borrowings, net of capitalization
            
            $38,463
            
            $31,816Prepayment
                penalty and deferred loan costwrite
                off related to early extinguishment of debt
            
            917
            
            9,866Loan
                cost amortization, net of capitalization
            
            1,395
            
            1,245Total
                interest expense
            
            $40,775
            
            $42,927





During
      August 2006, we opened a 264,900 square foot center in Wisconsin Dells,
      Wisconsin, which is owned by Tanger Wisconsin Dells, in which we have a 50%
      ownership interest and account for as an unconsolidated joint venture under
      the
      equity method. Our equity in earnings of unconsolidated joint ventures increased
      from 2005 to 2006 as a result of the opening of this center.





In
      November 2005, we purchased our consolidated joint venture partner’s interest in
      COROC. Therefore, consolidated joint venture minority interest decreased $24.0
      million as there was no allocation of earnings to this joint venture partner
      during 2006. The allocation of earnings to our joint venture partner was based
      on a preferred return on investment as opposed to their ownership percentage
      and
      accordingly had a significant impact on our earnings during 2005.





Discontinued
      operations includes the results of operations and gains on sales of real estate
      for our Pigeon Forge, Tennessee and North Branch, Minnesota centers, both of
      which were sold in the first quarter of 2006. The following table summarizes
      the
      results of operations and gains on sale of real estate for the 2006 and 2005
      periods:





Summary
                of discontinued operations
            
            2006
            
            2005Operating
                income from discontinued operations
            
            $      208
            
            $
                2,847Gain
                on sale of real estate
            
            13,833
            
            ---Discontinued
                operations
            
            $
                14,041
            
            $
                2,847





During
      the first quarter of 2005, we sold our outlet center at our Seymour, Indiana
      property. Due to significant continuing involvement, the sale did not qualify
      as
      discontinued operations under the provisions of FAS 144. We recorded a loss
      on
      sale of real estate of $4.7 million as a result of the sale. Net proceeds
      received for the center were approximately $2.0 million.








**2005
      Compared to 2004**





Base
      rentals increased $3.9 million, or 3%, in the 2005 period compared to the 2004
      period. Our overall occupancy rates for our stabilized outlet centers were
      comparable from year to year at 97%. Our base rental income increased $3.9
      million due to increases in rental rates on lease renewals and incremental
      rents
      from re-tenanting vacant space. During 2005, we executed 460 leases totaling
      1.9
      million square feet at an average increase of 6%. This compares to our execution
      of 471 leases totaling 2.0 million square feet at an average increase of 6%
      during 2004. Base rentals also increased approximately $400,000 due to the
      expansions of our Locust Grove, Georgia and Foley, Alabama centers which both
      occurred late in the fourth quarter of 2005. The impact of these increases
      was
      offset by decreases in the net amortization of above or below market leases
      totaling $324,000 and decreases in termination fees received of $433,000.





The
      values of the above and below market leases are amortized and recorded as either
      an increase (in the case of below market leases) or a decrease (in the case
      of
      above market leases) to rental income over the remaining term of the associated
      lease. For the 2005 period, we recorded $741,000 to rental income for the net
      amortization of market lease values compared with $1.1 million for the 2004
      period. If a tenant vacates its space prior to the contractual termination
      of
      the lease and no rental payments are being made on the lease, any unamortized
      balance of the related above or below market lease value will be written off
      and
      could materially impact our net income positively or negatively.





Percentage
      rentals, which represent revenues based on a percentage of tenants' sales volume
      above predetermined levels (the "breakpoint"), increased $1.1 million or 20%.
      The percentage rents in 2004 were reduced by an allocation to the previous
      owner
      of the COROC portfolio for their pro-rata share of percentage rents associated
      with tenants whose sales lease year began prior to December 19, 2003, the date
      of the initial acquisition. Reported same-space sales per square foot for the
      twelve months ended December 31, 2005 were $320 per square foot, a 3.4% increase
      over the prior year ended December 31, 2004. Same-space sales is defined as
      the
      weighted average sales per square foot reported in space open for the full
      duration of each comparison period. Our ability to attract high volume tenants
      to many of our outlet centers continues to improve the average sales per square
      foot throughout our portfolio.


Expense
      reimbursements, which represent the contractual recovery from tenants of certain
      common area maintenance, insurance, property tax, promotional, advertising
      and
      management expenses generally fluctuates consistently with the related
      reimbursable property operating expenses to which it relates. Expense
      reimbursements increased $4.1 million, or 8%, in the 2005 period versus the
      2004
      period. Expense reimbursements, expressed as a percentage of property operating
      expenses, were 88% and 89% in the 2005 and 2004 periods, respectively.





Other
      income decreased $873,000, or 13%, in 2005 compared to 2004 primarily due to
      a
      decrease in gains from sales of outparcels of land. Gains of $127,000 and $1.5
      million were recognized in the 2005 and 2004 periods, respectively. The decrease
      was offset by an increase in interest income from proceeds from debt and equity
      offerings, which were temporarily invested in short-term investments until
      the
      acquisition of COROC was completed as well as increases in vending income.





Property
      operating expenses increased by $5.0 million, or 9%, in the 2005 period as
      compared to the 2004 period. Property operating expenses increased due to
      portfolio wide increases in advertising and common area maintenance projects.
      Real estate taxes, which are also a part of property operating expenses,
      increased due to the COROC portfolio property values being revalued in several
      jurisdictions at the 2003 purchase price value.





General
      and administrative expenses increased $1.0 million, or 8%, in the 2005 period
      as
      compared to the 2004 period. The increase is primarily due to compensation
      expense related to employee share options granted in the second quarter of
      2004
      and restricted shares granted in 2004 and 2005 all of which are accounted for
      under FAS 123.  As
      a
      percentage of total revenues, general and administrative expenses remained
      constant at 7% in both the 2005 and 2004 periods.





Depreciation
      and amortization decreased from $50.7 million in the 2004 period to $48.2
      million in the 2005 period. This was due principally to the accelerated
      depreciation and amortization of certain assets in the acquisition of the COROC
      properties in December 2003 accounted for under FAS 141 for tenants that
      terminated their leases during the 2004 period.







Interest
      expense increased $7.8 million, or 22%, during the 2005 period as compared
      to
      the 2004 period due primarily to the $9.4 million prepayment premium and the
      write off of deferred loan costs totaling $447,000 incurred in the fourth
      quarter of 2005 relating to the early extinguishment of the $77.4 million John
      Hancock Life Insurance Company mortgages. The increase in interest expense
      caused by this charge was partially offset by lower borrowings throughout the
      year prior to the acquisition of our interest in COROC in November 2005 and
      the
      related $250 million senior unsecured note issuance.





In
      November 2005, we purchased our consolidated joint venture partner’s interest in
      COROC. Therefore, consolidated joint venture minority interest decreased $3.1
      million due to less than a full year of allocation of earnings to our joint
      venture partner during 2005. The allocation of earnings to our joint venture
      partner was based on a preferred return on investment as opposed to their
      ownership percentage and accordingly had a significant impact on our
      earnings.





Discontinued
      operations includes the results of operations and gains on sales of real estate
      for our Pigeon Forge, Tennessee and North Branch, Minnesota centers, both of
      which were sold in the first quarter of 2006. In 2004, we sold our Dalton,
      Georgia and Clover and LL Bean, New Hampshire properties. FAS 144 requires
      that
      all statements of operations presented be reclassified. The following table
      summarizes the results of operations and gains on sale of real estate for the
      2005 and 2004 periods:





Summary
                of discontinued operations
            
            
            2005
            
            
            2004Operating
                income from discontinued operations
            
            $
            2,847
            
            $
            2,104Loss
                on sale of real estate
            
            
            ---
            
            
            (1,460
            )Discontinued
                operations
            
            $
            2,847
            
            $
            644





During
      the first quarter of 2005, we sold our outlet center at our Seymour, Indiana
      property. Due to significant continuing involvement, the sale did not qualify
      as
      discontinued operations under the provisions of FAS 144. We recorded a loss
      on
      sale of real estate of $4.7 million as a result of the sale. Net proceeds
      received for the center were approximately $2.0 million.





***Liquidity
      and Capital Resources***





Net
      cash
      provided by operating activities was $88.4 million, $83.9 million and $84.8
      million for the years ended December 31, 2006, 2005 and 2004, respectively.
      The
      increase in cash provided from operating activities from 2005 to 2006 is
      primarily due to the incremental income from the COROC acquisition in November
      2005. The decrease from 2004 to 2005 is due to a prepayment penalty of $9.4
      million associated with the early extinguishment of the John Hancock Life
      Insurance Company mortgages in October 2005 offset by the change in accounts
      payable and accrued expenses.





Net
      cash
      provided by (used in) investing activities amounted to $(62.8) million, $(336.6)
      million and $2.6 million during 2006, 2005 and 2004, respectively, and reflects
      the acquisitions, expansions and dispositions of real estate during each year.
      In 2006, we funded the majority of our 352,300 square foot outlet center
      developed in Charleston, South Carolina which opened in August 2006. In November
      2005 we completed the acquisition of the final two-thirds interest of the
      Charter Oak Partners' portfolio of nine factory outlet centers totaling
      approximately 3.3 million square feet. We originally purchased a one-third
      interest in December 2003.





Net
      cash
      (used in) provided by financing activities of $(20.0) million, $251.5 million
      and $(93.2) million in 2006, 2005 and 2004, respectively, has fluctuated
      consistently with the capital needed to fund the current development and
      acquisition activity and reflects increases in distributions paid and units
      outstanding during 2006, 2005 and 2004. During 2005, together with the Company,
      we raised approximately $381.3 million in the public debt and equity markets
      in
      order to fund the acquisition described above and to repay the John Hancock
      Life
      Insurance mortgages.








**Current
      Developments and Dispositions**





Any
      developments or expansions that we, or a joint venture that we are involved
      in,
      have planned or anticipated may not be started or completed as scheduled, or
      may
      not result in accretive net income or funds from operations. In addition, we
      regularly evaluate acquisition or disposition proposals and engage from time
      to
      time in negotiations for acquisitions or dispositions of properties. We may
      also
      enter into letters of intent for the purchase or sale of properties. 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 net income or funds from operations.





WHOLLY
      OWNED CURRENT DEVELOPMENTS





During
      August of 2006, we opened our wholly-owned 352,300 square foot center located
      near Charleston, South Carolina. Tenants in the center include Gap, Banana
      Republic, Liz Claiborne, Nike, Adidas, Tommy Hilfiger, Guess, Reebok and others.
      As of December 31, 2006, the center was 89% occupied.





During
      the fourth quarter of 2006, we closed on the acquisition of the Pittsburgh
      land
      for $4.8 million and have completed the relocation of the power lines located
      on
      our property. Tax incentive financing bonds have been issued, with net proceeds
      of approximately $16.8 million expected to be received by us as qualifying
      expenditures during construction of the center are incurred. We currently expect
      to deliver the first phase of the center, approximately 309,000 square feet,
      during the first quarter of 2008. The Pittsburgh center is wholly owned by
      us.





During
      2007, we plan to expand four centers by a combined 140,000 square feet. These
      centers are located in Barstow, California; Branson, Missouri; Gonzales,
      Louisiana and Tilton, New Hampshire. These expansions are projected to be
      completed during the fourth quarter of 2007.





WHOLLY
      OWNED DISPOSITIONS





During
      the first quarter of 2006, we completed the sale of two outlet centers located
      in Pigeon Forge, Tennessee and North Branch, Minnesota. Net proceeds received
      from the sales of the centers were approximately $20.2 million. We recorded
      gains on sales of real estate of $13.8 million associated with these sales
      during the first quarter of 2006.





CONSOLIDATED
      JOINT VENTURES





*COROC
      Holdings, LLC*





On
      December 19, 2003, COROC Holdings, LLC, or COROC, a joint venture in which
      we
      had an initial one-third ownership interest and consolidated for financial
      reporting purposes under the provisions of FIN 46R, purchased the 3.3 million
      square foot Charter Oak portfolio of outlet center properties for $491.0
      million, including the assumption of $186.4 million of cross-collateralized
      debt
      which has a stated, fixed interest rate of 6.59% and matures in July 2008.
      We
      recorded the debt at its fair value of $198.3 million, with an effective
      interest rate of 4.97%. Accordingly, a debt premium of $11.9 million was
      recorded and is being amortized over the life of the debt. We funded the
      majority of our share of the equity required for the transaction through the
      issuance of 4.6 million Company common shares on December 10, 2003, generating
      approximately $88.0 million in net proceeds. The results of the Charter Oak
      portfolio have been included in the consolidated financial statements from
      December 2003.





In
      November 2005, we purchased for $286.0 million (including acquisition costs)
      the
      remaining two-thirds interest from our joint venture partner. We recorded a
      debt
      discount of $883,000 with an effective interest rate of 5.25% to reflect the
      fair value of the debt deemed to have been acquired in the acquisition. The
      all
      cash transaction was funded with a combination of Company common and preferred
      shares and our unsecured senior notes. The transaction completed the Charter
      Oak
      acquisition and solidified our position in the outlet industry. In addition,
      the
      centers acquired provide an excellent geographic fit, a diversified tenant
      portfolio and are in line with our strategy of creating an increased presence
      in
      high-end resort locations.














UNCONSOLIDATED
      JOINT VENTURES





The
      following table details certain information as of December 31, 2006 about
      various unconsolidated real estate joint ventures in which we have an ownership
      interest:





Joint
                Venture
            Center
                Location
            Opening
                Date
            Ownership
                %
            Square
                Feet
            Joint
                Venture Debt
              (in
                millions)TWMB
                Associates, LLC
            Myrtle
                Beach, South Carolina
            2002
            50%
            401,992
            $35.8Tanger
                Wisconsin Dells, LLC
            Wisconsin
                Dells, Wisconsin
            2006
            50%
            264,929
            $28.9Deer
                Park Enterprise, LLC
            Deer
                Park, Long Island NY
            Under
                construction
            33%
            800,000
                estimated
            $35.4


We
      may
      issue guarantees on the debt of a joint venture primarily because it allows
      the
      joint venture to obtain funding at a lower cost than could be obtained
      otherwise. This results in a higher return for the joint venture on its
      investment and in a higher return on our investment in the joint venture. We
      have joint and several guarantees for a portion of the debt outstanding for
      Tanger Wisconsin Dells and Deer Park Enterprise as of December 31,
      2006.





As
      is
      typical in real estate joint ventures, each of the above ventures contains
      provisions where a venture partner can trigger certain provisions and force
      the
      other partners to either buy or sell their investment in the joint venture.
      Should this occur, we may be required to incur a significant cash outflow in
      order to maintain ownership of these outlet centers.




*TWMB
      Associates, LLC*





TWMB
      Associates, LLC, or TWMB, a joint venture in which we have a 50% ownership
      interest, has operated a Tanger Outlet Center located on Highway 17 in Myrtle
      Beach, South Carolina since June 2002. The Myrtle Beach center now consists
      of
      approximately 402,000 square feet and has over 90 name brand tenants.





During
      March 2005, TWMB entered into an interest rate swap agreement with Bank of
      America with a notional amount of $35 million for five years. Under this
      agreement, TWMB receives a floating interest rate based on the 30 day LIBOR
      index and pays a fixed interest rate of 4.59%. This swap effectively changes
      the
      rate of interest on $35 million of variable rate mortgage debt to a fixed rate
      of 5.99% for the contract period.





In
      April
      2005, TWMB obtained non-recourse, permanent financing to replace the
      construction loan debt that was utilized to build the outlet center in Myrtle
      Beach, South Carolina. The new mortgage amount is $35.8 million with a rate
      of
      LIBOR + 1.40%. The note is for a term of five years with payments of interest
      only. In April 2010, TWMB has the option to extend the maturity date of the
      loan
      two more years until 2012. All debt incurred by this unconsolidated joint
      venture is collateralized by its property.





*Tanger
      Wisconsin Dells, LLC*





In
      March
      2005, the Tanger Wisconsin Dells joint venture was established to construct
      and
      operate a Tanger Outlet center in Wisconsin Dells, Wisconsin. During the first
      quarter of 2006, capital contributions of approximately $510,000 were made
      by
      each member. The 264,900 square foot center opened in August 2006. The tenants
      in the center include Polo Ralph Lauren, Abercrombie & Fitch, Hollister,
      Gap, Banana Republic, Old Navy, Liz Claiborne, Nike, Adidas, Tommy Hilfiger
      and
      others.





In
      February 2006, in conjunction with the construction of the center, Tanger
      Wisconsin Dells closed on a construction loan that provides for borrowings
      of up
      to $30.25 million with Wells Fargo Bank, NA due in February 2009. The
      construction loan is repayable on an interest only basis with interest floating
      based on the 30, 60 or 90 day LIBOR index plus 1.30%. The construction loan
      incurred by this unconsolidated joint venture is collateralized by its property
      as well as joint and several guarantees by us and designated guarantors of
      our
      venture partner.







The
      above
      mentioned guarantee of the construction loan debt is accounted for under the
      provisions of FASB Interpretation No. 45, “Guarantors Accounting and Disclosure
      Requirements for Guarantees, Including Indirect Guarantees of Indebtedness
      of
      Others”, or FIN 45. FIN 45 requires the guarantor to recognize a liability for
      the non-contingent component of the guarantee which represents the obligation
      to
      stand ready to perform in the event that specified triggering events or
      conditions occur. The initial measurement of this liability is the fair value
      of
      the guarantee at inception. The recognition of the liability is required even
      if
      it is not probable that payment will be required under the guarantee or if
      the
      guarantee was issued with a premium payment or as part of a transaction with
      multiple elements. We recorded at inception the fair value of our guarantee
      of
      the Tanger Wisconsin Dells joint venture's debt as an increase to our investment
      in Tanger Wisconsin Dells and recorded a corresponding liability of
      approximately $409,000. We have elected to account for the release from the
      obligation under the guarantee by the straight-line method over the three year
      life of the guarantee. The remaining value of the guarantee liability as of
      December 31, 2006 was approximately $295,000.





*Deer
      Park Enterprise, LLC*





In
      October 2003, Deer Park Enterprise, LLC, or Deer Park, a joint venture in which
      we have a one-third ownership interest, entered into a sale-leaseback
      transaction for the location on which it ultimately will develop a shopping
      center that will contain both outlet and big box retail tenants in Deer Park,
      New York. To date, we have made equity contributions totaling $4.5 million
      to
      Deer Park, including $1.5 million in 2006. Both of the other venture partners
      have made equity contributions equal to ours. Demolition of the buildings
      located at the Deer Park site began during the third quarter of 2006 and we
      currently expect this center will contain over 800,000 square feet and will
      be
      delivered in the first quarter of 2008.





In
      September 2006, Deer Park closed on a construction loan of $43.2 million with
      Bank of America which incurs interest at a floating interest rate equal to
      LIBOR
      plus 2.00% and is collateralized by the property as well as joint and several
      guarantees by all three venture partners. The loan balance as of December 31,
      2006 was approximately $35.4 million. Proceeds to date were used to refinance
      the debt incurred in the original purchase of the property, including a $19
      million loan with Bank of America and a $7 million purchase money mortgage
      note
      with the original seller of the property. The construction loan matures in
      April
      2007.





The
      above
      mentioned guarantee of the construction loan debt is accounted for under the
      provisions of FIN 45. We recorded at inception the fair value of our guarantee
      of the Deer Park joint venture's debt as an increase to our investment in Deer
      Park and recorded a corresponding liability of approximately $72,000. We have
      elected to account for the release from the obligation under the guarantee
      by
      the straight-line method over the three year life of the guarantee. The
      remaining value of the guarantee liability as of December 31, 2006 was
      approximately $36,000.





The
      original purchase of the property was in the form of a sale-leaseback
      transaction, which consisted of the sale of the property to Deer Park for $29
      million, including a 900,000 square foot industrial building, which was then
      leased back to the seller under an operating lease agreement. At the end of
      the
      lease in May 2005, the tenant vacated the building. However, the tenant had
      not
      satisfied all of the conditions necessary to terminate the lease. Deer Park
      is
      currently in litigation to recover from the tenant its monthly lease payments
      and will continue to do so until recovered. Annual rents due from the tenant
      were $3.4 million.





Through
      March 2006, the Deer Park joint venture accounted for the lease revenues under
      the provisions of FASB Statement No. 67 “Accounting for Costs and Initial Rental
      Operations of Real Estate Projects”, where the rent received from the tenant
      prior to May 2005 and that accrued from June 2005 through March 2006, net of
      applicable expenses, were treated as incidental revenues and were recorded
      as a
      reduction in the basis of the assets. Given the uncertainty regarding the final
      outcome of the litigation described above, Deer Park discontinued the accrual
      of
      rental revenues associated with the sale-leaseback transaction as of April
      1,
      2006. As a result, we recorded our portion of the project losses, which amounted
      to $31,000 for the 2006 period, as a reduction in our investment in Deer Park
      and as a reduction to equity in earnings of unconsolidated joint
      ventures.








**Financing
      Arrangements**





In
      February 2006, the Company completed the issuance of an additional 800,000
      Class
      C Preferred Shares, receiving net proceeds of approximately $19.4 million.
      The
      proceeds, which were contributed to us in exchange for preferred units, were
      used to pay down amounts outstanding on our unsecured lines of credit. The
      Company pays annual dividends equal to $1.875 per share with distributions
      from
      us. After the offering the total amount of Company Class C Preferred Shares
      (and
      Operating Partnership preferred units) outstanding was 3,000,000. All proceeds
      from common and preferred share issuances by the Company are contributed to
      the
      Operating Partnership in exchange for common and preferred units.





In
      August
      2006, the Operating Partnership issued $149.5 million of exchangeable senior
      unsecured notes that mature on August 15, 2026. The notes bear interest at
      a
      fixed coupon rate of 3.75%. The notes are exchangeable into the Company’s common
      shares, at the option of the holder, at an initial exchange ratio, subject
      to
      adjustment, of 27.6856 shares per $1,000 principal amount of notes (or an
      initial exchange price of $36.1198 per common share). The notes are senior
      unsecured obligations of the Operating Partnership and are guaranteed by the
      Company on a senior unsecured basis. On and after August 18, 2011, holders
      may
      exchange their notes for cash in an amount equal to the lesser of the exchange
      value and the aggregate principal amount of the notes to be exchanged, and,
      at
      our option, Company common shares, cash or a combination thereof for any excess.
      Note holders may exchange their notes prior to August 18, 2011 only upon the
      occurrence of specified events. In addition, on August 18, 2011, August 15,
      2016
      or August 15, 2021, note holders may require us to repurchase the notes for
      an
      amount equal to the principal amount of the notes plus any accrued and unpaid
      interest up to, but excluding, the repurchase date.





We
      used
      the net proceeds from the issuance to repay in full our mortgage debt
      outstanding with Woodman of the World Life Insurance Society totaling
      approximately $15.3 million, with an interest rate of 8.86% and an original
      maturity of September 2010. We also repaid all amounts outstanding under our
      unsecured lines of credit and a $53.5 million variable rate unsecured term
      loan
      with Wells Fargo with a weighted average interest rate of approximately 6.3%.
      As
      a result of the early repayment, we recognized a charge for the early
      extinguishment of the mortgages and term loan of approximately $917,000. The
      charge, which is included in interest expense, consisted of a prepayment premium
      of approximately $609,000 and the write-off of deferred loan fees totaling
      approximately $308,000.





At
      December 31, 2006, approximately 73% of our outstanding long-term debt
      represented unsecured borrowings and approximately 57% of the gross book value
      of our real estate portfolio was unencumbered.





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 our unitholders’ best
      interests. During the third quarter of 2006, we, together with the Company,
      updated our shelf registration as a well known seasoned issuer where we will
      be
      able to register unspecified amounts of different classes of securities on Form
      S-3 .
      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.





During
      the third quarter of 2006, we closed on unsecured lines of credit of $25 million
      each with Branch Banking and Trust Co. and SunTrust Bank. As of December 31,
      2006, we maintained unsecured lines of credit that provided for unsecured
      borrowings of up to $200 million. All of our lines of credit have maturity
      dates
      of June 2009 or later. Based on cash provided by operations, existing credit
      facilities, ongoing negotiations with certain financial institutions and our
      ability to sell debt or equity subject to market conditions, we believe that
      we
      have access to the necessary financing to fund the planned capital expenditures
      during 2007.





We
      anticipate that adequate cash will be available to fund our operating and
      administrative expenses, regular debt service obligations, and the payment
      of
      distributions in order for the Company to maintain its status in accordance
      with
      REIT requirements in both the short and long term. Although we receive most
      of
      our rental payments on a monthly basis, distributions to unitholders are made
      quarterly and interest payments on the senior, unsecured notes are made
      semi-annually. Amounts accumulated for such payments will be used in the interim
      to reduce any outstanding borrowings under the existing lines of credit or
      invested in short-term money market or other suitable instruments.





**Contractual
      Obligations and Commercial Commitments**





The
      following table details our contractual obligations over the next five years
      and
      thereafter as of December 31, 2006 (in thousands):





**Contractual****Obligations**
            
            
            2007
            
            
            2008
            
            
            2009
            
            
            2010
            
            
            2011
            
            
            Thereafter
            
            
            TotalDebt
            
            $
            3,791
            
            $
            272,679
            
            $
            ---
            
            $
            ---
            
            $
            ---
            
            $
            399,500
            
            $
            675,970Operating
                leases
            
            
            3,382
            
            
            2,997
            
            
            2,578
            
            
            2,281
            
            
            2,192
            
            
            69,552
            
            
            82,982Preferred
                unitdistributions(1)
            
            
            5,625
            
            
            5,625
            
            
            5,625
            
            
            80,625
            
            
            ---
            
            
            ---
            
            
            97,500Interest
                payments
            
            
            41,782
            
            
            36,801
            
            
            25,544
            
            
            20,981
            
            
            20,981
            
            
            145,594
            
            
            291,683$
            54,580
            
            $
            318,102
            
            $
            33,747
            
            $
            103,887
            
            $
            23,173
            
            $
            614,646
            
            $
            1,148,135


(1)
            Preferred
                unit distributions reflect cumulative distributions on our preferred
                units
                on which we pay an annual distribution of $1.875 per unit on the
                3,000,000
                outstanding preferred units as of December 31, 2006. The preferred
                units
                are redeemable from the Company to the extent that the Company redeems
                its
                Class C Preferred Shares for $25.00 per share after the respective
                optional redemption date. The future obligations include future
                distributions on preferred shares/units through the optional redemption
                date and the redemption amount is included on the optional redemption
                date.





In
      addition to the contractual payment obligations shown in the table above, we
      also have a property under development and several in the process of being
      expanded or renovated. To complete these projects we expect to incur
      approximately $104.2 million of costs in 2007 and $20.3 million in 2008. The
      timing of these expenditures may vary due to delays in construction or
      acceleration of the opening date of a particular project.





Our
      debt
      agreements require the maintenance of certain ratios, including debt service
      coverage and leverage, and limit the payment of distributions such that
      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. We have historically been and currently are in compliance with all of
      our
      debt covenants. We expect to remain in compliance with all our existing debt
      covenants; however, should circumstances arise that would cause us to be in
      default, the various lenders would have the ability to accelerate the maturity
      on our outstanding debt.





We
      currently maintain six unsecured credit facilities with major national banking
      institutions, totaling $200 million. As of December 31, 2006, no amounts were
      outstanding under these credit facilities. As of February 1, 2007, all six
      credit facilities will expire in June 2009 or later.





**Off-Balance
      Sheet Arrangements**





We
      are
      party to a joint and several guarantee with respect to the construction loan
      obtained by Tanger Wisconsin Dells during the first quarter of 2006, which
      currently has a balance of $28.9 million. We are also party to a joint and
      several guarantee with respect to the loan obtained by Deer Park which currently
      has a balance of $35.4 million. See “Joint Ventures” section above for further
      discussion of off-balance sheet arrangements and their related guarantees.
      Our
      pro-rata portion of the TWMB mortgage secured by the center is $17.9 million.
      There is no guarantee provided for the TWMB mortgage by us.








***Related
      Party Transactions***





As
      noted
      above in “Unconsolidated Joint Ventures”, we are 50% owners of the TWMB and
      Tanger Wisconsin Dells joint ventures. TWMB and Tanger Wisconsin Dells pay
      us
      management, leasing, marketing and development fees, which we believe
      approximate current market rates, for services provided to the joint ventures.
      During 2006, 2005 and 2004, we recognized approximately $410,000, $327,000
      and
      $288,000 in management fees, $188,000, $6,000 and $212,000 in leasing fees,
      $86,000, $66,000 and $55,000 in marketing fees and $304,000, $0 and $28,000
      in
      development fees, respectively.





TFLP
      is a
      related party which holds a limited partnership interest in and is the minority
      owner of the Operating Partnership. Stanley K. Tanger, the Company’s Chairman of
      the Board and Chief Executive Officer, is the sole general partner of TFLP.
      The
      only material related party transaction with TFLP is the payment of quarterly
      distributions of earnings which were $8.1 million, $7.8 million and $7.6 million
      for the years ended December 31, 2006, 2005 and 2004, respectively.





***Critical
      Accounting Policies***





We
      believe the following critical accounting policies affect our more significant
      judgments and estimates used in the preparation of our consolidated financial
      statements.





**Principles
      of Consolidation**





The
      consolidated financial statements include our accounts and our wholly-owned
      subsidiaries. Intercompany balances and transactions have been eliminated in
      consolidation. Investments in real estate joint ventures that represent
      non-controlling ownership interests are accounted for using the equity method
      of
      accounting. Under the provisions of FIN 46R, we were considered the primary
      beneficiary of our joint venture, COROC. Therefore, the results of operations
      and financial position of COROC were included in our Consolidated Financial
      Statements prior to November 2005 when we acquired the remaining two-thirds
      interest in the joint venture.





In
      2003,
      the FASB issued FIN 46R which clarifies the application of existing accounting
      pronouncements to certain entities in which equity investors do not have the
      characteristics of a controlling financial interest or do not have sufficient
      equity at risk for the entity to finance its activities without additional
      subordinated financial support from other parties. The provisions of FIN 46R
      were effective for all variable interests in variable interest entities in
      2004
      and thereafter. We have evaluated Deer Park, Tanger Wisconsin Dells and TWMB
      and
      have determined that under the current facts and circumstances we are not
      required to consolidate these entities under the provisions of FIN 46R. Should
      certain facts and circumstances change and we were required to consolidated
      any
      or all of these entities under FIN 46R, it could have a material impact on
      our
      consolidated balance sheets.





**Acquisition
      of Real Estate**





In
      accordance with Statement of Financial Accounting Standards No.  141
      “Business Combinations”, or FAS 141, we allocate the purchase price of
      acquisitions based on the fair value of land, building, tenant improvements,
      debt and deferred lease costs and other intangibles, such as the value of leases
      with above or below market rents, origination costs associated with the in-place
      leases, and the value of in-place leases and tenant relationships, if any.
      We
      depreciate the amount allocated to building, deferred lease costs and other
      intangible assets over their estimated useful lives, which generally range
      from
      three to 40  years.
      The values of the above and below market leases are amortized and recorded
      as
      either an increase (in the case of below market leases) or a decrease (in the
      case of above market leases) to rental income over the remaining term of the
      associated lease. The values of the below market leases that are considered
      to
      have renewal periods with below market rents are amortized over the remaining
      term of the associated lease plus the renewal periods.  The value
      associated with in-place leases is amortized over the remaining lease term
      and
      tenant relationships is amortized over the expected term, which includes an
      estimated probability of the lease renewal. If a tenant vacates its space prior
      to the contractual termination of the lease and no rental payments are being
      made on the lease, any unamortized balance of the related deferred lease costs
      is written off. The tenant improvements and origination costs are amortized
      as
      an expense over the remaining life of the lease (or charged against earnings
      if
      the lease is terminated prior to its contractual expiration date). We assess
      fair value based on estimated cash flow projections that utilize appropriate
      discount and capitalization rates and available market information.





If
      we do
      not allocate appropriately to the separate components of rental property,
      deferred lease costs and other intangibles or if we do not estimate correctly
      the total value of the property or the useful lives of the assets, our
      computation of depreciation and amortization expense may be significantly
      understated or overstated.








**Cost
      Capitalization**





In
      accordance with SFAS No. 91 “Accounting for Nonrefundable Fees and Costs
      Associated with Originating or Acquiring Loans and Initial Direct Costs of
      Leases—an amendment of FASB Statements No. 13, 60, and 65 and a rescission of
      FASB Statement No. 17”, we capitalize all incremental, direct fees and costs
      incurred to originate operating leases, including certain general and overhead
      costs, as deferred charges. The amount of general and overhead costs we
      capitalize is based on our estimate of the amount of costs directly related
      to
      executing these leases. We amortize these costs to expense over the estimated
      average minimum lease term.





We
      capitalize all costs incurred for the construction and development of
      properties, including certain general and overhead costs and interest costs.
      The
      amount of general and overhead costs we capitalize is based on our estimate
      of
      the amount of costs directly related to the construction or development of
      these
      assets. Direct costs to acquire assets are capitalized once the acquisition
      becomes probable.





If
      we
      incorrectly estimate the amount of costs to capitalize, we could significantly
      overstate or understate our financial condition and results of
      operations.





**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,
      recognize an impairment loss in an amount by which the carrying amount exceeds
      its fair value. If we do not recognize impairments at appropriate times and
      in
      appropriate amounts, our consolidated balance sheet may overstate the value
      of
      our long-lived assets. We believe that no impairment existed at December 31,
      2006.





**Revenue
      Recognition**





Base
      rentals are recognized on a straight-line basis over the term of the lease.
      Substantially all leases contain provisions which provide additional rents
      based
      on each tenants’ sales volume (“percentage rentals”) and reimbursement of the
      tenants’ share of advertising and promotion, common area maintenance, insurance
      and real estate tax expenses. Percentage rentals are recognized when specified
      targets that trigger the contingent rent are met. Expense reimbursements are
      recognized in the period the applicable expenses are incurred. Payments received
      from the early termination of leases are recognized as revenue from the time
      payment is received until the tenant vacates the space.





***New
      Accounting Pronouncements***





In
      July 2006, the FASB issued FASB Interpretation No. 48 “Accounting for
      Uncertainty in Income Taxes--an interpretation of FASB Statement No. 109”,
      or FIN 48, which clarifies the accounting for uncertainty in tax positions.
      FIN
      48 requires that we recognize the impact of a tax position in our financial
      statements if that position is more likely than not of being sustained on audit,
      based on the technical merits of the position. The provisions of FIN 48 are
      effective as of January 1, 2007, with the cumulative effect of the change in
      accounting principle recorded as an adjustment to opening retained earnings.
      We
      have evaluated FIN 48 and currently do not expect it to have a material impact
      on our financial statements.








In
      September 2006, the Securities and Exchange Commission issued Staff Accounting
      Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when
      Quantifying Misstatements in Current Year Financial Statements”, or SAB 108. SAB
      108 provides interpretive guidance on how the effects of prior-year uncorrected
      misstatements should be considered when quantifying misstatements in the current
      year financial statements. SAB 108 requires registrants to quantify
      misstatements using both an income statement ("rollover") and balance sheet
      ("iron curtain") approach and evaluate whether either approach results in a
      misstatement that, when all relevant quantitative and qualitative factors are
      considered, is material. If prior year errors that had been previously
      considered immaterial now are considered material based on either approach,
      no
      restatement is required so long as management properly applied its previous
      approach and all relevant facts and circumstances were considered. If prior
      years are not restated, the cumulative effect adjustment is recorded in opening
      accumulated earnings as of the beginning of the fiscal year of adoption. SAB
      108
      is effective for fiscal years ending after November 15, 2006. SAB 108 did not
      have an impact on our results from operations or financial
      position.





***Funds
      from Operations***





Funds
      from Operations, or FFO, represents income before extraordinary items and gains
      (losses) on sale or disposal of depreciable operating properties, plus
      depreciation and amortization uniquely significant to real estate and after
      adjustments for unconsolidated partnerships and joint ventures.




FFO
      is
      intended to exclude historical cost depreciation of real estate computed in
      accordance with Generally Accepted Accounting Principles, or GAAP, which assumes
      that the value of real estate assets diminish ratably over time. Historically,
      however, real estate values have risen or fallen with market conditions. Because
      FFO excludes depreciation and amortization unique to real estate, gains and
      losses from property dispositions and extraordinary items, it provides a
      performance measure that, when compared year over year, reflects the impact
      to
      operations from trends in occupancy rates, rental rates, operating costs,
      development activities and interest costs, providing perspective not immediately
      apparent from net income.





We
      present FFO because we consider it an important supplemental measure of our
      operating performance and believe it is frequently used by securities analysts,
      investors and other interested parties in the evaluation of REITs, any of which
      present FFO when reporting their results. FFO is widely used by us and others
      in
      our industry to evaluate and price potential acquisition candidates. The
      National Association of Real Estate Investment Trusts, Inc., of which we are
      a
      member, has encouraged its member companies to report their FFO as a
      supplemental, industry-wide standard measure of REIT operating performance.
      In
      addition, a percentage of bonus compensation to certain members of management
      is
      based on our FFO performance.





FFO
      has
      significant limitations as an analytical tool, and you should not consider
      it in
      isolation, or as a substitute for analysis of our results as reported under
      GAAP. Some of these limitations are:





§
            FFO
                does not reflect our cash expenditures, or future requirements, for
                capital expenditures or contractual
                commitments;


§
            FFO
                does not reflect changes in, or cash requirements for, our working
                capital
                needs;


§
            Although
                depreciation and amortization are non-cash charges, the assets being
                depreciated and amortized will often have to be replaced in the future,
                and FFO does not reflect any cash requirements for such
                replacements;


§
            FFO
                does not reflect the impact of earnings or charges resulting from
                matters
                which may not be indicative of our ongoing operations;
                and


§
            Other
                companies in our industry may calculate FFO differently than we do,
                limiting its usefulness as a comparative
                measure.





Because
      of these limitations, FFO should not be considered as a measure of discretionary
      cash available to us to invest in the growth of our business or our distribution
      paying capacity. We compensate for these limitations by relying primarily on
      our
      GAAP results and using FFO only supplementally. See the Statements of Cash
      Flow
      included in our consolidated financial statements.








Below
      is
      a reconciliation of FFO to net income for the years ended December 31, 2006,
      2005 and 2004 as well as other data for those respective periods (in
      thousands):




2006
            
            
            2005
            
            
            2004**Funds
                from Operations:**Net
                income
            
            $
            43,633
            
            $
            6,077
            
            $
            8,626Adjusted
                for:Minority
                interest adjustment - consolidated jointventure
            
            
            ---
            
            
            (315
            )
            
            (180
            )Depreciation
                and amortizationattributable
                to discontinued operations
            
            
            116
            
            
            722
            
            
            1,286Depreciation
                and amortization uniquely significantto
                real estate - consolidated
            
            
            56,938
            
            
            47,917
            
            
            50,492Depreciation
                and amortization uniquely significantto
                real estate - unconsolidated joint ventures
            
            
            1,825
            
            
            1,493
            
            
            1,334(Gain)
                loss on sale of real estate
            
            
            (13,833
            )
            
            4,690
            
            
            1,460Funds
                from operations(1)
            
            
            88,679
            
            
            60,584
            
            
            63,018Preferred
                unit distributions
            
            
            (5,433
            )
            
            (538
            )
            
            ---Funds
                from operations available to common unitholders
            
            $
            83,246
            
            $
            60,046
            
            $
            63,018Weighted
                average common units outstanding(2)
            
            
            18,574
            
            
            17,341
            
            
            16,650


*(* *1)
      The years ended December 31, 2006, 2005 and 2004 include gains on sales of
      outparcels of land of $402, $1,554 and $1,510, respectively.*


*(2)
      Assumes the share and unit options are converted to common shares of the
      Company.*








***Economic
      Conditions and Outlook***





The
      majority of our leases contain provisions designed to mitigate the impact of
      inflation. Such provisions include clauses for the escalation of base rent
      and
      clauses enabling us to receive percentage rentals based on tenants’ gross sales
      (above predetermined levels, which we believe often are lower than traditional
      retail industry standards) which generally increase as prices rise. Most of
      the
      leases require the tenant to pay their share of 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.





While
      factory outlet stores continue to be a profitable and fundamental distribution
      channel for brand name manufacturers, some retail formats are more successful
      than others. As 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.





During
      2007, we have approximately 1,548,000 square feet, or 18%, of our portfolio
      coming up for renewal. If we were unable to successfully renew or release a
      significant amount of this space on favorable economic terms, the loss in rent
      could have a material adverse effect on our results of operations.





We
      renewed 83% of the 1,760,000 square feet that came up for renewal in 2006 with
      the existing tenants at a 8% increase in the average base rental rate compared
      to the expiring rate. We also re-tenanted 465,000 square feet during 2006 at
      a
      17% increase in the average base rental rate.





Existing
      tenants’ sales have remained stable and renewals by existing tenants have
      remained strong. The existing tenants have already renewed approximately
      613,000, or 40%, of the square feet scheduled to expire in 2007 as of February
      1, 2007. In addition, we continue to attract and retain additional tenants.
      Our
      factory outlet centers typically include well-known, national, brand name
      companies. By maintaining a broad base of creditworthy tenants and a
      geographically diverse portfolio of properties located across the United States,
      we reduce our operating and leasing risks. No one tenant (including affiliates)
      accounts for more than 6% of our combined base and percentage rental revenues.
      Accordingly, we do not expect any material adverse impact on our results of
      operations and financial condition as a result of leases to be renewed or stores
      to be released.





As
      of
      December 31, 2006 and 2005, occupancy at our wholly owned, stabilized centers
      was 98% and 97%, respectively. Consistent with our long-term strategy of
      re-merchandising centers, we will continue to hold space off the market until
      an
      appropriate tenant is identified. While we believe this strategy will add value
      to our centers in the long-term, it may reduce our average occupancy rates
      in
      the near term.











**Item
      7A. Quantitative and Qualitative Disclosures About Market
      Risk**





**Market
      Risk**





We
      are
      exposed to various market risks, including changes in interest rates. Market
      risk is the potential loss arising from adverse changes in market rates and
      prices, such as interest rates. We may periodically enter into certain interest
      rate protection and interest rate swap agreements to effectively convert
      floating rate debt to a fixed rate basis and to hedge anticipated future
      financings. We do not enter into derivatives or other financial instruments
      for
      trading or speculative purposes.





In
      September 2005, we entered into two forward starting interest rate lock
      protection agreements to hedge risks related to anticipated future financings
      in
      2005 and 2008. The 2005 agreement locked the US Treasury index rate at 4.279%
      on
      a notional amount of $125 million for 10 years from such date in December 2005.
      This lock was unwound in the fourth quarter of 2005 in conjunction with the
      issuance of the $250 million senior unsecured notes due in 2015 and, as a
      result, we received a cash payment of $3.2 million. The gain was recorded in
      other comprehensive income and is being amortized into earnings using the
      effective interest method over a 10 year period that coincides with the interest
      payments associated with the senior unsecured notes due in 2015. The 2008
      agreement locked the US Treasury index rate at 4.526% on a notional amount
      of
      $100 million for 10 years from such date in July 2008. In November 2005, we
      entered into an additional agreement which locked the US Treasury index rate
      at
      4.715% on a notional amount of $100 million for 10 years from such date in
      July
      2008. We anticipate unsecured debt transactions of at least the notional amount
      to occur in the designated periods.





The
      fair
      value of the interest rate protection agreements represents the estimated
      receipts or payments that would be made to terminate the agreement. At December
      31, 2006, we would have received approximately $743,000 if we terminated the
      agreements. If the US Treasury rate index decreased 1% and we were to terminate
      the agreements, we would have to pay $14.9 million to do so. The fair value
      is
      based on dealer quotes, considering current interest rates and remaining term
      to
      maturity. We do not intend to terminate the agreements prior to their maturity
      because we plan on entering into the debt transactions as indicated.





During
      March 2005, TWMB, entered into an interest rate swap agreement with a notional
      amount of $35 million for five years to hedge floating rate debt on the
      permanent financing that was obtained in April 2005. Under this agreement,
      TWMB
      receives a floating interest rate based on the 30 day LIBOR index and pays
      a
      fixed interest rate of 4.59%. This swap effectively changes the rate of interest
      on $35 million of variable rate mortgage debt to a fixed rate debt of 5.99%
      for
      the contract period.


****


The
      fair
      value of the interest rate swap agreement represents the estimated receipts
      or
      payments that would be made to terminate the agreement. At December 31, 2006,
      TWMB would have received approximately $411,000 if the agreement was terminated.
      If the 30 day LIBOR index decreased 1% and TWMB were to terminate the agreement,
      TWMB would have to pay $634,000 to do so. The fair value is based on dealer
      quotes, considering current interest rates and remaining term to maturity.
      TWMB
      does not intend to terminate the interest rate swap agreement prior to its
      maturity. The fair value of this derivative is currently recorded as a liability
      in TWMB’s balance sheet; however, if held to maturity, the value of the swap
      will be zero at that time.





The
      fair
      market value of long-term fixed interest rate debt is subject to market risk.
      Generally, the fair market value of fixed interest rate debt will increase
      as
      interest rates fall and decrease as interest rates rise. The estimated fair
      value of our total long-term debt at December 31, 2006 was $715.7 million and
      its recorded value was $678.6 million. A 1% increase from prevailing interest
      rates at December 31, 2006 would result in a decrease in fair value of total
      long-term debt by approximately $46.8 million. Fair values were determined
      from
      quoted market prices, where available, using current interest rates considering
      credit ratings and the remaining terms to maturity.








The
      following table summarizes the notional values and fair values of our derivative
      financial instruments as of December 31, 2006.





**Financial
                Instrument Type**
            Notional
                Amount
            Rate
            Maturity
            
            Fair
                Value**TANGER
                PROPERTIES LIMITED PARTNERSHIP**US
                Treasury Lock
            $100,000,000
            4.526%
            July
                2008
            $
            967,000US
                Treasury Lock
            $100,000,000
            4.715%
            July
                2008
            $
            (224,000
            )**TWMB,
                ASSOCIATES, LLC**LIBOR
                Interest Rate Swap(1)
            $35,000,000
            4.59%
            March
                2010
            $
            411,000


(1)
            Amount
                represents fair value at TWMB Associates, LLC, in which we have a
                50%
                ownership interest.





**Item
      8.**  **Financial
      Statements and Supplementary Data**





The
      information required by this Item is set forth on the pages indicated in Item
      15(a) below.





**Item
                9.**
            **Changes
                in and Disagreements With Accountants on Accounting and Financial
                Disclosure**





Not
      applicable.





**Item
      9A.**  **Controls
      and Procedures**





(a)
            Evaluation
                of disclosure control procedures.


The
                Chief Executive Officer, Stanley K. Tanger, and Vice President, Treasurer
                & Assistant Secretary, Frank C. Marchisello Jr., of Tanger GP Trust,
                sole general partner of the registrant, evaluated the effectiveness
                of the
                registrant’s disclosure controls and procedures on December 31, 2006 and
                concluded that, as of that date, the registrant’s disclosure controls and
                procedures were effective to ensure that the information the registrant
                is
                required to disclose in its filings with the Securities and Exchange
                Commission under the Securities and Exchange Act of 1934 is recorded,
                processed, summarized and reported, within the time periods specified
                in
                the Commission’s rules and forms, and to ensure that information required
                to be disclosed by the registrant in the reports that it files under
                the
                Exchange Act is accumulated and communicated to the registrant’s
                management, including its principal executive officer and principal
                financial officer, as appropriate to allow timely decisions regarding
                required disclosure.


(b)  Management’s
      report on internal control over financial reporting.





Management’s
                Report on Internal Control over Financial Reporting appears on page
                F-1.




(c)
            There
                were no changes in our internal control over financial reporting
                identified in connection with the evaluation required by paragraph
                (d) of
                Exchange Act Rules 13a-15 or 15d-15 that occurred during our last
                fiscal
                quarter ended December 31, 2006 that have materially affected, or
                are
                reasonably likely to materially affect, our internal control over
                financial reporting.




**Item
      9B.**  **Other
      Information**





All
      information required to be disclosed in a report on form 8-K during the fourth
      quarter of 2006 was reported.







**PART
      III**





Certain
      information required by Part III is omitted from this Report in that the
      registrant’s majority owner, the Company, will file a definitive proxy statement
      pursuant to Regulation 14A (the “Proxy Statement”) not later than 120 days after
      the end of the fiscal year covered by this Report, and certain information
      included therein is incorporated herein by reference. Only those sections of
      the
      Proxy Statement which specifically address the items set forth herein are
      incorporated by reference.





**Item
                10.**
            **Directors,
                Executive Officers and Corporate
                Governance**





The
      Operating Partnership does not have any directors or officers. The information
      concerning the Company’s directors required by this Item is incorporated herein
      by reference to the Company’s Proxy Statement to be filed with respect to the
      Company’s Annual Meeting of Shareholders which is expected to be held on May 18,
      2007.





The
      information concerning the Company’s executive officers required by this Item is
      incorporated herein by reference herein to the section in Part I, Item 4,
      entitled “Executive Officers of the Company”.





The
      information regarding compliance with Section 16 of the Securities and Exchange
      Act of 1934 is incorporated herein to the Company’s Proxy Statement to be filed
      with respect to the Company’s Annual Meeting of Shareholders which is expected
      to be held on May 18, 2007.





The
      information concerning the Company Code of Ethics required by this Item is
      incorporated herein by reference to the Company’s Proxy Statement to be filed
      with respect to the Company’s Annual Meeting of Shareholders which is expected
      to be held on May 18, 2007.





**Item
      11.**  **Executive
      Compensation**





The
      information required by this Item is incorporated herein by reference to the
      Company’s Proxy Statement to be filed with respect to the Company’s Annual
      Meeting of Shareholders which is expected to be held on May 18,
      2007.





**Item
                12.**
            **Security
                Ownership of Certain Beneficial Owners and Management and Related
                Shareholder Matters.**





The
      information required by this Item is incorporated by reference herein to the
      Company’s Proxy Statement to be filed with respect to the Company’s Annual
      Meeting of Shareholders which is expected to be held on May 18,
      2007.





The
      following table provides information as of December 31, 2006 with respect to
      compensation plans under which the Operating Partnership’s equity securities are
      authorized for issuance:




**Plan
                Category**
            **(a)**
              **Number
                of Securities to be**
              **Issued
                Upon Exercise of Outstanding Options,****Warrants
                and Rights**
            **(b)**
              **Weighted Average**
              **Exercise Price of**
              **Outstanding Options,**
              **Warrants and Rights**
            **(c)**
              **Number of**
              **Securities Remaining**
              **Available for Future**
              **Issuance
                Under Equity**
              **Compensation
                Plans (Excluding     
                Securities****Reflected****in
                Column (a))**Equity
                compensation plans approved by security holders
            245,650
            $36.40
            947,685Equity
                compensation plans not approved by security holders
            ---
            ---
            ---Total
            245,650
            $36.40
            947,685








**Item
                13.**
            **Certain
                Relationships, Related Transactions and Director
                Independence**





The
      information required by this Item is incorporated herein by reference to the
      Company’s Proxy Statement to be filed with respect to the Company’s Annual
      Meeting of Shareholders which is expected to be held on May 18,
      2007.





**Item
      14. Principal Accounting Fees and Services**





The
      information required by Item 9(e) of Schedule 14A is incorporated herein by
      reference to the Company’s Proxy Statement to be filed with respect to the
      Company’s Annual Meeting of Shareholders which is expected to be held on May 18,
      2007.








**PART
      IV**





**Item
      15.**  **Exhibits
      and Financial Statement Schedules**





**(a)**  **Documents
      filed as a part of this report:**





1.
            Financial
                Statements


Management’s Report on Internal Control over Financial
                Reporting
            F-1Report of Independent Registered Public Accounting Firm
            F-2Consolidated Balance Sheets-December 31, 2006 and 2005
            F-4Consolidated Statements of Operations-Years Ended December 31, 2006, 2005 and 2004
            F-5Consolidated Statements of Partners’ Equity-Years Ended December 31, 2006, 2005 and 2004
            F-6Consolidated Statements of Cash Flows-Years Ended December 31, 2006, 2005 and 2004
            F-7Notes to Consolidated Financial Statements
            F-8
                to F-29





2.  Financial
      Statement Schedule


Schedule IIIReal Estate and Accumulated Depreciation
            F-30
                to F-31





All
      other
      schedules have been omitted because of the absence of conditions under which
      they are required or because the required information is given in the
      above-listed financial statements or notes thereto.





3.  Exhibits





Exhibit
      No.   Description





2.1
            Purchase
                and Sale Agreement between COROC Holdings, LLC and various entities
                dated
                October 3, 2003. (Incorporated by reference to the exhibits to the
                Company’s Current Report on Form 8-K dated December 8,
                2003.)2.2
            Purchase
                and Sale Agreement for interests in COROC Holdings, LLC between BROC
                Portfolio, L.L.C. and Tanger COROC, LLC dated August 22, 2005
                (Incorporated by reference to the exhibits to the Company’s Quarterly
                Report on Form 10-Q for the quarter ended September 30,
                2005.)3.3
            Amended
                and Restated Agreement of Limited Partnership for Tanger Properties
                Limited Partnership dated November 11, 2005. (Incorporated by reference
                to
                the exhibits to the Company’s Current Report on Form 8-K dated November
                21, 2005.)4.1
            Form
                of Senior Indenture. (Incorporated by reference to the exhibits to
                the
                Company’s Current Report on Form 8-K dated March 6,
                1996.)4.1A
            Form
                of First Supplemental Indenture (to Senior Indenture). (Incorporated
                by
                reference to the exhibits to the Company’s Current Report on Form 8-K
                dated March 6, 1996.)4.1B
            Form
                of Second Supplemental Indenture (to Senior Indenture) dated October
                24,
                1997 among Tanger Properties Limited Partnership, Tanger Factory
                Outlet
                Centers, Inc. and State Street Bank & Trust Company. (Incorporated by
                reference to the exhibits to the Company’s Current Report on Form 8-K
                dated October 24, 1997.)4.1C
            Form
                of Third Supplemental Indenture (to Senior Indenture) dated February
                15,
                2001. (Incorporated by reference to the exhibits to the Company’s Current
                Report on Form 8-K dated February 16, 2001.)4.1D
            Form
                of Fourth Supplemental Indenture (to Senior Indenture) dated November
                4,
                2005.  (Incorporated by reference to the exhibits to the Company’s
                Annual Report on Form 10-K for the year ended December 31,
                2006.)4.1E
            Form
                of Fifth Supplemental Indenture (to Senior Indenture) dated August
                16,
                2006.  (Incorporated by reference to the exhibits to the Company’s
                Annual Report on Form 10-K for the year ended December 31,
                2006.)10.1
            Amended
                and Restated Incentive Award Plan of Tanger Factory Outlet Centers,
                Inc.
                and Tanger Properties Limited Partnership, effective May 14, 2004.
                (Incorporated by reference to the Appendix A of the Company’s definitive
                proxy statement filed on Schedule 14A dated April 12,
                2004.)10.4
            Form
                of Unit Option Agreement between the Operating Partnership and certain
                employees. (Incorporated by reference to the exhibits to the Company’s
                Annual Report on Form 10-K for the year ended December 31, 1993.)10.5
            Amended
                and Restated Employment Agreement for Stanley K. Tanger, as of January
                1,
                2004. (Incorporated by reference to the exhibits to the Company’s
                Quarterly Report on Form 10-Q for the quarter ended June 30,
                2004.)10.6
            Amended
                and Restated Employment Agreement for Steven B. Tanger, as of January
                1,
                2004. (Incorporated by reference to the exhibits to the Company’s
                Quarterly Report on Form 10-Q for the quarter ended June 30,
                2004.)10.7
            Amended
                and Restated Employment Agreement for Frank C. Marchisello, Jr.,
                as of
                January 1, 2004. (Incorporated by reference to the exhibits to the
                Company’s Quarterly Report on Form 10-Q for the quarter ended June 30,
                2004.)10.8
            Amended
                and Restated Employment Agreement for Lisa J. Morrison, dated May
                9, 2006.
                (Incorporated by reference to the exhibits to the Company’s Quarterly
                Report on Form 10-Q for the quarter ended March 31,
                2006.)10.9
            Amended
                and Restated Employment Agreement for Joe Nehmen, as of January 1,
                2003.
                (Incorporated by reference to the exhibits to the Company’s Quarterly
                Report on Form 10-Q for the quarter ended September 30,
                2003.)10.11
            Registration
                Rights Agreement among the Company, the Tanger Family Limited Partnership
                and Stanley K. Tanger. (Incorporated by reference to the exhibits
                to the
                Company’s Registration Statement on Form S-11 filed May 27, 1993, as
                amended.)10.11A
            Amendment
                to Registration Rights Agreement among the Company, the Tanger Family
                Limited Partnership and Stanley K. Tanger. (Incorporated by reference
                to
                the exhibits to the Company’s Annual Report on Form 10-K for the year
                ended December 31, 1995.)10.11B
            Second
                Amendment to Registration Rights Agreement among the Company, the
                Tanger
                Family Limited Partnership and Stanley K. Tanger dated September
                4, 2002.
                (Incorporated by reference to the exhibits to the Company’s Annual Report
                on Form 10-K for the year ended December 31, 2003.)10.11C
            Third
                Amendment to Registration Rights Agreement among the Company, the
                Tanger
                Family Limited Partnership and Stanley K. Tanger dated December 5,
                2003.
                (Incorporated by reference to the exhibits to the Company’s Annual Report
                on Form 10-K for the year ended December 31, 2003.)10.11D
            Fourth
                Amendment to Registration Rights Agreement among the Company, the
                Tanger
                Family Limited Partnership and Stanley K. Tanger dated August 8,
                2006.
                (Incorporated by reference to the exhibits to the Company’s Registration
                Statement on Form S-3, dated August 9, 2006.)10.12
            Agreement
                Pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K. (Incorporated
                by
                reference to the exhibits to the Company’s Registration Statement on Form
                S-11 filed May 27, 1993, as amended.)10.13
            Assignment
                and Assumption Agreement among Stanley K. Tanger, Stanley K. Tanger
&
                Company, the Tanger Family Limited Partnership, the Operating Partnership
                and the Company. (Incorporated by reference to the exhibits to the
                Company’s Registration Statement on Form S-11 filed May 27, 1993, as
                amended.)10.14
            Promissory
                Notes by and between the Operating Partnership and John Hancock Mutual
                Life Insurance Company aggregating $66,500,000. (Incorporated by
                reference
                to the exhibits to the Company’s Quarterly Report on Form 10-Q for the
                quarter ended March 31, 1999.)10.15
            Form
                of Senior Indenture. (Incorporated by reference to the exhibits to
                the
                Company’s Current Report on Form 8-K dated March 6,
                1996.)10.16
            Form
                of First Supplemental Indenture (to Senior Indenture). (Incorporated
                by
                reference to the exhibits to the Company’s Current Report on Form 8-K
                dated March 6, 1996.)10.16A
            Form
                of Second Supplemental Indenture (to Senior Indenture) dated October
                24,
                1997 among Tanger Properties Limited Partnership, Tanger Factory
                Outlet
                Centers, Inc. and State Street Bank & Trust Company. (Incorporated by
                reference to the exhibits to the Company’s Current Report on Form 8-K
                dated October 24, 1997.)10.16B
            Form
                of Third Supplemental Indenture (to Senior Indenture) dated February
                15,
                2001. (Incorporated by reference to the exhibits to the Company’s Current
                Report on Form 8-K dated February 16, 2001.)10.17
            COROC
                Holdings, LLC Limited Liability Company Agreement dated October 3,
                2003.
                (Incorporated by reference to the exhibits to the Company’s Current Report
                on Form 8-K dated December 8, 2003.)10.18
            Form
                of Shopping Center Management Agreement between owners of COROC Holdings,
                LLC and Tanger Properties Limited Partnership. (Incorporated by reference
                to the exhibits to the Company’s Current Report on Form 8-K dated December
                8, 2003.)10.19
            Form
                of Restricted Share Agreement between the Company and certain Officers.
                (Incorporated by reference to the exhibits to the Company’s Quarterly
                Report on Form 10-Q for the quarter ended March 31,
                2005.)10.20
            Form
                of Restricted Share Agreement between the Company and certain Officers
                with certain performance criteria vesting. (Incorporated by reference
                to
                the exhibits to the Company’s Quarterly Report on Form 10-Q for the
                quarter ended March 31, 2005.)10.21
            Form
                of Restricted Share Agreement between the Company and certain Directors.
                (Incorporated by reference to the exhibits to the Company’s Quarterly
                Report on Form 10-Q for the quarter ended March 31,
                2005.)21.1
            List
                of Subsidiaries.23.1
            Consent
                of PricewaterhouseCoopers LLP.31.1
            Principal
                Executive Officer Certification Pursuant to 18 U.S.C. Section 1350,
                as
                Adopted Pursuant to Section 302 of the Sarbanes - Oxley Act of
                2002.31.2
            Principal
                Financial Officer Certification Pursuant to 18 U.S.C. Section 1350,
                as
                Adopted Pursuant to Section 302 of the Sarbanes - Oxley Act of
                2002.32.1
            Principal
                Executive Officer Certification Pursuant to 18 U.S.C. Section 1350,
                as
                Adopted Pursuant to Section 906 of the Sarbanes - Oxley Act of
                2002.32.2
            Principal
                Financial Officer Certification Pursuant to 18 U.S.C. Section 1350,
                as
                Adopted Pursuant to Section 906 of the Sarbanes - Oxley Act of
                2002.











**SIGNATURES**





Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
      1934, the Registrant has duly caused this report to be signed on its behalf
      by
      the undersigned, thereunto duly authorized.





TANGER
      PROPERTIES LIMITED PARTNERSHIP





By:
      Tanger GP Trust, its sole general partner





By: /s/
      Stanley K. Tanger


Stanley
      K. Tanger


Chairman
      of the Board of Trustees and


Chief
      Executive Officer





February
      27, 2007





Pursuant
      to the requirements of the Securities Exchange Act of 1934, this report has
      been
      signed below by the following persons on behalf of the Registrant and in the
      capacities and on the dates indicated:








Signature
            Title
            Date/s/
                Stanley K. Tanger
              Stanley
                K. Tanger
            Chairman
                of the Board of Trustees and Chief Executive Officer (Principal Executive
                Officer)
            February
                27 , 2007/s/
                Steven B. Tanger
              Steven
                B. Tanger
            Trustee
                and President
            February
                27, 2007/s/
                Frank C. Marchisello, Jr.
              Frank
                C. Marchisello Jr.
            Vice
                President, Treasurer &
              Assistant
                Secretary
              (Principal
                Financial and Accounting Officer)
            February
                27, 2007/s/
                Jack Africk
              Jack
                Africk
            Trustee
            February
                27, 2007/s/
                William G. Benton
              William
                G. Benton
            Trustee
            February
                27, 2007/s/
                Thomas E. Robinson
              Thomas
                E. Robinson
            Trustee
            February
                27, 2007/s/
                Allan L. Schuman
              Allan
                L. Schuman
            Trustee
            February
                27, 2007








MANAGEMENT’S
      REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING





Management
      is responsible for establishing and maintaining adequate internal control over
      financial reporting, and for performing an assessment of the effectiveness
      of
      internal control over financial reporting as of December 31, 2006. Internal
      control over financial reporting is a process designed to provide reasonable
      assurance regarding the reliability of financial reporting and the preparation
      of financial statements for external purposes in accordance with generally
      accepted accounting principles. The Operating Partnership’s internal control
      over financial reporting includes those policies and procedures that (i) pertain
      to the maintenance of records that, in reasonable detail, accurately and fairly
      reflect the transactions and dispositions of the assets of the Operating
      Partnership; (ii) provide reasonable assurance that transactions are recorded
      as
      necessary to permit preparation of financial statements in accordance with
      generally accepted accounting principles, and that receipts and expenditures
      of
      the Operating Partnership are being made only in accordance with authorizations
      of management and directors of the Operating Partnership; and (iii) provide
      reasonable assurance regarding prevention or timely detection of unauthorized
      acquisition, use, or disposition of the Operating Partnership’s assets that
      could have a material effect on the financial statements.





Management
      performed an assessment of the effectiveness of the Operating Partnership’s
      internal control over financial reporting as of December 31, 2006 based upon
      criteria in Internal Control - Integrated Framework issued by the Committee
      of
      Sponsoring Organizations of the Treadway Commission (“COSO”). Based on our
      assessment, management determined that the Operating Partnership’s internal
      control over financial reporting was effective as of December 31, 2006 based
      on
      the criteria in Internal Control-Integrated Framework issued by
      COSO.





Our
      management’s assessment of the effectiveness of the Operating Partnership’s
      internal control over financial reporting as of December 31, 2006 has been
      audited by PricewaterhouseCoopers LLP, an independent registered public
      accounting firm, as stated in their report which appears herein.





February
      27, 2007





/s/
      Stanley K. Tanger


Stanley
      K. Tanger


Chairman
      of the Board of Trustees and Chief Executive Officer





/s/
      Frank C. Marchisello Jr.


Frank
      C.
      Marchisello Jr.


Vice
      President, Treasurer and Assistant Secretary



















F-1





**Report
      of Independent Registered Public Accounting Firm**





To
      the
      Partners of Tanger Properties Limited Partnership:





We
      have
      completed integrated audits of Tanger Properties Limited Partnership's
      consolidated financial statements and of its internal control over financial
      reporting as of 2006, in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Our opinions, based on our audits,
      are presented below.





Consolidated
      financial statements and financial statement schedule





In
      our
      opinion, the consolidated balance sheets, and the related consolidated
      statements of operations, of partners’ equity and of cash flows present
      fairly, in all material respects, the financial position of Tanger Properties
      Limited Partnership and its subsidiaries at December 31, 2006 and 2005, and
      the
      results of their operations and their cash flows for each of the three years
      in
      the period ended December 31, 2006 in conformity with accounting principles
      generally accepted in the United States of America. In addition, in our opinion,
      the financial statement schedule presents fairly, in all material respects,
      the
      information set forth therein when read in conjunction with the related
      consolidated financial statements. These financial statements and financial
      statement schedule are the responsibility of the Operating Partnership’s
      management. Our responsibility is to express an opinion on these financial
      statements and financial statement schedule based on our audits. We conducted
      our audits of these statements in accordance with the standards of the Public
      Company Accounting Oversight Board (United States). Those standards require
      that
      we plan and perform the audit to obtain reasonable assurance about whether
      the
      financial statements are free of material misstatement. An audit of financial
      statements includes examining, on a test basis, evidence supporting the amounts
      and disclosures in the financial statements, assessing the accounting principles
      used and significant estimates made by management, and evaluating the overall
      financial statement presentation. We believe that our audits provide a
      reasonable basis for our opinion.





Internal
      control over financial reporting





Also,
      in
      our opinion, management’s assessment, included in the accompanying Management's
      Report on Internal Control Over Financial Reporting, that the Operating
      Partnership maintained effective internal control over financial reporting
      as of
      December 31, 2006 based on criteria established in *Internal
      Control - Integrated Framework* issued
      by the Committee of Sponsoring Organizations of the Treadway Commission (COSO),
      is fairly stated, in all material respects, based on those criteria.
      Furthermore, in our opinion, the Operating Partnership maintained, in all
      material respects, effective internal control over financial reporting as of
      December 31, 2006, based on criteria established in *Internal
      Control - Integrated Framework* issued
      by the COSO. The Operating Partnership’s management is responsible for
      maintaining effective internal control over financial reporting and for its
      assessment of the effectiveness of internal control over financial reporting.
      Our responsibility is to express opinions on management’s assessment and on
      the effectiveness of the Operating Partnership’s internal control over financial
      reporting based on our audit. We conducted our audit of internal control over
      financial reporting in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether effective
      internal control over financial reporting was maintained in all material
      respects. An audit of internal control over financial reporting includes
      obtaining an understanding of internal control over financial reporting,
      evaluating management’s assessment, testing and evaluating the design and
      operating effectiveness of internal control, and performing such other
      procedures as we consider necessary in the circumstances. We believe that our
      audit provides a reasonable basis for our opinions.


F-2





A
      company’s internal control over financial reporting is a process designed to
      provide reasonable assurance regarding the reliability of financial reporting
      and the preparation of financial statements for external purposes in accordance
      with generally accepted accounting principles. A company’s internal control over
      financial reporting includes those policies and procedures that (i) pertain
      to the maintenance of records that, in reasonable detail, accurately and fairly
      reflect the transactions and dispositions of the assets of the company;
      (ii) provide reasonable assurance that transactions are recorded as
      necessary to permit preparation of financial statements in accordance with
      generally accepted accounting principles, and that receipts and expenditures
      of
      the company are being made only in accordance with authorizations of management
      and directors of the company; and (iii) provide reasonable assurance
      regarding prevention or timely detection of unauthorized acquisition, use,
      or
      disposition of the company’s assets that could have a material effect on the
      financial statements.





Because
      of its inherent limitations, internal control over financial reporting may
      not
      prevent or detect misstatements. Also, projections of any evaluation of
      effectiveness to future periods are subject to the risk that controls may become
      inadequate because of changes in conditions, or that the degree of compliance
      with the policies or procedures may deteriorate.








/s/
      PricewaterhouseCoopers LLP


PricewaterhouseCoopers
      LLP


Greensboro,
      North Carolina


February
      27, 2007











F-3


**TANGER
      PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES**


**CONSOLIDATED
      BALANCE SHEETS**


(In
      thousands)


**December
                31,****2006**
            
            
            **2005****ASSETS**Rental
                propertyLand
            
            $
            130,137
            
            
            $
            120,715Buildings,
                improvements and fixtures
            
            
            1,068,070
            
            
            
            1,004,545Construction
                in progress
            
            
            18,640
            
            
            
            27,6061,216,847
            
            
            
            1,152,866Accumulated
                depreciation
            
            
            (275,372
            )
            
            
            (253,765
            )Rental
                property, net
            
            
            941,475
            
            
            
            899,101Cash
                and cash equivalents
            
            
            8,413
            
            
            
            2,926Assets
                held for sale
            
            
            ---
            
            
            
            2,637Investments
                in unconsolidated joint ventures
            
            
            14,451
            
            
            
            13,020Deferred
                charges, net
            
            
            55,089
            
            
            
            64,555Other
                assets
            
            
            21,207
            
            
            
            18,124**Total
                assets**
            
            $
            1,040,635
            
            
            $
            1,000,363**LIABILITIES
                AND PARTNERS’ EQUITY********Liabilities**DebtSenior,
                unsecured notes (net of discount of $832 and $901,
                respectively)
            
            $
            498,668
            
            
            $
            349,099Mortgages
                payable (including premium of $3,441 and $5,771,
                respectively)
            
            
            179,911
            
            
            
            201,233Unsecured
                note
            
            
            ---
            
            
            
            53,500Unsecured
                lines of credit
            
            
            ---
            
            
            
            59,775Total
                debt
            
            
            678,579
            
            
            
            663,607Construction
                trade payables
            
            
            23,504
            
            
            
            13,464Accounts
                payable and accrued expenses
            
            
            24,852
            
            
            
            23,711**Total
                liabilities**
            
            
            726,935
            
            
            
            700,782Commitments
                and contingencies**Partners’
                equity**General
                partner
            
            
            227
            
            
            
            317Limited
                partners
            
            
            309,587
            
            
            
            301,803Deferred
                compensation
            
            
            ---
            
            
            
            (5,501
            )Accumulated
                other comprehensive income
            
            
            3,886
            
            
            
            2,962**Total
                partners’ equity**
            
            
            313,700
            
            
            
            299,581**Total
                liabilities and partners’ equity**
            
            $
            1,040,635
            
            
            $
            1,000,363





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













F-4





**TANGER
      PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF OPERATIONS**


(in
      thousands, except per unit data)


**For
                the years ended December********31,****2006**
            
            
            **2005**
            
            
            **2004****REVENUES**Base
                rentals
            
            $
            138,696
            
            
            $
            131,227
            
            
            $
            127,291Percentage
                rentals
            
            
            7,188
            
            
            
            6,346
            
            
            
            5,269Expense
                reimbursements
            
            
            58,522
            
            
            
            55,415
            
            
            
            51,277Other
                income
            
            
            7,305
            
            
            
            5,773
            
            
            
            6,646Total
                revenues
            
            
            211,711
            
            
            
            198,761
            
            
            
            190,483**EXPENSES**Property
                operating
            
            
            68,702
            
            
            
            62,744
            
            
            
            57,720General
                and administrative
            
            
            16,707
            
            
            
            13,841
            
            
            
            12,849Depreciation
                and amortization
            
            
            57,203
            
            
            
            48,165
            
            
            
            50,713Total
                expenses
            
            
            142,612
            
            
            
            124,750
            
            
            
            121,282**Operating
                income**
            
            69,099
            
            
            74,011
            
            
            69,201Interest
                expense (including prepayment premium and deferred loan cost write
                off of
                $917 and $9,866 in 2006 and 2005, respectively)
            
            
            40,775
            
            
            
            42,927
            
            
            
            35,117**Income
                before equity in earnings of****unconsolidated
                joint ventures, minority interest****in
                consolidated joint venture, discontinued****operations
                and loss on sale of real estate**
            
            
            28,324
            
            
            
            31,084
            
            
            
            34,084Equity
                in earnings of unconsolidated joint ventures
            
            
            1,268
            
            
            
            879
            
            
            
            1,042Minority
                interest in consolidated joint venture
            
            
            ---
            
            
            
            (24,043
            )
            
            
            (27,144
            )**Income
                from continuing operations**
            
            
            29,592
            
            
            
            7,920
            
            
            
            7,982Discontinued
                operations
            
            
            14,041
            
            
            
            2,847
            
            
            
            644**Income
                before loss on sale of real estate**
            
            
            43,633
            
            
            
            10,767
            
            
            
            8,626Loss
                on sale of real estate
            
            
            ---
            
            
            
            (4,690
            )
            
            
            ---**Net
                income**
            
            
            43,633
            
            
            
            6,077
            
            
            
            8,626Less
                applicable preferred unit distributions
            
            
            (5,433
            )
            
            
            (538
            )
            
            
            ---**Net
                income available to common unitholders**
            
            
            38,200
            
            
            
            5,539
            
            
            
            8,626Income
                allocated to limited partners
            
            
            37,887
            
            
            
            5,490
            
            
            
            
            8,548Income
                allocated to general partner
            
            $
            313
            
            
            $
            49
            
            
            $
            78**Basic
                earnings per common unit:**Income
                from continuing operations
            
            $
            1.32
            
            
            $
            .16
            
            
            $
            .48Net
                income
            
            
            2.08
            
            
            
            .32
            
            
            
            .52**Diluted
                earnings per common unit:**Income
                from continuing operations
            
            $
            1.30
            
            
            $
            .16
            
            
            $
            .48Net
                income
            
            
            2.06
            
            
            
            .32
            
            
            
            .52





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





F-5





**TANGER
      PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF PARTNERS’ EQUITY**


(in
      thousands, except unit and per unit data)


General
              Partner
            
            
            Limited
              Partner
            
            
            Deferred
                Compensation
            
            
            Accumulated
                Other Comprehensive Income
            
            
            Total
                Partners’ Equity**Balance,
                December 31, 2003**
            
            $
            949
            
            $
            205,733
            
            $
            -
            
            $
            (82
            )
            $
            206,600Comprehensive
                income:Net
                income
            
            
            78
            
            
            8,548
            
            
            -
            
            
            -
            
            
            8,626Other
                comprehensive income
            
            
            -
            
            
            -
            
            
            -
            
            
            82
            
            
            82Total
                comprehensive income
            
            
            78
            
            
            8,548
            
            
            -
            
            
            82
            
            
            8,708Compensation
                under Incentive Award Plan
            
            
            -
            
            
            54
            
            
            1,422
            
            
            -
            
            
            1,476Issuance
                of 309,740 common units uponexercise
                of share and unit options
            
            
            -
            
            
            8,166
            
            
            -
            
            
            -
            
            
            8,166Issuance
                of 345,000 common units in exchangefor
                proceeds from the Company’s commonshare
                offering
            
            
            -
            
            
            13,173
            
            
            -
            
            
            -
            
            
            13,173Grant
                of share and unit options, net offorfeitures,
                and 106,125 restricted unit awards
            
            
            -
            
            
            5,397
            
            
            (5,397
            )
            
            -
            
            
            -Distributions
                to partners ($2.49 per common unit)
            
            
            (374
            )
            
            (40,995
            )
            
            -
            
            
            -
            
            
            (41,369
            )**Balance,
                December 31, 2004**
            
            
            653
            
            
            200,076
            
            
            (3,975
            )
            
            -
            
            
            196,754Comprehensive
                income:Net
                income
            
            
            49
            
            
            6,028
            
            
            -
            
            
            -
            
            
            6,077Other
                comprehensive income
            
            
            -
            
            
            -
            
            
            -
            
            
            2,962
            
            
            2,962Total
                comprehensive income
            
            
            49
            
            
            6,028
            
            
            -
            
            
            2,962
            
            
            9,039Compensation
                under Incentive Award Plan
            
            
            -
            
            
            10
            
            
            1,555
            
            
            -
            
            
            1,565Issuance
                of 83,850 common units uponexercise
                of share and unit options
            
            
            -
            
            
            2,196
            
            
            -
            
            
            -
            
            
            2,196Issuance
                of 2,200,000 preferredunits
                in exchange for proceeds fromthe
                Company’s preferred share offering
            
            
            -
            
            
            53,016
            
            
            -
            
            
            -
            
            
            53,016Issuance
                of 1,500,000 common units inexchange
                for proceeds from thethe
                Company’s common share offering
            
            
            -
            
            
            81,098
            
            
            -
            
            
            -
            
            
            81,098Grant
                of share and unit options, net offorfeitures,
                and 69,000 restricted unit awards
            
            
            -
            
            
            3,081
            
            
            (3,081
            )
            
            -
            
            
            -Distributions
                to partners ($2.56 per common unit)
            
            
            (385
            )
            
            (43,702
            )
            
            -
            
            
            -
            
            
            (44,087
            )**Balance,
                December 31, 2005**
            
            
            317
            
            
            301,803
            
            
            (5,501
            )
            
            2,962
            
            
            299,581Comprehensive
                income:Net
                income
            
            
            313
            
            
            43,320
            
            
            -
            
            
            -
            
            
            43,633Other
                comprehensive income
            
            
            -
            
            
            -
            
            
            -
            
            
            924
            
            
            924Total
                comprehensive income
            
            
            313
            
            
            43,320
            
            
            -
            
            
            924
            
            
            44,557Reclassification
                of deferred compensation
            
            
            -
            
            
            (5,501
            )
            
            5,501
            
            
            -
            
            
            -Compensation
                under Incentive Award Plan
            
            
            -
            
            
            2,675
            
            
            -
            
            
            -
            
            
            2,675Issuance
                of 65,310 common units uponexercise
                of share and unit options
            
            
            -
            
            
            2,381
            
            
            -
            
            
            -
            
            
            2,381Issuance
                of 800,000 preferred unitsin
                exchange for proceeds from theCompany’s
                preferred share offering
            
            
            -
            
            
            19,445
            
            
            -
            
            
            -
            
            
            19,445Grant
                of 81,000 restricted unit awards, net offorfeitures
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Preferred
                distributions ($1.8802 per preferred unit)
            
            
            -
            
            
            (5,262
            )
            
            -
            
            
            -
            
            
            (5,262
            )Distributions
                to partners ($2.685 per common unit)
            
            
            (403
            )
            
            (49,274
            )
            
            -
            
            
            -
            
            
            (49,677
            )**Balance,
                December 31, 2006**
            
            
            227
            
            
            309,587
            
            
            -
            
            
            3,886
            
            
            313,700





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





F-6





**TANGER
      PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


(in
      thousands)


**For
                the years ended December********31,****2006**
            
            
            **2005**
            
            
            **2004****OPERATING
                ACTIVITIES:**Net
                income
            
            $
            43,633
            
            
            $
            6,077
            
            
            $
            8,626Adjustments
                to reconcile net income to net cash provided by operating
                activities:Depreciation
                and amortization (including discontinuedoperations)
            
            
            57,319
            
            
            
            48,888
            
            
            
            51,999Amortization
                of deferred financing costs
            
            
            1,702
            
            
            
            1,691
            
            
            
            1,454Equity
                in earnings of unconsolidated joint ventures
            
            
            (1,268
            )
            
            
            (879
            )
            
            
            (1,042
            )Distributions
                received from unconsolidated joint ventures
            
            
            2,300
            
            
            
            2,000
            
            
            
            1,975Consolidated
                joint venture minority interest
            
            
            ---
            
            
            
            24,043
            
            
            
            27,144Compensation
                expense related to restricted unit awards andoptions
                granted
            
            
            2,675
            
            
            
            1,565
            
            
            
            1,476Amortization
                of debt premiums and discounts, net
            
            
            (2,507
            )
            
            
            (2,719
            )
            
            
            (2,506
            )(Gain)
                loss on sale of real estate
            
            
            (13,833
            )
            
            
            4,690
            
            
            
            1,460Gain
                on sale of outparcels of land
            
            
            (402
            )
            
            
            (1,554
            )
            
            
            (1,510
            )Net
                accretion of market rent rate adjustment
            
            
            (1,464
            )
            
            
            (741
            )
            
            
            (1,065
            )Straight-line
                base rent adjustment
            
            
            (2,219
            )
            
            
            (1,750
            )
            
            
            (389
            )Increases
                (decreases) due to changes in:Other
                assets
            
            
            222
            
            
            
            (4,045
            )
            
            
            (2,280
            )Accounts
                payable and accrued expenses
            
            
            2,196
            
            
            
            6,646
            
            
            
            (568
            )**Net
                cash provided by operating activities**
            
            
            88,354
            
            
            
            83,912
            
            
            
            84,774**INVESTING
                ACTIVITIES:**Acquisition
                of interest in COROC joint venture
            
            
            ---
            
            
            
            (285,974
            )
            
            
            ---Additions
                of rental properties
            
            
            (78,929
            )
            
            
            (44,092
            )
            
            
            (15,836
            )Additions
                to investments in unconsolidated joint ventures
            
            
            (2,020
            )
            
            
            (7,090
            )
            
            
            ---Additions
                to deferred lease costs
            
            
            (3,260
            )
            
            
            (3,218
            )
            
            
            (1,973
            )Net
                proceeds from sales of real estate
            
            
            21,378
            
            
            
            3,811
            
            
            
            20,416**Net
                cash (used in) provided by investing activities**
            
            (62,831
            )
            
            
            (336,563
            )
            
            
            2,607**FINANCING
                ACTIVITIES:**Cash
                distributions paid
            
            
            (54,939
            )
            
            
            (44,087
            )
            
            
            (41,369
            )Distributions
                to consolidated joint venture minority interest
            
            
            ---
            
            
            
            (21,386
            )
            
            
            (22,619
            )Contributions
                from sole general partner
            
            
            19,445
            
            
            
            134,114
            
            
            
            13,173Contributions
                from minority interest partner in consolidatedjoint
                venture
            
            
            ---
            
            
            
            800
            
            
            
            ---Proceeds
                from borrowings and issuance of debt
            
            
            279,175
            
            
            
            518,027
            
            
            
            88,600Repayments
                of debt
            
            
            (261,942
            )
            
            
            (338,865
            )
            
            
            (138,406
            )Additions
                to deferred financing costs
            
            
            (4,157
            )
            
            
            (2,534
            )
            
            
            (701
            )Proceeds
                from settlement of US Treasury rate lock
            
            
            ---
            
            
            
            3,224
            
            
            
            ---Proceeds
                from exercise of share and unit options
            
            
            2,382
            
            
            
            2,195
            
            
            
            8,166**Net
                cash (used in) provided by financing activities**
            
            (20,036
            )
            
            
            251,488
            
            
            
            (93,156
            )Net
                increase (decrease) in cash and cash equivalents
            
            
            5,487
            
            
            
            (1,163
            )
            
            
            (5,775
            )**Cash
                and cash equivalents, beginning of year**
            
            
            2,926
            
            
            
            4,089
            
            
            
            9,864**Cash
                and cash equivalents, end of year**
            
            $
            8,413
            
            
            $
            2,926
            
            
            $
            4,089


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


F-7


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**1.**
            **Organization
                of the Operating
                Partnership**





Tanger
      Properties Limited Partnership and subsidiaries, a North Carolina limited
      partnership, focuses exclusively on developing, acquiring, owning, operating
      and
      managing factory outlet shopping centers. We are one of the largest owners
      and
      operators of factory outlet centers in the United States. As of December 31,
      2006, we owned 30 outlet centers, with a total gross leasable area, or GLA,
      of
      approximately 8.4 million square feet. All reference to gross leasable area
      and
      square feet contained in the notes to the consolidated financial statements
      are
      unaudited. These factory outlet centers were 98% occupied and contained over
      1,800 stores, representing approximately 380 store brands. Also, we owned a
      50%
      interest in two outlet centers with a GLA of approximately 667,000 square feet
      and managed for a fee three outlet centers with a GLA of approximately 293,000
      square feet.





We
      are
      controlled by Tanger Factory Outlet Centers, Inc. and subsidiaries, a
      fully-integrated, self-administered and self-managed real estate investment
      trust, or REIT. The Company owns the majority of the units of partnership
      interest issued by the Operating Partnership, which we refer to as units,
      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.
      The
      remaining units are held by the Tanger family, through its ownership of the
      Tanger Family Limited Partnership, or TFLP. Stanley K. Tanger, the Company’s
      Chairman of the Board and Chief Executive Officer, is the sole general partner
      of TFLP. Unless the context indicates otherwise, the term “Operating
      Partnership” refers to Tanger Properties Limited Partnership and subsidiaries
      and the term “Company” refers to Tanger Factory Outlet Centers, Inc. and
      subsidiaries. The terms “we”, “our” and “us” refer to the Operating Partnership
      or the Operating Partnership and the Company together, as the text
      requires.





As
      of
      December 31, 2006, Tanger GP Trust owned 150,000 common units, Tanger LP Trust
      owned 15,370,668 common units and TFLP owned the remaining 3,033,305 common
      units. Each of TFLP’s common units is exchangeable for two of the Company’s
      common shares, subject to certain limitations to preserve the Company’s status
      as a REIT. In addition, Tanger LP Trust owned 3,000,000 preferred units which
      were issued by the Operating Partnership in exchange for the proceeds from
      the
      Company’s issuance of 3.0 million 7.5% Class C Cumulative Preferred Shares, or
      Class C Preferred Shares. If the Company redeems any Preferred Shares, the
      Operating Partnership will redeem an equivalent number of preferred units for
      the liquidation preference value of the Company’s Class C Preferred
      Shares.





**2.
      Summary of Significant Accounting Policies**





*Principles
      of Consolidation* - The
      consolidated financial statements include our accounts and our wholly-owned
      subsidiaries. Intercompany balances and transactions have been eliminated in
      consolidation. Investments in real estate joint ventures that represent
      non-controlling ownership interests are accounted for using the equity method
      of
      accounting.





In
      2003,
      the Financial Accountings Standards Board, or FASB, issued FASB Interpretation
      No. 46 (Revised 2003): “Consolidation of Variable Interest Entities: An
      Interpretation of ARB No. 51”, or FIN 46R, which clarifies the application of
      existing accounting pronouncements to certain entities in which equity investors
      do not have the characteristics of a controlling financial interest or do not
      have sufficient equity at risk for the entity to finance its activities without
      additional subordinated financial support from other parties. The provisions
      of
      FIN 46R were effective for all variable interests in variable interest entities
      in 2004 and thereafter. We were considered the primary beneficiary of our joint
      venture, COROC Holdings, LLC, or COROC, under the provisions of FIN 46R prior
      to
      us purchasing the remaining two-thirds interest in the venture in November
      2005.
      Therefore, the results of operations and financial position of COROC were
      included in our Consolidated Financial Statements since the acquisition date.
      We
      have evaluated Deer Park Enterprise, LLC, or Deer Park, Tanger Wisconsin Dells,
      LLC, or Tanger Wisconsin Dells and TWMB Associates, LLC, or TWMB, (Note 5)
      and
      have determined that under the current facts and circumstances we are not
      required to consolidate these entities under the provisions of FIN 46R.


F-8








*Minority
      Interests* -
“Minority interest in consolidated joint venture” reflects our partner’s
      ownership interest through November 2005 in the COROC joint venture which was
      consolidated under the provisions of FIN 46R. We purchased the interest owned
      by
      the minority interest partner in the COROC joint venture in November 2005 and
      therefore there is no consolidated joint venture minority interest remaining
      after that date.





*Related
      Parties* - We
      account for related party transactions under the guidance of FASB Statement
      No.
      57 “Related Party Disclosures”. TFLP (Note 1) is a related party which holds a
      limited partnership interest in and is the minority owner of the Operating
      Partnership. Stanley K. Tanger, the Company’s Chairman of the Board and Chief
      Executive Officer, is the sole general partner of TFLP. The only material
      related party transaction with TFLP is the payment of quarterly distributions
      of
      earnings which were $8.1 million, $7.8 million and $7.6 million for the years
      ended December 31, 2006, 2005 and 2004, respectively.





The
      nature of our relationships and the related party transactions for our
      unconsolidated joint ventures are discussed in Footnote 5.





*Reclassifications* -
      Certain
      amounts in the 2005 and 2004 consolidated statements of operations have been
      reclassified to the caption “discontinued operations” as required by FASB
      Statement No. 144 ”Accounting for the Impairment or Disposal of Long Lived
      Assets,”, or FAS 144.





*Use
      of Estimates* - The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities and disclosure of contingent assets and liabilities at the date
      of
      the financial statements and the reported amounts of revenues and expenses
      during the reporting period. Actual results could differ from those
      estimates.





*Operating
      Segments -* We
      aggregate the financial information of all centers into one reportable operating
      segment because the centers all have similar economic characteristics and
      provide similar products and services to similar types and classes of
      customers.





*Rental
      Property* - Rental
      properties are recorded at cost less accumulated depreciation. Costs incurred
      for the construction and development of properties, including certain general
      and overhead costs, are capitalized. The amount of general and overhead costs
      capitalized is based on our estimate of the amount of costs directly related
      to
      the construction or development of these assets. Direct costs to acquire assets
      are capitalized once the acquisition becomes probable. Depreciation is computed
      on the straight-line basis over the estimated useful lives of the assets. We
      generally use estimated lives ranging from 25 to 33 years for buildings and
      improvements, 15 years for land improvements and seven years for equipment.
      Expenditures for ordinary maintenance and repairs are charged to operations
      as
      incurred while significant renovations and improvements, including tenant
      finishing allowances, that improve and/or extend the useful life of the asset
      are capitalized and depreciated over their estimated useful life. Interest
      costs
      are capitalized during periods of active construction for qualified expenditures
      based upon interest rates in place during the construction period until
      construction is substantially complete. Capitalized interest costs are amortized
      over lives which are consistent with the constructed assets.





F-9


In
      accordance with FASB Statement No.  141
      “Business Combinations”, or FAS 141, we allocate the purchase price of
      acquisitions based on the fair value of land, building, tenant improvements,
      debt and deferred lease costs and other intangibles, such as the value of leases
      with above or below market rents, origination costs associated with the in-place
      leases, the value of in-place leases and tenant relationships, if any. We
      depreciate the amount allocated to building, deferred lease costs and other
      intangible assets over their estimated useful lives, which generally range
      from
      three to 40  years.
      The values of the above and below market leases are amortized and recorded
      as
      either an increase (in the case of below market leases) or a decrease (in the
      case of above market leases) to rental income over the remaining term of the
      associated lease. The values of the below market leases that are considered
      to
      have renewal periods with below market rents are amortized over the remaining
      term of the associated lease plus the renewal periods.  The value
      associated with in-place leases is amortized over the remaining lease term
      and
      tenant relationships is amortized over the expected term, which includes an
      estimated probability of the lease renewal. If a tenant vacates its space prior
      to the contractual termination of the lease and no rental payments are being
      made on the lease, any unamortized balance of the related deferred lease costs
      is written off. The tenant improvements and origination costs are amortized
      as
      an expense over the remaining life of the lease (or charged against earnings
      if
      the lease is terminated prior to its contractual expiration date). We assess
      fair value based on estimated cash flow projections that utilize appropriate
      discount and capitalization rates and available market information.





Buildings,
      improvements and fixtures consist primarily of permanent buildings and
      improvements made to land such as landscaping and infrastructure and costs
      incurred in providing rental space to tenants. Interest costs capitalized during
      2006, 2005 and 2004 amounted to $2.2 million, $665,000 and $201,000,
      respectively, and development costs capitalized amounted to $944,000, $685,000
      and $684,000, respectively. Depreciation expense related to rental property
      included in income from continuing operations for each of the years ended
      December 31, 2006, 2005 and 2004 was $40,336,000, $37,530,000 and $37,818,000,
      respectively.





The
      pre-construction stage of project development involves certain costs to secure
      land control and zoning and complete other initial tasks essential to the
      development of the project. These costs are transferred from other assets to
      rental property under construction when the pre-construction tasks are
      completed. Costs of unsuccessful pre-construction or acquisition efforts are
      charged to operations when the project is abandoned.





*Cash
      and Cash Equivalents* - All
      highly liquid investments with an original maturity of three months or less
      at
      the date of purchase are considered to be cash equivalents. Cash balances at
      a
      limited number of banks may periodically exceed insurable amounts. We believe
      that we mitigate our risk by investing in or through major financial
      institutions. Recoverability of investments is dependent upon the performance
      of
      the issuer. At December 31, 2006, we had a cash equivalent investment in a
      highly liquid money market account at a major financial institution of $7.7
      million.





*Deferred
      Charges* -
      Deferred charges includes deferred lease costs and other intangible assets
      consisting of fees and costs incurred, including certain general and overhead
      costs, to originate operating leases and are amortized over the average minimum
      lease term of 5 years. Deferred lease costs and other intangible assets also
      include the value of leases and origination costs deemed to have been acquired
      in real estate acquisitions in accordance with FAS 141. See “Rental Property”
under this section above for a discussion. Deferred financing costs include
      fees
      and costs incurred to obtain long-term financing and are amortized over the
      terms of the respective loans using the straight line method which approximates
      the effective interest method. Unamortized deferred financing costs are charged
      to expense when debt is retired before the maturity date.





F-10


*Guarantees
      of Indebtedness* - In
      November 2002, the FASB issued Interpretation No. 45, “Guarantors Accounting and
      Disclosure Requirements for Guarantees, Including Indirect Guarantees of
      Indebtedness of Others”, or FIN 45, which addresses the disclosure to be made by
      a guarantor in its interim and annual financial statements about its obligations
      under guarantees. FIN 45 applies to all guarantees entered into or modified
      after December 31, 2002. Based on this criterion, the guarantees of indebtedness
      by us in Deer Park and Tanger Wisconsin Dells (Note 5) are accounted for under
      the provisions of FIN 45. FIN 45 requires the guarantor to recognize a liability
      for the non-contingent component of the guarantee; this is the obligation to
      stand ready to perform in the event that specified triggering events or
      conditions occur. The initial measurement of this liability is the fair value
      of
      the guarantee at inception. The recognition of the liability is required even
      if
      it is not probable payments will be required under the guarantee or if the
      guarantee was issued with a premium payment or as part of a transaction with
      multiple elements. We recorded at inception the fair value of our guarantees
      of
      the Deer Park and Tanger Wisconsin Dells joint venture’s debt as a debit to our
      investment in Deer Park and Tanger Wisconsin Dells and a credit to a liability
      of approximately $481,000 in total. We have elected to account for the release
      from obligation under the guarantees by the straight-line method over the life
      of the guarantees. The recorded values of the guarantees were $331,000 and
      $46,000 at December 31, 2006 and 2005, respectively.




*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,
      recognize an impairment loss in an amount by which the carrying amount exceeds
      its fair value. Fair value is calculated as the estimated, discounted future
      cash flows associated with the asset. We believe that no impairment existed
      at
      December 31, 2006.





Real
      estate assets designated as held for sale are stated at their fair value less
      costs to sell or carrying value if greater. We classify real estate as held
      for
      sale when it meets the requirements of FASB Statement No. 144, “Accounting for
      the Impairment or Disposal of Long-Lived Assets”, or FAS 144, and our Board of
      Trustees approves the sale of the assets. Subsequent to this classification,
      no
      further depreciation is recorded on the assets. The operating results of real
      estate assets newly designated as held for sale and for assets sold are included
      in discontinued operations for all periods presented in our results of
      operations.





*Derivatives* - We
      selectively enter into interest rate protection agreements to mitigate changes
      in interest rates on our variable rate borrowings. The notional amounts of
      such
      agreements are used to measure the interest to be paid or received and do not
      represent the amount of exposure to loss. None of these agreements are used
      for
      speculative or trading purposes.





We
      recognize all derivatives as either assets or liabilities in the consolidated
      balance sheets and measure those instruments at their fair value in accordance
      with FASB Statement No. 133, “Accounting for Derivative Instruments and Hedging
      Activities” as amended by FAS 137 and FAS 138, collectively FAS 133. FAS 133
      also requires us to measure the effectiveness, as defined by FAS 133, of all
      derivatives. We formally document our derivative transactions, including
      identifying the hedge instruments and hedged items, as well as our risk
      management objectives and strategies for entering into the hedge transaction.
      At
      inception and on a quarterly basis thereafter, we assess the effectiveness
      of
      derivatives used to hedge transactions. If a cash flow hedge is deemed
      effective, we record the change in fair value in other comprehensive income.
      If
      after assessment it is determined that a portion of the derivative is
      ineffective, then that portion of the derivative's change in fair value will
      be
      immediately recognized in earnings.





F-11


*Income
      Taxes* - As a
      partnership, the allocated share of income or loss for the year is included
      in
      the income tax returns for the partners; accordingly, no provision has been
      made
      for Federal income taxes in the accompanying consolidated financial statements.





*Revenue
      Recognition* - Base
      rentals are recognized on a straight-line basis over the term of the lease.
      Substantially all leases contain provisions which provide additional rents
      based
      on tenants’ sales volume (“percentage rentals”) and reimbursement of the
      tenants’ share of advertising and promotion, common area maintenance, insurance
      and real estate tax expenses. Percentage rentals are recognized when specified
      targets that trigger the contingent rent are met. Expense reimbursements are
      recognized in the period the applicable expenses are incurred. Payments received
      from the early termination of leases are recognized as revenue from the time
      the
      payment is received until the tenant vacates the space. The values of the above
      and below market leases are amortized and recorded as either an increase (in
      the
      case of below market leases) or a decrease (in the case of above market leases)
      to rental income over the remaining term of the associated lease. If a tenant
      vacates its space prior to the contractual termination of the lease and no
      rental payments are being made on the lease, any unamortized balance of the
      related above or below market lease value will be written off.





We
      provide management, leasing and development services for a fee for certain
      properties that are not owned by us or that we partially own through a joint
      venture. Fees received for these services are recognized as other income when
      earned.





*Concentration
      of Credit Risk* -
      We
      perform ongoing credit evaluations of our tenants. Although the tenants operate
      principally in the retail industry, the properties are geographically diverse.
      No single tenant accounted for 10% or more of combined base and percentage
      rental income during 2006, 2005 or 2004.





The
      Riverhead, New York and Rehoboth Beach, Delaware centers are the only properties
      that comprise more than 10% of our consolidated gross revenues or consolidated
      total assets. The center in Riverhead, New York is our only center that
      comprises more than 10% of our consolidated gross revenues for the year ended
      December 31, 2006. The Riverhead center, which was originally constructed in
      1994 and now totals 729,315 square feet, represented 13% of our consolidated
      gross revenue for the year ended December 31, 2006. The Rehoboth center,
      acquired in December 2003, represents 11% of our consolidated total assets
      as of
      December 31, 2006. The Rehoboth center is 568,926 square feet. The occupancy
      rates as of December 31, 2006 for the Riverhead, and Rehoboth Beach centers
      were
      100% and 99%, respectively.





*Supplemental
      Cash Flow Information -* We
      purchase capital equipment and incur costs relating to construction of new
      facilities, including tenant finishing allowances. Expenditures included in
      construction trade payables as of December 31, 2006, 2005 and 2004 amounted
      to
      $23,504,000, $13,464,000 and $11,918,000, respectively. Interest paid, net
      of
      interest capitalized, in 2006, 2005 and 2004 was $40,236,000, $41,503,000 and
      $36,735,000, respectively. Interest paid for 2006 includes a prepayment premium
      for the early extinguishment of the Woodman of the World Life Insurance Society
      mortgage debt (Note 8) of approximately $609,000 which was included in interest
      expense. Interest paid for 2005 includes a prepayment premium for the early
      extinguishment of the John Hancock mortgage debt (Note 8) of approximately
      $9.4
      million which was included in interest expense.





A
      non
      cash financing activity that occurred in association with the acquisition in
      2005 of the final two-thirds interest in COROC was the recording of a reduction
      in the fair value of debt of $883,000 related to the mortgage assumed in the
      original COROC transaction.





*Accounting
      for Stock Based Compensation* - The
      Company may issue non-qualified share options and other share-based awards
      under
      the Amended and Restated Incentive Award Plan, or the Incentive Award Plan.
      The
      Operating Partnership will issue one common unit to the Company for every two
      common shares issued by the Company. Effective January 1, 2006, we adopted
      FASB Statement No. 123 (revised 2004), “Share-Based Payment”, or FAS 123R,
      under the modified prospective method. Since we had previously accounted for
      our
      share-based compensation plan under the fair value provisions of FAS No. 123,
      our adoption did not significantly impact our financial position or our results
      of operations. As required by the standard, deferred compensation as of December
      31, 2005, which was set forth separately in the Partners’ equity section of the
      Consolidated Balance Sheets, was reclassified to the limited partners’ equity
      interest during 2006. Compensation expense recognized in 2006 and for future
      years is now recorded as an increase to the limited partners’ equity
      interest.





*New
      Accounting Pronouncements* -
      In
      July 2006, the FASB issued FASB Interpretation No. 48 “Accounting for
      Uncertainty in Income Taxes--an interpretation of FASB Statement No. 109”,
      or FIN 48, which clarifies the accounting for uncertainty in tax positions.
      FIN
      48 requires that we recognize the impact of a tax position in our financial
      statements if that position is more likely than not of being sustained on audit,
      based on the technical merits of the position. The provisions of FIN 48 are
      effective as of January 1, 2007, with the cumulative effect of the change in
      accounting principle recorded as an adjustment to opening retained earnings.
      We
      have evaluated FIN 48 and currently do not expect it to have a material impact
      on our financial statements.





In
      September 2006, the Securities and Exchange Commission issued Staff Accounting
      Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when
      Quantifying Misstatements in Current Year Financial Statements”, or SAB 108. SAB
      108 provides interpretive guidance on how the effects of prior-year uncorrected
      misstatements should be considered when quantifying misstatements in the current
      year financial statements. SAB 108 requires registrants to quantify
      misstatements using both an income statement ("rollover") and balance sheet
      ("iron curtain") approach and evaluate whether either approach results in a
      misstatement that, when all relevant quantitative and qualitative factors are
      considered, is material. If prior year errors that had been previously
      considered immaterial now are considered material based on either approach,
      no
      restatement is required so long as management properly applied its previous
      approach and all relevant facts and circumstances were considered. If prior
      years are not restated, the cumulative effect adjustment is recorded in opening
      accumulated earnings as of the beginning of the fiscal year of adoption. SAB
      108
      is effective for fiscal years ending after November 15, 2006. SAB 108 did not
      have an impact on our results from operations or financial
      position.


F-12





**3.**  **Acquisitions**





***Abandonment
      of Acquisition Due Diligence Costs***





During
      2006, we incurred a $1.5 million charge for the abandonment of acquisition
      due
      diligence costs, as we have decided we are no longer in a position to pursue
      a
      potential acquisition opportunity. The abandoned acquisitions due diligence
      costs were incurred in connection with structuring, diligencing and submitting
      a
      proposal to acquire a significant portfolio from a public REIT that was
      exploring its strategic alternatives. The bid was requested, but ultimately
      not
      accepted, by the public REIT. These costs were included in property operating
      expenses in the accompanying Statement of Operations for 2006.





***COROC
      Holdings, LLC***




In
      December 2003, COROC, a joint venture in which we initially had a one-third
      ownership interest and have consolidated for financial reporting purposes under
      the provisions of FIN 46R, purchased the 3.3 million square foot Charter Oak
      portfolio of outlet center properties for $491.0 million, including the
      assumption of $186.4 million of cross-collateralized debt which has a stated,
      fixed interest rate of 6.59% and matures in July 2008. We recorded the debt
      at
      its fair value of $198.3 million, with an effective interest rate of 4.97%.
      Accordingly, a debt premium of $11.9 million was recorded and is being amortized
      over the life of the debt. We funded the majority of our share of the equity
      required for the transaction through the issuance of 4.6 million Company common
      shares on December 10, 2003, generating approximately $88.0 million in net
      proceeds. The results of the Charter Oak portfolio have been included in the
      consolidated financial statements from December 2003.





In
      November 2005, we purchased for $286.0 million (including acquisition costs)
      the
      remaining two-thirds interest in this joint venture. We recorded a debt discount
      of $883,000 with an effective interest rate of 5.25% to reflect the fair value
      of the debt deemed to have been acquired in the acquisition. The transaction
      was
      funded with a combination of Company common and preferred shares and our senior
      unsecured notes.





We
      allocated the purchase price in accordance with FAS 141. Since we previously
      owned a one-third interest in COROC, the allocation of the purchase price
      reflects the acquisition of our two-thirds share of the difference between
      the
      fair value of the COROC portfolio and underlying book value of the assets and
      liabilities at the date of acquisition.  The
      following table reconciles the purchase price of $282.5 million to the total
      assets recorded (in thousands):


Purchase
                price
            
            $
            282,500Acquisition
                costs
            
            
            3,474Joint
                venture partner minority interest
            
            
            (226,130
            )Debt
                discount
            
            
            (883
            )Total
            
            $
            58,961





F-13


The
      following table summarizes the allocation of the purchase price to the assets
      acquired and liabilities assumed as of November 2005, the date of acquisition
      and the weighted average amortization period by major intangible asset class
      (in
      thousands):


Value
            
            
            
            
            
            Weighted
              amortization
              periodRental
                propertyLand
            
            $
            7,891Buildings,
                improvements and fixtures
            
            
            39,478Total
                rental property
            
            
            47,369Deferred
                lease costs and other intangiblesBelow
                market lease value
            
            
            (4,689
            )
            
            3.5Lease
                in place value
            
            
            6,632
            
            
            6.4Tenant
                Relationships
            
            
            8,604
            
            
            7.2Present
                value of lease & legal costs
            
            
            1,045
            
            
            4.3Total
                deferred lease costs and other intangibles
            
            
            11,592Subtotal
            
            
            58,961Debt
                discount
            
            
            883Net
                assets acquired
            
            $
            59,844





The
      following condensed pro forma (unaudited) information assumes the acquisition
      of
      the remaining two-thirds interest in COROC had occurred as of the beginning
      of
      each respective period and that the issuance of 3.0 million of the Company’s
      common shares, 2.2 million of the Company’s Class C Preferred Shares and $250
      million of 6.15% senior unsecured notes also occurred as of the beginning of
      each respective period (in thousands except per share data):





For
                the Year EndedDecember
                31,2005
            
            
            2004Revenues
            
            $
            199,715
            
            $
            193,234Net
                income
            
            $
            17,977
            
            $
            21,018**Basic
                earnings per****common
                unit:**Net
                income
            
            $
            .76
            
            $
            .94Weighted
                average commonunits
                outstanding
            
            
            18,226
            
            
            18,055**Diluted
                earnings per common unit:**Net
                income
            
            $
            .76
            
            $
            .93Weighted
                average common units outstanding
            
            
            18,344
            
            
            18,150





**4.**  **Development
      of Rental Properties**





***Charleston,
      South Carolina***





During
      August of 2006, we opened our wholly-owned 352,300 square foot center located
      near Charleston, South Carolina. Tenants in the center include Gap, Banana
      Republic, Liz Claiborne, Nike, Adidas, Tommy Hilfiger, Guess, Reebok and others.
      As of December 31, 2006, the center was 88.7% occupied.





**Pittsburgh,
      Pennsylvania**





During
      the fourth quarter of 2006, we closed on the acquisition of the Pittsburgh
      land
      for $4.8 million. Tax incentive financing bonds have been issued, with net
      proceeds of approximately $16.8 million expected to be received by us as
      qualifying expenditures during construction of the center are incurred. We
      currently expect to deliver the first phase of the center, approximately 309,000
      square feet, during the first quarter of 2008.


F-14





**5.**
            **Investments
                in Unconsolidated Joint
                Ventures**





Our
      investment in unconsolidated joint ventures as of December 31, 2006 and 2005
      was
      $14.5 million and $13.0 million, respectively. We have evaluated the accounting
      treatment for each of the joint ventures under the guidance of FIN 46R 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. We
      are
      members of the following unconsolidated real estate joint ventures:





**Joint
                Venture**
            **Our
                Ownership %**
            **Project
                Location**TWMB
                Associates, LLC
            50%
            Myrtle
                Beach, South CarolinaTanger
                Wisconsin Dells, LLC
            50%
            Wisconsin
                Dells, WisconsinDeer
                Park Enterprise, LLC
            33%
            Deer
                Park, New York





These
      investments are recorded initially at cost and subsequently adjusted for our
      equity in the venture’s net income (loss) and cash contributions and
      distributions. Our investments in real estate joint ventures are reduced by
      50%
      of the profits earned for leasing and development services we provided to TWMB
      and Tanger Wisconsin Dells. The following management, leasing, marketing and
      development fees were recognized from services provided to TWMB and Tanger
      Wisconsin Dells during the years ended December 31, 2006, 2005 and 2004 (in
      thousands):





Year
                Ended
              December 31,2006
            2005
            2004Fee:Management
            
            $
                410
            $
                327
            $
                288Leasing
            
            188
            6
            212Marketing
            
            86
            66
            55Development
            
            304
            ---
            28Total
                Fees
            
            $
                988
            $
                399
            $
                583





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.





***TWMB
      Associates, LLC***





TWMB
      has
      operated a Tanger Outlet Center locate on Highway 17 in Myrtle Beach, South
      Carolina since June 2002. The Myrtle Beach center now consists of approximately
      402,000 square feet and has over 90 name brand tenants.





During
      March 2005, TWMB, entered into an interest rate swap agreement with Bank of
      America with a notional amount of $35 million for five years. Under this
      agreement, TWMB receives a floating interest rate based on the 30 day LIBOR
      index and pays a fixed interest rate of 4.59%. This swap effectively changes
      the
      rate of interest on $35 million of variable rate mortgage debt to a fixed rate
      of 5.99% for the contract period.





In
      April
      2005, TWMB obtained non-recourse, permanent financing to replace the
      construction loan debt that was utilized to build the outlet center in Myrtle
      Beach, South Carolina. The new mortgage amount is $35.8 million with a rate
      of
      LIBOR + 1.40%. The note is for a term of five years with payments of interest
      only. In April 2010, TWMB has the option to extend the maturity date of the
      loan
      two more years until 2012. All debt incurred by this unconsolidated joint
      venture is collateralized by its property.





F-15


***Tanger
      Wisconsin Dells, LLC***





In
      March
      2005, the Tanger Wisconsin Dells joint venture was established to construct
      and
      operate a Tanger Outlet center in Wisconsin Dells, Wisconsin. During the first
      quarter of 2006, capital contributions of approximately $510,000 were made
      by
      each member. The 264,900 square foot center opened in August 2006. The tenants
      in the center include Polo Ralph Lauren, Abercrombie & Fitch, Hollister,
      Gap, Banana Republic, Old Navy, Liz Claiborne, Nike, Adidas, Tommy Hilfiger
      and
      others.





In
      February 2006, in conjunction with the construction of the center, Tanger
      Wisconsin Dells closed on a construction loan which provides for borrowings
      up
      to $30.25 million with Wells Fargo Bank, NA due in February 2009. The
      construction loan is repayable on an interest only basis with interest floating
      based on the 30, 60 or 90 day LIBOR index plus 1.30%. The construction loan
      incurred by this unconsolidated joint venture is collateralized by its property
      as well as joint and several guarantees by us and designated guarantors of
      our
      venture partner. The construction loan balance as of December 31, 2006 was
      approximately $28.9 million.




The
      above
      mentioned guarantee of the construction loan debt is accounted for under the
      provisions of FIN 45. We recorded at inception the fair value of our guarantee
      of the Tanger Wisconsin Dells joint venture's debt as an increase to our
      investment in Tanger Wisconsin Dells and recorded a corresponding liability
      of
      approximately $409,000. We have elected to account for the release from the
      obligation under the guarantee by the straight-line method over the three year
      life of the guarantee. The remaining value of the guarantee liability as of
      December 31, 2006 was approximately $295,000.





***Deer
      Park Enterprise, LLC***





In
      October 2003, Deer Park Enterprise, LLC, or Deer Park, entered into a
      sale-leaseback transaction for the location on which it ultimately will develop
      a shopping center that will contain both outlet and big box retail tenants
      in
      Deer Park, New York. To date, we have made equity contributions totaling $4.5
      million to Deer Park, including $1.5 million in 2006. Both of the other venture
      partners have made equity contributions equal to ours.





In
      September 2006, Deer Park closed on a construction loan of $43.2 million with
      Bank of America which incurs interest at a floating interest rate equal to
      LIBOR
      plus 2.00% and is collateralized by the property as well as joint and several
      guarantees by all three venture partners. The loan balance as of December 31,
      2006 was approximately $35.4 million. Proceeds to date were used to refinance
      the debt incurred in the original purchase of the property, including a $19
      million loan with Bank of America and a $7 million purchase money mortgage
      note
      with the original seller of the property. The construction loan matures in
      April
      2007.





The
      above
      mentioned guarantee of the construction loan debt is accounted for under the
      provisions of FIN 45. We recorded at inception the fair value of our guarantee
      of the Deer Park joint venture's debt as an increase to our investment in Deer
      Park and recorded a corresponding liability of approximately $72,000. We have
      elected to account for the release from the obligation under the guarantee
      by
      the straight-line method over the three year life of the guarantee. The
      remaining value of the guarantee liability as of December 31, 2006 was
      approximately $36,000.





The
      original purchase of the property was in the form of a sale-leaseback
      transaction, which consisted of the sale of the property to Deer Park for $29
      million, including a 900,000 square foot industrial building, which was then
      leased back to the seller under an operating lease agreement. At the end of
      the
      lease in May 2005, the tenant vacated the building. However, the tenant had
      not
      satisfied all of the conditions necessary to terminate the lease. Deer Park
      is
      currently in litigation to recover from the tenant its monthly lease payments
      and will continue to do so until recovered. Annual rents due from the tenant
      were $3.4 million.





F-16


Through
      March 2006, the Deer Park joint venture accounted for the lease revenues under
      the provisions of FASB Statement No. 67 “Accounting for Costs and Initial Rental
      Operations of Real Estate Projects”, where the rent received from the tenant
      prior to May 2005 and that accrued from June 2005 through March 2006, net of
      applicable expenses, were treated as incidental revenues and were recorded
      as a
      reduction in the basis of the assets. Given the uncertainty regarding the final
      outcome of the litigation described above, Deer Park discontinued the accrual
      of
      rental revenues associated with the sale-leaseback transaction as of April
      1,
      2006. As a result, we recorded our portion of the project losses, which amounted
      to $31,000 for the 2006 period, as a reduction in our investment in Deer Park
      and as a reduction to equity in earnings of unconsolidated joint
      ventures.





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**2006
            2005**Assets**Investment
                properties at cost, net
            $ 
                74,253
            $ 64,915Construction
                in progress
            38,449
            15,734Cash
                and cash equivalents
            6,539
            6,355Deferred
                charges, net
            2,824
            1,548Other
                assets
            15,239
            6,690Total
                assets
            $
                137,304
            $
                95,242**Liabilities
                and Owners’ Equity**Mortgage
                payable
            $
                100,138
            $
                61,081Construction
                trade payables
            2,734
            6,588Accounts
                payable and other liabilities
            2,767
            1,177Total
                liabilities
            105,639
            68,846Owners’
                equity
            31,665
            26,396Total
                liabilities and owners’ equity
            $
                137,304
            $
                95,242





**Summary
                Statements of Operations- Unconsolidated Joint
                Ventures:**2006
            2005
            2004**Revenues**
            $
                14,703
            $
                10,909
            $
                9,821**Expenses:**Property
                operating
            5,415
            3,979
            3,539General
                and administrative
            213
            24
            31Depreciation
                and amortization
            3,781
            3,102
            2,742Total
                expenses
            9,409
            7,105
            6,312**Operating
                income**
            5,294
            3,804
            3,509Interest
                expense
            2,907
            2,161
            1,532**Net
                income**
            $
                 2,387
            $
                 1,643
            $ 1,977**Tanger
                Properties Limited Partnership share of:**Net
                income
            $ 
                1,268
            $   
                 879
            $
                1,042Depreciation
                (real estate related)
            $
                 1,825
            $ 
                1,493
            $
                1,334





F-17





**6.**  **Disposition
      of Properties and Properties Held for Sale**





***2006
      Transactions***





In
      January 2006, we completed the sale of our property in Pigeon Forge, Tennessee.
      Net proceeds received from the sale of the property were approximately $6.0
      million. We recorded a gain on sale of real estate of approximately $3.6
      million. We continue to manage and lease the property for a fee. Based on the
      nature and amounts of the fees to be received, we have determined that our
      management relationship does not constitute a significant continuing
      involvement, and therefore we have shown the results of operations for all
      periods presented in discontinued operations. As of December 31, 2005, the
      assets and liabilities of the Pigeon Forge property were classified as held
      for
      sale. The composition of the assets held for sale line item at December 31,
      2005
      consisted of $1.9 million of rental property, net; $687,000 of other assets
      and
      $73,000 of deferred charges, net.





In
      March
      2006, we completed the sale of our property located in North Branch, Minnesota.
      Net proceeds received from the sale of the property were approximately $14.2
      million. We recorded a gain on sale of real estate of approximately $10.3
      million. We also continue to manage and lease this property for a fee. Based
      on
      the nature and amount of the fees to be received, we have determined that our
      management relationship does not constitute a significant continuing involvement
      and therefore we have shown the results of operations and gain on sale of real
      estate as discontinued operations under the provisions of FAS 144.





***2005
      Transactions***





In
      February 2005, we completed the sale of the outlet center on a portion of our
      property located in Seymour, Indiana and recognized a loss of $4.7 million.
      Net
      proceeds received from the sale of the center were approximately $2.0 million.
      We continue to have a significant involvement in this location by retaining
      several outparcels and significant excess land adjacent to the disposed
      property. As such, the results of operations from the property continue to
      be
      recorded as a component of income from continuing operations and the loss on
      sale of real estate is reflected outside the discontinued operations caption
      under the guidance of Regulation S-X 210.3-15.





***2004
      Transactions***





In
      June
      and September 2004, we completed the sale of two non-core properties located
      in
      North Conway, New Hampshire and in Dalton, Georgia, respectively. Net proceeds
      received from the sales of these properties were approximately $17.5 million.
      We
      recorded a gain on sale of the North Conway, New Hampshire properties of
      approximately $2.1 million during the second quarter of 2004 and recorded a
      loss
      on the sale of the Dalton, Georgia property of approximately $3.5 million during
      the third quarter of 2004, resulting in a net loss for the year ended December
      31, 2004 of $1.5 million which is included in discontinued
      operations.


F-18





Below
      is
      a summary of the results of operations of the disposed properties through their
      respective disposition dates and properties held for sale as presented in
      discontinued operations for the respective periods (in thousands):





**Summary
                Statements of Operations - Disposed Properties and Assets Held for
                Sale:**
            
            
            2006
            
            
            2005
            
            
            2004**Revenues:**Base
                rentals
            
            $
            448
            
            $
            2,674
            
            $
            4,045Percentage
                rentals
            
            
            6
            
            
            67
            
            
            73Expense
                reimbursements
            
            
            229
            
            
            1,345
            
            
            1,926Other
                income
            
            
            14
            
            
            1,524
            
            
            128Total
                revenues
            
            
            697
            
            
            5,610
            
            
            6,172**Expenses:**Property
                operating
            
            
            373
            
            
            2,041
            
            
            2,782Depreciation
                and amortization
            
            
            116
            
            
            722
            
            
            1,286Total
                expenses
            
            
            489
            
            
            2,763
            
            
            4,068**Discontinued
                operations before****gain
                (loss) on sale of real estate**
            
            
            208
            
            
            2,847
            
            
            2,104Gain
                (loss) on sale of real estate included indiscontinued
                operations
            
            
            13,833
            
            
            ---
            
            
            (1,460
            )**Discontinued
                operations**
            
            $
            14,041
            
            $
            2,847
            
            $
            644





***Outparcel
      Sales***





Gains
      on
      sale of outparcels are included in other income in the consolidated statements
      of operations to the extent the outlet center at which it is located has not
      been sold. Cost is allocated to the outparcels based on the relative market
      value method. Below is a summary of outparcel sales that we completed during
      the
      years ended December 31, 2006, 2005 and 2004 (in thousands, except number of
      outparcels):




2006
            2005(1)
            2004Number
                of outparcels
            4
            1
            5Net
                proceeds
            $1,150
            $252
            $2,897Gain
                on sale included in other income
            $   402
            $127
            $1,510


(1)
      Note
      that these amounts exclude the sale of an outparcel at the North Branch,
      Minnesota center in 2005.
      The North Branch center was sold in March 2006 and is classified in discontinued
      operations. The gain on sale of outparcel totaled $1.4 million and is included
      in other income in the summary statements of operations of disposed
      properties.





**7.**  **Deferred
      Charges**





Deferred
      charges as of December 31, 2006 and 2005 consists of the following (in
      thousands):





2006
            
            2005Deferred
                lease costs
            
            $
            23,757
            
            $
            21,246Below
                market leases
            
            
            (5,369
            )
            
            (5,568
            )Other
                intangibles
            
            
            77,423
            
            
            77,142Deferred
                financing costs
            
            
            10,571
            
            
            7,505106,382
            
            
            100,325Accumulated
                amortization
            
            
            (51,293
            )
            
            (35,770
            )$
            55,089
            
            $
            64,555





F-19


Amortization
      of deferred lease costs and other intangibles included in income from continuing
      operations for the years ended December 31, 2006, 2005 and 2004 was
      $15,127,000, $9,643,000 and $11,606,000, respectively. Amortization of deferred
      financing costs, included in interest expense in the accompanying Consolidated
      Statements of Operations, for the years ended December 31, 2006, 2005 and 2004
      was $1,702,000, $1,691,000 and $1,454,000, respectively. The amortization
      amounts for the years ended December 31, 2006 and 2005 include the write off
      of
      deferred loan costs of $308,000 and $447,000, respectively, related to the
      early
      extinguishment of debt.





Estimated
      aggregate amortization expense of net below market leases and other intangibles
      for each of the five succeeding years is as follows (in thousands):





Year
            Amount2007
            $ 
                8,8582008
            8,0362009
            7,6832010
            6,7162011
            4,648Total
            $
                35,941





**8.
      Debt**





Debt
      as
      of December 31, 2006 and 2005 consists of the following (in
      thousands):


2006
            2005Senior,
                unsecured notes:9.125%
                Senior, unsecured notes, maturing February 2008
            $
                100,000
            $
                100,0006.150%
                Senior, unsecured notes, maturing November 2015, net ofdiscount
                of $832 and $901, respectively
            249,168
            249,0993.75%
                Senior, unsecured exchangeable notes, maturing August 2026
            149,500
            ---Unsecured
                note:Variable
                rate of LIBOR + .85%, repaid in 2006(1)
            ---
            53,500Mortgage
                notes with fixed interest:4.97%,
                maturing July 2008, including net premium of $3,441 and $5,771,respectively
            179,911
            185,7888.86%,
                repaid in September 2006
            ---
            15,445Unsecured
                lines of credit with variable interest rates of LIBOR +.85%, repaidin
                2006(1)
            ---
            59,775$
                678,579
            $
                663,607


(1)
            Depending
                on our investment grade rating, our unsecured lines of credit variable
                interest rates vary from either prime to prime + .50% or from LIBOR
                + .55%
                to LIBOR + 1.70% and expire in June 2009 or
                later.





Certain
      of our properties, which had a net book value of approximately $479.1 million
      at
      December 31, 2006, serve as collateral for the fixed rate mortgage. The
      unsecured lines of credit and senior unsecured notes require the maintenance
      of
      certain ratios, including debt service coverage and leverage, and limit the
      payment of distributions such that distributions will not exceed funds from
      operations, as defined in the agreements, for the prior fiscal year on an annual
      basis or 95% of funds from operations on a cumulative basis. As of December
      31,
      2006 we were in compliance with all of our debt covenants.





F-20


***2006
      Transactions***





In
      August
      2006, the Operating Partnership issued $149.5 million of exchangeable senior
      unsecured notes that mature on August 15, 2026. The notes bear interest at
      a
      fixed coupon rate of 3.75%. The notes are exchangeable into the Company’s common
      shares, at the option of the holder, at an initial exchange ratio, subject
      to
      adjustment, of 27.6856 shares per $1,000 principal amount of notes (or an
      initial exchange price of $36.1198 per common share). The notes are senior
      unsecured obligations of the Operating Partnership and are guaranteed by the
      Company on a senior unsecured basis. On and after August 18, 2011, holders
      may
      exchange their notes for cash in an amount equal to the lesser of the exchange
      value and the aggregate principal amount of the notes to be exchanged, and,
      at
      our option, Company common shares, cash or a combination thereof for any excess.
      Note holders may exchange their notes prior to August 18, 2011 only upon the
      occurrence of specified events. In addition, on August 18, 2011, August 15,
      2016
      or August 15, 2021, note holders may require us to repurchase the notes for
      an
      amount equal to the principal amount of the notes plus any accrued and unpaid
      interest up to, but excluding, the repurchase date. In no event will the total
      number of common shares issuable upon exchange exceed 4.9 million, subject
      to
      adjustments for dividend rate changes. Accordingly, the Company has reserved
      those shares.





We
      used
      the net proceeds from the issuance to repay in full our mortgage debt
      outstanding with Woodman of the World Life Insurance Society totaling
      approximately $15.3 million, with an interest rate of 8.86% and an original
      maturity of September 2010. We also repaid all amounts outstanding under our
      unsecured lines of credit and a $53.5 million variable rate unsecured term
      loan
      with Wells Fargo with a weighted average interest rate of approximately 6.3%.
      As
      a result of the early repayment, we recognized a charge for the early
      extinguishment of the mortgages and term loan of approximately $917,000. The
      charge, which is included in interest expense, consisted of a prepayment premium
      of approximately $609,000 and the write-off of deferred loan fees totaling
      approximately $308,000.





During
      the third quarter of 2006, we closed on unsecured lines of credit of $25 million
      each with Branch Banking and Trust Co. and SunTrust Bank. As of December 31,
      2006, we maintained unsecured lines of credit that provided for borrowings
      of up
      to $200 million. All of our lines of credit have maturity dates of June 2009
      or
      later.





***2005
      Transactions***





In
      October 2005, we repaid in full our mortgage debt outstanding with John Hancock
      Mutual Life Insurance Company totaling approximately $77.4 million, with
      interest rates ranging from 7.875% to 7.98% and an original maturity date of
      April 1, 2009. As a result of the early repayment, we recognized a charge for
      the early extinguishment of the John Hancock mortgage debt of approximately
      $9.9
      million. The charge, which is included in interest expense, was recorded in
      the
      fourth quarter of 2005 and consisted of a prepayment premium of approximately
      $9.4 million and the write-off of deferred loan fees totaling approximately
      $0.5
      million.





In
      November 2005, we closed on $250 million of 6.15% senior unsecured notes with
      net proceeds of approximately $247.2 million. The ten year notes were issued
      by
      the Operating Partnership and were priced at 99.635% of par value. The proceeds
      were used to fund a portion of the COROC acquisition described above in Note
      3.





***2004
      Transactions***





As
      part
      of the original COROC acquisition in December 2003, we assumed $186.4 million
      of
      cross-collateralized debt which has a stated, fixed interest rate of 6.59%
      and
      matures in July 2008. We initially recorded the debt at its fair value of $198.3
      million with an effective interest rate of 4.97%. Accordingly, a debt premium
      of
      $11.9 million was recorded and is being amortized over the life of the debt. When
      the
      remainder of the portfolio was acquired in November 2005, we recorded a debt
      discount of $883,000 with an effective interest rate of 5.25% to reflect the
      fair value of the debt deemed to have been acquired in the acquisition. The
      net
      premium had a recorded value of $3.4 million and $5.8 million as of December
      31,
      2006 and 2005, respectively.





F-21





Maturities
      of the existing long-term debt as of December 31, 2006 are as follows (in
      thousands):





Year
            Amount2007
            $ 
                 3,7912008
            272,6792009
            ---2010
            ---2011
            ---Thereafter
            399,500Subtotal
            675,970Net
                premium
            2,609Total
            $
                678,579








**9.
      Derivatives and Fair Value of Financial Instruments**





In
      September 2005, we entered into two forward starting interest rate lock
      protection agreements to hedge risks related to anticipated future financings
      in
      2005 and 2008. The 2005 agreement locked the US Treasury index rate at 4.279%
      on
      a notional amount of $125 million for 10 years from such date in December 2005.
      This lock was unwound in the fourth quarter of 2005 in conjunction with the
      issuance of the $250 million of 6.15% senior unsecured notes due in 2015
      discussed in Note 8 and, as a result, we received a cash payment of $3.2
      million. The gain was recorded in other comprehensive income and is being
      amortized into earnings using the effective interest method over a 10 year
      period that coincides with the interest payments associated with the 6.15%
      senior unsecured notes due in 2015. The 2008 agreement locked the US Treasury
      index rate at 4.526% on a notional amount of $100 million for 10 years from
      such
      date in July 2008. In November 2005, we entered into an additional agreement
      which locked the US Treasury index rate at 4.715% on a notional amount of $100
      million for 10 years from such date in July 2008. We anticipate unsecured debt
      transactions of at least the notional amount to occur in the designated periods.
      The US Treasury index rate lock agreements have been designated as cash flow
      hedges and are carried on the balance sheet at fair value.





During
      March 2005, TWMB, entered into an interest rate swap agreement with a notional
      amount of $35 million for five years to hedge floating rate debt on the
      permanent financing that was obtained in April 2005. Under this agreement,
      TWMB
      receives a floating interest rate based on the 30 day LIBOR index and pays
      a
      fixed interest rate of 4.59%. This swap effectively changes the rate of interest
      on $35 million of variable rate mortgage debt to a fixed rate debt of 5.99%
      for
      the contract period. TWMB’s interest rate swap agreement has been designated as
      a cash flow hedge and is carried on TWMB’s balance sheet at fair value.





In
      August
      2004, TWMB’s $19 million interest rate swap agreement which hedged the floating
      rate construction loan obtained to build the center expired as scheduled. Under
      this agreement, TWMB received a floating interest rate based on the 30 day
      LIBOR
      index and paid a fixed interest rate of 2.49%. This swap effectively changed
      the
      payment of interest on $19 million of variable rate debt to fixed rate debt
      for
      the contract period at a rate of 4.49%.





F-22


In
      accordance with our derivatives policy, these derivatives were designated as
      cash flow hedges and assessed for effectiveness at the time the contract was
      entered into and will be assessed for effectiveness on an on-going basis at
      each
      quarter end. Unrealized gains and losses related to the effective portion of
      our
      derivatives are recognized in other comprehensive income and gains or losses
      related to ineffective portions are recognized in the income statement. At
      December 31, 2006, all of our derivatives were considered effective.





The
      following table summarizes the notional values and fair values of our derivative
      financial instruments as of December 31, 2006.





**Financial
                Instrument Type**
            Notional
                Amount
            Rate
            Maturity
            
            Fair
                Value**TANGER
                PROPERTIES LIMITED PARTNERSHIP**US
                Treasury Lock
            $100,000,000
            4.526%
            July
                2008
            $
            967,000US
                Treasury Lock
            $100,000,000
            4.715%
            July
                2008
            $
            (224,000)**TWMB,
                ASSOCIATES, LLC**LIBOR
                Interest Rate Swap(1)
            $35,000,000
            4.59%
            March
                2010
            $
            411,000


(1)
            Amount
                represents fair value at TWMB Associates, LLC, in which we have a
                50%
                ownership interest.





The
      carrying amount of cash equivalents approximates fair value due to the
      short-term maturities of these financial instruments. The fair value of
      long-term debt at December 31, 2006 and 2005, estimated at the present value
      of
      future cash flows, discounted at interest rates available at the reporting
      date
      for new debt of similar type and remaining maturity, was approximately $723.5
      million and $670.0 million, respectively. The recorded values were $678.6
      million and $663.6 million, respectively, as of December 31, 2006 and
      2005.





**10.
      Partners’ Equity**





In
      February 2006, the Company completed the issuance of an additional 800,000
      Class
      C Preferred Shares, receiving net proceeds of approximately $19.4 million.
      The
      proceeds, which were contributed to us in exchange for 800,000 preferred units,
      were used to pay down amounts outstanding on our unsecured lines of credit.
      After the offering the total amount of Company Class C Preferred Shares (and
      Operating Partnership preferred units) outstanding was 3,000,000. All proceeds
      from common and preferred share issuances by the Company are contributed to
      the
      Operating Partnership in exchange for common and preferred units.





In
      November 2005, the Company closed on the sale of 2,200,000 Class C Preferred
      Shares with net proceeds of approximately $53.0 million. As a result, we issued
      2,200,000 preferred units to the Company in exchange for the proceeds. The
      proceeds were used to fund a portion of the COROC acquisition discussed in
      Note
      4. The Company may not redeem our Class C Preferred Shares prior to November
      14,
      2010, except in limited circumstances to preserve its status as a REIT. On
      or
      after November 14, 2010, the Company may redeem at its option it’s Class C
      Preferred Shares, in whole or from time to time in part, for cash at a
      redemption price of $25.00 per share, plus accrued and unpaid distributions,
      if
      any, to the redemption date. The Class C Preferred Shares have no stated
      maturity, are not subject to any sinking fund or mandatory redemptions and
      are
      not convertible or exchangeable for any of our other securities. The Company
      pays annual dividends equal to $1.875 per share with distributions from us.
      If
      the Company redeems any Preferred Shares, the Operating Partnership will redeem
      an equivalent number of preferred units for the liquidation preference value
      of
      the Company’s Class C Preferred Shares.





In
      September 2005, the Company completed the issuance of 3.0 million of its common
      shares to certain advisory clients of Cohen & Steers Capital Management,
      Inc. at a net price of $27.09 per share, receiving net proceeds of approximately
      $81.1 million. The proceeds were used to temporarily pay down amounts
      outstanding on our unsecured lines of credit.


F-23





In
      December 2003, the Company completed a public offering of 4.6 million common
      shares at a price of $20.25 per share, receiving net proceeds of approximately
      $88.0 million. The net proceeds were used together with other available funds
      to
      fund our portion of the equity required to purchase the COROC portfolio as
      mentioned in Note 4 above and for general corporate purposes. In addition in
      January 2004, the underwriters of the December 2003 offering exercised in full
      their over-allotment option to purchase an additional 690,000 Company common
      shares at the offering price of $20.25 per share. We received net proceeds
      of
      approximately $13.2 million from the exercise of the
      over-allotment.





At
      December 31, 2006 and 2005, the ownership interests of the Operating Partnership
      consisted of the following:





2006
            
            2005Preferred
                units:Limited
                partner
            3,000,000
            
            2,200,000Common
                units:General
                partner
            150,000
            
            150,000Limited
                partners
            18,403,973
            
            18,257,663Total
                common units
            18,553,973
            
            18,407,663





**11.
      Earnings Per Common Unit**





A
      reconciliation of the numerators and denominators in computing earnings per
      common unit in accordance with FASB Statement No. 128, “Earnings per Share”, for
      the years ended December 31, 2006, 2005 and 2004 is set forth as follows (in
      thousands, except per unit amounts):





2006
            
            
            2005
            
            
            2004**NUMERATOR**Income
                from continuing operations
            
            $
            29,592
            
            $
            7,920
            
            $
            7,982Loss
                on sale of real estate
            
            
            ---
            
            
            (4,690
            )
            
            ---Less
                applicable preferred unit distributions
            
            
            (5,433
            )
            
            (538
            )
            
            ---Income
                from continuing operation availableto
                common unitholders
            
            
            24,159
            
            
            2,692
            
            
            7,982Discontinued
                operations
            
            
            14,041
            
            
            2,847
            
            
            644Net
                income available to common unitholders
            
            $
            38,200
            
            $
            5,539
            
            $
            8,626**DENOMINATOR**Basic
                weighted average common units
            
            
            18,333
            
            
            17,223
            
            
            16,555Effect
                of exchangeable notes
            
            
            59
            
            
            ---
            
            
            ---Effect
                of outstanding unit options
            
            
            120
            
            
            81
            
            
            80Effect
                of unvested restricted unit awards
            
            
            62
            
            
            37
            
            
            15Diluted
                weighted average common units
            
            
            18,574
            
            
            17,341
            
            
            16,650**Basic
                earnings per common unit:**Income
                from continuing operations
            
            $
            1.32
            
            $
            .16
            
            $
            .48Discontinued
                operations
            
            
            .76
            
            
            .16
            
            
            .04Net
                income
            
            $
            2.08
            
            $
            .32
            
            $
            .52**Diluted
                earnings per common unit:**Income
                from continuing operations
            
            
            1.30
            
            
            .16
            
            
            .48Discontinued
                operations
            
            
            .76
            
            
            .16
            
            
            .04Net
                income
            
            $
            2.06
            
            $
            .32
            
            $
            .52





F-24


The
      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 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 initial
      exchange rate of $36.1198 per share.





The
      computation of diluted earnings per common unit excludes options to purchase
      common units when the exercise price is greater than the average market price
      of
      the common units for the period. The market price of a common unit is considered
      to be equivalent to twice the market price of a common share of the Company.
      Options to purchase common units excluded from the computation of diluted
      earnings per common unit during 2005 and 2004 because the exercise price was
      greater than the average market price of the common units totaled approximately
      750 and 119 common units, respectively. No options were excluded from the 2006
      computation.





Restricted
      unit awards are included in the diluted earnings per common unit computation
      if
      the effect is dilutive, using the treasury stock method. All restricted units
      issued are included in the calculation of diluted weighted average common units
      outstanding. If the share based awards were granted during the period, the
      shares issuable are weighted to reflect the portion of the period during which
      the awards were outstanding.





**12.**  **Share-Based
      Compensation**





We
      have a
      share-based compensation plan, the Amended and Restated Incentive Award Plan,
      or
      the Plan, which covers the Company’s independent directors and our employees.
      The Plan, originally a plan for granting share and unit options to the Company’s
      independent directors and our employees, was amended during 2004, to, among
      other things, add restricted shares and other share-based grants to the plan.
      The Plan was approved by a vote of shareholders at the Company’s Annual
      Shareholders’ Meeting in May 2004. We may issue up to 3.0 million common units
      under the Incentive Award Plan. We have granted 1,796,190 unit options, net
      of
      options forfeited, and 256,125 restricted unit awards, net of restricted units
      forfeited, through December 31, 2006. The amount and terms of the awards granted
      under the plan are determined by the Share and Unit Option Committee of the
      Company’s Board of Directors.





All
      non-qualified share and unit options granted under the Plan expire 10 years
      from
      the date of grant and 20% of the options become exercisable in each of the
      first
      five years commencing one year from the date of grant. Options are generally
      granted with an exercise price equal to the market price of the Company’s common
      shares on the day of grant. Common units issued upon exercise of unit options
      are exchangeable for two common shares of the Company. The fair value of each
      option grant is estimated on the date of grant using the Black-Scholes option
      pricing model with the following weighted-average assumptions used for the
      grants in 2004 and 2005: expected dividend yield ranging from 5.3% to 6.5%;
      expected life of 7 years; expected volatility of 23%; and risk-free interest
      rates ranging from 3.71% to 3.99%. There were no option grants in
      2006.





During
      2004, the Company’s Board of Directors approved the grant of 212,250 restricted
      Company common shares to the Company’s independent directors and certain
      executive officers of the Company which vest ratably over 3 years in the case
      of
      independent directors and over 5 years in the case of certain executive
      officers. The Company receives one common unit from the Operating Partnership
      for every two restricted shares issued by the Company. During 2005, the
      Company’s Board of Directors approved the grant of 138,000 restricted shares to
      the Company’s independent directors and certain executive officers of the
      Company. The independent directors’ restricted shares vest ratably over a three
      year period. The executive officers’ restricted shares vest over a five year
      period with 50% of the award vesting ratably over the five year period and
      50%
      vesting based on the attainment of certain market performance criteria. During
      2006, the Company’s Board of Directors approved the grant of 164,000 restricted
      shares to the Company’s independent directors and all of the senior executive
      officers of the Company. The independent directors’ restricted shares vest
      ratably over a three year period and the senior executive officers’ restricted
      shares vest ratably over a five year period. For all of the restricted awards
      described above, the grant date fair value of the award was determined based
      upon the market price of the Company’s common shares on the date of grant and
      the associated compensation expense is being recognized in accordance with
      the
      vesting schedule of each grant.





F-25


We
      recorded share based compensation expense in general and administrative expenses
      in the consolidated statements of operations for the years ended December 31,
      2006, 2005 and 2004, respectively, as follows (in thousands):


2006
            2005
            2004Restricted
                unit awards
            
            $
                2,210
            $
                1,275
            $
                1,250Share
                and unit options
            
            465
            290
            226Total
                share based compensation
            
            $
                2,675
            $
                1,565
            $
                1,476





Compensation
      award expense capitalization during the years ended December 31, 2006, 2005
      and
      2004 was $212,000, $32,000 and $33,000, respectively.





Options
      outstanding at December 31, 2006 had the following weighted average exercise
      prices and weighted average remaining contractual lives:


Options
                Outstanding
            Options
                ExercisableWeighted
                averageWeighted
            remaining
            
            WeightedRange
                of
            
            average
            contractual
            
            averageexercise
                prices
            Options
            exercise
                price
            life
                in years
            Options
            exercise
                price$18.625
                to $22.125
            26,100
            $
                19.70
            2.82
            26,100
            $
                19.70$30.125
                to $38.76
            30,000
            34.44
            4.17
            21,000
            32.59$38.83
                to $47.92
            189,550
            39.01
            7.33
            47,250
            39.04245,650
            $36.40
            6.47
            94,350
            $32.26





A
      summary
      of option activity under our Amended and Restated Incentive Award Plan as of
      December 31, 2006 and changes during the year then ended is presented below
      (aggregate intrinsic value amount in thousands):





Weighted-Weighted-
            
            averageaverage
            
            remaining
            
            Aggregateexercise
            
            contractual
            
            intrinsic**Options**
            
            Shares
            
            price
            
            life
                in years
            
            valueOutstanding
                as of December 31, 2005
            316,120
            
            $36.16Granted
            
            
            ---
            
            ---Exercised
            
            
            (65,310
            )
            35.06Forfeited
            
            
            (5,160
            )
            38.83Outstanding
                as of December 31, 2006
            245,650
            
            $36.40
            
            6.47
            
            $10,258Vested
                and Expected to Vest as ofDecember
                31, 2006
            239,689
            
            $36.34
            
            6.47
            
            $10,025Exercisable
                as of December 31, 2006
            94,350
            
            $32.26
            
            5.08
            
            $4,331


The
      weighted average grant date fair value of options granted during the years
      ended
      December 31, 2005 and 2004 was $6.62 and $4.36 per unit, respectively. The
      total
      intrinsic value of options exercised during the years ended December 31, 2006,
      2005 and 2004 was $2.1 million, $2.0 million and $4.7 million,
      respectively.





The
      following table summarizes information related to unvested restricted units
      outstanding as of December 31, 2006:


Weighted
                averageNumber
                of
            
            grant
                date**Unvested
                Restricted Units**
            
            units
            
            fair
                valueUnvested
                at December 31, 2005
            
            112,793
            
            $41.90Granted
            
            82,000
            
            63.83Vested
            
            (30,373)
            
            42.70Forfeited
            
            (1,000)
            
            64.16Unvested
                at December 31, 2006
            
            163,420 
                0
            
            $52.62


The
      total
      value of restricted units vested during the years ended 2006, 2005 and 2004
      was
      $1.3 million, $1.3 million and $1.2 million, respectively. As of December 31,
      2006, there was $8.2 million of total unrecognized compensation cost related
      to
      unvested share-based compensation arrangements granted under the Plan. That
      cost
      is expected to be recognized over a weighted-average period of 3.3 years.





F-26


**13.
      Employee Benefit Plans**





We
      have a
      qualified retirement plan, with a salary deferral feature designed to qualify
      under Section 401 of the Code (the “401(k) Plan”), which covers substantially
      all of our officers and employees. The 401(k) Plan permits our employees, in
      accordance with the provisions of Section 401(k) of the Code, to defer up to
      20%
      of their eligible compensation on a pre-tax basis subject to certain maximum
      amounts. Employee contributions are fully vested and are matched by us at a
      rate
      of compensation deferred to be determined annually at our discretion. The
      matching contribution is subject to vesting under a schedule providing for
      20%
      annual vesting starting with the second year of employment and 100% vesting
      after six years of employment. The employer matching contribution expense for
      the years ended 2006, 2005 and 2004 were approximately $102,000, $102,000 and
      $87,000, respectively.





**14.**  **Other
      Comprehensive Income**





Total
      comprehensive income for the years ended December 31, 2006, 2005 and 2004 is
      as
      follows (in thousands):





2006
            
            
            2005
            
            
            2004Net
                income
            
            $
            43,633
            
            $
            6,077
            
            $
            8,626Other
                comprehensive income:Payments
                received (gain) in settlement of $125 million(notional
                amount) of US treasury rate lock
            
            
            ---
            
            
            3,224
            
            
            ---Reclassification
                adjustment for amortization of gain onsettlement
                of US treasury rate lock included in net income
            
            
            (246
            )
            
            (40
            )
            
            ---Change
                in fair value of treasury rate locks,
            
            
            1,055
            
            
            (313
            )
            
            ---Change
                in fair value of our portion of TWMB cashflow
                hedge
            
            
            115
            
            
            91
            
            
            82Other
                comprehensive income
            
            
            924
            
            
            2,962
            
            
            82Total
                comprehensive income
            
            $
            44,557
            
            $
            9,039
            
            $
            8,708





**15.
      Supplementary Income Statement Information**





The
      following amounts are included in property operating expenses for the years
      ended December 31, 2006, 2005 and 2004 (in thousands):





2006
            2005
            2004Advertising
                and promotion
            $
                16,530
            $
                15,909
            $14,989Common
                area maintenance
            29,435
            27,860
            24,593Real
                estate taxes
            12,604
            12,473
            12,022Other
                operating expenses
            10,133
            6,502
            6,116$
                68,702
            $
                62,744
            $
                57,720





F-27





**16. Lease Agreements**





We
      are
      the lessor of over 1,800 stores in our 30 wholly owned factory outlet centers,
      under operating leases with initial terms that expire from 2007 to 2030. Most
      leases are renewable for five years at the lessee’s option. Future minimum lease
      receipts under non-cancelable operating leases as of December 31, 2006,
      excluding the effect of straight-line rent and percentage rentals, are as
      follows (in thousands):





2007
            $
                123,3972008
            104,9932009
            85,8732010
            63,3462011
            39,309Thereafter
            62,164$
                479,082





**17.**
            **Commitments
                and Contingencies**





Our
      non-cancelable operating leases, with initial terms in excess of one year,
      have
      terms that expire from 2007 to 2085. Annual rental payments for these leases
      totaled approximately $3,214,000, $2,949,000 and $2,927,000, for the years
      ended
      December 31, 2006, 2005 and 2004, respectively. Minimum lease payments for
      the
      next five years and thereafter are as follows (in thousands):





2007
            $ 
                3,3822008
            2,9972009
            2,5782010
            2,2812011
            2,192Thereafter
            69,552$
                82,982





We are also subject to legal proceedings and claims which have arisen in the
      ordinary course of our business and have not been finally adjudicated. In our
      opinion, the
      ultimate


resolution of these matters will have no material effect on our results of
      operations, financial condition or cash flows.








F-28





**TANGER
      PROPERTIES LIMITED PARTNERSHIP and SUBSIDIARIES**


**SCHEDULE
      III - REAL ESTATE AND ACCUMULATED DEPRECIATION**


**For
      the Year Ended December 31, 2006** (In
      thousands)


**Description**
            
            **Initial
                cost to Company**
            **Costs
                Capitalized**
              **Subsequent
                to Acquisition**
              **(Improvements)**
            **Gross
                Amount Carried at Close of Period**
              **12/31/06
                (1)****Outlet
                Center Name**
            **Location**
            **Encum-brances**
              **(4)**
            **Land**
            **Buildings,**
              **Improve-ments
                & Fixtures**
            **Land**
            **Buildings**
              **Improve-ments**
              **&
                Fixtures**
            **Land**
            **Buildings,**
              **Improve-ments
                & Fixtures**
            **Total**
            **Accumulated**
              **Depreciation**
            **Date
                of**
              **Construction**
            **Life
                Used to**
              **Compute**
              **Depreciation**
              **in
                Income**
              **Statement**Barstow
            Barstow,
                CA
            $
                ---
            $
                3,281
            $
                12,533
            $
                ---
            $5,884
            $3,281
            $18,417
            $21,698
            $8,354
            1995
            (2)Blowing
                Rock
            Blowing
                Rock, NC
            ---
            1,963
            9,424
            ---
            3,861
            1,963
            13,285
            15,248
            4,154
            1997
                (3)
            (2)Boaz
            Boaz,
                AL
            ---
            616
            2,195
            ---
            2,288
            616
            4,483
            5,099
            3,101
            1988
            (2)Branson
            Branson,
                MO
            ---
            4,407
            25,040
            ---
            7,532
            4,407
            32,572
            36,979
            16,527
            1994
            (2)Charleston
            Charleston,
                SC
            ---
            10,353
            48,877
            ---
            ---
            10,353
            48,877
            59,230
            609
            2006
            (2)Commerce
                I
            Commerce,
                GA
            ---
            755
            3,511
            492
            12,223
            1,247
            15,734
            16,981
            8,099
            1989
            (2)Commerce
                II
            Commerce,
                GA
            ---
            1,262
            14,046
            541
            23,263
            1,803
            37,309
            39,112
            14,939
            1995
            (2)Foley
            Foley,
                AL
            30,882
            4,400
            82,410
            693
            17,693
            5,093
            100,103
            105,196
            9,318
            2003
                (3)
            (2)Gonzales
            Gonzales,
                LA
            ---
            679
            15,895
            ---
            6,994
            679
            22,889
            23,568
            13,974
            1992
            (2)Hilton
                Head
            Blufton,
                SC
            17,713
            9,900
            41,504
            469
            4,233
            10,369
            45,737
            56,106
            5,289
            2003
                (3)
            (2)Howell
            Howell,
                MI
            ---
            2,250
            35,250
            ---
            2,865
            2,250
            38,115
            40,365
            5,593
            2002
                (3)
            (2)Kittery-I
            Kittery,
                ME
            ---
            1,242
            2,961
            229
            1,600
            1,471
            4,561
            6,032
            3,411
            1986
            (2)Kittery-II
            Kittery,
                ME
            ---
            1,450
            1,835
            ---
            726
            1,450
            2,561
            4,011
            1,646
            1989
            (2)Lancaster
            Lancaster,
                PA
            ---
            3,691
            19,907
            ---
            13,161
            3,691
            33,068
            36,759
            15,907
            1994
                (3)
            (2)Lincoln
                City
            Lincoln
                City, OR
            9,971
            6,500
            28,673
            268
            2,618
            6,768
            31,291
            38,059
            3,528
            2003
                (3)
            (2)Locust
                Grove
            Locust
                Grove, GA
            ---
            2,558
            11,801
            ---
            16,443
            2,558
            28,244
            30,802
            11,018
            1994
            (2)Myrtle
                Beach 501
            Myrtle
                Beach, SC
            21,926
            10,236
            57,094
            ---
            9,007
            10,236
            66,101
            76,337
            6,792
            2003
                (3)
            (2)Nags
                Head
            Nags
                Head, NC
            ---
            1,853
            6,679
            ---
            3,702
            1,853
            10,381
            12,234
            3,401
            1997
                (3)
            (2)Park
                City
            Park
                City, UT
            12,066
            6,900
            33,597
            343
            8,275
            7,243
            41,872
            49,115
            4,035
            2003
                (3)
            (2)Pittsburgh
            Washington,
                PA
            
            5,563
            12,188
            ---
            ---
            5,563
            12,188
            17,751
            ---
            Under
                Const.
            ---Rehoboth
            Rehoboth
                Beach, DE
            37,765
            20,600
            74,209
            1,876
            19,432
            22,476
            93,641
            116,117
            8,441
            2003
                (3)
            (2)Riverhead
            Riverhead,
                NY
            ---
            ---
            36,374
            6,152
            76,140
            6,152
            112,514
            118,666
            44,221
            1993
            (2)San
                Marcos
            San
                Marcos, TX
            ---
            1,801
            9,440
            16
            41,757
            1,817
            51,197
            53,014
            19,243
            1993
            (2)Sanibel
            Sanibel,
                FL
            ---
            4,916
            23,196
            ---
            8,877
            4,916
            32,073
            36,989
            8,345
            1998
                (3)
            (2)Sevierville
            Sevierville,
                TN
            ---
            ---
            18,495
            ---
            34,614
            ---
            53,109
            53,109
            16,227
            1997
                (3)
            (2)Seymour
            Seymour,
                IN
            ---
            1,084
            1,891
            ---
            ---
            1,084
            1,891
            2,975
            1,403
            1994
            (2)Terrell
            Terrell,
                TX
            ---
            523
            13,432
            ---
            7,813
            523
            21,245
            21,768
            11,002
            1994
            (2)Tilton
            Tilton,
                NH
            12,459
            1,800
            24,838
            30
            4,299
            1,830
            29,137
            30,967
            2,874
            2003
                (3)
            (2)Tuscola
            Tuscola,
                IL
            19,350
            1,600
            15,428
            43
            601
            1,643
            16,029
            17,672
            2,009
            2003
                (3)
            (2)West
                Branch
            West
                Branch, MI
            ---
            319
            3,428
            120
            8,411
            439
            11,839
            12,278
            5,599
            1991
            (2)Westbrook
            Westbrook,
                CT
            14,338
            6,264
            26,991
            4,233
            2,085
            10,497
            29,076
            39,573
            3,227
            2003
                (3)
            (2)Williamsburg
            Williamsburg,
                IA
            ---
            706
            6,781
            716
            14,834
            1,422
            21,615
            23,037
            13,086
            1991
            (2)$
                176,470
            $119,472
            $719,923
            $16,221
            $361,231
            $135,693
            $1,081,154
            $1,216,847
            $275,372


(1)  Aggregate cost for federal income tax purposes is approximately $985,961.
      Building, improvements & fixtures includes amounts included in construction
      in progress on the consolidated balance sheet.


(2)  The
      Operating Partnership generally uses estimated lives ranging from 25 to 33
      years
      for buildings and 15 years for land improvements. Tenant finishing allowances
      are depreciated over the initial lease term.


(3)  Represents
      year acquired.


(4)  Excludes
      net mortgage premium of $3,441.







F-29


**TANGER
      PROPERTIES LIMITED PARTNERSHIP and SUBSIDIARIES**


**SCHEDULE
      III - (Continued)**


**REAL
      ESTATE AND ACCUMULATED DEPRECIATION**


**For
      the Year Ended December 31, 2006**


**(In
      Thousands)**





The
      changes in total real estate for the three years ended December 31, 2006 are
      as
      follows:





2006
            
            
            2005
            
            
            2004Balance,
                beginning of year
            
            $
            1,152,866
            
            $
            1,077,393
            
            $
            1,078,553Acquisition
                of real estate
            
            
            ---
            
            
            47,369
            
            
            ---Improvements
            
            
            87,045
            
            
            45,684
            
            
            23,420Dispositions
                and assets heldfor
                sale
            
            
            (23,064
            )
            
            (17,580
            )
            
            (24,580
            )Balance,
                end of year
            
            $
            1,216,847
            
            $
            1,152,866
            
            $
            1,077,393








The
      changes in accumulated depreciation for the three years ended December 31,
      2006
      are as follows:





2006
            
            
            2005
            
            
            2004Balance,
                beginning of year
            
            $
            253,765
            
            $
            224,622
            
            $
            192,698Depreciation
                for the period
            
            
            40,440
            
            
            38,137
            
            
            38,968Dispositions
                and assets heldfor
                sale
            
            
            (18,833
            )
            
            (8,994
            )
            
            (7,044
            )Balance,
                end of year
            
            $
            275,372
            
            $
            253,765
            
            $
            224,622










F-30